an appeal may request an extension of such
deadline for good cause. The adjudicator may
extend such deadline based upon a finding of
good cause to a date specified by the adjudi-
cator.
‘‘(B) DELAY
IN
DECISION
DEADLINES
UNTIL
COMPLETION
OF
RECORD.—Notwith-
standing any other provision of this section, the
deadlines otherwise established for the making
of determination by adjudicators under this sec-
tion shall be tolled during time period between
the date of the filing of the request for appeal
and the date on which the record is complete.
‘‘(C) ADJUDICATOR
DEFINED.—For pur-
poses of this paragraph, the term ‘adjudicator’
means a qualified independent contractor under
subsection (c), an administrative law judge, or
an administrative appeals judge under the De-
partmental Appeals Board.’’.
(b) USE OF PATIENTS’ MEDICAL RECORDS.—Section
1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)) is amend-
ed by inserting ‘‘(including the medical records of the indi-
vidual 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))
is amended by adding at the end the following new
paragraph:
‘‘(4) REQUIREMENTS
OF
NOTICE
OF
DETER-
MINATIONS
AND
REDETERMINATIONS.—A written
notice of a determination on an initial determination
or on a redetermination, insofar as such determina-
tion or redetermination results in a denial of a claim
for benefits, shall be provided in printed form and
written in a manner calculated to be understood by
the beneficiary and shall include—
‘‘(A) the specific reasons for the deter-
mination (including, as appropriate, a summary
of the clinical or scientific evidence used in
making the determination);
‘‘(B) the procedures for obtaining addi-
tional information concerning the determination
or redetermination; and
‘‘(C) notification of the right to seek a re-
determination or otherwise appeal the deter-
mination and instructions on how to initiate
such a redetermination or appeal under this
section.’’.
(2) 
RECONSIDERATIONS.—Section
1869(c)(3)(E) 
(42 
U.S.C. 
1395ff(c)(3)(E)) 
is
amended—
(A) by inserting ‘‘be written in a manner
calculated to be understood by the beneficiary,
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)) is amended—
(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 beneficiary
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) PREPARATION OF RECORD FOR APPEAL.—
Section 1869(c)(3)(J) (42 U.S.C. 1395ff(c)(3)(J))
by striking ‘‘such information as is required for an
appeal’’ and inserting ‘‘the record for the appeal’’.
(d) QUALIFIED INDEPENDENT CONTRACTORS.—
(1) ELIGIBILITY REQUIREMENTS OF QUALIFIED
INDEPENDENT CONTRACTORS.—Section 1869(c) (42
U.S.C. 1395ff(c)) is amended—
(A) in paragraph (2)—
(i) by inserting ‘‘(except in the case of
a utilization and quality control peer re-
view organization, as defined in section
1152)’’ after ‘‘means an entity or organi-
zation that’’; and
(ii) by striking the period at the end
and inserting the following: ‘‘and meets the
following requirements:
‘‘(A) GENERAL REQUIREMENTS.—
‘‘(i) The entity or organization has
(directly or through contracts or other ar-
rangements) sufficient medical, legal, and
other expertise (including knowledge of the
program under this title) and sufficient
staffing to carry out duties of a qualified
independent contractor under this section
on a timely basis.
‘‘(ii) The entity or organization has
provided assurances that it will conduct ac-
tivities consistent with the applicable re-
quirements of this section, including that it
will not conduct any activities in a case un-
less the independence requirements of sub-
paragraph (B) are met with respect to the
case.
‘‘(iii) The entity or organization meets
such other requirements as the appropriate
Secretary provides by regulation.
‘‘(B) INDEPENDENCE REQUIREMENTS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), an entity or organization meets the
independence requirements of this sub-
paragraph with respect to any case if 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
(as determined under regulations).
‘‘(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—
‘‘(I) not exceed a reasonable
level; and
‘‘(II) not be contingent on any
decision rendered by the contractor or
by any reviewing professional.’’; and
(B) in paragraph (3)(A), by striking ‘‘,
and shall have sufficient training and expertise
in medical science and legal matters to make
reconsiderations under this subsection’’.
(2) ELIGIBILITY REQUIREMENTS FOR REVIEW-
ERS.—Section 
1869 
(42 
U.S.C. 
1395ff) 
is
amended—
(A) by amending subsection (c)(3)(D) to
read as follows:
‘‘(D) QUALIFICATIONS FOR REVIEWERS.—
The requirements of subsection (g) shall be met
(relating to qualifications of reviewing profes-
sionals).’’; and
(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’), each reviewing professional
meets the qualifications described in paragraph
(4).
‘‘(2) INDEPENDENCE.—
‘‘(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 (as determined
under regulations).
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to—
‘‘(i) prohibit an individual, solely on
the basis of affiliation with a fiscal inter-
mediary, carrier, or other contractor, from
serving as an reviewing professional if—
‘‘(I) a non-affiliated individual is
not reasonably available;
‘‘(II) the affiliated individual is
not involved in the provision of items
or services in the case under review;
‘‘(III) the fact of such an affili-
ation is disclosed to the Secretary and
the beneficiary (or authorized rep-
resentative) and neither party objects;
and
‘‘(IV) the affiliated individual is
not an employee of the intermediary,
carrier, or contractor and does not
provide services exclusively or pri-
marily to or on behalf of such inter-
mediary, carrier, 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
such affiliation if the affiliation is disclosed
to the Secretary and the beneficiary (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).
‘‘(3) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by a qualified inde-
pendent contractor to a reviewer in connection with
a review under this section shall—
‘‘(A) not exceed a reasonable level; and
‘‘(B) not be contingent on the decision ren-
dered by the reviewer.
‘‘(4) LICENSURE
AND
EXPERTISE.—Each re-
viewing professional shall be a physician (allopathic
or osteopathic) or health care professional who—
‘‘(A) is appropriately credentialed or li-
censed in 1 or more States to deliver health
care services; and
‘‘(B) typically treats the condition, makes
the diagnosis, or provides the type of treatment
under review.
‘‘(5) RELATED PARTY DEFINED.—For purposes
of this section, the term ‘related party’ means, with
respect to a case under this title involving an indi-
vidual beneficiary, any of the following:
‘‘(A) The Secretary, the fiscal intermediary
or carrier involved, or any fiduciary, officer, di-
rector, or employee of the Department of
Health and Human Services, or of such inter-
mediary or carrier.
‘‘(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.’’.
(e) IMPLEMENTATION
OF
CERTAIN
BIPA RE-
FORMS.—
(1) Section 521 of BIPA (114 Stat. 2763A–
543) is amended—
(A) in subsection (c), by striking ‘‘and (4)’’
and inserting ‘‘(4), and (5)’’;
(B) in subsection (d), by striking ‘‘October
1, 2002’’ and inserting ‘‘October 1, 2003’’; and
(C) by adding at the end the following new
subsection:
‘‘(e) USE OF PRO PROCESS FOR TERMINATION AND
DISCHARGES DURING TRANSITION PERIOD.—
‘‘(1) IN GENERAL.—In the case of an individual
who receives a notice of termination or discharge de-
scribed in subsection (b)(1)(F) of section 1869 of
the Social Security Act (as added by subsection (a))
that relates to an initial determination described in
subsection (a)(1)(C) of such section and that is
made during the applicable period described in para-
graph (2), the individual may request, in writing or
orally, an expedited review of such termination or
discharge under section 1154(e) of such Act (as in
effect before the end of such period and subject to
paragraph (3)).
‘‘(2) APPLICABLE
PERIOD.—This subsection
shall apply on or after October 1, 2002, and before
the effective date provided under subsection (d).
‘‘(3) RULES OF APPLICATION.—In applying sec-
tion 1154(e) of the Social Security Act under para-
graph (1)—
‘‘(A) any reference in such section—
‘‘(i) to a hospital is deemed a ref-
erence to a provider of services;
‘‘(ii) to inpatient hospital care or serv-
ices is deemed a reference to services of
such a provider of services;
‘‘(iii) a notice under paragraph (1) is
deemed a reference to the notice described
in paragraph (1) of this subsection; and
‘‘(iv) an inpatient is deemed a ref-
erence to a patient;
‘‘(B) paragraph (1) of such section
1154(e) shall not apply; and
‘‘(C) 
the 
provisions 
of 
section
1869(b)(1)(F)(ii) of such Act (as amended by
subsection (a)) (relating to expedited hearings)
shall apply to the review under this subsection
except that any reference in such section to the
Secretary or a hearing under this subsection
shall be deemed a reference to a peer review or-
ganization and a review under such section
1154(e).’’.
(2) Section 522(d) of BIPA (114 Stat. 2763A–
547) is amended by striking ‘‘October 1, 2001’’ and
inserting ‘‘October 1, 2002’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall be effective as if included in the enact-
ment of the respective provisions of subtitle C of title V
of BIPA, 114 Stat. 2763A–534.
SEC. 205. HEARING RIGHTS RELATED TO DECISIONS BY
THE SECRETARY TO DENY OR NOT RENEW A
MEDICARE ENROLLMENT AGREEMENT; CON-
SULTATION BEFORE CHANGING PROVIDER
ENROLLMENT FORMS.
(a) HEARING RIGHTS.—
(1) IN
GENERAL.—Section 1866 (42 U.S.C.
1395cc) is amended by adding at the end the fol-
lowing new subsection:
‘‘(j) HEARING RIGHTS
IN CASES
OF DENIAL
OR
NON-RENEWAL.—The Secretary shall establish by regula-
tion procedures under which—
‘‘(1) there are deadlines for actions on applica-
tions for enrollment (and, if applicable, renewal of
enrollment); and
‘‘(2) providers of services, physicians, practi-
tioners, and suppliers whose application to enroll
(or, if applicable, to renew enrollment) are denied
are provided a mechanism to appeal such denial and
a deadline for consideration of such appeals.’’.
(2) 
EFFECTIVE
DATE.—The 
Secretary 
of
Health and Human Services shall provide for the es-
tablishment of the procedures under the amendment
made by paragraph (1) within 6 months after the
date of the enactment of this Act.
(b) CONSULTATION BEFORE CHANGING PROVIDER
ENROLLMENT
FORMS.—Section 
1871 
(42 
U.S.C.
1395hh), as amended by sections 101(a), 102, and 103,
is further amended by adding at the end the following new
subsection:
‘‘(g) The Secretary shall consult with providers of
services, physicians, practitioners, and suppliers before
making changes in the provider enrollment forms required
of such providers, physicians, practitioners, and suppliers
to be eligible to submit claims for which payment may be
made under this title.’’.
SEC. 206. APPEALS BY PROVIDERS WHEN THERE IS NO
OTHER PARTY AVAILABLE.
(a) IN GENERAL.—Section 1870 (42 U.S.C. 1395gg)
is amended by adding at the end the following new sub-
section:
‘‘(h) Notwithstanding subsection (f) or any other pro-
vision of law, the Secretary shall permit a provider of serv-
ices, physician, practitioner, or other supplier to appeal
any determination of the Secretary under this title relating
to services rendered under this title to an individual who
subsequently dies, if there is no other party available to
appeal such determination, so long as the estate of the
individual, and the individual’s family and heirs, are not
liable for paying for the item or service and are not liable
for any increased coinsurance or deductible amounts re-
sulting from any decision increasing the reimbursement
amount for the provider of services, physician, practi-
tioner, or supplier.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act and shall apply to items and services fur-
nished on or after such date.
TITLE III—CONTRACTING
REFORM
SEC. 301. INCREASED FLEXIBILITY IN MEDICARE ADMINIS-
TRATION.
(a) CONSOLIDATION AND FLEXIBILITY IN MEDICARE
ADMINISTRATION.—
(1) IN GENERAL.—Title XVIII is amended by
inserting after section 1874 the following new sec-
tion:
‘‘CONTRACTS WITH MEDICARE ADMINISTRATIVE
CONTRACTORS
‘‘SEC. 1874A. (a) AUTHORITY.—
‘‘(1) 
AUTHORITY
TO
ENTER
INTO
CON-
TRACTS.—The Secretary may enter into contracts
with any eligible entity to serve as a medicare ad-
ministrative contractor with respect to the perform-
ance of any or all of the functions described in para-
graph (4) or parts of those functions (or, to the ex-
tent provided in a contract, to secure performance
thereof by other entities).
‘‘(2) ELIGIBILITY OF ENTITIES.—An entity is
eligible to enter into a contract with respect to the
performance of a particular function or activity de-
scribed in paragraph (4) only if—
‘‘(A) the entity has demonstrated capa-
bility to carry out such function;
‘‘(B) the entity complies with such conflict
of interest standards as are generally applicable
to Federal acquisition and procurement;
‘‘(C) the entity has sufficient assets to fi-
nancially support the performance of such func-
tion; and
‘‘(D) the entity meets such other require-
ments as the Secretary may impose.
‘‘(3) MEDICARE ADMINISTRATIVE CONTRACTOR
DEFINED.—For purposes of this title and title XI—
‘‘(A) IN
GENERAL.—The term ‘medicare
administrative contractor’ means an agency, or-
ganization, or other person with a contract
under this section.
‘‘(B) APPROPRIATE
MEDICARE
ADMINIS-
TRATIVE
CONTRACTOR.—With respect to the
performance of a particular function or activity
in relation to an individual entitled to benefits
under part A or enrolled under part B, or both,
a specific provider of services, physician, practi-
tioner, or supplier (or class of such providers of
services, physicians, practitioners, or suppliers),
the ‘appropriate’ medicare administrative con-
tractor is the medicare administrative con-
tractor that has a contract under this section
with respect to the performance of that function
or activity in relation to that individual, pro-
vider of services, physician, practitioner, or sup-
plier or class of provider of services, physician,
practitioner, or supplier.
‘‘(4) FUNCTIONS
DESCRIBED.—The functions
referred to in paragraphs (1) and (2) are payment
functions, provider services functions, and bene-
ficiary services functions as follows:
‘‘(A) 
DETERMINATION
OF
PAYMENT
AMOUNTS.—Determining (subject to the provi-
sions of section 1878 and to such review by the
Secretary as may be provided for by the con-
tracts) the amount of the payments required
pursuant to this title to be made to providers
of services, physicians, practitioners, and sup-
pliers.
‘‘(B) MAKING
PAYMENTS.—Making pay-
ments described in subparagraph (A).
‘‘(C) BENEFICIARY
EDUCATION
AND
AS-
SISTANCE.—Serving as a center for, and com-
municating to individuals entitled to benefits
under part A or enrolled under part B, or both,
with respect to education and outreach for
those individuals, and assistance with specific
issues, concerns or problems of those individ-
uals.
‘‘(D) PROVIDER
CONSULTATIVE
SERV-
ICES.—Providing consultative services to insti-
tutions, agencies, and other persons to enable
them to establish and maintain fiscal records
necessary for purposes of this title and other-
wise to qualify as providers of services, physi-
cians, practitioners, or suppliers.
‘‘(E) 
COMMUNICATION
WITH
PRO-
VIDERS.—Serving as a center for, and commu-
nicating to providers of services, physicians,
practitioners, and suppliers, any information or
instructions furnished to the medicare adminis-
trative contractor by the Secretary, and serving
as a channel of communication from such pro-
viders, physicians, practitioners, and suppliers
to the Secretary.
‘‘(F) PROVIDER
EDUCATION
AND
TECH-
NICAL ASSISTANCE.—Performing the functions
described in subsections (e) and (f), relating to
education, training, and technical assistance to
providers of services, physicians, practitioners,
and suppliers.
‘‘(G) 
ADDITIONAL
FUNCTIONS.—Per-
forming such other functions as are necessary
to carry out the purposes of this title.
‘‘(5) RELATIONSHIP TO MIP CONTRACTS.—
‘‘(A) NONDUPLICATION
OF
DUTIES.—In
entering into contracts under this section, the
Secretary shall assure that functions of medi-
care administrative contractors in carrying out
activities under parts A and B do not duplicate
functions carried out under the Medicare Integ-
rity Program under section 1893. The previous
sentence shall not apply with respect to the ac-
tivity described in section 1893(b)(5) (relating
to prior authorization of certain items of dura-
ble 
medical 
equipment 
under 
section
1834(a)(15)).
‘‘(B) CONSTRUCTION.—An entity shall not
be treated as a medicare administrative con-
tractor merely by reason of having entered into
a contract with the Secretary under section
1893.
‘‘(6) APPLICATION
OF
FEDERAL
ACQUISITION
REGULATION.—Except to the extent inconsistent
with a specific requirement of this title, the Federal
Acquisition Regulation applies to contracts under
this title.
‘‘(b) CONTRACTING REQUIREMENTS.—
‘‘(1) USE OF COMPETITIVE PROCEDURES.—
‘‘(A) IN GENERAL.—Except as provided in
laws with general applicability to Federal acqui-
sition and procurement or in subparagraph (B),
the Secretary shall use competitive procedures
when entering into contracts with medicare ad-
ministrative contractors under this section.
‘‘(B) RENEWAL OF CONTRACTS.—The Sec-
retary may renew a contract with a medicare
administrative contractor under this section
from term to term without regard to section 5
of title 41, United States Code, or any other
provision of law requiring competition, if the
medicare administrative contractor has met or
exceeded the performance requirements applica-
ble with respect to the contract and contractor,
except that the Secretary shall provide for the
application of competitive procedures under
such a contract not less frequently than once
every five years.
‘‘(C) TRANSFER
OF
FUNCTIONS.—The
Secretary may transfer functions among medi-
care administrative contractors without regard
to any provision of law requiring competition.
The Secretary shall ensure that performance
quality is considered in such transfers.
‘‘(D) INCENTIVES
FOR
QUALITY.—The
Secretary shall provide incentives for medicare
administrative contractors to provide quality
service and to promote efficiency.
‘‘(2) COMPLIANCE WITH REQUIREMENTS.—No
contract under this section shall be entered into with
any medicare administrative contractor unless the
Secretary finds that such medicare administrative
contractor will perform its obligations under the con-
tract efficiently and effectively and will meet such
requirements as to financial responsibility, legal au-
thority, and other matters as the Secretary finds
pertinent.
‘‘(3) PERFORMANCE REQUIREMENTS.—
‘‘(A) DEVELOPMENT
OF
SPECIFIC
PER-
FORMANCE
REQUIREMENTS.—The 
Secretary
shall develop contract performance require-
ments to carry out the specific requirements ap-
plicable under this title to a function described
in subsection (a)(4) and shall develop standards
for measuring the extent to which a contractor
has met such requirements. The Secretary shall
publish in the Federal Register such perform-
ance requirements and measurement standards.
‘‘(B) CONSIDERATIONS.—The Secretary
may include as one of the standards satisfaction
level as measured by provider and beneficiary
surveys.
‘‘(C) INCLUSION IN CONTRACTS.—All con-
tractor performance requirements shall be set
forth in the contract between the Secretary and
(1) EFFECTIVE DATE.—
(A) APPLICATION TO COMPETITIVELY BID
CONTRACTS.—The amendments made by this
section shall apply to contracts that are com-
petitively bid on or after such date or dates
(but not later than 1 year after the date of the
enactment of this Act) as the Secretary of
Health and Human Services specifies.
(B) CONSTRUCTION
FOR
CURRENT
CON-
TRACTS.—Such amendments shall not apply to
contracts in effect before the date specified
under subparagraph (A) that continue to retain
the terms and conditions in effect on such date
until such date as the contract is let out for
competitive bidding under such amendments.
(C) DEADLINE
FOR
COMPETITIVE
BID-
DING.—The Secretary shall provide for the let-
ting by competitive bidding of all contracts for
functions of medicare administrative contrac-
tors for annual contract periods that begin on
or after October 1, 2008.
(2) GENERAL
TRANSITION
RULES.—The Sec-
retary shall take such steps, consistent with para-
graph (1)(B) and (1)(C), as are necessary to provide
for an appropriate transition from contracts under