H. R. 1—287
SEC. 732. EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN
PATHOLOGY SERVICES UNDER MEDICARE.
Section 542(c) of BIPA (114 Stat. 2763A–551) is amended by
inserting ‘‘, and for services furnished during 2005 and 2006’’ before
the period at the end.
SEC. 733. PAYMENT FOR PANCREATIC ISLET CELL INVESTIGATIONAL
TRANSPLANTS FOR MEDICARE BENEFICIARIES IN CLIN-
ICAL TRIALS.
(a) CLINICAL TRIAL.—
(1) IN
GENERAL.—The Secretary, acting through the
National Institute of Diabetes and Digestive and Kidney Dis-
orders, shall conduct a clinical investigation of pancreatic islet
cell transplantation which includes medicare beneficiaries.
(2) AUTHORIZATION OF APPROPRIATIONS.—There are author-
ized to be appropriated to the Secretary such sums as may
be necessary to conduct the clinical investigation under para-
graph (1).
(b) MEDICARE PAYMENT.—Not earlier than October 1, 2004,
the Secretary shall pay for the routine costs as well as transplan-
tation and appropriate related items and services (as described
in subsection (c)) in the case of medicare beneficiaries who are
participating in a clinical trial described in subsection (a) as if
such transplantation were covered under title XVIII of such Act
and as would be paid under part A or part B of such title for
such beneficiary.
(c) SCOPE OF PAYMENT.—For purposes of subsection (b):
(1) The term ‘‘routine costs’’ means reasonable and nec-
essary routine patient care costs (as defined in the Centers
for Medicare & Medicaid Services Coverage Issues Manual,
section 30–1), including immunosuppressive drugs and other
followup care.
(2) The term ‘‘transplantation and appropriate related
items and services’’ means items and services related to the
acquisition and delivery of the pancreatic islet cell transplan-
tation, notwithstanding any national noncoverage determina-
tion contained in the Centers for Medicare & Medicaid Services
Coverage Issues Manual.
(3) The term ‘‘medicare beneficiary’’ means an individual
who is entitled to benefits under part A of title XVIII of the
Social Security Act, or enrolled under part B of such title,
or both.
(d) CONSTRUCTION.—The provisions of this section shall not
be construed—
(1) to permit payment for partial pancreatic tissue or islet
cell transplantation under title XVIII of the Social Security
Act other than payment as described in subsection (b); or
(2) as authorizing or requiring coverage or payment
conveying—
(A) benefits under part A of such title to a beneficiary
not entitled to such part A; or
(B) benefits under part B of such title to a beneficiary
not enrolled in such part B.
SEC. 734. RESTORATION OF MEDICARE TRUST FUNDS.
(a) DEFINITIONS.—In this section:
H. R. 1—288
(1) CLERICAL ERROR.—The term ‘‘clerical error’’ means a
failure that occurs on or after April 15, 2001, to have trans-
ferred the correct amount from the general fund of the Treasury
to a Trust Fund.
(2) TRUST FUND.—The term ‘‘Trust Fund’’ means the Fed-
eral 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 estab-
lished under section 1841 of such Act (42 U.S.C. 1395t).
(b) CORRECTION OF TRUST FUND HOLDINGS.—
(1) IN GENERAL.—The Secretary of the Treasury shall take
the actions described in paragraph (2) with respect to the
Trust Fund with the goal being that, after such actions are
taken, the holdings of the Trust Fund will replicate, to the
extent practicable in the judgment of the Secretary of the
Treasury, in consultation with the Secretary, the holdings that
would have been held by the Trust Fund if the clerical error
involved had not occurred.
(2) OBLIGATIONS ISSUED AND REDEEMED.—The Secretary
of the Treasury shall—
(A) issue to the Trust Fund obligations under chapter
31 of title 31, United States Code, that bear issue dates,
interest rates, and maturity dates that are the same as
those for the obligations that—
(i) would have been issued to the Trust Fund if
the clerical error involved had not occurred; or
(ii) were issued to the Trust Fund and were
redeemed by reason of the clerical error involved; and
(B) redeem from the Trust Fund obligations that would
have been redeemed from the Trust Fund if the clerical
error involved had not occurred.
(c) APPROPRIATION.—There is appropriated to the Trust Fund,
out of any money in the Treasury not otherwise appropriated,
an amount determined by the Secretary of the Treasury, in consulta-
tion with the Secretary, to be equal to the interest income lost
by the Trust Fund through the date on which the appropriation
is being made as a result of the clerical error involved.
(d) CONGRESSIONAL NOTICE.—In the case of a clerical error
that occurs after April 15, 2001, the Secretary of the Treasury,
before taking action to correct the error under this section, shall
notify the appropriate committees of Congress concerning such error
and the actions to be taken under this section in response to
such error.
(e) DEADLINE.—With respect to the clerical error that occurred
on April 15, 2001, not later than 120 days after the date of the
enactment of this Act—
(1) the Secretary of the Treasury shall take the actions
under subsection (b)(1); and
(2) the appropriation under subsection (c) shall be made.
SEC. 
735. 
MODIFICATIONS 
TO 
MEDICARE 
PAYMENT 
ADVISORY
COMMISSION (MEDPAC).
(a) EXAMINATION OF BUDGET CONSEQUENCES.—Section 1805(b)
(42 U.S.C. 1395b–6(b)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(8) EXAMINATION
OF
BUDGET
CONSEQUENCES.—Before
making any recommendations, the Commission shall examine
H. R. 1—289
the budget consequences of such recommendations, directly or
through consultation with appropriate expert entities.’’.
(b) CONSIDERATION OF EFFICIENT PROVISION OF SERVICES.—
Section 1805(b)(2)(B)(i) (42 U.S.C. 1395b–6(b)(2)(B)(i)) is amended
by inserting ‘‘the efficient provision of’’ after ‘‘expenditures for’’.
(c) APPLICATION OF DISCLOSURE REQUIREMENTS.—
(1) IN GENERAL.—Section 1805(c)(2)(D) (42 U.S.C. 1395b–
6(c)(2)(D)) is amended by adding at the end the following:
‘‘Members of the Commission shall be treated as employees
of Congress for purposes of applying title I of the Ethics in
Government Act of 1978 (Public Law 95–521).’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect on January 1, 2004.
(d) ADDITIONAL REPORTS.—
(1) DATA
NEEDS
AND
SOURCES.—The Medicare Payment
Advisory Commission shall conduct a study, and submit a
report to Congress by not later than June 1, 2004, on the
need for current data, and sources of current data available,
to determine the solvency and financial circumstances of hos-
pitals and other medicare providers of services.
(2) USE OF TAX-RELATED RETURNS.—Using return informa-
tion provided under Form 990 of the Internal Revenue Service,
the Commission shall submit to Congress, by not later than
June 1, 2004, a report on the following:
(A) Investments, endowments, and fundraising of hos-
pitals participating under the medicare program and
related foundations.
(B) Access to capital financing for private and for not-
for-profit hospitals.
(e) REPRESENTATION OF EXPERTS IN PRESCRIPTION DRUGS.—
(1) IN GENERAL.—Section 1805(c)(2)(B) (42 U.S.C. 1395b–
6(c)(2)(B)) is amended by inserting ‘‘experts in the area of
pharmaco-economics or prescription drug benefit programs,’’
after ‘‘other health professionals,’’.
(2) APPOINTMENT.—The Comptroller General of the United
States shall ensure that the membership of the Commission
complies with the amendment made by paragraph (1) with
respect to appointments made on or after the date of the
enactment of this Act.
SEC. 736. TECHNICAL AMENDMENTS.
(a) PART
A.—(1) Section 1814(a) (42 U.S.C. 1395f(a)) is
amended—
(A) by striking the seventh sentence, as added by section
322(a)(1) of BIPA (114 Stat. 2763A–501); and
(B) in paragraph (7)(A)—
(i) in clause (i), by inserting before the comma at
the end the following: ‘‘based on the physician’s or medical
director’s clinical judgment regarding the normal course
of the individual’s illness’’; and
(ii) in clause (ii), by inserting before the semicolon
at the end the following: ‘‘based on such clinical judgment’’.
(2) Section 1814(b) (42 U.S.C. 1395f(b)), in the matter preceding
paragraph (1), is amended by inserting a comma after ‘‘1813’’.
(3) Section 1815(e)(1)(B) (42 U.S.C. 1395g(e)(1)(B)), in the
matter preceding clause (i), is amended by striking ‘‘of hospital’’
and inserting ‘‘of a hospital’’.
H. R. 1—290
(4) Section 1816(c)(2)(B)(ii) (42 U.S.C. 1395h(c)(2)(B)(ii)) is
amended—
(A) by striking ‘‘and’’ at the end of subclause (III); and
(B) by striking the period at the end of subclause (IV)
and inserting ‘‘, and’’.
(5) Section 1817(k)(3)(A) (42 U.S.C. 1395i(k)(3)(A)) is amended—
(A) in clause (i)(I), by striking the comma at the end and
inserting a semicolon; and
(B) in clause (ii), by striking ‘‘the Medicare and medicaid
programs’’ and inserting ‘‘the programs under this title and
title XIX’’.
(6) Section 1817(k)(6)(B) (42 U.S.C. 1395i(k)(6)(B)) is amended
by striking ‘‘Medicare program under title XVIII’’ and inserting
‘‘program under this title’’.
(7) Section 1818 (42 U.S.C. 1395i–2) is amended—
(A) in subsection (d)(6)(A) is amended by inserting ‘‘of such
Code’’ after ‘‘3111(b)’’; and
(B) in subsection (g)(2)(B) is amended by striking ‘‘sub-
section (b).’’ and inserting ‘‘subsection (b)’’.
(8) Section 1819 (42 U.S.C. 1395i–3) is amended—
(A) in subsection (b)(4)(C)(i), by striking ‘‘at least at least’’
and inserting ‘‘at least’’;
(B) in subsection (d)(1)(A), by striking ‘‘physical mental’’
and inserting ‘‘physical, mental’’; and
(C) in subsection (f)(2)(B)(iii), by moving the last sentence
2 ems to the left.
(9) Section 1886(b)(3)(I)(i)(I) (42 U.S.C. 1395ww(b)(3)(I)(i)(I))
is amended by striking ‘‘the the’’ and inserting ‘‘the’’.
(10) The heading of subsection (mm) of section 1861 (42 U.S.C.
1395x) is amended to read as follows:
‘‘Critical Access Hospital; Critical Access Hospital Services’’.
(11) Paragraphs (1) and (2) of section 1861(tt) (42 U.S.C.
1395x(tt)) are each amended by striking ‘‘rural primary care’’ and
inserting ‘‘critical access’’.
(12) Section 1865(b)(3)(B) (42 U.S.C. 1395bb(b)(3)(B)) is
amended by striking ‘‘section 1819 and 1861(j)’’ and inserting ‘‘sec-
tions 1819 and 1861(j)’’.
(13) Section 1866(b)(2) (42 U.S.C. 1395cc(b)(2)) is amended by
moving subparagraph (D) 2 ems to the left.
(14) Section 1867 (42 U.S.C. 1395dd) is amended—
(A) in the matter following clause (ii) of subsection (d)(1)(B),
by striking ‘‘is is’’ and inserting ‘‘is’’;
(B) in subsection (e)(1)(B), by striking ‘‘a pregnant women’’
and inserting ‘‘a pregnant woman’’; and
(C) in subsection (e)(2), by striking ‘‘means hospital’’ and
inserting ‘‘means a hospital’’.
(15) Section 1886(g)(3)(B) (42 U.S.C. 1395ww(g)(3)(B)) is
amended by striking ‘‘(as defined in subsection (d)(5)(D)(iii)’’ and
inserting ‘‘(as defined in subsection (d)(5)(D)(iii))’’.
(b) PART B.—(1) Section 1833(h)(5)(D) (42 U.S.C. 1395l(h)(5)(D))
is amended by striking ‘‘clinic,,’’ and inserting ‘‘clinic,’’.
(2) Section 1833(t)(3)(C)(ii) (42 U.S.C. 1395l(t)(3)(C)(ii)) is
amended by striking ‘‘clause (iii)’’ and inserting ‘‘clause (iv)’’.
H. R. 1—291
(3) Section 1861(v)(1)(S)(ii)(III) (42 U.S.C. 1395x(v)(1)(S)(ii)(III))
is amended by striking ‘‘(as defined in section 1886(d)(5)(D)(iii)’’
and inserting ‘‘(as defined in section 1886(d)(5)(D)(iii))’’.
(4) Section 1834(b)(4)(D)(iv) (42 U.S.C. 1395m(b)(4)(D)(iv)) is
amended by striking ‘‘clauses (vi)’’ and inserting ‘‘clause (vi)’’.
(5) 
Section 
1834(m)(4)(C)(ii)(III) 
(42 
U.S.C.
1395m(m)(4)(C)(ii)(III)) is amended by striking ‘‘1861(aa)(s)’’ and
inserting ‘‘1861(aa)(2)’’.
(6) Section 1838(a)(1) (42 U.S.C. 1395q(a)(1)) is amended by
inserting a comma after ‘‘1966’’.
(7) The second sentence of section 1839(a)(4) (42 U.S.C.
1395r(a)(4)) is amended by striking ‘‘which will’’ and inserting ‘‘will’’.
(8) Section 1842(c)(2)(B)(ii) (42 U.S.C. 1395u(c)(2)(B)(ii)) is
amended—
(A) by striking ‘‘and’’ at the end of subclause (III); and
(B) by striking the period at the end of subclause (IV)
and inserting ‘‘, and’’.
(9) Section 1842(i)(2) (42 U.S.C. 1395u(i)(2)) is amended by
striking ‘‘services, a physician’’ and inserting ‘‘services, to a physi-
cian’’.
(10) Section 1848(i)(3)(A) (42 U.S.C. 1395w–4(i)(3)(A)) is
amended by striking ‘‘a comparable services’’ and inserting ‘‘com-
parable services’’.
(11) Section 1861(s)(2)(K)(i) (42 U.S.C. 1395x(s)(2)(K)(i)) is
amended by striking ‘‘; and but’’ and inserting ‘‘, but’’.
(12) Section 1861(aa)(1)(B) (42 U.S.C. 1395x(aa)(1)(B)) is
amended by striking ‘‘,,’’ and inserting a comma.
(13) Section 128(b)(2) of BIPA (114 Stat. 2763A–480) is
amended by striking ‘‘Not later that’’ and inserting ‘‘Not later
than’’ each place it appears.
(c) PARTS
A 
AND
B.—(1) Section 1812(a)(3) (42 U.S.C.
1395d(a)(3)) is amended—
(A) by striking ‘‘for individuals not’’ and inserting ‘‘in the
case of individuals not’’; and
(B) by striking ‘‘for individuals so’’ and inserting ‘‘in the
case of individuals so’’.
(2)(A) Section 1814(a) (42 U.S.C. 1395f(a)) is amended in the
sixth sentence by striking ‘‘leave home,’’ and inserting ‘‘leave home
and’’.
(B) Section 1835(a) (42 U.S.C. 1395n(a)) is amended in the
seventh sentence by striking ‘‘leave home,’’ and inserting ‘‘leave
home and’’.
(3) Section 1891(d)(1) (42 U.S.C. 1395bbb(d)(1)) is amended
by striking ‘‘subsection (c)(2)(C)(I)’’ and inserting ‘‘subsection
(c)(2)(C)(i)(I)’’.
(4) Section 1861(v) (42 U.S.C. 1395x(v)) is amended by moving
paragraph (8) (including clauses (i) through (v) of such paragraph)
2 ems to the left.
(5) Section 1866B(b)(7)(D) (42 U.S.C. 1395cc–2(b)(7)(D)) is
amended by striking ‘‘(c)(2)(A)(ii)’’ and inserting ‘‘(c)(2)(B)’’.
(6) 
Section 
1886(h)(3)(D)(ii)(III) 
(42 
U.S.C.
1395ww(h)(3)(D)(ii)(III)) is amended by striking ‘‘and’’ after the
comma at the end.
(7) Section 1893(a) (42 U.S.C. 1395ddd(a)) is amended by
striking ‘‘Medicare program’’ and inserting ‘‘medicare program’’.
(8) Section 1896(b)(4) (42 U.S.C. 1395ggg(b)(4)) is amended
by striking ‘‘701(f)’’ and inserting ‘‘712(f)’’.
H. R. 1—292
(d) PART
C.—(1) Section 1853 (42 U.S.C. 1395w–23), as
amended by section 607 of BIPA (114 Stat. 2763A–558), is
amended—
(A) in subsection (a)(3)(C)(ii), by striking ‘‘clause (iii)’’ and
inserting ‘‘clause (iv)’’;
(B) in subsection (a)(3)(C), by redesignating the clause (iii)
added by such section 607 as clause (iv); and
(C) in subsection (c)(5), by striking ‘‘(a)(3)(C)(iii)’’ and
inserting ‘‘(a)(3)(C)(iv)’’.
(2) Section 1876 (42 U.S.C. 1395mm) is amended—
(A) in subsection (c)(2)(B), by striking ‘‘signifcant’’ and
inserting ‘‘significant’’; and
(B) in subsection (j)(2), by striking ‘‘this setion’’ and
inserting ‘‘this section’’.
(e) MEDIGAP.—Section 1882 (42 U.S.C. 1395ss) is amended—
(1) in subsection (d)(3)(A)(i)(II), by striking ‘‘plan a medicare
supplemental policy’’ and inserting ‘‘plan, a medicare supple-
mental policy’’;
(2) in subsection (d)(3)(B)(iii)(II), by striking ‘‘to the best
of the issuer or seller’s knowledge’’ and inserting ‘‘to the best
of the issuer’s or seller’s knowledge’’;
(3) in subsection (g)(2)(A), by striking ‘‘medicare supple-
ment policies’’ and inserting ‘‘medicare supplemental policies’’;
(4) in subsection (p)(2)(B), by striking ‘‘, and’’ and inserting
‘‘; and’’; and
(5) in subsection (s)(3)(A)(iii), by striking ‘‘pre-existing’’ and
inserting ‘‘preexisting’’.
TITLE VIII—COST CONTAINMENT
Subtitle A—Cost Containment
SEC. 801. INCLUSION IN ANNUAL REPORT OF MEDICARE TRUSTEES
OF INFORMATION ON STATUS OF MEDICARE TRUST
FUNDS.
(a) DETERMINATIONS OF EXCESS GENERAL REVENUE MEDICARE
FUNDING.—
(1) IN GENERAL.—The Board of Trustees of each medicare
trust fund shall include in the annual reports submitted under
subsection (b)(2) of sections 1817 and 1841 of the Social Security
Act (42 U.S.C. 1395i and 1395t)—
(A) the information described in subsection (b); and
(B) a determination as to whether there is projected
to be excess general revenue medicare funding (as defined
in subsection (c)) for the fiscal year in which the report
is submitted or for any of the succeeding 6 fiscal years.
(2) MEDICARE FUNDING WARNING.—For purposes of section
1105(h) of title 31, United States Code, and this subtitle, an
affirmative determination under paragraph (1)(B) in 2 consecu-
tive annual reports shall be treated as a medicare funding
warning in the year in which the second such report is made.
(3) 7-FISCAL-YEAR REPORTING PERIOD.—For purposes of this
subtitle, the term ‘‘7-fiscal-year reporting period’’ means, with
respect to a year in which an annual report described in para-
graph (1) is made, the period of 7 consecutive fiscal years
beginning with the fiscal year in which the report is submitted.
H. R. 1—293
(b) INFORMATION.—The information described in this subsection
for an annual report in a year is as follows:
(1) PROJECTIONS
OF
GROWTH
OF
GENERAL
REVENUE
SPENDING.—A statement of the general revenue medicare
funding as a percentage of the total medicare outlays for each
of the following:
(A) Each fiscal year within the 7-fiscal-year reporting
period.
(B) Previous fiscal years and as of 10, 50, and 75
years after such year.
(2) COMPARISON WITH OTHER GROWTH TRENDS.—A compari-
son of the trend of such percentages with the annual growth
rate in the following:
(A) The gross domestic product.
(B) Private health costs.
(C) National health expenditures.
(D) Other appropriate measures.
(3) PART D SPENDING.—Expenditures, including trends in
expenditures, under part D of title XVIII of the Social Security
Act, as added by section 101.
(4) COMBINED MEDICARE TRUST FUND ANALYSIS.—A finan-
cial analysis of the combined medicare trust funds if general
revenue medicare funding were limited to the percentage speci-
fied in subsection (c)(1)(B) of total medicare outlays.
(c) DEFINITIONS.—For purposes of this section:
(1) EXCESS GENERAL REVENUE MEDICARE FUNDING.—The
term ‘‘excess general revenue medicare funding’’ means, with
respect to a fiscal year, that—
(A) general revenue medicare funding (as defined in
paragraph (2)), expressed as a percentage of total medicare
outlays (as defined in paragraph (4)) for the fiscal year;
exceeds
(B) 45 percent.
(2) GENERAL REVENUE MEDICARE FUNDING.—The term ‘‘gen-
eral revenue medicare funding’’ means for a year—
(A) the total medicare outlays (as defined in paragraph
(4)) for the year; minus
(B) the dedicated medicare financing sources (as
defined in paragraph (3)) for the year.
(3) DEDICATED MEDICARE FINANCING SOURCES.—The term
‘‘dedicated medicare financing sources’’ means the following:
(A) HOSPITAL INSURANCE TAX.—Amounts appropriated
to the Hospital Insurance Trust Fund under the third
sentence of section 1817(a) of the Social Security Act (42
U.S.C. 1395i(a)) and amounts transferred to such Trust
Fund under section 7(c)(2) of the Railroad Retirement Act
of 1974 (45 U.S.C. 231f(c)(2)).
(B) TAXATION OF CERTAIN OASDI BENEFITS.—Amounts
appropriated to the Hospital Insurance Trust Fund under
section 121(e)(1)(B) of the Social Security Amendments of
1983 (Public Law 98–21), as inserted by section 13215(c)
of the Omnibus Budget Reconciliation Act of 1993 (Public
Law 103–66).
(C) STATE TRANSFERS.—The State share of amounts
paid to the Federal Government by a State under section
1843 of the Social Security Act (42 U.S.C. 1395v) or pursu-
ant to section 1935(c) of such Act.
H. R. 1—294
(D) PREMIUMS.—The following premiums:
(i) PART A.—Premiums paid by non-Federal sources
under sections 1818 and section 1818A (42 U.S.C.
1395i–2 and 1395i–2a) of such Act.
(ii) PART
B.—Premiums paid by non-Federal
sources under section 1839 of such Act (42 U.S.C.
1395r), including any adjustments in premiums under
such section.
(iii) PART D.—Monthly beneficiary premiums paid
under part D of title XVIII of such Act, as added
by section 101, and MA monthly prescription drug
beneficiary premiums paid under part C of such title
insofar as they are attributable to basic prescription
drug coverage.
Premiums under clauses (ii) and (iii) shall be determined with-
out regard to any reduction in such premiums attributable
to a beneficiary rebate under section 1854(b)(1)(C) of such title,
as amended by section 222(b)(1), and premiums under clause
(iii) are deemed to include any amounts paid under section
1860D–13(b) of such title, as added by section 101.
(E) GIFTS.—Amounts received by the medicare trust
funds under section 201(i) of the Social Security Act (42
U.S.C. 401(i)).
(4) TOTAL MEDICARE OUTLAYS.—The term ‘‘total medicare
outlays’’ means total outlays from the medicare trust funds
and shall—
(A) include payments made to plans under part C
of title XVIII of the Social Security Act that are attributable
to any rebates under section 1854(b)(1)(C) of such Act
(42 U.S.C. 1395w–24(b)(1)(C)), as amended by section
222(b)(1);
(B) include administrative expenditures made in car-
rying out title XVIII of such Act and Federal outlays under
section 1935(b) of such Act, as added by section 103(a)(2);
and
(C) offset outlays by the amount of fraud and abuse
collections insofar as they are applied or deposited into
a medicare trust fund.
(5) MEDICARE
TRUST
FUND.—The term ‘‘medicare trust
fund’’ means—
(A) the Federal Hospital Insurance Trust Fund estab-
lished under section 1817 of the Social Security Act (42
U.S.C. 1395i); and
(B) the Federal Supplementary Medical Insurance
Trust Fund established under section 1841 of such Act
(42 U.S.C. 1395t), including the Medicare Prescription Drug
Account under such Trust Fund.
(d) CONFORMING AMENDMENTS.—
(1) FEDERAL HOSPITAL INSURANCE TRUST FUND.—Section
1817(b)(2) (42 U.S.C. 1395i(b)(2)) is amended by adding at
the end the following: ‘‘Each report provided under paragraph
(2) beginning with the report in 2005 shall include the informa-
tion specified in section 801(a) of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003.’’.
(2) FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST
FUND.—Section 1841(b)(2) (42 U.S.C. 1395t(b)(2)) is amended
by adding at the end the following: ‘‘Each report provided
H. R. 1—295
under paragraph (2) beginning with the report in 2005 shall
include the information specified in section 801(a) of the Medi-
care Prescription Drug, Improvement, and Modernization Act
of 2003.’’.
(e) NOTICE OF MEDICARE FUNDING WARNING.—Whenever any
report described in subsection (a) contains a determination that
for any fiscal year within the 7-fiscal-year reporting period there
will be excess general revenue medicare funding, Congress and
the President should address the matter under existing rules and
procedures.
SEC. 802. PRESIDENTIAL SUBMISSION OF LEGISLATION.
(a) IN GENERAL.—Section 1105 of title 31, United States Code,
is amended by adding at the end the following new subsection:
‘‘(h)(1) If there is a medicare funding warning under section
801(a)(2) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 made in a year, the President shall
submit to Congress, within the 15-day period beginning on the
date of the budget submission to Congress under subsection (a)
for the succeeding year, proposed legislation to respond to such
warning.
‘‘(2) Paragraph (1) does not apply if, during the year in which
the warning is made, legislation is enacted which eliminates excess
general revenue medicare funding (as defined in section 801(c)
of the Medicare Prescription Drug, Improvement, and Moderniza-
tion Act of 2003) for the 7-fiscal-year reporting period, as certified
by the Board of Trustees of each medicare trust fund (as defined
in section 801(c)(5) of such Act) not later than 30 days after the
date of the enactment of such legislation.’’.
(b) SENSE
OF CONGRESS.—It is the sense of Congress that
legislation submitted pursuant to section 1105(h) of title 31, United
States Code, in a year should be designed to eliminate excess
general revenue medicare funding (as defined in section 801(c))
for the 7-fiscal-year period that begins in such year.
SEC. 803. PROCEDURES IN THE HOUSE OF REPRESENTATIVES.
(a) INTRODUCTION AND REFERRAL OF PRESIDENT’S LEGISLATIVE
PROPOSAL.—
(1) INTRODUCTION.—In the case of a legislative proposal
submitted by the President pursuant to section 1105(h) of title
31, United States Code, within the 15-day period specified
in paragraph (1) of such section, the Majority Leader of the
House of Representatives (or his designee) and the Minority
Leader of the House of Representatives (or his designee) shall
introduce such proposal (by request), the title of which is as
follows: ‘‘A bill to respond to a medicare funding warning.’’
Such bill shall be introduced within 3 legislative days after
Congress receives such proposal.
(2) REFERRAL.—Any legislation introduced pursuant to
paragraph (1) shall be referred to the appropriate committees
of the House of Representatives.
(b) DIRECTION TO THE APPROPRIATE HOUSE COMMITTEES.—
(1) IN GENERAL.—In the House, in any year during which
the President is required to submit proposed legislation to
Congress under section 1105(h) of title 31, United States Code,
the appropriate committees shall report medicare funding legis-
lation by not later than June 30 of such year.
H. R. 1—296
(2) MEDICARE FUNDING LEGISLATION.—For purposes of this
section, the term ‘‘medicare funding legislation’’ means—
(A) legislation introduced pursuant to subsection (a)(1),
but only if the legislative proposal upon which the legisla-
tion is based was submitted within the 15-day period
referred to in such subsection; or
(B) any bill the title of which is as follows: ‘‘A bill
to respond to a medicare funding warning.’’.
(3) CERTIFICATION.—With respect to any medicare funding
legislation or any amendment to such legislation to respond
to a medicare funding warning, the chairman of the Committee
on the Budget of the House shall certify—
(A) whether or not such legislation eliminates excess
general revenue medicare funding (as defined in section
801(c)) for each fiscal year in the 7-fiscal-year reporting
period; and
(B) with respect to such an amendment, whether the
legislation, as amended, would eliminate excess general
revenue medicare funding (as defined in section 801(c))
for each fiscal year in such 7-fiscal-year reporting period.
(c) FALLBACK PROCEDURE FOR FLOOR CONSIDERATION IF THE
HOUSE FAILS TO VOTE ON FINAL PASSAGE BY JULY 30.—
(1) After July 30 of any year during which the President
is required to submit proposed legislation to Congress under
section 1105(h) of title 31, United States Code, unless the
House of Representatives has voted on final passage of any
medicare funding legislation for which there is an affirmative
certification under subsection (b)(3)(A), then, after the expira-
tion of not less than 30 calendar days (and concurrently 5
legislative days), it is in order to move to discharge any com-
mittee to which medicare funding legislation which has such
a certification and which has been referred to such committee
for 30 calendar days from further consideration of the legisla-
tion.
(2) A motion to discharge may be made only by an indi-
vidual favoring the legislation, may be made only if supported
by one-fifth of the total membership of the House (a quorum
being present), and is highly privileged in the House. Debate
thereon shall be limited to not more than one hour, the time
to be divided in the House equally between those favoring
and those opposing the motion. An amendment to the motion
is not in order, and it is not in order to move to reconsider
the vote by which the motion is agreed to or disagreed to.
(3) Only one motion to discharge a particular committee
may be adopted under this subsection in any session of a
Congress.
(4) Notwithstanding paragraph (1), it shall not be in order
to move to discharge a committee from further consideration
of medicare funding legislation pursuant to this subsection
during a session of a Congress if, during the previous session
of the Congress, the House passed medicare funding legislation
for which there is an affirmative certification under subsection
(b)(3)(A).
(d) FLOOR CONSIDERATION IN THE HOUSE OF DISCHARGED LEGIS-
LATION.—
(1) In the House, not later than 3 legislative days after
any committee has been discharged from further consideration
H. R. 1—297
of legislation under subsection (c), the Speaker shall resolve
the House into the Committee of the Whole for consideration
of the legislation.
(2) The first reading of the legislation shall be dispensed
with. All points of order against consideration of the legislation
are waived. General debate shall be confined to the legislation
and shall not exceed five hours, which shall be divided equally
between those favoring and those opposing the legislation. After
general debate the legislation shall be considered for amend-
ment under the five-minute rule. During consideration of the
legislation, no amendments shall be in order in the House
or in the Committee of the Whole except those for which there
has been an affirmative certification under subsection (b)(3)(B).
All points of order against consideration of any such amendment
in the Committee of the Whole are waived. The legislation,
together with any amendments which shall be in order, shall
be considered as read. During the consideration of the bill
for amendment, the Chairman of the Committee of the Whole
may accord priority in recognition on the basis of whether
the Member offering an amendment has caused it to be printed
in the portion of the Congressional Record designated for that
purpose in clause 8 of Rule XVIII of the Rules of the House
of Representatives. Debate on any amendment shall not exceed
one hour, which shall be divided equally between those favoring
and those opposing the amendment, and no pro forma amend-
ments shall be offered during the debate. The total time for
debate on all amendments shall not exceed 10 hours. At the
conclusion of consideration of the legislation for amendment,
the Committee shall rise and report the legislation to the
House with such amendments as may have been adopted. The
previous question shall be considered as ordered on the legisla-
tion and amendments thereto to final passage without inter-
vening motion except one motion to recommit with or without
instructions. If the Committee of the Whole rises and reports
that it has come to no resolution on the bill, then on the
next legislative day the House shall, immediately after the
third daily order of business under clause 1 of Rule XIV of
the Rules of the House of Representatives, resolve into the
Committee of the Whole for further consideration of the bill.
(3) All appeals from the decisions of the Chair relating
to the application of the Rules of the House of Representatives
to the procedure relating to any such legislation shall be decided
without debate.
(4) Except to the extent specifically provided in the pre-
ceding provisions of this subsection, consideration of any such
legislation and amendments thereto (or any conference report
thereon) shall be governed by the Rules of the House of Rep-
resentatives applicable to other bills and resolutions, amend-
ments, and conference reports in similar circumstances.
(e) LEGISLATIVE DAY DEFINED.—As used in this section, the
term ‘‘legislative day’’ means a day on which the House of Rep-
resentatives is in session.
(f) RESTRICTION ON WAIVER.—In the House, the provisions of
this section may be waived only by a rule or order proposing
only to waive such provisions.
(g) RULEMAKING POWER.—The provisions of this section are
enacted by the Congress—
H. R. 1—298
(1) as an exercise of the rulemaking power of the House
of Representatives and, as such, shall be considered as part
of the rules of that House and shall supersede other rules
only to the extent that they are inconsistent therewith; and
(2) with full recognition of the constitutional right of that
House to change the rules (so far as they relate to the proce-
dures of that House) at any time, in the same manner, and
to the same extent as in the case of any other rule of that
House.
SEC. 804. PROCEDURES IN THE SENATE.
(a) INTRODUCTION AND REFERRAL OF PRESIDENT’S LEGISLATIVE
PROPOSAL.—
(1) INTRODUCTION.—In the case of a legislative proposal
submitted by the President pursuant to section 1105(h) of title
31, United States Code, within the 15-day period specified
in paragraph (1) of such section, the Majority Leader and
Minority Leader of the Senate (or their designees) shall intro-
duce such proposal (by request), the title of which is as follows:
‘‘A bill to respond to a medicare funding warning.’’ Such bill
shall be introduced within 3 days of session after Congress
receives such proposal.
(2) REFERRAL.—Any legislation introduced pursuant to
paragraph (1) shall be referred to the Committee on Finance.
(b) MEDICARE FUNDING LEGISLATION.—For purposes of this sec-
tion, the term ‘‘medicare funding legislation’’ means—
(1) legislation introduced pursuant to subsection (a)(1), but
only if the legislative proposal upon which the legislation is
based was submitted within the 15-day period referred to in
such subsection; or
(2) any bill the title of which is as follows: ‘‘A bill to
respond to a medicare funding warning.’’.
(c) QUALIFICATION FOR SPECIAL PROCEDURES.—
(1) IN GENERAL.—The special procedures set forth in sub-
sections (d) and (e) shall apply to medicare funding legislation,
as described in subsection (b), only if the legislation—
(A) is medicare funding legislation that is passed by
the House of Representatives; or
(B) contains matter within the jurisdiction of the Com-
mittee on Finance in the Senate.
(2) FAILURE TO QUALIFY FOR SPECIAL PROCEDURES.—If the
medicare funding legislation does not satisfy paragraph (1),
then the legislation shall be considered under the ordinary
procedures of the Standing Rules of the Senate.
(d) DISCHARGE.—
(1) IN GENERAL.—If the Committee on Finance has not
reported medicare funding legislation described in subsection
(c)(1) by June 30 of a year in which the President is required
to submit medicare funding legislation to Congress under sec-
tion 1105(h) of title 31, United States Code, then any Senator
may move to discharge the Committee of any single medicare
funding legislation measure. Only one such motion shall be
in order in any session of Congress.
(2) DEBATE LIMITS.—Debate in the Senate on any such
motion to discharge, and all appeals in connection therewith,
shall be limited to not more than 2 hours. The time shall
be equally divided between, and controlled by, the maker of
H. R. 1—299
the motion and the Majority Leader, or their designees, except
that in the event the Majority Leader is in favor of such
motion, the time in opposition thereto shall be controlled by
the Minority Leader or the Minority Leader’s designee. A point
of order under this subsection may be made at any time.
It is not in order to move to proceed to another measure
or matter while such motion (or the motion to reconsider such
motion) is pending.
(3) AMENDMENTS.—No amendment to the motion to dis-
charge shall be in order.
(4) EXCEPTION IF CERTIFIED LEGISLATION ENACTED.—Not-
withstanding paragraph (1), it shall not be in order to discharge
the Committee from further consideration of medicare funding
legislation pursuant to this subsection during a session of a
Congress if the chairman of the Committee on the Budget
of the Senate certifies that medicare funding legislation has
been enacted that eliminates excess general revenue medicare
funding (as defined in section 801(c)) for each fiscal year in
the 7-fiscal-year reporting period.
(e) CONSIDERATION.—After the date on which the Committee
on Finance has reported medicare funding legislation described
in subsection (c)(1), or has been discharged (under subsection (d))
from further consideration of, such legislation, it is in order (even
though a previous motion to the same effect has been disagreed
to) for any Member of the Senate to move to proceed to the consider-
ation of such legislation.
(f) RULES
OF
THE SENATE.—This section is enacted by the
Senate—
(1) as an exercise of the rulemaking power of the Senate
and as such it is deemed a part of the rules of the Senate,
but applicable only with respect to the procedure to be followed
in the Senate in the case of a bill described in this paragraph,
and it supersedes other rules only to the extent that it is
inconsistent with such rules; and
(2) with full recognition of the constitutional right of the
Senate to change the rules (so far as relating to the procedure
of the Senate) at any time, in the same manner, and to the
same extent as in the case of any other rule of the Senate.
Subtitle B—Income-Related Reduction in
Part B Premium Subsidy
SEC. 811. INCOME-RELATED REDUCTION IN PART B PREMIUM SUB-
SIDY.
(a) IN GENERAL.—Section 1839 (42 U.S.C. 1395r), as amended
by section 241(c), is amended by adding at the end the following:
‘‘(i) REDUCTION IN PREMIUM SUBSIDY BASED ON INCOME.—
‘‘(1) IN GENERAL.—In the case of an individual whose modi-
fied adjusted gross income exceeds the threshold amount under
paragraph (2), the monthly amount of the premium subsidy
applicable to the premium under this section for a month
after December 2006 shall be reduced (and the monthly pre-
mium shall be increased) by the monthly adjustment amount
specified in paragraph (3).
‘‘(2) THRESHOLD AMOUNT.—For purposes of this subsection,
the threshold amount is—
H. R. 1—300
‘‘(A) except as provided in subparagraph (B), $80,000,
and
‘‘(B) in the case of a joint return, twice the amount
applicable under subparagraph (A) for the calendar year.
‘‘(3) MONTHLY ADJUSTMENT AMOUNT.—
‘‘(A) IN GENERAL.—Subject to subparagraph (B), the
monthly adjustment amount specified in this paragraph
for an individual for a month in a year is equal to the
product of the following:
‘‘(i) SLIDING SCALE PERCENTAGE.—The applicable
percentage specified in the table in subparagraph (C)
for the individual minus 25 percentage points.
‘‘(ii) UNSUBSIDIZED PART B PREMIUM AMOUNT.—200
percent of the monthly actuarial rate for enrollees age
65 and over (as determined under subsection (a)(1)
for the year).
‘‘(B) 5-YEAR
PHASE
IN.—The monthly adjustment
amount specified in this paragraph for an individual for
a month in a year before 2011 is equal to the following
percentage of the monthly adjustment amount specified
in subparagraph (A):
‘‘(i) For 2007, 20 percent.
‘‘(ii) For 2008, 40 percent.
‘‘(iii) For 2009, 60 percent.
‘‘(iv) for 2010, 80 percent.
‘‘(C) APPLICABLE PERCENTAGE.—
‘‘(i) IN GENERAL.—
‘‘If the modified adjusted gross income is:
The
applicable
percentage is:
More than $80,000 but not more than $100,000 ...........................
35 percent
More than $100,000 but not more than $150,000 .........................
50 percent
More than $150,000 but not more than $200,000 .........................
65 percent
More than $200,000 .........................................................................
80 percent.
‘‘(ii) JOINT RETURNS.—In the case of a joint return,
clause (i) shall be applied by substituting dollar
amounts which are twice the dollar amounts otherwise
applicable under clause (i) for the calendar year.
‘‘(iii) 
MARRIED
INDIVIDUALS
FILING
SEPARATE
RETURNS.—In the case of an individual who—
‘‘(I) is married as of the close of the taxable
year (within the meaning of section 7703 of the
Internal Revenue Code of 1986) but does not file
a joint return for such year, and
‘‘(II) does not live apart from such individual’s
spouse at all times during the taxable year,
clause (i) shall be applied by reducing each of the
dollar amounts otherwise applicable under such clause
for the calendar year by the threshold amount for
such year applicable to an unmarried individual.
‘‘(4) MODIFIED ADJUSTED GROSS INCOME.—
‘‘(A) IN GENERAL.—For purposes of this subsection, the
term ‘modified adjusted gross income’ means adjusted gross
income (as defined in section 62 of the Internal Revenue
Code of 1986)—
‘‘(i) determined without regard to sections 135,
911, 931, and 933 of such Code; and
H. R. 1—301
‘‘(ii) increased by the amount of interest received
or accrued during the taxable year which is exempt
from tax under such Code.
In the case of an individual filing a joint return, any
reference in this subsection to the modified adjusted gross
income of such individual shall be to such return’s modified
adjusted gross income.
‘‘(B) TAXABLE YEAR TO BE USED IN DETERMINING MODI-
FIED ADJUSTED GROSS INCOME.—
‘‘(i) IN GENERAL.—In applying this subsection for
an individual’s premiums in a month in a year, subject
to clause (ii) and subparagraph (C), the individual’s
modified adjusted gross income shall be such income
determined for the individual’s last taxable year begin-
ning in the second calendar year preceding the year
involved.
‘‘(ii) TEMPORARY USE OF OTHER DATA.—If, as of
October 15 before a calendar year, the Secretary of
the Treasury does not have adequate data for an indi-
vidual in appropriate electronic form for the taxable
year referred to in clause (i), the individual’s modified
adjusted gross income shall be determined using the
data in such form from the previous taxable year.
Except as provided in regulations prescribed by the
Commissioner of Social Security in consultation with
the Secretary, the preceding sentence shall cease to
apply when adequate data in appropriate electronic
form are available for the individual for the taxable
year referred to in clause (i), and proper adjustments
shall be made to the extent that the premium adjust-
ments determined under the preceding sentence were
inconsistent with those determined using such taxable
year.
‘‘(iii) NON-FILERS.—In the case of individuals with
respect to whom the Secretary of the Treasury does
not have adequate data in appropriate electronic form
for either taxable year referred to in clause (i) or clause
(ii), the Commissioner of Social Security, in consulta-
tion with the Secretary, shall prescribe regulations
which provide for the treatment of the premium adjust-
ment with respect to such individual under this sub-
section, including regulations which provide for—
‘‘(I) the application of the highest applicable
percentage under paragraph (3)(C) to such indi-
vidual if the Commissioner has information which
indicates that such individual’s modified adjusted
gross income might exceed the threshold amount
for the taxable year referred to in clause (i), and
‘‘(II) proper adjustments in the case of the
application of an applicable percentage under sub-
clause (I) to such individual which is inconsistent
with such individual’s modified adjusted gross
income for such taxable year.
‘‘(C) USE OF MORE RECENT TAXABLE YEAR.—
‘‘(i) IN
GENERAL.—The Commissioner of Social
Security in consultation with the Secretary of the
Treasury shall establish a procedures under which an
H. R. 1—302
individual’s modified adjusted gross income shall, at
the request of such individual, be determined under
this subsection—
‘‘(I) for a more recent taxable year than the
taxable year otherwise used under subparagraph
(B), or
‘‘(II) by such methodology as the Commis-
sioner, in consultation with such Secretary, deter-
mines to be appropriate, which may include a
methodology for aggregating or disaggregating
information from tax returns in the case of mar-
riage or divorce.
‘‘(ii) 
STANDARD
FOR
GRANTING
REQUESTS.—A
request under clause (i)(I) to use a more recent taxable
year may be granted only if—
‘‘(I) the individual furnishes to such Commis-
sioner with respect to such year such documenta-
tion, such as a copy of a filed Federal income
tax return or an equivalent document, as the
Commissioner specifies for purposes of deter-
mining the premium adjustment (if any) under
this subsection; and
‘‘(II) the individual’s modified adjusted gross
income for such year is significantly less than such
income for the taxable year determined under
subparagraph (B) by reason of the death of such
individual’s spouse, the marriage or divorce of such
individual, or other major life changing events
specified in regulations prescribed by the Commis-
sioner in consultation with the Secretary.
‘‘(5) INFLATION ADJUSTMENT.—
‘‘(A) IN GENERAL.—In the case of any calendar year
beginning after 2007, each dollar amount in paragraph
(2) or (3) shall be increased by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the percentage (if any) by which the average
of the Consumer Price Index for all urban consumers
(United States city average) for the 12-month period
ending with August of the preceding calendar year
exceeds such average for the 12-month period ending
with August 2006.
‘‘(B) ROUNDING.—If any dollar amount after being
increased under subparagraph (A) is not a multiple of
$1,000, such dollar amount shall be rounded to the nearest
multiple of $1,000.
‘‘(6) JOINT
RETURN
DEFINED.—For purposes of this sub-
section, the term ‘joint return’ has the meaning given to such
term by section 7701(a)(38) of the Internal Revenue Code of
1986.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1839 (42 U.S.C. 1395r) is amended—
(A) in subsection (a)(2), by striking ‘‘and (f)’’ and
inserting ‘‘(f), and (i)’’;
(B) in subsection (b), inserting ‘‘(without regard to any
adjustment under subsection (i))’’ after ‘‘subsection (a)’’;
and
(C) in subsection (f)—
H. R. 1—303
(i) by striking ‘‘and if’’ and inserting ‘‘if’’; and
(ii) by inserting ‘‘and if the amount of the individ-
ual’s premium is not adjusted for such January under
subsection (i),’’ after ‘‘section 1840(b)(1),’’.
(2) Section 1844 (42 U.S.C. 1395w) is amended—
(A) in subsection (a)(1)—
(i) in subparagraph (B), by striking ‘‘plus’’ at the
end and inserting ‘‘minus’’; and
(ii) by adding at the end the following new
subparagraph:
‘‘(C) the aggregate amount of additional premium payments
attributable to the application of section 1839(i); plus’’; and
(B) in subsection (c), by inserting before the period
at the end the following: ‘‘and without regard to any pre-
mium adjustment under section 1839(i)’’.
(c) 
REPORTING
REQUIREMENTS
FOR
SECRETARY
OF
THE
TREASURY.—
(1) IN
GENERAL.—Subsection (l) of section 6103 of the
Internal Revenue Code of 1986 (relating to disclosure of returns
and return information for purposes other than tax administra-
tion), as amended by section 105(e), is amended by adding
at the end the following new paragraph:
‘‘(20) DISCLOSURE OF RETURN INFORMATION TO CARRY OUT
MEDICARE PART B PREMIUM SUBSIDY ADJUSTMENT.—
‘‘(A) IN GENERAL.—The Secretary shall, upon written
request from the Commissioner of Social Security, disclose
to officers, employees, and contractors of the Social Security
Administration return information of a taxpayer whose
premium (according to the records of the Secretary) may
be subject to adjustment under section 1839(i) of the Social
Security Act. Such return information shall be limited to—
‘‘(i) taxpayer identity information with respect to
such taxpayer,
‘‘(ii) the filing status of such taxpayer,
‘‘(iii) the adjusted gross income of such taxpayer,
‘‘(iv) the amounts excluded from such taxpayer’s
gross income under sections 135 and 911 to the extent
such information is available,
‘‘(v) the interest received or accrued during the
taxable year which is exempt from the tax imposed
by chapter 1 to the extent such information is available,
‘‘(vi) the amounts excluded from such taxpayer’s
gross income by sections 931 and 933 to the extent
such information is available,
‘‘(vii) such other information relating to the
liability of the taxpayer as is prescribed by the Sec-
retary by regulation as might indicate in the case
of a taxpayer who is an individual described in sub-
section (i)(4)(B)(iii) of section 1839 of the Social Secu-
rity Act that the amount of the premium of the tax-
payer under such section may be subject to adjustment
under subsection (i) of such section and the amount
of such adjustment, and
‘‘(viii) the taxable year with respect to which the
preceding information relates.
‘‘(B) RESTRICTION
ON
USE
OF
DISCLOSED
INFORMA-
TION.—Return information disclosed under subparagraph
H. R. 1—304
(A) may be used by officers, employees, and contractors
of the Social Security Administration only for the purposes
of, and to the extent necessary in, establishing the appro-
priate amount of any premium adjustment under such
section 1839(i).’’
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (3) of section 6103(a) of such Code,
as amended by section 105(e)(1), is amended by striking
‘‘or (19)’’ and inserting ‘‘(19), or (20)’’.
(B) Paragraph (4) of section 6103(p) of such Code,
as amended by section 105(e)(3), is amended by striking
‘‘(l)(16), (17), or (19)’’ each place it appears and inserting
‘‘(l)(16), (17), (19), or (20)’’.
(C) Paragraph (2) of section 7213(a) of such Code,
as amended by section 105(e)(4), is amended by striking
‘‘or (19)’’ and inserting ‘‘(19), or (20)’’.
TITLE IX—ADMINISTRATIVE IMPROVE-
MENTS, 
REGULATORY 
REDUCTION,
AND CONTRACTING REFORM
SEC. 900. ADMINISTRATIVE IMPROVEMENTS WITHIN THE CENTERS
FOR MEDICARE & MEDICAID SERVICES (CMS).
(a) COORDINATED ADMINISTRATION OF MEDICARE PRESCRIPTION
DRUG
AND MEDICARE ADVANTAGE PROGRAMS.—Title XVIII (42
U.S.C. 1395 et seq.), as amended by section 721, is amended by
inserting after 1807 the following new section:
‘‘PROVISIONS RELATING TO ADMINISTRATION
‘‘SEC. 1808. (a) COORDINATED ADMINISTRATION OF MEDICARE
PRESCRIPTION DRUG AND MEDICARE ADVANTAGE PROGRAMS.—
‘‘(1) IN GENERAL.—There is within the Centers for Medicare
& Medicaid Services a center to carry out the duties described
in paragraph (3).
‘‘(2) DIRECTOR.—Such center shall be headed by a director
who shall report directly to the Administrator of the Centers
for Medicare & Medicaid Services.
‘‘(3) DUTIES.—The duties described in this paragraph are
the following:
‘‘(A) The administration of parts C and D.
‘‘(B) The provision of notice and information under
section 1804.
‘‘(C) Such other duties as the Secretary may specify.
‘‘(4) DEADLINE.—The Secretary shall ensure that the center
is carrying out the duties described in paragraph (3) by not
later than January 1, 2008.’’.
(b) MANAGEMENT STAFF FOR THE CENTERS FOR MEDICARE &
MEDICAID SERVICES.—Such section is further amended by adding
at the end the following new subsection:
‘‘(b) EMPLOYMENT OF MANAGEMENT STAFF.—
‘‘(1) IN GENERAL.—The Secretary may employ, within the
Centers for Medicare & Medicaid Services, such individuals
as management staff as the Secretary determines to be appro-
priate. With respect to the administration of parts C and D,
H. R. 1—305
such individuals shall include individuals with private sector
expertise in negotiations with health benefits plans.
‘‘(2) ELIGIBILITY.—To be eligible for employment under
paragraph (1) an individual shall be required to have dem-
onstrated, by their education and experience (either in the
public or private sector), superior expertise in at least one
of the following areas:
‘‘(A) The review, negotiation, and administration of health
care contracts.
‘‘(B) The design of health care benefit plans.
‘‘(C) Actuarial sciences.
‘‘(D) Compliance with health plan contracts.
‘‘(E) Consumer education and decision making.
‘‘(F) Any other area specified by the Secretary that requires
specialized management or other expertise.
‘‘(3) RATES OF PAYMENT.—
‘‘(A) PERFORMANCE-RELATED PAY.—Subject to subpara-
graph (B), the Secretary shall establish the rate of pay
for an individual employed under paragraph (1). Such rate
shall take into account expertise, experience, and perform-
ance.
‘‘(B) LIMITATION.—In no case may the rate of compensa-
tion determined under subparagraph (A) exceed the highest
rate of basic pay for the Senior Executive Service under
section 5382(b) of title 5, United States Code.’’.
(c) REQUIREMENT
FOR
DEDICATED
ACTUARY
FOR
PRIVATE
HEALTH PLANS.—Section 1117(b) (42 U.S.C. 1317(b)) is amended
by adding at the end the following new paragraph:
‘‘(3) In the office of the Chief Actuary there shall be an actuary
whose duties relate exclusively to the programs under parts C
and D of title XVIII and related provisions of such title.’’.
(d) INCREASE
IN GRADE
TO EXECUTIVE LEVEL III FOR
THE
ADMINISTRATOR OF THE CENTERS FOR MEDICARE & MEDICAID SERV-
ICES.—
(1) IN GENERAL.—Section 5314 of title 5, United States
Code, is amended by adding at the end the following:
‘‘Administrator of the Centers for Medicare & Medicaid
Services.’’.
(2) CONFORMING AMENDMENT.—Section 5315 of such title
is amended by striking ‘‘Administrator of the Health Care
Financing Administration.’’.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section take effect on January 1, 2004.
(e) CONFORMING AMENDMENTS RELATING
TO HEALTH CARE
FINANCING ADMINISTRATION.—
(1) AMENDMENTS TO THE SOCIAL SECURITY ACT.—The Social
Security Act is amended—
(A) in section 1117 (42 U.S.C. 1317)—
(i) in the heading to read as follows:
‘‘APPOINTMENT OF THE ADMINISTRATOR AND CHIEF ACTUARY OF THE
CENTERS FOR MEDICARE & MEDICAID SERVICES’’;
(ii) in subsection (a), by striking ‘‘Health Care
Financing Administration’’ and inserting ‘‘Centers for
Medicare & Medicaid Services’’; and
(iii) in subsection (b)(1)—
H. R. 1—306
(I) 
by 
striking 
‘‘Health 
Care 
Financing
Administration’’ and inserting ‘‘Centers for Medi-
care & Medicaid Services’’; and
(II) by striking ‘‘Administration’’ and inserting
‘‘Centers’’;
(B) in section 1140(a) (42 U.S.C. 1320b–10(a))—
(i) in paragraph (1), by striking ‘‘Health Care
Financing Administration’’ both places it appears in
the matter following subparagraph (B) and inserting
‘‘Centers for Medicare & Medicaid Services’’;
(ii) in paragraph (1)(A)—
(I) 
by 
striking 
‘‘Health 
Care 
Financing
Administration’’ and inserting ‘‘Centers for Medi-
care & Medicaid Services’’; and
(II) by striking ‘‘HCFA’’ and inserting ‘‘CMS’’;
and
(iii) in paragraph (1)(B), by striking ‘‘Health Care
Financing Administration’’ both places it appears and
inserting ‘‘Centers for Medicare & Medicaid Services’’;
(C) in section 1142(b)(3) (42 U.S.C. 1320b–12(b)(3)),
by striking ‘‘Health Care Financing Administration’’ and
inserting ‘‘Centers for Medicare & Medicaid Services’’;
(D) in section 1817(b) (42 U.S.C. 1395i(b))—
(i) by striking ‘‘Health Care Financing Administra-
tion’’, both in the fifth sentence of the matter preceding
paragraph (1) and in the second sentence of the matter
following paragraph (4), and inserting ‘‘Centers for
Medicare & Medicaid Services’’; and
(ii) by striking ‘‘Chief Actuarial Officer’’ in the
second sentence of the matter following paragraph (4)
and inserting ‘‘Chief Actuary’’;
(E) in section 1841(b) (42 U.S.C. 1395t(b))—
(i) by striking ‘‘Health Care Financing Administra-
tion’’, both in the fifth sentence of the matter preceding
paragraph (1) and in the second sentence of the matter
following paragraph (4), and inserting ‘‘Centers for
Medicare & Medicaid Services’’; and
(ii) by striking ‘‘Chief Actuarial Officer’’ in the
second sentence of the matter following paragraph (4)
and inserting ‘‘Chief Actuary’’;
(F) in section 1852(a)(5) (42 U.S.C. 1395w–22(a)(5)),
by striking ‘‘Health Care Financing Administration’’ in the
matter following subparagraph (B) and inserting ‘‘Centers
for Medicare & Medicaid Services’’;
(G) in section 1853 (42 U.S.C. 1395w–23)—
(i) in subsection (b)(4), by striking ‘‘Health Care
Financing Administration’’ in the first sentence and
inserting ‘‘Centers for Medicare & Medicaid Services’’;
and
(ii) in subsection (c)(7), by striking ‘‘Health Care
Financing Administration’’ in the last sentence and
inserting ‘‘Centers for Medicare & Medicaid Services’’;
(H) in section 1854(a)(5)(A) (42 U.S.C. 1395w–
24(a)(5)(A)), 
by 
striking 
‘‘Health 
Care 
Financing
Administration’’and inserting ‘‘Centers for Medicare &
Medicaid Services’’;
H. R. 1—309
Care Financing Administration’’ and inserting ‘‘Centers for
Medicare & Medicaid Services’’.
(E) THE
CHILDREN’S
HEALTH
ACT
OF
2000.—Section
2503(a) of the Children’s Health Act of 2000 (42 U.S.C.
247b–3a(a)) is amended by striking ‘‘Health Care Financing
Administration’’ and inserting ‘‘Centers for Medicare &
Medicaid Services’’.
(F) THE NATIONAL INSTITUTES OF HEALTH REVITALIZA-
TION ACT OF 1993.—Section 1909 of the National Institutes
of Health Revitalization Act of 1993 (42 U.S.C. 299a note)
is amended by striking ‘‘Health Care Financing Administra-
tion’’ and inserting ‘‘Centers for Medicare & Medicaid Serv-
ices’’.
(G) THE
OMNIBUS
BUDGET
RECONCILIATION
ACT
OF
1990.—Section 4359(d) of the Omnibus Budget Reconcili-
ation Act of 1990 (42 U.S.C. 1395b–3(d)) is amended by
striking ‘‘Health Care Financing Administration’’ and
inserting ‘‘Centers for Medicare & Medicaid Services’’.
(H) THE
MEDICARE, MEDICAID, AND
SCHIP
BENEFITS
IMPROVEMENT
AND
PROTECTION
ACT
OF
2000.—Section
104(d)(4) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (42 U.S.C. 1395m
note) is amended by striking ‘‘Health Care Financing
Administration’’ and inserting ‘‘Health Care’’.
(7) ADDITIONAL AMENDMENT.—Section 403 of the Act enti-
tled, ‘‘An Act to authorize certain appropriations for the terri-
tories of the United States, to amend certain Acts relating
thereto, and for other purposes’’, enacted October 15, 1977
(48 U.S.C. 1574–1; 48 U.S.C. 1421q–1), is amended by striking
‘‘Health Care Financing Administration’’ and inserting ‘‘Centers
for Medicare & Medicaid Services’’.
Subtitle A—Regulatory Reform
SEC. 901. CONSTRUCTION; DEFINITION OF SUPPLIER.
(a) CONSTRUCTION.—Nothing in this title shall be construed—
(1) to compromise or affect existing legal remedies for
addressing fraud or abuse, whether it be criminal prosecution,
civil enforcement, or administrative remedies, including under
sections 3729 through 3733 of title 31, United States Code
(commonly known as the ‘‘False Claims Act’’); or
(2) to prevent or impede the Department of Health and
Human Services in any way from its ongoing efforts to eliminate
waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative con-
tracting set forth in this division does not constitute consolidation
of the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund or reflect any posi-
tion on that issue.
(b) DEFINITION OF SUPPLIER.—Section 1861 (42 U.S.C. 1395x)
is amended by inserting after subsection (c) the following new
subsection:
H. R. 1—310
‘‘Supplier
‘‘(d) The term ‘supplier’ means, unless the context otherwise
requires, a physician or other practitioner, a facility, or other entity
(other than a provider of services) that furnishes items or services
under this title.’’.
SEC. 902. ISSUANCE OF REGULATIONS.
(a) REGULAR TIMELINE FOR PUBLICATION OF FINAL RULES.—
(1) IN
GENERAL.—Section 1871(a) (42 U.S.C. 1395hh(a))
is amended by adding at the end the following new paragraph:
‘‘(3)(A) The Secretary, in consultation with the Director of the
Office of Management and Budget, shall establish and publish
a regular timeline for the publication of final regulations based
on the previous publication of a proposed regulation or an interim
final regulation.
‘‘(B) Such timeline may vary among different regulations based
on differences in the complexity of the regulation, the number
and scope of comments received, and other relevant factors, but
shall not be longer than 3 years except under exceptional cir-
cumstances. If the Secretary intends to vary such timeline with
respect to the publication of a final regulation, the Secretary shall
cause to have published in the Federal Register notice of the dif-
ferent timeline by not later than the timeline previously established
with respect to such regulation. Such notice shall include a brief
explanation of the justification for such variation.
‘‘(C) In the case of interim final regulations, upon the expiration
of the regular timeline established under this paragraph for the
publication of a final regulation after opportunity for public com-
ment, the interim final regulation shall not continue in effect unless
the Secretary publishes (at the end of the regular timeline and,
if applicable, at the end of each succeeding 1-year period) a notice
of continuation of the regulation that includes an explanation of
why the regular timeline (and any subsequent 1-year extension)
was not complied with. If such a notice is published, the regular
timeline (or such timeline as previously extended under this para-
graph) for publication of the final regulation shall be treated as
having been extended for 1 additional year.
‘‘(D) The Secretary shall annually submit to Congress a report
that describes the instances in which the Secretary failed to publish
a final regulation within the applicable regular timeline under
this paragraph and that provides an explanation for such failures.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect on the date of the enactment of this Act.
The Secretary shall provide for an appropriate transition to
take into account the backlog of previously published interim
final regulations.
(b) LIMITATIONS ON NEW MATTER IN FINAL REGULATIONS.—
(1) IN GENERAL.—Section 1871(a) (42 U.S.C. 1395hh(a)),
as amended by subsection (a), is amended by adding at the
end the following new paragraph:
‘‘(4) 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 interim final rule, such provision
shall be treated as a proposed 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.’’.
H. R. 1—311
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to final regulations published on or after the
date of the enactment of this Act.
SEC. 903. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLI-
CIES.
(a) NO RETROACTIVE APPLICATION OF SUBSTANTIVE CHANGES.—
(1) IN
GENERAL.—Section 1871 (42 U.S.C. 1395hh), as
amended by section 902(a), is amended by adding at the end
the following new subsection:
‘‘(e)(1)(A) A substantive change in regulations, manual instruc-
tions, 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 fur-
nished 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(e)(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 sub-
stantive 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 Secretary provides for an earlier effective
date pursuant to this clause, the Secretary shall include in the
issuance or publication 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 undertaken on or after
the date of the enactment of this Act.
(c) RELIANCE ON GUIDANCE.—
(1) IN GENERAL.—Section 1871(e), 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 electronically) provided
by the Secretary or by a medicare contractor (as defined in
H. R. 1—312
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
penalty or interest under this title or the provisions of title XI
insofar as they relate to this title (including interest under a repay-
ment plan under section 1893 or otherwise) relating to the provision
of such items or service or such claim if the provider of services
or supplier reasonably relied on such guidance.
‘‘(B) Subparagraph (A) shall not be construed as preventing
the recoupment or repayment (without any additional 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 enactment of this Act
and shall only apply to a penalty or interest imposed with
respect to guidance provided on or after July 24, 2003.
SEC. 904. REPORTS AND STUDIES RELATING TO REGULATORY
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 appro-
priateness of establishing in the Secretary authority to provide
legally binding advisory opinions on appropriate interpretation
and application 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 opinions.
(2) REPORT.—The Comptroller General shall submit to Con-
gress a report on the study conducted under paragraph (1)
by not later than 1 year after the date of the enactment of
this Act.
(b) REPORT ON LEGAL AND REGULATORY INCONSISTENCIES.—
Section 1871 (42 U.S.C. 1395hh), as amended by section 903(a)(1),
is amended by adding at the end the following new subsection:
‘‘(f)(1) Not later than 2 years after the date of the enactment
of this subsection, and every 3 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 regulation.
‘‘(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
with respect to such areas of inconsistency and conflict; and
‘‘(B) information from medicare contractors that tracks the
nature of written and telephone inquiries.