257
longer than 3 years (or not longer 
than 5 years in the case of extreme 
hardship, as determined by the Sec-
retary). Interest shall accrue on the 
balance through the period of repay-
ment. Such plan shall meet terms and 
conditions determined to be appro-
priate by the Secretary. 
‘‘(B) HARDSHIP.—
‘‘(i) IN GENERAL.—For purposes 
of subparagraph (A), the repay-
ment of an overpayment (or over-
payments) 
within 
days 
is 
deemed to constitute a hardship 
if—
‘‘(I) in the case of a pro-
vider of services that files
cost reports, the aggregate 
amount of the overpayments 
exceeds 10 percent of the 
amount paid under this title 
to the provider of services for 
the cost reporting period cov-
ered by the most recently sub-
mitted cost report; or
258
‘‘(II) in the case of another 
provider of services or sup-
plier, the aggregate amount of 
the overpayments exceeds 10 
percent of the amount paid 
under this title to the pro-
vider of services or supplier 
for 
the 
previous 
calendar 
year. 
‘‘(ii) RULE
OF
APPLICATION.—
The 
Secretary 
shall 
establish 
rules for the application 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 plan under sub-
paragraph (A) with respect to a 
specific 
overpayment 
amount, 
such payment amount under the
259
repayment plan shall not be taken 
into account under clause (i) with 
respect to subsequent overpay-
ment amounts. 
‘‘(C) 
EXCEPTIONS.—Subparagraph 
(A) shall not apply if—
‘‘(i) the Secretary has reason 
to suspect that the provider of 
services or supplier may file for 
bankruptcy or otherwise cease to 
do business or discontinue par-
ticipation in the program under 
this title; or 
‘‘(ii) there is an indication of 
fraud or abuse committed against 
the program. 
‘‘(D) IMMEDIATE COLLECTION IF VIO-
LATION OF REPAYMENT PLAN.—If a pro-
vider of services or supplier fails to 
make a payment in accordance with a 
repayment plan under this para-
graph, 
the 
Secretary 
may 
imme-
diately seek to offset or otherwise re-
cover the total balance outstanding
260
(including applicable interest) under 
the repayment plan. 
‘‘(E) RELATION TO NO FAULT PROVI-
SION.—Nothing 
in 
this 
paragraph 
shall be construed as affecting the ap-
plication of section 1870(c) (relating 
to no adjustment in the cases of cer-
tain overpayments). 
‘‘(2) LIMITATION ON RECOUPMENT.—
‘‘(A) IN GENERAL.—In the case of a 
provider of services or supplier that 
is determined to have received an 
overpayment under this title and that 
seeks a reconsideration by a qualified 
independent contractor on such de-
termination under section 1869(b)(1), 
the Secretary may not take any ac-
tion (or authorize any other person, 
including any medicare contractor, as 
defined in subparagraph (C)) to re-
coup the overpayment until the date 
the decision on the reconsideration 
has been rendered. If the provisions 
of section 1869(b)(1) (providing for 
such a reconsideration by a qualified
261
independent contractor) are not in ef-
fect, in applying the previous sen-
tence any reference to such a recon-
sideration shall be treated as a ref-
erence to a redetermination by the 
fiscal intermediary or carrier in-
volved. 
‘‘(B) COLLECTION WITH INTEREST.—
Insofar as the determination on such 
appeal is against the provider of serv-
ices or supplier, interest on the over-
payment shall accrue on and after the 
date of the original notice of overpay-
ment. Insofar as such determination 
against the provider of services or 
supplier is later reversed, the Sec-
retary shall provide for repayment of 
the amount recouped plus interest at 
the same rate as would apply under 
the previous sentence for the period 
in which the amount was recouped. 
‘‘(C) MEDICARE
CONTRACTOR
DE-
FINED.—For purposes of this sub-
section, 
the 
term 
‘medicare 
con-
262
tractor’ has the meaning given such 
term in section 1889(g). 
‘‘(3) LIMITATION
ON
USE
OF
EXTRAPO-
LATION.—A medicare contractor may not 
use extrapolation to determine overpay-
ment 
amounts 
to 
be 
recovered 
by 
recoupment, offset, or otherwise unless—
‘‘(A) there is a sustained or high 
level of payment error (as defined by 
the Secretary by regulation); or 
‘‘(B) 
documented 
educational 
intervention has failed to correct the 
payment error (as determined by the 
Secretary). 
‘‘(4) PROVISION
OF
SUPPORTING
DOCU-
MENTATION.—In the case of a provider of 
services or supplier with respect to 
which amounts were previously overpaid,
a medicare contractor may request the 
periodic production of records or sup-
porting documentation for a limited sam-
ple of submitted claims to ensure that the 
previous practice is not continuing. 
‘‘(5) CONSENT SETTLEMENT REFORMS.—
263
‘‘(A) IN
GENERAL.—The Secretary 
may use a consent settlement (as de-
fined in subparagraph (D)) to settle a 
projected overpayment. 
‘‘(B) OPPORTUNITY TO SUBMIT ADDI-
TIONAL
INFORMATION
BEFORE
CONSENT 
SETTLEMENT OFFER.—Before offering a 
provider of services or supplier a con-
sent settlement, the Secretary shall—
‘‘(i) communicate to the pro-
vider of services or supplier—
‘‘(I) that, based on a re-
view of the medical records 
requested by the Secretary, a 
preliminary 
evaluation 
of 
those records indicates that 
there would be an overpay-
ment; 
‘‘(II) the nature of the 
problems identified in such 
evaluation; and 
‘‘(III) the steps that the 
provider of services or sup-
plier should take to address 
the problems; and
264
‘‘(ii) provide for a 45-day pe-
riod during which the provider of 
services or supplier may furnish 
additional 
information 
con-
cerning the medical records for 
the claims that had been re-
viewed. 
‘‘(C) CONSENT SETTLEMENT OFFER.—
The Secretary shall review any addi-
tional information furnished by the 
provider of services or supplier under 
subparagraph (B)(ii). Taking into con-
sideration such information, the Sec-
retary shall determine if there still 
appears to be an overpayment. If so, 
the Secretary—
‘‘(i) shall provide notice of 
such determination to the pro-
vider of services or supplier, in-
cluding an explanation of the rea-
son for such determination; and 
‘‘(ii) in order to resolve the 
overpayment, may offer the pro-
vider of services or supplier—
265
‘‘(I) the opportunity for a 
statistically 
valid 
random 
sample; or 
‘‘(II) a consent settlement. 
The 
opportunity 
provided 
under 
clause (ii)(I) does not waive any ap-
peal rights with respect to the alleged 
overpayment involved. 
‘‘(D) 
CONSENT
SETTLEMENT
DE-
FINED.—For purposes of this para-
graph, the term ‘consent settlement’ 
means an agreement between the Sec-
retary and a provider of services or 
supplier whereby both parties agree 
to settle a projected overpayment 
based on less than a statistically valid 
sample of claims and the provider of 
services or supplier agrees not to ap-
peal the claims involved. 
‘‘(6) NOTICE
OF
OVER-UTILIZATION
OF 
CODES.—The Secretary shall establish, in 
consultation 
with 
organizations 
rep-
resenting the classes of providers of serv-
ices and suppliers, a process under which 
the Secretary provides for notice to class-
266
es of providers of services and suppliers 
served by the contractor in cases in 
which the contractor has identified that 
particular billing codes may be overuti-
lized by that class of providers of services 
or suppliers under the programs under 
this title (or provisions of title XI insofar 
as they relate to such programs). 
‘‘(7) PAYMENT AUDITS.—
‘‘(A) WRITTEN NOTICE FOR POST-PAY-
MENT
AUDITS.—Subject to subpara-
graph (C), if a medicare contractor 
decides to conduct a post-payment 
audit of a provider of services or sup-
plier under this title, the contractor 
shall provide the provider of services 
or 
supplier 
with 
written 
notice 
(which may be in electronic form) of 
the intent to conduct such an audit. 
‘‘(B) EXPLANATION OF FINDINGS FOR 
ALL AUDITS.—Subject to subparagraph 
(C), if a medicare contractor audits a 
provider of services or supplier under 
this title, the contractor shall—
267
‘‘(i) give the provider of serv-
ices or supplier a full review and 
explanation of the findings of the 
audit in a manner that is under-
standable to the provider of serv-
ices or supplier and permits the 
development of an appropriate 
corrective action plan; 
‘‘(ii) inform the provider of 
services or supplier of the appeal 
rights under this title as well as 
consent settlement options (which 
are at the discretion of the Sec-
retary); 
‘‘(iii) give the provider of serv-
ices or supplier an opportunity to 
provide additional information to 
the contractor; and 
‘‘(iv) take into account infor-
mation provided, on a timely
basis, by the provider of services 
or supplier under clause (iii). 
‘‘(C) 
EXCEPTION.—Subparagraphs 
(A) and (B) shall not apply if the pro-
vision of notice or findings would
268
compromise pending law enforcement 
activities, whether civil or criminal, 
or reveal findings of law enforce-
ment-related audits. 
‘‘(8) 
STANDARD
METHODOLOGY
FOR 
PROBE SAMPLING.—The Secretary shall es-
tablish a standard methodology for medi-
care contractors to use in selecting a 
sample of claims for review in the case of 
an abnormal billing pattern.’’. 
(b) EFFECTIVE DATES AND DEADLINES.—
(1) USE OF REPAYMENT PLANS.—Section 
1893(f)(1) of the Social Security Act, as 
added by subsection (a), shall apply to re-
quests for repayment plans made after 
the date of the enactment of this Act. 
(2) LIMITATION ON RECOUPMENT.—Sec-
tion 1893(f)(2) of the Social Security Act, 
as added by subsection (a), shall apply to 
actions taken after the date of the enact-
ment of this Act. 
(3) USE
OF
EXTRAPOLATION.—Section 
1893(f)(3) of the Social Security Act, as 
added by subsection (a), shall apply to 
statistically valid random samples initi-
269
ated after the date that is 1 year after the 
date of the enactment of this Act. 
(4) PROVISION
OF
SUPPORTING
DOCU-
MENTATION.—Section 1893(f)(4) of the So-
cial Security Act, as added by subsection 
(a), shall take effect on the date of the en-
actment of this Act. 
(5) 
CONSENT
SETTLEMENT.—Section 
1893(f)(5) of the Social Security Act, as 
added by subsection (a), shall apply to 
consent settlements entered into after the 
date of the enactment of this Act. 
(6) NOTICE
OF
OVERUTILIZATION.—Not 
later than 1 year after the date of the en-
actment of this Act, the Secretary shall 
first establish the process for notice of 
overutilization of billing codes under sec-
tion 1893A(f)(6) of the Social Security Act, 
as added by subsection (a). 
(7) 
PAYMENT
AUDITS.—Section 
1893A(f)(7) of the Social Security Act, as 
added by subsection (a), shall apply to 
audits initiated after the date of the en-
actment of this Act.
270
(8) STANDARD
FOR
ABNORMAL
BILLING 
PATTERNS.—Not later than 1 year after the 
date of the enactment of this Act, the Sec-
retary shall first establish a standard 
methodology 
for 
selection 
of 
sample 
claims for abnormal billing patterns 
under section 1893(f)(8) of the Social Se-
curity Act, as added by subsection (a). 
SEC. 406. PROVIDER ENROLLMENT PROCESS; RIGHT OF AP-
PEAL. 
(a) IN GENERAL.—Section 1866 (42 U.S.C. 
1395cc) is amended—
(1) by adding at the end of the head-
ing the following: ‘‘; ENROLLMENT
PROC-
ESSES’’; and 
(2) by adding at the end the following 
new subsection: 
‘‘(j) ENROLLMENT PROCESS FOR PROVIDERS 
OF SERVICES AND SUPPLIERS.—
‘‘(1) ENROLLMENT PROCESS.—
‘‘(A) IN
GENERAL.—The Secretary 
shall establish by regulation a proc-
ess for the enrollment of providers of 
services and suppliers under this 
title.
271
‘‘(B) 
DEADLINES.—The 
Secretary 
shall establish by regulation proce-
dures under which there are dead-
lines for actions on applications for 
enrollment (and, if applicable, re-
newal of enrollment). The Secretary 
shall monitor the performance of 
medicare administrative contractors 
in meeting the deadlines established 
under this subparagraph. 
‘‘(C) CONSULTATION BEFORE CHANG-
ING
PROVIDER
ENROLLMENT
FORMS.—
The Secretary shall consult with pro-
viders of services and suppliers be-
fore making changes in the provider 
enrollment forms required of such 
providers and suppliers to be eligible 
to submit claims for which payment 
may be made under this title. 
‘‘(2) HEARING RIGHTS IN CASES OF DE-
NIAL
OR
NON-RENEWAL.—A provider of 
services or supplier whose application to 
enroll (or, if applicable, to renew enroll-
ment) under this title is denied may have 
a hearing and judicial review of such de-
272
nial under the procedures that apply 
under subsection (h)(1)(A) to a provider 
of services that is dissatisfied with a de-
termination by the Secretary.’’. 
(b) EFFECTIVE DATES.—
(1) ENROLLMENT
PROCESS.—The Sec-
retary shall provide for the establishment 
of the enrollment process under section 
1866(j)(1) of the Social Security Act, as 
added by subsection (a)(2), within 6 
months after the date of the enactment of 
this Act. 
(2) 
CONSULTATION.—Section 
1866(j)(1)(C) of the Social Security Act, as 
added by subsection (a)(2), shall apply 
with respect to changes in provider en-
rollment forms made on or after January 
1, 2004.
(3) 
HEARING
RIGHTS.—Section 
1866(j)(2) of the Social Security Act, as 
added by subsection (a)(2), shall apply to 
denials occurring on or after such date 
(not later than 1 year after the date of 
the enactment of this Act) as the Sec-
retary specifies.
273
SEC. 407. PROCESS FOR CORRECTION OF MINOR ERRORS 
AND OMISSIONS ON CLAIMS WITHOUT PUR-
SUING APPEALS PROCESS. 
The Secretary shall develop, in consulta-
tion with appropriate medicare contractors 
(as defined in section 1889(g) of the Social Se-
curity Act, as inserted by section 301(a)(1)) 
and representatives of providers of services 
and suppliers, a process whereby, in the case 
of minor errors or omissions (as defined by 
the Secretary) that are detected in the sub-
mission of claims under the programs under 
title XVIII of such Act, a provider of services 
or supplier is given an opportunity to correct 
such an error or omission without the need to 
initiate an appeal. Such process shall include 
the ability to resubmit corrected claims. 
SEC. 408. PRIOR DETERMINATION PROCESS FOR CERTAIN 
ITEMS 
AND 
SERVICES; 
ADVANCE 
BENE-
FICIARY NOTICES. 
(a) IN GENERAL.—Section 1869 (42 U.S.C. 
1395ff(b)), as amended by sections 521 and 522 
of BIPA and section 403(d)(2)(B), is further 
amended by adding at the end the following 
new subsection:
274
‘‘(h) PRIOR DETERMINATION PROCESS
FOR 
CERTAIN ITEMS AND SERVICES.—
‘‘(1) ESTABLISHMENT OF PROCESS.—
‘‘(A) IN GENERAL.—With respect to 
a medicare administrative contractor 
that has a contract under section 
1874A that provides for making pay-
ments under this title with respect to 
eligible items and services described 
in subparagraph (C), the Secretary 
shall establish a prior determination 
process that meets the requirements 
of this subsection and that shall be 
applied by such contractor in the 
case of eligible requesters. 
‘‘(B) 
ELIGIBLE
REQUESTER.—For 
purposes of this subsection, each of 
the following shall be an eligible re-
quester: 
‘‘(i) A physician, but only with 
respect to eligible items and serv-
ices for which the physician may 
be paid directly. 
‘‘(ii) An individual entitled to 
benefits under this title, but only
275
with respect to an item or service 
for which the individual receives, 
from the physician who may be 
paid directly for the item or serv-
ice, an advance beneficiary notice 
under section 1879(a) that pay-
ment may not be made (or may no 
longer be made) for the item or 
service under this title. 
‘‘(C) ELIGIBLE
ITEMS
AND
SERV-
ICES.—For purposes of this subsection 
and subject to paragraph (2), eligible 
items and services are items and 
services which are physicians’ serv-
ices (as defined in paragraph (4)(A) of 
section 1848(f) for purposes of calcu-
lating the sustainable growth rate 
under such section). 
‘‘(2) 
SECRETARIAL
FLEXIBILITY.—The 
Secretary shall establish by regulation 
reasonable limits on the categories of eli-
gible items and services for which a prior 
determination of coverage may be re-
quested under this subsection. In estab-
lishing such limits, the Secretary may
276
consider the dollar amount involved with 
respect to the item or service, adminis-
trative costs and burdens, and other rel-
evant factors. 
‘‘(3) REQUEST
FOR
PRIOR
DETERMINA-
TION.—
‘‘(A) IN GENERAL.—Subject to para-
graph (2), under the process estab-
lished under this subsection an eligi-
ble requester may submit to the con-
tractor a request for a determination, 
before the furnishing of an eligible 
item or service involved as to wheth-
er the item or service is covered 
under this title consistent with the 
applicable requirements of section 
1862(a)(1)(A) (relating to medical ne-
cessity). 
‘‘(B) ACCOMPANYING
DOCUMENTA-
TION.—The 
Secretary 
may 
require 
that the request be accompanied by a 
description of the item or service, 
supporting documentation relating to 
the medical necessity for the item or 
service, and any other appropriate
286
benefits under part A or B of title XVIII 
of such Act before items or services are 
furnished under such part in cases where 
a provider of services or other person 
that would furnish the item or service be-
lieves that payment will not be made for 
some or all of such items or services 
under such title. 
TITLE V—MISCELLANEOUS 
PROVISIONS 
SEC. 501. POLICY DEVELOPMENT REGARDING EVALUATION 
AND MANAGEMENT (E & M) DOCUMENTATION 
GUIDELINES. 
(a) IN GENERAL.—The Secretary may not 
implement any new documentation guidelines 
for evaluation and management physician 
services under the title XVIII of the Social Se-
curity Act on or after the date of the enact-
ment of this Act unless the Secretary—
(1) has developed the guidelines in 
collaboration with practicing physicians 
(including both generalists and special-
ists) and provided for an assessment of 
the proposed guidelines by the physician 
community;
287
(2) has established a plan that con-
tains specific goals, including a schedule, 
for improving the use of such guidelines; 
(3) has conducted appropriate and 
representative pilot projects under sub-
section (b) to test modifications to the 
evaluation and management documenta-
tion guidelines; 
(4) finds that the objectives described 
in subsection (c) will be met in the imple-
mentation of such guidelines; and 
(5) has established, and is imple-
menting, a program to educate physi-
cians on the use of such guidelines and 
that includes appropriate outreach.
The Secretary shall make changes to the man-
ner in which existing evaluation and manage-
ment documentation guidelines are imple-
mented to reduce paperwork burdens on phy-
sicians. 
(b) PILOT PROJECTS TO TEST EVALUATION 
AND
MANAGEMENT
DOCUMENTATION
GUIDE-
LINES.—
(1) IN GENERAL.—The Secretary shall 
conduct under this subsection appro-
288
priate and representative pilot projects 
to test new evaluation and management 
documentation guidelines referred to in 
subsection (a). 
(2) LENGTH AND CONSULTATION.—Each 
pilot project under this subsection shall—
(A) be voluntary; 
(B) be of sufficient length as de-
termined by the Secretary to allow 
for preparatory physician and medi-
care contractor education, analysis, 
and use and assessment of potential 
evaluation and management guide-
lines; and 
(C) be conducted, in development 
and throughout the planning and 
operational stages of the project, in 
consultation with practicing physi-
cians (including both generalists and 
specialists). 
(3) RANGE OF PILOT PROJECTS.—Of the 
pilot projects conducted under this sub-
section—
(A) at least one shall focus on a 
peer review method by physicians