making payments) as a fiscal intermediary 
or carrier under section 1816 or 1842, the 
first independent evaluation conducted 
pursuant to subparagraph (A) shall be 
completed prior to commencing such func-
tions. 
‘‘(ii) OTHER
CONTRACTORS.—In the 
case of a medicare administrative con-
tractor covered by this subsection that is 
not described in clause (i), the first inde-
pendent evaluation conducted pursuant to 
subparagraph (A) shall be completed with-
in 1 year after the date the contractor 
commences functions referred to in clause 
(i) under this section. 
‘‘(C) REPORTS ON EVALUATIONS.—
‘‘(i) 
TO
THE
DEPARTMENT
OF 
HEALTH AND HUMAN SERVICES.—The re-
sults of independent evaluations under sub-
paragraph (A) shall be submitted promptly 
to the Inspector General of the Depart-
ment of Health and Human Services and 
to the Secretary. 
‘‘(ii) TO
CONGRESS.—The Inspector 
General of the Department of Health and
Human Services shall submit to Congress 
annual reports on the results of such eval-
uations, including assessments of the scope 
and sufficiency of such evaluations. 
‘‘(iii) AGENCY REPORTING.—The Sec-
retary shall address the results of such 
evaluations in reports required under sec-
tion 3544(c) of title 44, United States 
Code.’’. 
(b) APPLICATION
OF REQUIREMENTS
TO FISCAL 
INTERMEDIARIES AND CARRIERS.—
(1) IN
GENERAL.—The provisions of section 
1874A(e)(2) of the Social Security Act (other than 
subparagraph (B)), as added by subsection (a), shall 
apply to each fiscal intermediary under section 1816 
of the Social Security Act (42 U.S.C. 1395h) and 
each carrier under section 1842 of such Act (42 
U.S.C. 1395u) in the same manner as they apply to 
medicare administrative contractors under such pro-
visions. 
(2) DEADLINE FOR INITIAL EVALUATION.—In 
the case of such a fiscal intermediary or carrier with 
an agreement or contract under such respective sec-
tion in effect as of the date of the enactment of this 
Act, 
the 
first 
evaluation 
under 
section
1874A(e)(2)(A) of the Social Security Act (as added 
by subsection (a)), pursuant to paragraph (1), shall 
be completed (and a report on the evaluation sub-
mitted to the Secretary) by not later than 1 year 
after such date. 
Subtitle C—Education and 
Outreach 
SEC. 221. PROVIDER EDUCATION AND TECHNICAL ASSIST-
ANCE. 
(a) COORDINATION OF EDUCATION FUNDING.—
(1) IN GENERAL.—Title XVIII is amended by 
inserting after section 1888 the following new sec-
tion:
‘‘PROVIDER EDUCATION AND TECHNICAL ASSISTANCE 
‘‘SEC. 1889. (a) COORDINATION
OF EDUCATION 
FUNDING.—The Secretary shall coordinate the edu-
cational activities provided through medicare contractors 
(as defined in subsection (g), including under section 
1893) in order to maximize the effectiveness of Federal 
education efforts for providers of services and suppliers.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on the date of the 
enactment of this Act. 
(3) REPORT.—Not later than October 1, 2004, 
the Secretary shall submit to Congress a report that 
includes a description and evaluation of the steps
taken to coordinate the funding of provider edu-
cation under section 1889(a) of the Social Security 
Act, as added by paragraph (1). 
(b) INCENTIVES TO IMPROVE CONTRACTOR PER-
FORMANCE.—
(1) IN GENERAL.—Section 1874A, as added by 
section 211(a)(1) and as amended by section 212(a), 
is amended by adding at the end the following new 
subsection: 
‘‘(f) INCENTIVES TO IMPROVE CONTRACTOR PER-
FORMANCE IN PROVIDER EDUCATION AND OUTREACH.—
The Secretary shall use specific claims payment error 
rates or similar methodology of medicare administrative 
contractors in the processing or reviewing of medicare 
claims in order to give such contractors an incentive to 
implement effective education and outreach programs for 
providers of services and suppliers.’’. 
(2) APPLICATION TO FISCAL INTERMEDIARIES 
AND CARRIERS.—The provisions of section 1874A(f) 
of the Social Security Act, as added by paragraph 
(1), shall apply to each fiscal intermediary under 
section 1816 of the Social Security Act (42 U.S.C. 
1395h) and each carrier under section 1842 of such 
Act (42 U.S.C. 1395u) in the same manner as they
apply to medicare administrative contractors under 
such provisions. 
(3) GAO REPORT ON ADEQUACY OF METHOD-
OLOGY.—Not later than October 1, 2004, the Comp-
troller General of the United States shall submit to 
Congress and to the Secretary a report on the ade-
quacy of the methodology under section 1874A(f) of 
the Social Security Act, as added by paragraph (1), 
and shall include in the report such recommenda-
tions as the Comptroller General determines appro-
priate with respect to the methodology. 
(4) REPORT ON USE OF METHODOLOGY IN AS-
SESSING
CONTRACTOR
PERFORMANCE.—Not later 
than October 1, 2004, the Secretary shall submit to 
Congress a report that describes how the Secretary 
intends to use such methodology in assessing medi-
care contractor performance in implementing effec-
tive education and outreach programs, including 
whether to use such methodology as a basis for per-
formance bonuses. The report shall include an anal-
ysis of the sources of identified errors and potential 
changes in systems of contractors and rules of the 
Secretary that could reduce claims error rates.
(c) PROVISION OF ACCESS TO AND PROMPT RE-
SPONSES FROM MEDICARE ADMINISTRATIVE CONTRAC-
TORS.—
(1) IN GENERAL.—Section 1874A, as added by 
section 211(a)(1) and as amended by section 212(a) 
and subsection (b), is further amended by adding at 
the end the following new subsection: 
‘‘(g) COMMUNICATIONS WITH BENEFICIARIES, PRO-
VIDERS OF SERVICES AND SUPPLIERS.—
‘‘(1) COMMUNICATION
STRATEGY.—The Sec-
retary shall develop a strategy for communications 
with individuals entitled to benefits under part A or 
enrolled under part B, or both, and with providers 
of services and suppliers under this title. 
‘‘(2) RESPONSE TO WRITTEN INQUIRIES.—Each 
medicare administrative contractor shall, for those 
providers of services and suppliers which submit 
claims to the contractor for claims processing and 
for those individuals entitled to benefits under part 
A or enrolled under part B, or both, with respect to 
whom claims are submitted for claims processing, 
provide general written responses (which may be 
through electronic transmission) in a clear, concise, 
and accurate manner to inquiries of providers of 
services, suppliers, and individuals entitled to bene-
fits under part A or enrolled under part B, or both, 
concerning the programs under this title within 45 
business days of the date of receipt of such inquiries. 
‘‘(3) RESPONSE
TO
TOLL-FREE
LINES.—The 
Secretary shall ensure that each medicare adminis-
trative contractor shall provide, for those providers 
of services and suppliers which submit claims to the 
contractor for claims processing and for those indi-
viduals entitled to benefits under part A or enrolled 
under part B, or both, with respect to whom claims 
are submitted for claims processing, a toll-free tele-
phone number at which such individuals, providers 
of services, and suppliers may obtain information re-
garding billing, coding, claims, coverage, and other 
appropriate information under this title. 
‘‘(4) 
MONITORING
OF
CONTRACTOR
RE-
SPONSES.—
‘‘(A) IN GENERAL.—Each medicare admin-
istrative contractor shall, consistent with stand-
ards developed by the Secretary under subpara-
graph (B)—
‘‘(i) maintain a system for identifying 
who provides the information referred to in 
paragraphs (2) and (3); and
‘‘(ii) monitor the accuracy, consist-
ency, and timeliness of the information so 
provided. 
‘‘(B) DEVELOPMENT OF STANDARDS.—
‘‘(i) IN
GENERAL.—The Secretary 
shall establish and make public standards 
to monitor the accuracy, consistency, and 
timeliness of the information provided in 
response to written and telephone inquiries 
under this subsection. Such standards shall 
be consistent with the performance require-
ments established under subsection (b)(3). 
‘‘(ii) 
EVALUATION.—In 
conducting 
evaluations of individual medicare adminis-
trative contractors, the Secretary shall 
take into account the results of the moni-
toring conducted under subparagraph (A) 
taking into account as performance re-
quirements 
the 
standards 
established 
under clause (i). The Secretary shall, in 
consultation 
with 
organizations 
rep-
resenting providers of services, suppliers, 
and individuals entitled to benefits under 
part A or enrolled under part B, or both, 
establish standards relating to the accu-
racy, consistency, and timeliness of the in-
formation so provided. 
‘‘(C) DIRECT
MONITORING.—Nothing in 
this paragraph shall be construed as preventing 
the Secretary from directly monitoring the ac-
curacy, consistency, and timeliness of the infor-
mation so provided. 
‘‘(5) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated such sums 
as are necessary to carry out this subsection.’’.
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect October 1, 2004. 
(3) APPLICATION TO FISCAL INTERMEDIARIES 
AND CARRIERS.—The provisions of section 1874A(g)
of the Social Security Act, as added by paragraph 
(1), shall apply to each fiscal intermediary under 
section 1816 of the Social Security Act (42 U.S.C. 
1395h) and each carrier under section 1842 of such 
Act (42 U.S.C. 1395u) in the same manner as they 
apply to medicare administrative contractors under 
such provisions. 
(d) IMPROVED PROVIDER EDUCATION AND TRAIN-
ING.—
(1) IN GENERAL.—Section 1889, as added by 
subsection (a), is amended by adding at the end the 
following new subsections: 
‘‘(b) ENHANCED EDUCATION AND TRAINING.—
‘‘(1) ADDITIONAL RESOURCES.—There are au-
thorized to be appropriated to the Secretary (in ap-
propriate part from the Federal Hospital Insurance 
Trust Fund and the Federal Supplementary Medical 
Insurance Trust Fund) such sums as may be nec-
essary for fiscal years beginning with fiscal year 
2005. 
‘‘(2) USE.—The funds made available under 
paragraph (1) shall be used to increase the conduct 
by medicare contractors of education and training of 
providers of services and suppliers regarding billing, 
coding, and other appropriate items and may also be 
used to improve the accuracy, consistency, and time-
liness of contractor responses. 
‘‘(c) TAILORING EDUCATION AND TRAINING ACTIVI-
TIES FOR SMALL PROVIDERS OR SUPPLIERS.—
‘‘(1) IN GENERAL.—Insofar as a medicare con-
tractor conducts education and training activities, it 
shall tailor such activities to meet the special needs 
of small providers of services or suppliers (as defined 
in paragraph (2)). Such education and training ac-
tivities for small providers of services and suppliers 
may include the provision of technical assistance 
(such as review of billing systems and internal con-
trols to determine program compliance and to sug-
gest more efficient and effective means of achieving 
such compliance). 
‘‘(2) SMALL PROVIDER OF SERVICES OR SUP-
PLIER.—In this subsection, the term ‘small provider 
of services or supplier’ means—
‘‘(A) a provider of services with fewer than 
25 full-time-equivalent employees; or 
‘‘(B) a supplier with fewer than 10 full-
time-equivalent employees.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on October 1, 
2004.
(e) 
REQUIREMENT
TO
MAINTAIN
INTERNET 
WEBSITES.—
(1) IN GENERAL.—Section 1889, as added by 
subsection (a) and as amended by subsection (d), is 
further amended by adding at the end the following 
new subsection: 
‘‘(d) INTERNET WEBSITES; FAQS.—The Secretary, 
and each medicare contractor insofar as it provides serv-
ices (including claims processing) for providers of services 
or suppliers, shall maintain an Internet website which—
‘‘(1) provides answers in an easily accessible 
format to frequently asked questions, and 
‘‘(2) includes other published materials of the 
contractor, 
that relate to providers of services and suppliers under the 
programs under this title (and title XI insofar as it relates 
to such programs).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on October 1, 
2004. 
(f) ADDITIONAL
PROVIDER
EDUCATION
PROVI-
SIONS.—
(1) IN GENERAL.—Section 1889, as added by 
subsection (a) and as amended by subsections (d) 
and (e), is further amended by adding at the end the 
following new subsections: 
‘‘(e) ENCOURAGEMENT OF PARTICIPATION IN EDU-
CATION PROGRAM ACTIVITIES.—A medicare contractor 
may not use a record of attendance at (or failure to at-
tend) educational activities or other information gathered 
during an educational program conducted under this sec-
tion or otherwise by the Secretary to select or track pro-
viders of services or suppliers for the purpose of con-
ducting any type of audit or prepayment review. 
‘‘(f) CONSTRUCTION.—Nothing in this section or sec-
tion 1893(g) shall be construed as providing for disclosure 
by a medicare contractor—
‘‘(1) of the screens used for identifying claims 
that will be subject to medical review; or 
‘‘(2) of information that would compromise 
pending law enforcement activities or reveal findings 
of law enforcement-related audits. 
‘‘(g) DEFINITIONS.—For purposes of this section, the 
term ‘medicare contractor’ includes the following: 
‘‘(1) A medicare administrative contractor with 
a contract under section 1874A, including a fiscal 
intermediary with a contract under section 1816 and 
a carrier with a contract under section 1842. 
‘‘(2) An eligible entity with a contract under 
section 1893. 
Such term does not include, with respect to activities of 
a specific provider of services or supplier an entity that 
has no authority under this title or title IX with respect 
to such activities and such provider of services or sup-
plier.’’.
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on the date of the 
enactment of this Act. 
SEC. 222. SMALL PROVIDER TECHNICAL ASSISTANCE DEM-
ONSTRATION PROGRAM. 
(a) ESTABLISHMENT.—
(1) IN GENERAL.—The Secretary shall establish 
a demonstration program (in this section referred to 
as the ‘‘demonstration program’’) under which tech-
nical assistance described in paragraph (2) is made 
available, upon request and on a voluntary basis, to 
small providers of services or suppliers in order to 
improve compliance with the applicable requirements 
of the programs under medicare program under title 
XVIII of the Social Security Act (including provi-
sions of title XI of such Act insofar as they relate 
to such title and are not administered by the Office
of the Inspector General of the Department of 
Health and Human Services). 
(2) FORMS OF TECHNICAL ASSISTANCE.—The 
technical assistance described in this paragraph is—
(A) evaluation and recommendations re-
garding billing and related systems; and
(B) information and assistance regarding 
policies and procedures under the medicare pro-
gram, including coding and reimbursement. 
(3) SMALL PROVIDERS OF SERVICES OR SUP-
PLIERS.—In this section, the term ‘‘small providers 
of services or suppliers’’ means—
(A) a provider of services with fewer than 
25 full-time-equivalent employees; or 
(B) a supplier with fewer than 10 full-
time-equivalent employees. 
(b) QUALIFICATION
OF
CONTRACTORS.—In con-
ducting the demonstration program, the Secretary shall 
enter into contracts with qualified organizations (such as 
peer review organizations or entities described in section 
1889(g)(2) of the Social Security Act, as inserted by sec-
tion 221(f)(1)) with appropriate expertise with billing sys-
tems of the full range of providers of services and sup-
pliers to provide the technical assistance. In awarding such 
contracts, the Secretary shall consider any prior investiga-
tions of the entity’s work by the Inspector General of De-
partment of Health and Human Services or the Comp-
troller General of the United States. 
(c) DESCRIPTION OF TECHNICAL ASSISTANCE.—The 
technical assistance provided under the demonstration 
program shall include a direct and in-person examination
of billing systems and internal controls of small providers 
of services or suppliers to determine program compliance 
and to suggest more efficient or effective means of achiev-
ing such compliance. 
(d) GAO EVALUATION.—Not later than 2 years after 
the date the demonstration program is first implemented, 
the Comptroller General, in consultation with the Inspec-
tor General of the Department of Health and Human 
Services, shall conduct an evaluation of the demonstration 
program. The evaluation shall include a determination of 
whether claims error rates are reduced for small providers 
of services or suppliers who participated in the program 
and the extent of improper payments made as a result 
of the demonstration program. The Comptroller General 
shall submit a report to the Secretary and the Congress 
on such evaluation and shall include in such report rec-
ommendations regarding the continuation or extension of 
the demonstration program. 
(e) FINANCIAL PARTICIPATION BY PROVIDERS.—The 
provision of technical assistance to a small provider of 
services or supplier under the demonstration program is 
conditioned upon the small provider of services or supplier 
paying an amount estimated (and disclosed in advance of 
a provider’s or supplier’s participation in the program) to
be equal to 25 percent of the cost of the technical assist-
ance. 
(f) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated, from amounts not oth-
erwise appropriated in the Treasury, such sums as may 
be necessary to carry out this section. 
SEC. 223. MEDICARE BENEFICIARY OMBUDSMAN. 
(a) IN GENERAL.—Section 1807, as added and 
amended by section 200, is amended by adding at the end 
the following new subsection: 
‘‘(c) MEDICARE BENEFICIARY OMBUDSMAN.—
‘‘(1) IN GENERAL.—The Secretary shall appoint 
within the Department of Health and Human Serv-
ices a Medicare Beneficiary Ombudsman who shall 
have expertise and experience in the fields of health 
care and education of (and assistance to) individuals 
entitled to benefits under this title. 
‘‘(2) DUTIES.—The Medicare Beneficiary Om-
budsman shall—
‘‘(A) receive complaints, grievances, and 
requests for information submitted by individ-
uals entitled to benefits under part A or en-
rolled under part B, or both, with respect to 
any aspect of the medicare program;
‘‘(B) provide assistance with respect to 
complaints, grievances, and requests referred to 
in subparagraph (A), including—
‘‘(i) assistance in collecting relevant 
information for such individuals, to seek 
an appeal of a decision or determination 
made by a fiscal intermediary, carrier, MA 
organization, or the Secretary; 
‘‘(ii) assistance to such individuals 
with 
any 
problems 
arising 
from 
disenrollment from an MA plan under part 
C; and 
‘‘(iii) assistance to such individuals in 
presenting 
information 
under 
section 
1839(i)(4)(C) (relating to income-related 
premium adjustment; and 
‘‘(C) submit annual reports to Congress 
and the Secretary that describe the activities of 
the Office and that include such recommenda-
tions for improvement in the administration of 
this title as the Ombudsman determines appro-
priate. 
The Ombudsman shall not serve as an advocate for 
any increases in payments or new coverage of serv-
ices, but may identify issues and problems in pay-
ment or coverage policies. 
‘‘(3) WORKING
WITH
HEALTH
INSURANCE 
COUNSELING
PROGRAMS.—To the extent possible, 
the Ombudsman shall work with health insurance 
counseling programs (receiving funding under sec-
tion 4360 of Omnibus Budget Reconciliation Act of 
1990) to facilitate the provision of information to in-
dividuals entitled to benefits under part A or en-
rolled under part B, or both regarding MA plans 
and changes to those plans. Nothing in this para-
graph shall preclude further collaboration between 
the Ombudsman and such programs.’’. 
(b) DEADLINE FOR APPOINTMENT.—By not later 
than 1 year after the date of the enactment of this Act, 
the Secretary shall appoint the Medicare Beneficiary Om-
budsman under section 1807(c) of the Social Security Act, 
as added by subsection (a). 
(c) FUNDING.—There are authorized to be appro-
priated to the Secretary (in appropriate part from the 
Federal Hospital Insurance Trust Fund, established
under section 1817 of the Social Security Act (42 U.S.C. 
1395i), and the Federal Supplementary Medical Insurance 
Trust Fund, established under section 1841 of such Act 
(42 U.S.C. 1395t)) to carry out section 1807(c) of such
Act (relating to the Medicare Beneficiary Ombudsman), 
as added by subsection (a), such sums as are necessary 
for fiscal year 2004 and each succeeding fiscal year. 
(d) USE OF CENTRAL, TOLL-FREE NUMBER (1–800–
MEDICARE).—
(1) PHONE TRIAGE SYSTEM; LISTING IN MEDI-
CARE HANDBOOK INSTEAD OF OTHER TOLL-FREE 
NUMBERS.—Section 1804(b) (42 U.S.C. 1395b–
2(b)) is amended by adding at the end the following: 
‘‘The Secretary shall provide, through the toll-free 
telephone number 1–800–MEDICARE, for a means 
by which individuals seeking information about, or 
assistance with, such programs who phone such toll-
free number are transferred (without charge) to ap-
propriate entities for the provision of such informa-
tion or assistance. Such toll-free number shall be the 
toll-free number listed for general information and 
assistance in the annual notice under subsection (a) 
instead of the listing of numbers of individual con-
tractors.’’. 
(2) MONITORING ACCURACY.—
(A) STUDY.—The Comptroller General of 
the United States shall conduct a study to mon-
itor the accuracy and consistency of information 
provided to individuals entitled to benefits
under part A or enrolled under part B, or both, 
through the toll-free telephone number 1–800–
MEDICARE, 
including 
an 
assessment 
of 
whether the information provided is sufficient 
to answer questions of such individuals. In con-
ducting the study, the Comptroller General 
shall examine the education and training of the 
individuals providing information through such 
number. 
(B) REPORT.—Not later than 1 year after 
the date of the enactment of this Act, the 
Comptroller General shall submit to Congress a 
report on the study conducted under subpara-
graph (A). 
SEC. 224. BENEFICIARY OUTREACH DEMONSTRATION PRO-
GRAM. 
(a) IN GENERAL.—The Secretary shall establish a 
demonstration program (in this section referred to as the 
‘‘demonstration program’’) under which medicare special-
ists employed by the Department of Health and Human 
Services provide advice and assistance to individuals enti-
tled to benefits under part A of title XVIII of the Social 
Security Act, or enrolled under part B of such title, or 
both, regarding the medicare program at the location of 
existing local offices of the Social Security Administration.
(b) LOCATIONS.—
(1) IN GENERAL.—The demonstration program 
shall be conducted in at least 6 offices or areas. 
Subject to paragraph (2), in selecting such offices 
and areas, the Secretary shall provide preference for 
offices with a high volume of visits by individuals re-
ferred to in subsection (a). 
(2) ASSISTANCE FOR RURAL BENEFICIARIES.—
The Secretary shall provide for the selection of at 
least 2 rural areas to participate in the demonstra-
tion program. In conducting the demonstration pro-
gram in such rural areas, the Secretary shall provide 
for medicare specialists to travel among local offices 
in a rural area on a scheduled basis. 
(c) DURATION.—The demonstration program shall be 
conducted over a 3-year period. 
(d) EVALUATION AND REPORT.—
(1) EVALUATION.—The Secretary shall provide 
for an evaluation of the demonstration program. 
Such evaluation shall include an analysis of—
(A) utilization of, and satisfaction of those 
individuals referred to in subsection (a) with, 
the assistance provided under the program; and 
(B) the cost-effectiveness of providing ben-
eficiary assistance through out-stationing medi-
care specialists at local offices of the Social Se-
curity Administration. 
(2) REPORT.—The Secretary shall submit to 
Congress a report on such evaluation and shall in-
clude in such report recommendations regarding the 
feasibility of permanently out-stationing medicare 
specialists at local offices of the Social Security Ad-
ministration. 
SEC. 225. INCLUSION OF ADDITIONAL INFORMATION IN NO-
TICES TO BENEFICIARIES ABOUT SKILLED 
NURSING FACILITY BENEFITS. 
(a) IN GENERAL.—The Secretary shall provide that 
in medicare beneficiary notices provided (under section 
1806(a) of the Social Security Act, 42 U.S.C. 1395b–7(a)) 
with respect to the provision of post-hospital extended care 
services under part A of title XVIII of the Social Security 
Act, there shall be included information on the number 
of days of coverage of such services remaining under such 
part for the medicare beneficiary and spell of illness in-
volved. 
(b) EFFECTIVE DATE.—Subsection (a) shall apply to 
notices provided during calendar quarters beginning more 
than 6 months after the date of the enactment of this Act.
SEC. 
226. 
INFORMATION 
ON 
MEDICARE-CERTIFIED 
SKILLED NURSING FACILITIES IN HOSPITAL 
DISCHARGE PLANS. 
(a) AVAILABILITY OF DATA.—The Secretary shall 
publicly provide information that enables hospital dis-
charge planners, medicare beneficiaries, and the public to 
identify skilled nursing facilities that are participating in 
the medicare program. 
(b) INCLUSION OF INFORMATION IN CERTAIN HOS-
PITAL DISCHARGE PLANS.—
(1) IN GENERAL.—Section 1861(ee)(2)(D) (42 
U.S.C. 1395x(ee)(2)(D)) is amended—
(A) by striking ‘‘hospice services’’ and in-
serting ‘‘hospice care and post-hospital ex-
tended care services’’; and 
(B) by inserting before the period at the 
end the following: ‘‘and, in the case of individ-
uals who are likely to need post-hospital ex-
tended care services, the availability of such 
services through facilities that participate in the 
program under this title and that serve the area 
in which the patient resides’’.
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to discharge plans 
made on or after such date as the Secretary shall 
specify, but not later than 6 months after the date
the Secretary provides for availability of information 
under subsection (a). 
Subtitle D—Appeals and Recovery 
SEC. 231. TRANSFER OF RESPONSIBILITY FOR MEDICARE 
APPEALS. 
(a) TRANSITION PLAN.—
(1) IN
GENERAL.—Not later than April 1, 
2004, the Commissioner of Social Security and the 
Secretary shall develop and transmit to Congress 
and the Comptroller General of the United States a 
plan under which the functions of administrative law 
judges responsible for hearing cases under title 
XVIII of the Social Security Act (and related provi-
sions in title XI of such Act) are transferred from 
the responsibility of the Commissioner and the So-
cial Security Administration to the Secretary and 
the Department of Health and Human Services. 
(2) CONTENTS.—The plan shall include infor-
mation on the following: 
(A) WORKLOAD.—The number of such ad-
ministrative law judges and support staff re-
quired now and in the future to hear and decide 
such cases in a timely manner, taking into ac-
count the current and anticipated claims vol-
ume, appeals, number of beneficiaries, and stat-
utory changes. 
(B) COST
PROJECTIONS
AND
FINANC-
ING.—Funding levels required for fiscal year 
2005 and subsequent fiscal years to carry out 
the functions transferred under the plan. 
(C) TRANSITION TIMETABLE.—A timetable 
for the transition. 
(D) REGULATIONS.—The establishment of 
specific regulations to govern the appeals proc-
ess. 
(E) CASE TRACKING.—The development of 
a unified case tracking system that will facili-
tate the maintenance and transfer of case spe-
cific data across both the fee-for-service and 
managed care components of the medicare pro-
gram. 
(F) FEASIBILITY OF PRECEDENTIAL AU-
THORITY.—The feasibility of developing a proc-
ess to give decisions of the Departmental Ap-
peals Board in the Department of Health and 
Human Services addressing broad legal issues 
binding, precedential authority. 
(G) ACCESS
TO
ADMINISTRATIVE
LAW 
JUDGES.—The feasibility of—
(i) filing appeals with administrative 
law judges electronically; and 
(ii) conducting hearings using tele- or 
video-conference technologies. 
(H) INDEPENDENCE OF ADMINISTRATIVE 
LAW JUDGES.—The steps that should be taken 
to ensure the independence of administrative 
law judges consistent with the requirements of 
subsection (b)(2). 
(I) 
GEOGRAPHIC
DISTRIBUTION.—The 
steps that should be taken to provide for an ap-
propriate geographic distribution of administra-
tive law judges throughout the United States to 
carry out subsection (b)(3). 
(J) HIRING.—The steps that should be 
taken to hire administrative law judges (and 
support staff) to carry out subsection (b)(4). 
(K) PERFORMANCE STANDARDS.—The ap-
propriateness 
of 
establishing 
performance 
standards for administrative law judges with re-
spect to timelines for decisions in cases under 
title XVIII of the Social Security Act taking 
into account requirements under subsection 
(b)(2) for the independence of such judges and
consistent with the applicable provisions of title 
5, United States Code relating to impartiality. 
(L) SHARED RESOURCES.—The steps that 
should be taken to carry out subsection (b)(6) 
(relating to the arrangements with the Commis-
sioner of Social Security to share office space, 
support staff, and other resources, with appro-
priate reimbursement). 
(M) TRAINING.—The training that should 
be provided to administrative law judges with 
respect to laws and regulations under title 
XVIII of the Social Security Act. 
(3) ADDITIONAL INFORMATION.—The plan may 
also include recommendations for further congres-
sional action, including modifications to the require-
ments and deadlines established under section 1869 
of the Social Security Act (42 U.S.C. 1395ff) (as 
amended by this Act).
(4) GAO EVALUATION.—The Comptroller Gen-
eral of the United States shall evaluate the plan 
and, not later than the date that is 6 months after 
the date on which the plan is received by the Comp-
troller General, shall submit to Congress a report on 
such evaluation. 
(b) TRANSFER OF ADJUDICATION AUTHORITY.—
(1) IN
GENERAL.—Not earlier than July 1, 
2005, and not later than October 1, 2005, the Com-
missioner of Social Security and the Secretary shall 
implement the transition plan under subsection (a) 
and transfer the administrative law judge functions 
described in such subsection from the Social Secu-
rity Administration to the Secretary. 
(2) ASSURING INDEPENDENCE OF JUDGES.—
The Secretary shall assure the independence of ad-
ministrative law judges performing the administra-
tive law judge functions transferred under para-
graph (1) from the Centers for Medicare & Medicaid 
Services and its contractors. In order to assure such 
independence, the Secretary shall place such judges 
in an administrative office that is organizationally 
and functionally separate from such Centers. Such 
judges shall report to, and be under the general su-
pervision of, the Secretary, but shall not report to, 
or be subject to supervision by, another officer of the 
Department of Health and Human Services. 
(3) GEOGRAPHIC
DISTRIBUTION.—The Sec-
retary shall provide for an appropriate geographic
distribution of administrative law judges performing 
the administrative law judge functions transferred
under paragraph (1) throughout the United States 
to ensure timely access to such judges. 
(4) 
HIRING
AUTHORITY.—Subject 
to 
the 
amounts provided in advance in appropriations Acts, 
the Secretary shall have authority to hire adminis-
trative law judges to hear such cases, taking into 
consideration those judges with expertise in handling 
medicare appeals and in a manner consistent with 
paragraph (3), and to hire support staff for such 
judges. 
(5) FINANCING.—Amounts payable under law 
to the Commissioner for administrative law judges 
performing the administrative law judge functions 
transferred under paragraph (1) from the Federal 
Hospital Insurance Trust Fund and the Federal 
Supplementary Medical Insurance Trust Fund shall 
become payable to the Secretary for the functions so 
transferred. 
(6) SHARED RESOURCES.—The Secretary shall 
enter into such arrangements with the Commissioner 
as may be appropriate with respect to transferred 
functions of administrative law judges to share office 
space, support staff, and other resources, with ap-
propriate reimbursement from the Trust Funds de-
scribed in paragraph (5).
(c) INCREASED FINANCIAL SUPPORT.—In addition to 
any amounts otherwise appropriated, to ensure timely ac-
tion on appeals before administrative law judges and the 
Departmental Appeals Board consistent with section 1869 
of the Social Security Act (42 U.S.C. 1395ff) (as amended 
by this Act), there are authorized to be appropriated (in 
appropriate part from the Federal Hospital Insurance 
Trust Fund, established under section 1817 of the Social 
Security Act (42 U.S.C. 1395i), and the Federal Supple-
mentary Medical Insurance Trust Fund, established under 
section 1841 of such Act (42 U.S.C. 1395t)) to the Sec-
retary such sums as are necessary for fiscal year 2005 
and each subsequent fiscal year to—
(1) increase the number of administrative law 
judges (and their staffs) under subsection (b)(4); 
(2) improve education and training opportuni-
ties for administrative law judges (and their staffs); 
and 
(3) increase the staff of the Departmental Ap-
peals Board. 
(d) 
CONFORMING
AMENDMENT.—Section 
1869(f)(2)(A)(i) (42 U.S.C. 1395ff(f)(2)(A)(i)) is amend-
ed by striking ‘‘of the Social Security Administration’’. 
SEC. 232. PROCESS FOR EXPEDITED ACCESS TO REVIEW. 
(a) EXPEDITED ACCESS TO JUDICIAL REVIEW.—
(1) IN GENERAL.—Section 1869(b) (42 U.S.C. 
1395ff(b)) is amended—
(A) in paragraph (1)(A), by inserting ‘‘, 
subject to paragraph (2),’’ before ‘‘to judicial 
review of the Secretary’s final decision’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2) EXPEDITED
ACCESS
TO
JUDICIAL
RE-
VIEW.—
‘‘(A) IN
GENERAL.—The Secretary shall 
establish a process under which a provider of 
services or supplier that furnishes an item or 
service or an individual entitled to benefits 
under part A or enrolled under part B, or both, 
who has filed an appeal under paragraph (1) 
(other than an appeal filed under paragraph 
(1)(F)(i)) may obtain access to judicial review 
when a review entity (described in subpara-
graph (D)), on its own motion or at the request 
of the appellant, determines that the Depart-
mental Appeals Board does not have the au-
thority to decide the question of law or regula-
tion relevant to the matters in controversy and 
that there is no material issue of fact in dis-
pute. The appellant may make such request
only once with respect to a question of law or 
regulation for a specific matter in dispute in a 
case of an appeal. 
‘‘(B) PROMPT DETERMINATIONS.—If, after 
or coincident with appropriately filing a request 
for an administrative hearing, the appellant re-
quests a determination by the appropriate re-
view entity that the Departmental Appeals 
Board does not have the authority to decide the 
question of law or regulations relevant to the 
matters in controversy and that there is no ma-
terial issue of fact in dispute, and if such re-
quest is accompanied by the documents and 
materials as the appropriate review entity shall 
require for purposes of making such determina-
tion, such review entity shall make a determina-
tion on the request in writing within 60 days 
after the date such review entity receives the re-
quest and such accompanying documents and 
materials. Such a determination by such review 
entity shall be considered a final decision and 
not subject to review by the Secretary. 
‘‘(C) ACCESS TO JUDICIAL REVIEW.—
‘‘(i) IN GENERAL.—If the appropriate 
review entity—
‘‘(I) determines that there are no 
material issues of fact in dispute and 
that the only issues to be adjudicated 
are ones of law or regulation that the 
Departmental Appeals Board does not 
have authority to decide; or 
‘‘(II) fails to make such deter-
mination within the period provided 
under subparagraph (B), 
then the appellant may bring a civil action 
as described in this subparagraph. 
‘‘(ii) DEADLINE
FOR
FILING.—Such 
action shall be filed, in the case described 
in—
‘‘(I) clause (i)(I), within 60 days 
of the date of the determination de-
scribed in such clause; or 
‘‘(II) clause (i)(II), within 60 
days of the end of the period provided 
under subparagraph (B) for the deter-
mination. 
‘‘(iii) VENUE.—Such action shall be 
brought in the district court of the United
States for the judicial district in which the 
appellant is located (or, in the case of an
action brought jointly by more than one 
applicant, the judicial district in which the 
greatest number of applicants are located) 
or in the District Court for the District of 
Columbia. 
‘‘(iv) INTEREST ON ANY AMOUNTS IN 
CONTROVERSY.—Where a provider of serv-
ices or supplier is granted judicial review 
pursuant to this paragraph, the amount in 
controversy (if any) shall be subject to an-
nual interest beginning on the first day of 
the first month beginning after the 60-day 
period as determined pursuant to clause 
(ii) and equal to the rate of interest on ob-
ligations issued for purchase by the Fed-
eral Supplementary Medical Insurance 
Trust Fund for the month in which the 
civil action authorized under this para-
graph is commenced, to be awarded by the 
reviewing court in favor of the prevailing 
party. No interest awarded pursuant to the 
preceding sentence shall be deemed income 
or cost for the purposes of determining re-
imbursement due providers of services or 
suppliers under this title.
‘‘(D) REVIEW ENTITY DEFINED.—For pur-
poses of this subsection, the term ‘review entity’ 
means an entity of up to three reviewers who 
are administrative law judges or members of 
the Departmental Appeals Board selected for 
purposes of making determinations under this 
paragraph.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1869(b)(1)(F)(ii) (42 U.S.C. 1395ff(b)(1)(F)(ii)) is 
amended to read as follows: 
‘‘(ii) REFERENCE TO EXPEDITED AC-
CESS TO JUDICIAL REVIEW.—For the pro-
vision relating to expedited access to judi-
cial review, see paragraph (2).’’.
(b) APPLICATION TO PROVIDER AGREEMENT DETER-
MINATIONS.—Section 
1866(h)(1) 
(42 
U.S.C. 
1395cc(h)(1)) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(h)(1)’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) An institution or agency described in subpara-
graph (A) that has filed for a hearing under subparagraph 
(A) shall have expedited access to judicial review under 
this subparagraph in the same manner as providers of 
services, suppliers, and individuals entitled to benefits
under part A or enrolled under part B, or both, may ob-
tain expedited access to judicial review under the process 
established under section 1869(b)(2). Nothing in this sub-
paragraph shall be construed to affect the application of 
any remedy imposed under section 1819 during the pend-
ency of an appeal under this subparagraph.’’. 
(c) EXPEDITED REVIEW
OF CERTAIN PROVIDER 
AGREEMENT DETERMINATIONS.—
(1) TERMINATION AND CERTAIN OTHER IMME-
DIATE REMEDIES.—Section 1866(h)(1) (42 U.S.C. 
1395cc(h)(1)), as amended by subsection (b), is 
amended by adding at the end the following new 
subparagraph: 
‘‘(C)(i) The Secretary shall develop and implement a 
process to expedite proceedings under this subsection in 
which—
‘‘(I) the remedy of termination of participation 
has been imposed; 
‘‘(II) a remedy described in clause (i) or (iii) of 
section 1819(h)(2)(B) has been imposed, but only if 
such remedy has been imposed on an immediate 
basis; or 
‘‘(III) a determination has been made as to a 
finding of substandard quality of care that results in
the loss of approval of a skilled nursing facility’s 
nurse aide training program. 
‘‘(ii) Under such process under clause (i), priority 
shall be provided in cases of termination described in 
clause (i)(I). 
‘‘(iii) Nothing in this subparagraph shall be con-
strued to affect the application of any remedy imposed 
under section 1819 during the pendency of an appeal 
under this subparagraph.’’.
(2) WAIVER OF DISAPPROVAL OF NURSE-AIDE 
TRAINING PROGRAMS.—Sections 1819(f)(2) and sec-
tion 1919(f)(2) (42 U.S.C. 1395i–3(f)(2) and 
1396r(f)(2)) are each amended—
(A) in subparagraph (B)(iii), by striking 
‘‘subparagraph (C)’’ and inserting ‘‘subpara-
graphs (C) and (D)’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) WAIVER OF DISAPPROVAL OF NURSE-
AIDE TRAINING PROGRAMS.—Upon application 
of a nursing facility, the Secretary may waive 
the application of subparagraph (B)(iii)(I)(c) if 
the imposition of the civil monetary penalty was 
not related to the quality of care provided to 
residents of the facility. Nothing in this sub-
paragraph shall be construed as eliminating any 
requirement upon a facility to pay a civil mone-
tary penalty described in the preceding sen-
tence.’’. 
(3) 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, established under section 1817 
of the Social Security Act (42 U.S.C. 1395i), and 
the Federal Supplementary Medical Insurance Trust 
Fund, established under section 1841 of such Act 
(42 U.S.C. 1395t)) to the Secretary such additional 
sums for fiscal year 2004 and each subsequent fiscal 
year as may be necessary. The purposes for which 
such amounts are available include increasing the 
number of administrative law judges (and their 
staffs) and the appellate level staff at the Depart-
mental Appeals Board of the Department of Health
and Human Services and educating such judges and 
staffs on long-term care issues.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to appeals filed on or after October 
1, 2004. 
SEC. 233. REVISIONS TO MEDICARE APPEALS PROCESS. 
(a) REQUIRING FULL AND EARLY PRESENTATION OF 
EVIDENCE.—
(1) IN GENERAL.—Section 1869(b) (42 U.S.C. 
1395ff(b)), as amended by section 232(a), is further 
amended by adding at the end the following new 
paragraph: 
‘‘(3) REQUIRING
FULL
AND
EARLY
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. 
(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 
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 
‘‘(iii) notification of the right to seek 
a redetermination or otherwise appeal the 
determination and instructions on how to 
initiate such a redetermination under this 
section;
‘‘(B) such written notice shall be provided 
in printed form and written in a manner 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 individual provided such written 
notice may obtain, upon request, information on 
the specific provision of the policy, manual, or 
regulation used in making the redetermination. 
‘‘(5) REQUIREMENTS OF NOTICE OF 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
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 individual provided such written 
notice may obtain, upon request, information on 
the specific provision of the policy, manual, or 
regulation used in making the redetermina-
tion.’’. 
(2) 
RECONSIDERATIONS.—Section 
1869(c)(3)(E) 
(42 
U.S.C. 
1395ff(c)(3)(E)) 
is 
amended—
(A) by inserting ‘‘be written in a manner 
calculated to be understood by the individual 
entitled to benefits under part A or enrolled 
under part B, or both, and shall include (to the 
extent appropriate)’’ after ‘‘in writing,’’; and 
(B) by inserting ‘‘and a notification of the 
right to appeal such determination and 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 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)) is amended by striking ‘‘prepare’’
and inserting ‘‘submit’’ and by striking ‘‘with re-
spect to’’ and all that follows through ‘‘and relevant 
policies’’. 
(d) QUALIFIED INDEPENDENT CONTRACTORS.—
(1) ELIGIBILITY REQUIREMENTS OF QUALIFIED 
INDEPENDENT
CONTRACTORS.—Section 1869(c)(3) 
(42 U.S.C. 1395ff(c)(3)) is amended—
(A) in subparagraph (A), by striking ‘‘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. 
‘‘(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) 
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’), 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.—
‘‘(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
B, or both, or such individual’s au-
thorized representative, and neither 
party objects; and 
‘‘(III) the individual is not an 
employee of the intermediary, carrier, 
or contractor and does not provide 
services exclusively or primarily to or 
on behalf of such intermediary, 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-
sion of services as a reviewer under this sub-
section. 
‘‘(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 not be contingent 
on the decision rendered by the reviewer. 
‘‘(4) LICENSURE
AND
EXPERTISE.—Each re-
viewing professional shall be—
‘‘(A) a physician (allopathic or osteopathic) 
who is appropriately credentialed or licensed in 
one or more States to deliver health care serv-
ices and has medical expertise in the field of 
practice that is appropriate for the items or 
services at issue; or 
‘‘(B) a health care professional who is le-
gally authorized in one or more States (in ac-
cordance with State law or the State regulatory 
mechanism provided by State law) to furnish 
the health care items or services at issue and
has medical expertise in the field of practice 
that is appropriate for such items or services. 
‘‘(5) RELATED PARTY DEFINED.—For purposes 
of this section, the term ‘related party’ means, with
respect to a case under this title involving a specific 
individual entitled to benefits under part A or 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 ‘‘a 
sufficient number of qualified independent contrac-
tors (but not fewer than 4 such contractors) to con-
duct reconsiderations consistent with the timeframes 
applicable under this subsection’’. 
(4) EFFECTIVE DATE.—The amendments made 
by paragraphs (1) and (2) shall be effective as if 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. 234. PREPAYMENT REVIEW. 
(a) IN GENERAL.—Section 1874A, as added by sec-
tion 211(a)(1) and as amended by sections 212(b), 
221(b)(1), and 221(c)(1), is further amended by adding 
at the end the following new subsection: 
‘‘(h) CONDUCT OF PREPAYMENT REVIEW.—
‘‘(1) CONDUCT OF RANDOM PREPAYMENT RE-
VIEW.—
‘‘(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.
‘‘(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 under section 1893(f)(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.
(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. 235. RECOVERY OF OVERPAYMENTS. 
(a) 
IN
GENERAL.—Section 
1893 
(42 
U.S.C. 
1395ddd) is amended by adding at the end the following 
new subsection:
‘‘(f) RECOVERY OF OVERPAYMENTS.—
‘‘(1) USE OF REPAYMENT PLANS.—
‘‘(A) IN
GENERAL.—If the repayment, 
within 30 days by a provider of services or sup-
plier, of an overpayment under this title would 
constitute a hardship (as described 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—
‘‘(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