IB 
Union Calendar No. 43
108TH CONGRESS 
1ST SESSION 
H. R. 810
[Report No. 108–74, Parts I and II] 
To amend title XVIII of the Social Security Act to provide regulatory relief 
and contracting flexibility under the Medicare Program. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 13, 2003
Mrs. JOHNSON of Connecticut (for herself, Mr. STARK, Mr. BILIRAKIS, Mr. 
BROWN of Ohio, Mr. THOMAS, Mr. RANGEL, Mr. TAUZIN, Mr. DINGELL, 
Mr. RYAN of Wisconsin, Mr. PORTMAN, Mr. CARDIN, Ms. DUNN, Mr. 
GREENWOOD, Mr. KLECZKA, Mr. LEWIS of Kentucky, Mr. CAMP, Mr. 
POMEROY, Mr. SHAW, Mr. BURR, Mr. MCNULTY, Mrs. JONES of Ohio, 
Mr. CRANE, Mr. MCINNIS, Mr. RAMSTAD, Mr. ENGLISH, Mr. 
MCDERMOTT, Mr. MCCRERY, Mr. HAYWORTH, Mr. HOUGHTON, Mr. 
NUSSLE, Mr. NORWOOD, Mr. GORDON, Mr. UPTON, Mr. ENGEL, Mr. 
BUYER, Mr. PICKERING, Mr. BARTON of Texas, Mr. DOYLE, Mrs. CAPPS, 
Mr. WAXMAN, Mr. PALLONE, Mr. HALL, Mr. SAM JOHNSON of Texas, 
Mr. CANTOR, Mr. FOLEY, Mr. WELLER, and Mr. DEUTSCH) introduced 
the following bill; which was referred to the Committee on Ways and 
Means, and in addition to the Committee on Energy and Commerce, for 
a period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
APRIL 11, 2003
Reported from the Committee on Ways and Means with an amendment 
[Strike out all after the enacting clause and insert the part printed in italic] 
APRIL 11, 2003
Referral to the Committee on Energy and Commerce extended for a period 
ending not later than April 29, 2003
APRIL 29, 2003
Additional sponsors: Mrs. MCCARTHY of New York, Mrs. CUBIN, Mr.
TOOMEY, Mrs. MALONEY, Mr. ROGERS of Michigan, Mr. WYNN, Mr. 
KENNEDY of Minnesota, and Mr. DAVIS of Florida 
APRIL 29, 2003
Reported from the Committee on Energy and Commerce with an amendment, 
committed to the Committee of the Whole House on the State of the 
Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in boldface roman] 
[For text of introduced bill, see copy of bill as introduced on February 13, 2003] 
A BILL 
To amend title XVIII of the Social Security Act to provide 
regulatory relief and contracting flexibility under the 
Medicare Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU-
RITY ACT; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medicare Regulatory and Contracting Reform Act of 
2003’’. 
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Except 
as otherwise specifically provided, whenever in this Act an 
amendment is expressed in terms of an amendment to or 
repeal of a section or other provision, the reference shall 
be considered to be made to that section or other provision 
of the Social Security Act. 
(c) TABLE OF CONTENTS.—The table of contents of this 
Act is as follows:
Sec. 1. Short title; amendments to Social Security Act; table of contents. 
Sec. 2. Findings and construction. 
Sec. 3. Definitions. 
TITLE I—REGULATORY REFORM 
Sec. 101. Issuance of regulations. 
Sec. 102. Compliance with changes in regulations and policies. 
Sec. 103. Reports and studies relating to regulatory reform. 
TITLE II—CONTRACTING REFORM 
Sec. 201. Increased flexibility in medicare administration. 
Sec. 202. Requirements for information security for medicare administrative con-
tractors. 
TITLE III—EDUCATION AND OUTREACH 
Sec. 301. Provider education and technical assistance. 
Sec. 302. Small provider technical assistance demonstration program. 
Sec. 303. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman. 
Sec. 304. Beneficiary outreach demonstration program. 
Sec. 305. Inclusion of additional information in notices to beneficiaries about 
skilled nursing facility benefits. 
Sec. 306. Information on medicare-certified skilled nursing facilities in hospital 
discharge plans. 
TITLE IV—APPEALS AND RECOVERY 
Sec. 401. Transfer of responsibility for medicare appeals. 
Sec. 402. Process for expedited access to review. 
Sec. 403. Revisions to medicare appeals process. 
Sec. 404. Prepayment review. 
Sec. 405. Recovery of overpayments. 
Sec. 406. Provider enrollment process; right of appeal. 
Sec. 407. Process for correction of minor errors and omissions without pursuing 
appeals process. 
Sec. 408. Prior determination process for certain items and services; advance ben-
eficiary notices. 
TITLE V—MISCELLANEOUS PROVISIONS 
Sec. 501. Policy development regarding evaluation and management (E & M) 
documentation guidelines. 
Sec. 502. Improvement in oversight of technology and coverage. 
Sec. 503. Treatment of hospitals for certain services under medicare secondary 
payor (MSP) provisions. 
Sec. 504. EMTALA improvements. 
Sec. 505. Emergency Medical Treatment and Active Labor Act (EMTALA) Tech-
nical Advisory Group. 
Sec. 506. Authorizing use of arrangements to provide core hospice services in cer-
tain circumstances. 
Sec. 507. Application of OSHA bloodborne pathogens standard to certain hos-
pitals. 
Sec. 508. BIPA-related technical amendments and corrections. 
Sec. 509. Conforming authority to waive a program exclusion. 
Sec. 510. Treatment of certain dental claims.
Sec. 511. Furnishing hospitals with information to compute DSH formula. 
Sec. 512. Revisions to reassignment provisions. 
Sec. 513. Specialized Medicare+Choice plans for special needs beneficiaries. 
Sec. 514. Temporary suspension of OASIS requirement for collection of data on 
non-medicare and non-medicaid patients. 
Sec. 515. Miscellaneous reports, studies, and publication requirements.
SEC. 2. FINDINGS AND CONSTRUCTION. 
(a) FINDINGS.—Congress finds the following: 
(1) The overwhelming majority of providers of 
services and suppliers in the United States are law-
abiding persons who provide important health care 
services to patients each day. 
(2) The Secretary of Health and Human Serv-
ices should work to streamline paperwork require-
ments under the medicare program and communicate 
clearer instructions to providers of services and sup-
pliers so that they may spend more time caring for 
patients. 
(b) CONSTRUCTION.—Nothing in this Act shall be con-
strued—
(1) to compromise or affect existing legal rem-
edies for addressing fraud or abuse, whether it be 
criminal prosecution, civil enforcement, or adminis-
trative remedies, including under sections 3729 
through 3733 of title 31, United States Code (known 
as the False Claims Act); or 
(2) to prevent or impede the Department of 
Health and Human Services in any way from its on-
going efforts to eliminate waste, fraud, and abuse in 
the medicare program. 
Furthermore, the consolidation of medicare administrative 
contracting set forth in this Act does not constitute consoli-
dation of the Federal Hospital Insurance Trust Fund and 
the Federal Supplementary Medical Insurance Trust Fund 
or reflect any position on that issue. 
SEC. 3. DEFINITIONS. 
(a) USE OF TERM SUPPLIER IN MEDICARE.—Section 
1861 (42 U.S.C. 1395x) is amended by inserting after sub-
section (c) the following new subsection: 
‘‘Supplier 
‘‘(d) The term ‘supplier’ means, unless the context oth-
erwise requires, a physician or other practitioner, a facility, 
or other entity (other than a provider of services) that fur-
nishes items or services under this title.’’. 
(b) OTHER TERMS USED IN ACT.—In this Act: 
(1) BIPA.—The term ‘‘BIPA’’ means the Medi-
care, Medicaid, and SCHIP Benefits Improvement 
and Protection Act of 2000, as enacted into law by 
section 1(a)(6) of Public Law 106–554. 
(2) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services.
TITLE I—REGULATORY REFORM 
SEC. 101. ISSUANCE OF REGULATIONS. 
(a) LIMITATIONS ON NEW MATTER IN FINAL REGULA-
TIONS.—Section 1871(a) (42 U.S.C. 1395hh(a)) is amended 
by adding at the end the following new paragraph: 
‘‘(3) If the Secretary publishes a final regulation that 
includes a provision that is not a logical outgrowth of a 
previously published notice of proposed rulemaking or in-
terim final rule, such provision shall be treated as a pro-
posed regulation and shall not take effect until there is the 
further opportunity for public comment and a publication 
of the provision again as a final regulation.’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to final regulations published on or 
after the date of the enactment of this Act. 
SEC. 102. COMPLIANCE WITH CHANGES IN REGULATIONS 
AND POLICIES. 
(a) NO RETROACTIVE APPLICATION OF SUBSTANTIVE 
CHANGES.—
(1) IN
GENERAL.—Section 1871 (42 U.S.C. 
1395hh), as amended by section 101(a), is amended 
by adding at the end the following new subsection: 
‘‘(d)(1)(A) A substantive change in regulations, man-
ual instructions, interpretative rules, statements of policy, 
or guidelines of general applicability under this title shall
not be applied (by extrapolation or otherwise) retroactively 
to items and services furnished before the effective date of 
the change, unless the Secretary determines that—
‘‘(i) such retroactive application is necessary to 
comply with statutory requirements; or 
‘‘(ii) failure to apply the change retroactively 
would be contrary to the public interest.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply to substantive changes 
issued on or after the date of the enactment of this 
Act. 
(b) TIMELINE FOR COMPLIANCE WITH SUBSTANTIVE 
CHANGES AFTER NOTICE.—
(1) IN GENERAL.—Section 1871(d)(1), as added 
by subsection (a), is amended by adding at the end 
the following: 
‘‘(B)(i) Except as provided in clause (ii), a substantive 
change referred to in subparagraph (A) shall not become 
effective before the end of the 30-day period that begins on 
the date that the Secretary has issued or published, as the 
case may be, the substantive change. 
‘‘(ii) The Secretary may provide for such a substantive 
change to take effect on a date that precedes the end of the 
30-day period under clause (i) if the Secretary finds that 
waiver of such 30-day period is necessary to comply with
statutory requirements or that the application of such 30-
day period is contrary to the public interest. If the Sec-
retary provides for an earlier effective date pursuant to this 
clause, the Secretary shall include in the issuance or publi-
cation of the substantive change a finding described in the 
first sentence, and a brief statement of the reasons for such 
finding. 
‘‘(C) No action shall be taken against a provider of 
services or supplier with respect to noncompliance with 
such a substantive change for items and services furnished 
before the effective date of such a change.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply to compliance actions un-
dertaken on or after the date of the enactment of this 
Act. 
(c) RELIANCE ON GUIDANCE.—
(1) IN GENERAL.—Section 1871(d), as added by 
subsection (a), is further amended by adding at the 
end the following new paragraph: 
‘‘(2)(A) If—
‘‘(i) a provider of services or supplier follows the 
written guidance (which may be transmitted elec-
tronically) provided by the Secretary or by a medi-
care contractor (as defined in section 1889(g)) acting 
within the scope of the contractor’s contract authority,
with respect to the furnishing of items or services and 
submission of a claim for benefits for such items or 
services with respect to such provider or supplier; 
‘‘(ii) the Secretary determines that the provider 
of services or supplier has accurately presented the 
circumstances relating to such items, services, and 
claim to the contractor in writing; and 
‘‘(iii) the guidance was in error; 
the provider of services or supplier shall not be subject to 
any sanction (including any penalty or requirement for re-
payment of any amount) if the provider of services or sup-
plier reasonably relied on such guidance. 
‘‘(B) Subparagraph (A) shall not be construed as pre-
venting the recoupment or repayment (without any addi-
tional penalty) relating to an overpayment insofar as the 
overpayment was solely the result of a clerical or technical 
operational error.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall take effect on the date of the en-
actment of this Act but shall not apply to any sanc-
tion for which notice was provided on or before the 
date of the enactment of this Act. 
SEC. 103. REPORTS AND STUDIES RELATING TO REGU-
LATORY REFORM. 
(a) GAO STUDY ON ADVISORY OPINION AUTHORITY.—
(1) STUDY.—The Comptroller General of the 
United States shall conduct a study to determine the 
feasibility and appropriateness of establishing in the 
Secretary authority to provide legally binding advi-
sory opinions on appropriate interpretation and ap-
plication of regulations to carry out the medicare pro-
gram under title XVIII of the Social Security Act. 
Such study shall examine the appropriate timeframe 
for issuing such advisory opinions, as well as the need 
for additional staff and funding to provide such opin-
ions. 
(2) REPORT.—The Comptroller General shall 
submit to Congress a report on the study conducted 
under paragraph (1) by not later than one year after 
the date of the enactment of this Act. 
(b) REPORT ON LEGAL AND REGULATORY INCONSIST-
ENCIES.—Section 1871 (42 U.S.C. 1395hh), as amended by 
section 2(a), is amended by adding at the end the following 
new subsection: 
‘‘(e)(1) Not later than 2 years after the date of the en-
actment of this subsection, and every 2 years thereafter, the 
Secretary shall submit to Congress a report with respect 
to the administration of this title and areas of inconsistency 
or conflict among the various provisions under law and reg-
ulation.
‘‘(2) In preparing a report under paragraph (1), the 
Secretary shall collect—
‘‘(A) information from individuals entitled to 
benefits under part A or enrolled under part B, or 
both, providers of services, and suppliers and from the 
Medicare Beneficiary Ombudsman and the Medicare 
Provider Ombudsman with respect to such areas of 
inconsistency and conflict; and 
‘‘(B) information from medicare contractors that 
tracks the nature of written and telephone inquiries. 
‘‘(3) A report under paragraph (1) shall include a de-
scription of efforts by the Secretary to reduce such inconsist-
ency or conflicts, and recommendations for legislation or 
administrative action that the Secretary determines appro-
priate to further reduce such inconsistency or conflicts.’’. 
TITLE II—CONTRACTING 
REFORM 
SEC. 201. INCREASED FLEXIBILITY IN MEDICARE ADMINIS-
TRATION. 
(a) CONSOLIDATION AND FLEXIBILITY IN MEDICARE 
ADMINISTRATION.—
(1) IN GENERAL.—Title XVIII is amended by in-
serting after section 1874 the following new section: 
‘‘CONTRACTS WITH MEDICARE ADMINISTRATIVE 
CONTRACTORS 
‘‘SEC. 1874A. (a) AUTHORITY.—
‘‘(1) AUTHORITY TO ENTER INTO CONTRACTS.—
The Secretary may enter into contracts with any eli-
gible entity to serve as a medicare administrative 
contractor with respect to the performance of any or 
all of the functions described in paragraph (4) or 
parts of those functions (or, to the extent provided in 
a contract, to secure performance thereof by other en-
tities). 
‘‘(2) ELIGIBILITY OF ENTITIES.—An entity is el-
igible to enter into a contract with respect to the per-
formance of a particular function described in para-
graph (4) only if—
‘‘(A) the entity has demonstrated capability 
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 ad-
ministrative contractor’ means an agency, orga-
nization, or other person with a contract under 
this section. 
‘‘(B) APPROPRIATE MEDICARE ADMINISTRA-
TIVE CONTRACTOR.—With respect to the perform-
ance of a particular function in relation to an 
individual entitled to benefits under part A or 
enrolled under part B, or both, a specific pro-
vider of services or supplier (or class of such pro-
viders of services or suppliers), the ‘appropriate’ 
medicare administrative contractor is the medi-
care administrative contractor that has a con-
tract under this section with respect to the per-
formance of that function in relation to that in-
dividual, provider of services or supplier or class 
of provider of services or supplier. 
‘‘(4) FUNCTIONS DESCRIBED.—The functions re-
ferred to in paragraphs (1) and (2) are payment 
functions, provider services functions, and functions 
relating to services furnished to individuals entitled 
to benefits under part A or enrolled under part B, or 
both, 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 pur-
suant to this title to be made to providers of 
services, suppliers and individuals. 
‘‘(B) MAKING
PAYMENTS.—Making pay-
ments described in subparagraph (A) (including 
receipt, disbursement, and accounting for funds 
in making such payments). 
‘‘(C) BENEFICIARY EDUCATION AND ASSIST-
ANCE.—Providing education and outreach to in-
dividuals entitled to benefits under part A or en-
rolled under part B, or both, and providing as-
sistance to those individuals with specific issues, 
concerns or problems. 
‘‘(D) 
PROVIDER
CONSULTATIVE
SERV-
ICES.—Providing consultative services to institu-
tions, agencies, and other persons to enable them 
to establish and maintain fiscal records nec-
essary for purposes of this title and otherwise to 
qualify as providers of services or suppliers. 
‘‘(E) COMMUNICATION WITH PROVIDERS.—
Communicating to providers of services and sup-
pliers any information or instructions furnished 
to the medicare administrative contractor by the
Secretary, and facilitating communication be-
tween such providers and suppliers and the Sec-
retary. 
‘‘(F) PROVIDER EDUCATION AND TECHNICAL 
ASSISTANCE.—Performing the functions relating 
to provider education, training, and technical 
assistance. 
‘‘(G) ADDITIONAL FUNCTIONS.—Performing 
such other functions as are necessary to carry 
out the purposes of this title. 
‘‘(5) RELATIONSHIP TO MIP CONTRACTS.—
‘‘(A) NONDUPLICATION OF DUTIES.—In en-
tering into contracts under this section, the Sec-
retary shall assure that functions of medicare 
administrative contractors in carrying out ac-
tivities under parts A and B do not duplicate 
activities 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 durable 
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 Acqui-
sition 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, tak-
ing into account performance quality as well as 
price and other factors. 
‘‘(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 provi-
sion of law requiring competition, if the medi-
care administrative contractor has met or ex-
ceeded the performance requirements applicable 
with respect to the contract and contractor, ex-
cept that the Secretary shall provide for the ap-
plication of competitive procedures under such a 
contract not less frequently than once every five 
years. 
‘‘(C) TRANSFER OF FUNCTIONS.—The Sec-
retary may transfer functions among medicare 
administrative contractors consistent with the 
provisions of this paragraph. The Secretary shall 
ensure that performance quality is considered in 
such transfers. The Secretary shall provide pub-
lic notice (whether in the Federal Register or 
otherwise) of any such transfer (including a de-
scription of the functions so transferred, a de-
scription of the providers of services and sup-
pliers affected by such transfer, and contact in-
formation for the contractors involved). 
‘‘(D) INCENTIVES FOR QUALITY.—The Sec-
retary shall provide incentives for medicare ad-
ministrative contractors to provide quality serv-
ice 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 re-
quirements as to financial responsibility, legal au-
thority, quality of services provided, and other mat-
ters as the Secretary finds pertinent. 
‘‘(3) PERFORMANCE REQUIREMENTS.—
‘‘(A) DEVELOPMENT OF SPECIFIC PERFORM-
ANCE
REQUIREMENTS.—In developing contract 
performance requirements, the Secretary shall 
develop performance requirements applicable to 
functions described in subsection (a)(4). 
‘‘(B) CONSULTATION.—In developing such 
requirements, the Secretary may consult with 
providers of services and suppliers, organizations 
representing individuals entitled to benefits 
under part A or enrolled under part B, or both, 
and organizations and agencies performing func-
tions necessary to carry out the purposes of this 
section with respect to such performance require-
ments. 
‘‘(C) INCLUSION IN CONTRACTS.—All con-
tractor performance requirements shall be set 
forth in the contract between the Secretary and 
the appropriate medicare administrative con-
tractor. Such performance requirements—
‘‘(i) shall reflect the performance re-
quirements developed under subparagraph 
(A), but may include additional perform-
ance requirements; 
‘‘(ii) shall be used for evaluating con-
tractor performance under the contract; and 
‘‘(iii) shall be consistent with the writ-
ten statement of work provided under the 
contract. 
‘‘(4) INFORMATION
REQUIREMENTS.—The Sec-
retary shall not enter into a contract with a medicare 
administrative contractor under this section unless 
the contractor agrees—
‘‘(A) to furnish to the Secretary such timely 
information and reports as the Secretary may 
find necessary in performing his functions under 
this title; and 
‘‘(B) to maintain such records and afford 
such access thereto as the Secretary finds nec-
essary to assure the correctness and verification 
of the information and reports under subpara-
graph (A) and otherwise to carry out the pur-
poses of this title. 
‘‘(5) SURETY BOND.—A contract with a medi-
care administrative contractor under this section may
require the medicare administrative contractor, and 
any of its officers or employees certifying payments or 
disbursing funds pursuant to the contract, or other-
wise participating in carrying out the contract, to 
give surety bond to the United States in such amount 
as the Secretary may deem appropriate. 
‘‘(c) TERMS AND CONDITIONS.—
‘‘(1) IN GENERAL.—A contract with any medi-
care administrative contractor under this section may 
contain such terms and conditions as the Secretary 
finds necessary or appropriate and may provide for 
advances of funds to the medicare administrative con-
tractor for the making of payments by it under sub-
section (a)(4)(B). 
‘‘(2) PROHIBITION ON MANDATES FOR CERTAIN 
DATA COLLECTION.—The Secretary may not require, 
as a condition of entering into, or renewing, a con-
tract under this section, that the medicare adminis-
trative contractor match data obtained other than in 
its activities under this title with data used in the ad-
ministration of this title for purposes of identifying 
situations in which the provisions of section 1862(b) 
may apply. 
‘‘(d) LIMITATION ON LIABILITY OF MEDICARE ADMIN-
ISTRATIVE CONTRACTORS AND CERTAIN OFFICERS.—
‘‘(1) CERTIFYING OFFICER.—No individual des-
ignated pursuant to a contract under this section as 
a certifying officer shall, in the absence of the reckless 
disregard of the individual’s obligations or the intent 
by that individual to defraud the United States, be 
liable with respect to any payments certified by the 
individual under this section. 
‘‘(2) DISBURSING OFFICER.—No disbursing offi-
cer shall, in the absence of the reckless disregard of the 
officer’s obligations or the intent by that officer to de-
fraud the United States, be liable with respect to any 
payment by such officer under this section if it was 
based upon an authorization (which meets the appli-
cable requirements for such internal controls estab-
lished by the Comptroller General) of a certifying offi-
cer designated as provided in paragraph (1) of this 
subsection. 
‘‘(3) LIABILITY OF MEDICARE ADMINISTRATIVE 
CONTRACTOR.—
‘‘(A) IN GENERAL.—No medicare adminis-
trative contractor shall be liable to the United 
States for a payment by a certifying or dis-
bursing officer unless, in connection with such 
payment, the medicare administrative contractor 
acted with reckless disregard of its obligations
under its medicare administrative contract or 
with intent to defraud the United States. 
‘‘(B) RELATIONSHIP
TO
FALSE
CLAIMS 
ACT.—Nothing in this subsection shall be con-
strued to limit liability for conduct that would 
constitute a violation of sections 3729 through 
3731 of title 31, United States Code (commonly 
known as the ‘False Claims Act’). 
‘‘(4) INDEMNIFICATION BY SECRETARY.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (D), in the case of a medicare 
administrative contractor (or a person who is a 
director, officer, or employee of such a contractor 
or who is engaged by the contractor to partici-
pate directly in the claims administration proc-
ess) who is made a party to any judicial or ad-
ministrative proceeding arising from or relating 
directly to the claims administration process 
under this title, the Secretary may, to the extent 
the Secretary determines to be appropriate and 
as specified in the contract with the contractor, 
indemnify the contractor and such persons. 
‘‘(B) CONDITIONS.—The Secretary may not 
provide indemnification under subparagraph (A) 
insofar as the liability for such costs arises di-
rectly from conduct that is determined by the ju-
dicial proceeding or by the Secretary to be crimi-
nal in nature, fraudulent, or grossly negligent. If 
indemnification is provided by the Secretary 
with respect to a contractor before a determina-
tion that such costs arose directly from such con-
duct, the contractor shall reimburse the Secretary 
for costs of indemnification. 
‘‘(C) SCOPE OF INDEMNIFICATION.—Indem-
nification by the Secretary under subparagraph 
(A) may include payment of judgments, settle-
ments (subject to subparagraph (D)), awards, 
and costs (including reasonable legal expenses). 
‘‘(D) WRITTEN
APPROVAL
FOR
SETTLE-
MENTS.—A contractor or other person described 
in subparagraph (A) may not propose to nego-
tiate a settlement or compromise of a proceeding 
described in such subparagraph without the 
prior written approval of the Secretary to nego-
tiate such settlement or compromise. Any indem-
nification under subparagraph (A) with respect 
to amounts paid under a settlement or com-
promise of a proceeding described in such sub-
paragraph are conditioned upon prior written
approval by the Secretary of the final settlement 
or compromise. 
‘‘(E) 
CONSTRUCTION.—Nothing 
in 
this 
paragraph shall be construed—
‘‘(i) to change any common law immu-
nity that may be available to a medicare 
administrative contractor or person de-
scribed in subparagraph (A); or 
‘‘(ii) to permit the payment of costs 
not otherwise allowable, reasonable, or allo-
cable under the Federal Acquisition Regula-
tions.’’. 
(2) CONSIDERATION OF INCORPORATION OF CUR-
RENT LAW STANDARDS.—In developing contract per-
formance requirements under section 1874A(b) of the 
Social Security Act, as inserted by paragraph (1), the 
Secretary shall consider inclusion of the performance 
standards described in sections 1816(f)(2) of such Act 
(relating to timely processing of reconsiderations and 
applications 
for 
exemptions) 
and 
section 
1842(b)(2)(B) of such Act (relating to timely review 
of determinations and fair hearing requests), as such 
sections were in effect before the date of the enactment 
of this Act.
(b) CONFORMING AMENDMENTS TO SECTION 1816 (RE-
LATING TO FISCAL INTERMEDIARIES).—Section 1816 (42 
U.S.C. 1395h) is amended as follows: 
(1) The heading is amended to read as follows: 
‘‘PROVISIONS RELATING TO THE ADMINISTRATION OF PART 
A’’. 
(2) Subsection (a) is amended to read as follows: 
‘‘(a) The administration of this part shall be conducted 
through contracts with medicare administrative contractors 
under section 1874A.’’. 
(3) Subsection (b) is repealed. 
(4) Subsection (c) is amended—
(A) by striking paragraph (1); and 
(B) in each of paragraphs (2)(A) and 
(3)(A), by striking ‘‘agreement under this sec-
tion’’ and inserting ‘‘contract under section 
1874A that provides for making payments under 
this part’’. 
(5) Subsections (d) through (i) are repealed. 
(6) Subsections (j) and (k) are each amended—
(A) by striking ‘‘An agreement with an 
agency or organization under this section’’ and 
inserting ‘‘A contract with a medicare adminis-
trative contractor under section 1874A with re-
spect to the administration of this part’’; and
(B) by striking ‘‘such agency or organiza-
tion’’ and inserting ‘‘such medicare administra-
tive contractor’’ each place it appears. 
(7) Subsection (l) is repealed. 
(c) CONFORMING AMENDMENTS TO SECTION 1842 (RE-
LATING TO CARRIERS).—Section 1842 (42 U.S.C. 1395u) 
is amended as follows: 
(1) The heading is amended to read as follows: 
‘‘PROVISIONS RELATING TO THE ADMINISTRATION OF PART 
B’’. 
(2) Subsection (a) is amended to read as follows: 
‘‘(a) The administration of this part shall be conducted 
through contracts with medicare administrative contractors 
under section 1874A.’’. 
(3) Subsection (b) is amended—
(A) by striking paragraph (1); 
(B) in paragraph (2)—
(i) by striking subparagraphs (A) and 
(B); 
(ii) in subparagraph (C), by striking 
‘‘carriers’’ and inserting ‘‘medicare admin-
istrative contractors’’; and 
(iii) by striking subparagraphs (D) 
and (E); 
(C) in paragraph (3)—
(i) in the matter before subparagraph 
(A), by striking ‘‘Each such contract shall 
provide that the carrier’’ and inserting 
‘‘The Secretary’’; 
(ii) by striking ‘‘will’’ the first place it 
appears in each of subparagraphs (A), (B), 
(F), (G), (H), and (L) and inserting 
‘‘shall’’; 
(iii) in subparagraph (B), in the mat-
ter before clause (i), by striking ‘‘to the pol-
icyholders and subscribers of the carrier’’ 
and inserting ‘‘to the policyholders and sub-
scribers of the medicare administrative con-
tractor’’; 
(iv) by striking subparagraphs (C), 
(D), and (E); 
(v) in subparagraph (H)—
(I) by striking ‘‘if it makes deter-
minations or payments with respect to 
physicians’ services,’’ in the matter 
preceding clause (i); and 
(II) by striking ‘‘carrier’’ and in-
serting ‘‘medicare administrative con-
tractor’’ in clause (i); 
(vi) by striking subparagraph (I);
(vii) in subparagraph (L), by striking 
the semicolon and inserting a period; 
(viii) in the first sentence, after sub-
paragraph (L), by striking ‘‘and shall con-
tain’’ and all that follows through the pe-
riod; and 
(ix) in the seventh sentence, by insert-
ing ‘‘medicare administrative contractor,’’ 
after ‘‘carrier,’’; and 
(D) by striking paragraph (5); 
(E) in paragraph (6)(D)(iv), by striking 
‘‘carrier’’ and inserting ‘‘medicare administra-
tive contractor’’; and 
(F) in paragraph (7), by striking ‘‘the car-
rier’’ and inserting ‘‘the Secretary’’ each place it 
appears. 
(4) Subsection (c) is amended—
(A) by striking paragraph (1); 
(B) in paragraph (2)(A), by striking ‘‘con-
tract under this section which provides for the 
disbursement of funds, as described in subsection 
(a)(1)(B),’’ and inserting ‘‘contract under section 
1874A that provides for making payments under 
this part’’;
(C) in paragraph (3)(A), by striking ‘‘sub-
section 
(a)(1)(B)’’ 
and 
inserting 
‘‘section 
1874A(a)(3)(B)’’; 
(D) in paragraph (4), in the matter pre-
ceding subparagraph (A), by striking ‘‘carrier’’ 
and inserting ‘‘medicare administrative con-
tractor’’; and 
(E) by striking paragraphs (5) and (6). 
(5) Subsections (d), (e), and (f) are repealed. 
(6) Subsection (g) is amended by striking ‘‘car-
rier or carriers’’ and inserting ‘‘medicare administra-
tive contractor or contractors’’. 
(7) Subsection (h) is amended—
(A) in paragraph (2)—
(i) by striking ‘‘Each carrier having 
an agreement with the Secretary under sub-
section (a)’’ and inserting ‘‘The Secretary’’; 
and 
(ii) by striking ‘‘Each such carrier’’ 
and inserting ‘‘The Secretary’’; 
(B) in paragraph (3)(A)—
(i) by striking ‘‘a carrier having an 
agreement with the Secretary under sub-
section (a)’’ and inserting ‘‘medicare ad-
ministrative contractor having a contract
under section 1874A that provides for mak-
ing payments under this part’’; and 
(ii) by striking ‘‘such carrier’’ and in-
serting ‘‘such contractor’’; 
(C) in paragraph (3)(B)—
(i) by striking ‘‘a carrier’’ and insert-
ing ‘‘a medicare administrative contractor’’ 
each place it appears; and 
(ii) by striking ‘‘the carrier’’ and in-
serting ‘‘the contractor’’ each place it ap-
pears; and 
(D) in paragraphs (5)(A) and (5)(B)(iii), 
by striking ‘‘carriers’’ and inserting ‘‘medicare 
administrative contractors’’ each place it ap-
pears. 
(8) Subsection (l) is amended—
(A) in paragraph (1)(A)(iii), by striking 
‘‘carrier’’ and inserting ‘‘medicare administra-
tive contractor’’; and 
(B) in paragraph (2), by striking ‘‘carrier’’ 
and inserting ‘‘medicare administrative con-
tractor’’. 
(9) Subsection (p)(3)(A) is amended by striking 
‘‘carrier’’ and inserting ‘‘medicare administrative 
contractor’’.
(10) Subsection (q)(1)(A) is amended by striking 
‘‘carrier’’. 
(d) EFFECTIVE DATE; TRANSITION RULE.—
(1) EFFECTIVE DATE.—
(A) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made 
by this section shall take effect on October 1, 
2005, and the Secretary is authorized to take 
such steps before such date as may be necessary 
to implement such amendments on a timely 
basis. 
(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 (ex-
cept as otherwise provided under this Act, other 
than under this section) 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 contractors
for annual contract periods that begin on or 
after October 1, 2010. 
(D) WAIVER
OF
PROVIDER
NOMINATION 
PROVISIONS
DURING
TRANSITION.—During the 
period beginning on the date of the enactment of 
this Act and before the date specified under sub-
paragraph (A), the Secretary may enter into 
new agreements under section 1816 of the Social 
Security Act (42 U.S.C. 1395h) without regard 
to any of the provider nomination provisions of 
such section. 
(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 
section 1816 and section 1842 of the Social Security 
Act (42 U.S.C. 1395h, 1395u) to contracts under sec-
tion 1874A, as added by subsection (a)(1). 
(3) AUTHORIZING CONTINUATION OF MIP FUNC-
TIONS
UNDER
CURRENT
CONTRACTS
AND
AGREE-
MENTS AND UNDER ROLLOVER CONTRACTS.—The pro-
visions contained in the exception in section 
1893(d)(2) of the Social Security Act (42 U.S.C. 
1395ddd(d)(2)) shall continue to apply notwith-
standing the amendments made by this section, and
any reference in such provisions to an agreement or 
contract shall be deemed to include a contract under 
section 1874A of such Act, as inserted by subsection 
(a)(1), that continues the activities referred to in such 
provisions. 
(e) REFERENCES.—On and after the effective date pro-
vided under subsection (d)(1), any reference to a fiscal 
intermediary or carrier under title XI or XVIII of the So-
cial Security Act (or any regulation, manual instruction, 
interpretative rule, statement of policy, or guideline issued 
to carry out such titles) shall be deemed a reference to an 
appropriate medicare administrative contractor (as pro-
vided under section 1874A of the Social Security Act). 
(f) REPORTS ON IMPLEMENTATION.—
(1) PLAN FOR IMPLEMENTATION.—By not later 
than October 1, 2004, the Secretary shall submit a re-
port to Congress and the Comptroller General of the 
United States that describes the plan for implementa-
tion of the amendments made by this section. The 
Comptroller General shall conduct an evaluation of 
such plan and shall submit to Congress, not later 
than 6 months after the date the report is received, a 
report on such evaluation and shall include in such 
report such recommendations as the Comptroller Gen-
eral deems appropriate.
(2) STATUS
OF
IMPLEMENTATION.—The Sec-
retary shall submit a report to Congress not later 
than October 1, 2008, that describes the status of im-
plementation of such amendments and that includes 
a description of the following: 
(A) The number of contracts that have been 
competitively bid as of such date. 
(B) The distribution of functions among 
contracts and contractors. 
(C) A timeline for complete transition to 
full competition. 
(D) A detailed description of how the Sec-
retary has modified oversight and management 
of medicare contractors to adapt to full competi-
tion. 
SEC. 202. REQUIREMENTS FOR INFORMATION SECURITY 
FOR MEDICARE ADMINISTRATIVE CONTRAC-
TORS. 
(a) IN GENERAL.—Section 1874A, as added by section 
201(a)(1), is amended by adding at the end the following 
new subsection: 
‘‘(e) REQUIREMENTS FOR INFORMATION SECURITY.—
‘‘(1) DEVELOPMENT OF INFORMATION SECURITY 
PROGRAM.—A medicare administrative contractor 
that performs the functions referred to in subpara-
graphs (A) and (B) of subsection (a)(4) (relating to 
determining and making payments) shall implement 
a contractor-wide information security program to 
provide information security for the operation and 
assets of the contractor with respect to such functions 
under this title. An information security program 
under this paragraph shall meet the requirements for 
information security programs imposed on Federal 
agencies under paragraphs (1) through (8) of section 
3544(b) of title 44, United States Code (other than re-
quirements under paragraphs (2)(D)(i), (5)(A), and 
(5)(B) of such section). 
‘‘(2) INDEPENDENT AUDITS.—
‘‘(A) PERFORMANCE
OF
ANNUAL
EVALUA-
TIONS.—Each year a medicare administrative 
contractor that performs the functions referred to 
in subparagraphs (A) and (B) of subsection 
(a)(4) (relating to determining and making pay-
ments) shall undergo an evaluation of the infor-
mation security of the contractor with respect to 
such functions under this title. The evaluation 
shall—
‘‘(i) be performed by an entity that 
meets such requirements for independence as 
the Inspector General of the Department of
Health and Human Services may establish; 
and 
‘‘(ii) test the effectiveness of informa-
tion security policies, procedures, and prac-
tices of a representative subset of the con-
tractor’s information systems (as defined in 
section 3502(8) of title 44, United States 
Code) relating to such functions under this 
title and an assessment of compliance with 
the requirements of this subsection and re-
lated information security policies, proce-
dures, standards and guidelines, including 
policies and procedures as may be pre-
scribed by the Director of the Office of Man-
agement and Budget and applicable infor-
mation security standards promulgated 
under section 11331 of title 40, United 
States Code. 
‘‘(B) DEADLINE
FOR
INITIAL
EVALUA-
TION.—
‘‘(i) NEW CONTRACTORS.—In the case 
of a medicare administrative contractor 
covered by this subsection that has not pre-
viously performed the functions referred to 
in subparagraphs (A) and (B) of subsection
(a)(4) (relating to determining and making 
payments) as a fiscal intermediary or car-
rier under section 1816 or 1842, the first 
independent evaluation conducted pursuant 
subparagraph (A) shall be completed prior 
to commencing such functions. 
‘‘(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 independent 
evaluation conducted pursuant subpara-
graph (A) shall be completed within 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 results of 
independent evaluations under subpara-
graph (A) shall be submitted promptly to 
the Inspector General of the Department of 
Health and Human Services and to the Sec-
retary. 
‘‘(ii) TO
CONGRESS.—The Inspector 
General of 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 eval-
uations in reports required under section 
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 section 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)), pur-
suant to paragraph (1), shall be completed (and a re-
port on the evaluation submitted to the Secretary) by 
not later than 1 year after such date. 
TITLE III—EDUCATION AND 
OUTREACH 
SEC. 301. PROVIDER EDUCATION AND TECHNICAL ASSIST-
ANCE. 
(a) COORDINATION OF EDUCATION FUNDING.—
(1) IN GENERAL.—The Social Security Act is 
amended by inserting after section 1888 the following 
new section: 
‘‘PROVIDER EDUCATION AND TECHNICAL ASSISTANCE 
‘‘SEC. 1889. (a) COORDINATION OF EDUCATION FUND-
ING.—The Secretary shall coordinate the educational activi-
ties 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 en-
actment 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 education
under section 1889(a) of the Social Security Act, as 
added by paragraph (1). 
(b) INCENTIVES TO IMPROVE CONTRACTOR PERFORM-
ANCE.—
(1) IN GENERAL.—Section 1874A, as added by 
section 201(a)(1) and as amended by section 202(a), 
is amended by adding at the end the following new 
subsection: 
‘‘(f) INCENTIVES TO IMPROVE CONTRACTOR PERFORM-
ANCE IN PROVIDER EDUCATION AND OUTREACH.—The Sec-
retary shall use specific claims payment error rates or simi-
lar 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 pro-
visions.
(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 recommendations 
as the Comptroller General determines appropriate 
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 in-
tends to use such methodology in assessing medicare 
contractor performance in implementing effective edu-
cation and outreach programs, including whether to 
use such methodology as a basis for performance bo-
nuses. The report shall include an analysis 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 201(a)(1) and as amended by section 202(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 Secretary 
shall develop a strategy for communications with in-
dividuals 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 elec-
tronic transmission) in a clear, concise, and accurate 
manner to inquiries of providers of services, suppliers 
and individuals entitled to benefits under part A or 
enrolled under part B, or both, concerning the pro-
grams under this title within 45 business days of the 
date of receipt of such inquiries.
‘‘(3) RESPONSE TO TOLL-FREE LINES.—The Sec-
retary shall ensure that each medicare administrative 
contractor shall provide, for those providers of services 
and suppliers which submit claims to the contractor 
for claims processing and for those individuals enti-
tled 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 telephone number at 
which such individuals, providers of services and sup-
pliers may obtain information regarding billing, cod-
ing, claims, coverage, and other appropriate informa-
tion 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 admin-
istrative contractors, the Secretary shall 
take into account the results of the moni-
toring conducted under subparagraph (A) 
taking into account as performance require-
ments the standards established under 
clause (i). The Secretary shall, in consulta-
tion with organizations representing pro-
viders of services, suppliers, and individuals 
entitled to benefits under part A or enrolled 
under part B, or both, establish standards 
relating to the accuracy, consistency, and 
timeliness of the information so provided. 
‘‘(C) DIRECT MONITORING.—Nothing in this 
paragraph shall be construed as preventing the 
Secretary from directly monitoring the accuracy,
consistency, and timeliness of the information so 
provided.’’. 
(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 sec-
tion 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) $25,000,000 for each of fiscal
years 2005 and 2006 and such sums as may be nec-
essary for succeeding fiscal years. 
‘‘(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 timeli-
ness 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)). 
‘‘(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 SITES.—
(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 SITES; FAQS.—The Secretary, and 
each medicare contractor insofar as it provides services (in-
cluding claims processing) for providers of services or sup-
pliers, shall maintain an Internet site which—
‘‘(1) provides answers in an easily accessible for-
mat 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 PROVISIONS.—
(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 fol-
lowing 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 attend) 
educational activities or other information gathered during 
an educational program conducted under this section or 
otherwise by the Secretary to select or track providers of 
services or suppliers for the purpose of conducting 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 of information that would com-
promise pending law enforcement activities or reveal find-
ings 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 sec-
tion 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 supplier.’’.
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall take effect on the date of the en-
actment of this Act. 
SEC. 302. 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 conducting 
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 section 5(f)(1)) with 
appropriate expertise with billing systems of the full range 
of providers of services and suppliers to provide the tech-
nical assistance. In awarding such contracts, the Secretary 
shall consider any prior investigations of the entity’s work 
by the Inspector General of Department of Health and 
Human Services or the Comptroller General of the United 
States. 
(c) DESCRIPTION OF TECHNICAL ASSISTANCE.—The 
technical assistance provided under the demonstration pro-
gram 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 achieving such 
compliance. 
(d) AVOIDANCE OF RECOVERY ACTIONS FOR PROB-
LEMS IDENTIFIED AS CORRECTED.—The Secretary shall 
provide that, absent evidence of fraud and notwithstanding 
any other provision of law, any errors found in a compli-
ance review for a small provider of services or supplier that 
participates in the demonstration program shall not be sub-
ject to recovery action if the technical assistance personnel 
under the program determine that—
(1) the problem that is the subject of the compli-
ance review has been corrected to their satisfaction 
within 30 days of the date of the visit by such per-
sonnel to the small provider of services or supplier; 
and 
(2) such problem remains corrected for such pe-
riod as is appropriate. 
The previous sentence applies only to claims filed as part 
of the demonstration program and lasts only for the dura-
tion of such program and only as long as the small provider 
of services or supplier is a participant in such program. 
(e) GAO EVALUATION.—Not later than 2 years after 
the date of the date the demonstration program is first im-
(2) for fiscal year 2006, $6,000,000. 
SEC. 303. MEDICARE PROVIDER OMBUDSMAN; MEDICARE 
BENEFICIARY OMBUDSMAN. 
(a) MEDICARE PROVIDER OMBUDSMAN.—Section 1868 
(42 U.S.C. 1395ee) is amended—
(1) by adding at the end of the heading the fol-
lowing: ‘‘; MEDICARE PROVIDER OMBUDSMAN’’; 
(2) by inserting ‘‘PRACTICING PHYSICIANS ADVI-
SORY COUNCIL.—(1)’’ after ‘‘(a)’’; 
(3) in paragraph (1), as so redesignated under 
paragraph (2), by striking ‘‘in this section’’ and in-
serting ‘‘in this subsection’’; 
(4) by redesignating subsections (b) and (c) as 
paragraphs (2) and (3), respectively; and 
(5) by adding at the end the following new sub-
section: 
‘‘(b) MEDICARE PROVIDER OMBUDSMAN.—The Sec-
retary shall appoint within the Department of Health and 
Human Services a Medicare Provider Ombudsman. The 
Ombudsman shall—
‘‘(1) provide assistance, on a confidential basis, 
to providers of services and suppliers with respect to 
complaints, grievances, and requests for information 
concerning the programs under this title (including 
provisions of title XI insofar as they relate to this
title and are not administered by the Office of the In-
spector General of the Department of Health and 
Human Services) and in the resolution of unclear or 
conflicting guidance given by the Secretary and medi-
care contractors to such providers of services and sup-
pliers regarding such programs and provisions and 
requirements under this title and such provisions; 
and 
‘‘(2) submit recommendations to the Secretary 
for improvement in the administration of this title 
and such provisions, including—
‘‘(A) recommendations to respond to recur-
ring patterns of confusion in this title and such 
provisions (including recommendations regard-
ing suspending imposition of sanctions where 
there is widespread confusion in program ad-
ministration), and 
‘‘(B) recommendations to provide for an ap-
propriate and consistent response (including not 
providing for audits) in cases of self-identified 
overpayments by providers of services and sup-
pliers. 
The Ombudsman shall not serve as an advocate for any in-
creases in payments or new coverage of services, but may
identify issues and problems in payment or coverage poli-
cies.’’. 
(b) MEDICARE
BENEFICIARY
OMBUDSMAN.—Title 
XVIII is amended by inserting after section 1806 the fol-
lowing new section: 
‘‘MEDICARE BENEFICIARY OMBUDSMAN 
‘‘SEC. 1807. (a) IN GENERAL.—The Secretary shall 
appoint within the Department of Health and Human 
Services 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. 
‘‘(b) DUTIES.—The Medicare Beneficiary Ombudsman 
shall—
‘‘(1) receive complaints, grievances, and requests 
for information submitted by individuals entitled to 
benefits under part A or enrolled under part B, or 
both, with respect to any aspect of the medicare pro-
gram; 
‘‘(2) provide assistance with respect to com-
plaints, grievances, and requests referred to in para-
graph (1), including—
‘‘(A) assistance in collecting relevant infor-
mation for such individuals, to seek an appeal of 
a decision or determination made by a fiscal
intermediary, carrier, Medicare+Choice organi-
zation, or the Secretary; and 
‘‘(B) assistance to such individuals with 
any problems arising from disenrollment from a 
Medicare+Choice plan under part C; and 
‘‘(3) submit annual reports to Congress and the 
Secretary that describe the activities of the Office and 
that include such recommendations for improvement 
in the administration of this title as the Ombudsman 
determines appropriate. 
The Ombudsman shall not serve as an advocate for any in-
creases in payments or new coverage of services, but may 
identify issues and problems in payment or coverage poli-
cies. 
‘‘(c) WORKING WITH HEALTH INSURANCE COUN-
SELING PROGRAMS.—To the extent possible, the Ombuds-
man shall work with health insurance counseling programs 
(receiving funding under section 4360 of Omnibus Budget 
Reconciliation Act of 1990) to facilitate the provision of in-
formation to individuals entitled to benefits under part A 
or 
enrolled 
under 
part 
B, 
or 
both 
regarding 
Medicare+Choice plans and changes to those plans. Noth-
ing in this subsection shall preclude further collaboration 
between the Ombudsman and such programs.’’.
(c) DEADLINE
FOR APPOINTMENT.—The Secretary 
shall appoint the Medicare Provider Ombudsman and the 
Medicare Beneficiary Ombudsman, under the amendments 
made by subsections (a) and (b), respectively, by not later 
than 1 year after the date of the enactment of this Act. 
(d) FUNDING.—There are authorized to be appro-
priated to the Secretary (in appropriate part from the Fed-
eral Hospital Insurance Trust Fund and the Federal Sup-
plementary Medical Insurance Trust Fund) to carry out 
the provisions of subsection (b) of section 1868 of the Social 
Security Act (relating to the Medicare Provider Ombuds-
man), as added by subsection (a)(5) and section 1807 of 
such Act (relating to the Medicare Beneficiary Ombuds-
man), as added by subsection (b), such sums as are nec-
essary for fiscal year 2004 and each succeeding fiscal year. 
(e) 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 number 
1–800–MEDICARE, for a means by which individ-
uals seeking information about, or assistance with, 
such programs who phone such toll-free number are
transferred (without charge) to appropriate entities 
for the provision of such information 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 list-
ing of numbers of individual contractors.’’. 
(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 number 1–800–MEDICARE, 
including an assessment of whether the informa-
tion provided is sufficient to answer questions of 
such individuals. In conducting the study, the 
Comptroller General shall examine the education 
and training of the individuals providing infor-
mation through such number. 
(B) REPORT.—Not later than 1 year after 
the date of the enactment of this Act, the Comp-
troller General shall submit to Congress a report 
on the study conducted under subparagraph (A).
‘‘(2) EXPEDITED
ACCESS
TO
JUDICIAL
RE-
VIEW.—
‘‘(A) IN GENERAL.—The Secretary shall es-
tablish a process under which a provider of serv-
ices 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) may obtain 
access to judicial review when a review panel 
(described in subparagraph (D)), on its own mo-
tion or at the request of the appellant, deter-
mines that no entity in the administrative ap-
peals process has the authority to decide the 
question of law or regulation relevant to the mat-
ters in controversy and that there is no material 
issue of fact in dispute. The appellant may make 
such request only once with respect to a question 
of law or regulation 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 review 
panel that no review panel has the authority to 
decide the question of law or regulations relevant 
to the matters in controversy and that there is
238
(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 
APPEALS.— 
(1) INITIAL DETERMINATIONS AND REDE-
TERMINATIONS.—Section 1869(a) (42 U.S.C. 
1395ff(a)), as amended by BIPA, is amend-
ed by adding at the end the following 
new paragraphs:
‘‘(4) REQUIREMENTS OF NOTICE OF DE-
TERMINATIONS.—With respect to an initial 
determination insofar as it results in a 
denial of a claim for benefits—
‘‘(A) the written notice on the de-
termination shall include—
‘‘(i) the reasons for the deter-
mination, including whether a 
local medical review policy or a 
local coverage determination was 
used;
239
‘‘(ii) the procedures for ob-
taining 
additional 
information 
concerning the determination, in-
cluding the information described 
in subparagraph (B); and 
‘‘(iii) notification of the right 
to seek a redetermination or oth-
erwise appeal the determination 
and instructions on how to ini-
tiate 
such 
a 
redetermination 
under this section; and 
‘‘(B) the person provided such no-
tice may obtain, upon request, the 
specific provision of the policy, man-
ual, or regulation used in making the 
determination. 
‘‘(5) REQUIREMENTS OF NOTICE OF REDE-
TERMINATIONS.—With respect to a redeter-
mination insofar as it results in a denial 
of a claim for benefits—
‘‘(A) the written notice on the re-
determination shall include—
‘‘(i) the specific reasons for 
the redetermination;
310
(c) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to hospice 
care provided on or after the date of the en-
actment of this Act. 
SEC. 507. APPLICATION OF OSHA BLOODBORNE PATHO-
GENS STANDARD TO CERTAIN HOSPITALS. 
(a) IN GENERAL.—Section 1866 (42 U.S.C. 
1395cc) is amended—
(1) in subsection (a)(1)—
(A) in subparagraph (R), by strik-
ing ‘‘and’’ at the end; 
(B) in subparagraph (S), by strik-
ing the period at the end and insert-
ing ‘‘, and’’; and 
(C) by inserting after subpara-
graph (S) the following new subpara-
graph: 
‘‘(T) in the case of hospitals that are 
not otherwise subject to the Occupational 
Safety and Health Act of 1970, to comply 
with the Bloodborne Pathogens standard 
under section 1910.1030 of title 29 of the 
Code of Federal Regulations (or as subse-
quently redesignated).’’; and