IB 

Union Calendar No. 43

108TH CONGRESS 

1ST SESSION H. R. 810

[Report No. 108–74, Parts I and II] 

To amend title XVIII of the Social Security Act to provide regulatory relief 

and contracting flexibility under the Medicare Program. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 13, 2003

Mrs. JOHNSON of Connecticut (for herself, Mr. STARK, Mr. BILIRAKIS, Mr. 

BROWN of Ohio, Mr. THOMAS, Mr. RANGEL, Mr. TAUZIN, Mr. DINGELL, 

Mr. RYAN of Wisconsin, Mr. PORTMAN, Mr. CARDIN, Ms. DUNN, Mr. 

GREENWOOD, Mr. KLECZKA, Mr. LEWIS of Kentucky, Mr. CAMP, Mr. 

POMEROY, Mr. SHAW, Mr. BURR, Mr. MCNULTY, Mrs. JONES of Ohio, 

Mr. CRANE, Mr. MCINNIS, Mr. RAMSTAD, Mr. ENGLISH, Mr. 

MCDERMOTT, Mr. MCCRERY, Mr. HAYWORTH, Mr. HOUGHTON, Mr. 

NUSSLE, Mr. NORWOOD, Mr. GORDON, Mr. UPTON, Mr. ENGEL, Mr. 

BUYER, Mr. PICKERING, Mr. BARTON of Texas, Mr. DOYLE, Mrs. CAPPS, 

Mr. WAXMAN, Mr. PALLONE, Mr. HALL, Mr. SAM JOHNSON of Texas, 

Mr. CANTOR, Mr. FOLEY, Mr. WELLER, and Mr. DEUTSCH) introduced 

the following bill; which was referred to the Committee on Ways and 

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

APRIL 11, 2003

Reported from the Committee on Ways and Means with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

APRIL 11, 2003

Referral to the Committee on Energy and Commerce extended for a period 

ending not later than April 29, 2003

APRIL 29, 2003

Additional sponsors: Mrs. MCCARTHY of New York, Mrs. CUBIN, Mr. 
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TOOMEY, Mrs. MALONEY, Mr. ROGERS of Michigan, Mr. WYNN, Mr. 

KENNEDY of Minnesota, and Mr. DAVIS of Florida 

APRIL 29, 2003

Reported from the Committee on Energy and Commerce with an amendment, 

committed to the Committee of the Whole House on the State of the 

Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in boldface roman] 

[For text of introduced bill, see copy of bill as introduced on February 13, 2003] 

A BILL

To amend title XVIII of the Social Security Act to provide 

regulatory relief and contracting flexibility under the 

Medicare Program.

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

3 SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU4 RITY ACT; TABLE OF CONTENTS. 

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

6 ‘‘Medicare Regulatory and Contracting Reform Act of 

7 2003’’. 

8 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Except 

9 as otherwise specifically provided, whenever in this Act an 

10 amendment is expressed in terms of an amendment to or 

11 repeal of a section or other provision, the reference shall 

12 be considered to be made to that section or other provision 

13 of the Social Security Act. 

14 (c) TABLE OF CONTENTS.—The table of contents of this 

15 Act is as follows:
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Sec. 1. Short title; amendments to Social Security Act; table of contents. 

Sec. 2. Findings and construction. 

Sec. 3. Definitions. 

TITLE I—REGULATORY REFORM 

Sec. 101. Issuance of regulations. 

Sec. 102. Compliance with changes in regulations and policies. 

Sec. 103. Reports and studies relating to regulatory reform. 

TITLE II—CONTRACTING REFORM 

Sec. 201. Increased flexibility in medicare administration. 

Sec. 202. Requirements for information security for medicare administrative contractors. 

TITLE III—EDUCATION AND OUTREACH 

Sec. 301. Provider education and technical assistance. 

Sec. 302. Small provider technical assistance demonstration program. 

Sec. 303. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman. 

Sec. 304. Beneficiary outreach demonstration program. 

Sec. 305. Inclusion of additional information in notices to beneficiaries about 

skilled nursing facility benefits. 

Sec. 306. Information on medicare-certified skilled nursing facilities in hospital 

discharge plans. 

TITLE IV—APPEALS AND RECOVERY 

Sec. 401. Transfer of responsibility for medicare appeals. 

Sec. 402. Process for expedited access to review. 

Sec. 403. Revisions to medicare appeals process. 

Sec. 404. Prepayment review. 

Sec. 405. Recovery of overpayments. 

Sec. 406. Provider enrollment process; right of appeal. 

Sec. 407. Process for correction of minor errors and omissions without pursuing 

appeals process. 

Sec. 408. Prior determination process for certain items and services; advance beneficiary notices. 

TITLE V—MISCELLANEOUS PROVISIONS 

Sec. 501. Policy development regarding evaluation and management (E & M) 

documentation guidelines. 

Sec. 502. Improvement in oversight of technology and coverage. 

Sec. 503. Treatment of hospitals for certain services under medicare secondary 

payor (MSP) provisions. 

Sec. 504. EMTALA improvements. 

Sec. 505. Emergency Medical Treatment and Active Labor Act (EMTALA) Technical Advisory Group. 

Sec. 506. Authorizing use of arrangements to provide core hospice services in certain circumstances. 

Sec. 507. Application of OSHA bloodborne pathogens standard to certain hospitals. 

Sec. 508. BIPA-related technical amendments and corrections. 

Sec. 509. Conforming authority to waive a program exclusion. 

Sec. 510. Treatment of certain dental claims. 
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Sec. 511. Furnishing hospitals with information to compute DSH formula. 

Sec. 512. Revisions to reassignment provisions. 

Sec. 513. Specialized Medicare+Choice plans for special needs beneficiaries. 

Sec. 514. Temporary suspension of OASIS requirement for collection of data on 

non-medicare and non-medicaid patients. 

Sec. 515. Miscellaneous reports, studies, and publication requirements.

1 SEC. 2. FINDINGS AND CONSTRUCTION. 

2 (a) FINDINGS.—Congress finds the following: 

3 (1) The overwhelming majority of providers of 

4 services and suppliers in the United States are law5 abiding persons who provide important health care 

6 services to patients each day. 

7 (2) The Secretary of Health and Human Serv8 ices should work to streamline paperwork require9 ments under the medicare program and communicate 

10 clearer instructions to providers of services and sup11 pliers so that they may spend more time caring for 

12 patients. 

13 (b) CONSTRUCTION.—Nothing in this Act shall be con14 strued—

15 (1) to compromise or affect existing legal rem16 edies for addressing fraud or abuse, whether it be 

17 criminal prosecution, civil enforcement, or adminis18 trative remedies, including under sections 3729 

19 through 3733 of title 31, United States Code (known 

20 as the False Claims Act); or 

21 (2) to prevent or impede the Department of 

22 Health and Human Services in any way from its on-
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1 going efforts to eliminate waste, fraud, and abuse in 

2 the medicare program. 

3 Furthermore, the consolidation of medicare administrative 

4 contracting set forth in this Act does not constitute consoli5 dation of the Federal Hospital Insurance Trust Fund and 

6 the Federal Supplementary Medical Insurance Trust Fund 

7 or reflect any position on that issue. 

8 SEC. 3. DEFINITIONS. 

9 (a) USE OF TERM SUPPLIER IN MEDICARE.—Section 

10 1861 (42 U.S.C. 1395x) is amended by inserting after sub11 section (c) the following new subsection: 

12 ‘‘Supplier 

13 ‘‘(d) The term ‘supplier’ means, unless the context oth14 erwise requires, a physician or other practitioner, a facility, 

15 or other entity (other than a provider of services) that fur16 nishes items or services under this title.’’. 

17 (b) OTHER TERMS USED IN ACT.—In this Act: 

18 (1) BIPA.—The term ‘‘BIPA’’ means the Medi19 care, Medicaid, and SCHIP Benefits Improvement 

20 and Protection Act of 2000, as enacted into law by 

21 section 1(a)(6) of Public Law 106–554. 

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

23 the Secretary of Health and Human Services.
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1 TITLE I—REGULATORY REFORM 

2 SEC. 101. ISSUANCE OF REGULATIONS. 

3 (a) LIMITATIONS ON NEW MATTER IN FINAL REGULA4 TIONS.—Section 1871(a) (42 U.S.C. 1395hh(a)) is amended 

5 by adding at the end the following new paragraph: 

6 ‘‘(3) If the Secretary publishes a final regulation that 

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

8 previously published notice of proposed rulemaking or in9 terim final rule, such provision shall be treated as a pro10 posed regulation and shall not take effect until there is the 

11 further opportunity for public comment and a publication 

12 of the provision again as a final regulation.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by sub14 section (a) shall apply to final regulations published on or 

15 after the date of the enactment of this Act. 

16 SEC. 102. COMPLIANCE WITH CHANGES IN REGULATIONS 

17 AND POLICIES. 

18 (a) NO RETROACTIVE APPLICATION OF SUBSTANTIVE

19 CHANGES.—

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

21 1395hh), as amended by section 101(a), is amended 

22 by adding at the end the following new subsection: 

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

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

2 to items and services furnished before the effective date of 

3 the change, unless the Secretary determines that—

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

5 comply with statutory requirements; or 

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

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

8 (2) EFFECTIVE DATE.—The amendment made by 

9 paragraph (1) shall apply to substantive changes 

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

11 Act. 

12 (b) TIMELINE FOR COMPLIANCE WITH SUBSTANTIVE

13 CHANGES AFTER NOTICE.—

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

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

16 the following: 

17 ‘‘(B)(i) Except as provided in clause (ii), a substantive 

18 change referred to in subparagraph (A) shall not become 

19 effective before the end of the 30-day period that begins on 

20 the date that the Secretary has issued or published, as the 

21 case may be, the substantive change. 

22 ‘‘(ii) The Secretary may provide for such a substantive 

23 change to take effect on a date that precedes the end of the 

24 30-day period under clause (i) if the Secretary finds that 

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

2 day period is contrary to the public interest. If the Sec3 retary provides for an earlier effective date pursuant to this 

4 clause, the Secretary shall include in the issuance or publi5 cation of the substantive change a finding described in the 

6 first sentence, and a brief statement of the reasons for such 

7 finding. 

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

9 services or supplier with respect to noncompliance with 

10 such a substantive change for items and services furnished 

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

12 (2) EFFECTIVE DATE.—The amendment made by 

13 paragraph (1) shall apply to compliance actions un14 dertaken on or after the date of the enactment of this 

15 Act. 

16 (c) RELIANCE ON GUIDANCE.—

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

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

19 end the following new paragraph: 

20 ‘‘(2)(A) If—

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

22 written guidance (which may be transmitted elec23 tronically) provided by the Secretary or by a medi24 care contractor (as defined in section 1889(g)) acting 

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

2 submission of a claim for benefits for such items or 

3 services with respect to such provider or supplier; 

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

5 of services or supplier has accurately presented the 

6 circumstances relating to such items, services, and 

7 claim to the contractor in writing; and 

8 ‘‘(iii) the guidance was in error; 

9 the provider of services or supplier shall not be subject to 

10 any sanction (including any penalty or requirement for re11 payment of any amount) if the provider of services or sup12 plier reasonably relied on such guidance. 

13 ‘‘(B) Subparagraph (A) shall not be construed as pre14 venting the recoupment or repayment (without any addi15 tional penalty) relating to an overpayment insofar as the 

16 overpayment was solely the result of a clerical or technical 

17 operational error.’’. 

18 (2) EFFECTIVE DATE.—The amendment made by 

19 paragraph (1) shall take effect on the date of the en20 actment of this Act but shall not apply to any sanc21 tion for which notice was provided on or before the 

22 date of the enactment of this Act. 

23 SEC. 103. REPORTS AND STUDIES RELATING TO REGU24 LATORY REFORM. 

25 (a) GAO STUDY ON ADVISORY OPINION AUTHORITY.—
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1 (1) STUDY.—The Comptroller General of the 

2 United States shall conduct a study to determine the 

3 feasibility and appropriateness of establishing in the 

4 Secretary authority to provide legally binding advi5 sory opinions on appropriate interpretation and ap6 plication of regulations to carry out the medicare pro7 gram under title XVIII of the Social Security Act. 

8 Such study shall examine the appropriate timeframe 

9 for issuing such advisory opinions, as well as the need 

10 for additional staff and funding to provide such opin11 ions. 

12 (2) REPORT.—The Comptroller General shall 

13 submit to Congress a report on the study conducted 

14 under paragraph (1) by not later than one year after 

15 the date of the enactment of this Act. 

16 (b) REPORT ON LEGAL AND REGULATORY INCONSIST17 ENCIES.—Section 1871 (42 U.S.C. 1395hh), as amended by 

18 section 2(a), is amended by adding at the end the following 

19 new subsection: 

20 ‘‘(e)(1) Not later than 2 years after the date of the en21 actment of this subsection, and every 2 years thereafter, the 

22 Secretary shall submit to Congress a report with respect 

23 to the administration of this title and areas of inconsistency 

24 or conflict among the various provisions under law and reg25 ulation.
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1 ‘‘(2) In preparing a report under paragraph (1), the 

2 Secretary shall collect—

3 ‘‘(A) information from individuals entitled to 

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

5 both, providers of services, and suppliers and from the 

6 Medicare Beneficiary Ombudsman and the Medicare 

7 Provider Ombudsman with respect to such areas of 

8 inconsistency and conflict; and 

9 ‘‘(B) information from medicare contractors that 

10 tracks the nature of written and telephone inquiries. 

11 ‘‘(3) A report under paragraph (1) shall include a de12 scription of efforts by the Secretary to reduce such inconsist13 ency or conflicts, and recommendations for legislation or 

14 administrative action that the Secretary determines appro15 priate to further reduce such inconsistency or conflicts.’’. 

16 TITLE II—CONTRACTING 

17 REFORM 

18 SEC. 201. INCREASED FLEXIBILITY IN MEDICARE ADMINIS19 TRATION. 

20 (a) CONSOLIDATION AND FLEXIBILITY IN MEDICARE

21 ADMINISTRATION.—

22 (1) IN GENERAL.—Title XVIII is amended by in23 serting after section 1874 the following new section: 

24 ‘‘CONTRACTS WITH MEDICARE ADMINISTRATIVE

25 CONTRACTORS

26 ‘‘SEC. 1874A. (a) AUTHORITY.—
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1 ‘‘(1) AUTHORITY TO ENTER INTO CONTRACTS.—

2 The Secretary may enter into contracts with any eli3 gible entity to serve as a medicare administrative 

4 contractor with respect to the performance of any or 

5 all of the functions described in paragraph (4) or 

6 parts of those functions (or, to the extent provided in 

7 a contract, to secure performance thereof by other en8 tities). 

9 ‘‘(2) ELIGIBILITY OF ENTITIES.—An entity is el10 igible to enter into a contract with respect to the per11 formance of a particular function described in para12 graph (4) only if—

13 ‘‘(A) the entity has demonstrated capability 

14 to carry out such function; 

15 ‘‘(B) the entity complies with such conflict 

16 of interest standards as are generally applicable 

17 to Federal acquisition and procurement; 

18 ‘‘(C) the entity has sufficient assets to fi19 nancially support the performance of such func20 tion; and 

21 ‘‘(D) the entity meets such other require22 ments as the Secretary may impose. 

23 ‘‘(3) MEDICARE ADMINISTRATIVE CONTRACTOR

24 DEFINED.—For purposes of this title and title XI—
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1 ‘‘(A) IN GENERAL.—The term ‘medicare ad2 ministrative contractor’ means an agency, orga3 nization, or other person with a contract under 

4 this section. 

5 ‘‘(B) APPROPRIATE MEDICARE ADMINISTRA6 TIVE CONTRACTOR.—With respect to the perform7 ance of a particular function in relation to an 

8 individual entitled to benefits under part A or 

9 enrolled under part B, or both, a specific pro10 vider of services or supplier (or class of such pro11 viders of services or suppliers), the ‘appropriate’ 

12 medicare administrative contractor is the medi13 care administrative contractor that has a con14 tract under this section with respect to the per15 formance of that function in relation to that in16 dividual, provider of services or supplier or class 

17 of provider of services or supplier. 

18 ‘‘(4) FUNCTIONS DESCRIBED.—The functions re19 ferred to in paragraphs (1) and (2) are payment 

20 functions, provider services functions, and functions 

21 relating to services furnished to individuals entitled 

22 to benefits under part A or enrolled under part B, or 

23 both, as follows: 

24 ‘‘(A) DETERMINATION OF PAYMENT

25 AMOUNTS.—Determining (subject to the provi-
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1 sions of section 1878 and to such review by the 

2 Secretary as may be provided for by the con3 tracts) the amount of the payments required pur4 suant to this title to be made to providers of 

5 services, suppliers and individuals. 

6 ‘‘(B) MAKING PAYMENTS.—Making pay7 ments described in subparagraph (A) (including 

8 receipt, disbursement, and accounting for funds 

9 in making such payments). 

10 ‘‘(C) BENEFICIARY EDUCATION AND ASSIST11 ANCE.—Providing education and outreach to in12 dividuals entitled to benefits under part A or en13 rolled under part B, or both, and providing as14 sistance to those individuals with specific issues, 

15 concerns or problems. 

16 ‘‘(D) PROVIDER CONSULTATIVE SERV17 ICES.—Providing consultative services to institu18 tions, agencies, and other persons to enable them 

19 to establish and maintain fiscal records nec20 essary for purposes of this title and otherwise to 

21 qualify as providers of services or suppliers. 

22 ‘‘(E) COMMUNICATION WITH PROVIDERS.—

23 Communicating to providers of services and sup24 pliers any information or instructions furnished 

25 to the medicare administrative contractor by the 
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1 Secretary, and facilitating communication be2 tween such providers and suppliers and the Sec3 retary. 

4 ‘‘(F) PROVIDER EDUCATION AND TECHNICAL

5 ASSISTANCE.—Performing the functions relating 

6 to provider education, training, and technical 

7 assistance. 

8 ‘‘(G) ADDITIONAL FUNCTIONS.—Performing 

9 such other functions as are necessary to carry 

10 out the purposes of this title. 

11 ‘‘(5) RELATIONSHIP TO MIP CONTRACTS.—

12 ‘‘(A) NONDUPLICATION OF DUTIES.—In en13 tering into contracts under this section, the Sec14 retary shall assure that functions of medicare 

15 administrative contractors in carrying out ac16 tivities under parts A and B do not duplicate 

17 activities carried out under the Medicare Integ18 rity Program under section 1893. The previous 

19 sentence shall not apply with respect to the ac20 tivity described in section 1893(b)(5) (relating to 

21 prior authorization of certain items of durable 

22 medical equipment under section 1834(a)(15)). 

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

24 be treated as a medicare administrative con25 tractor merely by reason of having entered into
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1 a contract with the Secretary under section 

2 1893. 

3 ‘‘(6) APPLICATION OF FEDERAL ACQUISITION

4 REGULATION.—Except to the extent inconsistent with 

5 a specific requirement of this title, the Federal Acqui6 sition Regulation applies to contracts under this title. 

7 ‘‘(b) CONTRACTING REQUIREMENTS.—

8 ‘‘(1) USE OF COMPETITIVE PROCEDURES.—

9 ‘‘(A) IN GENERAL.—Except as provided in 

10 laws with general applicability to Federal acqui11 sition and procurement or in subparagraph (B), 

12 the Secretary shall use competitive procedures 

13 when entering into contracts with medicare ad14 ministrative contractors under this section, tak15 ing into account performance quality as well as 

16 price and other factors. 

17 ‘‘(B) RENEWAL OF CONTRACTS.—The Sec18 retary may renew a contract with a medicare 

19 administrative contractor under this section 

20 from term to term without regard to section 5 of 

21 title 41, United States Code, or any other provi22 sion of law requiring competition, if the medi23 care administrative contractor has met or ex24 ceeded the performance requirements applicable 

25 with respect to the contract and contractor, ex-
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1 cept that the Secretary shall provide for the ap2 plication of competitive procedures under such a 

3 contract not less frequently than once every five 

4 years. 

5 ‘‘(C) TRANSFER OF FUNCTIONS.—The Sec6 retary may transfer functions among medicare 

7 administrative contractors consistent with the 

8 provisions of this paragraph. The Secretary shall 

9 ensure that performance quality is considered in 

10 such transfers. The Secretary shall provide pub11 lic notice (whether in the Federal Register or 

12 otherwise) of any such transfer (including a de13 scription of the functions so transferred, a de14 scription of the providers of services and sup15 pliers affected by such transfer, and contact in16 formation for the contractors involved). 

17 ‘‘(D) INCENTIVES FOR QUALITY.—The Sec18 retary shall provide incentives for medicare ad19 ministrative contractors to provide quality serv20 ice and to promote efficiency. 

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

22 contract under this section shall be entered into with 

23 any medicare administrative contractor unless the 

24 Secretary finds that such medicare administrative 

25 contractor will perform its obligations under the con-
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1 tract efficiently and effectively and will meet such re2 quirements as to financial responsibility, legal au3 thority, quality of services provided, and other mat4 ters as the Secretary finds pertinent. 

5 ‘‘(3) PERFORMANCE REQUIREMENTS.—

6 ‘‘(A) DEVELOPMENT OF SPECIFIC PERFORM7 ANCE REQUIREMENTS.—In developing contract 

8 performance requirements, the Secretary shall 

9 develop performance requirements applicable to 

10 functions described in subsection (a)(4). 

11 ‘‘(B) CONSULTATION.—In developing such 

12 requirements, the Secretary may consult with 

13 providers of services and suppliers, organizations 

14 representing individuals entitled to benefits 

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

16 and organizations and agencies performing func17 tions necessary to carry out the purposes of this 

18 section with respect to such performance require19 ments. 

20 ‘‘(C) INCLUSION IN CONTRACTS.—All con21 tractor performance requirements shall be set 

22 forth in the contract between the Secretary and 

23 the appropriate medicare administrative con24 tractor. Such performance requirements—
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1 ‘‘(i) shall reflect the performance re2 quirements developed under subparagraph 

3 (A), but may include additional perform4 ance requirements; 

5 ‘‘(ii) shall be used for evaluating con6 tractor performance under the contract; and 

7 ‘‘(iii) shall be consistent with the writ8 ten statement of work provided under the 

9 contract. 

10 ‘‘(4) INFORMATION REQUIREMENTS.—The Sec11 retary shall not enter into a contract with a medicare 

12 administrative contractor under this section unless 

13 the contractor agrees—

14 ‘‘(A) to furnish to the Secretary such timely 

15 information and reports as the Secretary may 

16 find necessary in performing his functions under 

17 this title; and 

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

19 such access thereto as the Secretary finds nec20 essary to assure the correctness and verification 

21 of the information and reports under subpara22 graph (A) and otherwise to carry out the pur23 poses of this title. 

24 ‘‘(5) SURETY BOND.—A contract with a medi25 care administrative contractor under this section may 
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1 require the medicare administrative contractor, and 

2 any of its officers or employees certifying payments or 

3 disbursing funds pursuant to the contract, or other4 wise participating in carrying out the contract, to 

5 give surety bond to the United States in such amount 

6 as the Secretary may deem appropriate. 

7 ‘‘(c) TERMS AND CONDITIONS.—

8 ‘‘(1) IN GENERAL.—A contract with any medi9 care administrative contractor under this section may 

10 contain such terms and conditions as the Secretary 

11 finds necessary or appropriate and may provide for 

12 advances of funds to the medicare administrative con13 tractor for the making of payments by it under sub14 section (a)(4)(B). 

15 ‘‘(2) PROHIBITION ON MANDATES FOR CERTAIN

16 DATA COLLECTION.—The Secretary may not require, 

17 as a condition of entering into, or renewing, a con18 tract under this section, that the medicare adminis19 trative contractor match data obtained other than in 

20 its activities under this title with data used in the ad21 ministration of this title for purposes of identifying 

22 situations in which the provisions of section 1862(b) 

23 may apply. 

24 ‘‘(d) LIMITATION ON LIABILITY OF MEDICARE ADMIN25 ISTRATIVE CONTRACTORS AND CERTAIN OFFICERS.—
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1 ‘‘(1) CERTIFYING OFFICER.—No individual des2 ignated pursuant to a contract under this section as 

3 a certifying officer shall, in the absence of the reckless 

4 disregard of the individual’s obligations or the intent 

5 by that individual to defraud the United States, be 

6 liable with respect to any payments certified by the 

7 individual under this section. 

8 ‘‘(2) DISBURSING OFFICER.—No disbursing offi9 cer shall, in the absence of the reckless disregard of the 

10 officer’s obligations or the intent by that officer to de11 fraud the United States, be liable with respect to any 

12 payment by such officer under this section if it was 

13 based upon an authorization (which meets the appli14 cable requirements for such internal controls estab15 lished by the Comptroller General) of a certifying offi16 cer designated as provided in paragraph (1) of this 

17 subsection. 

18 ‘‘(3) LIABILITY OF MEDICARE ADMINISTRATIVE

19 CONTRACTOR.—

20 ‘‘(A) IN GENERAL.—No medicare adminis21 trative contractor shall be liable to the United 

22 States for a payment by a certifying or dis23 bursing officer unless, in connection with such 

24 payment, the medicare administrative contractor 

25 acted with reckless disregard of its obligations 
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1 under its medicare administrative contract or 

2 with intent to defraud the United States. 

3 ‘‘(B) RELATIONSHIP TO FALSE CLAIMS

4 ACT.—Nothing in this subsection shall be con5 strued to limit liability for conduct that would 

6 constitute a violation of sections 3729 through 

7 3731 of title 31, United States Code (commonly 

8 known as the ‘False Claims Act’). 

9 ‘‘(4) INDEMNIFICATION BY SECRETARY.—

10 ‘‘(A) IN GENERAL.—Subject to subpara11 graphs (B) and (D), in the case of a medicare 

12 administrative contractor (or a person who is a 

13 director, officer, or employee of such a contractor 

14 or who is engaged by the contractor to partici15 pate directly in the claims administration proc16 ess) who is made a party to any judicial or ad17 ministrative proceeding arising from or relating 

18 directly to the claims administration process 

19 under this title, the Secretary may, to the extent 

20 the Secretary determines to be appropriate and 

21 as specified in the contract with the contractor, 

22 indemnify the contractor and such persons. 

23 ‘‘(B) CONDITIONS.—The Secretary may not 

24 provide indemnification under subparagraph (A) 

25 insofar as the liability for such costs arises di-
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1 rectly from conduct that is determined by the ju2 dicial proceeding or by the Secretary to be crimi3 nal in nature, fraudulent, or grossly negligent. If 

4 indemnification is provided by the Secretary 

5 with respect to a contractor before a determina6 tion that such costs arose directly from such con7 duct, the contractor shall reimburse the Secretary 

8 for costs of indemnification. 

9 ‘‘(C) SCOPE OF INDEMNIFICATION.—Indem10 nification by the Secretary under subparagraph 

11 (A) may include payment of judgments, settle12 ments (subject to subparagraph (D)), awards, 

13 and costs (including reasonable legal expenses). 

14 ‘‘(D) WRITTEN APPROVAL FOR SETTLE15 MENTS.—A contractor or other person described 

16 in subparagraph (A) may not propose to nego17 tiate a settlement or compromise of a proceeding 

18 described in such subparagraph without the 

19 prior written approval of the Secretary to nego20 tiate such settlement or compromise. Any indem21 nification under subparagraph (A) with respect 

22 to amounts paid under a settlement or com23 promise of a proceeding described in such sub24 paragraph are conditioned upon prior written 
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1 approval by the Secretary of the final settlement 

2 or compromise. 

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

4 paragraph shall be construed—

5 ‘‘(i) to change any common law immu6 nity that may be available to a medicare 

7 administrative contractor or person de8 scribed in subparagraph (A); or 

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

10 not otherwise allowable, reasonable, or allo11 cable under the Federal Acquisition Regula12 tions.’’. 

13 (2) CONSIDERATION OF INCORPORATION OF CUR14 RENT LAW STANDARDS.—In developing contract per15 formance requirements under section 1874A(b) of the 

16 Social Security Act, as inserted by paragraph (1), the 

17 Secretary shall consider inclusion of the performance 

18 standards described in sections 1816(f)(2) of such Act 

19 (relating to timely processing of reconsiderations and 

20 applications for exemptions) and section 

21 1842(b)(2)(B) of such Act (relating to timely review 

22 of determinations and fair hearing requests), as such 

23 sections were in effect before the date of the enactment 

24 of this Act. 
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1 (b) CONFORMING AMENDMENTS TO SECTION 1816 (RE2 LATING TO FISCAL INTERMEDIARIES).—Section 1816 (42 

3 U.S.C. 1395h) is amended as follows: 

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

5 ‘‘PROVISIONS RELATING TO THE ADMINISTRATION OF PART

6 A’’. 

7 (2) Subsection (a) is amended to read as follows: 

8 ‘‘(a) The administration of this part shall be conducted 

9 through contracts with medicare administrative contractors 

10 under section 1874A.’’. 

11 (3) Subsection (b) is repealed. 

12 (4) Subsection (c) is amended—

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

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

15 (3)(A), by striking ‘‘agreement under this sec16 tion’’ and inserting ‘‘contract under section 

17 1874A that provides for making payments under 

18 this part’’. 

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

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

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

22 agency or organization under this section’’ and 

23 inserting ‘‘A contract with a medicare adminis24 trative contractor under section 1874A with re25 spect to the administration of this part’’; and
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1 (B) by striking ‘‘such agency or organiza2 tion’’ and inserting ‘‘such medicare administra3 tive contractor’’ each place it appears. 

4 (7) Subsection (l) is repealed. 

5 (c) CONFORMING AMENDMENTS TO SECTION 1842 (RE6 LATING TO CARRIERS).—Section 1842 (42 U.S.C. 1395u) 

7 is amended as follows: 

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

9 ‘‘PROVISIONS RELATING TO THE ADMINISTRATION OF PART

10 B’’. 

11 (2) Subsection (a) is amended to read as follows: 

12 ‘‘(a) The administration of this part shall be conducted 

13 through contracts with medicare administrative contractors 

14 under section 1874A.’’. 

15 (3) Subsection (b) is amended—

16 (A) by striking paragraph (1); 

17 (B) in paragraph (2)—

18 (i) by striking subparagraphs (A) and 

19 (B); 

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

21 ‘‘carriers’’ and inserting ‘‘medicare admin22 istrative contractors’’; and 

23 (iii) by striking subparagraphs (D) 

24 and (E); 

25 (C) in paragraph (3)—
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1 (i) in the matter before subparagraph 

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

3 provide that the carrier’’ and inserting 

4 ‘‘The Secretary’’; 

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

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

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

8 ‘‘shall’’; 

9 (iii) in subparagraph (B), in the mat10 ter before clause (i), by striking ‘‘to the pol11 icyholders and subscribers of the carrier’’ 

12 and inserting ‘‘to the policyholders and sub13 scribers of the medicare administrative con14 tractor’’; 

15 (iv) by striking subparagraphs (C), 

16 (D), and (E); 

17 (v) in subparagraph (H)—

18 (I) by striking ‘‘if it makes deter19 minations or payments with respect to 

20 physicians’ services,’’ in the matter 

21 preceding clause (i); and 

22 (II) by striking ‘‘carrier’’ and in23 serting ‘‘medicare administrative con24 tractor’’ in clause (i); 

25 (vi) by striking subparagraph (I); 
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1 (vii) in subparagraph (L), by striking 

2 the semicolon and inserting a period; 

3 (viii) in the first sentence, after sub4 paragraph (L), by striking ‘‘and shall con5 tain’’ and all that follows through the pe6 riod; and 

7 (ix) in the seventh sentence, by insert8 ing ‘‘medicare administrative contractor,’’ 

9 after ‘‘carrier,’’; and 

10 (D) by striking paragraph (5); 

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

12 ‘‘carrier’’ and inserting ‘‘medicare administra13 tive contractor’’; and 

14 (F) in paragraph (7), by striking ‘‘the car15 rier’’ and inserting ‘‘the Secretary’’ each place it 

16 appears. 

17 (4) Subsection (c) is amended—

18 (A) by striking paragraph (1); 

19 (B) in paragraph (2)(A), by striking ‘‘con20 tract under this section which provides for the 

21 disbursement of funds, as described in subsection 

22 (a)(1)(B),’’ and inserting ‘‘contract under section 

23 1874A that provides for making payments under 

24 this part’’; 
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1 (C) in paragraph (3)(A), by striking ‘‘sub2 section (a)(1)(B)’’ and inserting ‘‘section 

3 1874A(a)(3)(B)’’; 

4 (D) in paragraph (4), in the matter pre5 ceding subparagraph (A), by striking ‘‘carrier’’ 

6 and inserting ‘‘medicare administrative con7 tractor’’; and 

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

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

10 (6) Subsection (g) is amended by striking ‘‘car11 rier or carriers’’ and inserting ‘‘medicare administra12 tive contractor or contractors’’. 

13 (7) Subsection (h) is amended—

14 (A) in paragraph (2)—

15 (i) by striking ‘‘Each carrier having 

16 an agreement with the Secretary under sub17 section (a)’’ and inserting ‘‘The Secretary’’; 

18 and 

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

20 and inserting ‘‘The Secretary’’; 

21 (B) in paragraph (3)(A)—

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

23 agreement with the Secretary under sub24 section (a)’’ and inserting ‘‘medicare ad25 ministrative contractor having a contract 
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1 under section 1874A that provides for mak2 ing payments under this part’’; and 

3 (ii) by striking ‘‘such carrier’’ and in4 serting ‘‘such contractor’’; 

5 (C) in paragraph (3)(B)—

6 (i) by striking ‘‘a carrier’’ and insert7 ing ‘‘a medicare administrative contractor’’ 

8 each place it appears; and 

9 (ii) by striking ‘‘the carrier’’ and in10 serting ‘‘the contractor’’ each place it ap11 pears; and 

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

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

14 administrative contractors’’ each place it ap15 pears. 

16 (8) Subsection (l) is amended—

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

18 ‘‘carrier’’ and inserting ‘‘medicare administra19 tive contractor’’; and 

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

21 and inserting ‘‘medicare administrative con22 tractor’’. 

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

24 ‘‘carrier’’ and inserting ‘‘medicare administrative 

25 contractor’’.
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1 (10) Subsection (q)(1)(A) is amended by striking 

2 ‘‘carrier’’. 

3 (d) EFFECTIVE DATE; TRANSITION RULE.—

4 (1) EFFECTIVE DATE.—

5 (A) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the amendments made 

7 by this section shall take effect on October 1, 

8 2005, and the Secretary is authorized to take 

9 such steps before such date as may be necessary 

10 to implement such amendments on a timely 

11 basis. 

12 (B) CONSTRUCTION FOR CURRENT CON13 TRACTS.—Such amendments shall not apply to 

14 contracts in effect before the date specified under 

15 subparagraph (A) that continue to retain the 

16 terms and conditions in effect on such date (ex17 cept as otherwise provided under this Act, other 

18 than under this section) until such date as the 

19 contract is let out for competitive bidding under 

20 such amendments. 

21 (C) DEADLINE FOR COMPETITIVE BID22 DING.—The Secretary shall provide for the let23 ting by competitive bidding of all contracts for 

24 functions of medicare administrative contractors 
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1 for annual contract periods that begin on or 

2 after October 1, 2010. 

3 (D) WAIVER OF PROVIDER NOMINATION

4 PROVISIONS DURING TRANSITION.—During the 

5 period beginning on the date of the enactment of 

6 this Act and before the date specified under sub7 paragraph (A), the Secretary may enter into 

8 new agreements under section 1816 of the Social 

9 Security Act (42 U.S.C. 1395h) without regard 

10 to any of the provider nomination provisions of 

11 such section. 

12 (2) GENERAL TRANSITION RULES.—The Sec13 retary shall take such steps, consistent with para14 graph (1)(B) and (1)(C), as are necessary to provide 

15 for an appropriate transition from contracts under 

16 section 1816 and section 1842 of the Social Security 

17 Act (42 U.S.C. 1395h, 1395u) to contracts under sec18 tion 1874A, as added by subsection (a)(1). 

19 (3) AUTHORIZING CONTINUATION OF MIP FUNC20 TIONS UNDER CURRENT CONTRACTS AND AGREE21 MENTS AND UNDER ROLLOVER CONTRACTS.—The pro22 visions contained in the exception in section 

23 1893(d)(2) of the Social Security Act (42 U.S.C. 

24 1395ddd(d)(2)) shall continue to apply notwith25 standing the amendments made by this section, and 
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1 any reference in such provisions to an agreement or 

2 contract shall be deemed to include a contract under 

3 section 1874A of such Act, as inserted by subsection 

4 (a)(1), that continues the activities referred to in such 

5 provisions. 

6 (e) REFERENCES.—On and after the effective date pro7 vided under subsection (d)(1), any reference to a fiscal 

8 intermediary or carrier under title XI or XVIII of the So9 cial Security Act (or any regulation, manual instruction, 

10 interpretative rule, statement of policy, or guideline issued 

11 to carry out such titles) shall be deemed a reference to an 

12 appropriate medicare administrative contractor (as pro13 vided under section 1874A of the Social Security Act). 

14 (f) REPORTS ON IMPLEMENTATION.—

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

16 than October 1, 2004, the Secretary shall submit a re17 port to Congress and the Comptroller General of the 

18 United States that describes the plan for implementa19 tion of the amendments made by this section. The 

20 Comptroller General shall conduct an evaluation of 

21 such plan and shall submit to Congress, not later 

22 than 6 months after the date the report is received, a 

23 report on such evaluation and shall include in such 

24 report such recommendations as the Comptroller Gen25 eral deems appropriate. 
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1 (2) STATUS OF IMPLEMENTATION.—The Sec2 retary shall submit a report to Congress not later 

3 than October 1, 2008, that describes the status of im4 plementation of such amendments and that includes 

5 a description of the following: 

6 (A) The number of contracts that have been 

7 competitively bid as of such date. 

8 (B) The distribution of functions among 

9 contracts and contractors. 

10 (C) A timeline for complete transition to 

11 full competition. 

12 (D) A detailed description of how the Sec13 retary has modified oversight and management 

14 of medicare contractors to adapt to full competi15 tion. 

16 SEC. 202. REQUIREMENTS FOR INFORMATION SECURITY 

17 FOR MEDICARE ADMINISTRATIVE CONTRAC18 TORS. 

19 (a) IN GENERAL.—Section 1874A, as added by section 

20 201(a)(1), is amended by adding at the end the following 

21 new subsection: 

22 ‘‘(e) REQUIREMENTS FOR INFORMATION SECURITY.—

23 ‘‘(1) DEVELOPMENT OF INFORMATION SECURITY

24 PROGRAM.—A medicare administrative contractor 

25 that performs the functions referred to in subpara-
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1 graphs (A) and (B) of subsection (a)(4) (relating to 

2 determining and making payments) shall implement 

3 a contractor-wide information security program to 

4 provide information security for the operation and 

5 assets of the contractor with respect to such functions 

6 under this title. An information security program 

7 under this paragraph shall meet the requirements for 

8 information security programs imposed on Federal 

9 agencies under paragraphs (1) through (8) of section 

10 3544(b) of title 44, United States Code (other than re11 quirements under paragraphs (2)(D)(i), (5)(A), and 

12 (5)(B) of such section). 

13 ‘‘(2) INDEPENDENT AUDITS.—

14 ‘‘(A) PERFORMANCE OF ANNUAL EVALUA15 TIONS.—Each year a medicare administrative 

16 contractor that performs the functions referred to 

17 in subparagraphs (A) and (B) of subsection 

18 (a)(4) (relating to determining and making pay19 ments) shall undergo an evaluation of the infor20 mation security of the contractor with respect to 

21 such functions under this title. The evaluation 

22 shall—

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

24 meets such requirements for independence as 

25 the Inspector General of the Department of
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1 Health and Human Services may establish; 

2 and 

3 ‘‘(ii) test the effectiveness of informa4 tion security policies, procedures, and prac5 tices of a representative subset of the con6 tractor’s information systems (as defined in 

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

8 Code) relating to such functions under this 

9 title and an assessment of compliance with 

10 the requirements of this subsection and re11 lated information security policies, proce12 dures, standards and guidelines, including 

13 policies and procedures as may be pre14 scribed by the Director of the Office of Man15 agement and Budget and applicable infor16 mation security standards promulgated 

17 under section 11331 of title 40, United 

18 States Code. 

19 ‘‘(B) DEADLINE FOR INITIAL EVALUA20 TION.—

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

22 of a medicare administrative contractor 

23 covered by this subsection that has not pre24 viously performed the functions referred to 

25 in subparagraphs (A) and (B) of subsection 
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1 (a)(4) (relating to determining and making 

2 payments) as a fiscal intermediary or car3 rier under section 1816 or 1842, the first 

4 independent evaluation conducted pursuant 

5 subparagraph (A) shall be completed prior 

6 to commencing such functions. 

7 ‘‘(ii) OTHER CONTRACTORS.—In the 

8 case of a medicare administrative con9 tractor covered by this subsection that is not 

10 described in clause (i), the first independent 

11 evaluation conducted pursuant subpara12 graph (A) shall be completed within 1 year 

13 after the date the contractor commences 

14 functions referred to in clause (i) under this 

15 section. 

16 ‘‘(C) REPORTS ON EVALUATIONS.—

17 ‘‘(i) TO THE DEPARTMENT OF HEALTH

18 AND HUMAN SERVICES.—The results of 

19 independent evaluations under subpara20 graph (A) shall be submitted promptly to 

21 the Inspector General of the Department of 

22 Health and Human Services and to the Sec23 retary. 

24 ‘‘(ii) TO CONGRESS.—The Inspector 

25 General of Department of Health and 
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1 Human Services shall submit to Congress 

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

4 and sufficiency of such evaluations. 

5 ‘‘(iii) AGENCY REPORTING.—The Sec6 retary shall address the results of such eval7 uations in reports required under section 

8 3544(c) of title 44, United States Code.’’. 

9 (b) APPLICATION OF REQUIREMENTS TO FISCAL

10 INTERMEDIARIES AND CARRIERS.—

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

12 1874A(e)(2) of the Social Security Act (other than 

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

14 apply to each fiscal intermediary under section 1816 

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

16 each carrier under section 1842 of such Act (42 

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

18 medicare administrative contractors under such pro19 visions. 

20 (2) DEADLINE FOR INITIAL EVALUATION.—In the 

21 case of such a fiscal intermediary or carrier with an 

22 agreement or contract under such respective section in 

23 effect as of the date of the enactment of this Act, the 

24 first evaluation under section 1874A(e)(2)(A) of the 

25 Social Security Act (as added by subsection (a)), pur-
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1 suant to paragraph (1), shall be completed (and a re2 port on the evaluation submitted to the Secretary) by 

3 not later than 1 year after such date. 

4 TITLE III—EDUCATION AND 

5 OUTREACH 

6 SEC. 301. PROVIDER EDUCATION AND TECHNICAL ASSIST7 ANCE. 

8 (a) COORDINATION OF EDUCATION FUNDING.—

9 (1) IN GENERAL.—The Social Security Act is 

10 amended by inserting after section 1888 the following 

11 new section: 

12 ‘‘PROVIDER EDUCATION AND TECHNICAL ASSISTANCE

13 ‘‘SEC. 1889. (a) COORDINATION OF EDUCATION FUND14 ING.—The Secretary shall coordinate the educational activi15 ties provided through medicare contractors (as defined in 

16 subsection (g), including under section 1893) in order to 

17 maximize the effectiveness of Federal education efforts for 

18 providers of services and suppliers.’’. 

19 (2) EFFECTIVE DATE.—The amendment made by 

20 paragraph (1) shall take effect on the date of the en21 actment of this Act. 

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

23 the Secretary shall submit to Congress a report that 

24 includes a description and evaluation of the steps 

25 taken to coordinate the funding of provider education 
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1 under section 1889(a) of the Social Security Act, as 

2 added by paragraph (1). 

3 (b) INCENTIVES TO IMPROVE CONTRACTOR PERFORM4 ANCE.—

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

6 section 201(a)(1) and as amended by section 202(a), 

7 is amended by adding at the end the following new 

8 subsection: 

9 ‘‘(f) INCENTIVES TO IMPROVE CONTRACTOR PERFORM10 ANCE IN PROVIDER EDUCATION AND OUTREACH.—The Sec11 retary shall use specific claims payment error rates or simi12 lar methodology of medicare administrative contractors in 

13 the processing or reviewing of medicare claims in order to 

14 give such contractors an incentive to implement effective 

15 education and outreach programs for providers of services 

16 and suppliers.’’. 

17 (2) APPLICATION TO FISCAL INTERMEDIARIES

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

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

20 shall apply to each fiscal intermediary under section 

21 1816 of the Social Security Act (42 U.S.C. 1395h) 

22 and each carrier under section 1842 of such Act (42 

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

24 medicare administrative contractors under such pro25 visions.
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1 (3) GAO REPORT ON ADEQUACY OF METHOD2 OLOGY.—Not later than October 1, 2004, the Comp3 troller General of the United States shall submit to 

4 Congress and to the Secretary a report on the ade5 quacy of the methodology under section 1874A(f) of 

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

7 and shall include in the report such recommendations 

8 as the Comptroller General determines appropriate 

9 with respect to the methodology. 

10 (4) REPORT ON USE OF METHODOLOGY IN AS11 SESSING CONTRACTOR PERFORMANCE.—Not later 

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

13 Congress a report that describes how the Secretary in14 tends to use such methodology in assessing medicare 

15 contractor performance in implementing effective edu16 cation and outreach programs, including whether to 

17 use such methodology as a basis for performance bo18 nuses. The report shall include an analysis of the 

19 sources of identified errors and potential changes in 

20 systems of contractors and rules of the Secretary that 

21 could reduce claims error rates. 

22 (c) PROVISION OF ACCESS TO AND PROMPT RE23 SPONSES FROM MEDICARE ADMINISTRATIVE CONTRAC24 TORS.—
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1 (1) IN GENERAL.—Section 1874A, as added by 

2 section 201(a)(1) and as amended by section 202(a) 

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

4 the end the following new subsection: 

5 ‘‘(g) COMMUNICATIONS WITH BENEFICIARIES, PRO6 VIDERS OF SERVICES AND SUPPLIERS.—

7 ‘‘(1) COMMUNICATION STRATEGY.—The Secretary 

8 shall develop a strategy for communications with in9 dividuals entitled to benefits under part A or enrolled 

10 under part B, or both, and with providers of services 

11 and suppliers under this title. 

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

13 medicare administrative contractor shall, for those 

14 providers of services and suppliers which submit 

15 claims to the contractor for claims processing and for 

16 those individuals entitled to benefits under part A or 

17 enrolled under part B, or both, with respect to whom 

18 claims are submitted for claims processing, provide 

19 general written responses (which may be through elec20 tronic transmission) in a clear, concise, and accurate 

21 manner to inquiries of providers of services, suppliers 

22 and individuals entitled to benefits under part A or 

23 enrolled under part B, or both, concerning the pro24 grams under this title within 45 business days of the 

25 date of receipt of such inquiries. 
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1 ‘‘(3) RESPONSE TO TOLL-FREE LINES.—The Sec2 retary shall ensure that each medicare administrative 

3 contractor shall provide, for those providers of services 

4 and suppliers which submit claims to the contractor 

5 for claims processing and for those individuals enti6 tled to benefits under part A or enrolled under part 

7 B, or both, with respect to whom claims are submitted 

8 for claims processing, a toll-free telephone number at 

9 which such individuals, providers of services and sup10 pliers may obtain information regarding billing, cod11 ing, claims, coverage, and other appropriate informa12 tion under this title. 

13 ‘‘(4) MONITORING OF CONTRACTOR RE14 SPONSES.—

15 ‘‘(A) IN GENERAL.—Each medicare admin16 istrative contractor shall, consistent with stand17 ards developed by the Secretary under subpara18 graph (B)—

19 ‘‘(i) maintain a system for identifying 

20 who provides the information referred to in 

21 paragraphs (2) and (3); and 

22 ‘‘(ii) monitor the accuracy, consist23 ency, and timeliness of the information so 

24 provided. 

25 ‘‘(B) DEVELOPMENT OF STANDARDS.—
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1 ‘‘(i) IN GENERAL.—The Secretary shall 

2 establish and make public standards to 

3 monitor the accuracy, consistency, and 

4 timeliness of the information provided in 

5 response to written and telephone inquiries 

6 under this subsection. Such standards shall 

7 be consistent with the performance require8 ments established under subsection (b)(3). 

9 ‘‘(ii) EVALUATION.—In conducting 

10 evaluations of individual medicare admin11 istrative contractors, the Secretary shall 

12 take into account the results of the moni13 toring conducted under subparagraph (A) 

14 taking into account as performance require15 ments the standards established under 

16 clause (i). The Secretary shall, in consulta17 tion with organizations representing pro18 viders of services, suppliers, and individuals 

19 entitled to benefits under part A or enrolled 

20 under part B, or both, establish standards 

21 relating to the accuracy, consistency, and 

22 timeliness of the information so provided. 

23 ‘‘(C) DIRECT MONITORING.—Nothing in this 

24 paragraph shall be construed as preventing the 

25 Secretary from directly monitoring the accuracy, 
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1 consistency, and timeliness of the information so 

2 provided.’’. 

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

4 paragraph (1) shall take effect October 1, 2004. 

5 (3) APPLICATION TO FISCAL INTERMEDIARIES

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

7 of the Social Security Act, as added by paragraph 

8 (1), shall apply to each fiscal intermediary under sec9 tion 1816 of the Social Security Act (42 U.S.C. 

10 1395h) and each carrier under section 1842 of such 

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

12 apply to medicare administrative contractors under 

13 such provisions. 

14 (d) IMPROVED PROVIDER EDUCATION AND TRAIN15 ING.—

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

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

18 following new subsections: 

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

20 ‘‘(1) ADDITIONAL RESOURCES.—There are au21 thorized to be appropriated to the Secretary (in ap22 propriate part from the Federal Hospital Insurance 

23 Trust Fund and the Federal Supplementary Medical 

24 Insurance Trust Fund) $25,000,000 for each of fiscal
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1 years 2005 and 2006 and such sums as may be nec2 essary for succeeding fiscal years. 

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

4 paragraph (1) shall be used to increase the conduct by 

5 medicare contractors of education and training of 

6 providers of services and suppliers regarding billing, 

7 coding, and other appropriate items and may also be 

8 used to improve the accuracy, consistency, and timeli9 ness of contractor responses. 

10 ‘‘(c) TAILORING EDUCATION AND TRAINING ACTIVI11 TIES FOR SMALL PROVIDERS OR SUPPLIERS.—

12 ‘‘(1) IN GENERAL.—Insofar as a medicare con13 tractor conducts education and training activities, it 

14 shall tailor such activities to meet the special needs 

15 of small providers of services or suppliers (as defined 

16 in paragraph (2)). 

17 ‘‘(2) SMALL PROVIDER OF SERVICES OR SUP18 PLIER.—In this subsection, the term ‘small provider 

19 of services or supplier’ means—

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

21 25 full-time-equivalent employees; or 

22 ‘‘(B) a supplier with fewer than 10 full23 time-equivalent employees.’’. 

24 (2) EFFECTIVE DATE.—The amendment made by 

25 paragraph (1) shall take effect on October 1, 2004. 
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1 (e) REQUIREMENT TO MAINTAIN INTERNET SITES.—

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

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

4 further amended by adding at the end the following 

5 new subsection: 

6 ‘‘(d) INTERNET SITES; FAQS.—The Secretary, and 

7 each medicare contractor insofar as it provides services (in8 cluding claims processing) for providers of services or sup9 pliers, shall maintain an Internet site which—

10 ‘‘(1) provides answers in an easily accessible for11 mat to frequently asked questions, and 

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

13 contractor, 

14 that relate to providers of services and suppliers under the 

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

16 to such programs).’’. 

17 (2) EFFECTIVE DATE.—The amendment made by 

18 paragraph (1) shall take effect on October 1, 2004. 

19 (f) ADDITIONAL PROVIDER EDUCATION PROVISIONS.—

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

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

22 (e), is further amended by adding at the end the fol23 lowing new subsections: 

24 ‘‘(e) ENCOURAGEMENT OF PARTICIPATION IN EDU25 CATION PROGRAM ACTIVITIES.—A medicare contractor 
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1 may not use a record of attendance at (or failure to attend) 

2 educational activities or other information gathered during 

3 an educational program conducted under this section or 

4 otherwise by the Secretary to select or track providers of 

5 services or suppliers for the purpose of conducting any type 

6 of audit or prepayment review. 

7 ‘‘(f) CONSTRUCTION.—Nothing in this section or sec8 tion 1893(g) shall be construed as providing for disclosure 

9 by a medicare contractor of information that would com10 promise pending law enforcement activities or reveal find11 ings of law enforcement-related audits. 

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

13 term ‘medicare contractor’ includes the following: 

14 ‘‘(1) A medicare administrative contractor with 

15 a contract under section 1874A, including a fiscal 

16 intermediary with a contract under section 1816 and 

17 a carrier with a contract under section 1842. 

18 ‘‘(2) An eligible entity with a contract under sec19 tion 1893. 

20 Such term does not include, with respect to activities of a 

21 specific provider of services or supplier an entity that has 

22 no authority under this title or title IX with respect to such 

23 activities and such provider of services or supplier.’’. 
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1 (2) EFFECTIVE DATE.—The amendment made by 

2 paragraph (1) shall take effect on the date of the en3 actment of this Act. 

4 SEC. 302. SMALL PROVIDER TECHNICAL ASSISTANCE DEM5 ONSTRATION PROGRAM. 

6 (a) ESTABLISHMENT.—

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

8 a demonstration program (in this section referred to 

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

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

12 small providers of services or suppliers in order to 

13 improve compliance with the applicable requirements 

14 of the programs under medicare program under title 

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

17 such title and are not administered by the Office of 

18 the Inspector General of the Department of Health 

19 and Human Services). 

20 (2) FORMS OF TECHNICAL ASSISTANCE.—The 

21 technical assistance described in this paragraph is—

22 (A) evaluation and recommendations re23 garding billing and related systems; and 
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1 (B) information and assistance regarding 

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

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

6 services or suppliers’’ means—

7 (A) a provider of services with fewer than 

8 25 full-time-equivalent employees; or 

9 (B) a supplier with fewer than 10 full-time10 equivalent employees. 

11 (b) QUALIFICATION OF CONTRACTORS.—In conducting 

12 the demonstration program, the Secretary shall enter into 

13 contracts with qualified organizations (such as peer review 

14 organizations or entities described in section 1889(g)(2) of 

15 the Social Security Act, as inserted by section 5(f)(1)) with 

16 appropriate expertise with billing systems of the full range 

17 of providers of services and suppliers to provide the tech18 nical assistance. In awarding such contracts, the Secretary 

19 shall consider any prior investigations of the entity’s work 

20 by the Inspector General of Department of Health and 

21 Human Services or the Comptroller General of the United 

22 States. 

23 (c) DESCRIPTION OF TECHNICAL ASSISTANCE.—The 

24 technical assistance provided under the demonstration pro25 gram shall include a direct and in-person examination of
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1 billing systems and internal controls of small providers of 

2 services or suppliers to determine program compliance and 

3 to suggest more efficient or effective means of achieving such 

4 compliance. 

5 (d) AVOIDANCE OF RECOVERY ACTIONS FOR PROB6 LEMS IDENTIFIED AS CORRECTED.—The Secretary shall 

7 provide that, absent evidence of fraud and notwithstanding 

8 any other provision of law, any errors found in a compli9 ance review for a small provider of services or supplier that 

10 participates in the demonstration program shall not be sub11 ject to recovery action if the technical assistance personnel 

12 under the program determine that—

13 (1) the problem that is the subject of the compli14 ance review has been corrected to their satisfaction 

15 within 30 days of the date of the visit by such per16 sonnel to the small provider of services or supplier; 

17 and 

18 (2) such problem remains corrected for such pe19 riod as is appropriate. 

20 The previous sentence applies only to claims filed as part 

21 of the demonstration program and lasts only for the dura22 tion of such program and only as long as the small provider 

23 of services or supplier is a participant in such program. 

24 (e) GAO EVALUATION.—Not later than 2 years after 

25 the date of the date the demonstration program is first im-
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1 plemented, the Comptroller General, in consultation with 

2 the Inspector General of the Department of Health and 

3 Human Services, shall conduct an evaluation of the dem4 onstration program. The evaluation shall include a deter5 mination of whether claims error rates are reduced for 

6 small providers of services or suppliers who participated 

7 in the program and the extent of improper payments made 

8 as a result of the demonstration program. The Comptroller 

9 General shall submit a report to the Secretary and the Con10 gress on such evaluation and shall include in such report 

11 recommendations regarding the continuation or extension 

12 of the demonstration program. 

13 (f) FINANCIAL PARTICIPATION BY PROVIDERS.—The 

14 provision of technical assistance to a small provider of serv15 ices or supplier under the demonstration program is condi16 tioned upon the small provider of services or supplier pay17 ing an amount estimated (and disclosed in advance of a 

18 provider’s or supplier’s participation in the program) to 

19 be equal to 25 percent of the cost of the technical assistance. 

20 (g) AUTHORIZATION OF APPROPRIATIONS.—There are 

21 authorized to be appropriated to the Secretary (in appro22 priate part from the Federal Hospital Insurance Trust 

23 Fund and the Federal Supplementary Medical Insurance 

24 Trust Fund) to carry out the demonstration program— 

25 (1) for fiscal year 2005, $1,000,000, and 
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1 (2) for fiscal year 2006, $6,000,000. 

2 SEC. 303. MEDICARE PROVIDER OMBUDSMAN; MEDICARE 

3 BENEFICIARY OMBUDSMAN. 

4 (a) MEDICARE PROVIDER OMBUDSMAN.—Section 1868 

5 (42 U.S.C. 1395ee) is amended—

6 (1) by adding at the end of the heading the fol7 lowing: ‘‘; MEDICARE PROVIDER OMBUDSMAN’’; 

8 (2) by inserting ‘‘PRACTICING PHYSICIANS ADVI9 SORY COUNCIL.—(1)’’ after ‘‘(a)’’; 

10 (3) in paragraph (1), as so redesignated under 

11 paragraph (2), by striking ‘‘in this section’’ and in12 serting ‘‘in this subsection’’; 

13 (4) by redesignating subsections (b) and (c) as 

14 paragraphs (2) and (3), respectively; and 

15 (5) by adding at the end the following new sub16 section: 

17 ‘‘(b) MEDICARE PROVIDER OMBUDSMAN.—The Sec18 retary shall appoint within the Department of Health and 

19 Human Services a Medicare Provider Ombudsman. The 

20 Ombudsman shall—

21 ‘‘(1) provide assistance, on a confidential basis, 

22 to providers of services and suppliers with respect to 

23 complaints, grievances, and requests for information 

24 concerning the programs under this title (including 

25 provisions of title XI insofar as they relate to this 
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1 title and are not administered by the Office of the In2 spector General of the Department of Health and 

3 Human Services) and in the resolution of unclear or 

4 conflicting guidance given by the Secretary and medi5 care contractors to such providers of services and sup6 pliers regarding such programs and provisions and 

7 requirements under this title and such provisions; 

8 and 

9 ‘‘(2) submit recommendations to the Secretary 

10 for improvement in the administration of this title 

11 and such provisions, including—

12 ‘‘(A) recommendations to respond to recur13 ring patterns of confusion in this title and such 

14 provisions (including recommendations regard15 ing suspending imposition of sanctions where 

16 there is widespread confusion in program ad17 ministration), and 

18 ‘‘(B) recommendations to provide for an ap19 propriate and consistent response (including not 

20 providing for audits) in cases of self-identified 

21 overpayments by providers of services and sup22 pliers. 

23 The Ombudsman shall not serve as an advocate for any in24 creases in payments or new coverage of services, but may 
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1 identify issues and problems in payment or coverage poli2 cies.’’. 

3 (b) MEDICARE BENEFICIARY OMBUDSMAN.—Title 

4 XVIII is amended by inserting after section 1806 the fol5 lowing new section: 

6 ‘‘MEDICARE BENEFICIARY OMBUDSMAN

7 ‘‘SEC. 1807. (a) IN GENERAL.—The Secretary shall 

8 appoint within the Department of Health and Human 

9 Services a Medicare Beneficiary Ombudsman who shall 

10 have expertise and experience in the fields of health care 

11 and education of (and assistance to) individuals entitled 

12 to benefits under this title. 

13 ‘‘(b) DUTIES.—The Medicare Beneficiary Ombudsman 

14 shall—

15 ‘‘(1) receive complaints, grievances, and requests 

16 for information submitted by individuals entitled to 

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

18 both, with respect to any aspect of the medicare pro19 gram; 

20 ‘‘(2) provide assistance with respect to com21 plaints, grievances, and requests referred to in para22 graph (1), including—

23 ‘‘(A) assistance in collecting relevant infor24 mation for such individuals, to seek an appeal of 

25 a decision or determination made by a fiscal
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1 intermediary, carrier, Medicare+Choice organi2 zation, or the Secretary; and 

3 ‘‘(B) assistance to such individuals with 

4 any problems arising from disenrollment from a 

5 Medicare+Choice plan under part C; and 

6 ‘‘(3) submit annual reports to Congress and the 

7 Secretary that describe the activities of the Office and 

8 that include such recommendations for improvement 

9 in the administration of this title as the Ombudsman 

10 determines appropriate. 

11 The Ombudsman shall not serve as an advocate for any in12 creases in payments or new coverage of services, but may 

13 identify issues and problems in payment or coverage poli14 cies. 

15 ‘‘(c) WORKING WITH HEALTH INSURANCE COUN16 SELING PROGRAMS.—To the extent possible, the Ombuds17 man shall work with health insurance counseling programs 

18 (receiving funding under section 4360 of Omnibus Budget 

19 Reconciliation Act of 1990) to facilitate the provision of in20 formation to individuals entitled to benefits under part A 

21 or enrolled under part B, or both regarding 

22 Medicare+Choice plans and changes to those plans. Noth23 ing in this subsection shall preclude further collaboration 

24 between the Ombudsman and such programs.’’. 
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1 (c) DEADLINE FOR APPOINTMENT.—The Secretary 

2 shall appoint the Medicare Provider Ombudsman and the 

3 Medicare Beneficiary Ombudsman, under the amendments 

4 made by subsections (a) and (b), respectively, by not later 

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

6 (d) FUNDING.—There are authorized to be appro7 priated to the Secretary (in appropriate part from the Fed8 eral Hospital Insurance Trust Fund and the Federal Sup9 plementary Medical Insurance Trust Fund) to carry out 

10 the provisions of subsection (b) of section 1868 of the Social 

11 Security Act (relating to the Medicare Provider Ombuds12 man), as added by subsection (a)(5) and section 1807 of 

13 such Act (relating to the Medicare Beneficiary Ombuds14 man), as added by subsection (b), such sums as are nec15 essary for fiscal year 2004 and each succeeding fiscal year. 

16 (e) USE OF CENTRAL, TOLL-FREE NUMBER (1–800–

17 MEDICARE).—

18 (1) PHONE TRIAGE SYSTEM; LISTING IN MEDI19 CARE HANDBOOK INSTEAD OF OTHER TOLL-FREE

20 NUMBERS.—Section 1804(b) (42 U.S.C. 1395b–2(b)) 

21 is amended by adding at the end the following: ‘‘The 

22 Secretary shall provide, through the toll-free number 

23 1–800–MEDICARE, for a means by which individ24 uals seeking information about, or assistance with, 

25 such programs who phone such toll-free number are 
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1 transferred (without charge) to appropriate entities 

2 for the provision of such information or assistance. 

3 Such toll-free number shall be the toll-free number 

4 listed for general information and assistance in the 

5 annual notice under subsection (a) instead of the list6 ing of numbers of individual contractors.’’. 

7 (2) MONITORING ACCURACY.—

8 (A) STUDY.—The Comptroller General of 

9 the United States shall conduct a study to mon10 itor the accuracy and consistency of information 

11 provided to individuals entitled to benefits under 

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

13 through the toll-free number 1–800–MEDICARE, 

14 including an assessment of whether the informa15 tion provided is sufficient to answer questions of 

16 such individuals. In conducting the study, the 

17 Comptroller General shall examine the education 

18 and training of the individuals providing infor19 mation through such number. 

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

21 the date of the enactment of this Act, the Comp22 troller General shall submit to Congress a report 

23 on the study conducted under subparagraph (A). 
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1 SEC. 304. BENEFICIARY OUTREACH DEMONSTRATION PRO2 GRAM. 

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

4 demonstration program (in this section referred to as the 

5 ‘‘demonstration program’’) under which medicare special6 ists employed by the Department of Health and Human 

7 Services provide advice and assistance to individuals enti8 tled to benefits under part A of title XVIII of the Social 

9 Security Act, or enrolled under part B of such title, or both, 

10 regarding the medicare program at the location of existing 

11 local offices of the Social Security Administration. 

12 (b) LOCATIONS.—

13 (1) IN GENERAL.—The demonstration program 

14 shall be conducted in at least 6 offices or areas. Sub15 ject to paragraph (2), in selecting such offices and 

16 areas, the Secretary shall provide preference for offices 

17 with a high volume of visits by individuals referred 

18 to in subsection (a). 

19 (2) ASSISTANCE FOR RURAL BENEFICIARIES.—

20 The Secretary shall provide for the selection of at 

21 least 2 rural areas to participate in the demonstra22 tion program. In conducting the demonstration pro23 gram in such rural areas, the Secretary shall provide 

24 for medicare specialists to travel among local offices 

25 in a rural area on a scheduled basis. 
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1 (c) DURATION.—The demonstration program shall be 

2 conducted over a 3-year period. 

3 (d) EVALUATION AND REPORT.—

4 (1) EVALUATION.—The Secretary shall provide 

5 for an evaluation of the demonstration program. Such 

6 evaluation shall include an analysis of—

7 (A) utilization of, and satisfaction of those 

8 individuals referred to in subsection (a) with, the 

9 assistance provided under the program; and 

10 (B) the cost-effectiveness of providing bene11 ficiary assistance through out-stationing medi12 care specialists at local offices of the Social Secu13 rity Administration. 

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

15 Congress a report on such evaluation and shall in16 clude in such report recommendations regarding the 

17 feasibility of permanently out-stationing medicare 

18 specialists at local offices of the Social Security Ad19 ministration. 

20 SEC. 305. INCLUSION OF ADDITIONAL INFORMATION IN NO21 TICES TO BENEFICIARIES ABOUT SKILLED 

22 NURSING FACILITY BENEFITS. 

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

24 medicare beneficiary notices provided (under section 

25 1806(a) of the Social Security Act, 42 U.S.C. 1395b–7(a))
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1 with respect to the provision of post-hospital extended care 

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

3 Act, there shall be included information on the number of 

4 days of coverage of such services remaining under such part 

5 for the medicare beneficiary and spell of illness involved. 

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

7 notices provided during calendar quarters beginning more 

8 than 6 months after the date of the enactment of this Act. 

9 SEC. 306. INFORMATION ON MEDICARE-CERTIFIED SKILLED 

10 NURSING FACILITIES IN HOSPITAL DIS11 CHARGE PLANS. 

12 (a) AVAILABILITY OF DATA.—The Secretary shall pub13 licly provide information that enables hospital discharge 

14 planners, medicare beneficiaries, and the public to identify 

15 skilled nursing facilities that are participating in the medi16 care program. 

17 (b) INCLUSION OF INFORMATION IN CERTAIN HOS18 PITAL DISCHARGE PLANS.—

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

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

21 (A) by striking ‘‘hospice services’’ and in22 serting ‘‘hospice care and post-hospital extended 

23 care services’’; and 

24 (B) by inserting before the period at the end 

25 the following: ‘‘and, in the case of individuals 
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1 who are likely to need post-hospital extended care 

2 services, the availability of such services through 

3 facilities that participate in the program under 

4 this title and that serve the area in which the 

5 patient resides’’. 

6 (2) EFFECTIVE DATE.—The amendments made 

7 by paragraph (1) shall apply to discharge plans made 

8 on or after such date as the Secretary shall specify, 

9 but not later than 6 months after the date the Sec10 retary provides for availability of information under 

11 subsection (a). 

12 TITLE IV—APPEALS AND 

13 RECOVERY 

14 SEC. 401. TRANSFER OF RESPONSIBILITY FOR MEDICARE 

15 APPEALS. 

16 (a) TRANSITION PLAN.—

17 (1) IN GENERAL.—Not later than October 1, 

18 2004, the Commissioner of Social Security and the 

19 Secretary shall develop and transmit to Congress and 

20 the Comptroller General of the United States a plan 

21 under which the functions of administrative law 

22 judges responsible for hearing cases under title XVIII 

23 of the Social Security Act (and related provisions in 

24 title XI of such Act) are transferred from the responsi25 bility of the Commissioner and the Social Security 
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1 Administration to the Secretary and the Department 

2 of Health and Human Services. 

3 (2) GAO EVALUATION.—The Comptroller Gen4 eral of the United States shall evaluate the plan and, 

5 not later than the date that is 6 months after the date 

6 on which the plan is received by the Comptroller Gen7 eral, shall submit to Congress a report on such eval8 uation. 

9 (b) TRANSFER OF ADJUDICATION AUTHORITY.—

10 (1) IN GENERAL.—Not earlier than July 1, 2005, 

11 and not later than October 1, 2005, the Commissioner 

12 of Social Security and the Secretary shall implement 

13 the transition plan under subsection (a) and transfer 

14 the administrative law judge functions described in 

15 such subsection from the Social Security Administra16 tion to the Secretary. 

17 (2) ASSURING INDEPENDENCE OF JUDGES.—The 

18 Secretary shall assure the independence of adminis19 trative law judges performing the administrative law 

20 judge functions transferred under paragraph (1) from 

21 the Centers for Medicare & Medicaid Services and its 

22 contractors. In order to assure such independence, the 

23 Secretary shall place such judges in an administra24 tive office that is organizationally and functionally 

25 separate from such Centers. Such judges shall report 
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1 to, and be under the general supervision of, the Sec2 retary (or, to the extent the Secretary delegates such 

3 authority, the officer next in rank below the Sec4 retary), but shall not report to, or be subject to super5 vision by, any other officer of the Department. 

6 (3) GEOGRAPHIC DISTRIBUTION.—The Secretary 

7 shall provide for an appropriate geographic distribu8 tion of administrative law judges performing the ad9 ministrative law judge functions transferred under 

10 paragraph (1) throughout the United States to ensure 

11 timely access to such judges. 

12 (4) HIRING AUTHORITY.—Subject to the amounts 

13 provided in advance in appropriations Act, the Sec14 retary shall have authority to hire administrative law 

15 judges to hear such cases, giving priority to those 

16 judges with prior experience in handling medicare 

17 appeals and in a manner consistent with paragraph 

18 (3), and to hire support staff for such judges. 

19 (5) FINANCING.—Amounts payable under law to 

20 the Commissioner for administrative law judges per21 forming the administrative law judge functions trans22 ferred under paragraph (1) from the Federal Hospital 

23 Insurance Trust Fund and the Federal Supple24 mentary Medical Insurance Trust Fund shall become 
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1 payable to the Secretary for the functions so trans2 ferred. 

3 (6) SHARED RESOURCES.—The Secretary shall 

4 enter into such arrangements with the Commissioner 

5 as may be appropriate with respect to transferred 

6 functions of administrative law judges to share office 

7 space, support staff, and other resources, with appro8 priate reimbursement from the Trust Funds described 

9 in paragraph (5). 

10 (c) INCREASED FINANCIAL SUPPORT.—In addition to 

11 any amounts otherwise appropriated, to ensure timely ac12 tion on appeals before administrative law judges and the 

13 Departmental Appeals Board consistent with section 1869 

14 of the Social Security Act (as amended by section 521 of 

15 BIPA, 114 Stat. 2763A–534), there are authorized to be ap16 propriated (in appropriate part from the Federal Hospital 

17 Insurance Trust Fund and the Federal Supplementary 

18 Medical Insurance Trust Fund) to the Secretary such sums 

19 as are necessary for fiscal year 2005 and each subsequent 

20 fiscal year to—

21 (1) increase the number of administrative law 

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

23 (2) improve education and training opportuni24 ties for administrative law judges (and their staffs); 

25 and
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1 (3) increase the staff of the Departmental Ap2 peals Board. 

3 (d) CONFORMING AMENDMENT.—Section 

4 1869(f)(2)(A)(i) (42 U.S.C. 1395ff(f)(2)(A)(i)), as added by 

5 section 522(a) of BIPA (114 Stat. 2763A–543), is amended 

6 by striking ‘‘of the Social Security Administration’’. 

7 SEC. 402. PROCESS FOR EXPEDITED ACCESS TO REVIEW. 

8 (a) EXPEDITED ACCESS TO JUDICIAL REVIEW.—Sec9 tion 1869(b) (42 U.S.C. 1395ff(b)) as amended by BIPA, 

10 is amended—

11 (1) in paragraph (1)(A), by inserting ‘‘, subject 

12 to paragraph (2),’’ before ‘‘to judicial review of the 

13 Secretary’s final decision’’; 

14 (2) in paragraph (1)(F)—

15 (A) by striking clause (ii); 

16 (B) by striking ‘‘PROCEEDING’’ and all that 

17 follows through ‘‘DETERMINATION’’ and inserting 

18 ‘‘DETERMINATIONS AND RECONSIDERATIONS’’; 

19 and 

20 (C) by redesignating subclauses (I) and (II) 

21 as clauses (i) and (ii) and by moving the inden22 tation of such subclauses (and the matter that 

23 follows) 2 ems to the left; and 

24 (3) by adding at the end the following new para25 graph: 
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1 ‘‘(2) EXPEDITED ACCESS TO JUDICIAL RE2 VIEW.—

3 ‘‘(A) IN GENERAL.—The Secretary shall es4 tablish a process under which a provider of serv5 ices or supplier that furnishes an item or service 

6 or an individual entitled to benefits under part 

7 A or enrolled under part B, or both, who has 

8 filed an appeal under paragraph (1) may obtain 

9 access to judicial review when a review panel 

10 (described in subparagraph (D)), on its own mo11 tion or at the request of the appellant, deter12 mines that no entity in the administrative ap13 peals process has the authority to decide the 

14 question of law or regulation relevant to the mat15 ters in controversy and that there is no material 

16 issue of fact in dispute. The appellant may make 

17 such request only once with respect to a question 

18 of law or regulation in a case of an appeal. 

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

20 or coincident with appropriately filing a request 

21 for an administrative hearing, the appellant re22 quests a determination by the appropriate review 

23 panel that no review panel has the authority to 

24 decide the question of law or regulations relevant 

25 to the matters in controversy and that there is 
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1 no material issue of fact in dispute and if such 

2 request is accompanied by the documents and 

3 materials as the appropriate review panel shall 

4 require for purposes of making such determina5 tion, such review panel shall make a determina6 tion on the request in writing within 60 days 

7 after the date such review panel receives the re8 quest and such accompanying documents and 

9 materials. Such a determination by such review 

10 panel shall be considered a final decision and 

11 not subject to review by the Secretary. 

12 ‘‘(C) ACCESS TO JUDICIAL REVIEW.—

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

14 review panel—

15 ‘‘(I) determines that there are no 

16 material issues of fact in dispute and 

17 that the only issue is one of law or reg18 ulation that no review panel has the 

19 authority to decide; or 

20 ‘‘(II) fails to make such deter21 mination within the period provided 

22 under subparagraph (B); 

23 then the appellant may bring a civil action 

24 as described in this subparagraph. 
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1 ‘‘(ii) DEADLINE FOR FILING.—Such 

2 action shall be filed, in the case described 

3 in—

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

5 of date of the determination described 

6 in such subparagraph; or 

7 ‘‘(II) clause (i)(II), within 60 

8 days of the end of the period provided 

9 under subparagraph (B) for the deter10 mination. 

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

12 brought in the district court of the United 

13 States for the judicial district in which the 

14 appellant is located (or, in the case of an 

15 action brought jointly by more than one ap16 plicant, the judicial district in which the 

17 greatest number of applicants are located) 

18 or in the district court for the District of 

19 Columbia. 

20 ‘‘(iv) INTEREST ON AMOUNTS IN CON21 TROVERSY.—Where a provider of services or 

22 supplier seeks judicial review pursuant to 

23 this paragraph, the amount in controversy 

24 shall be subject to annual interest beginning 

25 on the first day of the first month beginning 
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1 after the 60-day period as determined pur2 suant to clause (ii) and equal to the rate of 

3 interest on obligations issued for purchase 

4 by the Federal Hospital Insurance Trust 

5 Fund and by the Federal Supplementary 

6 Medical Insurance Trust Fund for the 

7 month in which the civil action authorized 

8 under this paragraph is commenced, to be 

9 awarded by the reviewing court in favor of 

10 the prevailing party. No interest awarded 

11 pursuant to the preceding sentence shall be 

12 deemed income or cost for the purposes of 

13 determining reimbursement due providers of 

14 services or suppliers under this Act. 

15 ‘‘(D) REVIEW PANELS.—For purposes of 

16 this subsection, a ‘review panel’ is a panel con17 sisting of 3 members (who shall be administra18 tive law judges, members of the Departmental 

19 Appeals Board, or qualified individuals associ20 ated with a qualified independent contractor (as 

21 defined in subsection (c)(2)) or with another 

22 independent entity) designated by the Secretary 

23 for purposes of making determinations under 

24 this paragraph.’’.
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1 (b) APPLICATION TO PROVIDER AGREEMENT DETER2 MINATIONS.—Section 1866(h)(1) (42 U.S.C. 1395cc(h)(1)) 

3 is amended—

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

5 (2) by adding at the end the following new sub6 paragraph: 

7 ‘‘(B) An institution or agency described in subpara8 graph (A) that has filed for a hearing under subparagraph 

9 (A) shall have expedited access to judicial review under this 

10 subparagraph in the same manner as providers of services, 

11 suppliers, and individuals entitled to benefits under part 

12 A or enrolled under part B, or both, may obtain expedited 

13 access to judicial review under the process established under 

14 section 1869(b)(2). Nothing in this subparagraph shall be 

15 construed to affect the application of any remedy imposed 

16 under section 1819 during the pendency of an appeal under 

17 this subparagraph.’’. 

18 (c) EFFECTIVE DATE.—The amendments made by this 

19 section shall apply to appeals filed on or after October 1, 

20 2004. 

21 (d) EXPEDITED REVIEW OF CERTAIN PROVIDER

22 AGREEMENT DETERMINATIONS.—

23 (1) TERMINATION AND CERTAIN OTHER IMME24 DIATE REMEDIES.—The Secretary shall develop and 

25 implement a process to expedite proceedings under 
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1 sections 1866(h) of the Social Security Act (42 U.S.C. 

2 1395cc(h)) in which the remedy of termination of 

3 participation, or a remedy described in clause (i) or 

4 (iii) of section 1819(h)(2)(B) of such Act (42 U.S.C. 

5 1395i–3(h)(2)(B)) which is applied on an immediate 

6 basis, has been imposed. Under such process priority 

7 shall be provided in cases of termination. 

8 (2) INCREASED FINANCIAL SUPPORT.—In addi9 tion to any amounts otherwise appropriated, to re10 duce by 50 percent the average time for administra11 tive determinations on appeals under section 1866(h) 

12 of the Social Security Act (42 U.S.C. 1395cc(h)), 

13 there are authorized to be appropriated (in appro14 priate part from the Federal Hospital Insurance 

15 Trust Fund and the Federal Supplementary Medical 

16 Insurance Trust Fund) to the Secretary such addi17 tional sums for fiscal year 2005 and each subsequent 

18 fiscal year as may be necessary. The purposes for 

19 which such amounts are available include increasing 

20 the number of administrative law judges (and their 

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

23 and Human Services and educating such judges and 

24 staffs on long-term care issues. 
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1 (e) PROCESS FOR REINSTATEMENT OF APPROVAL OF

2 CERTAIN SNF TRAINING PROGRAMS.—

3 (1) IN GENERAL.—In the case of a termination 

4 of approval of a nurse aide training program de5 scribed in paragraph (2) of a skilled nursing facility, 

6 the Secretary shall develop and implement a process 

7 for the reinstatement of approval of such program be8 fore the end of the mandatory 2 year disapproval pe9 riod if the facility and program is certified by the 

10 Secretary, in coordination with the applicable State 

11 survey and certification agency and after public no12 tice, as being in compliance with applicable require13 ments and as having remedied any deficiencies in the 

14 facility or program that resulted in noncompliance. 

15 (2) TERMINATION OF APPROVAL DESCRIBED.—A 

16 termination of approval of a training program de17 scribed in this paragraph is a mandatory 2-year dis18 approval provided for under section 1819(f)(2)(B)(iii) 

19 of the Social Security Act (42 U.S.C. 1395i–

20 3(f)(2)(B)(iii)) if the only basis for the mandatory 

21 disapproval was the assessment of a civil money pen22 alty of not less than $5,000. 

23 SEC. 403. REVISIONS TO MEDICARE APPEALS PROCESS. 

24 (a) REQUIRING FULL AND EARLY PRESENTATION OF

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

2 1395ff(b)), as amended by BIPA and as amended by 

3 section 402(a), is further amended by adding at the 

4 end the following new paragraph: 

5 ‘‘(3) REQUIRING FULL AND EARLY PRESEN6 TATION OF EVIDENCE BY PROVIDERS.—A provider of 

7 services or supplier may not introduce evidence in 

8 any appeal under this section that was not presented 

9 at the reconsideration conducted by the qualified 

10 independent contractor under subsection (c), unless 

11 there is good cause which precluded the introduction 

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

13 (2) EFFECTIVE DATE.—The amendment made by 

14 paragraph (1) shall take effect on October 1, 2004. 

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

16 1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)), as amended 

17 by BIPA, is amended by inserting ‘‘(including the medical 

18 records of the individual involved)’’ after ‘‘clinical experi19 ence’’. 

20 (c) NOTICE REQUIREMENTS FOR MEDICARE AP21 PEALS.— 

22 (1) INITIAL DETERMINATIONS AND REDETER23 MINATIONS.—Section 1869(a) (42 U.S.C. 1395ff(a)), 

24 as amended by BIPA, is amended by adding at the 

25 end the following new paragraphs: 
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1 ‘‘(4) REQUIREMENTS OF NOTICE OF DETERMINA2 TIONS.—With respect to an initial determination in3 sofar as it results in a denial of a claim for benefits—

4 ‘‘(A) the written notice on the determina5 tion shall include—

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

7 including whether a local medical review 

8 policy or a local coverage determination 

9 was used; 

10 ‘‘(ii) the procedures for obtaining addi11 tional information concerning the deter12 mination, including the information de13 scribed in subparagraph (B); and 

14 ‘‘(iii) notification of the right to seek a 

15 redetermination or otherwise appeal the de16 termination and instructions on how to ini17 tiate such a redetermination under this sec18 tion; and 

19 ‘‘(B) the person provided such notice may 

20 obtain, upon request, the specific provision of the 

21 policy, manual, or regulation used in making 

22 the determination. 

23 ‘‘(5) REQUIREMENTS OF NOTICE OF REDETER24 MINATIONS.—With respect to a redetermination inso25 far as it results in a denial of a claim for benefits—
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1 ‘‘(A) the written notice on the redetermina2 tion shall include—

3 ‘‘(i) the specific reasons for the redeter4 mination; 

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

6 clinical or scientific evidence used in mak7 ing the redetermination; 

8 ‘‘(iii) a description of the procedures 

9 for obtaining additional information con10 cerning the redetermination; and 

11 ‘‘(iv) notification of the right to appeal 

12 the redetermination and instructions on 

13 how to initiate such an appeal under this 

14 section; 

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

16 in printed form and written in a manner cal17 culated to be understood by the individual enti18 tled to benefits under part A or enrolled under 

19 part B, or both; and 

20 ‘‘(C) the person provided such notice may 

21 obtain, upon request, information on the specific 

22 provision of the policy, manual, or regulation 

23 used in making the redetermination.’’. 
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1 (2) RECONSIDERATIONS.—Section 1869(c)(3)(E) 

2 (42 U.S.C. 1395ff(c)(3)(E)), as amended by BIPA, is 

3 amended—

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

5 calculated to be understood by the individual en6 titled to benefits under part A or enrolled under 

7 part B, or both, and shall include (to the extent 

8 appropriate)’’ after ‘‘in writing, ’’; and 

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

10 right to appeal such determination and instruc11 tions on how to initiate such appeal under this 

12 section’’ after ‘‘such decision,’’. 

13 (3) APPEALS.—Section 1869(d) (42 U.S.C. 

14 1395ff(d)), as amended by BIPA, is amended—

15 (A) in the heading, by inserting ‘‘; NOTICE’’ 

16 after ‘‘SECRETARY’’; and 

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

18 paragraph: 

19 ‘‘(4) NOTICE.—Notice of the decision of an ad20 ministrative law judge shall be in writing in a man21 ner calculated to be understood by the individual en22 titled to benefits under part A or enrolled under part 

23 B, or both, and shall include—

24 ‘‘(A) the specific reasons for the determina25 tion (including, to the extent appropriate, a 
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1 summary of the clinical or scientific evidence 

2 used in making the determination); 

3 ‘‘(B) the procedures for obtaining addi4 tional information concerning the decision; and 

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

6 decision and instructions on how to initiate such 

7 an appeal under this section.’’. 

8 (4) SUBMISSION OF RECORD FOR APPEAL.—Sec9 tion 1869(c)(3)(J)(i) (42 U.S.C. 1395ff(c)(3)(J)(i)) by 

10 striking ‘‘prepare’’ and inserting ‘‘submit’’ and by 

11 striking ‘‘with respect to’’ and all that follows through 

12 ‘‘and relevant policies’’. 

13 (d) QUALIFIED INDEPENDENT CONTRACTORS.—

14 (1) ELIGIBILITY REQUIREMENTS OF QUALIFIED

15 INDEPENDENT CONTRACTORS.—Section 1869(c)(3) (42 

16 U.S.C. 1395ff(c)(3)), as amended by BIPA, is amend17 ed—

18 (A) in subparagraph (A), by striking ‘‘suffi19 cient training and expertise in medical science 

20 and legal matters’’ and inserting ‘‘sufficient 

21 medical, legal, and other expertise (including 

22 knowledge of the program under this title) and 

23 sufficient staffing’’; and 

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

25 subparagraph: 
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1 ‘‘(K) INDEPENDENCE REQUIREMENTS.—

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

3 (ii), a qualified independent contractor 

4 shall not conduct any activities in a case 

5 unless the entity—

6 ‘‘(I) is not a related party (as de7 fined in subsection (g)(5)); 

8 ‘‘(II) does not have a material fa9 milial, financial, or professional rela10 tionship with such a party in relation 

11 to such case; and 

12 ‘‘(III) does not otherwise have a 

13 conflict of interest with such a party. 

14 ‘‘(ii) EXCEPTION FOR REASONABLE

15 COMPENSATION.—Nothing in clause (i) shall 

16 be construed to prohibit receipt by a quali17 fied independent contractor of compensation 

18 from the Secretary for the conduct of activi19 ties under this section if the compensation 

20 is provided consistent with clause (iii). 

21 ‘‘(iii) LIMITATIONS ON ENTITY COM22 PENSATION.—Compensation provided by the 

23 Secretary to a qualified independent con24 tractor in connection with reviews under 

25 this section shall not be contingent on any 
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1 decision rendered by the contractor or by 

2 any reviewing professional.’’. 

3 (2) ELIGIBILITY REQUIREMENTS FOR REVIEW4 ERS.—Section 1869 (42 U.S.C. 1395ff), as amended 

5 by BIPA, is amended—

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

7 read as follows: 

8 ‘‘(D) QUALIFICATIONS FOR REVIEWERS.—

9 The requirements of subsection (g) shall be met 

10 (relating to qualifications of reviewing profes11 sionals).’’; and 

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

13 subsection: 

14 ‘‘(g) QUALIFICATIONS OF REVIEWERS.—

15 ‘‘(1) IN GENERAL.—In reviewing determinations 

16 under this section, a qualified independent contractor 

17 shall assure that—

18 ‘‘(A) each individual conducting a review 

19 shall meet the qualifications of paragraph (2); 

20 ‘‘(B) compensation provided by the con21 tractor to each such reviewer is consistent with 

22 paragraph (3); and 

23 ‘‘(C) in the case of a review by a panel de24 scribed in subsection (c)(3)(B) composed of phy25 sicians or other health care professionals (each in
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1 this subsection referred to as a ‘reviewing profes2 sional’), a reviewing professional meets the 

3 qualifications described in paragraph (4) and, 

4 where a claim is regarding the furnishing of 

5 treatment by a physician (allopathic or osteo6 pathic) or the provision of items or services by 

7 a physician (allopathic or osteopathic), a review8 ing professional shall be a physician (allopathic 

9 or osteopathic). 

10 ‘‘(2) INDEPENDENCE.—

11 ‘‘(A) IN GENERAL.—Subject to subpara12 graph (B), each individual conducting a review 

13 in a case shall—

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

15 in paragraph (5)); 

16 ‘‘(ii) not have a material familial, fi17 nancial, or professional relationship with 

18 such a party in the case under review; and 

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

20 interest with such a party. 

21 ‘‘(B) EXCEPTION.—Nothing in subpara22 graph (A) shall be construed to—

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

24 the basis of a participation agreement with 

25 a fiscal intermediary, carrier, or other con-
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1 tractor, from serving as a reviewing profes2 sional if—

3 ‘‘(I) the individual is not involved 

4 in the provision of items or services in 

5 the case under review; 

6 ‘‘(II) the fact of such an agree7 ment is disclosed to the Secretary and 

8 the individual entitled to benefits 

9 under part A or enrolled under part B, 

10 or both, (or authorized representative) 

11 and neither party objects; and 

12 ‘‘(III) the individual is not an 

13 employee of the intermediary, carrier, 

14 or contractor and does not provide 

15 services exclusively or primarily to or 

16 on behalf of such intermediary, carrier, 

17 or contractor; 

18 ‘‘(ii) prohibit an individual who has 

19 staff privileges at the institution where the 

20 treatment involved takes place from serving 

21 as a reviewer merely on the basis of having 

22 such staff privileges if the existence of such 

23 privileges is disclosed to the Secretary and 

24 such individual (or authorized representa25 tive), and neither party objects; or 
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1 ‘‘(iii) prohibit receipt of compensation 

2 by a reviewing professional from a con3 tractor if the compensation is provided con4 sistent with paragraph (3). 

5 For purposes of this paragraph, the term ‘par6 ticipation agreement’ means an agreement relat7 ing to the provision of health care services by the 

8 individual and does not include the provision of 

9 services as a reviewer under this subsection. 

10 ‘‘(3) LIMITATIONS ON REVIEWER COMPENSA11 TION.—Compensation provided by a qualified inde12 pendent contractor to a reviewer in connection with 

13 a review under this section shall not be contingent on 

14 the decision rendered by the reviewer. 

15 ‘‘(4) LICENSURE AND EXPERTISE.—Each review16 ing professional shall be—

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

18 who is appropriately credentialed or licensed in 

19 one or more States to deliver health care services 

20 and has medical expertise in the field of practice 

21 that is appropriate for the items or services at 

22 issue; or 

23 ‘‘(B) a health care professional who is le24 gally authorized in one or more States (in ac25 cordance with State law or the State regulatory 
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1 mechanism provided by State law) to furnish the 

2 health care items or services at issue and has 

3 medical expertise in the field of practice that is 

4 appropriate for such items or services. 

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

6 of this section, the term ‘related party’ means, with 

7 respect to a case under this title involving a specific 

8 individual entitled to benefits under part A or en9 rolled under part B, or both, any of the following: 

10 ‘‘(A) The Secretary, the medicare adminis11 trative contractor involved, or any fiduciary, of12 ficer, director, or employee of the Department of 

13 Health and Human Services, or of such con14 tractor. 

15 ‘‘(B) The individual (or authorized rep16 resentative). 

17 ‘‘(C) The health care professional that pro18 vides the items or services involved in the case. 

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

20 services (or treatment) involved in the case are 

21 provided. 

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

23 other item that is included in the items or serv24 ices involved in the case. 
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1 ‘‘(F) Any other party determined under any 

2 regulations to have a substantial interest in the 

3 case involved.’’. 

4 (3) REDUCING MINIMUM NUMBER OF QUALIFIED

5 INDEPENDENT CONTRACTORS.—Section 1869(c)(4) (42 

6 U.S.C. 1395ff(c)(4)) is amended by striking ‘‘not 

7 fewer than 12 qualified independent contractors under 

8 this subsection’’ and inserting ‘‘a sufficient number of 

9 qualified independent contractors (but not fewer than 

10 4 such contractors) to conduct reconsiderations con11 sistent with the timeframes applicable under this sub12 section’’. 

13 (4) EFFECTIVE DATE.—The amendments made 

14 by paragraphs (1) and (2) shall be effective as if in15 cluded in the enactment of the respective provisions of 

16 subtitle C of title V of BIPA, (114 Stat. 2763A–534). 

17 (5) TRANSITION.—In applying section 1869(g) of 

18 the Social Security Act (as added by paragraph (2)), 

19 any reference to a medicare administrative contractor 

20 shall be deemed to include a reference to a fiscal 

21 intermediary under section 1816 of the Social Secu22 rity Act (42 U.S.C. 1395h) and a carrier under sec23 tion 1842 of such Act (42 U.S.C. 1395u).
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1 SEC. 404. PREPAYMENT REVIEW. 

2 (a) IN GENERAL.—Section 1874A, as added by section 

3 201(a)(1) and as amended by sections 202(b), 301(b)(1), 

4 and 301(c)(1), is further amended by adding at the end the 

5 following new subsection: 

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

7 ‘‘(1) CONDUCT OF RANDOM PREPAYMENT RE8 VIEW.—

9 ‘‘(A) IN GENERAL.—A medicare adminis10 trative contractor may conduct random prepay11 ment review only to develop a contractor-wide or 

12 program-wide claims payment error rates or 

13 under such additional circumstances as may be 

14 provided under regulations, developed in con15 sultation with providers of services and sup16 pliers. 

17 ‘‘(B) USE OF STANDARD PROTOCOLS WHEN

18 CONDUCTING PREPAYMENT REVIEWS.—When a 

19 medicare administrative contractor conducts a 

20 random prepayment review, the contractor may 

21 conduct such review only in accordance with a 

22 standard protocol for random prepayment audits 

23 developed by the Secretary. 

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

25 paragraph shall be construed as preventing the 
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1 denial of payments for claims actually reviewed 

2 under a random prepayment review. 

3 ‘‘(D) RANDOM PREPAYMENT REVIEW.—For 

4 purposes of this subsection, the term ‘random 

5 prepayment review’ means a demand for the 

6 production of records or documentation absent 

7 cause with respect to a claim. 

8 ‘‘(2) LIMITATIONS ON NON-RANDOM PREPAYMENT

9 REVIEW.—

10 ‘‘(A) LIMITATIONS ON INITIATION OF NON11 RANDOM PREPAYMENT REVIEW.—A medicare ad12 ministrative contractor may not initiate non13 random prepayment review of a provider of serv14 ices or supplier based on the initial identifica15 tion by that provider of services or supplier of 

16 an improper billing practice unless there is a 

17 likelihood of sustained or high level of payment 

18 error (as defined in subsection (i)(3)(A)). 

19 ‘‘(B) TERMINATION OF NON-RANDOM PRE20 PAYMENT REVIEW.—The Secretary shall issue 

21 regulations relating to the termination, includ22 ing termination dates, of non-random prepay23 ment review. Such regulations may vary such a 

24 termination date based upon the differences in 
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1 the circumstances triggering prepayment re2 view.’’. 

3 (b) EFFECTIVE DATE.—

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

5 subsection, the amendment made by subsection (a) 

6 shall take effect 1 year after the date of the enactment 

7 of this Act. 

8 (2) DEADLINE FOR PROMULGATION OF CERTAIN

9 REGULATIONS.—The Secretary shall first issue regula10 tions under section 1874A(h) of the Social Security 

11 Act, as added by subsection (a), by not later than 1 

12 year after the date of the enactment of this Act. 

13 (3) APPLICATION OF STANDARD PROTOCOLS FOR

14 RANDOM PREPAYMENT REVIEW.—Section 

15 1874A(h)(1)(B) of the Social Security Act, as added 

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

17 reviews conducted on or after such date (not later 

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

19 Act) as the Secretary shall specify. 

20 (c) APPLICATION TO FISCAL INTERMEDIARIES AND

21 CARRIERS.—The provisions of section 1874A(h) of the So22 cial Security Act, as added by subsection (a), shall apply 

23 to each fiscal intermediary under section 1816 of the Social 

24 Security Act (42 U.S.C. 1395h) and each carrier under sec25 tion 1842 of such Act (42 U.S.C. 1395u) in the same man-
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1 ner as they apply to medicare administrative contractors 

2 under such provisions. 

3 SEC. 405. RECOVERY OF OVERPAYMENTS. 

4 (a) IN GENERAL.—Section 1893 (42 U.S.C. 1395ddd) 

5 is amended by adding at the end the following new sub6 section: 

7 ‘‘(f) RECOVERY OF OVERPAYMENTS.—

8 ‘‘(1) USE OF REPAYMENT PLANS.—

9 ‘‘(A) IN GENERAL.—If the repayment, with10 in 30 days by a provider of services or supplier, 

11 of an overpayment under this title would con12 stitute a hardship (as defined in subparagraph 

13 (B)), subject to subparagraph (C), upon request 

14 of the provider of services or supplier the Sec15 retary shall enter into a plan with the provider 

16 of services or supplier for the repayment 

17 (through offset or otherwise) of such overpayment 

18 over a period of at least 6 months but not longer 

19 than 3 years (or not longer than 5 years in the 

20 case of extreme hardship, as determined by the 

21 Secretary). Interest shall accrue on the balance 

22 through the period of repayment. Such plan shall 

23 meet terms and conditions determined to be ap24 propriate by the Secretary. 

25 ‘‘(B) HARDSHIP.—
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1 ‘‘(i) IN GENERAL.—For purposes of 

2 subparagraph (A), the repayment of an 

3 overpayment (or overpayments) within 30 

4 days is deemed to constitute a hardship if—

5 ‘‘(I) in the case of a provider of 

6 services that files cost reports, the ag7 gregate amount of the overpayments 

8 exceeds 10 percent of the amount paid 

9 under this title to the provider of serv10 ices for the cost reporting period cov11 ered by the most recently submitted 

12 cost report; or 

13 ‘‘(II) in the case of another pro14 vider of services or supplier, the aggre15 gate amount of the overpayments ex16 ceeds 10 percent of the amount paid 

17 under this title to the provider of serv18 ices or supplier for the previous cal19 endar year. 

20 ‘‘(ii) RULE OF APPLICATION.—The 

21 Secretary shall establish rules for the appli22 cation of this subparagraph in the case of a 

23 provider of services or supplier that was not 

24 paid under this title during the previous
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1 year or was paid under this title only dur2 ing a portion of that year. 

3 ‘‘(iii) TREATMENT OF PREVIOUS OVER4 PAYMENTS.—If a provider of services or 

5 supplier has entered into a repayment plan 

6 under subparagraph (A) with respect to a 

7 specific overpayment amount, such payment 

8 amount under the repayment plan shall not 

9 be taken into account under clause (i) with 

10 respect to subsequent overpayment amounts. 

11 ‘‘(C) EXCEPTIONS.—Subparagraph (A) 

12 shall not apply if—

13 ‘‘(i) the Secretary has reason to suspect 

14 that the provider of services or supplier 

15 may file for bankruptcy or otherwise cease 

16 to do business or discontinue participation 

17 in the program under this title; or 

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

19 abuse committed against the program. 

20 ‘‘(D) IMMEDIATE COLLECTION IF VIOLATION

21 OF REPAYMENT PLAN.—If a provider of services 

22 or supplier fails to make a payment in accord23 ance with a repayment plan under this para24 graph, the Secretary may immediately seek to 

25 offset or otherwise recover the total balance out-
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1 standing (including applicable interest) under 

2 the repayment plan. 

3 ‘‘(E) RELATION TO NO FAULT PROVISION.—

4 Nothing in this paragraph shall be construed as 

5 affecting the application of section 1870(c) (re6 lating to no adjustment in the cases of certain 

7 overpayments). 

8 ‘‘(2) LIMITATION ON RECOUPMENT.—

9 ‘‘(A) IN GENERAL.—In the case of a pro10 vider of services or supplier that is determined to 

11 have received an overpayment under this title 

12 and that seeks a reconsideration by a qualified 

13 independent contractor on such determination 

14 under section 1869(b)(1), the Secretary may not 

15 take any action (or authorize any other person, 

16 including any medicare contractor, as defined in 

17 subparagraph (C)) to recoup the overpayment 

18 until the date the decision on the reconsideration 

19 has been rendered. If the provisions of section 

20 1869(b)(1) (providing for such a reconsideration 

21 by a qualified independent contractor) are not in 

22 effect, in applying the previous sentence any ref23 erence to such a reconsideration shall be treated 

24 as a reference to a redetermination by the fiscal 

25 intermediary or carrier involved. 
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1 ‘‘(B) COLLECTION WITH INTEREST.—Inso2 far as the determination on such appeal is 

3 against the provider of services or supplier, in4 terest on the overpayment shall accrue on and 

5 after the date of the original notice of overpay6 ment. Insofar as such determination against the 

7 provider of services or supplier is later reversed, 

8 the Secretary shall provide for repayment of the 

9 amount recouped plus interest at the same rate 

10 as would apply under the previous sentence for 

11 the period in which the amount was recouped. 

12 ‘‘(C) MEDICARE CONTRACTOR DEFINED.—

13 For purposes of this subsection, the term ‘medi14 care contractor’ has the meaning given such term 

15 in section 1889(g). 

16 ‘‘(3) LIMITATION ON USE OF EXTRAPOLATION.—

17 A medicare contractor may not use extrapolation to 

18 determine overpayment amounts to be recovered by 

19 recoupment, offset, or otherwise unless—

20 ‘‘(A) there is a sustained or high level of 

21 payment error (as defined by the Secretary by 

22 regulation); or 

23 ‘‘(B) documented educational intervention 

24 has failed to correct the payment error (as deter25 mined by the Secretary). 
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1 ‘‘(4) PROVISION OF SUPPORTING DOCUMENTA2 TION.—In the case of a provider of services or sup3 plier with respect to which amounts were previously 

4 overpaid, a medicare contractor may request the peri5 odic production of records or supporting documenta6 tion for a limited sample of submitted claims to en7 sure that the previous practice is not continuing. 

8 ‘‘(5) CONSENT SETTLEMENT REFORMS.—

9 ‘‘(A) IN GENERAL.—The Secretary may use 

10 a consent settlement (as defined in subparagraph 

11 (D)) to settle a projected overpayment. 

12 ‘‘(B) OPPORTUNITY TO SUBMIT ADDITIONAL

13 INFORMATION BEFORE CONSENT SETTLEMENT

14 OFFER.—Before offering a provider of services or 

15 supplier a consent settlement, the Secretary 

16 shall—

17 ‘‘(i) communicate to the provider of 

18 services or supplier—

19 ‘‘(I) that, based on a review of the 

20 medical records requested by the Sec21 retary, a preliminary evaluation of 

22 those records indicates that there would 

23 be an overpayment; 

24 ‘‘(II) the nature of the problems 

25 identified in such evaluation; and 
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1 ‘‘(III) the steps that the provider 

2 of services or supplier should take to 

3 address the problems; and 

4 ‘‘(ii) provide for a 45-day period dur5 ing which the provider of services or sup6 plier may furnish additional information 

7 concerning the medical records for the 

8 claims that had been reviewed. 

9 ‘‘(C) CONSENT SETTLEMENT OFFER.—The 

10 Secretary shall review any additional informa11 tion furnished by the provider of services or sup12 plier under subparagraph (B)(ii). Taking into 

13 consideration such information, the Secretary 

14 shall determine if there still appears to be an 

15 overpayment. If so, the Secretary—

16 ‘‘(i) shall provide notice of such deter17 mination to the provider of services or sup18 plier, including an explanation of the rea19 son for such determination; and 

20 ‘‘(ii) in order to resolve the overpay21 ment, may offer the provider of services or 

22 supplier—

23 ‘‘(I) the opportunity for a statis24 tically valid random sample; or 

25 ‘‘(II) a consent settlement.
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1 The opportunity provided under clause (ii)(I) 

2 does not waive any appeal rights with respect to 

3 the alleged overpayment involved. 

4 ‘‘(D) CONSENT SETTLEMENT DEFINED.—

5 For purposes of this paragraph, the term ‘con6 sent settlement’ means an agreement between the 

7 Secretary and a provider of services or supplier 

8 whereby both parties agree to settle a projected 

9 overpayment based on less than a statistically 

10 valid sample of claims and the provider of serv11 ices or supplier agrees not to appeal the claims 

12 involved. 

13 ‘‘(6) NOTICE OF OVER-UTILIZATION OF CODES.—

14 The Secretary shall establish, in consultation with or15 ganizations representing the classes of providers of 

16 services and suppliers, a process under which the Sec17 retary provides for notice to classes of providers of 

18 services and suppliers served by the contractor in 

19 cases in which the contractor has identified that par20 ticular billing codes may be overutilized by that class 

21 of providers of services or suppliers under the pro22 grams under this title (or provisions of title XI inso23 far as they relate to such programs). 

24 ‘‘(7) PAYMENT AUDITS.—
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1 ‘‘(A) WRITTEN NOTICE FOR POST-PAYMENT

2 AUDITS.—Subject to subparagraph (C), if a 

3 medicare contractor decides to conduct a post4 payment audit of a provider of services or sup5 plier under this title, the contractor shall provide 

6 the provider of services or supplier with written 

7 notice (which may be in electronic form) of the 

8 intent to conduct such an audit. 

9 ‘‘(B) EXPLANATION OF FINDINGS FOR ALL

10 AUDITS.—Subject to subparagraph (C), if a 

11 medicare contractor audits a provider of services 

12 or supplier under this title, the contractor 

13 shall—

14 ‘‘(i) give the provider of services or 

15 supplier a full review and explanation of 

16 the findings of the audit in a manner that 

17 is understandable to the provider of services 

18 or supplier and permits the development of 

19 an appropriate corrective action plan; 

20 ‘‘(ii) inform the provider of services or 

21 supplier of the appeal rights under this title 

22 as well as consent settlement options (which 

23 are at the discretion of the Secretary); 
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1 ‘‘(iii) give the provider of services or 

2 supplier an opportunity to provide addi3 tional information to the contractor; and 

4 ‘‘(iv) take into account information 

5 provided, on a timely basis, by the provider 

6 of services or supplier under clause (iii). 

7 ‘‘(C) EXCEPTION.—Subparagraphs (A) and 

8 (B) shall not apply if the provision of notice or 

9 findings would compromise pending law enforce10 ment activities, whether civil or criminal, or re11 veal findings of law enforcement-related audits. 

12 ‘‘(8) STANDARD METHODOLOGY FOR PROBE SAM13 PLING.—The Secretary shall establish a standard 

14 methodology for medicare contractors to use in select15 ing a sample of claims for review in the case of an 

16 abnormal billing pattern.’’. 

17 (b) EFFECTIVE DATES AND DEADLINES.—

18 (1) USE OF REPAYMENT PLANS.—Section 

19 1893(f)(1) of the Social Security Act, as added by 

20 subsection (a), shall apply to requests for repayment 

21 plans made after the date of the enactment of this Act. 

22 (2) LIMITATION ON RECOUPMENT.—Section 

23 1893(f)(2) of the Social Security Act, as added by 

24 subsection (a), shall apply to actions taken after the 

25 date of the enactment of this Act. 
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1 (3) USE OF EXTRAPOLATION.—Section 

2 1893(f)(3) of the Social Security Act, as added by 

3 subsection (a), shall apply to statistically valid ran4 dom samples initiated after the date that is 1 year 

5 after the date of the enactment of this Act. 

6 (4) PROVISION OF SUPPORTING DOCUMENTA7 TION.—Section 1893(f)(4) of the Social Security Act, 

8 as added by subsection (a), shall take effect on the 

9 date of the enactment of this Act. 

10 (5) CONSENT SETTLEMENT.—Section 1893(f)(5) 

11 of the Social Security Act, as added by subsection (a), 

12 shall apply to consent settlements entered into after 

13 the date of the enactment of this Act. 

14 (6) NOTICE OF OVERUTILIZATION.—Not later 

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

16 Act, the Secretary shall first establish the process for 

17 notice of overutilization of billing codes under section 

18 1893A(f)(6) of the Social Security Act, as added by 

19 subsection (a). 

20 (7) PAYMENT AUDITS.—Section 1893A(f)(7) of 

21 the Social Security Act, as added by subsection (a), 

22 shall apply to audits initiated after the date of the 

23 enactment of this Act. 

24 (8) STANDARD FOR ABNORMAL BILLING PAT25 TERNS.—Not later than 1 year after the date of the
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1 enactment of this Act, the Secretary shall first estab2 lish a standard methodology for selection of sample 

3 claims for abnormal billing patterns under section 

4 1893(f)(8) of the Social Security Act, as added by 

5 subsection (a). 

6 SEC. 406. PROVIDER ENROLLMENT PROCESS; RIGHT OF AP7 PEAL. 

8 (a) IN GENERAL.—Section 1866 (42 U.S.C. 1395cc) 

9 is amended—

10 (1) by adding at the end of the heading the fol11 lowing: ‘‘; ENROLLMENT PROCESSES’’; and 

12 (2) by adding at the end the following new sub13 section: 

14 ‘‘(j) ENROLLMENT PROCESS FOR PROVIDERS OF SERV15 ICES AND SUPPLIERS.—

16 ‘‘(1) ENROLLMENT PROCESS.—

17 ‘‘(A) IN GENERAL.—The Secretary shall es18 tablish by regulation a process for the enrollment 

19 of providers of services and suppliers under this 

20 title. 

21 ‘‘(B) DEADLINES.—The Secretary shall es22 tablish by regulation procedures under which 

23 there are deadlines for actions on applications 

24 for enrollment (and, if applicable, renewal of en25 rollment). The Secretary shall monitor the per-
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1 formance of medicare administrative contractors 

2 in meeting the deadlines established under this 

3 subparagraph. 

4 ‘‘(C) CONSULTATION BEFORE CHANGING

5 PROVIDER ENROLLMENT FORMS.—The Secretary 

6 shall consult with providers of services and sup7 pliers before making changes in the provider en8 rollment forms required of such providers and 

9 suppliers to be eligible to submit claims for 

10 which payment may be made under this title. 

11 ‘‘(2) HEARING RIGHTS IN CASES OF DENIAL OR

12 NON-RENEWAL.—A provider of services or supplier 

13 whose application to enroll (or, if applicable, to renew 

14 enrollment) under this title is denied may have a 

15 hearing and judicial review of such denial under the 

16 procedures that apply under subsection (h)(1)(A) to a 

17 provider of services that is dissatisfied with a deter18 mination by the Secretary.’’. 

19 (b) EFFECTIVE DATES.—

20 (1) ENROLLMENT PROCESS.—The Secretary shall 

21 provide for the establishment of the enrollment process 

22 under section 1866(j)(1) of the Social Security Act, as 

23 added by subsection (a)(2), within 6 months after the 

24 date of the enactment of this Act. 
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1 (2) CONSULTATION.—Section 1866(j)(1)(C) of 

2 the Social Security Act, as added by subsection 

3 (a)(2), shall apply with respect to changes in provider 

4 enrollment forms made on or after January 1, 2004. 

5 (3) HEARING RIGHTS.—Section 1866(j)(2) of the 

6 Social Security Act, as added by subsection (a)(2), 

7 shall apply to denials occurring on or after such date 

8 (not later than 1 year after the date of the enactment 

9 of this Act) as the Secretary specifies. 

10 SEC. 407. PROCESS FOR CORRECTION OF MINOR ERRORS 

11 AND OMISSIONS WITHOUT PURSUING AP12 PEALS PROCESS. 

13 (a) CLAIMS.—The Secretary shall develop, in consulta14 tion with appropriate medicare contractors (as defined in 

15 section 1889(g) of the Social Security Act, as inserted by 

16 section 301(a)(1)) and representatives of providers of serv17 ices and suppliers, a process whereby, in the case of minor 

18 errors or omissions (as defined by the Secretary) that are 

19 detected in the submission of claims under the programs 

20 under title XVIII of such Act, a provider of services or sup21 plier is given an opportunity to correct such an error or 

22 omission without the need to initiate an appeal. Such proc23 ess shall include the ability to resubmit corrected claims. 

24 (b) PERMITTING USE OF CORRECTED AND SUPPLE25 MENTARY DATA.—
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1 (1) IN GENERAL.—Section 1886(d)(10)(D)(vi) 

2 (42 U.S.C. 1395ww(d)(10)(D)(vi)) is amended by 

3 adding after subclause (II) at the end the following: 

4 ‘‘Notwithstanding subclause (I), a hospital may submit, 

5 and the Secretary may accept upon verification, data that 

6 corrects or supplements the data described in such subclause 

7 without regard to whether the corrected or supplementary 

8 data relate to a cost report that has been settled.’’. 

9 (2) EFFECTIVE DATE.—The amendment made by 

10 paragraph (1) shall apply to fiscal years beginning 

11 with fiscal year 2004. 

12 (3) SUBMITTAL AND RESUBMITTAL OF APPLICA13 TIONS PERMITTED FOR FISCAL YEAR 2004.—

14 (A) IN GENERAL.—Notwithstanding any 

15 other provision of law, a hospital may submit 

16 (or resubmit) an application for a change de17 scribed in section 1886(d)(10)(C)(i)(II) of the 

18 Social Security Act for fiscal year 2004 if the 

19 hospital demonstrates on a timely basis to the 

20 satisfaction of the Secretary that the use of cor21 rected or supplementary data under the amend22 ment made by paragraph (1) would materially 

23 affect the approval of such an application. 

24 (B) APPLICATION OF BUDGET NEU25 TRALITY.—If one or more hospital’s applications
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1 are approved as a result of paragraph (1) and 

2 subparagraph (A) for fiscal year 2004, the Sec3 retary shall make a proportional adjustment in 

4 the standardized amounts determined under sec5 tion 1886(d)(3) of the Social Security Act (42 

6 U.S.C. 1395ww(d)(3)) for fiscal year 2004 to as7 sure that approval of such applications does not 

8 result in aggregate payments under section 

9 1886(d) of such Act that are greater or less than 

10 those that would otherwise be made if paragraph 

11 (1) and subparagraph (A) did not apply. 

12 SEC. 408. PRIOR DETERMINATION PROCESS FOR CERTAIN 

13 ITEMS AND SERVICES; ADVANCE BENE14 FICIARY NOTICES. 

15 (a) IN GENERAL.—Section 1869 (42 U.S.C. 1395ff(b)), 

16 as amended by sections 521 and 522 of BIPA and section 

17 403(d)(2)(B), is further amended by adding at the end the 

18 following new subsection: 

19 ‘‘(h) PRIOR DETERMINATION PROCESS FOR CERTAIN

20 ITEMS AND SERVICES.—

21 ‘‘(1) ESTABLISHMENT OF PROCESS.—

22 ‘‘(A) IN GENERAL.—With respect to a medi23 care administrative contractor that has a con24 tract under section 1874A that provides for mak25 ing payments under this title with respect to eli-
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1 gible items and services described in subpara2 graph (C), the Secretary shall establish a prior 

3 determination process that meets the require4 ments of this subsection and that shall be applied 

5 by such contractor in the case of eligible request6 ers. 

7 ‘‘(B) ELIGIBLE REQUESTER.—For purposes 

8 of this subsection, each of the following shall be 

9 an eligible requester: 

10 ‘‘(i) A physician, but only with respect 

11 to eligible items and services for which the 

12 physician may be paid directly. 

13 ‘‘(ii) An individual entitled to benefits 

14 under this title, but only with respect to an 

15 item or service for which the individual re16 ceives, from the physician who may be paid 

17 directly for the item or service, an advance 

18 beneficiary notice under section 1879(a) 

19 that payment may not be made (or may no 

20 longer be made) for the item or service 

21 under this title. 

22 ‘‘(C) ELIGIBLE ITEMS AND SERVICES.—For 

23 purposes of this subsection and subject to para24 graph (2), eligible items and services are items 

25 and services which are physicians’ services (as 
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1 defined in paragraph (4)(A) of section 1848(f) 

2 for purposes of calculating the sustainable 

3 growth rate under such section). 

4 ‘‘(2) SECRETARIAL FLEXIBILITY.—The Secretary 

5 shall establish by regulation reasonable limits on the 

6 categories of eligible items and services for which a 

7 prior determination of coverage may be requested 

8 under this subsection. In establishing such limits, the 

9 Secretary may consider the dollar amount involved 

10 with respect to the item or service, administrative 

11 costs and burdens, and other relevant factors. 

12 ‘‘(3) REQUEST FOR PRIOR DETERMINATION.—

13 ‘‘(A) IN GENERAL.—Subject to paragraph 

14 (2), under the process established under this sub15 section an eligible requester may submit to the 

16 contractor a request for a determination, before 

17 the furnishing of an eligible item or service in18 volved as to whether the item or service is cov19 ered under this title consistent with the applica20 ble requirements of section 1862(a)(1)(A) (relat21 ing to medical necessity). 

22 ‘‘(B) ACCOMPANYING DOCUMENTATION.—

23 The Secretary may require that the request be 

24 accompanied by a description of the item or 

25 service, supporting documentation relating to the 
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1 medical necessity for the item or service, and 

2 any other appropriate documentation. In the 

3 case of a request submitted by an eligible re4 quester who is described in paragraph (1)(B)(ii), 

5 the Secretary may require that the request also 

6 be accompanied by a copy of the advance bene7 ficiary notice involved. 

8 ‘‘(4) RESPONSE TO REQUEST.—

9 ‘‘(A) IN GENERAL.—Under such process, the 

10 contractor shall provide the eligible requester 

11 with written notice of a determination as to 

12 whether—

13 ‘‘(i) the item or service is so covered; 

14 ‘‘(ii) the item or service is not so cov15 ered; or 

16 ‘‘(iii) the contractor lacks sufficient in17 formation to make a coverage determina18 tion. 

19 If the contractor makes the determination de20 scribed in clause (iii), the contractor shall in21 clude in the notice a description of the addi22 tional information required to make the coverage 

23 determination. 

24 ‘‘(B) DEADLINE TO RESPOND.—Such notice 

25 shall be provided within the same time period as 
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1 the time period applicable to the contractor pro2 viding notice of initial determinations on a 

3 claim for benefits under subsection (a)(2)(A). 

4 ‘‘(C) INFORMING BENEFICIARY IN CASE OF

5 PHYSICIAN REQUEST.—In the case of a request 

6 in which an eligible requester is not the indi7 vidual described in paragraph (1)(B)(ii), the 

8 process shall provide that the individual to 

9 whom the item or service is proposed to be fur10 nished shall be informed of any determination 

11 described in clause (ii) (relating to a determina12 tion of non-coverage) and the right (referred to 

13 in paragraph (6)(B)) to obtain the item or serv14 ice and have a claim submitted for the item or 

15 service. 

16 ‘‘(5) EFFECT OF DETERMINATIONS.—

17 ‘‘(A) BINDING NATURE OF POSITIVE DETER18 MINATION.—If the contractor makes the deter19 mination described in paragraph (4)(A)(i), such 

20 determination shall be binding on the contractor 

21 in the absence of fraud or evidence of misrepre22 sentation of facts presented to the contractor. 

23 ‘‘(B) NOTICE AND RIGHT TO REDETERMINA24 TION IN CASE OF A DENIAL.—
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1 ‘‘(i) IN GENERAL.—If the contractor 

2 makes the determination described in para3 graph (4)(A)(ii)—

4 ‘‘(I) the eligible requester has the 

5 right to a redetermination by the con6 tractor on the determination that the 

7 item or service is not so covered; and 

8 ‘‘(II) the contractor shall include 

9 in notice under paragraph (4)(A) a 

10 brief explanation of the basis for the 

11 determination, including on what na12 tional or local coverage or noncoverage 

13 determination (if any) the determina14 tion is based, and the right to such a 

15 redetermination. 

16 ‘‘(ii) DEADLINE FOR REDETERMINA17 TIONS.—The contractor shall complete and 

18 provide notice of such redetermination with19 in the same time period as the time period 

20 applicable to the contractor providing notice 

21 of redeterminations relating to a claim for 

22 benefits under subsection (a)(3)(C)(ii). 

23 ‘‘(6) LIMITATION ON FURTHER REVIEW.—

24 ‘‘(A) IN GENERAL.—Contractor determina25 tions described in paragraph (4)(A)(ii) or 
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1 (4)(A)(iii) (and redeterminations made under 

2 paragraph (5)(B)), relating to pre-service claims 

3 are not subject to further administrative appeal 

4 or judicial review under this section or other5 wise. 

6 ‘‘(B) DECISION NOT TO SEEK PRIOR DETER7 MINATION OR NEGATIVE DETERMINATION DOES

8 NOT IMPACT RIGHT TO OBTAIN SERVICES, SEEK

9 REIMBURSEMENT, OR APPEAL RIGHTS.—Nothing 

10 in this subsection shall be construed as affecting 

11 the right of an individual who—

12 ‘‘(i) decides not to seek a prior deter13 mination under this subsection with respect 

14 to items or services; or 

15 ‘‘(ii) seeks such a determination and 

16 has received a determination described in 

17 paragraph (4)(A)(ii), 

18 from receiving (and submitting a claim for) such 

19 items services and from obtaining administrative 

20 or judicial review respecting such claim under 

21 the other applicable provisions of this section. 

22 Failure to seek a prior determination under this 

23 subsection with respect to items and services 

24 shall not be taken into account in such adminis25 trative or judicial review. 
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1 ‘‘(C) NO PRIOR DETERMINATION AFTER RE2 CEIPT OF SERVICES.—Once an individual is pro3 vided items and services, there shall be no prior 

4 determination under this subsection with respect 

5 to such items or services.’’. 

6 (b) EFFECTIVE DATE; TRANSITION.—

7 (1) EFFECTIVE DATE.—The Secretary shall es8 tablish the prior determination process under the 

9 amendment made by subsection (a) in such a manner 

10 as to provide for the acceptance of requests for deter11 minations under such process filed not later than 18 

12 months after the date of the enactment of this Act. 

13 (2) TRANSITION.—During the period in which 

14 the amendment made by subsection (a) has become ef15 fective but contracts are not provided under section 

16 1874A of the Social Security Act with medicare ad17 ministrative contractors, any reference in section 

18 1869(g) of such Act (as added by such amendment) to 

19 such a contractor is deemed a reference to a fiscal 

20 intermediary or carrier with an agreement under sec21 tion 1816, or contract under section 1842, respec22 tively, of such Act. 

23 (3) LIMITATION ON APPLICATION TO SGR.—For 

24 purposes of applying section 1848(f)(2)(D) of the So25 cial Security Act (42 U.S.C. 1395w–4(f)(2)(D)), the 
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1 amendment made by subsection (a) shall not be con2 sidered to be a change in law or regulation. 

3 (c) PROVISIONS RELATING TO ADVANCE BENEFICIARY

4 NOTICES; REPORT ON PRIOR DETERMINATION PROCESS.—

5 (1) DATA COLLECTION.—The Secretary shall es6 tablish a process for the collection of information on 

7 the instances in which an advance beneficiary notice 

8 (as defined in paragraph (4)) has been provided and 

9 on instances in which a beneficiary indicates on such 

10 a notice that the beneficiary does not intend to seek 

11 to have the item or service that is the subject of the 

12 notice furnished. 

13 (2) OUTREACH AND EDUCATION.—The Secretary 

14 shall establish a program of outreach and education 

15 for beneficiaries and providers of services and other 

16 persons on the appropriate use of advance beneficiary 

17 notices and coverage policies under the medicare pro18 gram. 

19 (3) GAO REPORT ON USE OF ADVANCE BENE20 FICIARY NOTICES.—Not later than 18 months after 

21 the date on which section 1869(g) of the Social Secu22 rity Act (as added by subsection (a)) takes effect, the 

23 Comptroller General of the United States shall submit 

24 to Congress a report on the use of advance beneficiary 

25 notices under title XVIII of such Act. Such report 
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1 shall include information concerning the providers of 

2 services and other persons that have provided such no3 tices and the response of beneficiaries to such notices. 

4 (4) GAO REPORT ON USE OF PRIOR DETERMINA5 TION PROCESS.—Not later than 18 months after the 

6 date on which section 1869(g) of the Social Security 

7 Act (as added by subsection (a)) takes effect, the 

8 Comptroller General of the United States shall submit 

9 to Congress a report on the use of the prior deter10 mination process under such section. Such report 

11 shall include—

12 (A) information concerning the types of 

13 procedures for which a prior determination has 

14 been sought, determinations made under the 

15 process, and changes in receipt of services result16 ing from the application of such process; and 

17 (B) an evaluation of whether the process 

18 was useful for physicians (and other suppliers) 

19 and beneficiaries, whether it was timely, and 

20 whether the amount of information required was 

21 burdensome to physicians and beneficiaries. 

22 (5) ADVANCE BENEFICIARY NOTICE DEFINED.—

23 In this subsection, the term ‘‘advance beneficiary no24 tice’’ means a written notice provided under section

25 1879(a) of the Social Security Act (42 U.S.C. 
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1 1395pp(a)) to an individual entitled to benefits under 

2 part A or B of title XVIII of such Act before items 

3 or services are furnished under such part in cases 

4 where a provider of services or other person that 

5 would furnish the item or service believes that pay6 ment will not be made for some or all of such items 

7 or services under such title. 

8 TITLE V—MISCELLANEOUS 

9 PROVISIONS 

10 SEC. 501. POLICY DEVELOPMENT REGARDING EVALUATION 

11 AND MANAGEMENT (E & M) DOCUMENTATION 

12 GUIDELINES. 

13 (a) IN GENERAL.—The Secretary may not implement 

14 any new documentation guidelines for, or clinical examples 

15 of, evaluation and management physician services under 

16 the title XVIII of the Social Security Act on or after the 

17 date of the enactment of this Act unless the Secretary—

18 (1) has developed the guidelines in collaboration 

19 with practicing physicians (including both generalists 

20 and specialists) and provided for an assessment of the 

21 proposed guidelines by the physician community; 

22 (2) has established a plan that contains specific 

23 goals, including a schedule, for improving the use of 

24 such guidelines; 
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1 (3) has conducted appropriate and representative 

2 pilot projects under subsection (b) to test modifica3 tions to the evaluation and management documenta4 tion guidelines; 

5 (4) finds that the objectives described in sub6 section (c) will be met in the implementation of such 

7 guidelines; and 

8 (5) has established, and is implementing, a pro9 gram to educate physicians on the use of such guide10 lines and that includes appropriate outreach. 

11 The Secretary shall make changes to the manner in which 

12 existing evaluation and management documentation guide13 lines are implemented to reduce paperwork burdens on phy14 sicians. 

15 (b) PILOT PROJECTS TO TEST EVALUATION AND MAN16 AGEMENT DOCUMENTATION GUIDELINES.—

17 (1) IN GENERAL.—The Secretary shall conduct 

18 under this subsection appropriate and representative 

19 pilot projects to test new evaluation and management 

20 documentation guidelines referred to in subsection 

21 (a). 

22 (2) LENGTH AND CONSULTATION.—Each pilot 

23 project under this subsection shall—

24 (A) be voluntary; 
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1 (B) be of sufficient length as determined by 

2 the Secretary to allow for preparatory physician 

3 and medicare contractor education, analysis, 

4 and use and assessment of potential evaluation 

5 and management guidelines; and 

6 (C) be conducted, in development and 

7 throughout the planning and operational stages 

8 of the project, in consultation with practicing 

9 physicians (including both generalists and spe10 cialists). 

11 (3) RANGE OF PILOT PROJECTS.—Of the pilot 

12 projects conducted under this subsection—

13 (A) at least one shall focus on a peer review 

14 method by physicians (not employed by a medi15 care contractor) which evaluates medical record 

16 information for claims submitted by physicians 

17 identified as statistical outliers relative to defini18 tions published in the Current Procedures Ter19 minology (CPT) code book of the American Med20 ical Association; 

21 (B) at least one shall focus on an alter22 native method to detailed guidelines based on 

23 physician documentation of face to face encoun24 ter time with a patient; 
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1 (C) at least one shall be conducted for serv2 ices furnished in a rural area and at least one 

3 for services furnished outside such an area; and 

4 (D) at least one shall be conducted in a set5 ting where physicians bill under physicians’ 

6 services in teaching settings and at least one 

7 shall be conducted in a setting other than a 

8 teaching setting. 

9 (4) BANNING OF TARGETING OF PILOT PROJECT

10 PARTICIPANTS.—Data collected under this subsection 

11 shall not be used as the basis for overpayment de12 mands or post-payment audits. Such limitation ap13 plies only to claims filed as part of the pilot project 

14 and lasts only for the duration of the pilot project 

15 and only as long as the provider is a participant in 

16 the pilot project. 

17 (5) STUDY OF IMPACT.—Each pilot project shall 

18 examine the effect of the new evaluation and manage19 ment documentation guidelines on—

20 (A) different types of physician practices, 

21 including those with fewer than 10 full-time22 equivalent employees (including physicians); and 

23 (B) the costs of physician compliance, in24 cluding education, implementation, auditing, 

25 and monitoring. 
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1 (6) PERIODIC REPORTS.—The Secretary shall 

2 submit to Congress periodic reports on the pilot 

3 projects under this subsection. 

4 (c) OBJECTIVES FOR EVALUATION AND MANAGEMENT

5 GUIDELINES.—The objectives for modified evaluation and 

6 management documentation guidelines developed by the 

7 Secretary shall be to—

8 (1) identify clinically relevant documentation 

9 needed to code accurately and assess coding levels ac10 curately; 

11 (2) decrease the level of non-clinically pertinent 

12 and burdensome documentation time and content in 

13 the physician’s medical record; 

14 (3) increase accuracy by reviewers; and 

15 (4) educate both physicians and reviewers. 

16 (d) STUDY OF SIMPLER, ALTERNATIVE SYSTEMS OF

17 DOCUMENTATION FOR PHYSICIAN CLAIMS.—

18 (1) STUDY.—The Secretary shall carry out a 

19 study of the matters described in paragraph (2). 

20 (2) MATTERS DESCRIBED.—The matters referred 

21 to in paragraph (1) are—

22 (A) the development of a simpler, alter23 native system of requirements for documentation 

24 accompanying claims for evaluation and man25 agement physician services for which payment is
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1 made under title XVIII of the Social Security 

2 Act; and 

3 (B) consideration of systems other than cur4 rent coding and documentation requirements for 

5 payment for such physician services. 

6 (3) CONSULTATION WITH PRACTICING PHYSI7 CIANS.—In designing and carrying out the study 

8 under paragraph (1), the Secretary shall consult with 

9 practicing physicians, including physicians who are 

10 part of group practices and including both generalists 

11 and specialists. 

12 (4) APPLICATION OF HIPAA UNIFORM CODING RE13 QUIREMENTS.—In developing an alternative system 

14 under paragraph (2), the Secretary shall consider re15 quirements of administrative simplification under 

16 part C of title XI of the Social Security Act. 

17 (5) REPORT TO CONGRESS.—(A) Not later than 

18 October 1, 2005, the Secretary shall submit to Con19 gress a report on the results of the study conducted 

20 under paragraph (1). 

21 (B) The Medicare Payment Advisory Commis22 sion shall conduct an analysis of the results of the 

23 study included in the report under subparagraph (A) 

24 and shall submit a report on such analysis to Con25 gress. 
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1 (e) STUDY ON APPROPRIATE CODING OF CERTAIN EX2 TENDED OFFICE VISITS.—The Secretary shall conduct a 

3 study of the appropriateness of coding in cases of extended 

4 office visits in which there is no diagnosis made. Not later 

5 than October 1, 2005, the Secretary shall submit a report 

6 to Congress on such study and shall include recommenda7 tions on how to code appropriately for such visits in a man8 ner that takes into account the amount of time the physi9 cian spent with the patient. 

10 (f) DEFINITIONS.—In this section—

11 (1) the term ‘‘rural area’’ has the meaning given 

12 that term in section 1886(d)(2)(D) of the Social Secu13 rity Act, 42 U.S.C. 1395ww(d)(2)(D); and 

14 (2) the term ‘‘teaching settings’’ are those set15 tings described in section 415.150 of title 42, Code of 

16 Federal Regulations. 

17 SEC. 502. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY 

18 AND COVERAGE. 

19 (a) COUNCIL FOR TECHNOLOGY AND INNOVATION.—

20 Section 1868 (42 U.S.C. 1395ee), as amended by section 

21 301(a), is amended by adding at the end the following new 

22 subsection: 

23 ‘‘(c) COUNCIL FOR TECHNOLOGY AND INNOVATION.—

24 ‘‘(1) ESTABLISHMENT.—The Secretary shall es25 tablish a Council for Technology and Innovation 
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1 within the Centers for Medicare & Medicaid Services 

2 (in this section referred to as ‘CMS’). 

3 ‘‘(2) COMPOSITION.—The Council shall be com4 posed of senior CMS staff and clinicians and shall be 

5 chaired by the Executive Coordinator for Technology 

6 and Innovation (appointed or designated under para7 graph (4)). 

8 ‘‘(3) DUTIES.—The Council shall coordinate the 

9 activities of coverage, coding, and payment processes 

10 under this title with respect to new technologies and 

11 procedures, including new drug therapies, and shall 

12 coordinate the exchange of information on new tech13 nologies between CMS and other entities that make 

14 similar decisions. 

15 ‘‘(4) EXECUTIVE COORDINATOR FOR TECH16 NOLOGY AND INNOVATION.—The Secretary shall ap17 point (or designate) a noncareer appointee (as defined 

18 in section 3132(a)(7) of title 5, United States Code) 

19 who shall serve as the Executive Coordinator for Tech20 nology and Innovation. Such executive coordinator 

21 shall report to the Administrator of CMS, shall chair 

22 the Council, shall oversee the execution of its duties, 

23 and shall serve as a single point of contact for outside 

24 groups and entities regarding the coverage, coding, 

25 and payment processes under this title.’’. 
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1 (b) METHODS FOR DETERMINING PAYMENT BASIS FOR

2 NEW LAB TESTS.—Section 1833(h) (42 U.S.C. 1395l(h)) 

3 is amended by adding at the end the following: 

4 ‘‘(8)(A) The Secretary shall establish by regulation 

5 procedures for determining the basis for, and amount of, 

6 payment under this subsection for any clinical diagnostic 

7 laboratory test with respect to which a new or substantially 

8 revised HCPCS code is assigned on or after January 1, 

9 2005 (in this paragraph referred to as ‘new tests’). 

10 ‘‘(B) Determinations under subparagraph (A) shall be 

11 made only after the Secretary—

12 ‘‘(i) makes available to the public (through an 

13 Internet site and other appropriate mechanisms) a 

14 list that includes any such test for which establish15 ment of a payment amount under this subsection is 

16 being considered for a year; 

17 ‘‘(ii) on the same day such list is made avail18 able, causes to have published in the Federal Register 

19 notice of a meeting to receive comments and rec20 ommendations (and data on which recommendations 

21 are based) from the public on the appropriate basis 

22 under this subsection for establishing payment 

23 amounts for the tests on such list; 

24 ‘‘(iii) not less than 30 days after publication of 

25 such notice convenes a meeting, that includes rep-
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1 resentatives of officials of the Centers for Medicare & 

2 Medicaid Services involved in determining payment 

3 amounts, to receive such comments and recommenda4 tions (and data on which the recommendations are 

5 based); 

6 ‘‘(iv) taking into account the comments and rec7 ommendations (and accompanying data) received at 

8 such meeting, develops and makes available to the 

9 public (through an Internet site and other appro10 priate mechanisms) a list of proposed determinations 

11 with respect to the appropriate basis for establishing 

12 a payment amount under this subsection for each 

13 such code, together with an explanation of the reasons 

14 for each such determination, the data on which the 

15 determinations are based, and a request for public 

16 written comments on the proposed determination; and 

17 ‘‘(v) taking into account the comments received 

18 during the public comment period, develops and 

19 makes available to the public (through an Internet 

20 site and other appropriate mechanisms) a list of final 

21 determinations of the payment amounts for such tests 

22 under this subsection, together with the rationale for 

23 each such determination, the data on which the deter24 minations are based, and responses to comments and 

25 suggestions received from the public.
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1 ‘‘(C) Under the procedures established pursuant to sub2 paragraph (A), the Secretary shall—

3 ‘‘(i) set forth the criteria for making determina4 tions under subparagraph (A); and 

5 ‘‘(ii) make available to the public the data (other 

6 than proprietary data) considered in making such de7 terminations. 

8 ‘‘(D) The Secretary may convene such further public 

9 meetings to receive public comments on payment amounts 

10 for new tests under this subsection as the Secretary deems 

11 appropriate. 

12 ‘‘(E) For purposes of this paragraph: 

13 ‘‘(i) The term ‘HCPCS’ refers to the Health Care 

14 Procedure Coding System. 

15 ‘‘(ii) A code shall be considered to be ‘substan16 tially revised’ if there is a substantive change to the 

17 definition of the test or procedure to which the code 

18 applies (such as a new analyte or a new methodology 

19 for measuring an existing analyte-specific test).’’. 

20 (c) GAO STUDY ON IMPROVEMENTS IN EXTERNAL

21 DATA COLLECTION FOR USE IN THE MEDICARE INPATIENT

22 PAYMENT SYSTEM.—

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

24 United States shall conduct a study that analyzes 

25 which external data can be collected in a shorter time 
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1 frame by the Centers for Medicare & Medicaid Serv2 ices for use in computing payments for inpatient hos3 pital services. The study may include an evaluation 

4 of the feasibility and appropriateness of using of 

5 quarterly samples or special surveys or any other 

6 methods. The study shall include an analysis of 

7 whether other executive agencies, such as the Bureau 

8 of Labor Statistics in the Department of Commerce, 

9 are best suited to collect this information. 

10 (2) REPORT.—By not later than October 1, 

11 2004, the Comptroller General shall submit a report 

12 to Congress on the study under paragraph (1). 

13 (d) PROCESS FOR ADOPTION OF ICD CODES AS DATA

14 STANDARD.—Section 1172(f) (42 U.S.C. 1320d–1(f)) is 

15 amended by inserting after the first sentence the following: 

16 ‘‘Notwithstanding the preceding sentence, if the National 

17 Committee on Vital and Health Statistics has not made a 

18 recommendation to the Secretary before the date of the en19 actment of this sentence, with respect to the adoption of the 

20 International Classification of Diseases, 10th Revision, 

21 Procedure Coding System (‘ICD–10–PCS’) and the Inter22 national Classification of Diseases, 10th Revision, Clinical 

23 Modification (‘ICD–10–CM’) as a standard under this part 

24 for the reporting of services, the Secretary may adopt ICD–
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1 10–PCS and ICD–10–CM as such a standard on or after 

2 such date without receiving such a recommendation.’’. 

3 SEC. 503. TREATMENT OF HOSPITALS FOR CERTAIN SERV4 ICES UNDER MEDICARE SECONDARY PAYOR 

5 (MSP) PROVISIONS. 

6 (a) IN GENERAL.—The Secretary shall not require a 

7 hospital (including a critical access hospital) to ask ques8 tions (or obtain information) relating to the application of 

9 section 1862(b) of the Social Security Act (relating to medi10 care secondary payor provisions) in the case of reference 

11 laboratory services described in subsection (b), if the Sec12 retary does not impose such requirement in the case of such 

13 services furnished by an independent laboratory. 

14 (b) REFERENCE LABORATORY SERVICES DE15 SCRIBED.—Reference laboratory services described in this 

16 subsection are clinical laboratory diagnostic tests (or the 

17 interpretation of such tests, or both) furnished without a 

18 face-to-face encounter between the individual entitled to 

19 benefits under part A or enrolled under part B, or both, 

20 and the hospital involved and in which the hospital submits 

21 a claim only for such test or interpretation. 

22 SEC. 504. EMTALA IMPROVEMENTS. 

23 (a) PAYMENT FOR EMTALA-MANDATED SCREENING

24 AND STABILIZATION SERVICES.—
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1 (1) IN GENERAL.—Section 1862 (42 U.S.C. 

2 1395y) is amended by inserting after subsection (c) 

3 the following new subsection: 

4 ‘‘(d) For purposes of subsection (a)(1)(A), in the case 

5 of any item or service that is required to be provided pursu6 ant to section 1867 to an individual who is entitled to bene7 fits under this title, determinations as to whether the item 

8 or service is reasonable and necessary shall be made on the 

9 basis of the information available to the treating physician 

10 or practitioner (including the patient’s presenting symp11 toms or complaint) at the time the item or service was or12 dered or furnished by the physician or practitioner (and 

13 not on the patient’s principal diagnosis). When making 

14 such determinations with respect to such an item or service, 

15 the Secretary shall not consider the frequency with which 

16 the item or service was provided to the patient before or 

17 after the time of the admission or visit.’’. 

18 (2) EFFECTIVE DATE.—The amendment made by 

19 paragraph (1) shall apply to items and services fur20 nished on or after January 1, 2004. 

21 (b) NOTIFICATION OF PROVIDERS WHEN EMTALA IN22 VESTIGATION CLOSED.—Section 1867(d) (42 U.S.C. 42 

23 U.S.C. 1395dd(d)) is amended by adding at the end the 

24 following new paragraph: 
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1 ‘‘(4) NOTICE UPON CLOSING AN INVESTIGA2 TION.—The Secretary shall establish a procedure to 

3 notify hospitals and physicians when an investigation 

4 under this section is closed.’’. 

5 (c) PRIOR REVIEW BY PEER REVIEW ORGANIZATIONS

6 IN EMTALA CASES INVOLVING TERMINATION OF PARTICI7 PATION.—

8 (1) IN GENERAL.—Section 1867(d)(3) (42 U.S.C. 

9 1395dd(d)(3)) is amended—

10 (A) in the first sentence, by inserting ‘‘or in 

11 terminating a hospital’s participation under this 

12 title’’ after ‘‘in imposing sanctions under para13 graph (1)’’; and 

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

15 sentences: ‘‘Except in the case in which a delay 

16 would jeopardize the health or safety of individ17 uals, the Secretary shall also request such a re18 view before making a compliance determination 

19 as part of the process of terminating a hospital’s 

20 participation under this title for violations re21 lated to the appropriateness of a medical screen22 ing examination, stabilizing treatment, or an 

23 appropriate transfer as required by this section, 

24 and shall provide a period of 5 days for such re25 view. The Secretary shall provide a copy of the
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1 organization’s report to the hospital or physician 

2 consistent with confidentiality requirements im3 posed on the organization under such part B.’’. 

4 (2) EFFECTIVE DATE.—The amendments made 

5 by paragraph (1) shall apply to terminations of par6 ticipation initiated on or after the date of the enact7 ment of this Act. 

8 SEC. 505. EMERGENCY MEDICAL TREATMENT AND ACTIVE 

9 LABOR ACT (EMTALA) TECHNICAL ADVISORY 

10 GROUP. 

11 (a) ESTABLISHMENT.—The Secretary shall establish a 

12 Technical Advisory Group (in this section referred to as the 

13 ‘‘Advisory Group’’) to review issues related to the Emer14 gency Medical Treatment and Labor Act (EMTALA) and 

15 its implementation. In this section, the term ‘‘EMTALA’’ 

16 refers to the provisions of section 1867 of the Social Security 

17 Act (42 U.S.C. 1395dd). 

18 (b) MEMBERSHIP.—The Advisory Group shall be com19 posed of 19 members, including the Administrator of the 

20 Centers for Medicare & Medicaid Services and the Inspector 

21 General of the Department of Health and Human Services 

22 and of which—

23 (1) 4 shall be representatives of hospitals, includ24 ing at least one public hospital, that have experience 
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1 with the application of EMTALA and at least 2 of 

2 which have not been cited for EMTALA violations; 

3 (2) 7 shall be practicing physicians drawn from 

4 the fields of emergency medicine, cardiology or 

5 cardiothoracic surgery, orthopedic surgery, neuro6 surgery, pediatrics or a pediatric subspecialty, obstet7 rics-gynecology, and psychiatry, with not more than 

8 one physician from any particular field; 

9 (3) 2 shall represent patients; 

10 (4) 2 shall be staff involved in EMTALA inves11 tigations from different regional offices of the Centers 

12 for Medicare & Medicaid Services; and 

13 (5) 1 shall be from a State survey office involved 

14 in EMTALA investigations and 1 shall be from a 

15 peer review organization, both of whom shall be from 

16 areas other than the regions represented under para17 graph (4). 

18 In selecting members described in paragraphs (1) through 

19 (3), the Secretary shall consider qualified individuals nomi20 nated by organizations representing providers and patients. 

21 (c) GENERAL RESPONSIBILITIES.—The Advisory 

22 Group—

23 (1) shall review EMTALA regulations; 
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1 (2) may provide advice and recommendations to 

2 the Secretary with respect to those regulations and 

3 their application to hospitals and physicians; 

4 (3) shall solicit comments and recommendations 

5 from hospitals, physicians, and the public regarding 

6 the implementation of such regulations; and 

7 (4) may disseminate information on the applica8 tion of such regulations to hospitals, physicians, and 

9 the public. 

10 (d) ADMINISTRATIVE MATTERS.—

11 (1) CHAIRPERSON.—The members of the Advi12 sory Group shall elect a member to serve as chair13 person of the Advisory Group for the life of the Advi14 sory Group. 

15 (2) MEETINGS.—The Advisory Group shall first 

16 meet at the direction of the Secretary. The Advisory 

17 Group shall then meet twice per year and at such 

18 other times as the Advisory Group may provide. 

19 (e) TERMINATION.—The Advisory Group shall termi20 nate 30 months after the date of its first meeting. 

21 (f) WAIVER OF ADMINISTRATIVE LIMITATION.—The 

22 Secretary shall establish the Advisory Group notwith23 standing any limitation that may apply to the number of 

24 advisory committees that may be established (within the 

25 Department of Health and Human Services or otherwise). 
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1 SEC. 506. AUTHORIZING USE OF ARRANGEMENTS TO PRO2 VIDE CORE HOSPICE SERVICES IN CERTAIN 

3 CIRCUMSTANCES. 

4 (a) IN GENERAL.—Section 1861(dd)(5) (42 U.S.C. 

5 1395x(dd)(5)) is amended by adding at the end the fol6 lowing: 

7 ‘‘(D) In extraordinary, exigent, or other non-routine 

8 circumstances, such as unanticipated periods of high pa9 tient loads, staffing shortages due to illness or other events, 

10 or temporary travel of a patient outside a hospice pro11 gram’s service area, a hospice program may enter into ar12 rangements with another hospice program for the provision 

13 by that other program of services described in paragraph 

14 (2)(A)(ii)(I). The provisions of paragraph (2)(A)(ii)(II) 

15 shall apply with respect to the services provided under such 

16 arrangements. 

17 ‘‘(E) A hospice program may provide services de18 scribed in paragraph (1)(A) other than directly by the pro19 gram if the services are highly specialized services of a reg20 istered professional nurse and are provided non-routinely 

21 and so infrequently so that the provision of such services 

22 directly would be impracticable and prohibitively expen23 sive.’’. 

24 (b) CONFORMING PAYMENT PROVISION.—Section 

25 1814(i) (42 U.S.C. 1395f(i)) is amended by adding at the 

26 end the following new paragraph:
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1 ‘‘(4) In the case of hospice care provided by a hospice 

2 program under arrangements under section 1861(dd)(5)(D) 

3 made by another hospice program, the hospice program that 

4 made the arrangements shall bill and be paid for the hospice 

5 care.’’. 

6 (c) EFFECTIVE DATE.—The amendments made by this 

7 section shall apply to hospice care provided on or after the 

8 date of the enactment of this Act. 

9 SEC. 507. APPLICATION OF OSHA BLOODBORNE PATHO10 GENS STANDARD TO CERTAIN HOSPITALS. 

11 (a) IN GENERAL.—Section 1866 (42 U.S.C. 1395cc) 

12 is amended—

13 (1) in subsection (a)(1)—

14 (A) in subparagraph (R), by striking ‘‘and’’ 

15 at the end; 

16 (B) in subparagraph (S), by striking the 

17 period at the end and inserting ‘‘, and’’; and 

18 (C) by inserting after subparagraph (S) the 

19 following new subparagraph: 

20 ‘‘(T) in the case of hospitals that are not other21 wise subject to the Occupational Safety and Health 

22 Act of 1970 or a State occupational safety and health 

23 plan that is approved under section 18(b) of such Act, 

24 to comply with the Bloodborne Pathogens standard 

25 under section 1910.1030 of title 29 of the Code of Fed-
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1 eral Regulations (or as subsequently redesignated).’’; 

2 and 

3 (2) by adding at the end of subsection (b) the fol4 lowing new paragraph: 

5 ‘‘(4)(A) A hospital that fails to comply with the re6 quirement of subsection (a)(1)(T) (relating to the 

7 Bloodborne Pathogens standard) is subject to a civil money 

8 penalty in an amount described in subparagraph (B), but 

9 is not subject to termination of an agreement under this 

10 section. 

11 ‘‘(B) The amount referred to in subparagraph (A) is 

12 an amount that is similar to the amount of civil penalties 

13 that may be imposed under section 17 of the Occupational 

14 Safety and Health Act of 1970 for a violation of the 

15 Bloodborne Pathogens standard referred to in subsection 

16 (a)(1)(T) by a hospital that is subject to the provisions of 

17 such Act. 

18 ‘‘(C) A civil money penalty under this paragraph shall 

19 be imposed and collected in the same manner as civil money 

20 penalties under subsection (a) of section 1128A are imposed 

21 and collected under that section.’’. 

22 (b) EFFECTIVE DATE.—The amendments made by this 

23 subsection (a) shall apply to hospitals as of July 1, 2004. 
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1 SEC. 508. BIPA-RELATED TECHNICAL AMENDMENTS AND 

2 CORRECTIONS. 

3 (a) TECHNICAL AMENDMENTS RELATING TO ADVISORY

4 COMMITTEE UNDER BIPA SECTION 522.—(1) Subsection 

5 (i) of section 1114 (42 U.S.C. 1314)—

6 (A) is transferred to section 1862 and added at 

7 the end of such section; and 

8 (B) is redesignated as subsection (j). 

9 (2) Section 1862 (42 U.S.C. 1395y) is amended—

10 (A) in the last sentence of subsection (a), by 

11 striking ‘‘established under section 1114(f)’’; and 

12 (B) in subsection (j), as so transferred and redes13 ignated—

14 (i) by striking ‘‘under subsection (f)’’; and 

15 (ii) by striking ‘‘section 1862(a)(1)’’ and 

16 inserting ‘‘subsection (a)(1)’’. 

17 (b) TERMINOLOGY CORRECTIONS.—(1) Section 

18 1869(c)(3)(I)(ii) (42 U.S.C. 1395ff(c)(3)(I)(ii)), as amend19 ed by section 521 of BIPA, is amended—

20 (A) in subclause (III), by striking ‘‘policy’’ and 

21 inserting ‘‘determination’’; and 

22 (B) in subclause (IV), by striking ‘‘medical re23 view policies’’ and inserting ‘‘coverage determina24 tions’’. 

25 (2) Section 1852(a)(2)(C) (42 U.S.C. 1395w–

26 22(a)(2)(C)) is amended by striking ‘‘policy’’ and ‘‘POLICY’’ 
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1 and inserting ‘‘determination’’ each place it appears and 

2 ‘‘DETERMINATION’’, respectively. 

3 (c) REFERENCE CORRECTIONS.—Section 1869(f)(4) 

4 (42 U.S.C. 1395ff(f)(4)), as added by section 522 of BIPA, 

5 is amended—

6 (1) in subparagraph (A)(iv), by striking ‘‘sub7 clause (I), (II), or (III)’’ and inserting ‘‘clause (i), 

8 (ii), or (iii)’’; 

9 (2) in subparagraph (B), by striking ‘‘clause 

10 (i)(IV)’’ and ‘‘clause (i)(III)’’ and inserting ‘‘sub11 paragraph (A)(iv)’’ and ‘‘subparagraph (A)(iii)’’, re12 spectively; and 

13 (3) in subparagraph (C), by striking ‘‘clause 

14 (i)’’, ‘‘subclause (IV)’’ and ‘‘subparagraph (A)’’ and 

15 inserting ‘‘subparagraph (A)’’, ‘‘clause (iv)’’ and 

16 ‘‘paragraph (1)(A)’’, respectively each place it ap17 pears. 

18 (d) OTHER CORRECTIONS.—Effective as if included in 

19 the enactment of section 521(c) of BIPA, section 1154(e) 

20 (42 U.S.C. 1320c–3(e)) is amended by striking paragraph 

21 (5). 

22 (e) EFFECTIVE DATE.—Except as otherwise provided, 

23 the amendments made by this section shall be effective as 

24 if included in the enactment of BIPA. 
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1 SEC. 509. CONFORMING AUTHORITY TO WAIVE A PROGRAM 

2 EXCLUSION. 

3 The first sentence of section 1128(c)(3)(B) (42 U.S.C. 

4 1320a–7(c)(3)(B)) is amended to read as follows: ‘‘Subject 

5 to subparagraph (G), in the case of an exclusion under sub6 section (a), the minimum period of exclusion shall be not 

7 less than five years, except that, upon the request of the ad8 ministrator of a Federal health care program (as defined 

9 in section 1128B(f)) who determines that the exclusion 

10 would impose a hardship on individuals entitled to benefits 

11 under part A of title XVIII or enrolled under part B of 

12 such title, or both, the Secretary may waive the exclusion 

13 under subsection (a)(1), (a)(3), or (a)(4) with respect to 

14 that program in the case of an individual or entity that 

15 is the sole community physician or sole source of essential 

16 specialized services in a community.’’. 

17 SEC. 510. TREATMENT OF CERTAIN DENTAL CLAIMS. 

18 (a) IN GENERAL.—Section 1862 (42 U.S.C. 1395y), as 

19 amended by section 508(a)(1), is amended by adding at the 

20 end the following new subsection: 

21 ‘‘(k)(1) Subject to paragraph (2), a group health plan 

22 (as defined in subsection (a)(1)(A)(v)) providing supple23 mental or secondary coverage to individuals also entitled 

24 to services under this title shall not require a medicare 

25 claims determination under this title for dental benefits spe26 cifically excluded under subsection (a)(12) as a condition
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1 of making a claims determination for such benefits under 

2 the group health plan. 

3 ‘‘(2) A group health plan may require a claims deter4 mination under this title in cases involving or appearing 

5 to involve inpatient dental hospital services or dental serv6 ices expressly covered under this title pursuant to actions 

7 taken by the Secretary.’’. 

8 (b) EFFECTIVE DATE.—The amendment made by sub9 section (a) shall take effect on the date that is 60 days after 

10 the date of the enactment of this Act. 

11 SEC. 511. FURNISHING HOSPITALS WITH INFORMATION TO 

12 COMPUTE DSH FORMULA. 

13 Beginning not later than 1 year after the date of the 

14 enactment of this Act, the Secretary shall furnish to sub15 section (d) hospitals (as defined in section 1886(d)(1)(B) 

16 of the Social Security Act, 42 U.S.C. 1395ww(d)(1)(B)) the 

17 data necessary for such hospitals to compute the number 

18 of patient days described in subclause (II) of section 

19 1886(d)(5)(F)(vi) of the Social Security Act (42 U.S.C. 

20 1395ww(d)(5)(F)(vi)) used in computing the dispropor21 tionate patient percentage under such section for that hos22 pital. Such data shall also be furnished to other hospitals 

23 which would qualify for additional payments under part 

24 A of title XVIII of the Social Security Act on the basis of 

25 such data. 
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1 SEC. 512. REVISIONS TO REASSIGNMENT PROVISIONS. 

2 (a) IN GENERAL.—Section 1842(b)(6)(A)(ii) (42 

3 U.S.C. 1395u(b)(6)(A)(ii)) is amended to read as follows: 

4 ‘‘(ii) where the service was provided under a contractual 

5 arrangement between such physician or other person and 

6 a qualified entity (as defined by the Secretary) or other per7 son, to the entity or other person if under such arrangement 

8 such entity or individual submits the bill for such service 

9 and such arrangement (I) includes joint and several liabil10 ity for overpayment by such physician or other person and 

11 such entity or other person, and (II) meets such other pro12 gram integrity and other safeguards as the Secretary may 

13 determine to be appropriate,’’. 

14 (b) CONFORMING AMENDMENT.—The second sentence 

15 of section 1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended 

16 by striking ‘‘except to an employer or facility as described 

17 in clause (A)’’ and inserting ‘‘except to an employer, entity, 

18 or other person as described in subparagraph (A)’’. 

19 (c) EFFECTIVE DATE.—The amendments made by this 

20 section shall apply to payments made on or after one year 

21 after the date of the enactment of this Act. 

22 SEC. 513. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPE23 CIAL NEEDS BENEFICIARIES. 

24 (a) TREATMENT AS COORDINATED CARE PLAN.—Sec25 tion 1851(a)(2)(A) (42 U.S.C. 1395w–21(a)(2)(A)) is 

26 amended by adding at the end the following new sentence: 
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1 ‘‘Specialized Medicare+Choice plans for special needs bene2 ficiaries (as defined in section 1859(b)(4)) may be any type 

3 of coordinated care plan.’’. 

4 (b) SPECIALIZED MEDICARE+CHOICE PLAN FOR SPE5 CIAL NEEDS BENEFICIARIES DEFINED.—Section 1859(b) 

6 (42 U.S.C. 1395w–29(b)) is amended by adding at the end 

7 the following new paragraph: 

8 ‘‘(4) SPECIALIZED MEDICARE+CHOICE PLANS

9 FOR SPECIAL NEEDS BENEFICIARIES.—

10 ‘‘(A) IN GENERAL.—The term ‘specialized 

11 Medicare+Choice plan for special needs bene12 ficiaries’ means a Medicare+Choice plan that 

13 exclusively serves special needs beneficiaries (as 

14 defined in subparagraph (B)). 

15 ‘‘(B) SPECIAL NEEDS BENEFICIARY.—The 

16 term ‘special needs beneficiary’ means a 

17 Medicare+Choice eligible individual who—

18 ‘‘(i) is institutionalized (as defined by 

19 the Secretary); 

20 ‘‘(ii) is entitled to medical assistance 

21 under a State plan under title XIX; or 

22 ‘‘(iii) meets such requirements as the 

23 Secretary may determine would benefit 

24 from enrollment in such a specialized 

25 Medicare+Choice plan described in sub-
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1 paragraph (A) for individuals with severe 

2 or disabling chronic conditions.’’. 

3 (c) RESTRICTION ON ENROLLMENT PERMITTED.—Sec4 tion 1859 (42 U.S.C. 1395w–29) is amended by adding at 

5 the end the following new subsection: 

6 ‘‘(f) RESTRICTION ON ENROLLMENT FOR SPECIALIZED

7 MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS BENE8 FICIARIES.—In the case of a specialized Medicare+Choice 

9 plan (as defined in subsection (b)(4)), notwithstanding any 

10 other provision of this part and in accordance with regula11 tions of the Secretary and for periods before January 1, 

12 2008, the plan may restrict the enrollment of individuals 

13 under the plan to individuals who are within one or more 

14 classes of special needs beneficiaries.’’. 

15 (d) REPORT TO CONGRESS.—Not later than December 

16 31, 2006, the Secretary shall submit to Congress a report 

17 that assesses the impact of specialized Medicare+Choice 

18 plans for special needs beneficiaries on the cost and quality 

19 of services provided to enrollees. Such report shall include 

20 an assessment of the costs and savings to the medicare pro21 gram as a result of amendments made by subsections (a), 

22 (b), and (c). 

23 (e) EFFECTIVE DATES.—
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1 (1) IN GENERAL.—The amendments made by 

2 subsections (a), (b), and (c) shall take effect upon the 

3 date of the enactment of this Act. 

4 (2) DEADLINE FOR ISSUANCE OF REQUIREMENTS

5 FOR SPECIAL NEEDS BENEFICIARIES; TRANSITION.—

6 No later than 6 months after the date of the enact7 ment of this Act, the Secretary shall issue final regu8 lations to establish requirements for special needs 

9 beneficiaries under section 1859(b)(4)(B)(iii) of the 

10 Social Security Act, as added by subsection (b). 

11 SEC. 514. TEMPORARY SUSPENSION OF OASIS REQUIRE12 MENT FOR COLLECTION OF DATA ON NON13 MEDICARE AND NON-MEDICAID PATIENTS. 

14 (a) IN GENERAL.—During the period described in sub15 section (b), the Secretary may not require, under section 

16 4602(e) of the Balanced Budget Act of 1997 or otherwise 

17 under OASIS, a home health agency to gather or submit 

18 information that relates to an individual who is not eligible 

19 for benefits under either title XVIII or title XIX of the So20 cial Security Act (such information in this section referred 

21 to as ‘‘non-medicare/medicaid OASIS information’’). 

22 (b) PERIOD OF SUSPENSION.—The period described in 

23 this subsection—

24 (1) begins on the date of the enactment of this 

25 Act; and
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1 (2) ends on the last day of the 2nd month begin2 ning after the date as of which the Secretary has pub3 lished final regulations regarding the collection and 

4 use by the Centers for Medicare & Medicaid Services 

5 of non-medicare/medicaid OASIS information fol6 lowing the submission of the report required under 

7 subsection (c). 

8 (c) REPORT.—

9 (1) STUDY.—The Secretary shall conduct a study 

10 on how non-medicare/medicaid OASIS information is 

11 and can be used by large home health agencies. Such 

12 study shall examine—

13 (A) whether there are unique benefits from 

14 the analysis of such information that cannot be 

15 derived from other information available to, or 

16 collected by, such agencies; and 

17 (B) the value of collecting such information 

18 by small home health agencies compared to the 

19 administrative burden related to such collection. 

20 In conducting the study the Secretary shall obtain 

21 recommendations from quality assessment experts in 

22 the use of such information and the necessity of small, 

23 as well as large, home health agencies collecting such 

24 information. 
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1 (2) REPORT.—The Secretary shall submit to 

2 Congress a report on the study conducted under para3 graph (1) by not later than 18 months after the date 

4 of the enactment of this Act. 

5 (d) CONSTRUCTION.—Nothing in this section shall be 

6 construed as preventing home health agencies from col7 lecting non-medicare/medicaid OASIS information for 

8 their own use. 

9 SEC. 515. MISCELLANEOUS REPORTS, STUDIES, AND PUBLI10 CATION REQUIREMENTS. 

11 (a) GAO REPORTS ON THE PHYSICIAN COMPENSA12 TION.—

13 (1) SUSTAINABLE GROWTH RATE AND UP14 DATES.—Not later than 6 months after the date of the 

15 enactment of this Act, the Comptroller General of the 

16 United States shall submit to Congress a report on 

17 the appropriateness of the updates in the conversion 

18 factor under subsection (d)(3) of section 1848 of the 

19 Social Security Act (42 U.S.C. 1395w–4), including 

20 the appropriateness of the sustainable growth rate for21 mula under subsection (f) of such section for 2002 

22 and succeeding years. Such report shall examine the 

23 stability and predictability of such updates and rate 

24 and alternatives for the use of such rate in the up25 dates. 
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1 (2) PHYSICIAN COMPENSATION GENERALLY.—Not 

2 later than 12 months after the date of the enactment 

3 of this Act, the Comptroller General shall submit to 

4 Congress a report on all aspects of physician com5 pensation for services furnished under title XVIII of 

6 the Social Security Act, and how those aspects inter7 act and the effect on appropriate compensation for 

8 physician services. Such report shall review alter9 natives for the physician fee schedule under section 

10 1848 of such title (42 U.S.C. 1395w–4). 

11 (b) ANNUAL PUBLICATION OF LIST OF NATIONAL COV12 ERAGE DETERMINATIONS.—The Secretary shall provide, in 

13 an appropriate annual publication available to the public, 

14 a list of national coverage determinations made under title 

15 XVIII of the Social Security Act in the previous year and 

16 information on how to get more information with respect 

17 to such determinations. 

18 (c) GAO REPORT ON FLEXIBILITY IN APPLYING HOME

19 HEALTH CONDITIONS OF PARTICIPATION TO PATIENTS

20 WHO ARE NOT MEDICARE BENEFICIARIES.—Not later than 

21 6 months after the date of the enactment of this Act, the 

22 Comptroller General of the United States shall submit to 

23 Congress a report on the implications if there were flexi24 bility in the application of the medicare conditions of par25 ticipation for home health agencies with respect to groups 
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1 or types of patients who are not medicare beneficiaries. The 

2 report shall include an analysis of the potential impact of 

3 such flexible application on clinical operations and the re4 cipients of such services and an analysis of methods for 

5 monitoring the quality of care provided to such recipients. 

6 (d) OIG REPORT ON NOTICES RELATING TO USE OF

7 HOSPITAL LIFETIME RESERVE DAYS.—Not later than 1 

8 year after the date of the enactment of this Act, the Inspec9 tor General of the Department of Health and Human Serv10 ices shall submit a report to Congress on—

11 (1) the extent to which hospitals provide notice 

12 to medicare beneficiaries in accordance with applica13 ble requirements before they use the 60 lifetime reserve 

14 days described in section 1812(a)(1) of the Social Se15 curity Act (42 U.S.C. 1395d(a)(1)); and 

16 (2) the appropriateness and feasibility of hos17 pitals providing a notice to such beneficiaries before 

18 they completely exhaust such lifetime reserve days.

19 SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU20 RITY ACT; TABLE OF CONTENTS. 

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

22 the ‘‘Medicare Regulatory and Contracting 

23 Reform Act of 2003’’. 

24 (b) AMENDMENTS TO SOCIAL SECURITY

25 ACT.—Except as otherwise specifically pro-
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1 vided, whenever in this Act an amendment is 

2 expressed in terms of an amendment to or re3 peal of a section or other provision, the ref4 erence shall be considered to be made to that 

5 section or other provision of the Social Secu6 rity Act. 

7 (c) TABLE OF CONTENTS.—The table of con8 tents of this Act is as follows:

Sec. 1. Short title; amendments to Social Security Act; table of 

contents. 

Sec. 2. Findings and construction. 

Sec. 3. Definitions. 

TITLE I—REGULATORY REFORM 

Sec. 101. Issuance of regulations. 

Sec. 102. Compliance with changes in regulations and policies. 

Sec. 103. Reports and studies relating to regulatory reform. 

TITLE II—CONTRACTING REFORM 

Sec. 201. Increased flexibility in medicare administration. 

Sec. 202. Requirements for information security for medicare 

administrative contractors. 

TITLE III—EDUCATION AND OUTREACH 

Sec. 301. Provider education and technical assistance. 

Sec. 302. Small provider technical assistance demonstration 

program. 

Sec. 303. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman. 

Sec. 304. Beneficiary outreach demonstration program. 

Sec. 305. Inclusion of additional information in notices to 

beneficiaries about skilled nursing facility benefits. 

Sec. 306. Information on medicare-certified skilled nursing facilities in hospital discharge plans. 

TITLE IV—APPEALS AND RECOVERY 

Sec. 401. Transfer of responsibility for medicare appeals. 

Sec. 402. Process for expedited access to review. 

Sec. 403. Revisions to medicare appeals process. 

Sec. 404. Prepayment review. 

Sec. 405. Recovery of overpayments. 

Sec. 406. Provider enrollment process; right of appeal.
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Sec. 407. Process for correction of minor errors and omissions 

on claims without pursuing appeals process. 

Sec. 408. Prior determination process for certain items and 

services; advance beneficiary notices. 

TITLE V—MISCELLANEOUS PROVISIONS 

Sec. 501. Policy development regarding evaluation and management (E & M) documentation guidelines. 

Sec. 502. Improvement in oversight of technology and coverage. 

Sec. 503. Treatment of hospitals for certain services under 

medicare secondary payor (MSP) provisions. 

Sec. 504. EMTALA improvements. 

Sec. 505. Emergency Medical Treatment and Active Labor Act 

(EMTALA) Technical Advisory Group. 

Sec. 506. Authorizing use of arrangements to provide core hospice services in certain circumstances. 

Sec. 507. Application of OSHA bloodborne pathogens standard 

to certain hospitals. 

Sec. 508. BIPA-related technical amendments and corrections. 

Sec. 509. Conforming authority to waive a program exclusion. 

Sec. 510. Treatment of certain dental claims. 

Sec. 511. Enhancement of program integrity efforts in medicare 

provider enrollment. 

Sec. 512. Other provisions.

1 SEC. 2. FINDINGS AND CONSTRUCTION. 

2 (a) FINDINGS.—Congress finds the fol3 lowing: 

4 (1) The overwhelming majority of 

5 providers of services and suppliers in the 

6 United States are law-abiding persons 

7 who provide important health care serv8 ices to patients each day. 

9 (2) The Secretary of Health and 

10 Human Services should work to stream11 line paperwork requirements under the 

12 medicare program and communicate 

13 clearer instructions to providers of serv-
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1 ices and suppliers so that they may spend 

2 more time caring for patients. 

3 (b) CONSTRUCTION.—Nothing in this Act 

4 shall be construed—

5 (1) to compromise or affect existing 

6 legal remedies for addressing fraud or 

7 abuse, whether it be criminal prosecu8 tion, civil enforcement, or administrative 

9 remedies, including under sections 3729 

10 through 3733 of title 31, United States 

11 Code (known as the False Claims Act); or 

12 (2) to prevent or impede the Depart13 ment of Health and Human Services in 

14 any way from its ongoing efforts to elimi15 nate waste, fraud, and abuse in the medi16 care program. 

17 Furthermore, the consolidation of medicare 

18 administrative contracting set forth in this 

19 Act does not constitute consolidation of the 

20 Federal Hospital Insurance Trust Fund and 

21 the Federal Supplementary Medical Insur22 ance Trust Fund or reflect any position on 

23 that issue. 
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1 SEC. 3. DEFINITIONS. 

2 (a) USE OF TERM SUPPLIER IN MEDICARE.—

3 Section 1861 (42 U.S.C. 1395x) is amended by 

4 inserting after subsection (c) the following 

5 new subsection: 

6 ‘‘Supplier 

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

8 context otherwise requires, a physician or 

9 other practitioner, a facility, or other entity 

10 (other than a provider of services) that fur11 nishes items or services under this title.’’. 

12 (b) OTHER TERMS USED IN ACT.—In this 

13 Act: 

14 (1) BIPA.—The term ‘‘BIPA’’ means 

15 the Medicare, Medicaid, and SCHIP Bene16 fits Improvement and Protection Act of 

17 2000, as enacted into law by section 

18 1(a)(6) of Public Law 106–554. 

19 (2) SECRETARY.—The term ‘‘Secretary’’ 

20 means the Secretary of Health and 

21 Human Services. 

22 TITLE I—REGULATORY REFORM 

23 SEC. 101. ISSUANCE OF REGULATIONS. 

24 (a) REGULAR TIMELINE FOR PUBLICATION OF

25 FINAL RULES.—
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1 (1) IN GENERAL.—Section 1871(a) (42 

2 U.S.C. 1395hh(a)) is amended by adding 

3 at the end the following new paragraph: 

4 ‘‘(3)(A) The Secretary, in consultation with 

5 the Director of the Office of Management and 

6 Budget, shall establish and publish a regular 

7 timeline for the publication of final regula8 tions based on the previous publication of a 

9 proposed regulation or an interim final regu10 lation. 

11 ‘‘(B) Such timeline may vary among dif12 ferent regulations based on differences in the 

13 complexity of the regulation, the number and 

14 scope of comments received, and other rel15 evant factors, but shall not be longer than 3 

16 years except under exceptional cir17 cumstances. If the Secretary intends to vary 

18 such timeline with respect to the publication 

19 of a final regulation, the Secretary shall cause 

20 to have published in the Federal Register no21 tice of the different timeline by not later than 

22 the timeline previously established with re23 spect to such regulation. Such notice shall in24 clude a brief explanation of the justification 

25 for such variation. 
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1 ‘‘(C) In the case of interim final regula2 tions, upon the expiration of the regular 

3 timeline established under this paragraph for 

4 the publication of a final regulation after op5 portunity for public comment, the interim 

6 final regulation shall not continue in effect 

7 unless the Secretary publishes (at the end of 

8 the regular timeline and, if applicable, at the 

9 end of each succeeding 1-year period) a notice 

10 of continuation of the regulation that in11 cludes an explanation of why the regular 

12 timeline (and any subsequent 1-year exten13 sion) was not complied with. If such a notice 

14 is published, the regular timeline (or such 

15 timeline as previously extended under this 

16 paragraph) for publication of the final regula17 tion shall be treated as having been extended 

18 for 1 additional year. 

19 ‘‘(D) The Secretary shall annually submit 

20 to Congress a report that describes the in21 stances in which the Secretary failed to pub22 lish a final regulation within the applicable 

23 regular timeline under this paragraph and 

24 that provides an explanation for such fail25 ures.’’.
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1 (2) EFFECTIVE DATE.—The amendment 

2 made by paragraph (1) shall take effect 

3 on the date of the enactment of this Act. 

4 The Secretary shall provide for an appro5 priate transition to take into account the 

6 backlog of previously published interim 

7 final regulations. 

8 (b) LIMITATIONS ON NEW MATTER IN FINAL

9 REGULATIONS.—

10 (1) IN GENERAL.—Section 1871(a) (42 

11 U.S.C. 1395hh(a)), as amended by sub12 section (a), is amended by adding at the 

13 end the following new paragraph: 

14 ‘‘(4) If the Secretary publishes a final reg15 ulation that includes a provision that is not 

16 a logical outgrowth of a previously published 

17 notice of proposed rulemaking or interim 

18 final rule, such provision shall be treated as 

19 a proposed regulation and shall not take ef20 fect until there is the further opportunity for 

21 public comment and a publication of the pro22 vision again as a final regulation.’’. 

23 (2) EFFECTIVE DATE.—The amendment 

24 made by paragraph (1) shall apply to 
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1 final regulations published on or after 

2 the date of the enactment of this Act. 

3 SEC. 102. COMPLIANCE WITH CHANGES IN REGULATIONS 

4 AND POLICIES. 

5 (a) NO RETROACTIVE APPLICATION OF SUB6 STANTIVE CHANGES.—

7 (1) IN GENERAL.—Section 1871 (42 

8 U.S.C. 1395hh), as amended by section 

9 101(a), is amended by adding at the end 

10 the following new subsection: 

11 ‘‘(d)(1)(A) A substantive change in regula12 tions, manual instructions, interpretative 

13 rules, statements of policy, or guidelines of 

14 general applicability under this title shall not 

15 be applied (by extrapolation or otherwise) 

16 retroactively to items and services furnished 

17 before the effective date of the change, unless 

18 the Secretary determines that—

19 ‘‘(i) such retroactive application is 

20 necessary to comply with statutory re21 quirements; or 

22 ‘‘(ii) failure to apply the change retro23 actively would be contrary to the public 

24 interest.’’. 
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1 (2) EFFECTIVE DATE.—The amendment 

2 made by paragraph (1) shall apply to sub3 stantive changes issued on or after the 

4 date of the enactment of this Act. 

5 (b) TIMELINE FOR COMPLIANCE WITH SUB6 STANTIVE CHANGES AFTER NOTICE.—

7 (1) IN GENERAL.—Section 1871(d)(1), as 

8 added by subsection (a), is amended by 

9 adding at the end the following: 

10 ‘‘(B)(i) Except as provided in clause (ii), a 

11 substantive change referred to in subpara12 graph (A) shall not become effective before 

13 the end of the 30-day period that begins on 

14 the date that the Secretary has issued or pub15 lished, as the case may be, the substantive 

16 change. 

17 ‘‘(ii) The Secretary may provide for such 

18 a substantive change to take effect on a date 

19 that precedes the end of the 30-day period 

20 under clause (i) if the Secretary finds that 

21 waiver of such 30-day period is necessary to 

22 comply with statutory requirements or that 

23 the application of such 30-day period is con24 trary to the public interest. If the Secretary 

25 provides for an earlier effective date pursu-
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1 ant to this clause, the Secretary shall include 

2 in the issuance or publication of the sub3 stantive change a finding described in the 

4 first sentence, and a brief statement of the 

5 reasons for such finding. 

6 ‘‘(C) No action shall be taken against a 

7 provider of services or supplier with respect 

8 to noncompliance with such a substantive 

9 change for items and services furnished be10 fore the effective date of such a change.’’. 

11 (2) EFFECTIVE DATE.—The amendment 

12 made by paragraph (1) shall apply to 

13 compliance actions undertaken on or 

14 after the date of the enactment of this 

15 Act. 

16 (c) RELIANCE ON GUIDANCE.—

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

18 added by subsection (a), is further 

19 amended by adding at the end the fol20 lowing new paragraph: 

21 ‘‘(2)(A) If—

22 ‘‘(i) a provider of services or supplier 

23 follows the written guidance (which may 

24 be transmitted electronically) provided 

25 by the Secretary or by a medicare con-
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1 tractor (as defined in section 1889(g)) act2 ing within the scope of the contractor’s 

3 contract authority, with respect to the 

4 furnishing of items or services and sub5 mission of a claim for benefits for such 

6 items or services with respect to such 

7 provider or supplier; 

8 ‘‘(ii) the Secretary determines that 

9 the provider of services or supplier has 

10 accurately presented the circumstances 

11 relating to such items, services, and claim 

12 to the contractor in writing; and 

13 ‘‘(iii) the guidance was in error; 

14 the provider of services or supplier shall not 

15 be subject to any sanction (including any pen16 alty or requirement for repayment of any 

17 amount) if the provider of services or supplier 

18 reasonably relied on such guidance. 

19 ‘‘(B) Subparagraph (A) shall not be con20 strued as preventing the recoupment or re21 payment (without any additional penalty) re22 lating to an overpayment insofar as the over23 payment was solely the result of a clerical or 

24 technical operational error.’’.
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1 (2) EFFECTIVE DATE.—The amendment 

2 made by paragraph (1) shall take effect 

3 on the date of the enactment of this Act 

4 but shall not apply to any sanction for 

5 which notice was provided on or before 

6 the date of the enactment of this Act. 

7 SEC. 103. REPORTS AND STUDIES RELATING TO REGU8 LATORY REFORM. 

9 (a) GAO STUDY ON ADVISORY OPINION AU10 THORITY.—

11 (1) STUDY.—The Comptroller General 

12 of the United States shall conduct a study 

13 to determine the feasibility and appro14 priateness of establishing in the Sec15 retary authority to provide legally bind16 ing advisory opinions on appropriate in17 terpretation and application of regula18 tions to carry out the medicare program 

19 under title XVIII of the Social Security 

20 Act. Such study shall examine the appro21 priate timeframe for issuing such advi22 sory opinions, as well as the need for ad23 ditional staff and funding to provide such 

24 opinions. 
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1 (2) REPORT.—The Comptroller Gen2 eral shall submit to Congress a report on 

3 the study conducted under paragraph (1) 

4 by not later than one year after the date 

5 of the enactment of this Act. 

6 (b) REPORT ON LEGAL AND REGULATORY IN7 CONSISTENCIES.—Section 1871 (42 U.S.C. 

8 1395hh), as amended by section 2(a), is 

9 amended by adding at the end the following 

10 new subsection: 

11 ‘‘(e)(1) Not later than 2 years after the 

12 date of the enactment of this subsection, and 

13 every 2 years thereafter, the Secretary shall 

14 submit to Congress a report with respect to 

15 the administration of this title and areas of in16 consistency or conflict among the various pro17 visions under law and regulation. 

18 ‘‘(2) In preparing a report under para19 graph (1), the Secretary shall collect—

20 ‘‘(A) information from individuals en21 titled to benefits under part A or enrolled 

22 under part B, or both, providers of serv23 ices, and suppliers and from the Medi24 care Beneficiary Ombudsman and the 

25 Medicare Provider Ombudsman with re-
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1 spect to such areas of inconsistency and 

2 conflict; and 

3 ‘‘(B) information from medicare con4 tractors that tracks the nature of written 

5 and telephone inquiries. 

6 ‘‘(3) A report under paragraph (1) shall in7 clude a description of efforts by the Secretary 

8 to reduce such inconsistency or conflicts, and 

9 recommendations for legislation or adminis10 trative action that the Secretary determines 

11 appropriate to further reduce such inconsist12 ency or conflicts.’’. 

13 TITLE II—CONTRACTING 

14 REFORM 

15 SEC. 201. INCREASED FLEXIBILITY IN MEDICARE ADMINIS16 TRATION. 

17 (a) CONSOLIDATION AND FLEXIBILITY IN

18 MEDICARE ADMINISTRATION.—

19 (1) IN GENERAL.—Title XVIII is amend20 ed by inserting after section 1874 the fol21 lowing new section: 

22 ‘‘CONTRACTS WITH MEDICARE ADMINISTRATIVE

23 CONTRACTORS

24 ‘‘SEC. 1874A. (a) AUTHORITY.—

25 ‘‘(1) AUTHORITY TO ENTER INTO CON26 TRACTS.—The Secretary may enter into 
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1 contracts with any eligible entity to serve 

2 as a medicare administrative contractor 

3 with respect to the performance of any or 

4 all of the functions described in para5 graph (4) or parts of those functions (or, 

6 to the extent provided in a contract, to 

7 secure performance thereof by other enti8 ties). 

9 ‘‘(2) ELIGIBILITY OF ENTITIES.—An enti10 ty is eligible to enter into a contract with 

11 respect to the performance of a par12 ticular function described in paragraph 

13 (4) only if—

14 ‘‘(A) the entity has demonstrated 

15 capability to carry out such function; 

16 ‘‘(B) the entity complies with such 

17 conflict of interest standards as are 

18 generally applicable to Federal acqui19 sition and procurement; 

20 ‘‘(C) the entity has sufficient as21 sets to financially support the per22 formance of such function; and 

23 ‘‘(D) the entity meets such other 

24 requirements as the Secretary may 

25 impose. 
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1 ‘‘(3) MEDICARE ADMINISTRATIVE CON2 TRACTOR DEFINED.—For purposes of this 

3 title and title XI—

4 ‘‘(A) IN GENERAL.—The term ‘medi5 care administrative contractor’ 

6 means an agency, organization, or 

7 other person with a contract under 

8 this section. 

9 ‘‘(B) APPROPRIATE MEDICARE AD10 MINISTRATIVE CONTRACTOR.—With re11 spect to the performance of a par12 ticular function in relation to an indi13 vidual entitled to benefits under part 

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

15 specific provider of services or sup16 plier (or class of such providers of 

17 services or suppliers), the ‘appro18 priate’ medicare administrative con19 tractor is the medicare administra20 tive contractor that has a contract 

21 under this section with respect to the 

22 performance of that function in rela23 tion to that individual, provider of 

24 services or supplier or class of pro25 vider of services or supplier.
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1 ‘‘(4) FUNCTIONS DESCRIBED.—The func2 tions referred to in paragraphs (1) and (2) 

3 are payment functions, provider services 

4 functions, and functions relating to serv5 ices furnished to individuals entitled to 

6 benefits under part A or enrolled under 

7 part B, or both, as follows: 

8 ‘‘(A) DETERMINATION OF PAYMENT

9 AMOUNTS.—Determining (subject to 

10 the provisions of section 1878 and to 

11 such review by the Secretary as may 

12 be provided for by the contracts) the 

13 amount of the payments required 

14 pursuant to this title to be made to 

15 providers of services, suppliers and 

16 individuals. 

17 ‘‘(B) MAKING PAYMENTS.—Making 

18 payments described in subparagraph 

19 (A) (including receipt, disbursement, 

20 and accounting for funds in making 

21 such payments). 

22 ‘‘(C) BENEFICIARY EDUCATION AND

23 ASSISTANCE.—Providing education and 

24 outreach to individuals entitled to 

25 benefits under part A or enrolled 
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1 under part B, or both, and providing 

2 assistance to those individuals with 

3 specific issues, concerns or problems. 

4 ‘‘(D) PROVIDER CONSULTATIVE SERV5 ICES.—Providing consultative services 

6 to institutions, agencies, and other 

7 persons to enable them to establish 

8 and maintain fiscal records necessary 

9 for purposes of this title and other10 wise to qualify as providers of serv11 ices or suppliers. 

12 ‘‘(E) COMMUNICATION WITH PRO13 VIDERS.—Communicating to providers 

14 of services and suppliers any infor15 mation or instructions furnished to 

16 the medicare administrative con17 tractor by the Secretary, and facili18 tating communication between such 

19 providers and suppliers and the Sec20 retary. 

21 ‘‘(F) PROVIDER EDUCATION AND

22 TECHNICAL ASSISTANCE.—Performing 

23 the functions relating to provider 

24 education, training, and technical as25 sistance. 
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1 ‘‘(G) ADDITIONAL FUNCTIONS.—Per2 forming such other functions as are 

3 necessary to carry out the purposes 

4 of this title. 

5 ‘‘(5) RELATIONSHIP TO MIP CON6 TRACTS.—

7 ‘‘(A) NONDUPLICATION OF DUTIES.—

8 In entering into contracts under this 

9 section, the Secretary shall assure 

10 that functions of medicare adminis11 trative contractors in carrying out ac12 tivities under parts A and B do not 

13 duplicate activities carried out under 

14 the Medicare Integrity Program 

15 under section 1893. The previous sen16 tence shall not apply with respect to 

17 the activity described in section 

18 1893(b)(5) (relating to prior author19 ization of certain items of durable 

20 medical equipment under section 

21 1834(a)(15)). 

22 ‘‘(B) CONSTRUCTION.—An entity 

23 shall not be treated as a medicare ad24 ministrative contractor merely by 

25 reason of having entered into a con-
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1 tract with the Secretary under sec2 tion 1893. 

3 ‘‘(6) APPLICATION OF FEDERAL ACQUISI4 TION REGULATION.—Except to the extent 

5 inconsistent with a specific requirement 

6 of this title, the Federal Acquisition Reg7 ulation applies to contracts under this 

8 title. 

9 ‘‘(b) CONTRACTING REQUIREMENTS.—

10 ‘‘(1) USE OF COMPETITIVE PROCE11 DURES.—

12 ‘‘(A) IN GENERAL.—Except as pro13 vided in laws with general applica14 bility to Federal acquisition and pro15 curement or in subparagraph (B), the 

16 Secretary shall use competitive pro17 cedures when entering into contracts 

18 with medicare administrative con19 tractors under this section, taking 

20 into account performance quality as 

21 well as price and other factors. 

22 ‘‘(B) RENEWAL OF CONTRACTS.—The 

23 Secretary may renew a contract with 

24 a medicare administrative contractor 

25 under this section from term to term 
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1 without regard to section 5 of title 41, 

2 United States Code, or any other pro3 vision of law requiring competition, if 

4 the medicare administrative con5 tractor has met or exceeded the per6 formance requirements applicable 

7 with respect to the contract and con8 tractor, except that the Secretary 

9 shall provide for the application of 

10 competitive procedures under such a 

11 contract not less frequently than once 

12 every five years. 

13 ‘‘(C) TRANSFER OF FUNCTIONS.—The 

14 Secretary may transfer functions 

15 among medicare administrative con16 tractors consistent with the provi17 sions of this paragraph. The Sec18 retary shall ensure that performance 

19 quality is considered in such trans20 fers. The Secretary shall provide pub21 lic notice (whether in the Federal 

22 Register or otherwise) of any such 

23 transfer (including a description of 

24 the functions so transferred, a de25 scription of the providers of services
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1 and suppliers affected by such trans2 fer, and contact information for the 

3 contractors involved). 

4 ‘‘(D) INCENTIVES FOR QUALITY.—The 

5 Secretary shall provide incentives for 

6 medicare administrative contractors 

7 to provide quality service and to pro8 mote efficiency. 

9 ‘‘(2) COMPLIANCE WITH REQUIRE10 MENTS.—No contract under this section 

11 shall be entered into with any medicare 

12 administrative contractor unless the Sec13 retary finds that such medicare adminis14 trative contractor will perform its obliga15 tions under the contract efficiently and 

16 effectively and will meet such require17 ments as to financial responsibility, legal 

18 authority, quality of services provided, 

19 and other matters as the Secretary finds 

20 pertinent. 

21 ‘‘(3) PERFORMANCE REQUIREMENTS.—

22 ‘‘(A) DEVELOPMENT OF SPECIFIC

23 PERFORMANCE REQUIREMENTS.—In de24 veloping contract performance re25 quirements, the Secretary shall de-
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1 velop performance requirements ap2 plicable to functions described in 

3 subsection (a)(4). 

4 ‘‘(B) CONSULTATION.— In devel5 oping such requirements, the Sec6 retary may consult with providers of 

7 services and suppliers, organizations 

8 representing individuals entitled to 

9 benefits under part A or enrolled 

10 under part B, or both, and organiza11 tions and agencies performing func12 tions necessary to carry out the pur13 poses of this section with respect to 

14 such performance requirements. 

15 ‘‘(C) INCLUSION IN CONTRACTS.—All 

16 contractor performance requirements 

17 shall be set forth in the contract be18 tween the Secretary and the appro19 priate medicare administrative con20 tractor. Such performance require21 ments—

22 ‘‘(i) shall reflect the perform23 ance requirements developed 

24 under subparagraph (A), but may 
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1 include additional performance 

2 requirements; 

3 ‘‘(ii) shall be used for evalu4 ating contractor performance 

5 under the contract; and 

6 ‘‘(iii) shall be consistent with 

7 the written statement of work 

8 provided under the contract. 

9 ‘‘(4) INFORMATION REQUIREMENTS.—The 

10 Secretary shall not enter into a contract 

11 with a medicare administrative con12 tractor under this section unless the con13 tractor agrees—

14 ‘‘(A) to furnish to the Secretary 

15 such timely information and reports 

16 as the Secretary may find necessary 

17 in performing his functions under 

18 this title; and 

19 ‘‘(B) to maintain such records and 

20 afford such access thereto as the Sec21 retary finds necessary to assure the 

22 correctness and verification of the in23 formation and reports under subpara24 graph (A) and otherwise to carry out 

25 the purposes of this title. 
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1 ‘‘(5) SURETY BOND.—A contract with a 

2 medicare administrative contractor 

3 under this section may require the medi4 care administrative contractor, and any 

5 of its officers or employees certifying 

6 payments or disbursing funds pursuant 

7 to the contract, or otherwise partici8 pating in carrying out the contract, to 

9 give surety bond to the United States in 

10 such amount as the Secretary may deem 

11 appropriate. 

12 ‘‘(c) TERMS AND CONDITIONS.—

13 ‘‘(1) IN GENERAL.—A contract with any 

14 medicare administrative contractor 

15 under this section may contain such 

16 terms and conditions as the Secretary 

17 finds necessary or appropriate and may 

18 provide for advances of funds to the 

19 medicare administrative contractor for 

20 the making of payments by it under sub21 section (a)(4)(B). 

22 ‘‘(2) PROHIBITION ON MANDATES FOR

23 CERTAIN DATA COLLECTION.—The Secretary 

24 may not require, as a condition of enter25 ing into, or renewing, a contract under 
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1 this section, that the medicare adminis2 trative contractor match data obtained 

3 other than in its activities under this title 

4 with data used in the administration of 

5 this title for purposes of identifying situ6 ations in which the provisions of section 

7 1862(b) may apply. 

8 ‘‘(d) LIMITATION ON LIABILITY OF MEDICARE

9 ADMINISTRATIVE CONTRACTORS AND CERTAIN

10 OFFICERS.—

11 ‘‘(1) CERTIFYING OFFICER.—No indi12 vidual designated pursuant to a contract 

13 under this section as a certifying officer 

14 shall, in the absence of the reckless dis15 regard of the individual’s obligations or 

16 the intent by that individual to defraud 

17 the United States, be liable with respect 

18 to any payments certified by the indi19 vidual under this section. 

20 ‘‘(2) DISBURSING OFFICER.—No dis21 bursing officer shall, in the absence of 

22 the reckless disregard of the officer’s ob23 ligations or the intent by that officer to 

24 defraud the United States, be liable with 

25 respect to any payment by such officer
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1 under this section if it was based upon an 

2 authorization (which meets the applica3 ble requirements for such internal con4 trols established by the Comptroller Gen5 eral) of a certifying officer designated as 

6 provided in paragraph (1) of this sub7 section. 

8 ‘‘(3) LIABILITY OF MEDICARE ADMINIS9 TRATIVE CONTRACTOR.—

10 ‘‘(A) IN GENERAL.—No medicare ad11 ministrative contractor shall be liable 

12 to the United States for a payment by 

13 a certifying or disbursing officer un14 less, in connection with such pay15 ment, the medicare administrative 

16 contractor acted with reckless dis17 regard of its obligations under its 

18 medicare administrative contract or 

19 with intent to defraud the United 

20 States. 

21 ‘‘(B) RELATIONSHIP TO FALSE

22 CLAIMS ACT.—Nothing in this sub23 section shall be construed to limit li24 ability for conduct that would con25 stitute a violation of sections 3729 
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1 through 3731 of title 31, United States 

2 Code (commonly known as the ‘False 

3 Claims Act’). 

4 ‘‘(4) INDEMNIFICATION BY SECRETARY.—

5 ‘‘(A) IN GENERAL.—Subject to sub6 paragraphs (B) and (D), in the case of 

7 a medicare administrative contractor 

8 (or a person who is a director, officer, 

9 or employee of such a contractor or 

10 who is engaged by the contractor to 

11 participate directly in the claims ad12 ministration process) who is made a 

13 party to any judicial or administra14 tive proceeding arising from or relat15 ing directly to the claims administra16 tion process under this title, the Sec17 retary may, to the extent the Sec18 retary determines to be appropriate 

19 and as specified in the contract with 

20 the contractor, indemnify the con21 tractor and such persons. 

22 ‘‘(B) CONDITIONS.—The Secretary 

23 may not provide indemnification 

24 under subparagraph (A) insofar as 

25 the liability for such costs arises di-
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1 rectly from conduct that is deter2 mined by the judicial proceeding or 

3 by the Secretary to be criminal in na4 ture, fraudulent, or grossly negligent. 

5 If indemnification is provided by the 

6 Secretary with respect to a con7 tractor before a determination that 

8 such costs arose directly from such 

9 conduct, the contractor shall reim10 burse the Secretary for costs of in11 demnification. 

12 ‘‘(C) SCOPE OF INDEMNIFICATION.—

13 Indemnification by the Secretary 

14 under subparagraph (A) may include 

15 payment of judgments, settlements 

16 (subject to subparagraph (D)), 

17 awards, and costs (including reason18 able legal expenses). 

19 ‘‘(D) WRITTEN APPROVAL FOR SET20 TLEMENTS.—A contractor or other per21 son described in subparagraph (A) 

22 may not propose to negotiate a settle23 ment or compromise of a proceeding 

24 described in such subparagraph with25 out the prior written approval of the 
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1 Secretary to negotiate such settle2 ment or compromise. Any indem3 nification under subparagraph (A) 

4 with respect to amounts paid under a 

5 settlement or compromise of a pro6 ceeding described in such subpara7 graph are conditioned upon prior 

8 written approval by the Secretary of 

9 the final settlement or compromise. 

10 ‘‘(E) CONSTRUCTION.—Nothing in 

11 this paragraph shall be construed—

12 ‘‘(i) to change any common 

13 law immunity that may be avail14 able to a medicare administrative 

15 contractor or person described in 

16 subparagraph (A); or 

17 ‘‘(ii) to permit the payment of 

18 costs not otherwise allowable, 

19 reasonable, or allocable under the 

20 Federal Acquisition Regulations.’’. 

21 (2) CONSIDERATION OF INCORPORATION

22 OF CURRENT LAW STANDARDS.—In devel23 oping contract performance require24 ments under section 1874A(b) of the So25 cial Security Act, as inserted by para-
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1 graph (1), the Secretary shall consider in2 clusion of the performance standards de3 scribed in sections 1816(f)(2) of such Act 

4 (relating to timely processing of reconsid5 erations and applications for exemptions) 

6 and section 1842(b)(2)(B) of such Act (re7 lating to timely review of determinations 

8 and fair hearing requests), as such sec9 tions were in effect before the date of the 

10 enactment of this Act. 

11 (b) CONFORMING AMENDMENTS TO SECTION

12 1816 (RELATING TO FISCAL INTERMEDIARIES).—

13 Section 1816 (42 U.S.C. 1395h) is amended as 

14 follows: 

15 (1) The heading is amended to read as 

16 follows: 

17 ‘‘PROVISIONS RELATING TO THE ADMINISTRATION

18 OF PART A’’. 

19 (2) Subsection (a) is amended to read 

20 as follows: 

21 ‘‘(a) The administration of this part shall 

22 be conducted through contracts with medi23 care administrative contractors under section 

24 1874A.’’. 

25 (3) Subsection (b) is repealed. 

26 (4) Subsection (c) is amended—
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1 (A) by striking paragraph (1); and

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

3 and (3)(A), by striking ‘‘agreement 

4 under this section’’ and inserting 

5 ‘‘contract under section 1874A that 

6 provides for making payments under 

7 this part’’. 

8 (5) Subsections (d) through (i) are re9 pealed. 

10 (6) Subsections (j) and (k) are each 

11 amended—

12 (A) by striking ‘‘An agreement 

13 with an agency or organization under 

14 this section’’ and inserting ‘‘A con15 tract with a medicare administrative 

16 contractor under section 1874A with 

17 respect to the administration of this 

18 part’’; and 

19 (B) by striking ‘‘such agency or 

20 organization’’ and inserting ‘‘such 

21 medicare administrative contractor’’ 

22 each place it appears. 

23 (7) Subsection (l) is repealed. 
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1 (c) CONFORMING AMENDMENTS TO SECTION

2 1842 (RELATING TO CARRIERS).—Section 1842 

3 (42 U.S.C. 1395u) is amended as follows: 

4 (1) The heading is amended to read as 

5 follows: 

6 ‘‘PROVISIONS RELATING TO THE ADMINISTRATION

7 OF PART B’’. 

8 (2) Subsection (a) is amended to read 

9 as follows: 

10 ‘‘(a) The administration of this part shall 

11 be conducted through contracts with medi12 care administrative contractors under section 

13 1874A.’’. 

14 (3) Subsection (b) is amended—

15 (A) by striking paragraph (1); 

16 (B) in paragraph (2)—

17 (i) by striking subparagraphs 

18 (A) and (B); 

19 (ii) in subparagraph (C), by 

20 striking ‘‘carriers’’ and inserting 

21 ‘‘medicare administrative contrac22 tors’’; and 

23 (iii) by striking subpara24 graphs (D) and (E); 

25 (C) in paragraph (3)—
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1 (i) in the matter before sub2 paragraph (A), by striking ‘‘Each 

3 such contract shall provide that 

4 the carrier’’ and inserting ‘‘The 

5 Secretary’’; 

6 (ii) by striking ‘‘will’’ the first 

7 place it appears in each of sub8 paragraphs (A), (B), (F), (G), (H), 

9 and (L) and inserting ‘‘shall’’; 

10 (iii) in subparagraph (B), in 

11 the matter before clause (i), by 

12 striking ‘‘to the policyholders and 

13 subscribers of the carrier’’ and in14 serting ‘‘to the policyholders and 

15 subscribers of the medicare ad16 ministrative contractor’’; 

17 (iv) by striking subparagraphs 

18 (C), (D), and (E); 

19 (v) in subparagraph (H)—

20 (I) by striking ‘‘if it makes 

21 determinations or payments 

22 with respect to physicians’ 

23 services,’’ in the matter pre24 ceding clause (i); and 
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1 (II) by striking ‘‘carrier’’ 

2 and inserting ‘‘medicare ad3 ministrative contractor’’ in 

4 clause (i); 

5 (vi) by striking subparagraph 

6 (I); 

7 (vii) in subparagraph (L), by 

8 striking the semicolon and insert9 ing a period; 

10 (viii) in the first sentence, 

11 after subparagraph (L), by strik12 ing ‘‘and shall contain’’ and all 

13 that follows through the period; 

14 and 

15 (ix) in the seventh sentence, 

16 by inserting ‘‘medicare adminis17 trative contractor,’’ after ‘‘car18 rier,’’; and 

19 (D) by striking paragraph (5); 

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

21 striking ‘‘carrier’’ and inserting 

22 ‘‘medicare administrative contractor’’; 

23 and 
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1 (F) in paragraph (7), by striking 

2 ‘‘the carrier’’ and inserting ‘‘the Sec3 retary’’ each place it appears. 

4 (4) Subsection (c) is amended—

5 (A) by striking paragraph (1); 

6 (B) in paragraph (2)(A), by strik7 ing ‘‘contract under this section 

8 which provides for the disbursement 

9 of funds, as described in subsection 

10 (a)(1)(B),’’ and inserting ‘‘contract 

11 under section 1874A that provides for 

12 making payments under this part’’; 

13 (C) in paragraph (3)(A), by strik14 ing ‘‘subsection (a)(1)(B)’’ and insert15 ing ‘‘section 1874A(a)(3)(B)’’; 

16 (D) in paragraph (4), in the mat17 ter preceding subparagraph (A), by 

18 striking ‘‘carrier’’ and inserting 

19 ‘‘medicare administrative contractor’’; 

20 and 

21 (E) by striking paragraphs (5) and 

22 (6). 

23 (5) Subsections (d), (e), and (f) are re24 pealed. 
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1 (6) Subsection (g) is amended by 

2 striking ‘‘carrier or carriers’’ and insert3 ing ‘‘medicare administrative contractor 

4 or contractors’’. 

5 (7) Subsection (h) is amended—

6 (A) in paragraph (2)—

7 (i) by striking ‘‘Each carrier 

8 having an agreement with the 

9 Secretary under subsection (a)’’ 

10 and inserting ‘‘The Secretary’’; 

11 and 

12 (ii) by striking ‘‘Each such 

13 carrier’’ and inserting ‘‘The Sec14 retary’’; 

15 (B) in paragraph (3)(A)—

16 (i) by striking ‘‘a carrier hav17 ing an agreement with the Sec18 retary under subsection (a)’’ and 

19 inserting ‘‘medicare administra20 tive contractor having a contract 

21 under section 1874A that provides 

22 for making payments under this 

23 part’’; and 

24 (ii) by striking ‘‘such carrier’’ 

25 and inserting ‘‘such contractor’’; 
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1 (C) in paragraph (3)(B)—

2 (i) by striking ‘‘a carrier’’ and 

3 inserting ‘‘a medicare administra4 tive contractor’’ each place it ap5 pears; and 

6 (ii) by striking ‘‘the carrier’’ 

7 and inserting ‘‘the contractor’’ 

8 each place it appears; and 

9 (D) in paragraphs (5)(A) and 

10 (5)(B)(iii), by striking ‘‘carriers’’ and 

11 inserting ‘‘medicare administrative 

12 contractors’’ each place it appears. 

13 (8) Subsection (l) is amended—

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

15 striking ‘‘carrier’’ and inserting 

16 ‘‘medicare administrative contractor’’; 

17 and 

18 (B) in paragraph (2), by striking 

19 ‘‘carrier’’ and inserting ‘‘medicare ad20 ministrative contractor’’. 

21 (9) Subsection (p)(3)(A) is amended by 

22 striking ‘‘carrier’’ and inserting ‘‘medi23 care administrative contractor’’. 

24 (10) Subsection (q)(1)(A) is amended 

25 by striking ‘‘carrier’’. 
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1 (d) EFFECTIVE DATE; TRANSITION RULE.—

2 (1) EFFECTIVE DATE.—

3 (A) IN GENERAL.—Except as other4 wise provided in this subsection, the 

5 amendments made by this section 

6 shall take effect on October 1, 2005, 

7 and the Secretary is authorized to 

8 take such steps before such date as 

9 may be necessary to implement such 

10 amendments on a timely basis. 

11 (B) CONSTRUCTION FOR CURRENT

12 CONTRACTS.—Such amendments shall 

13 not apply to contracts in effect before 

14 the date specified under subpara15 graph (A) that continue to retain the 

16 terms and conditions in effect on 

17 such date (except as otherwise pro18 vided under this Act, other than 

19 under this section) until such date as 

20 the contract is let out for competitive 

21 bidding under such amendments. 

22 (C) DEADLINE FOR COMPETITIVE

23 BIDDING.—The Secretary shall provide 

24 for the letting by competitive bidding 

25 of all contracts for functions of medi-
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1 care administrative contractors for 

2 annual contract periods that begin on 

3 or after October 1, 2010. 

4 (D) WAIVER OF PROVIDER NOMINA5 TION PROVISIONS DURING TRANSITION.—

6 During the period beginning on the 

7 date of the enactment of this Act and 

8 before the date specified under sub9 paragraph (A), the Secretary may 

10 enter into new agreements under sec11 tion 1816 of the Social Security Act 

12 (42 U.S.C. 1395h) without regard to 

13 any of the provider nomination provi14 sions of such section. 

15 (2) GENERAL TRANSITION RULES.—The 

16 Secretary shall take such steps, con17 sistent with paragraph (1)(B) and (1)(C), 

18 as are necessary to provide for an appro19 priate transition from contracts under 

20 section 1816 and section 1842 of the So21 cial Security Act (42 U.S.C. 1395h, 1395u) 

22 to contracts under section 1874A, as 

23 added by subsection (a)(1). 

24 (3) AUTHORIZING CONTINUATION OF MIP

25 FUNCTIONS UNDER CURRENT CONTRACTS AND
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1 AGREEMENTS AND UNDER ROLLOVER CON2 TRACTS.—The provisions contained in the 

3 exception in section 1893(d)(2) of the So4 cial Security Act (42 U.S.C. 1395ddd(d)(2)) 

5 shall continue to apply notwithstanding 

6 the amendments made by this section, 

7 and any reference in such provisions to 

8 an agreement or contract shall be 

9 deemed to include a contract under sec10 tion 1874A of such Act, as inserted by 

11 subsection (a)(1), that continues the ac12 tivities referred to in such provisions. 

13 (e) REFERENCES.—On and after the effec14 tive date provided under subsection (d)(1), 

15 any reference to a fiscal intermediary or car16 rier under title XI or XVIII of the Social Secu17 rity Act (or any regulation, manual instruc18 tion, interpretative rule, statement of policy, 

19 or guideline issued to carry out such titles) 

20 shall be deemed a reference to an appropriate 

21 medicare administrative contractor (as pro22 vided under section 1874A of the Social Secu23 rity Act). 

24 (f) REPORTS ON IMPLEMENTATION.—
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1 (1) PLAN FOR IMPLEMENTATION.—By 

2 not later than October 1, 2004, the Sec3 retary shall submit a report to Congress 

4 and the Comptroller General of the 

5 United States that describes the plan for 

6 implementation of the amendments made

7 by this section. The Comptroller General 

8 shall conduct an evaluation of such plan 

9 and shall submit to Congress, not later 

10 than 6 months after the date the report 

11 is received, a report on such evaluation 

12 and shall include in such report such rec13 ommendations as the Comptroller Gen14 eral deems appropriate. 

15 (2) STATUS OF IMPLEMENTATION.—The 

16 Secretary shall submit a report to Con17 gress not later than October 1, 2008, that 

18 describes the status of implementation of 

19 such amendments and that includes a de20 scription of the following: 

21 (A) The number of contracts that 

22 have been competitively bid as of 

23 such date. 

24 (B) The distribution of functions 

25 among contracts and contractors. 
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1 (C) A timeline for complete transi2 tion to full competition. 

3 (D) A detailed description of how 

4 the Secretary has modified oversight 

5 and management of medicare con6 tractors to adapt to full competition. 

7 SEC. 202. REQUIREMENTS FOR INFORMATION SECURITY 

8 FOR MEDICARE ADMINISTRATIVE CONTRAC9 TORS. 

10 (a) IN GENERAL.—Section 1874A, as added 

11 by section 201(a)(1), is amended by adding at 

12 the end the following new subsection: 

13 ‘‘(e) REQUIREMENTS FOR INFORMATION SECU14 RITY.—

15 ‘‘(1) DEVELOPMENT OF INFORMATION SE16 CURITY PROGRAM.—A medicare administra17 tive contractor that performs the func18 tions referred to in subparagraphs (A) 

19 and (B) of subsection (a)(4) (relating to 

20 determining and making payments) shall 

21 implement a contractor-wide information 

22 security program to provide information 

23 security for the operation and assets of 

24 the contractor with respect to such func25 tions under this title. An information se-
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1 curity program under this paragraph 

2 shall meet the requirements for informa3 tion security programs imposed on Fed4 eral agencies under paragraphs (1) 

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

6 United States Code (other than the re7 quirements under paragraph (2)(D)(i) of 

8 such section). 

9 ‘‘(2) INDEPENDENT AUDITS.—

10 ‘‘(A) PERFORMANCE OF ANNUAL

11 EVALUATIONS.—Each year a medicare 

12 administrative contractor that per13 forms the functions referred to in 

14 subparagraphs (A) and (B) of sub15 section (a)(4) (relating to determining 

16 and making payments) shall undergo 

17 an evaluation of the information se18 curity of the contractor with respect 

19 to such functions under this title. The 

20 evaluation shall—

21 ‘‘(i) be performed by an entity 

22 that meets such requirements for 

23 independence as the Inspector 

24 General of the Department of 
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1 Health and Human Services may 

2 establish; and 

3 ‘‘(ii) test the effectiveness of 

4 information security control tech5 niques of an appropriate subset of 

6 the contractor’s information sys7 tems (as defined in section 3502(8) 

8 of title 44, United States Code) re9 lating to such functions under 

10 this title and an assessment of 

11 compliance with the require12 ments of this subsection and re13 lated information security poli14 cies, procedures, standards and 

15 guidelines, including policies and 

16 procedures as may be prescribed 

17 by the Director of the Office of 

18 Management and Budget and ap19 plicable information security 

20 standards promulgated under sec21 tion 11331 of title 40, United 

22 States Code. 

23 ‘‘(B) DEADLINE FOR INITIAL EVALUA24 TION.—
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1 ‘‘(i) NEW CONTRACTORS.—In the 

2 case of a medicare administrative 

3 contractor covered by this sub4 section that has not previously 

5 performed the functions referred 

6 to in subparagraphs (A) and (B) of 

7 subsection (a)(4) (relating to de8 termining and making payments)

9 as a fiscal intermediary or carrier 

10 under section 1816 or 1842, the 

11 first independent evaluation con12 ducted pursuant subparagraph 

13 (A) shall be completed prior to 

14 commencing such functions. 

15 ‘‘(ii) OTHER CONTRACTORS.—In 

16 the case of a medicare adminis17 trative contractor covered by this 

18 subsection that is not described 

19 in clause (i), the first independent 

20 evaluation conducted pursuant 

21 subparagraph (A) shall be com22 pleted within 1 year after the 

23 date the contractor commences 

24 functions referred to in clause (i) 

25 under this section. 
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1 ‘‘(C) REPORTS ON EVALUATIONS.—

2 ‘‘(i) TO THE DEPARTMENT OF

3 HEALTH AND HUMAN SERVICES.—The 

4 results of independent evalua5 tions under subparagraph (A) 

6 shall be submitted promptly to 

7 the Inspector General of the De8 partment of Health and Human 

9 Services and to the Secretary. 

10 ‘‘(ii) TO CONGRESS.—The In11 spector General of Department of 

12 Health and Human Services shall 

13 submit to Congress annual re14 ports on the results of such eval15 uations, including assessments of 

16 the scope and sufficiency of such 

17 evaluations. 

18 ‘‘(iii) AGENCY REPORTING.—The 

19 Secretary shall address the re20 sults of such evaluations in re21 ports required under section 

22 3544(c) of title 44, United States 

23 Code.’’. 

24 (b) APPLICATION OF REQUIREMENTS TO FIS25 CAL INTERMEDIARIES AND CARRIERS.—
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1 (1) IN GENERAL.—The provisions of 

2 section 1874A(e)(2) of the Social Security 

3 Act (other than subparagraph (B)), as 

4 added by subsection (a), shall apply to 

5 each fiscal intermediary under section 

6 1816 of the Social Security Act (42 U.S.C. 

7 1395h) and each carrier under section 

8 1842 of such Act (42 U.S.C. 1395u) in the 

9 same manner as they apply to medicare 

10 administrative contractors under such 

11 provisions. 

12 (2) DEADLINE FOR INITIAL EVALUA13 TION.—In the case of such a fiscal inter14 mediary or carrier with an agreement or 

15 contract under such respective section in 

16 effect as of the date of the enactment of 

17 this Act, the first evaluation under sec18 tion 1874A(e)(2)(A) of the Social Security 

19 Act (as added by subsection (a)), pursu20 ant to paragraph (1), shall be completed 

21 (and a report on the evaluation sub22 mitted to the Secretary) by not later than 

23 1 year after such date. 
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1 TITLE III—EDUCATION AND 

2 OUTREACH 

3 SEC. 301. PROVIDER EDUCATION AND TECHNICAL ASSIST4 ANCE. 

5 (a) COORDINATION OF EDUCATION FUND6 ING.—

7 (1) IN GENERAL.—The Social Security 

8 Act is amended by inserting after section 

9 1888 the following new section: 

10 ‘‘PROVIDER EDUCATION AND TECHNICAL

11 ASSISTANCE

12 ‘‘SEC. 1889. (a) COORDINATION OF EDU13 CATION FUNDING.—The Secretary shall coordi14 nate the educational activities provided 

15 through medicare contractors (as defined in 

16 subsection (g), including under section 1893) 

17 in order to maximize the effectiveness of Fed18 eral education efforts for providers of serv19 ices and suppliers.’’. 

20 (2) EFFECTIVE DATE.—The amendment 

21 made by paragraph (1) shall take effect 

22 on the date of the enactment of this Act. 

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

24 2004, the Secretary shall submit to Con25 gress a report that includes a description 
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1 and evaluation of the steps taken to co2 ordinate the funding of provider edu3 cation under section 1889(a) of the Social 

4 Security Act, as added by paragraph (1). 

5 (b) INCENTIVES TO IMPROVE CONTRACTOR

6 PERFORMANCE.—

7 (1) IN GENERAL.—Section 1874A, as 

8 added by section 201(a)(1) and as amend9 ed by section 202(a), is amended by add10 ing at the end the following new sub11 section: 

12 ‘‘(f) INCENTIVES TO IMPROVE CONTRACTOR

13 PERFORMANCE IN PROVIDER EDUCATION AND

14 OUTREACH.—The Secretary shall use specific 

15 claims payment error rates or similar method16 ology of medicare administrative contractors 

17 in the processing or reviewing of medicare 

18 claims in order to give such contractors an in19 centive to implement effective education and 

20 outreach programs for providers of services 

21 and suppliers.’’. 

22 (2) APPLICATION TO FISCAL INTER23 MEDIARIES AND CARRIERS.—The provisions 

24 of section 1874A(f) of the Social Security 

25 Act, as added by paragraph (1), shall 
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1 apply to each fiscal intermediary under 

2 section 1816 of the Social Security Act (42 

3 U.S.C. 1395h) and each carrier under sec4 tion 1842 of such Act (42 U.S.C. 1395u) in 

5 the same manner as they apply to medi6 care administrative contractors under 

7 such provisions. 

8 (3) GAO REPORT ON ADEQUACY OF

9 METHODOLOGY.—Not later than October 1,

10 2004, the Comptroller General of the 

11 United States shall submit to Congress 

12 and to the Secretary a report on the ade13 quacy of the methodology under section 

14 1874A(f) of the Social Security Act, as 

15 added by paragraph (1), and shall include 

16 in the report such recommendations as 

17 the Comptroller General determines ap18 propriate with respect to the method19 ology. 

20 (4) REPORT ON USE OF METHODOLOGY IN

21 ASSESSING CONTRACTOR PERFORMANCE.—

22 Not later than October 1, 2004, the Sec23 retary shall submit to Congress a report 

24 that describes how the Secretary intends 

25 to use such methodology in assessing 
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1 medicare contractor performance in im2 plementing effective education and out3 reach programs, including whether to use 

4 such methodology as a basis for perform5 ance bonuses. The report shall include an 

6 analysis of the sources of identified er7 rors and potential changes in systems of 

8 contractors and rules of the Secretary 

9 that could reduce claims error rates. 

10 (c) PROVISION OF ACCESS TO AND PROMPT

11 RESPONSES FROM MEDICARE ADMINISTRATIVE

12 CONTRACTORS.—

13 (1) IN GENERAL.—Section 1874A, as 

14 added by section 201(a)(1) and as amend15 ed by section 202(a) and subsection (b), is 

16 further amended by adding at the end 

17 the following new subsection: 

18 ‘‘(g) COMMUNICATIONS WITH BENEFICIARIES, 

19 PROVIDERS OF SERVICES AND SUPPLIERS.—

20 ‘‘(1) COMMUNICATION STRATEGY.—The 

21 Secretary shall develop a strategy for 

22 communications with individuals entitled 

23 to benefits under part A or enrolled 

24 under part B, or both, and with providers 

25 of services and suppliers under this title. 
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1 ‘‘(2) RESPONSE TO WRITTEN INQUIRIES.—

2 Each medicare administrative contractor 

3 shall, for those providers of services and 

4 suppliers which submit claims to the con5 tractor for claims processing and for 

6 those individuals entitled to benefits 

7 under part A or enrolled under part B, or 

8 both, with respect to whom claims are 

9 submitted for claims processing, provide 

10 general written responses (which may be 

11 through electronic transmission) in a 

12 clear, concise, and accurate manner to in13 quiries of providers of services, suppliers 

14 and individuals entitled to benefits under 

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

16 concerning the programs under this title 

17 within 45 business days of the date of re18 ceipt of such inquiries. 

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

20 The Secretary shall ensure that each 

21 medicare administrative contractor shall 

22 provide, for those providers of services 

23 and suppliers which submit claims to the 

24 contractor for claims processing and for 

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

2 both, with respect to whom claims are 

3 submitted for claims processing, a toll4 free telephone number at which such in5 dividuals, providers of services and sup6 pliers may obtain information regarding 

7 billing, coding, claims, coverage, and 

8 other appropriate information under this 

9 title. 

10 ‘‘(4) MONITORING OF CONTRACTOR RE11 SPONSES.—

12 ‘‘(A) IN GENERAL.—Each medicare 

13 administrative contractor shall, con14 sistent with standards developed by 

15 the Secretary under subparagraph 

16 (B)—

17 ‘‘(i) maintain a system for 

18 identifying who provides the in19 formation referred to in para20 graphs (2) and (3); and 

21 ‘‘(ii) monitor the accuracy, 

22 consistency, and timeliness of the 

23 information so provided. 

24 ‘‘(B) DEVELOPMENT OF STAND25 ARDS.—
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1 ‘‘(i) IN GENERAL.—The Sec2 retary shall establish and make 

3 public standards to monitor the 

4 accuracy, consistency, and timeli5 ness of the information provided 

6 in response to written and tele7 phone inquiries under this sub8 section. Such standards shall be 

9 consistent with the performance

10 requirements established under 

11 subsection (b)(3). 

12 ‘‘(ii) EVALUATION.—In con13 ducting evaluations of individual 

14 medicare administrative contrac15 tors, the Secretary shall take into 

16 account the results of the moni17 toring conducted under subpara18 graph (A) taking into account as 

19 performance requirements the 

20 standards established under 

21 clause (i). The Secretary shall, in 

22 consultation with organizations 

23 representing providers of serv24 ices, suppliers, and individuals 

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

2 establish standards relating to 

3 the accuracy, consistency, and 

4 timeliness of the information so 

5 provided. 

6 ‘‘(C) DIRECT MONITORING.—Nothing 

7 in this paragraph shall be construed 

8 as preventing the Secretary from di9 rectly monitoring the accuracy, con10 sistency, and timeliness of the infor11 mation so provided.’’. 

12 (2) EFFECTIVE DATE.—The amendment 

13 made by paragraph (1) shall take effect 

14 October 1, 2004. 

15 (3) APPLICATION TO FISCAL INTER16 MEDIARIES AND CARRIERS.—The provisions 

17 of section 1874A(g) of the Social Security 

18 Act, as added by paragraph (1), shall 

19 apply to each fiscal intermediary under 

20 section 1816 of the Social Security Act (42 

21 U.S.C. 1395h) and each carrier under sec22 tion 1842 of such Act (42 U.S.C. 1395u) in 

23 the same manner as they apply to medi24 care administrative contractors under 

25 such provisions. 
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1 (d) IMPROVED PROVIDER EDUCATION AND

2 TRAINING.—

3 (1) IN GENERAL.—Section 1889, as 

4 added by subsection (a), is amended by 

5 adding at the end the following new sub6 sections: 

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

8 ‘‘(1) ADDITIONAL RESOURCES.—There 

9 are authorized to be appropriated to the 

10 Secretary (in appropriate part from the 

11 Federal Hospital Insurance Trust Fund 

12 and the Federal Supplementary Medical 

13 Insurance Trust Fund) $25,000,000 for 

14 each of fiscal years 2005 and 2006 and 

15 such sums as may be necessary for suc16 ceeding fiscal years. 

17 ‘‘(2) USE.—The funds made available 

18 under paragraph (1) shall be used to in19 crease the conduct by medicare contrac20 tors of education and training of pro21 viders of services and suppliers regard22 ing billing, coding, and other appropriate 

23 items and may also be used to improve 

24 the accuracy, consistency, and timeliness 

25 of contractor responses. 
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1 ‘‘(c) TAILORING EDUCATION AND TRAINING

2 ACTIVITIES FOR SMALL PROVIDERS OR SUP3 PLIERS.—

4 ‘‘(1) IN GENERAL.—Insofar as a medi5 care contractor conducts education and 

6 training activities, it shall tailor such ac7 tivities to meet the special needs of small 

8 providers of services or suppliers (as de9 fined in paragraph (2)). 

10 ‘‘(2) SMALL PROVIDER OF SERVICES OR

11 SUPPLIER.—In this subsection, the term 

12 ‘small provider of services or supplier’ 

13 means—

14 ‘‘(A) a provider of services with 

15 fewer than 25 full-time-equivalent em16 ployees; or 

17 ‘‘(B) a supplier with fewer than 10 

18 full-time-equivalent employees.’’. 

19 (2) EFFECTIVE DATE.—The amendment 

20 made by paragraph (1) shall take effect 

21 on October 1, 2004. 

22 (e) REQUIREMENT TO MAINTAIN INTERNET

23 SITES.—

24 (1) IN GENERAL.—Section 1889, as 

25 added by subsection (a) and as amended 
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1 by subsection (d), is further amended by 

2 adding at the end the following new sub3 section: 

4 ‘‘(d) INTERNET SITES; FAQS.—The Sec5 retary, and each medicare contractor insofar 

6 as it provides services (including claims proc7 essing) for providers of services or suppliers, 

8 shall maintain an Internet site which—

9 ‘‘(1) provides answers in an easily ac10 cessible format to frequently asked ques11 tions, and 

12 ‘‘(2) includes other published mate13 rials of the contractor, 

14 that relate to providers of services and sup15 pliers under the programs under this title 

16 (and title XI insofar as it relates to such pro17 grams).’’. 

18 (2) EFFECTIVE DATE.—The amendment 

19 made by paragraph (1) shall take effect 

20 on October 1, 2004. 

21 (f) ADDITIONAL PROVIDER EDUCATION PRO22 VISIONS.—

23 (1) IN GENERAL.—Section 1889, as 

24 added by subsection (a) and as amended 

25 by subsections (d) and (e), is further 
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1 amended by adding at the end the fol2 lowing new subsections: 

3 ‘‘(e) ENCOURAGEMENT OF PARTICIPATION IN

4 EDUCATION PROGRAM ACTIVITIES.—A medicare 

5 contractor may not use a record of attendance 

6 at (or failure to attend) educational activities 

7 or other information gathered during an edu8 cational program conducted under this sec9 tion or otherwise by the Secretary to select or 

10 track providers of services or suppliers for 

11 the purpose of conducting any type of audit 

12 or prepayment review. 

13 ‘‘(f) CONSTRUCTION.—Nothing in this sec14 tion or section 1893(g) shall be construed as 

15 providing for disclosure by a medicare con16 tractor of information that would compromise 

17 pending law enforcement activities or reveal 

18 findings of law enforcement-related audits. 

19 ‘‘(g) DEFINITIONS.—For purposes of this 

20 section, the term ‘medicare contractor’ in21 cludes the following: 

22 ‘‘(1) A medicare administrative con23 tractor with a contract under section 

24 1874A, including a fiscal intermediary 

25 with a contract under section 1816 and a 
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1 carrier with a contract under section 

2 1842. 

3 ‘‘(2) An eligible entity with a contract 

4 under section 1893. 

5 Such term does not include, with respect to 

6 activities of a specific provider of services or 

7 supplier an entity that has no authority under 

8 this title or title IX with respect to such activi9 ties and such provider of services or sup10 plier.’’. 

11 (2) EFFECTIVE DATE.—The amendment 

12 made by paragraph (1) shall take effect 

13 on the date of the enactment of this Act. 

14 SEC. 302. SMALL PROVIDER TECHNICAL ASSISTANCE DEM15 ONSTRATION PROGRAM. 

16 (a) ESTABLISHMENT.—

17 (1) IN GENERAL.—The Secretary shall 

18 establish a demonstration program (in 

19 this section referred to as the ‘‘dem20 onstration program’’) under which tech21 nical assistance described in paragraph 

22 (2) is made available, upon request and 

23 on a voluntary basis, to small providers 

24 of services or suppliers in order to im25 prove compliance with the applicable re-
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1 quirements of the programs under medi2 care program under title XVIII of the So3 cial Security Act (including provisions of 

4 title XI of such Act insofar as they relate 

5 to such title and are not administered by 

6 the Office of the Inspector General of the 

7 Department of Health and Human Serv8 ices). 

9 (2) FORMS OF TECHNICAL ASSISTANCE.—

10 The technical assistance described in this 

11 paragraph is—

12 (A) evaluation and recommenda13 tions regarding billing and related 

14 systems; and 

15 (B) information and assistance re16 garding policies and procedures 

17 under the medicare program, includ18 ing coding and reimbursement. 

19 (3) SMALL PROVIDERS OF SERVICES OR

20 SUPPLIERS.—In this section, the term 

21 ‘‘small providers of services or suppliers’’ 

22 means—

23 (A) a provider of services with 

24 fewer than 25 full-time-equivalent em25 ployees; or 
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1 (B) a supplier with fewer than 10 

2 full-time-equivalent employees. 

3 (b) QUALIFICATION OF CONTRACTORS.—In 

4 conducting the demonstration program, the 

5 Secretary shall enter into contracts with 

6 qualified organizations (such as peer review 

7 organizations or entities described in section 

8 1889(g)(2) of the Social Security Act, as in9 serted by section 5(f)(1)) with appropriate ex10 pertise with billing systems of the full range 

11 of providers of services and suppliers to pro12 vide the technical assistance. In awarding 

13 such contracts, the Secretary shall consider 

14 any prior investigations of the entity’s work 

15 by the Inspector General of Department of 

16 Health and Human Services or the Comp17 troller General of the United States. 

18 (c) DESCRIPTION OF TECHNICAL ASSIST19 ANCE.—The technical assistance provided 

20 under the demonstration program shall in21 clude a direct and in-person examination of 

22 billing systems and internal controls of small 

23 providers of services or suppliers to deter24 mine program compliance and to suggest 
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1 more efficient or effective means of achieving 

2 such compliance. 

3 (d) AVOIDANCE OF RECOVERY ACTIONS FOR

4 PROBLEMS IDENTIFIED AS CORRECTED.—The 

5 Secretary shall provide that, absent evidence 

6 of fraud and notwithstanding any other provi7 sion of law, any errors found in a compliance 

8 review for a small provider of services or sup9 plier that participates in the demonstration

10 program shall not be subject to recovery ac11 tion if the technical assistance personnel 

12 under the program determine that—

13 (1) the problem that is the subject of 

14 the compliance review has been cor15 rected to their satisfaction within 30 days 

16 of the date of the visit by such personnel 

17 to the small provider of services or sup18 plier; and 

19 (2) such problem remains corrected 

20 for such period as is appropriate. 

21 The previous sentence applies only to claims 

22 filed as part of the demonstration program 

23 and lasts only for the duration of such pro24 gram and only as long as the small provider 
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1 of services or supplier is a participant in such 

2 program. 

3 (e) GAO EVALUATION.—Not later than 2 

4 years after the date of the date the dem5 onstration program is first implemented, the 

6 Comptroller General, in consultation with the 

7 Inspector General of the Department of 

8 Health and Human Services, shall conduct an 

9 evaluation of the demonstration program. The 

10 evaluation shall include a determination of 

11 whether claims error rates are reduced for 

12 small providers of services or suppliers who 

13 participated in the program and the extent of 

14 improper payments made as a result of the 

15 demonstration program. The Comptroller 

16 General shall submit a report to the Secretary 

17 and the Congress on such evaluation and 

18 shall include in such report recommendations 

19 regarding the continuation or extension of 

20 the demonstration program. 

21 (f) FINANCIAL PARTICIPATION BY PRO22 VIDERS.—The provision of technical assistance 

23 to a small provider of services or supplier 

24 under the demonstration program is condi25 tioned upon the small provider of services or 
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1 supplier paying an amount estimated (and 

2 disclosed in advance of a provider’s or sup3 plier’s participation in the program) to be 

4 equal to 25 percent of the cost of the technical 

5 assistance. 

6 (g) AUTHORIZATION OF APPROPRIATIONS.—

7 There are authorized to be appropriated to 

8 the Secretary (in appropriate part from the 

9 Federal Hospital Insurance Trust Fund and 

10 the Federal Supplementary Medical Insur11 ance Trust Fund) to carry out the demonstra12 tion program— 

13 (1) for fiscal year 2005, $1,000,000, and 

14 (2) for fiscal year 2006, $6,000,000. 

15 SEC. 303. MEDICARE PROVIDER OMBUDSMAN; MEDICARE 

16 BENEFICIARY OMBUDSMAN. 

17 (a) MEDICARE PROVIDER OMBUDSMAN.—Sec18 tion 1868 (42 U.S.C. 1395ee) is amended—

19 (1) by adding at the end of the head20 ing the following: ‘‘; MEDICARE PROVIDER

21 OMBUDSMAN’’; 

22 (2) by inserting ‘‘PRACTICING PHYSI23 CIANS ADVISORY COUNCIL.—(1)’’ after ‘‘(a)’’; 

24 (3) in paragraph (1), as so redesig25 nated under paragraph (2), by striking 
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1 ‘‘in this section’’ and inserting ‘‘in this 

2 subsection’’; 

3 (4) by redesignating subsections (b) 

4 and (c) as paragraphs (2) and (3), respec5 tively; and 

6 (5) by adding at the end the following 

7 new subsection: 

8 ‘‘(b) MEDICARE PROVIDER OMBUDSMAN.—

9 The Secretary shall appoint within the De10 partment of Health and Human Services a 

11 Medicare Provider Ombudsman. The Om12 budsman shall—

13 ‘‘(1) provide assistance, on a confiden14 tial basis, to providers of services and 

15 suppliers with respect to complaints, 

16 grievances, and requests for information 

17 concerning the programs under this title 

18 (including provisions of title XI insofar as 

19 they relate to this title and are not ad20 ministered by the Office of the Inspector 

21 General of the Department of Health and 

22 Human Services) and in the resolution of 

23 unclear or conflicting guidance given by 

24 the Secretary and medicare contractors 

25 to such providers of services and sup-
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1 pliers regarding such programs and pro2 visions and requirements under this title 

3 and such provisions; and 

4 ‘‘(2) submit recommendations to the 

5 Secretary for improvement in the admin6 istration of this title and such provisions, 

7 including—

8 ‘‘(A) recommendations to respond 

9 to recurring patterns of confusion in 

10 this title and such provisions (includ11 ing recommendations regarding sus12 pending imposition of sanctions 

13 where there is widespread confusion 

14 in program administration), and 

15 ‘‘(B) recommendations to provide 

16 for an appropriate and consistent re17 sponse (including not providing for 

18 audits) in cases of self-identified over19 payments by providers of services 

20 and suppliers. 

21 The Ombudsman shall not serve as an advo22 cate for any increases in payments or new 

23 coverage of services, but may identify issues 

24 and problems in payment or coverage poli25 cies.’’. 
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1 (b) MEDICARE BENEFICIARY OMBUDSMAN.—

2 Title XVIII is amended by inserting after sec3 tion 1806 the following new section: 

4 ‘‘MEDICARE BENEFICIARY OMBUDSMAN

5 ‘‘SEC. 1807. (a) IN GENERAL.—The Secretary 

6 shall appoint within the Department of 

7 Health and Human Services a Medicare Bene8 ficiary Ombudsman who shall have expertise 

9 and experience in the fields of health care 

10 and education of (and assistance to) individ11 uals entitled to benefits under this title.

12 ‘‘(b) DUTIES.—The Medicare Beneficiary 

13 Ombudsman shall—

14 ‘‘(1) receive complaints, grievances, 

15 and requests for information submitted 

16 by individuals entitled to benefits under 

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

18 with respect to any aspect of the medi19 care program; 

20 ‘‘(2) provide assistance with respect 

21 to complaints, grievances, and requests 

22 referred to in paragraph (1), including—

23 ‘‘(A) assistance in collecting rel24 evant information for such individ25 uals, to seek an appeal of a decision 

26 or determination made by a fiscal 
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1 intermediary, carrier, 

2 Medicare+Choice organization, or the 

3 Secretary; and 

4 ‘‘(B) assistance to such individ5 uals with any problems arising from 

6 disenrollment from a 

7 Medicare+Choice plan under part C; 

8 and 

9 ‘‘(3) submit annual reports to Con10 gress and the Secretary that describe the 

11 activities of the Office and that include 

12 such recommendations for improvement 

13 in the administration of this title as the 

14 Ombudsman determines appropriate. 

15 The Ombudsman shall not serve as an advo16 cate for any increases in payments or new 

17 coverage of services, but may identify issues 

18 and problems in payment or coverage poli19 cies. 

20 ‘‘(c) WORKING WITH HEALTH INSURANCE

21 COUNSELING PROGRAMS.—To the extent pos22 sible, the Ombudsman shall work with health 

23 insurance counseling programs (receiving 

24 funding under section 4360 of Omnibus Budg25 et Reconciliation Act of 1990) to facilitate the 
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1 provision of information to individuals enti2 tled to benefits under part A or enrolled 

3 under part B, or both regarding 

4 Medicare+Choice plans and changes to those 

5 plans. Nothing in this subsection shall pre6 clude further collaboration between the Om7 budsman and such programs.’’. 

8 (c) DEADLINE FOR APPOINTMENT.—The Sec9 retary shall appoint the Medicare Provider 

10 Ombudsman and the Medicare Beneficiary 

11 Ombudsman, under the amendments made by 

12 subsections (a) and (b), respectively, by not 

13 later than 1 year after the date of the enact14 ment of this Act. 

15 (d) FUNDING.—There are authorized to be 

16 appropriated to the Secretary (in appropriate 

17 part from the Federal Hospital Insurance 

18 Trust Fund and the Federal Supplementary 

19 Medical Insurance Trust Fund) to carry out 

20 the provisions of subsection (b) of section 

21 1868 of the Social Security Act (relating to the 

22 Medicare Provider Ombudsman), as added by 

23 subsection (a)(5) and section 1807 of such Act 

24 (relating to the Medicare Beneficiary Om25 budsman), as added by subsection (b), such 
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1 sums as are necessary for fiscal year 2004 and 

2 each succeeding fiscal year. 

3 (e) USE OF CENTRAL, TOLL-FREE NUMBER

4 (1–800–MEDICARE).—

5 (1) PHONE TRIAGE SYSTEM; LISTING IN

6 MEDICARE HANDBOOK INSTEAD OF OTHER

7 TOLL-FREE NUMBERS.—Section 1804(b) (42 

8 U.S.C. 1395b–2(b)) is amended by adding 

9 at the end the following: ‘‘The Secretary 

10 shall provide, through the toll-free num11 ber 1–800–MEDICARE, for a means by 

12 which individuals seeking information 

13 about, or assistance with, such programs 

14 who phone such toll-free number are 

15 transferred (without charge) to appro16 priate entities for the provision of such 

17 information or assistance. Such toll-free 

18 number shall be the toll-free number list19 ed for general information and assistance 

20 in the annual notice under subsection (a) 

21 instead of the listing of numbers of indi22 vidual contractors.’’. 

23 (2) MONITORING ACCURACY.—

24 (A) STUDY.—The Comptroller Gen25 eral of the United States shall con-
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1 duct a study to monitor the accuracy 

2 and consistency of information pro3 vided to individuals entitled to bene4 fits under part A or enrolled under 

5 part B, or both, through the toll-free 

6 number 1–800–MEDICARE, including 

7 an assessment of whether the infor8 mation provided is sufficient to an9 swer questions of such individuals. In 

10 conducting the study, the Comp11 troller General shall examine the edu12 cation and training of the individuals 

13 providing information through such 

14 number. 

15 (B) REPORT.—Not later than 1 

16 year after the date of the enactment 

17 of this Act, the Comptroller General 

18 shall submit to Congress a report on 

19 the study conducted under subpara20 graph (A). 

21 SEC. 304. BENEFICIARY OUTREACH DEMONSTRATION PRO22 GRAM. 

23 (a) IN GENERAL.—The Secretary shall es24 tablish a demonstration program (in this sec25 tion referred to as the ‘‘demonstration pro-
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1 gram’’) under which medicare specialists em2 ployed by the Department of Health and 

3 Human Services provide advice and assist4 ance to individuals entitled to benefits under 

5 part A of title XVIII of the Social Security Act, 

6 or enrolled under part B of such title, or both, 

7 regarding the medicare program at the loca8 tion of existing local offices of the Social Secu9 rity Administration. 

10 (b) LOCATIONS.—

11 (1) IN GENERAL.—The demonstration 

12 program shall be conducted in at least 6 

13 offices or areas. Subject to paragraph (2), 

14 in selecting such offices and areas, the 

15 Secretary shall provide preference for of16 fices with a high volume of visits by indi17 viduals referred to in subsection (a). 

18 (2) ASSISTANCE FOR RURAL BENE19 FICIARIES.—The Secretary shall provide 

20 for the selection of at least 2 rural areas 

21 to participate in the demonstration pro22 gram. In conducting the demonstration 

23 program in such rural areas, the Sec24 retary shall provide for medicare special-
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1 ists to travel among local offices in a 

2 rural area on a scheduled basis. 

3 (c) DURATION.—The demonstration pro4 gram shall be conducted over a 3-year period. 

5 (d) EVALUATION AND REPORT.—

6 (1) EVALUATION.—The Secretary shall 

7 provide for an evaluation of the dem8 onstration program. Such evaluation 

9 shall include an analysis of—

10 (A) utilization of, and satisfaction 

11 of those individuals referred to in 

12 subsection (a) with, the assistance 

13 provided under the program; and 

14 (B) the cost-effectiveness of pro15 viding beneficiary assistance through 

16 out-stationing medicare specialists at 

17 local offices of the Social Security Ad18 ministration. 

19 (2) REPORT.—The Secretary shall sub20 mit to Congress a report on such evalua21 tion and shall include in such report rec22 ommendations regarding the feasibility 

23 of permanently out-stationing medicare 

24 specialists at local offices of the Social 

25 Security Administration. 
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1 SEC. 305. INCLUSION OF ADDITIONAL INFORMATION IN NO2 TICES TO BENEFICIARIES ABOUT SKILLED 

3 NURSING FACILITY BENEFITS. 

4 (a) IN GENERAL.—The Secretary shall pro5 vide that in medicare beneficiary notices pro6 vided (under section 1806(a) of the Social Se7 curity Act, 42 U.S.C. 1395b–7(a)) with respect 

8 to the provision of post-hospital extended 

9 care services under part A of title XVIII of the 

10 Social Security Act, there shall be included in11 formation on the number of days of coverage 

12 of such services remaining under such part 

13 for the medicare beneficiary and spell of ill14 ness involved. 

15 (b) EFFECTIVE DATE.—Subsection (a) shall 

16 apply to notices provided during calendar 

17 quarters beginning more than 6 months after 

18 the date of the enactment of this Act. 

19 SEC. 306. INFORMATION ON MEDICARE-CERTIFIED 

20 SKILLED NURSING FACILITIES IN HOSPITAL 

21 DISCHARGE PLANS. 

22 (a) AVAILABILITY OF DATA.—The Secretary 

23 shall publicly provide information that en24 ables hospital discharge planners, medicare 

25 beneficiaries, and the public to identify 
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1 skilled nursing facilities that are partici2 pating in the medicare program. 

3 (b) INCLUSION OF INFORMATION IN CERTAIN

4 HOSPITAL DISCHARGE PLANS.—

5 (1) IN GENERAL.—Section 

6 1861(ee)(2)(D) (42 U.S.C. 1395x(ee)(2)(D)) 

7 is amended—

8 (A) by striking ‘‘hospice services’’ 

9 and inserting ‘‘hospice care and post10 hospital extended care services’’; and 

11 (B) by inserting before the period 

12 at the end the following: ‘‘and, in the 

13 case of individuals who are likely to 

14 need post-hospital extended care 

15 services, the availability of such serv16 ices through facilities that partici17 pate in the program under this title 

18 and that serve the area in which the 

19 patient resides’’. 

20 (2) EFFECTIVE DATE.—The amendments 

21 made by paragraph (1) shall apply to dis22 charge plans made on or after such date 

23 as the Secretary shall specify, but not 

24 later than 6 months after the date the 
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1 Secretary provides for availability of in2 formation under subsection (a). 

3 TITLE IV—APPEALS AND 

4 RECOVERY 

5 SEC. 401. TRANSFER OF RESPONSIBILITY FOR MEDICARE 

6 APPEALS. 

7 (a) TRANSITION PLAN.—

8 (1) IN GENERAL.—Not later than Octo9 ber 1, 2004, the Commissioner of Social 

10 Security and the Secretary shall develop 

11 and transmit to Congress and the Comp12 troller General of the United States a 

13 plan under which the functions of admin14 istrative law judges responsible for hear15 ing cases under title XVIII of the Social 

16 Security Act (and related provisions in 

17 title XI of such Act) are transferred from 

18 the responsibility of the Commissioner 

19 and the Social Security Administration to 

20 the Secretary and the Department of 

21 Health and Human Services. 

22 (2) GAO EVALUATION.—The Comp23 troller General of the United States shall 

24 evaluate the plan and, not later than the 

25 date that is 6 months after the date on 
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1 which the plan is received by the Comp2 troller General, shall submit to Congress 

3 a report on such evaluation. 

4 (b) TRANSFER OF ADJUDICATION AUTHOR5 ITY.—

6 (1) IN GENERAL.—Not earlier than July 

7 1, 2005, and not later than October 1, 

8 2005, the Commissioner of Social Security 

9 and the Secretary shall implement the 

10 transition plan under subsection (a) and 

11 transfer the administrative law judge

12 functions described in such subsection 

13 from the Social Security Administration 

14 to the Secretary. 

15 (2) ASSURING INDEPENDENCE OF

16 JUDGES.—The Secretary shall assure the 

17 independence of administrative law 

18 judges performing the administrative law 

19 judge functions transferred under para20 graph (1) from the Centers for Medicare 

21 & Medicaid Services and its contractors. 

22 In order to assure such independence, 

23 the Secretary shall place such judges in 

24 an administrative office that is organiza25 tionally and functionally separate from 
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1 such Centers. Such judges shall report to, 

2 and be under the general supervision of, 

3 the Secretary, but shall not report to, or 

4 be subject to supervision by, another 

5 other officer of the Department. 

6 (3) GEOGRAPHIC DISTRIBUTION.—The 

7 Secretary shall provide for an appro8 priate geographic distribution of admin9 istrative law judges performing the ad10 ministrative law judge functions trans11 ferred under paragraph (1) throughout 

12 the United States to ensure timely access 

13 to such judges. 

14 (4) HIRING AUTHORITY.—Subject to the 

15 amounts provided in advance in appro16 priations Act, the Secretary shall have 

17 authority to hire administrative law 

18 judges to hear such cases, giving priority 

19 to those judges with prior experience in 

20 handling medicare appeals and in a man21 ner consistent with paragraph (3), and to 

22 hire support staff for such judges. 

23 (5) FINANCING.—Amounts payable 

24 under law to the Commissioner for ad25 ministrative law judges performing the 
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1 administrative law judge functions trans2 ferred under paragraph (1) from the Fed3 eral Hospital Insurance Trust Fund and 

4 the Federal Supplementary Medical In5 surance Trust Fund shall become payable 

6 to the Secretary for the functions so 

7 transferred. 

8 (6) SHARED RESOURCES.—The Sec9 retary shall enter into such arrangements 

10 with the Commissioner as may be appro11 priate with respect to transferred func12 tions of administrative law judges to 

13 share office space, support staff, and 

14 other resources, with appropriate reim15 bursement from the Trust Funds de16 scribed in paragraph (5). 

17 (c) INCREASED FINANCIAL SUPPORT.—In ad18 dition to any amounts otherwise appro19 priated, to ensure timely action on appeals be20 fore administrative law judges and the De21 partmental Appeals Board consistent with 

22 section 1869 of the Social Security Act (as 

23 amended by section 521 of BIPA, 114 Stat. 

24 2763A–534), there are authorized to be appro25 priated (in appropriate part from the Federal 
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1 Hospital Insurance Trust Fund and the Fed2 eral Supplementary Medical Insurance Trust 

3 Fund) to the Secretary such sums as are nec4 essary for fiscal year 2005 and each subse5 quent fiscal year to—

6 (1) increase the number of adminis7 trative law judges (and their staffs) 

8 under subsection (b)(4); 

9 (2) improve education and training 

10 opportunities for administrative law 

11 judges (and their staffs); and 

12 (3) increase the staff of the Depart13 mental Appeals Board. 

14 (d) CONFORMING AMENDMENT.—Section 

15 1869(f)(2)(A)(i) (42 U.S.C. 1395ff(f)(2)(A)(i)), as 

16 added by section 522(a) of BIPA (114 Stat. 

17 2763A–543), is amended by striking ‘‘of the So18 cial Security Administration’’. 

19 SEC. 402. PROCESS FOR EXPEDITED ACCESS TO REVIEW. 

20 (a) EXPEDITED ACCESS TO JUDICIAL RE21 VIEW.—Section 1869(b) (42 U.S.C. 1395ff(b)) as 

22 amended by BIPA, is amended—

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

24 subject to paragraph (2),’’ before ‘‘to judi-
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1 cial review of the Secretary’s final deci2 sion’’; 

3 (2) in paragraph (1)(F)—

4 (A) by striking clause (ii); 

5 (B) by striking ‘‘PROCEEDING’’ and 

6 all that follows through ‘‘DETERMINA7 TION’’ and inserting ‘‘DETERMINATIONS

8 AND RECONSIDERATIONS’’; and 

9 (C) by redesignating subclauses 

10 (I) and (II) as clauses (i) and (ii) and 

11 by moving the indentation of such

12 subclauses (and the matter that fol13 lows) 2 ems to the left; and 

14 (3) by adding at the end the following 

15 new paragraph: 

16 ‘‘(2) EXPEDITED ACCESS TO JUDICIAL RE17 VIEW.—

18 ‘‘(A) IN GENERAL.—The Secretary 

19 shall establish a process under which 

20 a provider of services or supplier that 

21 furnishes an item or service or an in22 dividual entitled to benefits under 

23 part A or enrolled under part B, or 

24 both, who has filed an appeal under 

25 paragraph (1) may obtain access to 
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1 judicial review when a review panel 

2 (described in subparagraph (D)), on 

3 its own motion or at the request of 

4 the appellant, determines that no en5 tity in the administrative appeals 

6 process has the authority to decide 

7 the question of law or regulation rel8 evant to the matters in controversy 

9 and that there is no material issue of 

10 fact in dispute. The appellant may 

11 make such request only once with re12 spect to a question of law or regula13 tion in a case of an appeal. 

14 ‘‘(B) PROMPT DETERMINATIONS.—If, 

15 after or coincident with appro16 priately filing a request for an admin17 istrative hearing, the appellant re18 quests a determination by the appro19 priate review panel that no review 

20 panel has the authority to decide the 

21 question of law or regulations rel22 evant to the matters in controversy 

23 and that there is no material issue of 

24 fact in dispute and if such request is 

25 accompanied by the documents and 
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1 materials as the appropriate review 

2 panel shall require for purposes of 

3 making such determination, such re4 view panel shall make a determina5 tion on the request in writing within 

6 60 days after the date such review 

7 panel receives the request and such 

8 accompanying documents and mate9 rials. Such a determination by such 

10 review panel shall be considered a 

11 final decision and not subject to re12 view by the Secretary. 

13 ‘‘(C) ACCESS TO JUDICIAL REVIEW.—

14 ‘‘(i) IN GENERAL.—If the appro15 priate review panel—

16 ‘‘(I) determines that there 

17 are no material issues of fact 

18 in dispute and that the only 

19 issue is one of law or regula20 tion that no review panel has 

21 the authority to decide; or 

22 ‘‘(II) fails to make such de23 termination within the period 

24 provided under subparagraph 

25 (B); 
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1 then the appellant may bring a 

2 civil action as described in this 

3 subparagraph. 

4 ‘‘(ii) DEADLINE FOR FILING.—

5 Such action shall be filed, in the 

6 case described in—

7 ‘‘(I) clause (i)(I), within 60 

8 days of date of the determina9 tion described in such sub10 paragraph; or 

11 ‘‘(II) clause (i)(II), within 

12 60 days of the end of the pe13 riod provided under subpara14 graph (B) for the determina15 tion. 

16 ‘‘(iii) VENUE.—Such action 

17 shall be brought in the district 

18 court of the United States for the 

19 judicial district in which the ap20 pellant is located (or, in the case 

21 of an action brought jointly by 

22 more than one applicant, the judi23 cial district in which the greatest 

24 number of applicants are located) 
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1 or in the district court for the 

2 District of Columbia. 

3 ‘‘(iv) INTEREST ON AMOUNTS IN

4 CONTROVERSY.—Where a provider 

5 of services or supplier seeks judi6 cial review pursuant to this para7 graph, the amount in controversy 

8 shall be subject to annual interest 

9 beginning on the first day of the 

10 first month beginning after the 

11 60-day period as determined pur12 suant to clause (ii) and equal to 

13 the rate of interest on obligations 

14 issued for purchase by the Fed15 eral Hospital Insurance Trust 

16 Fund and by the Federal Supple17 mentary Medical Insurance Trust 

18 Fund for the month in which the 

19 civil action authorized under this 

20 paragraph is commenced, to be 

21 awarded by the reviewing court 

22 in favor of the prevailing party. 

23 No interest awarded pursuant to 

24 the preceding sentence shall be 

25 deemed income or cost for the 
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1 purposes of determining reim2 bursement due providers of serv3 ices or suppliers under this Act. 

4 ‘‘(D) REVIEW PANELS.—For pur5 poses of this subsection, a ‘review 

6 panel’ is a panel consisting of 3 mem7 bers (who shall be administrative law 

8 judges, members of the Departmental 

9 Appeals Board, or qualified individ10 uals associated with a qualified inde11 pendent contractor (as defined in

12 subsection (c)(2)) or with another 

13 independent entity) designated by the 

14 Secretary for purposes of making de15 terminations under this paragraph.’’. 

16 (b) APPLICATION TO PROVIDER AGREEMENT

17 DETERMINATIONS.—Section 1866(h)(1) (42 

18 U.S.C. 1395cc(h)(1)) is amended—

19 (1) by inserting ‘‘(A)’’ after ‘‘(h)(1)’’; 

20 and 

21 (2) by adding at the end the following 

22 new subparagraph: 

23 ‘‘(B) An institution or agency described in 

24 subparagraph (A) that has filed for a hearing 

25 under subparagraph (A) shall have expedited 
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1 access to judicial review under this subpara2 graph in the same manner as providers of 

3 services, suppliers, and individuals entitled to 

4 benefits under part A or enrolled under part 

5 B, or both, may obtain expedited access to ju6 dicial review under the process established 

7 under section 1869(b)(2). Nothing in this sub8 paragraph shall be construed to affect the ap9 plication of any remedy imposed under sec10 tion 1819 during the pendency of an appeal 

11 under this subparagraph.’’. 

12 (c) EFFECTIVE DATE.—The amendments 

13 made by this section shall apply to appeals 

14 filed on or after October 1, 2004. 

15 (d) EXPEDITED REVIEW OF CERTAIN PRO16 VIDER AGREEMENT DETERMINATIONS.—

17 (1) TERMINATION AND CERTAIN OTHER

18 IMMEDIATE REMEDIES.—The Secretary shall 

19 develop and implement a process to expe20 dite proceedings under sections 1866(h) 

21 of the Social Security Act (42 U.S.C. 

22 1395cc(h)) in which the remedy of termi23 nation of participation, or a remedy de24 scribed in clause (i) or (iii) of section 

25 1819(h)(2)(B) of such Act (42 U.S.C. 1395i–
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1 3(h)(2)(B)) which is applied on an imme2 diate basis, has been imposed. Under 

3 such process priority shall be provided in 

4 cases of termination. 

5 (2) INCREASED FINANCIAL SUPPORT.—In 

6 addition to any amounts otherwise ap7 propriated, to reduce by 50 percent the 

8 average time for administrative deter9 minations on appeals under section 

10 1866(h) of the Social Security Act (42 

11 U.S.C. 1395cc(h)), there are authorized to 

12 be appropriated (in appropriate part 

13 from the Federal Hospital Insurance 

14 Trust Fund and the Federal Supple15 mentary Medical Insurance Trust Fund) 

16 to the Secretary such additional sums for 

17 fiscal year 2005 and each subsequent fis18 cal year as may be necessary. The pur19 poses for which such amounts are avail20 able include increasing the number of ad21 ministrative law judges (and their staffs) 

22 and the appellate level staff at the De23 partmental Appeals Board of the Depart24 ment of Health and Human Services and 
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1 educating such judges and staffs on long2 term care issues. 

3 SEC. 403. REVISIONS TO MEDICARE APPEALS PROCESS. 

4 (a) REQUIRING FULL AND EARLY PRESEN5 TATION OF EVIDENCE.—

6 (1) IN GENERAL.—Section 1869(b) (42 

7 U.S.C. 1395ff(b)), as amended by BIPA 

8 and as amended by section 402(a), is fur9 ther amended by adding at the end the 

10 following new paragraph: 

11 ‘‘(3) REQUIRING FULL AND EARLY PRES12 ENTATION OF EVIDENCE BY PROVIDERS.—A 

13 provider of services or supplier may not 

14 introduce evidence in any appeal under 

15 this section that was not presented at the 

16 reconsideration conducted by the quali17 fied independent contractor under sub18 section (c), unless there is good cause 

19 which precluded the introduction of such 

20 evidence at or before that reconsider21 ation.’’. 

22 (2) EFFECTIVE DATE.—The amendment 

23 made by paragraph (1) shall take effect 

24 on October 1, 2004. 
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1 (b) USE OF PATIENTS’ MEDICAL RECORDS.—

2 Section 1869(c)(3)(B)(i) (42 U.S.C. 

3 1395ff(c)(3)(B)(i)), as amended by BIPA, is 

4 amended by inserting ‘‘(including the medical 

5 records of the individual involved)’’ after 

6 ‘‘clinical experience’’. 

7 (c) NOTICE REQUIREMENTS FOR MEDICARE

8 APPEALS.— 

9 (1) INITIAL DETERMINATIONS AND REDE10 TERMINATIONS.—Section 1869(a) (42 U.S.C. 

11 1395ff(a)), as amended by BIPA, is amend12 ed by adding at the end the following 

13 new paragraphs:

14 ‘‘(4) REQUIREMENTS OF NOTICE OF DE15 TERMINATIONS.—With respect to an initial 

16 determination insofar as it results in a 

17 denial of a claim for benefits—

18 ‘‘(A) the written notice on the de19 termination shall include—

20 ‘‘(i) the reasons for the deter21 mination, including whether a 

22 local medical review policy or a 

23 local coverage determination was 

24 used; 
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1 ‘‘(ii) the procedures for ob2 taining additional information 

3 concerning the determination, in4 cluding the information described 

5 in subparagraph (B); and 

6 ‘‘(iii) notification of the right 

7 to seek a redetermination or oth8 erwise appeal the determination 

9 and instructions on how to ini10 tiate such a redetermination 

11 under this section; and 

12 ‘‘(B) the person provided such no13 tice may obtain, upon request, the 

14 specific provision of the policy, man15 ual, or regulation used in making the 

16 determination. 

17 ‘‘(5) REQUIREMENTS OF NOTICE OF REDE18 TERMINATIONS.—With respect to a redeter19 mination insofar as it results in a denial 

20 of a claim for benefits—

21 ‘‘(A) the written notice on the re22 determination shall include—

23 ‘‘(i) the specific reasons for 

24 the redetermination; 
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1 ‘‘(ii) as appropriate, a sum2 mary of the clinical or scientific 

3 evidence used in making the rede4 termination; 

5 ‘‘(iii) a description of the pro6 cedures for obtaining additional 

7 information concerning the rede8 termination; and 

9 ‘‘(iv) notification of the right 

10 to appeal the redetermination 

11 and instructions on how to ini12 tiate such an appeal under this 

13 section; 

14 ‘‘(B) such written notice shall be 

15 provided in printed form and written 

16 in a manner calculated to be under17 stood by the individual entitled to 

18 benefits under part A or enrolled 

19 under part B, or both; and 

20 ‘‘(C) the person provided such no21 tice may obtain, upon request, infor22 mation on the specific provision of 

23 the policy, manual, or regulation used 

24 in making the redetermination.’’. 
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1 (2) RECONSIDERATIONS.—Section 

2 1869(c)(3)(E) (42 U.S.C. 1395ff(c)(3)(E)), as 

3 amended by BIPA, is amended—

4 (A) by inserting ‘‘be written in a 

5 manner calculated to be understood 

6 by the individual entitled to benefits 

7 under part A or enrolled under part 

8 B, or both, and shall include (to the 

9 extent appropriate)’’ after ‘‘in writing, 

10 ’’; and 

11 (B) by inserting ‘‘and a notifica12 tion of the right to appeal such deter13 mination and instructions on how to 

14 initiate such appeal under this sec15 tion’’ after ‘‘such decision,’’. 

16 (3) APPEALS.—Section 1869(d) (42 

17 U.S.C. 1395ff(d)), as amended by BIPA, is 

18 amended—

19 (A) in the heading, by inserting ‘‘; 

20 NOTICE’’ after ‘‘SECRETARY’’; and 

21 (B) by adding at the end the fol22 lowing new paragraph: 

23 ‘‘(4) NOTICE.—Notice of the decision of 

24 an administrative law judge shall be in 

25 writing in a manner calculated to be un-
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1 derstood by the individual entitled to 

2 benefits under part A or enrolled under 

3 part B, or both, and shall include—

4 ‘‘(A) the specific reasons for the 

5 determination (including, to the ex6 tent appropriate, a summary of the 

7 clinical or scientific evidence used in 

8 making the determination); 

9 ‘‘(B) the procedures for obtaining 

10 additional information concerning 

11 the decision; and 

12 ‘‘(C) notification of the right to 

13 appeal the decision and instructions 

14 on how to initiate such an appeal 

15 under this section.’’.

16 (4) SUBMISSION OF RECORD FOR AP17 PEAL.—Section 1869(c)(3)(J)(i) (42 U.S.C. 

18 1395ff(c)(3)(J)(i)) by striking ‘‘prepare’’ 

19 and inserting ‘‘submit’’ and by striking 

20 ‘‘with respect to’’ and all that follows 

21 through ‘‘and relevant policies’’. 

22 (d) QUALIFIED INDEPENDENT CONTRAC23 TORS.—

24 (1) ELIGIBILITY REQUIREMENTS OF

25 QUALIFIED INDEPENDENT CONTRACTORS.—
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1 Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)), 

2 as amended by BIPA, is amended—

3 (A) in subparagraph (A), by strik4 ing ‘‘sufficient training and expertise 

5 in medical science and legal matters’’ 

6 and inserting ‘‘sufficient medical, 

7 legal, and other expertise (including 

8 knowledge of the program under this 

9 title) and sufficient staffing’’; and 

10 (B) by adding at the end the fol11 lowing new subparagraph: 

12 ‘‘(K) INDEPENDENCE REQUIRE13 MENTS.—

14 ‘‘(i) IN GENERAL.—Subject to 

15 clause (ii), a qualified inde16 pendent contractor shall not con17 duct any activities in a case un18 less the entity—

19 ‘‘(I) is not a related party 

20 (as defined in subsection 

21 (g)(5)); 

22 ‘‘(II) does not have a mate23 rial familial, financial, or pro24 fessional relationship with 
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1 such a party in relation to 

2 such case; and 

3 ‘‘(III) does not otherwise 

4 have a conflict of interest 

5 with such a party. 

6 ‘‘(ii) EXCEPTION FOR REASON7 ABLE COMPENSATION.—Nothing in 

8 clause (i) shall be construed to 

9 prohibit receipt by a qualified 

10 independent contractor of com11 pensation from the Secretary for 

12 the conduct of activities under 

13 this section if the compensation is 

14 provided consistent with clause 

15 (iii). 

16 ‘‘(iii) LIMITATIONS ON ENTITY

17 COMPENSATION.—Compensation 

18 provided by the Secretary to a 

19 qualified independent contractor 

20 in connection with reviews under 

21 this section shall not be contin22 gent on any decision rendered by 

23 the contractor or by any review24 ing professional.’’. 
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1 (2) ELIGIBILITY REQUIREMENTS FOR RE2 VIEWERS.—Section 1869 (42 U.S.C. 1395ff), 

3 as amended by BIPA, is amended—

4 (A) by amending subsection 

5 (c)(3)(D) to read as follows: 

6 ‘‘(D) QUALIFICATIONS FOR REVIEW7 ERS.—The requirements of subsection 

8 (g) shall be met (relating to qualifica9 tions of reviewing professionals).’’; 

10 and 

11 (B) by adding at the end the fol12 lowing new subsection: 

13 ‘‘(g) QUALIFICATIONS OF REVIEWERS.—

14 ‘‘(1) IN GENERAL.—In reviewing deter15 minations under this section, a qualified 

16 independent contractor shall assure 

17 that—

18 ‘‘(A) each individual conducting a 

19 review shall meet the qualifications 

20 of paragraph (2); 

21 ‘‘(B) compensation provided by 

22 the contractor to each such reviewer 

23 is consistent with paragraph (3); and 

24 ‘‘(C) in the case of a review by a 

25 panel described in subsection 
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1 (c)(3)(B) composed of physicians or 

2 other health care professionals (each 

3 in this subsection referred to as a ‘re4 viewing professional’), a reviewing 

5 professional meets the qualifications 

6 described in paragraph (4) and, 

7 where a claim is regarding the fur8 nishing of treatment by a physician 

9 (allopathic or osteopathic) or the pro10 vision of items or services by a physi11 cian (allopathic or osteopathic), each 

12 reviewing professional shall be a phy13 sician (allopathic or osteopathic). 

14 ‘‘(2) INDEPENDENCE.—

15 ‘‘(A) IN GENERAL.—Subject to sub16 paragraph (B), each individual con17 ducting a review in a case shall—

18 ‘‘(i) not be a related party (as 

19 defined in paragraph (5)); 

20 ‘‘(ii) not have a material famil21 ial, financial, or professional rela22 tionship with such a party in the 

23 case under review; and 
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1 ‘‘(iii) not otherwise have a 

2 conflict of interest with such a 

3 party. 

4 ‘‘(B) EXCEPTION.—Nothing in sub5 paragraph (A) shall be construed to—

6 ‘‘(i) prohibit an individual, 

7 solely on the basis of a participa8 tion agreement with a fiscal inter9 mediary, carrier, or other con10 tractor, from serving as a review11 ing professional if—

12 ‘‘(I) the individual is not 

13 involved in the provision of 

14 items or services in the case 

15 under review;

16 ‘‘(II) the fact of such an 

17 agreement is disclosed to the 

18 Secretary and the individual 

19 entitled to benefits under part 

20 A or enrolled under part B, or 

21 both, (or authorized rep22 resentative) and neither party 

23 objects; and 

24 ‘‘(III) the individual is not 

25 an employee of the inter-
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1 mediary, carrier, or con2 tractor and does not provide 

3 services exclusively or pri4 marily to or on behalf of such 

5 intermediary, carrier, or con6 tractor; 

7 ‘‘(ii) prohibit an individual 

8 who has staff privileges at the in9 stitution where the treatment in10 volved takes place from serving 

11 as a reviewer merely on the basis 

12 of having such staff privileges if 

13 the existence of such privileges is 

14 disclosed to the Secretary and 

15 such individual (or authorized 

16 representative), and neither party 

17 objects; or 

18 ‘‘(iii) prohibit receipt of com19 pensation by a reviewing profes20 sional from a contractor if the 

21 compensation is provided con22 sistent with paragraph (3). 

23 For purposes of this paragraph, the 

24 term ‘participation agreement’ means 

25 an agreement relating to the provi-
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1 sion of health care services by the in2 dividual and does not include the 

3 provision of services as a reviewer 

4 under this subsection. 

5 ‘‘(3) LIMITATIONS ON REVIEWER COM6 PENSATION.—Compensation provided by a 

7 qualified independent contractor to a re8 viewer in connection with a review under 

9 this section shall not be contingent on 

10 the decision rendered by the reviewer. 

11 ‘‘(4) LICENSURE AND EXPERTISE.—Each 

12 reviewing professional shall be—

13 ‘‘(A) a physician (allopathic or os14 teopathic) who is appropriately 

15 credentialed or licensed in one or 

16 more States to deliver health care 

17 services and has medical expertise in 

18 the field of practice that is appro19 priate for the items or services at 

20 issue; or 

21 ‘‘(B) a health care professional 

22 who is legally authorized in one or 

23 more States (in accordance with State 

24 law or the State regulatory mecha25 nism provided by State law) to fur-
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1 nish the health care items or services 

2 at issue and has medical expertise in 

3 the field of practice that is appro4 priate for such items or services. 

5 ‘‘(5) RELATED PARTY DEFINED.—For 

6 purposes of this section, the term ‘related 

7 party’ means, with respect to a case 

8 under this title involving a specific indi9 vidual entitled to benefits under part A 

10 or enrolled under part B, or both, any of 

11 the following: 

12 ‘‘(A) The Secretary, the medicare 

13 administrative contractor involved, 

14 or any fiduciary, officer, director, or 

15 employee of the Department of 

16 Health and Human Services, or of 

17 such contractor. 

18 ‘‘(B) The individual (or authorized 

19 representative). 

20 ‘‘(C) The health care professional 

21 that provides the items or services in22 volved in the case. 

23 ‘‘(D) The institution at which the 

24 items or services (or treatment) in25 volved in the case are provided. 
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1 ‘‘(E) The manufacturer of any 

2 drug or other item that is included in 

3 the items or services involved in the 

4 case. 

5 ‘‘(F) Any other party determined 

6 under any regulations to have a sub7 stantial interest in the case in8 volved.’’. 

9 (3) REDUCING MINIMUM NUMBER OF

10 QUALIFIED INDEPENDENT CONTRACTORS.—

11 Section 1869(c)(4) (42 U.S.C. 1395ff(c)(4)) 

12 is amended by striking ‘‘not fewer than 

13 12 qualified independent contractors 

14 under this subsection’’ and inserting ‘‘a 

15 sufficient number of qualified inde16 pendent contractors (but not fewer than 

17 4 such contractors) to conduct reconsid18 erations consistent with the timeframes 

19 applicable under this subsection’’. 

20 (4) EFFECTIVE DATE.—The amendments 

21 made by paragraphs (1) and (2) shall be 

22 effective as if included in the enactment 

23 of the respective provisions of subtitle C 

24 of title V of BIPA, (114 Stat. 2763A–534). 
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1 (5) TRANSITION.—In applying section 

2 1869(g) of the Social Security Act (as 

3 added by paragraph (2)), any reference to 

4 a medicare administrative contractor 

5 shall be deemed to include a reference to 

6 a fiscal intermediary under section 1816 

7 of the Social Security Act (42 U.S.C. 

8 1395h) and a carrier under section 1842 

9 of such Act (42 U.S.C. 1395u). 

10 SEC. 404. PREPAYMENT REVIEW. 

11 (a) IN GENERAL.—Section 1874A, as added 

12 by section 201(a)(1) and as amended by sec13 tions 202(b), 301(b)(1), and 301(c)(1), is further 

14 amended by adding at the end the following 

15 new subsection: 

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

17 ‘‘(1) CONDUCT OF RANDOM PREPAYMENT

18 REVIEW.—

19 ‘‘(A) IN GENERAL.—A medicare ad20 ministrative contractor may conduct 

21 random prepayment review only to 

22 develop a contractor-wide or pro23 gram-wide claims payment error 

24 rates or under such additional cir25 cumstances as may be provided 
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1 under regulations, developed in con2 sultation with providers of services 

3 and suppliers. 

4 ‘‘(B) USE OF STANDARD PROTOCOLS

5 WHEN CONDUCTING PREPAYMENT RE6 VIEWS.—When a medicare administra7 tive contractor conducts a random 

8 prepayment review, the contractor 

9 may conduct such review only in ac10 cordance with a standard protocol for 

11 random prepayment audits developed 

12 by the Secretary. 

13 ‘‘(C) CONSTRUCTION.—Nothing in 

14 this paragraph shall be construed as 

15 preventing the denial of payments for 

16 claims actually reviewed under a ran17 dom prepayment review. 

18 ‘‘(D) RANDOM PREPAYMENT RE19 VIEW.—For purposes of this sub20 section, the term ‘random prepay21 ment review’ means a demand for the 

22 production of records or documenta23 tion absent cause with respect to a 

24 claim. 
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1 ‘‘(2) LIMITATIONS ON NON-RANDOM PRE2 PAYMENT REVIEW.—

3 ‘‘(A) LIMITATIONS ON INITIATION OF

4 NON-RANDOM PREPAYMENT REVIEW.—A 

5 medicare administrative contractor 

6 may not initiate non-random prepay7 ment review of a provider of services 

8 or supplier based on the initial iden9 tification by that provider of services 

10 or supplier of an improper billing 

11 practice unless there is a likelihood 

12 of sustained or high level of payment 

13 error (as defined in subsection 

14 (i)(3)(A)). 

15 ‘‘(B) TERMINATION OF NON-RANDOM

16 PREPAYMENT REVIEW.—The Secretary 

17 shall issue regulations relating to the 

18 termination, including termination 

19 dates, of non-random prepayment re20 view. Such regulations may vary such 

21 a termination date based upon the 

22 differences in the circumstances trig23 gering prepayment review.’’. 

24 (b) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—Except as provided 

2 in this subsection, the amendment made 

3 by subsection (a) shall take effect 1 year 

4 after the date of the enactment of this 

5 Act. 

6 (2) DEADLINE FOR PROMULGATION OF

7 CERTAIN REGULATIONS.—The Secretary 

8 shall first issue regulations under section 

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

10 added by subsection (a), by not later than 

11 1 year after the date of the enactment of 

12 this Act. 

13 (3) APPLICATION OF STANDARD PROTO14 COLS FOR RANDOM PREPAYMENT REVIEW.—

15 Section 1874A(h)(1)(B) of the Social Secu16 rity Act, as added by subsection (a), shall 

17 apply to random prepayment reviews 

18 conducted on or after such date (not later 

19 than 1 year after the date of the enact20 ment of this Act) as the Secretary shall 

21 specify. 

22 (c) APPLICATION TO FISCAL INTERMEDIARIES

23 AND CARRIERS.—The provisions of section 

24 1874A(h) of the Social Security Act, as added 

25 by subsection (a), shall apply to each fiscal 
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1 intermediary under section 1816 of the Social 

2 Security Act (42 U.S.C. 1395h) and each car3 rier under section 1842 of such Act (42 U.S.C. 

4 1395u) in the same manner as they apply to 

5 medicare administrative contractors under 

6 such provisions. 

7 SEC. 405. RECOVERY OF OVERPAYMENTS. 

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

9 1395ddd) is amended by adding at the end the 

10 following new subsection: 

11 ‘‘(f) RECOVERY OF OVERPAYMENTS.—

12 ‘‘(1) USE OF REPAYMENT PLANS.—

13 ‘‘(A) IN GENERAL.—If the repay14 ment, within 30 days by a provider of 

15 services or supplier, of an overpay16 ment under this title would con17 stitute a hardship (as defined in sub18 paragraph (B)), subject to subpara19 graph (C), upon request of the pro20 vider of services or supplier the Sec21 retary shall enter into a plan with the 

22 provider of services or supplier for 

23 the repayment (through offset or oth24 erwise) of such overpayment over a 

25 period of at least 6 months but not 
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1 longer than 3 years (or not longer 

2 than 5 years in the case of extreme 

3 hardship, as determined by the Sec4 retary). Interest shall accrue on the 

5 balance through the period of repay6 ment. Such plan shall meet terms and 

7 conditions determined to be appro8 priate by the Secretary. 

9 ‘‘(B) HARDSHIP.—

10 ‘‘(i) IN GENERAL.—For purposes 

11 of subparagraph (A), the repay12 ment of an overpayment (or over13 payments) within 30 days is 

14 deemed to constitute a hardship 

15 if—

16 ‘‘(I) in the case of a pro17 vider of services that files

18 cost reports, the aggregate 

19 amount of the overpayments 

20 exceeds 10 percent of the 

21 amount paid under this title 

22 to the provider of services for 

23 the cost reporting period cov24 ered by the most recently sub25 mitted cost report; or 
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1 ‘‘(II) in the case of another 

2 provider of services or sup3 plier, the aggregate amount of 

4 the overpayments exceeds 10 

5 percent of the amount paid 

6 under this title to the pro7 vider of services or supplier 

8 for the previous calendar 

9 year. 

10 ‘‘(ii) RULE OF APPLICATION.—

11 The Secretary shall establish 

12 rules for the application of this 

13 subparagraph in the case of a 

14 provider of services or supplier 

15 that was not paid under this title 

16 during the previous year or was 

17 paid under this title only during a 

18 portion of that year. 

19 ‘‘(iii) TREATMENT OF PREVIOUS

20 OVERPAYMENTS.—If a provider of 

21 services or supplier has entered 

22 into a repayment plan under sub23 paragraph (A) with respect to a 

24 specific overpayment amount, 

25 such payment amount under the 
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1 repayment plan shall not be taken 

2 into account under clause (i) with 

3 respect to subsequent overpay4 ment amounts. 

5 ‘‘(C) EXCEPTIONS.—Subparagraph 

6 (A) shall not apply if—

7 ‘‘(i) the Secretary has reason 

8 to suspect that the provider of 

9 services or supplier may file for 

10 bankruptcy or otherwise cease to 

11 do business or discontinue par12 ticipation in the program under 

13 this title; or 

14 ‘‘(ii) there is an indication of 

15 fraud or abuse committed against 

16 the program. 

17 ‘‘(D) IMMEDIATE COLLECTION IF VIO18 LATION OF REPAYMENT PLAN.—If a pro19 vider of services or supplier fails to 

20 make a payment in accordance with a 

21 repayment plan under this para22 graph, the Secretary may imme23 diately seek to offset or otherwise re24 cover the total balance outstanding 
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1 (including applicable interest) under 

2 the repayment plan. 

3 ‘‘(E) RELATION TO NO FAULT PROVI4 SION.—Nothing in this paragraph 

5 shall be construed as affecting the ap6 plication of section 1870(c) (relating 

7 to no adjustment in the cases of cer8 tain overpayments). 

9 ‘‘(2) LIMITATION ON RECOUPMENT.—

10 ‘‘(A) IN GENERAL.—In the case of a 

11 provider of services or supplier that 

12 is determined to have received an 

13 overpayment under this title and that 

14 seeks a reconsideration by a qualified 

15 independent contractor on such de16 termination under section 1869(b)(1), 

17 the Secretary may not take any ac18 tion (or authorize any other person, 

19 including any medicare contractor, as 

20 defined in subparagraph (C)) to re21 coup the overpayment until the date 

22 the decision on the reconsideration 

23 has been rendered. If the provisions 

24 of section 1869(b)(1) (providing for 

25 such a reconsideration by a qualified 
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1 independent contractor) are not in ef2 fect, in applying the previous sen3 tence any reference to such a recon4 sideration shall be treated as a ref5 erence to a redetermination by the 

6 fiscal intermediary or carrier in7 volved. 

8 ‘‘(B) COLLECTION WITH INTEREST.—

9 Insofar as the determination on such 

10 appeal is against the provider of serv11 ices or supplier, interest on the over12 payment shall accrue on and after the 

13 date of the original notice of overpay14 ment. Insofar as such determination 

15 against the provider of services or 

16 supplier is later reversed, the Sec17 retary shall provide for repayment of 

18 the amount recouped plus interest at 

19 the same rate as would apply under 

20 the previous sentence for the period 

21 in which the amount was recouped. 

22 ‘‘(C) MEDICARE CONTRACTOR DE23 FINED.—For purposes of this sub24 section, the term ‘medicare con-
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1 tractor’ has the meaning given such 

2 term in section 1889(g). 

3 ‘‘(3) LIMITATION ON USE OF EXTRAPO4 LATION.—A medicare contractor may not 

5 use extrapolation to determine overpay6 ment amounts to be recovered by 

7 recoupment, offset, or otherwise unless—

8 ‘‘(A) there is a sustained or high 

9 level of payment error (as defined by 

10 the Secretary by regulation); or 

11 ‘‘(B) documented educational 

12 intervention has failed to correct the 

13 payment error (as determined by the 

14 Secretary). 

15 ‘‘(4) PROVISION OF SUPPORTING DOCU16 MENTATION.—In the case of a provider of 

17 services or supplier with respect to 

18 which amounts were previously overpaid,

19 a medicare contractor may request the 

20 periodic production of records or sup21 porting documentation for a limited sam22 ple of submitted claims to ensure that the 

23 previous practice is not continuing. 

24 ‘‘(5) CONSENT SETTLEMENT REFORMS.—
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1 ‘‘(A) IN GENERAL.—The Secretary 

2 may use a consent settlement (as de3 fined in subparagraph (D)) to settle a 

4 projected overpayment. 

5 ‘‘(B) OPPORTUNITY TO SUBMIT ADDI6 TIONAL INFORMATION BEFORE CONSENT

7 SETTLEMENT OFFER.—Before offering a 

8 provider of services or supplier a con9 sent settlement, the Secretary shall—

10 ‘‘(i) communicate to the pro11 vider of services or supplier—

12 ‘‘(I) that, based on a re13 view of the medical records 

14 requested by the Secretary, a 

15 preliminary evaluation of 

16 those records indicates that 

17 there would be an overpay18 ment; 

19 ‘‘(II) the nature of the 

20 problems identified in such 

21 evaluation; and 

22 ‘‘(III) the steps that the 

23 provider of services or sup24 plier should take to address 

25 the problems; and 
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1 ‘‘(ii) provide for a 45-day pe2 riod during which the provider of 

3 services or supplier may furnish 

4 additional information con5 cerning the medical records for 

6 the claims that had been re7 viewed. 

8 ‘‘(C) CONSENT SETTLEMENT OFFER.—

9 The Secretary shall review any addi10 tional information furnished by the 

11 provider of services or supplier under 

12 subparagraph (B)(ii). Taking into con13 sideration such information, the Sec14 retary shall determine if there still 

15 appears to be an overpayment. If so, 

16 the Secretary—

17 ‘‘(i) shall provide notice of 

18 such determination to the pro19 vider of services or supplier, in20 cluding an explanation of the rea21 son for such determination; and 

22 ‘‘(ii) in order to resolve the 

23 overpayment, may offer the pro24 vider of services or supplier—
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1 ‘‘(I) the opportunity for a 

2 statistically valid random 

3 sample; or 

4 ‘‘(II) a consent settlement. 

5 The opportunity provided under 

6 clause (ii)(I) does not waive any ap7 peal rights with respect to the alleged 

8 overpayment involved. 

9 ‘‘(D) CONSENT SETTLEMENT DE10 FINED.—For purposes of this para11 graph, the term ‘consent settlement’ 

12 means an agreement between the Sec13 retary and a provider of services or 

14 supplier whereby both parties agree 

15 to settle a projected overpayment 

16 based on less than a statistically valid 

17 sample of claims and the provider of 

18 services or supplier agrees not to ap19 peal the claims involved. 

20 ‘‘(6) NOTICE OF OVER-UTILIZATION OF

21 CODES.—The Secretary shall establish, in 

22 consultation with organizations rep23 resenting the classes of providers of serv24 ices and suppliers, a process under which 

25 the Secretary provides for notice to class-
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1 es of providers of services and suppliers 

2 served by the contractor in cases in 

3 which the contractor has identified that 

4 particular billing codes may be overuti5 lized by that class of providers of services 

6 or suppliers under the programs under 

7 this title (or provisions of title XI insofar 

8 as they relate to such programs). 

9 ‘‘(7) PAYMENT AUDITS.—

10 ‘‘(A) WRITTEN NOTICE FOR POST-PAY11 MENT AUDITS.—Subject to subpara12 graph (C), if a medicare contractor 

13 decides to conduct a post-payment 

14 audit of a provider of services or sup15 plier under this title, the contractor 

16 shall provide the provider of services 

17 or supplier with written notice 

18 (which may be in electronic form) of 

19 the intent to conduct such an audit. 

20 ‘‘(B) EXPLANATION OF FINDINGS FOR

21 ALL AUDITS.—Subject to subparagraph 

22 (C), if a medicare contractor audits a 

23 provider of services or supplier under 

24 this title, the contractor shall—
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1 ‘‘(i) give the provider of serv2 ices or supplier a full review and 

3 explanation of the findings of the 

4 audit in a manner that is under5 standable to the provider of serv6 ices or supplier and permits the 

7 development of an appropriate 

8 corrective action plan; 

9 ‘‘(ii) inform the provider of 

10 services or supplier of the appeal 

11 rights under this title as well as 

12 consent settlement options (which 

13 are at the discretion of the Sec14 retary); 

15 ‘‘(iii) give the provider of serv16 ices or supplier an opportunity to 

17 provide additional information to 

18 the contractor; and 

19 ‘‘(iv) take into account infor20 mation provided, on a timely

21 basis, by the provider of services 

22 or supplier under clause (iii). 

23 ‘‘(C) EXCEPTION.—Subparagraphs 

24 (A) and (B) shall not apply if the pro25 vision of notice or findings would 
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1 compromise pending law enforcement 

2 activities, whether civil or criminal, 

3 or reveal findings of law enforce4 ment-related audits. 

5 ‘‘(8) STANDARD METHODOLOGY FOR

6 PROBE SAMPLING.—The Secretary shall es7 tablish a standard methodology for medi8 care contractors to use in selecting a 

9 sample of claims for review in the case of 

10 an abnormal billing pattern.’’. 

11 (b) EFFECTIVE DATES AND DEADLINES.—

12 (1) USE OF REPAYMENT PLANS.—Section 

13 1893(f)(1) of the Social Security Act, as 

14 added by subsection (a), shall apply to re15 quests for repayment plans made after 

16 the date of the enactment of this Act. 

17 (2) LIMITATION ON RECOUPMENT.—Sec18 tion 1893(f)(2) of the Social Security Act, 

19 as added by subsection (a), shall apply to 

20 actions taken after the date of the enact21 ment of this Act. 

22 (3) USE OF EXTRAPOLATION.—Section 

23 1893(f)(3) of the Social Security Act, as 

24 added by subsection (a), shall apply to 

25 statistically valid random samples initi-
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1 ated after the date that is 1 year after the 

2 date of the enactment of this Act. 

3 (4) PROVISION OF SUPPORTING DOCU4 MENTATION.—Section 1893(f)(4) of the So5 cial Security Act, as added by subsection 

6 (a), shall take effect on the date of the en7 actment of this Act. 

8 (5) CONSENT SETTLEMENT.—Section 

9 1893(f)(5) of the Social Security Act, as 

10 added by subsection (a), shall apply to 

11 consent settlements entered into after the 

12 date of the enactment of this Act. 

13 (6) NOTICE OF OVERUTILIZATION.—Not 

14 later than 1 year after the date of the en15 actment of this Act, the Secretary shall 

16 first establish the process for notice of 

17 overutilization of billing codes under sec18 tion 1893A(f)(6) of the Social Security Act, 

19 as added by subsection (a). 

20 (7) PAYMENT AUDITS.—Section 

21 1893A(f)(7) of the Social Security Act, as 

22 added by subsection (a), shall apply to 

23 audits initiated after the date of the en24 actment of this Act. 
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1 (8) STANDARD FOR ABNORMAL BILLING

2 PATTERNS.—Not later than 1 year after the 

3 date of the enactment of this Act, the Sec4 retary shall first establish a standard 

5 methodology for selection of sample 

6 claims for abnormal billing patterns 

7 under section 1893(f)(8) of the Social Se8 curity Act, as added by subsection (a). 

9 SEC. 406. PROVIDER ENROLLMENT PROCESS; RIGHT OF AP10 PEAL. 

11 (a) IN GENERAL.—Section 1866 (42 U.S.C. 

12 1395cc) is amended—

13 (1) by adding at the end of the head14 ing the following: ‘‘; ENROLLMENT PROC15 ESSES’’; and 

16 (2) by adding at the end the following 

17 new subsection: 

18 ‘‘(j) ENROLLMENT PROCESS FOR PROVIDERS

19 OF SERVICES AND SUPPLIERS.—

20 ‘‘(1) ENROLLMENT PROCESS.—

21 ‘‘(A) IN GENERAL.—The Secretary 

22 shall establish by regulation a proc23 ess for the enrollment of providers of 

24 services and suppliers under this 

25 title. 
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1 ‘‘(B) DEADLINES.—The Secretary 

2 shall establish by regulation proce3 dures under which there are dead4 lines for actions on applications for 

5 enrollment (and, if applicable, re6 newal of enrollment). The Secretary 

7 shall monitor the performance of 

8 medicare administrative contractors 

9 in meeting the deadlines established 

10 under this subparagraph. 

11 ‘‘(C) CONSULTATION BEFORE CHANG12 ING PROVIDER ENROLLMENT FORMS.—

13 The Secretary shall consult with pro14 viders of services and suppliers be15 fore making changes in the provider 

16 enrollment forms required of such 

17 providers and suppliers to be eligible 

18 to submit claims for which payment 

19 may be made under this title. 

20 ‘‘(2) HEARING RIGHTS IN CASES OF DE21 NIAL OR NON-RENEWAL.—A provider of 

22 services or supplier whose application to 

23 enroll (or, if applicable, to renew enroll24 ment) under this title is denied may have 

25 a hearing and judicial review of such de-
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1 nial under the procedures that apply 

2 under subsection (h)(1)(A) to a provider 

3 of services that is dissatisfied with a de4 termination by the Secretary.’’. 

5 (b) EFFECTIVE DATES.—

6 (1) ENROLLMENT PROCESS.—The Sec7 retary shall provide for the establishment 

8 of the enrollment process under section 

9 1866(j)(1) of the Social Security Act, as 

10 added by subsection (a)(2), within 6 

11 months after the date of the enactment of 

12 this Act. 

13 (2) CONSULTATION.—Section 

14 1866(j)(1)(C) of the Social Security Act, as 

15 added by subsection (a)(2), shall apply 

16 with respect to changes in provider en17 rollment forms made on or after January 

18 1, 2004.

19 (3) HEARING RIGHTS.—Section 

20 1866(j)(2) of the Social Security Act, as 

21 added by subsection (a)(2), shall apply to 

22 denials occurring on or after such date 

23 (not later than 1 year after the date of 

24 the enactment of this Act) as the Sec25 retary specifies. 
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1 SEC. 407. PROCESS FOR CORRECTION OF MINOR ERRORS 

2 AND OMISSIONS ON CLAIMS WITHOUT PUR3 SUING APPEALS PROCESS. 

4 The Secretary shall develop, in consulta5 tion with appropriate medicare contractors 

6 (as defined in section 1889(g) of the Social Se7 curity Act, as inserted by section 301(a)(1)) 

8 and representatives of providers of services 

9 and suppliers, a process whereby, in the case 

10 of minor errors or omissions (as defined by 

11 the Secretary) that are detected in the sub12 mission of claims under the programs under 

13 title XVIII of such Act, a provider of services 

14 or supplier is given an opportunity to correct 

15 such an error or omission without the need to 

16 initiate an appeal. Such process shall include 

17 the ability to resubmit corrected claims. 

18 SEC. 408. PRIOR DETERMINATION PROCESS FOR CERTAIN 

19 ITEMS AND SERVICES; ADVANCE BENE20 FICIARY NOTICES. 

21 (a) IN GENERAL.—Section 1869 (42 U.S.C. 

22 1395ff(b)), as amended by sections 521 and 522 

23 of BIPA and section 403(d)(2)(B), is further 

24 amended by adding at the end the following 

25 new subsection: 
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1 ‘‘(h) PRIOR DETERMINATION PROCESS FOR

2 CERTAIN ITEMS AND SERVICES.—

3 ‘‘(1) ESTABLISHMENT OF PROCESS.—

4 ‘‘(A) IN GENERAL.—With respect to 

5 a medicare administrative contractor 

6 that has a contract under section 

7 1874A that provides for making pay8 ments under this title with respect to 

9 eligible items and services described 

10 in subparagraph (C), the Secretary 

11 shall establish a prior determination 

12 process that meets the requirements 

13 of this subsection and that shall be 

14 applied by such contractor in the 

15 case of eligible requesters. 

16 ‘‘(B) ELIGIBLE REQUESTER.—For 

17 purposes of this subsection, each of 

18 the following shall be an eligible re19 quester: 

20 ‘‘(i) A physician, but only with 

21 respect to eligible items and serv22 ices for which the physician may 

23 be paid directly. 

24 ‘‘(ii) An individual entitled to 

25 benefits under this title, but only 
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1 with respect to an item or service 

2 for which the individual receives, 

3 from the physician who may be 

4 paid directly for the item or serv5 ice, an advance beneficiary notice 

6 under section 1879(a) that pay7 ment may not be made (or may no 

8 longer be made) for the item or 

9 service under this title. 

10 ‘‘(C) ELIGIBLE ITEMS AND SERV11 ICES.—For purposes of this subsection 

12 and subject to paragraph (2), eligible 

13 items and services are items and 

14 services which are physicians’ serv15 ices (as defined in paragraph (4)(A) of 

16 section 1848(f) for purposes of calcu17 lating the sustainable growth rate 

18 under such section). 

19 ‘‘(2) SECRETARIAL FLEXIBILITY.—The 

20 Secretary shall establish by regulation 

21 reasonable limits on the categories of eli22 gible items and services for which a prior 

23 determination of coverage may be re24 quested under this subsection. In estab25 lishing such limits, the Secretary may 
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1 consider the dollar amount involved with 

2 respect to the item or service, adminis3 trative costs and burdens, and other rel4 evant factors. 

5 ‘‘(3) REQUEST FOR PRIOR DETERMINA6 TION.—

7 ‘‘(A) IN GENERAL.—Subject to para8 graph (2), under the process estab9 lished under this subsection an eligi10 ble requester may submit to the con11 tractor a request for a determination, 

12 before the furnishing of an eligible 

13 item or service involved as to wheth14 er the item or service is covered 

15 under this title consistent with the 

16 applicable requirements of section 

17 1862(a)(1)(A) (relating to medical ne18 cessity). 

19 ‘‘(B) ACCOMPANYING DOCUMENTA20 TION.—The Secretary may require 

21 that the request be accompanied by a 

22 description of the item or service, 

23 supporting documentation relating to 

24 the medical necessity for the item or 

25 service, and any other appropriate 
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1 documentation. In the case of a re2 quest submitted by an eligible re3 quester who is described in para4 graph (1)(B)(ii), the Secretary may re5 quire that the request also be accom6 panied by a copy of the advance ben7 eficiary notice involved. 

8 ‘‘(4) RESPONSE TO REQUEST.—

9 ‘‘(A) IN GENERAL.—Under such 

10 process, the contractor shall provide 

11 the eligible requester with written 

12 notice of a determination as to 

13 whether—

14 ‘‘(i) the item or service is so 

15 covered;

16 ‘‘(ii) the item or service is not 

17 so covered; or 

18 ‘‘(iii) the contractor lacks suf19 ficient information to make a cov20 erage determination. 

21 If the contractor makes the deter22 mination described in clause (iii), the 

23 contractor shall include in the notice 

24 a description of the additional infor-
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1 mation required to make the cov2 erage determination. 

3 ‘‘(B) DEADLINE TO RESPOND.—Such 

4 notice shall be provided within the 

5 same time period as the time period 

6 applicable to the contractor pro7 viding notice of initial determina8 tions on a claim for benefits under 

9 subsection (a)(2)(A). 

10 ‘‘(C) INFORMING BENEFICIARY IN

11 CASE OF PHYSICIAN REQUEST.—In the 

12 case of a request in which an eligible 

13 requester is not the individual de14 scribed in paragraph (1)(B)(ii), the 

15 process shall provide that the indi16 vidual to whom the item or service is 

17 proposed to be furnished shall be in18 formed of any determination de19 scribed in clause (ii) (relating to a de20 termination of non-coverage) and the 

21 right (referred to in paragraph (6)(B)) 

22 to obtain the item or service and have 

23 a claim submitted for the item or 

24 service. 

25 ‘‘(5) EFFECT OF DETERMINATIONS.—
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1 ‘‘(A) BINDING NATURE OF POSITIVE

2 DETERMINATION.—If the contractor 

3 makes the determination described in 

4 paragraph (4)(A)(i), such determina5 tion shall be binding on the con6 tractor in the absence of fraud or evi7 dence of misrepresentation of facts 

8 presented to the contractor. 

9 ‘‘(B) NOTICE AND RIGHT TO REDE10 TERMINATION IN CASE OF A DENIAL.—

11 ‘‘(i) IN GENERAL.—If the con12 tractor makes the determination 

13 described in paragraph 

14 (4)(A)(ii)—

15 ‘‘(I) the eligible requester 

16 has the right to a redeter17 mination by the contractor on 

18 the determination that the 

19 item or service is not so cov20 ered; and 

21 ‘‘(II) the contractor shall 

22 include in notice under para23 graph (4)(A) a brief expla24 nation of the basis for the de25 termination, including on 
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1 what national or local cov2 erage or noncoverage deter3 mination (if any) the deter4 mination is based, and the 

5 right to such a redetermina6 tion. 

7 ‘‘(ii) DEADLINE FOR REDETER8 MINATIONS.—The contractor shall 

9 complete and provide notice of 

10 such redetermination within the 

11 same time period as the time pe12 riod applicable to the contractor 

13 providing notice of redetermina14 tions relating to a claim for bene15 fits under subsection (a)(3)(C)(ii). 

16 ‘‘(6) LIMITATION ON FURTHER REVIEW.—

17 ‘‘(A) IN GENERAL.—Contractor de18 terminations described in paragraph 

19 (4)(A)(ii) or (4)(A)(iii) (and redeter20 minations made under paragraph 

21 (5)(B)), relating to pre-service claims 

22 are not subject to further administra23 tive appeal or judicial review under 

24 this section or otherwise. 
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1 ‘‘(B) DECISION NOT TO SEEK PRIOR

2 DETERMINATION OR NEGATIVE DETER3 MINATION DOES NOT IMPACT RIGHT TO

4 OBTAIN SERVICES, SEEK REIMBURSE5 MENT, OR APPEAL RIGHTS.—Nothing in 

6 this subsection shall be construed as 

7 affecting the right of an individual 

8 who—

9 ‘‘(i) decides not to seek a prior 

10 determination under this sub11 section with respect to items or 

12 services; or 

13 ‘‘(ii) seeks such a determina14 tion and has received a deter15 mination described in paragraph 

16 (4)(A)(ii), 

17 from receiving (and submitting a 

18 claim for) such items services and 

19 from obtaining administrative or ju20 dicial review respecting such claim 

21 under the other applicable provisions 

22 of this section. Failure to seek a prior 

23 determination under this subsection 

24 with respect to items and services 

25 shall not be taken into account in 
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1 such administrative or judicial re2 view. 

3 ‘‘(C) NO PRIOR DETERMINATION

4 AFTER RECEIPT OF SERVICES.—Once an 

5 individual is provided items and serv6 ices, there shall be no prior deter7 mination under this subsection with 

8 respect to such items or services.’’. 

9 (b) EFFECTIVE DATE; TRANSITION.—

10 (1) EFFECTIVE DATE.—The Secretary 

11 shall establish the prior determination 

12 process under the amendment made by 

13 subsection (a) in such a manner as to pro14 vide for the acceptance of requests for 

15 determinations under such process filed

16 not later than 18 months after the date of 

17 the enactment of this Act. 

18 (2) TRANSITION.—During the period in 

19 which the amendment made by sub20 section (a) has become effective but con21 tracts are not provided under section 

22 1874A of the Social Security Act with 

23 medicare administrative contractors, any 

24 reference in section 1869(g) of such Act 

25 (as added by such amendment) to such a 
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1 contractor is deemed a reference to a fis2 cal intermediary or carrier with an 

3 agreement under section 1816, or con4 tract under section 1842, respectively, of 

5 such Act. 

6 (3) LIMITATION ON APPLICATION TO

7 SGR.—For purposes of applying section 

8 1848(f)(2)(D) of the Social Security Act (42 

9 U.S.C. 1395w–4(f)(2)(D)), the amendment 

10 made by subsection (a) shall not be con11 sidered to be a change in law or regula12 tion. 

13 (c) PROVISIONS RELATING TO ADVANCE BEN14 EFICIARY NOTICES; REPORT ON PRIOR DETER15 MINATION PROCESS.—

16 (1) DATA COLLECTION.—The Secretary 

17 shall establish a process for the collection 

18 of information on the instances in which 

19 an advance beneficiary notice (as defined 

20 in paragraph (4)) has been provided and 

21 on instances in which a beneficiary indi22 cates on such a notice that the bene23 ficiary does not intend to seek to have 

24 the item or service that is the subject of 

25 the notice furnished. 
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1 (2) OUTREACH AND EDUCATION.—The 

2 Secretary shall establish a program of 

3 outreach and education for beneficiaries 

4 and providers of services and other per5 sons on the appropriate use of advance 

6 beneficiary notices and coverage policies 

7 under the medicare program. 

8 (3) GAO REPORT ON USE OF ADVANCE

9 BENEFICIARY NOTICES.—Not later than 18 

10 months after the date on which section 

11 1869(g) of the Social Security Act (as 

12 added by subsection (a)) takes effect, the 

13 Comptroller General of the United States 

14 shall submit to Congress a report on the 

15 use of advance beneficiary notices under 

16 title XVIII of such Act. Such report shall 

17 include information concerning the pro18 viders of services and other persons that 

19 have provided such notices and the re20 sponse of beneficiaries to such notices. 

21 (4) GAO REPORT ON USE OF PRIOR DE22 TERMINATION PROCESS.—Not later than 18 

23 months after the date on which section 

24 1869(g) of the Social Security Act (as 

25 added by subsection (a)) takes effect, the 
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1 Comptroller General of the United States 

2 shall submit to Congress a report on the 

3 use of the prior determination process 

4 under such section. Such report shall in5 clude—

6 (A) information concerning the 

7 types of procedures for which a prior 

8 determination has been sought, deter9 minations made under the process, 

10 and changes in receipt of services re11 sulting from the application of such 

12 process; and 

13 (B) an evaluation of whether the 

14 process was useful for physicians 

15 (and other suppliers) and bene16 ficiaries, whether it was timely, and 

17 whether the amount of information 

18 required was burdensome to physi19 cians and beneficiaries. 

20 (5) ADVANCE BENEFICIARY NOTICE DE21 FINED.—In this subsection, the term ‘‘ad22 vance beneficiary notice’’ means a writ23 ten notice provided under section 1879(a) 

24 of the Social Security Act (42 U.S.C. 

25 1395pp(a)) to an individual entitled to 
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1 benefits under part A or B of title XVIII 

2 of such Act before items or services are 

3 furnished under such part in cases where 

4 a provider of services or other person 

5 that would furnish the item or service be6 lieves that payment will not be made for 

7 some or all of such items or services 

8 under such title. 

9 TITLE V—MISCELLANEOUS 

10 PROVISIONS 

11 SEC. 501. POLICY DEVELOPMENT REGARDING EVALUATION 

12 AND MANAGEMENT (E & M) DOCUMENTATION 

13 GUIDELINES. 

14 (a) IN GENERAL.—The Secretary may not 

15 implement any new documentation guidelines 

16 for evaluation and management physician 

17 services under the title XVIII of the Social Se18 curity Act on or after the date of the enact19 ment of this Act unless the Secretary—

20 (1) has developed the guidelines in 

21 collaboration with practicing physicians 

22 (including both generalists and special23 ists) and provided for an assessment of 

24 the proposed guidelines by the physician 

25 community; 
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1 (2) has established a plan that con2 tains specific goals, including a schedule, 

3 for improving the use of such guidelines; 

4 (3) has conducted appropriate and 

5 representative pilot projects under sub6 section (b) to test modifications to the 

7 evaluation and management documenta8 tion guidelines; 

9 (4) finds that the objectives described 

10 in subsection (c) will be met in the imple11 mentation of such guidelines; and 

12 (5) has established, and is imple13 menting, a program to educate physi14 cians on the use of such guidelines and 

15 that includes appropriate outreach.

16 The Secretary shall make changes to the man17 ner in which existing evaluation and manage18 ment documentation guidelines are imple19 mented to reduce paperwork burdens on phy20 sicians. 

21 (b) PILOT PROJECTS TO TEST EVALUATION

22 AND MANAGEMENT DOCUMENTATION GUIDE23 LINES.—

24 (1) IN GENERAL.—The Secretary shall 

25 conduct under this subsection appro-
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1 priate and representative pilot projects 

2 to test new evaluation and management 

3 documentation guidelines referred to in 

4 subsection (a). 

5 (2) LENGTH AND CONSULTATION.—Each 

6 pilot project under this subsection shall—

7 (A) be voluntary; 

8 (B) be of sufficient length as de9 termined by the Secretary to allow 

10 for preparatory physician and medi11 care contractor education, analysis, 

12 and use and assessment of potential 

13 evaluation and management guide14 lines; and 

15 (C) be conducted, in development 

16 and throughout the planning and 

17 operational stages of the project, in 

18 consultation with practicing physi19 cians (including both generalists and 

20 specialists). 

21 (3) RANGE OF PILOT PROJECTS.—Of the 

22 pilot projects conducted under this sub23 section—

24 (A) at least one shall focus on a 

25 peer review method by physicians 
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1 (not employed by a medicare con2 tractor) which evaluates medical 

3 record information for claims sub4 mitted by physicians identified as sta5 tistical outliers relative to definitions 

6 published in the Current Procedures 

7 Terminology (CPT) code book of the 

8 American Medical Association; 

9 (B) at least one shall focus on an 

10 alternative method to detailed guide11 lines based on physician documenta12 tion of face to face encounter time 

13 with a patient; 

14 (C) at least one shall be con15 ducted for services furnished in a 

16 rural area and at least one for serv17 ices furnished outside such an area; 

18 and 

19 (D) at least one shall be con20 ducted in a setting where physicians 

21 bill under physicians’ services in 

22 teaching settings and at least one 

23 shall be conducted in a setting other 

24 than a teaching setting. 
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1 (4) BANNING OF TARGETING OF PILOT

2 PROJECT PARTICIPANTS.—Data collected 

3 under this subsection shall not be used as 

4 the basis for overpayment demands or 

5 post-payment audits. Such limitation ap6 plies only to claims filed as part of the 

7 pilot project and lasts only for the dura8 tion of the pilot project and only as long 

9 as the provider is a participant in the 

10 pilot project. 

11 (5) STUDY OF IMPACT.—Each pilot 

12 project shall examine the effect of the 

13 new evaluation and management docu14 mentation guidelines on—

15 (A) different types of physician 

16 practices, including those with fewer 

17 than 10 full-time-equivalent employ18 ees (including physicians); and 

19 (B) the costs of physician compli20 ance, including education, implemen21 tation, auditing, and monitoring. 

22 (6) PERIODIC REPORTS.—The Secretary 

23 shall submit to Congress periodic reports 

24 on the pilot projects under this sub25 section. 
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1 (c) OBJECTIVES FOR EVALUATION AND MAN2 AGEMENT GUIDELINES.—The objectives for 

3 modified evaluation and management docu4 mentation guidelines developed by the Sec5 retary shall be to—

6 (1) identify clinically relevant docu7 mentation needed to code accurately and 

8 assess coding levels accurately; 

9 (2) decrease the level of non-clinically 

10 pertinent and burdensome documenta11 tion time and content in the physician’s 

12 medical record; 

13 (3) increase accuracy by reviewers; 

14 and 

15 (4) educate both physicians and re16 viewers. 

17 (d) STUDY OF SIMPLER, ALTERNATIVE SYS18 TEMS OF DOCUMENTATION FOR PHYSICIAN

19 CLAIMS.—

20 (1) STUDY.—The Secretary shall carry 

21 out a study of the matters described in 

22 paragraph (2). 

23 (2) MATTERS DESCRIBED.—The matters 

24 referred to in paragraph (1) are—
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1 (A) the development of a simpler, 

2 alternative system of requirements 

3 for documentation accompanying 

4 claims for evaluation and manage5 ment physician services for which 

6 payment is made under title XVIII of 

7 the Social Security Act; and 

8 (B) consideration of systems other 

9 than current coding and documenta10 tion requirements for payment for 

11 such physician services. 

12 (3) CONSULTATION WITH PRACTICING

13 PHYSICIANS.—In designing and carrying 

14 out the study under paragraph (1), the 

15 Secretary shall consult with practicing

16 physicians, including physicians who are 

17 part of group practices and including 

18 both generalists and specialists. 

19 (4) APPLICATION OF HIPAA UNIFORM

20 CODING REQUIREMENTS.—In developing an 

21 alternative system under paragraph (2), 

22 the Secretary shall consider require23 ments of administrative simplification 

24 under part C of title XI of the Social Se25 curity Act. 
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1 (5) REPORT TO CONGRESS.—(A) Not 

2 later than October 1, 2005, the Secretary 

3 shall submit to Congress a report on the 

4 results of the study conducted under 

5 paragraph (1). 

6 (B) The Medicare Payment Advisory 

7 Commission shall conduct an analysis of 

8 the results of the study included in the 

9 report under subparagraph (A) and shall 

10 submit a report on such analysis to Con11 gress. 

12 (e) STUDY ON APPROPRIATE CODING OF CER13 TAIN EXTENDED OFFICE VISITS.—The Secretary 

14 shall conduct a study of the appropriateness 

15 of coding in cases of extended office visits in 

16 which there is no diagnosis made. Not later 

17 than October 1, 2005, the Secretary shall sub18 mit a report to Congress on such study and 

19 shall include recommendations on how to 

20 code appropriately for such visits in a manner 

21 that takes into account the amount of time 

22 the physician spent with the patient. 

23 (f) DEFINITIONS.—In this section—

24 (1) the term ‘‘rural area’’ has the 

25 meaning given that term in section 
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1 1886(d)(2)(D) of the Social Security Act, 

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

3 (2) the term ‘‘teaching settings’’ are 

4 those settings described in section 

5 415.150 of title 42, Code of Federal Regu6 lations. 

7 SEC. 502. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY 

8 AND COVERAGE. 

9 (a) COUNCIL FOR TECHNOLOGY AND INNOVA10 TION.—Section 1868 (42 U.S.C. 1395ee), as 

11 amended by section 301(a), is amended by 

12 adding at the end the following new sub13 section: 

14 ‘‘(c) COUNCIL FOR TECHNOLOGY AND INNOVA15 TION.—

16 ‘‘(1) ESTABLISHMENT.—The Secretary 

17 shall establish a Council for Technology 

18 and Innovation within the Centers for 

19 Medicare & Medicaid Services (in this 

20 section referred to as ‘CMS’). 

21 ‘‘(2) COMPOSITION.—The Council shall 

22 be composed of senior CMS staff and cli23 nicians and shall be chaired by the Exec24 utive Coordinator for Technology and In-
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1 novation (appointed or designated under 

2 paragraph (4)). 

3 ‘‘(3) DUTIES.—The Council shall co4 ordinate the activities of coverage, cod5 ing, and payment processes under this 

6 title with respect to new technologies 

7 and procedures, including new drug 

8 therapies, and shall coordinate the ex9 change of information on new tech10 nologies between CMS and other entities 

11 that make similar decisions. 

12 ‘‘(4) EXECUTIVE COORDINATOR FOR

13 TECHNOLOGY AND INNOVATION.—The Sec14 retary shall appoint (or designate) a non15 career appointee (as defined in section 

16 3132(a)(7) of title 5, United States Code) 

17 who shall serve as the Executive Coordi18 nator for Technology and Innovation. 

19 Such executive coordinator shall report 

20 to the Administrator of CMS, shall chair 

21 the Council, shall oversee the execution 

22 of its duties, and shall serve as a single 

23 point of contact for outside groups and 

24 entities regarding the coverage, coding, 

25 and payment processes under this title.’’. 
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1 (b) METHODS FOR DETERMINING PAYMENT

2 BASIS FOR NEW LAB TESTS.—Section 1833(h) (42 

3 U.S.C. 1395l(h)) is amended by adding at the 

4 end the following: 

5 ‘‘(8)(A) The Secretary shall establish by 

6 regulation procedures for determining the 

7 basis for, and amount of, payment under this 

8 subsection for any clinical diagnostic labora9 tory test with respect to which a new or sub10 stantially revised HCPCS code is assigned on 

11 or after January 1, 2005 (in this paragraph re12 ferred to as ‘new tests’). 

13 ‘‘(B) Determinations under subparagraph 

14 (A) shall be made only after the Secretary—

15 ‘‘(i) makes available to the public 

16 (through an Internet site and other ap17 propriate mechanisms) a list that in18 cludes any such test for which establish19 ment of a payment amount under this 

20 subsection is being considered for a year; 

21 ‘‘(ii) on the same day such list is made 

22 available, causes to have published in the 

23 Federal Register notice of a meeting to 

24 receive comments and recommendations 

25 (and data on which recommendations are 
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1 based) from the public on the appro2 priate basis under this subsection for es3 tablishing payment amounts for the tests 

4 on such list; 

5 ‘‘(iii) not less than 30 days after publi6 cation of such notice convenes a meeting, 

7 that includes representatives of officials 

8 of the Centers for Medicare & Medicaid 

9 Services involved in determining pay10 ment amounts, to receive such comments 

11 and recommendations (and data on 

12 which the recommendations are based); 

13 ‘‘(iv) taking into account the com14 ments and recommendations (and accom15 panying data) received at such meeting, 

16 develops and makes available to the pub17 lic (through an Internet site and other 

18 appropriate mechanisms) a list of pro19 posed determinations with respect to the 

20 appropriate basis for establishing a pay21 ment amount under this subsection for 

22 each such code, together with an expla23 nation of the reasons for each such deter24 mination, the data on which the deter25 minations are based, and a request for 
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1 public written comments on the proposed 

2 determination; and 

3 ‘‘(v) taking into account the com4 ments received during the public com5 ment period, develops and makes avail6 able to the public (through an Internet 

7 site and other appropriate mechanisms) a 

8 list of final determinations of the pay9 ment amounts for such tests under this 

10 subsection, together with the rationale 

11 for each such determination, the data on 

12 which the determinations are based, and 

13 responses to comments and suggestions 

14 received from the public.

15 ‘‘(C) Under the procedures established 

16 pursuant to subparagraph (A), the Secretary 

17 shall—

18 ‘‘(i) set forth the criteria for making 

19 determinations under subparagraph (A); 

20 and 

21 ‘‘(ii) make available to the public the 

22 data (other than proprietary data) con23 sidered in making such determinations. 

24 ‘‘(D) The Secretary may convene such fur25 ther public meetings to receive public com-
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1 ments on payment amounts for new tests 

2 under this subsection as the Secretary deems 

3 appropriate. 

4 ‘‘(E) For purposes of this paragraph: 

5 ‘‘(i) The term ‘HCPCS’ refers to the 

6 Health Care Procedure Coding System. 

7 ‘‘(ii) A code shall be considered to be 

8 ‘substantially revised’ if there is a sub9 stantive change to the definition of the 

10 test or procedure to which the code ap11 plies (such as a new analyte or a new 

12 methodology for measuring an existing 

13 analyte-specific test).’’. 

14 (c) GAO STUDY ON IMPROVEMENTS IN EXTER15 NAL DATA COLLECTION FOR USE IN THE MEDI16 CARE INPATIENT PAYMENT SYSTEM.—

17 (1) STUDY.—The Comptroller General 

18 of the United States shall conduct a study 

19 that analyzes which external data can be 

20 collected in a shorter time frame by the 

21 Centers for Medicare & Medicaid Serv22 ices for use in computing payments for 

23 inpatient hospital services. The study 

24 may include an evaluation of the feasi25 bility and appropriateness of using of 
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1 quarterly samples or special surveys or 

2 any other methods. The study shall in3 clude an analysis of whether other execu4 tive agencies, such as the Bureau of 

5 Labor Statistics in the Department of 

6 Commerce, are best suited to collect this 

7 information. 

8 (2) REPORT.—By not later than Octo9 ber 1, 2004, the Comptroller General shall 

10 submit a report to Congress on the study 

11 under paragraph (1). 

12 (d) PROCESS FOR ADOPTION OF ICD CODES

13 AS DATA STANDARD.—Section 1172(f) (42 U.S.C. 

14 1320d–1(f)) is amended by inserting after the 

15 first sentence the following: ‘‘Notwithstanding 

16 the preceding sentence, if the National Com17 mittee on Vital and Health Statistics has not 

18 made a recommendation to the Secretary be19 fore the date of the enactment of this sen20 tence, with respect to the adoption of the 

21 International Classification of Diseases, 10th 

22 Revision, Procedure Coding System (‘ICD–10–

23 PCS’) and the International Classification of 

24 Diseases, 10th Revision, Clinical Modification 

25 (‘ICD–10–CM’) as a standard under this part 
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1 for the reporting of services, the Secretary 

2 may adopt ICD–10–PCS and ICD–10–CM as 

3 such a standard on or after such date without 

4 receiving such a recommendation.’’. 

5 SEC. 503. TREATMENT OF HOSPITALS FOR CERTAIN SERV6 ICES UNDER MEDICARE SECONDARY PAYOR 

7 (MSP) PROVISIONS. 

8 (a) IN GENERAL.—The Secretary shall not 

9 require a hospital (including a critical access 

10 hospital) to ask questions (or obtain informa11 tion) relating to the application of section 

12 1862(b) of the Social Security Act (relating to 

13 medicare secondary payor provisions) in the 

14 case of reference laboratory services de15 scribed in subsection (b), if the Secretary does 

16 not impose such requirement in the case of 

17 such services furnished by an independent 

18 laboratory. 

19 (b) REFERENCE LABORATORY SERVICES DE20 SCRIBED.—Reference laboratory services de21 scribed in this subsection are clinical labora22 tory diagnostic tests (or the interpretation of 

23 such tests, or both) furnished without a face24 to-face encounter between the individual en25 titled to benefits under part A or enrolled 
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1 under part B, or both, and the hospital in2 volved and in which the hospital submits a 

3 claim only for such test or interpretation. 

4 SEC. 504. EMTALA IMPROVEMENTS. 

5 (a) PAYMENT FOR EMTALA-MANDATED

6 SCREENING AND STABILIZATION SERVICES.—

7 (1) IN GENERAL.—Section 1862 (42 

8 U.S.C. 1395y) is amended by inserting 

9 after subsection (c) the following new 

10 subsection: 

11 ‘‘(d) For purposes of subsection (a)(1)(A), 

12 in the case of any item or service that is re13 quired to be provided pursuant to section 

14 1867 to an individual who is entitled to bene15 fits under this title, determinations as to 

16 whether the item or service is reasonable and 

17 necessary shall be made on the basis of the in18 formation available to the treating physician 

19 or practitioner (including the patient’s pre20 senting symptoms or complaint) at the time 

21 the item or service was ordered or furnished 

22 by the physician or practitioner (and not on 

23 the patient’s principal diagnosis). When mak24 ing such determinations with respect to such 

25 an item or service, the Secretary shall not 
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1 consider the frequency with which the item 

2 or service was provided to the patient before 

3 or after the time of the admission or visit.’’. 

4 (2) EFFECTIVE DATE.—The amendment 

5 made by paragraph (1) shall apply to 

6 items and services furnished on or after 

7 January 1, 2004. 

8 (b) NOTIFICATION OF PROVIDERS WHEN

9 EMTALA INVESTIGATION CLOSED.—Section 

10 1867(d) (42 U.S.C. 1395dd(d)) is amended by 

11 adding at the end the following new para12 graph:

13 ‘‘(4) NOTICE UPON CLOSING AN INVES14 TIGATION.—The Secretary shall establish a 

15 procedure to notify hospitals and physi16 cians when an investigation under this 

17 section is closed.’’. 

18 (c) PRIOR REVIEW BY PEER REVIEW ORGANI19 ZATIONS IN EMTALA CASES INVOLVING TERMI20 NATION OF PARTICIPATION.—

21 (1) IN GENERAL.—Section 1867(d)(3) (42 

22 U.S.C. 1395dd(d)(3)) is amended—

23 (A) in the first sentence, by insert24 ing ‘‘or in terminating a hospital’s 

25 participation under this title’’ after 
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1 ‘‘in imposing sanctions under para2 graph (1)’’; and 

3 (B) by adding at the end the fol4 lowing new sentences: ‘‘Except in the 

5 case in which a delay would jeop6 ardize the health or safety of individ7 uals, the Secretary shall also request 

8 such a review before making a com9 pliance determination as part of the 

10 process of terminating a hospital’s 

11 participation under this title for vio12 lations related to the appropriateness 

13 of a medical screening examination, 

14 stabilizing treatment, or an appro15 priate transfer as required by this 

16 section, and shall provide a period of 

17 5 days for such review. The Secretary 

18 shall provide a copy of the organiza19 tion’s report to the hospital or physi20 cian consistent with confidentiality 

21 requirements imposed on the organi22 zation under such part B.’’. 

23 (2) EFFECTIVE DATE.—The amendments 

24 made by paragraph (1) shall apply to ter25 minations of participation initiated on or 
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1 after the date of the enactment of this 

2 Act. 

3 SEC. 505. EMERGENCY MEDICAL TREATMENT AND ACTIVE 

4 LABOR ACT (EMTALA) TECHNICAL ADVISORY 

5 GROUP. 

6 (a) ESTABLISHMENT.—The Secretary shall 

7 establish a Technical Advisory Group (in this 

8 section referred to as the ‘‘Advisory Group’’) 

9 to review issues related to the Emergency 

10 Medical Treatment and Labor Act (EMTALA) 

11 and its implementation. In this section, the 

12 term ‘‘EMTALA’’ refers to the provisions of 

13 section 1867 of the Social Security Act (42 

14 U.S.C. 1395dd). 

15 (b) MEMBERSHIP.—The Advisory Group 

16 shall be composed of 19 members, including 

17 the Administrator of the Centers for Medicare 

18 & Medicaid Services and the Inspector Gen19 eral of the Department of Health and Human 

20 Services and of which—

21 (1) 4 shall be representatives of hos22 pitals, including at least one public hos23 pital, that have experience with the ap24 plication of EMTALA and at least 2 of 
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1 which have not been cited for EMTALA 

2 violations; 

3 (2) 7 shall be practicing physicians 

4 drawn from the fields of emergency medi5 cine, cardiology or cardiothoracic sur6 gery, orthopedic surgery, neurosurgery, 

7 pediatrics or a pediatric subspecialty, ob8 stetrics-gynecology, and psychiatry, with 

9 not more than one physician from any 

10 particular field; 

11 (3) 2 shall represent patients; 

12 (4) 2 shall be staff involved in 

13 EMTALA investigations from different re14 gional offices of the Centers for Medicare 

15 & Medicaid Services; and 

16 (5) 1 shall be from a State survey of17 fice involved in EMTALA investigations 

18 and 1 shall be from a peer review organi19 zation, both of whom shall be from areas 

20 other than the regions represented under 

21 paragraph (4). 

22 In selecting members described in para23 graphs (1) through (3), the Secretary shall 

24 consider qualified individuals nominated by 
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1 organizations representing providers and pa2 tients. 

3 (c) GENERAL RESPONSIBILITIES.—The Advi4 sory Group—

5 (1) shall review EMTALA regulations; 

6 (2) may provide advice and rec7 ommendations to the Secretary with re8 spect to those regulations and their ap9 plication to hospitals and physicians; 

10 (3) shall solicit comments and rec11 ommendations from hospitals, physicians, 

12 and the public regarding the implementa13 tion of such regulations; and 

14 (4) may disseminate information on 

15 the application of such regulations to 

16 hospitals, physicians, and the public. 

17 (d) ADMINISTRATIVE MATTERS.—

18 (1) CHAIRPERSON.—The members of 

19 the Advisory Group shall elect a member 

20 to serve as chairperson of the Advisory 

21 Group for the life of the Advisory Group. 

22 (2) MEETINGS.—The Advisory Group 

23 shall first meet at the direction of the 

24 Secretary. The Advisory Group shall then 

25 meet twice per year and at such other 
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1 times as the Advisory Group may pro2 vide. 

3 (e) TERMINATION.—The Advisory Group 

4 shall terminate 30 months after the date of its 

5 first meeting. 

6 (f) WAIVER OF ADMINISTRATIVE LIMITA7 TION.—The Secretary shall establish the Advi8 sory Group notwithstanding any limitation 

9 that may apply to the number of advisory 

10 committees that may be established (within 

11 the Department of Health and Human Serv12 ices or otherwise).

13 SEC. 506. AUTHORIZING USE OF ARRANGEMENTS TO PRO14 VIDE CORE HOSPICE SERVICES IN CERTAIN 

15 CIRCUMSTANCES. 

16 (a) IN GENERAL.—Section 1861(dd)(5) (42 

17 U.S.C. 1395x(dd)(5)) is amended by adding at 

18 the end the following: 

19 ‘‘(D) In extraordinary, exigent, or other 

20 non-routine circumstances, such as unantici21 pated periods of high patient loads, staffing 

22 shortages due to illness or other events, or 

23 temporary travel of a patient outside a hos24 pice program’s service area, a hospice pro25 gram may enter into arrangements with an-
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1 other hospice program for the provision by 

2 that other program of services described in 

3 paragraph (2)(A)(ii)(I). The provisions of para4 graph (2)(A)(ii)(II) shall apply with respect to 

5 the services provided under such arrange6 ments. 

7 ‘‘(E) A hospice program may provide serv8 ices described in paragraph (1)(A) other than 

9 directly by the program if the services are 

10 highly specialized services of a registered 

11 professional nurse and are provided non-rou12 tinely and so infrequently so that the provi13 sion of such services directly would be im14 practicable and prohibitively expensive.’’. 

15 (b) CONFORMING PAYMENT PROVISION.—Sec16 tion 1814(i) (42 U.S.C. 1395f(i)) is amended by 

17 adding at the end the following new para18 graph: 

19 ‘‘(4) In the case of hospice care provided 

20 by a hospice program under arrangements 

21 under section 1861(dd)(5)(D) made by another 

22 hospice program, the hospice program that 

23 made the arrangements shall bill and be paid 

24 for the hospice care.’’. 
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1 (c) EFFECTIVE DATE.—The amendments 

2 made by this section shall apply to hospice 

3 care provided on or after the date of the en4 actment of this Act. 

5 SEC. 507. APPLICATION OF OSHA BLOODBORNE PATHO6 GENS STANDARD TO CERTAIN HOSPITALS. 

7 (a) IN GENERAL.—Section 1866 (42 U.S.C. 

8 1395cc) is amended—

9 (1) in subsection (a)(1)—

10 (A) in subparagraph (R), by strik11 ing ‘‘and’’ at the end; 

12 (B) in subparagraph (S), by strik13 ing the period at the end and insert14 ing ‘‘, and’’; and 

15 (C) by inserting after subpara16 graph (S) the following new subpara17 graph: 

18 ‘‘(T) in the case of hospitals that are 

19 not otherwise subject to the Occupational 

20 Safety and Health Act of 1970, to comply 

21 with the Bloodborne Pathogens standard 

22 under section 1910.1030 of title 29 of the 

23 Code of Federal Regulations (or as subse24 quently redesignated).’’; and 
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1 (2) by adding at the end of subsection 

2 (b) the following new paragraph: 

3 ‘‘(4)(A) A hospital that fails to comply with 

4 the requirement of subsection (a)(1)(T) (relat5 ing to the Bloodborne Pathogens standard) is 

6 subject to a civil money penalty in an amount 

7 described in subparagraph (B), but is not sub8 ject to termination of an agreement under 

9 this section. 

10 ‘‘(B) The amount referred to in subpara11 graph (A) is an amount that is similar to the 

12 amount of civil penalties that may be imposed 

13 under section 17 of the Occupational Safety 

14 and Health Act of 1970 for a violation of the 

15 Bloodborne Pathogens standard referred to in 

16 subsection (a)(1)(T) by a hospital that is sub17 ject to the provisions of such Act. 

18 ‘‘(C) A civil money penalty under this 

19 paragraph shall be imposed and collected in 

20 the same manner as civil money penalties 

21 under subsection (a) of section 1128A are im22 posed and collected under that section.’’. 

23 (b) EFFECTIVE DATE.—The amendments 

24 made by this subsection (a) shall apply to hos25 pitals as of July 1, 2004. 
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1 SEC. 508. BIPA-RELATED TECHNICAL AMENDMENTS AND 

2 CORRECTIONS. 

3 (a) TECHNICAL AMENDMENTS RELATING TO

4 ADVISORY COMMITTEE UNDER BIPA SECTION

5 522.—(1) Subsection (i) of section 1114 (42 

6 U.S.C. 1314)—

7 (A) is transferred to section 1862 and 

8 added at the end of such section; and 

9 (B) is redesignated as subsection (j). 

10 (2) Section 1862 (42 U.S.C. 1395y) is 

11 amended—

12 (A) in the last sentence of subsection 

13 (a), by striking ‘‘established under section 

14 1114(f)’’; and 

15 (B) in subsection (j), as so transferred 

16 and redesignated—

17 (i) by striking ‘‘under subsection 

18 (f)’’; and 

19 (ii) by striking ‘‘section 1862(a)(1)’’ 

20 and inserting ‘‘subsection (a)(1)’’. 

21 (b) TERMINOLOGY CORRECTIONS.—(1) Sec22 tion 1869(c)(3)(I)(ii) (42 U.S.C. 

23 1395ff(c)(3)(I)(ii)), as amended by section 521 

24 of BIPA, is amended—

25 (A) in subclause (III), by striking ‘‘pol26 icy’’ and inserting ‘‘determination’’; and 
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1 (B) in subclause (IV), by striking 

2 ‘‘medical review policies’’ and inserting 

3 ‘‘coverage determinations’’. 

4 (2) Section 1852(a)(2)(C) (42 U.S.C. 1395w–

5 22(a)(2)(C)) is amended by striking ‘‘policy’’ 

6 and ‘‘POLICY’’ and inserting ‘‘determination’’ 

7 each place it appears and ‘‘DETERMINATION’’, 

8 respectively. 

9 (c) REFERENCE CORRECTIONS.—Section 

10 1869(f)(4) (42 U.S.C. 1395ff(f)(4)), as added by 

11 section 522 of BIPA, is amended—

12 (1) in subparagraph (A)(iv), by strik13 ing ‘‘subclause (I), (II), or (III)’’ and in14 serting ‘‘clause (i), (ii), or (iii)’’; 

15 (2) in subparagraph (B), by striking 

16 ‘‘clause (i)(IV)’’ and ‘‘clause (i)(III)’’ and 

17 inserting ‘‘subparagraph (A)(iv)’’ and 

18 ‘‘subparagraph (A)(iii)’’, respectively; and 

19 (3) in subparagraph (C), by striking 

20 ‘‘clause (i)’’, ‘‘subclause (IV)’’ and ‘‘sub21 paragraph (A)’’ and inserting ‘‘subpara22 graph (A)’’, ‘‘clause (iv)’’ and ‘‘paragraph 

23 (1)(A)’’, respectively each place it ap24 pears. 
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1 (d) OTHER CORRECTIONS.—Effective as if 

2 included in the enactment of section 521(c) of 

3 BIPA, section 1154(e) (42 U.S.C. 1320c–3(e)) is 

4 amended by striking paragraph (5). 

5 (e) EFFECTIVE DATE.—Except as otherwise 

6 provided, the amendments made by this sec7 tion shall be effective as if included in the en8 actment of BIPA.

9 SEC. 509. CONFORMING AUTHORITY TO WAIVE A PROGRAM 

10 EXCLUSION. 

11 The first sentence of section 1128(c)(3)(B) 

12 (42 U.S.C. 1320a–7(c)(3)(B)) is amended to read 

13 as follows: ‘‘Subject to subparagraph (G), in 

14 the case of an exclusion under subsection (a), 

15 the minimum period of exclusion shall be not 

16 less than five years, except that, upon the re17 quest of the administrator of a Federal health 

18 care program (as defined in section 1128B(f)) 

19 who determines that the exclusion would im20 pose a hardship on individuals entitled to 

21 benefits under part A of title XVIII or enrolled 

22 under part B of such title, or both, the Sec23 retary may waive the exclusion under sub24 section (a)(1), (a)(3), or (a)(4) with respect to 

25 that program in the case of an individual or 
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1 entity that is the sole community physician or 

2 sole source of essential specialized services in 

3 a community.’’. 

4 SEC. 510. TREATMENT OF CERTAIN DENTAL CLAIMS. 

5 (a) IN GENERAL.—Section 1862 (42 U.S.C. 

6 1395y), as amended by section 508(a)(1), is 

7 amended by adding at the end the following 

8 new subsection: 

9 ‘‘(k)(1) Subject to paragraph (2), a group 

10 health plan (as defined in subsection 

11 (a)(1)(A)(v)) providing supplemental or sec12 ondary coverage to individuals also entitled 

13 to services under this title shall not require 

14 a medicare claims determination under this 

15 title for dental benefits specifically excluded 

16 under subsection (a)(12) as a condition of 

17 making a claims determination for such bene18 fits under the group health plan. 

19 ‘‘(2) A group health plan may require a 

20 claims determination under this title in cases 

21 involving or appearing to involve inpatient 

22 dental hospital services or dental services ex23 pressly covered under this title pursuant to 

24 actions taken by the Secretary.’’. 
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1 (b) EFFECTIVE DATE.—The amendment 

2 made by subsection (a) shall take effect on the 

3 date that is 60 days after the date of the enact4 ment of this Act. 

5 SEC. 511. ENHANCEMENT OF PROGRAM INTEGRITY EF6 FORTS IN MEDICARE PROVIDER ENROLL7 MENT. 

8 (a) IN GENERAL.—Section 1842(b)(6)(A) (42 

9 U.S.C. 1395u(b)(6)(A)) is amended—

10 (1) by striking ‘‘or’’ before ‘‘(ii)’’; and 

11 (2) by inserting after ‘‘for such serv12 ice,’’ the following: ‘‘or (iii) where the 

13 service was provided under a contractual 

14 arrangement between such physician or 

15 other person and an entity (such as a 

16 medical group, physician practice man17 agement organization, or a staffing com18 pany), to the entity if under such ar19 rangement such entity submits the bill 

20 for such service and such arrangement 

21 meets such other qualifications to assure 

22 program integrity as the Secretary may 

23 provide,’’. 

24 (b) EFFECTIVE DATE.—The amendments 

25 made by this section shall apply to payments 
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1 made on or after the date of the enactment of 

2 this Act. 

3 SEC. 512. OTHER PROVISIONS. 

4 (a) GAO REPORTS ON THE PHYSICIAN COM5 PENSATION.—

6 (1) SUSTAINABLE GROWTH RATE AND

7 UPDATES.—Not later than 6 months after 

8 the date of the enactment of this Act, the 

9 Comptroller General of the United States 

10 shall submit to Congress a report on the 

11 appropriateness of the updates in the 

12 conversion factor under subsection (d)(3) 

13 of section 1848 of the Social Security Act 

14 (42 U.S.C. 1395w–4), including the appro15 priateness of the sustainable growth rate 

16 formula under subsection (f) of such sec17 tion for 2002 and succeeding years. Such 

18 report shall examine the stability and 

19 predictability of such updates and rate 

20 and alternatives for the use of such rate 

21 in the updates. 

22 (2) PHYSICIAN COMPENSATION GEN23 ERALLY.—Not later than 12 months after 

24 the date of the enactment of this Act, the 

25 Comptroller General shall submit to Con-
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1 gress a report on all aspects of physician 

2 compensation for services furnished 

3 under title XVIII of the Social Security 

4 Act, and how those aspects interact and 

5 the effect on appropriate compensation 

6 for physician services. Such report shall 

7 review alternatives for the physician fee 

8 schedule under section 1848 of such title 

9 (42 U.S.C. 1395w–4). 

10 (b) ANNUAL PUBLICATION OF LIST OF NA11 TIONAL COVERAGE DETERMINATIONS.—The Sec12 retary shall provide, in an appropriate annual 

13 publication available to the public, a list of 

14 national coverage determinations made 

15 under title XVIII of the Social Security Act in 

16 the previous year and information on how to 

17 get more information with respect to such de18 terminations. 

19 (c) GAO REPORT ON FLEXIBILITY IN APPLY20 ING HOME HEALTH CONDITIONS OF PARTICIPA21 TION TO PATIENTS WHO ARE NOT MEDICARE

22 BENEFICIARIES.—Not later than 6 months after 

23 the date of the enactment of this Act, the 

24 Comptroller General of the United States 

25 shall submit to Congress a report on the im-
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1 plications if there were flexibility in the appli2 cation of the medicare conditions of partici3 pation for home health agencies with respect 

4 to groups or types of patients who are not 

5 medicare beneficiaries. The report shall in6 clude an analysis of the potential impact of 

7 such flexible application on clinical oper8 ations and the recipients of such services and 

9 an analysis of methods for monitoring the 

10 quality of care provided to such recipients. 

11 (d) OIG REPORT ON NOTICES RELATING TO

12 USE OF HOSPITAL LIFETIME RESERVE DAYS.—

13 Not later than 1 year after the date of the en14 actment of this Act, the Inspector General of 

15 the Department of Health and Human Serv16 ices shall submit a report to Congress on—

17 (1) the extent to which hospitals pro18 vide notice to medicare beneficiaries in 

19 accordance with applicable requirements 

20 before they use the 60 lifetime reserve 

21 days described in section 1812(a)(1) of the 

22 Social Security Act (42 U.S.C. 1395d(a)(1)); 

23 and 

24 (2) the appropriateness and feasi25 bility of hospitals providing a notice to 
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1 such beneficiaries before they completely 

2 exhaust such lifetime reserve days.

Union Calendar No. 43

108TH CONGRESS 

1ST SESSION H. R. 810

[Report No. 108–74, Parts I and II] 

A BILL

To amend title XVIII of the Social Security Act to 

provide regulatory relief and contracting flexibility under the Medicare Program. 

APRIL 29, 2003

Reported from the Committee on Energy and Commerce 

with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed