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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to appeals filed on or after October 
1, 2004. 
(d) EXPEDITED REVIEW
OF CERTAIN PROVIDER 
AGREEMENT DETERMINATIONS.—
(1) TERMINATION AND CERTAIN OTHER IMME-
DIATE REMEDIES.—The Secretary shall develop and 
implement a process to expedite proceedings under 
sections 1866(h) of the Social Security Act (42 
U.S.C. 1395cc(h)) in which the remedy of termi-
nation of participation, or a remedy described in 
clause (i) or (iii) of section 1819(h)(2)(B) of such 
Act (42 U.S.C. 1395i–3(h)(2)(B)) which is applied 
on an immediate basis, has been imposed. Under 
such process priority shall be provided in cases of 
termination. 
(2) INCREASED FINANCIAL SUPPORT.—In addi-
tion to any amounts otherwise appropriated, to re-
duce by 50 percent the average time for administra-
tive determinations on appeals under section 
1866(h) of the Social Security Act (42 U.S.C. 
1395cc(h)), there are authorized to be appropriated 
(in appropriate part from the Federal Hospital In-
surance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund) to the Secretary
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such additional sums for fiscal year 2005 and each 
subsequent fiscal year as may be necessary. The 
purposes for which such amounts are available in-
clude increasing the number of administrative law 
judges (and their staffs) and the appellate level staff 
at the Departmental Appeals Board of the Depart-
ment of Health and Human Services and educating 
such judges and staffs on long-term care issues. 
(e) PROCESS FOR REINSTATEMENT OF APPROVAL OF 
CERTAIN SNF TRAINING PROGRAMS.—
(1) IN GENERAL.—In the case of a termination 
of approval of a nurse aide training program de-
scribed in paragraph (2) of a skilled nursing facility, 
the Secretary shall develop and implement a process 
for the reinstatement of approval of such program 
before the end of the mandatory 2 year disapproval 
period if the facility and program is certified by the 
Secretary, in coordination with the applicable State 
survey and certification agency and after public no-
tice, as being in compliance with applicable require-
ments and as having remedied any deficiencies in 
the facility or program that resulted in noncompli-
ance. 
(2) TERMINATION OF APPROVAL DESCRIBED.—
A termination of approval of a training program de-
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scribed in this paragraph is a mandatory 2-year dis-
approval 
provided 
for 
under 
section 
1819(f)(2)(B)(iii) of the Social Security Act (42 
U.S.C. 1395i–3(f)(2)(B)(iii)) if the only basis for 
the mandatory disapproval was the assessment of a 
civil money penalty of not less than $5,000. 
SEC. 933. REVISIONS TO MEDICARE APPEALS PROCESS. 
(a) REQUIRING FULL AND EARLY PRESENTATION OF 
EVIDENCE.—
(1) IN GENERAL.—Section 1869(b) (42 U.S.C. 
1395ff(b)), as amended by BIPA and as amended by 
section 932(a), is further amended by adding at the 
end the following new paragraph: 
‘‘(3) REQUIRING
FULL
AND
EARLY
PRESEN-
TATION OF EVIDENCE BY PROVIDERS.—A provider 
of services or supplier may not introduce evidence in 
any appeal under this section that was not presented 
at the reconsideration conducted by the qualified 
independent contractor under subsection (c), unless 
there is good cause which precluded the introduction 
of such evidence at or before that reconsideration.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on October 1, 
2004.
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(b) USE OF PATIENTS’ MEDICAL RECORDS.—Section 
1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)), as 
amended by BIPA, is amended by inserting ‘‘(including 
the medical records of the individual involved)’’ after 
‘‘clinical experience’’. 
(c) NOTICE REQUIREMENTS
FOR MEDICARE AP-
PEALS.— 
(1) INITIAL DETERMINATIONS AND REDETER-
MINATIONS.—Section 
1869(a) 
(42 
U.S.C. 
1395ff(a)), as amended by BIPA, is amended by 
adding at the end the following new paragraphs: 
‘‘(4) REQUIREMENTS
OF
NOTICE
OF
DETER-
MINATIONS.—With respect to an initial determina-
tion insofar as it results in a denial of a claim for 
benefits—
‘‘(A) the written notice on the determina-
tion shall include—
‘‘(i) the reasons for the determination, 
including whether a local medical review 
policy or a local coverage determination 
was used; 
‘‘(ii) the procedures for obtaining ad-
ditional information concerning the deter-
mination, including the information de-
scribed in subparagraph (B); and
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‘‘(iii) notification of the right to seek 
a redetermination or otherwise appeal the 
determination and instructions on how to 
initiate such a redetermination under this 
section; and 
‘‘(B) the person provided such notice may 
obtain, upon request, the specific provision of 
the policy, manual, or regulation used in mak-
ing the determination. 
‘‘(5) REQUIREMENTS OF NOTICE OF REDETER-
MINATIONS.—With respect to a redetermination in-
sofar as it results in a denial of a claim for bene-
fits—
‘‘(A) the written notice on the redeter-
mination shall include—
‘‘(i) the specific reasons for the rede-
termination; 
‘‘(ii) as appropriate, a summary of the 
clinical or scientific evidence used in mak-
ing the redetermination; 
‘‘(iii) a description of the procedures 
for obtaining additional information con-
cerning the redetermination; and 
‘‘(iv) notification of the right to ap-
peal the redetermination and instructions
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on how to initiate such an appeal under 
this section; 
‘‘(B) such written notice shall be provided 
in printed form and written in a manner cal-
culated to be understood by the individual enti-
tled to benefits under part A or enrolled under 
part B, or both; and 
‘‘(C) the person provided such notice may 
obtain, upon request, information on the spe-
cific provision of the policy, manual, or regula-
tion used in making the redetermination.’’. 
(2) 
RECONSIDERATIONS.—Section 
1869(c)(3)(E) (42 U.S.C. 1395ff(c)(3)(E)), as 
amended by BIPA, is amended—
(A) by inserting ‘‘be written in a manner 
calculated to be understood by the individual 
entitled to benefits under part A or enrolled 
under part B, or both, and shall include (to the 
extent appropriate)’’ after ‘‘in writing, ’’; and 
(B) by inserting ‘‘and a notification of the 
right to appeal such determination and instruc-
tions on how to initiate such appeal under this 
section’’ after ‘‘such decision,’’. 
(3) APPEALS.—Section 1869(d) (42 U.S.C. 
1395ff(d)), as amended by BIPA, is amended—
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(A) in the heading, by inserting ‘‘; NO-
TICE’’ after ‘‘SECRETARY’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) NOTICE.—Notice of the decision of an ad-
ministrative law judge shall be in writing in a man-
ner calculated to be understood by the individual en-
titled to benefits under part A or enrolled under part 
B, or both, and shall include—
‘‘(A) the specific reasons for the deter-
mination (including, to the extent appropriate, 
a summary of the clinical or scientific evidence 
used in making the determination); 
‘‘(B) the procedures for obtaining addi-
tional information concerning the decision; and 
‘‘(C) notification of the right to appeal the 
decision and instructions on how to initiate 
such an appeal under this section.’’. 
(4) SUBMISSION
OF
RECORD
FOR
APPEAL.—
Section 
1869(c)(3)(J)(i) 
(42 
U.S.C. 
1395ff(c)(3)(J)(i)) by striking ‘‘prepare’’ and insert-
ing ‘‘submit’’ and by striking ‘‘with respect to’’ and 
all that follows through ‘‘and relevant policies’’. 
(d) QUALIFIED INDEPENDENT CONTRACTORS.—
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(1) ELIGIBILITY REQUIREMENTS OF QUALIFIED 
INDEPENDENT
CONTRACTORS.—Section 1869(c)(3) 
(42 U.S.C. 1395ff(c)(3)), as amended by BIPA, is 
amended—
(A) in subparagraph (A), by striking ‘‘suf-
ficient training and expertise in medical science 
and legal matters’’ and inserting ‘‘sufficient 
medical, legal, and other expertise (including 
knowledge of the program under this title) and 
sufficient staffing’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(K) INDEPENDENCE REQUIREMENTS.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii), a qualified independent contractor 
shall not conduct any activities in a case 
unless the entity—
‘‘(I) is not a related party (as de-
fined in subsection (g)(5)); 
‘‘(II) does not have a material fa-
milial, financial, or professional rela-
tionship with such a party in relation 
to such case; and 
‘‘(III) does not otherwise have a 
conflict of interest with such a party.
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‘‘(ii) EXCEPTION
FOR
REASONABLE 
COMPENSATION.—Nothing in clause (i) 
shall be construed to prohibit receipt by a 
qualified independent contractor of com-
pensation from the Secretary for the con-
duct of activities under this section if the 
compensation is provided consistent with 
clause (iii). 
‘‘(iii) LIMITATIONS ON ENTITY COM-
PENSATION.—Compensation provided by 
the Secretary to a qualified independent 
contractor in connection with reviews 
under this section shall not be contingent 
on any decision rendered by the contractor 
or by any reviewing professional.’’. 
(2) ELIGIBILITY REQUIREMENTS FOR REVIEW-
ERS.—Section 1869 (42 U.S.C. 1395ff), as amended 
by BIPA, is amended—
(A) by amending subsection (c)(3)(D) to 
read as follows: 
‘‘(D) QUALIFICATIONS FOR REVIEWERS.—
The requirements of subsection (g) shall be met 
(relating to qualifications of reviewing profes-
sionals).’’; and
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(B) by adding at the end the following new 
subsection: 
‘‘(g) QUALIFICATIONS OF REVIEWERS.—
‘‘(1) IN
GENERAL.—In reviewing determina-
tions under this section, a qualified independent con-
tractor shall assure that—
‘‘(A) each individual conducting a review 
shall meet the qualifications of paragraph (2); 
‘‘(B) compensation provided by the con-
tractor to each such reviewer is consistent with 
paragraph (3); and 
‘‘(C) in the case of a review by a panel de-
scribed in subsection (c)(3)(B) composed of 
physicians or other health care professionals 
(each in this subsection referred to as a ‘review-
ing professional’), a reviewing professional 
meets the qualifications described in paragraph 
(4) and, where a claim is regarding the fur-
nishing of treatment by a physician (allopathic 
or osteopathic) or the provision of items or 
services by a physician (allopathic or osteo-
pathic), a reviewing professional shall be a phy-
sician (allopathic or osteopathic). 
‘‘(2) INDEPENDENCE.—
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‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), each individual conducting a review 
in a case shall—
‘‘(i) not be a related party (as defined 
in paragraph (5)); 
‘‘(ii) not have a material familial, fi-
nancial, or professional relationship with 
such a party in the case under review; and 
‘‘(iii) not otherwise have a conflict of 
interest with such a party. 
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to—
‘‘(i) prohibit an individual, solely on 
the basis of a participation agreement with 
a fiscal intermediary, carrier, or other con-
tractor, from serving as a reviewing profes-
sional if—
‘‘(I) the individual is not involved 
in the provision of items or services in 
the case under review; 
‘‘(II) the fact of such an agree-
ment is disclosed to the Secretary and 
the individual entitled to benefits 
under part A or enrolled under part
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B, or both, (or authorized representa-
tive) and neither party objects; and 
‘‘(III) the individual is not an 
employee of the intermediary, carrier, 
or contractor and does not provide 
services exclusively or primarily to or 
on behalf of such intermediary, car-
rier, or contractor; 
‘‘(ii) prohibit an individual who has 
staff privileges at the institution where the 
treatment involved takes place from serv-
ing as a reviewer merely on the basis of 
having such staff privileges if the existence 
of such privileges is disclosed to the Sec-
retary and such individual (or authorized 
representative), and neither party objects; 
or 
‘‘(iii) prohibit receipt of compensation 
by a reviewing professional from a con-
tractor if the compensation is provided 
consistent with paragraph (3). 
For purposes of this paragraph, the term ‘par-
ticipation agreement’ means an agreement re-
lating to the provision of health care services by 
the individual and does not include the provi-
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individual entitled to benefits under part A or en-
rolled under part B, or both, any of the following: 
‘‘(A) The Secretary, the medicare adminis-
trative contractor involved, or any fiduciary, of-
ficer, director, or employee of the Department 
of Health and Human Services, or of such con-
tractor. 
‘‘(B) The individual (or authorized rep-
resentative). 
‘‘(C) The health care professional that pro-
vides the items or services involved in the case. 
‘‘(D) The institution at which the items or 
services (or treatment) involved in the case are 
provided. 
‘‘(E) The manufacturer of any drug or 
other item that is included in the items or serv-
ices involved in the case. 
‘‘(F) Any other party determined under 
any regulations to have a substantial interest in 
the case involved.’’. 
(3) REDUCING
MINIMUM
NUMBER
OF
QUALI-
FIED
INDEPENDENT
CONTRACTORS.—Section 
1869(c)(4) (42 U.S.C. 1395ff(c)(4)) is amended by 
striking ‘‘not fewer than 12 qualified independent 
contractors under this subsection’’ and inserting
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‘‘with a sufficient number of qualified independent 
contractors (but not fewer than 4 such contractors) 
to conduct reconsiderations consistent with the time-
frames applicable under this subsection’’. 
(4) EFFECTIVE DATE.—The amendments made 
by paragraphs (1) and (2) shall be effective as if in-
cluded in the enactment of the respective provisions 
of subtitle C of title V of BIPA, (114 Stat. 2763A–
534). 
(5) TRANSITION.—In applying section 1869(g) 
of the Social Security Act (as added by paragraph 
(2)), any reference to a medicare administrative con-
tractor shall be deemed to include a reference to a 
fiscal intermediary under section 1816 of the Social 
Security Act (42 U.S.C. 1395h) and a carrier under 
section 1842 of such Act (42 U.S.C. 1395u). 
SEC. 934. PREPAYMENT REVIEW. 
(a) IN GENERAL.—Section 1874A, as added by sec-
tion 911(a)(1) and as amended by sections 912(b), 
921(b)(1), and 921(c)(1), is further amended by adding 
at the end the following new subsection: 
‘‘(h) CONDUCT OF PREPAYMENT REVIEW.—
‘‘(1) CONDUCT OF RANDOM PREPAYMENT RE-
VIEW.—
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‘‘(A) IN GENERAL.—A medicare adminis-
trative contractor may conduct random prepay-
ment review only to develop a contractor-wide 
or program-wide claims payment error rates or 
under such additional circumstances as may be 
provided under regulations, developed in con-
sultation with providers of services and sup-
pliers. 
‘‘(B) USE
OF
STANDARD
PROTOCOLS 
WHEN CONDUCTING PREPAYMENT REVIEWS.—
When a medicare administrative contractor con-
ducts a random prepayment review, the con-
tractor may conduct such review only in accord-
ance with a standard protocol for random pre-
payment audits developed by the Secretary. 
‘‘(C) CONSTRUCTION.—Nothing in this 
paragraph shall be construed as preventing the 
denial of payments for claims actually reviewed 
under a random prepayment review. 
‘‘(D) RANDOM
PREPAYMENT
REVIEW.—
For purposes of this subsection, the term ‘ran-
dom prepayment review’ means a demand for 
the production of records or documentation ab-
sent cause with respect to a claim.
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‘‘(2) LIMITATIONS
ON
NON-RANDOM
PREPAY-
MENT REVIEW.—
‘‘(A) LIMITATIONS ON INITIATION OF NON-
RANDOM
PREPAYMENT
REVIEW.—A medicare 
administrative contractor may not initiate non-
random prepayment review of a provider of 
services or supplier based on the initial identi-
fication by that provider of services or supplier 
of an improper billing practice unless there is a 
likelihood of sustained or high level of payment 
error (as defined in subsection (i)(3)(A)). 
‘‘(B) TERMINATION OF NON-RANDOM PRE-
PAYMENT REVIEW.—The Secretary shall issue 
regulations relating to the termination, includ-
ing termination dates, of non-random prepay-
ment review. Such regulations may vary such a 
termination date based upon the differences in 
the circumstances triggering prepayment re-
view.’’. 
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in this 
subsection, the amendment made by subsection (a) 
shall take effect 1 year after the date of the enact-
ment of this Act.
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(2) DEADLINE
FOR
PROMULGATION
OF
CER-
TAIN REGULATIONS.—The Secretary shall first issue 
regulations under section 1874A(h) of the Social Se-
curity Act, as added by subsection (a), by not later 
than 1 year after the date of the enactment of this 
Act. 
(3) APPLICATION
OF
STANDARD
PROTOCOLS 
FOR
RANDOM
PREPAYMENT
REVIEW.—Section 
1874A(h)(1)(B) of the Social Security Act, as added 
by subsection (a), shall apply to random prepayment 
reviews conducted on or after such date (not later 
than 1 year after the date of the enactment of this 
Act) as the Secretary shall specify. 
(c) APPLICATION TO FISCAL INTERMEDIARIES AND 
CARRIERS.—The provisions of section 1874A(h) of the So-
cial Security Act, as added by subsection (a), shall apply 
to each fiscal intermediary under section 1816 of the So-
cial Security Act (42 U.S.C. 1395h) and each carrier 
under section 1842 of such Act (42 U.S.C. 1395u) in the 
same manner as they apply to medicare administrative 
contractors under such provisions. 
SEC. 935. RECOVERY OF OVERPAYMENTS. 
(a) 
IN
GENERAL.—Section 
1893 
(42 
U.S.C. 
1395ddd) is amended by adding at the end the following 
new subsection:
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‘‘(f) RECOVERY OF OVERPAYMENTS.—
‘‘(1) USE OF REPAYMENT PLANS.—
‘‘(A) IN
GENERAL.—If the repayment, 
within 30 days by a provider of services or sup-
plier, of an overpayment under this title would 
constitute a hardship (as defined in subpara-
graph (B)), subject to subparagraph (C), upon 
request of the provider of services or supplier 
the Secretary shall enter into a plan with the 
provider of services or supplier for the repay-
ment (through offset or otherwise) of such over-
payment over a period of at least 6 months but 
not longer than 3 years (or not longer than 5 
years in the case of extreme hardship, as deter-
mined by the Secretary). Interest shall accrue 
on the balance through the period of repay-
ment. Such plan shall meet terms and condi-
tions determined to be appropriate by the Sec-
retary. 
‘‘(B) HARDSHIP.—
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), the repayment of an 
overpayment (or overpayments) within 30 
days is deemed to constitute a hardship 
if—
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‘‘(I) in the case of a provider of 
services that files cost reports, the ag-
gregate amount of the overpayments 
exceeds 10 percent of the amount paid 
under this title to the provider of 
services for the cost reporting period 
covered by the most recently sub-
mitted cost report; or 
‘‘(II) in the case of another pro-
vider of services or supplier, the ag-
gregate amount of the overpayments 
exceeds 10 percent of the amount paid 
under this title to the provider of 
services or supplier for the previous 
calendar year. 
‘‘(ii) RULE
OF
APPLICATION.—The 
Secretary shall establish rules for the ap-
plication of this subparagraph in the case 
of a provider of services or supplier that 
was not paid under this title during the 
previous year or was paid under this title 
only during a portion of that year. 
‘‘(iii) 
TREATMENT
OF
PREVIOUS 
OVERPAYMENTS.—If a provider of services 
or supplier has entered into a repayment
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plan under subparagraph (A) with respect 
to a specific overpayment amount, such 
payment amount under the repayment plan 
shall not be taken into account under 
clause (i) with respect to subsequent over-
payment amounts. 
‘‘(C) 
EXCEPTIONS.—Subparagraph 
(A) 
shall not apply if—
‘‘(i) the Secretary has reason to sus-
pect that the provider of services or sup-
plier may file for bankruptcy or otherwise 
cease to do business or discontinue partici-
pation in the program under this title; or 
‘‘(ii) there is an indication of fraud or 
abuse committed against the program. 
‘‘(D) IMMEDIATE COLLECTION IF VIOLA-
TION OF REPAYMENT PLAN.—If a provider of 
services or supplier fails to make a payment in 
accordance with a repayment plan under this 
paragraph, the Secretary may immediately seek 
to offset or otherwise recover the total balance 
outstanding 
(including 
applicable 
interest) 
under the repayment plan. 
‘‘(E) RELATION
TO
NO
FAULT
PROVI-
SION.—Nothing in this paragraph shall be con-
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strued as affecting the application of section 
1870(c) (relating to no adjustment in the cases 
of certain overpayments). 
‘‘(2) LIMITATION ON RECOUPMENT.—
‘‘(A) IN GENERAL.—In the case of a pro-
vider of services or supplier that is determined 
to have received an overpayment under this title 
and that seeks a reconsideration by a qualified 
independent contractor on such determination 
under section 1869(b)(1), the Secretary may 
not take any action (or authorize any other per-
son, including any medicare contractor, as de-
fined in subparagraph (C)) to recoup the over-
payment until the date the decision on the re-
consideration has been rendered. If the provi-
sions of section 1869(b)(1) (providing for such 
a reconsideration by a qualified independent 
contractor) are not in effect, in applying the 
previous sentence any reference to such a recon-
sideration shall be treated as a reference to a 
redetermination by the fiscal intermediary or 
carrier involved. 
‘‘(B) COLLECTION WITH INTEREST.—Inso-
far as the determination on such appeal is 
against the provider of services or supplier, in-
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terest on the overpayment shall accrue on and 
after the date of the original notice of overpay-
ment. Insofar as such determination against the 
provider of services or supplier is later reversed, 
the Secretary shall provide for repayment of the 
amount recouped plus interest at the same rate 
as would apply under the previous sentence for 
the period in which the amount was recouped. 
‘‘(C) MEDICARE CONTRACTOR DEFINED.—
For purposes of this subsection, the term ‘medi-
care contractor’ has the meaning given such 
term in section 1889(g). 
‘‘(3) LIMITATION
ON
USE
OF
EXTRAPO-
LATION.—A medicare contractor may not use ex-
trapolation to determine overpayment amounts to be 
recovered by recoupment, offset, or otherwise un-
less—
‘‘(A) there is a sustained or high level of 
payment error (as defined by the Secretary by 
regulation); or 
‘‘(B) documented educational intervention 
has failed to correct the payment error (as de-
termined by the Secretary). 
‘‘(4) PROVISION OF SUPPORTING DOCUMENTA-
TION.—In the case of a provider of services or sup-
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plier with respect to which amounts were previously 
overpaid, a medicare contractor may request the 
periodic production of records or supporting docu-
mentation for a limited sample of submitted claims 
to ensure that the previous practice is not con-
tinuing. 
‘‘(5) CONSENT SETTLEMENT REFORMS.—
‘‘(A) IN
GENERAL.—The Secretary may 
use a consent settlement (as defined in sub-
paragraph (D)) to settle a projected overpay-
ment. 
‘‘(B) OPPORTUNITY
TO
SUBMIT
ADDI-
TIONAL INFORMATION BEFORE CONSENT SET-
TLEMENT OFFER.—Before offering a provider 
of services or supplier a consent settlement, the 
Secretary shall—
‘‘(i) communicate to the provider of 
services or supplier—
‘‘(I) that, based on a review of 
the medical records requested by the 
Secretary, a preliminary evaluation of 
those records indicates that there 
would be an overpayment; 
‘‘(II) the nature of the problems 
identified in such evaluation; and
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‘‘(III) the steps that the provider 
of services or supplier should take to 
address the problems; and 
‘‘(ii) provide for a 45-day period dur-
ing which the provider of services or sup-
plier may furnish additional information 
concerning the medical records for the 
claims that had been reviewed. 
‘‘(C) CONSENT SETTLEMENT OFFER.—The 
Secretary shall review any additional informa-
tion furnished by the provider of services or 
supplier under subparagraph (B)(ii). Taking 
into consideration such information, the Sec-
retary shall determine if there still appears to 
be an overpayment. If so, the Secretary—
‘‘(i) shall provide notice of such deter-
mination to the provider of services or sup-
plier, including an explanation of the rea-
son for such determination; and 
‘‘(ii) in order to resolve the overpay-
ment, may offer the provider of services or 
supplier—
‘‘(I) the opportunity for a statis-
tically valid random sample; or 
‘‘(II) a consent settlement.
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The opportunity provided under clause (ii)(I) 
does not waive any appeal rights with respect to 
the alleged overpayment involved. 
‘‘(D) CONSENT SETTLEMENT DEFINED.—
For purposes of this paragraph, the term ‘con-
sent settlement’ means an agreement between 
the Secretary and a provider of services or sup-
plier whereby both parties agree to settle a pro-
jected overpayment based on less than a statis-
tically valid sample of claims and the provider 
of services or supplier agrees not to appeal the 
claims involved. 
‘‘(6) 
NOTICE
OF
OVER-UTILIZATION
OF 
CODES.—The Secretary shall establish, in consulta-
tion with organizations representing the classes of 
providers of services and suppliers, a process under 
which the Secretary provides for notice to classes of 
providers of services and suppliers served by the con-
tractor in cases in which the contractor has identi-
fied that particular billing codes may be overutilized 
by that class of providers of services or suppliers 
under the programs under this title (or provisions of 
title XI insofar as they relate to such programs). 
‘‘(7) PAYMENT AUDITS.—
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‘‘(A) WRITTEN
NOTICE
FOR
POST-PAY-
MENT AUDITS.—Subject to subparagraph (C), if 
a medicare contractor decides to conduct a 
post-payment audit of a provider of services or 
supplier under this title, the contractor shall 
provide the provider of services or supplier with 
written notice (which may be in electronic form) 
of the intent to conduct such an audit. 
‘‘(B) EXPLANATION OF FINDINGS FOR ALL 
AUDITS.—Subject to subparagraph (C), if a 
medicare contractor audits a provider of serv-
ices or supplier under this title, the contractor 
shall—
‘‘(i) give the provider of services or 
supplier a full review and explanation of 
the findings of the audit in a manner that 
is understandable to the provider of serv-
ices or supplier and permits the develop-
ment of an appropriate corrective action 
plan; 
‘‘(ii) inform the provider of services or 
supplier of the appeal rights under this 
title as well as consent settlement options 
(which are at the discretion of the Sec-
retary);
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‘‘(iii) give the provider of services or 
supplier an opportunity to provide addi-
tional information to the contractor; and 
‘‘(iv) take into account information 
provided, on a timely basis, by the provider 
of services or supplier under clause (iii). 
‘‘(C) 
EXCEPTION.—Subparagraphs 
(A) 
and (B) shall not apply if the provision of no-
tice or findings would compromise pending law 
enforcement activities, whether civil or criminal, 
or reveal findings of law enforcement-related 
audits. 
‘‘(8) STANDARD
METHODOLOGY
FOR
PROBE 
SAMPLING.—The Secretary shall establish a stand-
ard methodology for medicare contractors to use in 
selecting a sample of claims for review in the case 
of an abnormal billing pattern.’’. 
(b) EFFECTIVE DATES AND DEADLINES.—
(1) USE
OF
REPAYMENT
PLANS.—Section 
1893(f)(1) of the Social Security Act, as added by 
subsection (a), shall apply to requests for repayment 
plans made after the date of the enactment of this 
Act. 
(2) LIMITATION
ON
RECOUPMENT.—Section 
1893(f)(2) of the Social Security Act, as added by
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subsection (a), shall apply to actions taken after the 
date of the enactment of this Act. 
(3) 
USE
OF
EXTRAPOLATION.—Section 
1893(f)(3) of the Social Security Act, as added by 
subsection (a), shall apply to statistically valid ran-
dom samples initiated after the date that is 1 year 
after the date of the enactment of this Act. 
(4) PROVISION
OF
SUPPORTING
DOCUMENTA-
TION.—Section 1893(f)(4) of the Social Security 
Act, as added by subsection (a), shall take effect on 
the date of the enactment of this Act. 
(5) 
CONSENT
SETTLEMENT.—Section 
1893(f)(5) of the Social Security Act, as added by 
subsection (a), shall apply to consent settlements en-
tered into after the date of the enactment of this 
Act. 
(6) NOTICE OF OVERUTILIZATION.—Not later 
than 1 year after the date of the enactment of this 
Act, the Secretary shall first establish the process 
for notice of overutilization of billing codes under 
section 1893A(f)(6) of the Social Security Act, as 
added by subsection (a). 
(7) PAYMENT AUDITS.—Section 1893A(f)(7) of 
the Social Security Act, as added by subsection (a),
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shall apply to audits initiated after the date of the 
enactment of this Act. 
(8) STANDARD FOR ABNORMAL BILLING PAT-
TERNS.—Not later than 1 year after the date of the 
enactment of this Act, the Secretary shall first es-
tablish a standard methodology for selection of sam-
ple claims for abnormal billing patterns under sec-
tion 1893(f)(8) of the Social Security Act, as added 
by subsection (a). 
SEC. 936. PROVIDER ENROLLMENT PROCESS; RIGHT OF AP-
PEAL. 
(a) IN GENERAL.—Section 1866 (42 U.S.C. 1395cc) 
is amended—
(1) by adding at the end of the heading the fol-
lowing: ‘‘; ENROLLMENT PROCESSES’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(j) ENROLLMENT PROCESS
FOR PROVIDERS
OF 
SERVICES AND SUPPLIERS.—
‘‘(1) ENROLLMENT PROCESS.—
‘‘(A) IN
GENERAL.—The Secretary shall 
establish by regulation a process for the enroll-
ment of providers of services and suppliers 
under this title.
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‘‘(B) DEADLINES.—The Secretary shall es-
tablish by regulation procedures under which 
there are deadlines for actions on applications 
for enrollment (and, if applicable, renewal of 
enrollment). The Secretary shall monitor the 
performance of medicare administrative con-
tractors in meeting the deadlines established 
under this subparagraph. 
‘‘(C) CONSULTATION
BEFORE
CHANGING 
PROVIDER
ENROLLMENT
FORMS.—The Sec-
retary shall consult with providers of services 
and suppliers before making changes in the pro-
vider enrollment forms required of such pro-
viders and suppliers to be eligible to submit 
claims for which payment may be made under 
this title. 
‘‘(2) HEARING RIGHTS IN CASES OF DENIAL OR 
NON-RENEWAL.—A provider of services or supplier 
whose application to enroll (or, if applicable, to 
renew enrollment) under this title is denied may 
have a hearing and judicial review of such denial 
under the procedures that apply under subsection 
(h)(1)(A) to a provider of services that is dissatisfied 
with a determination by the Secretary.’’. 
(b) EFFECTIVE DATES.—
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(1) ENROLLMENT
PROCESS.—The Secretary 
shall provide for the establishment of the enrollment 
process under section 1866(j)(1) of the Social Secu-
rity Act, as added by subsection (a)(2), within 6 
months after the date of the enactment of this Act. 
(2) CONSULTATION.—Section 1866(j)(1)(C) of 
the Social Security Act, as added by subsection 
(a)(2), shall apply with respect to changes in pro-
vider enrollment forms made on or after January 1, 
2004. 
(3) HEARING RIGHTS.—Section 1866(j)(2) of 
the Social Security Act, as added by subsection 
(a)(2), shall apply to denials occurring on or after 
such date (not later than 1 year after the date of 
the enactment of this Act) as the Secretary specifies. 
SEC. 937. PROCESS FOR CORRECTION OF MINOR ERRORS 
AND OMISSIONS WITHOUT PURSUING AP-
PEALS PROCESS. 
(a) CLAIMS.—The Secretary shall develop, in con-
sultation with appropriate medicare contractors (as de-
fined in section 1889(g) of the Social Security Act, as in-
serted by section 301(a)(1)) and representatives of pro-
viders of services and suppliers, a process whereby, in the 
case of minor errors or omissions (as defined by the Sec-
retary) that are detected in the submission of claims under
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the programs under title XVIII of such Act, a provider 
of services or supplier is given an opportunity to correct 
such an error or omission without the need to initiate an 
appeal. Such process shall include the ability to resubmit 
corrected claims. 
(b) PERMITTING USE OF CORRECTED AND SUPPLE-
MENTARY DATA.—
(1) IN GENERAL.—Section 1886(d)(10)(D)(vi) 
(42 U.S.C. 1395ww(d)(10)(D)(vi)) is amended by 
adding after subclause (II) at the end the following: 
‘‘Notwithstanding subclause (I), a hospital may submit, 
and the Secretary may accept upon verification, data that 
corrects or supplements the data described in such sub-
clause without regard to whether the corrected or supple-
mentary data relate to a cost report that has been set-
tled.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to fiscal years begin-
ning with fiscal year 2004. 
(3) SUBMITTAL AND RESUBMITTAL OF APPLI-
CATIONS PERMITTED FOR FISCAL YEAR 2004.—
(A) IN
GENERAL.—Notwithstanding any 
other provision of law, a hospital may submit 
(or resubmit) an application for a change de-
scribed in section 1886(d)(10)(C)(i)(II) of the
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Social Security Act for fiscal year 2004 if the 
hospital demonstrates on a timely basis to the 
satisfaction of the Secretary that the use of cor-
rected or supplementary data under the amend-
ment made by paragraph (1) would materially 
affect the approval of such an application. 
(B) 
APPLICATION
OF
BUDGET
NEU-
TRALITY.—If one or more hospital’s applica-
tions are approved as a result of paragraph (1) 
and subparagraph (A) for fiscal year 2004, the 
Secretary shall make a proportional adjustment 
in the standardized amounts determined under 
section 1886(d)(3) of the Social Security Act 
(42 U.S.C. 1395ww(d)(3)) for fiscal year 2004 
to assure that approval of such applications 
does not result in aggregate payments under 
section 1886(d) of such Act that are greater or 
less than those that would otherwise be made if 
paragraph (1) and subparagraph (A) did not 
apply. 
SEC. 938. PRIOR DETERMINATION PROCESS FOR CERTAIN 
ITEMS 
AND 
SERVICES; 
ADVANCE 
BENE-
FICIARY NOTICES. 
(a) 
IN
GENERAL.—Section 
1869 
(42 
U.S.C. 
1395ff(b)), as amended by sections 521 and 522 of BIPA
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and section 933(d)(2)(B), is further amended by adding 
at the end the following new subsection: 
‘‘(h) PRIOR DETERMINATION PROCESS FOR CERTAIN 
ITEMS AND SERVICES.—
‘‘(1) ESTABLISHMENT OF PROCESS.—
‘‘(A) IN
GENERAL.—With respect to a 
medicare administrative contractor that has a 
contract under section 1874A that provides for 
making payments under this title with respect 
to eligible items and services described in sub-
paragraph (C), the Secretary shall establish a 
prior determination process that meets the re-
quirements of this subsection and that shall be 
applied by such contractor in the case of eligible 
requesters. 
‘‘(B) ELIGIBLE
REQUESTER.—For pur-
poses of this subsection, each of the following 
shall be an eligible requester: 
‘‘(i) A physician, but only with respect 
to eligible items and services for which the 
physician may be paid directly. 
‘‘(ii) An individual entitled to benefits 
under this title, but only with respect to an 
item or service for which the individual re-
ceives, from the physician who may be paid
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directly for the item or service, an advance 
beneficiary notice under section 1879(a) 
that payment may not be made (or may no 
longer be made) for the item or service 
under this title. 
‘‘(C) ELIGIBLE
ITEMS
AND
SERVICES.—
For purposes of this subsection and subject to 
paragraph (2), eligible items and services are 
items and services which are physicians’ serv-
ices (as defined in paragraph (4)(A) of section 
1848(f) for purposes of calculating the sustain-
able growth rate under such section). 
‘‘(2) SECRETARIAL
FLEXIBILITY.—The Sec-
retary shall establish by regulation reasonable limits 
on the categories of eligible items and services for 
which a prior determination of coverage may be re-
quested under this subsection. In establishing such 
limits, the Secretary may consider the dollar amount 
involved with respect to the item or service, adminis-
trative costs and burdens, and other relevant factors. 
‘‘(3) REQUEST FOR PRIOR DETERMINATION.—
‘‘(A) IN GENERAL.—Subject to paragraph 
(2), under the process established under this 
subsection an eligible requester may submit to 
the contractor a request for a determination,
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before the furnishing of an eligible item or serv-
ice involved as to whether the item or service is 
covered under this title consistent with the ap-
plicable requirements of section 1862(a)(1)(A) 
(relating to medical necessity). 
‘‘(B) ACCOMPANYING DOCUMENTATION.—
The Secretary may require that the request be 
accompanied by a description of the item or 
service, supporting documentation relating to 
the medical necessity for the item or service, 
and any other appropriate documentation. In 
the case of a request submitted by an eligible 
requester who is described in paragraph 
(1)(B)(ii), the Secretary may require that the 
request also be accompanied by a copy of the 
advance beneficiary notice involved. 
‘‘(4) RESPONSE TO REQUEST.—
‘‘(A) IN GENERAL.—Under such process, 
the contractor shall provide the eligible re-
quester with written notice of a determination 
as to whether—
‘‘(i) the item or service is so covered; 
‘‘(ii) the item or service is not so cov-
ered; or
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‘‘(iii) the contractor lacks sufficient 
information to make a coverage determina-
tion. 
If the contractor makes the determination de-
scribed in clause (iii), the contractor shall in-
clude in the notice a description of the addi-
tional information required to make the cov-
erage determination. 
‘‘(B) DEADLINE TO RESPOND.—Such no-
tice shall be provided within the same time pe-
riod as the time period applicable to the con-
tractor providing notice of initial determinations 
on a claim for benefits under subsection 
(a)(2)(A). 
‘‘(C) INFORMING BENEFICIARY IN CASE OF 
PHYSICIAN REQUEST.—In the case of a request 
in which an eligible requester is not the indi-
vidual described in paragraph (1)(B)(ii), the 
process shall provide that the individual to 
whom the item or service is proposed to be fur-
nished shall be informed of any determination 
described in clause (ii) (relating to a determina-
tion of non-coverage) and the right (referred to 
in paragraph (6)(B)) to obtain the item or serv-
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ice and have a claim submitted for the item or 
service. 
‘‘(5) EFFECT OF DETERMINATIONS.—
‘‘(A) BINDING NATURE OF POSITIVE DE-
TERMINATION.—If the contractor makes the de-
termination described in paragraph (4)(A)(i), 
such determination shall be binding on the con-
tractor in the absence of fraud or evidence of 
misrepresentation of facts presented to the con-
tractor. 
‘‘(B) NOTICE
AND
RIGHT
TO
REDETER-
MINATION IN CASE OF A DENIAL.—
‘‘(i) IN GENERAL.—If the contractor 
makes the determination described in para-
graph (4)(A)(ii)—
‘‘(I) the eligible requester has the 
right to a redetermination by the con-
tractor on the determination that the 
item or service is not so covered; and 
‘‘(II) the contractor shall include 
in notice under paragraph (4)(A) a 
brief explanation of the basis for the 
determination, including on what na-
tional or local coverage or noncov-
erage determination (if any) the de-
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termination is based, and the right to 
such a redetermination. 
‘‘(ii) DEADLINE
FOR
REDETERMINA-
TIONS.—The contractor shall complete and 
provide notice of such redetermination 
within the same time period as the time 
period applicable to the contractor pro-
viding notice of redeterminations relating 
to a claim for benefits under subsection 
(a)(3)(C)(ii). 
‘‘(6) LIMITATION ON FURTHER REVIEW.—
‘‘(A) IN GENERAL.—Contractor determina-
tions described in paragraph (4)(A)(ii) or 
(4)(A)(iii) (and redeterminations made under 
paragraph (5)(B)), relating to pre-service 
claims are not subject to further administrative 
appeal or judicial review under this section or 
otherwise. 
‘‘(B) DECISION NOT TO SEEK PRIOR DE-
TERMINATION
OR
NEGATIVE
DETERMINATION 
DOES NOT IMPACT RIGHT TO OBTAIN SERVICES, 
SEEK REIMBURSEMENT, OR APPEAL RIGHTS.—
Nothing in this subsection shall be construed as 
affecting the right of an individual who—
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‘‘(i) decides not to seek a prior deter-
mination under this subsection with re-
spect to items or services; or 
‘‘(ii) seeks such a determination and 
has received a determination described in 
paragraph (4)(A)(ii), 
from receiving (and submitting a claim for) 
such items services and from obtaining adminis-
trative or judicial review respecting such claim 
under the other applicable provisions of this 
section. Failure to seek a prior determination 
under this subsection with respect to items and 
services shall not be taken into account in such 
administrative or judicial review. 
‘‘(C) NO
PRIOR
DETERMINATION
AFTER 
RECEIPT OF SERVICES.—Once an individual is 
provided items and services, there shall be no 
prior determination under this subsection with 
respect to such items or services.’’. 
(b) EFFECTIVE DATE; TRANSITION.—
(1) EFFECTIVE DATE.—The Secretary shall es-
tablish the prior determination process under the 
amendment made by subsection (a) in such a man-
ner as to provide for the acceptance of requests for 
determinations under such process filed not later
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than 18 months after the date of the enactment of 
this Act. 
(2) TRANSITION.—During the period in which 
the amendment made by subsection (a) has become 
effective but contracts are not provided under sec-
tion 1874A of the Social Security Act with medicare 
administrative contractors, any reference in section 
1869(g) of such Act (as added by such amendment) 
to such a contractor is deemed a reference to a fiscal 
intermediary or carrier with an agreement under 
section 1816, or contract under section 1842, re-
spectively, of such Act. 
(3) LIMITATION ON APPLICATION TO SGR.—For 
purposes of applying section 1848(f)(2)(D) of the 
Social Security Act (42 U.S.C. 1395w–4(f)(2)(D)), 
the amendment made by subsection (a) shall not be 
considered to be a change in law or regulation. 
(c) PROVISIONS RELATING
TO ADVANCE BENE-
FICIARY NOTICES; REPORT ON PRIOR DETERMINATION 
PROCESS.—
(1) DATA
COLLECTION.—The Secretary shall 
establish a process for the collection of information 
on the instances in which an advance beneficiary no-
tice (as defined in paragraph (5)) has been provided 
and on instances in which a beneficiary indicates on
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such a notice that the beneficiary does not intend to 
seek to have the item or service that is the subject 
of the notice furnished. 
(2) OUTREACH
AND
EDUCATION.—The Sec-
retary shall establish a program of outreach and 
education for beneficiaries and providers of services 
and other persons on the appropriate use of advance 
beneficiary notices and coverage policies under the 
medicare program. 
(3) GAO REPORT REPORT ON USE OF ADVANCE 
BENEFICIARY NOTICES.—Not later than 18 months 
after the date on which section 1869(g) of the Social 
Security Act (as added by subsection (a)) takes ef-
fect, the Comptroller General of the United States 
shall submit to Congress a report on the use of ad-
vance beneficiary notices under title XVIII of such 
Act. Such report shall include information con-
cerning the providers of services and other persons 
that have provided such notices and the response of 
beneficiaries to such notices. 
(4) GAO REPORT ON USE OF PRIOR DETER-
MINATION
PROCESS.—Not later than 18 months 
after the date on which section 1869(g) of the Social 
Security Act (as added by subsection (a)) takes ef-
fect, the Comptroller General of the United States
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shall submit to Congress a report on the use of the 
prior determination process under such section. Such 
report shall include—
(A) information concerning the types of 
procedures for which a prior determination has 
been sought, determinations made under the 
process, and changes in receipt of services re-
sulting from the application of such process; 
and 
(B) an evaluation of whether the process 
was useful for physicians (and other suppliers) 
and beneficiaries, whether it was timely, and 
whether the amount of information required 
was burdensome to physicians and beneficiaries. 
(5) 
ADVANCE
BENEFICIARY
NOTICE
DE-
FINED.—In this subsection, the term ‘‘advance bene-
ficiary notice’’ means a written notice provided 
under section 1879(a) of the Social Security Act (42 
U.S.C. 1395pp(a)) to an individual entitled to bene-
fits under part A or B of title XVIII of such Act 
before items or services are furnished under such 
part in cases where a provider of services or other 
person that would furnish the item or service be-
lieves that payment will not be made for some or all 
of such items or services under such title.
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Subtitle V—Miscellaneous 
Provisions 
SEC. 941. POLICY DEVELOPMENT REGARDING EVALUATION 
AND MANAGEMENT (E & M) DOCUMENTATION 
GUIDELINES. 
(a) IN GENERAL.—The Secretary may not implement 
any new documentation guidelines for, or clinical examples 
of, evaluation and management physician services under 
the title XVIII of the Social Security Act on or after the 
date of the enactment of this Act unless the Secretary—
(1) has developed the guidelines in collaboration 
with practicing physicians (including both generalists 
and specialists) and provided for an assessment of 
the proposed guidelines by the physician community; 
(2) has established a plan that contains specific 
goals, including a schedule, for improving the use of 
such guidelines; 
(3) has conducted appropriate and representa-
tive pilot projects under subsection (b) to test modi-
fications to the evaluation and management docu-
mentation guidelines; 
(4) finds that the objectives described in sub-
section (c) will be met in the implementation of such 
guidelines; and
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(5) has established, and is implementing, a pro-
gram to educate physicians on the use of such guide-
lines and that includes appropriate outreach. 
The Secretary shall make changes to the manner in which 
existing evaluation and management documentation guide-
lines are implemented to reduce paperwork burdens on 
physicians. 
(b) PILOT PROJECTS TO TEST EVALUATION AND 
MANAGEMENT DOCUMENTATION GUIDELINES.—
(1) IN GENERAL.—The Secretary shall conduct 
under this subsection appropriate and representative 
pilot projects to test new evaluation and manage-
ment documentation guidelines referred to in sub-
section (a). 
(2) LENGTH AND CONSULTATION.—Each pilot 
project under this subsection shall—
(A) be voluntary; 
(B) be of sufficient length as determined 
by the Secretary to allow for preparatory physi-
cian and medicare contractor education, anal-
ysis, and use and assessment of potential eval-
uation and management guidelines; and 
(C) be conducted, in development and 
throughout the planning and operational stages 
of the project, in consultation with practicing
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physicians (including both generalists and spe-
cialists). 
(3) RANGE OF PILOT PROJECTS.—Of the pilot 
projects conducted under this subsection—
(A) at least one shall focus on a peer re-
view method by physicians (not employed by a 
medicare contractor) which evaluates medical 
record information for claims submitted by phy-
sicians identified as statistical outliers relative 
to definitions published in the Current Proce-
dures Terminology (CPT) code book of the 
American Medical Association; 
(B) at least one shall focus on an alter-
native method to detailed guidelines based on 
physician documentation of face to face encoun-
ter time with a patient; 
(C) at least one shall be conducted for 
services furnished in a rural area and at least 
one for services furnished outside such an area; 
and 
(D) at least one shall be conducted in a 
setting where physicians bill under physicians’ 
services in teaching settings and at least one 
shall be conducted in a setting other than a 
teaching setting.