102
‘‘(I) assistance in collecting rel-
evant information for such bene-
ficiaries, to seek an appeal of a deci-
sion or determination made by a fiscal
intermediary, 
carrier,
Medicare+Choice 
organization, 
a
PDP sponsor under part D, or the
Secretary; and
‘‘(II) assistance to such bene-
ficiaries with any problems arising
from 
disenrollment 
from 
a
Medicare+Choice plan under part C
or a prescription drug plan under part
D; and
‘‘(iii) submit annual reports to Con-
gress, the Secretary, and the Medicare Pol-
icy Advisory Board describing the activities
of the Office, and including such rec-
ommendations for improvement in the ad-
ministration of this title as the Ombuds-
man determines appropriate.
‘‘(C) COORDINATION
WITH
STATE
OM-
BUDSMAN PROGRAMS AND CONSUMER ORGANI-
ZATIONS.—The Medicare Ombudsman shall, to
the extent appropriate, coordinate with State
103
medical Ombudsman programs, and with State-
and community-based consumer organizations,
to—
‘‘(i) provide information about the
medicare program; and
‘‘(ii) conduct outreach to educate
medicare beneficiaries with respect to man-
ners in which problems under the medicare
program may be resolved or avoided.
‘‘(e) MEDICARE POLICY ADVISORY BOARD.—
‘‘(1) ESTABLISHMENT.—There is established
within the Medicare Benefits Administration the
Medicare Policy Advisory Board (in this section re-
ferred to the ‘Board’). The Board shall advise, con-
sult with, and make recommendations to the Admin-
istrator of the Medicare Benefits Administration
with respect to the administration of parts C and D,
including the review of payment policies under such
parts.
‘‘(2) REPORTS.—
‘‘(A) IN GENERAL.—With respect to mat-
ters of the administration of parts C and D, the
Board shall submit to Congress and to the Ad-
ministrator of the Medicare Benefits Adminis-
tration such reports as the Board determines
104
appropriate. Each such report may contain such
recommendations as the Board determines ap-
propriate 
for 
legislative 
or 
administrative
changes to improve the administration of such
parts, including the topics described in subpara-
graph (B). Each such report shall be published
in the Federal Register.
‘‘(B) TOPICS
DESCRIBED.—Reports re-
quired under subparagraph (A) may include the
following topics:
‘‘(i) FOSTERING COMPETITION.—Rec-
ommendations or proposals to increase
competition under parts C and D for serv-
ices furnished to medicare beneficiaries.
‘‘(ii) 
EDUCATION
AND
ENROLL-
MENT.—Recommendations for the im-
provement to efforts to provide medicare
beneficiaries information and education on
the program under this title, and specifi-
cally parts C and D, and the program for
enrollment under the title.
‘‘(iii) IMPLEMENTATION OF RISK-AD-
JUSTMENT.—Evaluation of the implemen-
tation under section 1853(a)(3)(C) of the
risk adjustment methodology to payment
105
rates 
under 
that 
section 
to
Medicare+Choice organizations offering
Medicare+Choice plans that accounts for
variations in per capita costs based on
health status and other demographic fac-
tors.
‘‘(iv) DISEASE
MANAGEMENT
PRO-
GRAMS.—Recommendations on the incor-
poration of disease management programs
under parts C and D.
‘‘(v) RURAL
ACCESS.—Recommenda-
tions to improve competition and access to
plans under parts C and D in rural areas.
‘‘(C) MAINTAINING
INDEPENDENCE
OF
BOARD.—The Board shall directly submit to
Congress reports required under subparagraph
(A). No officer or agency of the United States
may require the Board to submit to any officer
or agency of the United States for approval,
comments, or review, prior to the submission to
Congress of such reports.
‘‘(3) DUTY OF ADMINISTRATOR OF MEDICARE
BENEFITS ADMINISTRATION.—With respect to any
report submitted by the Board under paragraph
(2)(A), not later than 90 days after the report is
106
submitted, the Administrator of the Medicare Bene-
fits Administration shall submit to Congress and the
President an analysis of recommendations made by
the Board in such report. Each such analysis shall
be published in the Federal Register.
‘‘(4) MEMBERSHIP.—
‘‘(A) APPOINTMENT.—Subject to the suc-
ceeding provisions of this paragraph, the Board
shall consist of seven members to be appointed
as follows:
‘‘(i) Three members shall be ap-
pointed by the President.
‘‘(ii) Two members shall be appointed
by the Speaker of the House of Represent-
atives, with the advice of the chairman and
the ranking minority member of the Com-
mittees on Ways and Means and on Com-
merce of the House of Representatives.
‘‘(iii) Two members shall be appointed
by the President pro tempore of the Senate
with the advice of the chairman and the
ranking minority member of the Senate
Committee on Finance.
‘‘(B) 
QUALIFICATIONS.—The 
members
shall be chosen on the basis of their integrity,
107
impartiality, and good judgment, and shall be
individuals who are, by reason of their edu-
cation and experience in health care benefits
management, exceptionally qualified to perform
the duties of members of the Board.
‘‘(C) PROHIBITION ON INCLUSION OF FED-
ERAL EMPLOYEES.—No officer or employee of
the United States may serve as a member of
the Board.
‘‘(5) COMPENSATION.—Members of the Board
shall receive, for each day (including travel time)
they are engaged in the performance of the functions
of the board, compensation at rates not to exceed
the daily equivalent to the annual rate in effect for
level IV of the Executive Schedule under section
5315 of title 5, United States Code.
‘‘(6) TERMS OF OFFICE.—
‘‘(A) IN GENERAL.—The term of office of
members of the Board shall be 3 years.
‘‘(B) TERMS OF INITIAL APPOINTEES.—As
designated by the President at the time of ap-
pointment, of the members first appointed—
‘‘(i) one shall be appointed for a term
of 1 year;
108
‘‘(ii) three shall be appointed for
terms of 2 years; and
‘‘(iii) three shall be appointed for
terms of 3 years.
‘‘(C) REAPPOINTMENTS.—Any person ap-
pointed as a member of the Board may not
serve for more than 8 years.
‘‘(D) VACANCY.—Any member appointed
to fill a vacancy occurring before the expiration
of the term for which the member’s predecessor
was appointed shall be appointed only for the
remainder of that term. A member may serve
after the expiration of that member’s term until
a successor has taken office. A vacancy in the
Board shall be filled in the manner in which the
original appointment was made.
‘‘(7) CHAIR.—The Chair of the Board shall be
elected by the members. The term of office of the
Chair shall be 3 years.
‘‘(8) MEETINGS.—The Board shall meet at the
call of the Chair, but in no event less than three
times during each fiscal year.
‘‘(9) DIRECTOR AND STAFF.—
109
‘‘(A) APPOINTMENT
OF
DIRECTOR.—The
Board shall have a Director who shall be ap-
pointed by the Chair.
‘‘(B) IN GENERAL.—With the approval of
the Board, the Director may appoint, without
regard to chapter 31 of title 5, United States
Code, such additional personnel as the Director
considers appropriate.
‘‘(C) FLEXIBILITY WITH RESPECT TO COM-
PENSATION.—
‘‘(i) IN GENERAL.—The Director and
staff of the Board shall, subject to clause
(ii), be paid without regard to the provi-
sions of chapter 51 and chapter 53 of such
title (relating to classification and schedule
pay rates).
‘‘(ii) MAXIMUM
RATE.—In no case
may the rate of compensation determined
under clause (i) exceed the rate of basic
pay payable for level IV of the Executive
Schedule under section 5315 of title 5,
United States Code.
‘‘(D) ASSISTANCE
FROM
THE
ADMINIS-
TRATOR OF THE MEDICARE BENEFITS ADMINIS-
TRATION.—The Administrator of the Medicare
110
Benefits Administration shall make available to
the Board such information and other assist-
ance as it may require to carry out its func-
tions.
‘‘(10) CONTRACT AUTHORITY.—The Board may
contract with and compensate government and pri-
vate agencies or persons to carry out its duties
under this subsection, without regard to section
3709 of the Revised Statutes (41 U.S.C. 5).
‘‘(f) FUNDING.—There is authorized to be appro-
priated, in appropriate part from the Federal Hospital In-
surance Trust Fund and from the Federal Supplementary
Medical Insurance Trust Fund (including the Medicare
Prescription Drug Account), such sums as are necessary
to carry out this section.’’.
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendment made by
subsection (a) shall take effect on the date of the en-
actment of this Act.
(2) TIMING OF INITIAL APPOINTMENTS.—The
Administrator and Deputy Administrator of the
Medicare Benefits Administration may not be ap-
pointed before March 1, 2001.
(3) DUTIES WITH RESPECT TO ELIGIBILITY DE-
TERMINATIONS
AND
ENROLLMENT.—The Adminis-
111
trator of the Medicare Benefits Administration shall
carry out enrollment under title XVIII of the Social
Security Act, make eligibility determinations under
such title, and carry out part C of such title for
years beginning or after January 1, 2003.
SEC. 202. MISCELLANEOUS ADMINISTRATIVE PROVISIONS.
(a) ADMINISTRATOR AS MEMBER OF THE BOARD OF
TRUSTEES OF THE MEDICARE TRUST FUNDS.—Section
1817(b) and section 1841(b) of the Social Security Act
(42 U.S.C. 1395i(b), 1395t(b)) are each amended by
striking ‘‘and the Secretary of Health and Human Serv-
ices, all ex officio,’’ and inserting ‘‘the Secretary of Health
and Human Services, and the Administrator of the Medi-
care Benefits Administration, all ex officio,’’.
(b) INCREASE IN GRADE TO EXECUTIVE LEVEL III
FOR THE ADMINISTRATOR OF THE HEALTH CARE FI-
NANCING ADMINISTRATION.—
(1) IN
GENERAL.—Section 5314 of title 5,
United States Code, by adding at the end the fol-
lowing:
‘‘Administrator of the Health Care Financing
Administration.’’.
(2) CONFORMING AMENDMENT.—Section 5315
of such title is amended by striking ‘‘Administrator
of the Health Care Financing Administration.’’.
112
(3) EFFECTIVE DATE.—The amendments made
by this subsection take effect on March 1, 2001.
Subtitle B—Oversight of Financial
Sustainability of the Medicare
Program
SEC. 211. ADDITIONAL REQUIREMENTS FOR ANNUAL FI-
NANCIAL REPORT AND OVERSIGHT ON MEDI-
CARE PROGRAM.
(a) IN GENERAL.—Section 1817 of the Social Secu-
rity Act (42 U.S.C. 1395i) is amended by adding at the
end the following new subsection:
‘‘(l) COMBINED REPORT ON OPERATION AND STATUS
OF
THE TRUST FUND
AND
THE FEDERAL SUPPLE-
MENTARY MEDICAL INSURANCE TRUST FUND.—
‘‘(1) IN GENERAL.—In addition to the duty of
the Board of Trustees to report to Congress under
subsection (b), on the date the Board submits the
report required under subsection (b)(2), the Board
shall submit to Congress a report on the operation
and status of the Trust Fund and the Federal Sup-
plementary Medical Insurance Trust Fund estab-
lished under section 1841 (in this subsection re-
ferred to as the ‘Trust Funds’). Such report shall
included the following information:
113
‘‘(A) OVERALL SPENDING FROM THE GEN-
ERAL FUND OF THE TREASURY.—A statement
of total amounts obligated during the preceding
fiscal year from the General Revenues of the
Treasury to the Trust Funds for payment for
benefits covered under this title, stated in terms
of the total amount and in terms of the per-
centage such amount bears to all other amounts
obligated from such General Revenues during
such fiscal year.
‘‘(B) HISTORICAL
OVERVIEW
OF
SPEND-
ING.—From the date of the inception of the
program of insurance under this title through
the fiscal year involved, a statement of the total
amounts referred to in subparagraph (A).
‘‘(C) 10-YEAR
AND
50-YEAR
PROJEC-
TIONS.—An estimate of total amounts referred
to in subparagraph (A) required to be obligated
for payment for benefits covered under this title
for each of the 10 fiscal years succeeding the
fiscal year involved and for the 50-year period
beginning with the succeeding fiscal year.
‘‘(D) RELATION
TO
GDP
GROWTH.—A
comparison of the rate of growth of the total
amounts referred to in subparagraph (A) to the
114
rate of growth in the gross domestic product for
the same period.
‘‘(2) PUBLICATION.—Each report submitted
under paragraph (1) shall be published by the Com-
mittee on Ways and Means as a public document
and shall be made available by such Committee on
the Internet.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to fiscal years be-
ginning on or after the date of the enactment of this Act.
(c) CONGRESSIONAL HEARINGS.—It is the sense of
the Congress that the committees of jurisdiction shall hold
hearings on the reports submitted under section 1817(l)
of the Social Security Act.
Subtitle C—Changes in Medicare
Coverage and Appeals Process
SEC. 221. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) CONDUCT OF RECONSIDERATIONS OF DETER-
MINATIONS
BY INDEPENDENT CONTRACTORS.—Section
1869 of the Social Security Act (42 U.S.C. 1395ff) is
amended to read as follows:
‘‘DETERMINATIONS; APPEALS
‘‘SEC. 1869. (a) INITIAL DETERMINATIONS.—The
Secretary shall promulgate regulations and make initial
determinations with respect to benefits under part A or
115
part B in accordance with those regulations for the fol-
lowing:
‘‘(1) The initial determination of whether an in-
dividual is entitled to benefits under such parts.
‘‘(2) The initial determination of the amount of
benefits available to the individual under such parts.
‘‘(3) Any other initial determination with re-
spect to a claim for benefits under such parts, in-
cluding an initial determination by the Secretary
that payment may not be made, or may no longer
be made, for an item or service under such parts, an
initial determination made by a utilization and qual-
ity control peer review organization under section
1154(a)(2), and an initial determination made by an
entity pursuant to a contract with the Secretary to
administer provisions of this title or title XI.
‘‘(b) APPEAL RIGHTS.—
‘‘(1) IN GENERAL.—
‘‘(A) RECONSIDERATION
OF
INITIAL
DE-
TERMINATION.—Subject to subparagraph (D),
any individual dissatisfied with any initial de-
termination under subsection (a) shall be enti-
tled to reconsideration of the determination,
and, subject to subparagraphs (D) and (E), a
hearing thereon by the Secretary to the same
116
extent as is provided in section 205(b) and to
judicial review of the Secretary’s final decision
after such hearing as is provided in section
205(g).
‘‘(B) REPRESENTATION BY PROVIDER OR
SUPPLIER.—
‘‘(i) IN
GENERAL.—Sections 206(a),
1102, and 1871 shall not be construed as
authorizing the Secretary to prohibit an in-
dividual from being represented under this
section by a person that furnishes or sup-
plies the individual, directly or indirectly,
with services or items, solely on the basis
that the person furnishes or supplies the
individual with such a service or item.
‘‘(ii) MANDATORY WAIVER OF RIGHT
TO
PAYMENT
FROM
BENEFICIARY.—Any
person that furnishes services or items to
an individual may not represent an indi-
vidual under this section with respect to
the issue described in section 1879(a)(2)
unless the person has waived any rights for
payment from the beneficiary with respect
to the services or items involved in the ap-
peal.
117
‘‘(iii) PROHIBITION ON PAYMENT FOR
REPRESENTATION.—If a person furnishes
services or items to an individual and rep-
resents the individual under this section,
the person may not impose any financial li-
ability on such individual in connection
with such representation.
‘‘(iv) 
REQUIREMENTS
FOR
REP-
RESENTATIVES OF A BENEFICIARY.—The
provisions of section 205(j) and section
206 (regarding representation of claim-
ants) shall apply to representation of an
individual with respect to appeals under
this section in the same manner as they
apply to representation of an individual
under those sections.
‘‘(C) SUCCESSION OF RIGHTS IN CASES OF
ASSIGNMENT.—The right of an individual to an
appeal under this section with respect to an
item or service may be assigned to the provider
of services or supplier of the item or service
upon the written consent of such individual
using a standard form established by the Sec-
retary for such an assignment.
‘‘(D) TIME LIMITS FOR APPEALS.—
118
‘‘(i) RECONSIDERATIONS.—Reconsid-
eration under subparagraph (A) shall be
available only if the individual described
subparagraph (A) files notice with the Sec-
retary to request reconsideration by not
later than 180 days after the individual re-
ceives notice of the initial determination
under subsection (a) or within such addi-
tional time as the Secretary may allow.
‘‘(ii) HEARINGS CONDUCTED BY THE
SECRETARY.—The Secretary shall establish
in regulations time limits for the filing of
a request for a hearing by the Secretary in
accordance with provisions in sections 205
and 206.
‘‘(E) AMOUNTS IN CONTROVERSY.—
‘‘(i) IN GENERAL.—A hearing (by the
Secretary) shall not be available to an indi-
vidual under this section if the amount in
controversy is less than $100, and judicial
review shall not be available to the indi-
vidual if the amount in controversy is less
than $1,000.
‘‘(ii) AGGREGATION
OF
CLAIMS.—In
determining the amount in controversy, the
119
Secretary, under regulations, shall allow
two or more appeals to be aggregated if
the appeals involve—
‘‘(I) the delivery of similar or re-
lated services to the same individual
by one or more providers of services
or suppliers, or
‘‘(II) common issues of law and
fact arising from services furnished to
two or more individuals by one or
more providers of services or sup-
pliers.
‘‘(F) EXPEDITED PROCEEDINGS.—
‘‘(i) EXPEDITED
DETERMINATION.—
In the case of an individual who—
‘‘(I) has received notice by a pro-
vider of services that the provider of
services plans to terminate services
provided to an individual and a physi-
cian certifies that failure to continue
the provision of such services is likely
to place the individual’s health at sig-
nificant risk, or
‘‘(II) has received notice by a
provider of services that the provider
120
of services plans to discharge the indi-
vidual from the provider of services,
the individual may request, in writing or
orally, an expedited determination or an
expedited reconsideration of an initial de-
termination made under subsection (a), as
the case may be, and the Secretary shall
provide such expedited determination or
expedited reconsideration.
‘‘(ii) EXPEDITED
HEARING.—In a
hearing by the Secretary under this sec-
tion, in which the moving party alleges
that no material issues of fact are in dis-
pute, the Secretary shall make an expe-
dited determination as to whether any such
facts are in dispute and, if not, shall
render a decision expeditiously.
‘‘(G) REOPENING AND REVISION OF DE-
TERMINATIONS.—The Secretary may reopen or
revise any initial determination or reconsidered
determination described in this subsection
under guidelines established by the Secretary in
regulations.
‘‘(2) 
REVIEW
OF
COVERAGE
DETERMINA-
TIONS.—
121
‘‘(A) NATIONAL
COVERAGE
DETERMINA-
TIONS.—
‘‘(i) IN GENERAL.—Review of any na-
tional coverage determination shall be sub-
ject to the following limitations:
‘‘(I) Such a determination shall
not be reviewed by any administrative
law judge.
‘‘(II) Such a determination shall
not be held unlawful or set aside on
the ground that a requirement of sec-
tion 553 of title 5, United States
Code, or section 1871(b) of this title,
relating to publication in the Federal
Register or opportunity for public
comment, was not satisfied.
‘‘(III) Upon the filing of a com-
plaint by an aggrieved party, such a
determination shall be reviewed by the
Departmental Appeals Board of the
Department of Health and Human
Services. In conducting such a review,
the Departmental Appeals Board shall
review the record and shall permit dis-
covery and the taking of evidence to
122
evaluate the reasonableness of the de-
termination. In reviewing such a de-
termination, the Departmental Ap-
peals Board shall defer only to the
reasonable findings of fact, reasonable
interpretations of law, and reasonable
applications of fact to law by the Sec-
retary.
‘‘(IV) A decision of the Depart-
mental Appeals Board constitutes a
final agency action and is subject to
judicial review.
‘‘(ii) DEFINITION OF NATIONAL COV-
ERAGE DETERMINATION.—For purposes of
this section, the term ‘national coverage
determination’ means a determination by
the Secretary respecting whether or not a
particular item or service is covered na-
tionally under this title, including such a
determination under 1862(a)(1).
‘‘(B) LOCAL
COVERAGE
DETERMINATION.—In
the case of a local coverage determination made by
a fiscal intermediary or a carrier under part A or
part B respecting whether a particular type or class
124
issue is the constitutionality of a provision of this
title, or that a regulation, determination, or ruling
by the Secretary is invalid, the moving party may
seek review by a court of competent jurisdiction.
‘‘(D) PENDING
NATIONAL
COVERAGE
DETER-
MINATIONS.—
‘‘(i) IN GENERAL.—In the event the Sec-
retary has not issued a national coverage or
noncoverage determination with respect to a
particular type or class of items or services, an
affected party may submit to the Secretary a
request to make such a determination with re-
spect to such items or services. By not later
than the end of the 90-day period beginning on
the date the Secretary receives such a request,
the Secretary shall take one of the following ac-
tions:
‘‘(I) Issue a national coverage deter-
mination, with or without limitations.
‘‘(II) Issue a national noncoverage de-
termination.
‘‘(III) Issue a determination that no
national coverage or noncoverage deter-
mination is appropriate as of the end of
125
such 90-day period with respect to national
coverage of such items or services.
‘‘(IV) Issue a notice that states that
the Secretary has not completed a review
of the request for a national coverage de-
termination and that includes an identi-
fication of the remaining steps in the Sec-
retary’s review process and a deadline by
which the Secretary will complete the re-
view and take an action described in sub-
clause (I), (II), or (III).
‘‘(ii) In the case of an action described in
clause (i)(IV), if the Secretary fails to take an
action referred to in such clause by the deadline
specified by the Secretary under such clause,
then the Secretary is deemed to have taken an
action described in clause (i)(III) as of the
deadline.
‘‘(iii) When issuing a determination under
clause (i), the Secretary shall include an expla-
nation of the basis for the determination. An
action taken under clause (i) (other than sub-
clause (IV)) is deemed to be a national coverage
determination for purposes of review under sub-
paragraph (A).
126
‘‘(E) ANNUAL REPORT ON NATIONAL COVERAGE
DETERMINATIONS.—
‘‘(i) IN GENERAL.—Not later than Decem-
ber 1 of each year, beginning in 2001, the Sec-
retary shall submit to Congress a report that
sets forth a detailed compilation of the actual
time periods that were necessary to complete
and fully implement national coverage deter-
minations that were made in the previous fiscal
year for items, services, or medical devices not
previously covered as a benefit under this title,
including, with respect to each new item, serv-
ice, or medical device, a statement of the time
taken by the Secretary to make the necessary
coverage, coding, and payment determinations,
including the time taken to complete each sig-
nificant step in the process of making such de-
terminations.
‘‘(ii) PUBLICATION OF REPORTS ON THE
INTERNET.—The Secretary shall publish each
report submitted under clause (i) on the medi-
care Internet site of the Department of Health
and Human Services.
‘‘(3) PUBLICATION ON THE INTERNET OF DECI-
SIONS OF HEARINGS OF THE SECRETARY.—Each de-
127
cision of a hearing by the Secretary shall be made
public, and the Secretary shall publish each decision
on the Medicare Internet site of the Department of
Health and Human Services. The Secretary shall re-
move from such decision any information that would
identify any individual, provider of services, or sup-
plier.
‘‘(4) LIMITATION ON REVIEW OF CERTAIN REG-
ULATIONS.—A regulation or instruction which re-
lates to a method for determining the amount of
payment under part B and which was initially issued
before January 1, 1981, shall not be subject to judi-
cial review.
‘‘(5) STANDING.—An action under this section
seeking review of a coverage determination (with re-
spect to items and services under this title) may be
initiated only by one (or more) of the following ag-
grieved persons, or classes of persons:
‘‘(A) Individuals entitled to benefits under
part A, or enrolled under part B, or both, who
are in need of the items or services that are the
subject of the coverage determination.
‘‘(B) Persons, or classes of persons, who
make, manufacture, offer, supply, make avail-
able, or provide such items and services.
128
‘‘(c) CONDUCT
OF RECONSIDERATIONS
BY INDE-
PENDENT CONTRACTORS.—
‘‘(1) IN GENERAL.—The Secretary shall enter
into contracts with qualified independent contractors
to conduct reconsiderations of initial determinations
made under paragraphs (2) and (3) of subsection
(a). Contracts shall be for an initial term of three
years and shall be renewable on a triennial basis
thereafter.
‘‘(2) 
QUALIFIED
INDEPENDENT
CON-
TRACTOR.—For purposes of this subsection, the
term ‘qualified independent contractor’ means an en-
tity or organization that is independent of any orga-
nization under contract with the Secretary that
makes initial determinations under subsection (a),
and that meets the requirements established by the
Secretary consistent with paragraph (3).
‘‘(3) REQUIREMENTS.—Any 
qualified 
inde-
pendent contractor entering into a contract with the
Secretary under this subsection shall meet the fol-
lowing requirements:
‘‘(A) IN
GENERAL.—The qualified inde-
pendent contractor shall perform such duties
and functions and assume such responsibilities
as may be required under regulations of the
129
Secretary promulgated to carry out the provi-
sions of this subsection, and such additional du-
ties, functions, and responsibilities as provided
under the contract.
‘‘(B) 
DETERMINATIONS.—The 
qualified
independent contractor shall determine, on the
basis of such criteria, guidelines, and policies
established by the Secretary and published
under subsection (d)(2)(D), whether payment
shall be made for items or services under part
A or part B and the amount of such payment.
Such determination shall constitute the conclu-
sive determination on those issues for purposes
of payment under such parts for fiscal inter-
mediaries, carriers, and other entities whose de-
terminations are subject to review by the con-
tractor; except that payment may be made if—
‘‘(i) such payment is allowed by rea-
son of section 1879;
‘‘(ii) in the case of inpatient hospital
services or extended care services, the
qualified independent contractor deter-
mines that additional time is required in
order to arrange for postdischarge care,
but payment may be continued under this
130
clause for not more than 2 days, and only
in the case in which the provider of such
services did not know and could not rea-
sonably have been expected to know (as de-
termined under section 1879) that pay-
ment would not otherwise be made for
such services under part A or part B prior
to notification by the qualified independent
contractor under this subsection;
‘‘(iii) such determination is changed
as the result of any hearing by the Sec-
retary or judicial review of the decision
under this section; or
‘‘(iv) such payment is authorized
under section 1861(v)(1)(G).
‘‘(C) DEADLINES FOR DECISIONS.—
‘‘(i) DETERMINATIONS.—The quali-
fied independent contractor shall conduct
and conclude a determination under sub-
paragraph (B) or an appeal of an initial
determination, and mail the notice of the
decision by not later than the end of the
45-day period beginning on the date a re-
quest for reconsideration has been timely
filed.
131
‘‘(ii) CONSEQUENCES OF FAILURE TO
MEET DEADLINE.—In the case of a failure
by the qualified independent contractor to
mail the notice of the decision by the end
of the period described in clause (i), the
party requesting the reconsideration or ap-
peal may request a hearing before an ad-
ministrative law judge, notwithstanding
any requirements for a reconsidered deter-
mination for purposes of the party’s right
to such hearing.
‘‘(iii) 
EXPEDITED
RECONSIDER-
ATIONS.—The qualified independent con-
tractor shall perform an expedited recon-
sideration under subsection (b)(1)(F) of a
notice from a provider of services or sup-
plier that payment may not be made for an
item or service furnished by the provider of
services or supplier, of a decision by a pro-
vider of services to terminate services fur-
nished to an individual, or in accordance
with the following:
‘‘(I) DEADLINE FOR DECISION.—
Notwithstanding section 216(j), not
later than 1 day after the date the
132
qualified independent contractor has
received a request for such reconsider-
ation and has received such medical
or other records needed for such re-
consideration, 
the 
qualified 
inde-
pendent contractor shall provide no-
tice (by telephone and in writing) to
the individual and the provider of
services and attending physician of
the individual of the results of the re-
consideration. Such reconsideration
shall be conducted regardless of
whether the provider of services or
supplier will charge the individual for
continued services or whether the indi-
vidual will be liable for payment for
such continued services.
‘‘(II) CONSULTATION WITH BEN-
EFICIARY.—In such reconsideration,
the qualified independent contractor
shall solicit the views of the individual
involved.
‘‘(D) LIMITATION ON INDIVIDUAL REVIEW-
ING DETERMINATIONS.—
133
‘‘(i) 
PHYSICIANS.—No 
physician
under the employ of a qualified inde-
pendent contractor may review—
‘‘(I) 
determinations 
regarding
health care services furnished to a pa-
tient if the physician was directly re-
sponsible for furnishing such services;
or
‘‘(II) determinations regarding
health care services provided in or by
an institution, organization, or agen-
cy, if the physician or any member of
the physician’s family has, directly or
indirectly, a significant financial inter-
est in such institution, organization,
or agency.
‘‘(ii) 
PHYSICIAN’S
FAMILY
DE-
SCRIBED.—For purposes of this para-
graph, a physician’s family includes the
physician’s spouse (other than a spouse
who is legally separated from the physician
under a decree of divorce or separate
maintenance), children (including step-
children and legally adopted children),
grandchildren, parents, and grandparents.
134
‘‘(E) 
EXPLANATION
OF
DETERMINA-
TIONS.—Any determination of a qualified inde-
pendent contractor shall be in writing, and shall
include a detailed explanation of the determina-
tion as well as a discussion of the pertinent
facts and applicable regulations applied in mak-
ing such determination.
‘‘(F) NOTICE REQUIREMENTS.—Whenever
a qualified independent contractor makes a de-
termination under this subsection, the qualified
independent contractor shall promptly notify
such individual and the entity responsible for
the payment of claims under part A or part B
of such determination.
‘‘(G) DISSEMINATION OF INFORMATION.—
Each qualified independent contractor shall,
using the methodology established by the Sec-
retary under subsection (d)(4), make available
all determinations of such qualified independent
contractors to fiscal intermediaries (under sec-
tion 1816), carriers (under section 1842), peer
review organizations (under part B of title XI),
Medicare+Choice 
organizations 
offering
Medicare+Choice plans under part C, and
other entities under contract with the Secretary
136
an electronic database in a manner that
provides for identification of the following:
‘‘(I) Specific claims that give rise
to appeals.
‘‘(II) Situations suggesting the
need for increased education for pro-
viders of services, physicians, or sup-
pliers.
‘‘(III) Situations suggesting the
need for changes in national or local
coverage policy.
‘‘(IV) Situations suggesting the
need for changes in local medical re-
view policies.
‘‘(iii) 
ANNUAL
REPORTING.—Each
qualified independent contractor shall sub-
mit annually to the Secretary (or otherwise
as the Secretary may request) records
maintained under this paragraph for the
previous year.
‘‘(J) HEARINGS BY THE SECRETARY.—The
qualified independent contractor shall (i) pre-
pare such information as is required for an ap-
peal of its reconsidered determination to the
Secretary for a hearing, including as necessary,
137
explanations of issues involved in the deter-
mination and relevant policies, and (ii) partici-
pate in such hearings as required by the Sec-
retary.
‘‘(4) NUMBER
OF
QUALIFIED
INDEPENDENT
CONTRACTORS.—The Secretary shall enter into con-
tracts with not fewer than 12 qualified independent
contractors under this subsection.
‘‘(5) LIMITATION ON QUALIFIED INDEPENDENT
CONTRACTOR LIABILITY.—No qualified independent
contractor having a contract with the Secretary
under this subsection and no person who is em-
ployed by, or who has a fiduciary relationship with,
any such qualified independent contractor or who
furnishes professional services to such qualified inde-
pendent contractor, shall be held by reason of the
performance of any duty, function, or activity re-
quired or authorized pursuant to this subsection or
to a valid contract entered into under this sub-
section, to have violated any criminal law, or to be
civilly liable under any law of the United States or
of any State (or political subdivision thereof) pro-
vided due care was exercised in the performance of
such duty, function, or activity.
‘‘(d) ADMINISTRATIVE PROVISIONS.—
138
‘‘(1) OUTREACH.—The Secretary shall perform
such outreach activities as are necessary to inform
individuals entitled to benefits under this title and
providers of services and suppliers with respect to
their rights of, and the process for, appeals made
under this section. The Secretary shall use the toll-
free telephone number maintained by the Secretary
(1–800–MEDICAR(E)) (1–800–633–4227) to pro-
vide information regarding appeal rights and re-
spond to inquiries regarding the status of appeals.
‘‘(2) GUIDANCE FOR RECONSIDERATIONS AND
HEARINGS.—
‘‘(A) REGULATIONS.—Not later than 1
year after the date of the enactment of this sec-
tion, the Secretary shall promulgate regulations
governing the processes of reconsiderations of
determinations by the Secretary and qualified
independent contractors and of hearings by the
Secretary. Such regulations shall include such
specific criteria and provide such guidance as
required to ensure the adequate functioning of
the reconsiderations and hearings processes and
to ensure consistency in such processes.
‘‘(B) DEADLINES
FOR
ADMINISTRATIVE
ACTION.—
139
‘‘(i) HEARING
BY
ADMINISTRATIVE
LAW JUDGE.—
‘‘(I) IN
GENERAL.—Except as
provided in subclause (II), an admin-
istrative law judge shall conduct and
conclude a hearing on a decision of a
qualified 
independent 
contractor
under subsection (c) and render a de-
cision on such hearing by not later
than the end of the 90-day period be-
ginning on the date a request for
hearing has been timely filed.
‘‘(II) WAIVER OF DEADLINE BY
PARTY SEEKING HEARING.—The 90-
day period under subclause (i) shall
not apply in the case of a motion or
stipulation by the party requesting the
hearing to waive such period.
‘‘(ii) DEPARTMENTAL APPEALS BOARD
REVIEW.—The 
Departmental 
Appeals
Board of the Department of Health and
Human Services shall conduct and con-
clude a review of the decision on a hearing
described in subparagraph (B) and make a
decision or remand the case to the admin-
140
istrative law judge for reconsideration by
not later than the end of the 90-day period
beginning on the date a request for review
has been timely filed.
‘‘(iii) CONSEQUENCES OF FAILURE TO
MEET DEADLINES.—In the case of a fail-
ure by an administrative law judge to
render a decision by the end of the period
described in clause (ii), the party request-
ing the hearing may request a review by
the Departmental Appeals Board of the
Department of Health and Human Serv-
ices, notwithstanding any requirements for
a hearing for purposes of the party’s right
to such a review.
‘‘(iv) DAB HEARING PROCEDURE.—In
the case of a request described in clause
(iii), the Departmental Appeals Board
shall review the case de novo.
‘‘(C) POLICIES.—The Secretary shall pro-
vide such specific criteria and guidance, includ-
ing all applicable national and local coverage
policies and rationale for such policies, as is
necessary to assist the qualified independent
contractors to make informed decisions in con-
141
sidering appeals under this section. The Sec-
retary shall furnish to the qualified independent
contractors the criteria and guidance described
in this paragraph in a published format, which
may be an electronic format.
‘‘(D) PUBLICATION
OF
MEDICARE
COV-
ERAGE POLICIES ON THE INTERNET.—The Sec-
retary shall publish national and local coverage
policies under this title on an Internet site
maintained by the Secretary.
‘‘(E) EFFECT
OF
FAILURE
TO
PUBLISH
POLICIES.—
‘‘(i) NATIONAL AND LOCAL COVERAGE
POLICIES.—Qualified independent contrac-
tors shall not be bound by any national or
local medicare coverage policy established
by the Secretary that is not published on
the Internet site under subparagraph (D).
‘‘(ii) OTHER POLICIES.—With respect
to policies established by the Secretary
other than the policies described in clause
(i), qualified independent contractors shall
not be bound by such policies if the Sec-
retary does not furnish to the qualified
independent contractor the policies in a
142
published format consistent with subpara-
graph (C).
‘‘(3) CONTINUING
EDUCATION
REQUIREMENT
FOR QUALIFIED INDEPENDENT CONTRACTORS AND
ADMINISTRATIVE LAW JUDGES.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide to each qualified independent con-
tractor, and, in consultation with the Commis-
sioner of Social Security, to administrative law
judges that decide appeals of reconsiderations
of initial determinations or other decisions or
determinations under this section, such con-
tinuing education with respect to policies of the
Secretary under this title or part B of title XI
as is necessary for such qualified independent
contractors and administrative law judges to
make informed decisions with respect to ap-
peals.
‘‘(B) MONITORING
OF
DECISIONS
BY
QUALIFIED INDEPENDENT CONTRACTORS AND
ADMINISTRATIVE LAW JUDGES.—The Secretary
shall monitor determinations made by all quali-
fied independent contractors and administrative
law judges under this section and shall provide
continuing education and training to such quali-
143
fied independent contractors and administrative
law judges to ensure consistency of determina-
tions with respect to appeals on similar or re-
lated matters. To ensure such consistency, the
Secretary shall provide for administration and
oversight of qualified independent contractors
and, in consultation with the Commissioner of
Social Security, administrative law judges
through a central office of the Department of
Health and Human Services. Such administra-
tion and oversight may not be delegated to re-
gional offices of the Department.
‘‘(4) DISSEMINATION
OF
DETERMINATIONS.—
The Secretary shall establish a methodology under
which qualified independent contractors shall carry
out subsection (c)(3)(G).
‘‘(5) SURVEY.—Not less frequently than every 5
years, the Secretary shall conduct a survey of a valid
sample of individuals entitled to benefits under this
title, providers of services, and suppliers to deter-
mine the satisfaction of such individuals or entities
with the process for appeals of determinations pro-
vided for under this section and education and train-
ing provided by the Secretary with respect to that
process. The Secretary shall submit to Congress a
144
report describing the results of the survey, and shall
include any recommendations for administrative or
legislative actions that the Secretary determines ap-
propriate.
‘‘(6) REPORT
TO
CONGRESS.—The Secretary
shall submit to Congress an annual report describing
the number of appeals for the previous year, identi-
fying issues that require administrative or legislative
actions, and including any recommendations of the
Secretary with respect to such actions. The Sec-
retary shall include in such report an analysis of de-
terminations by qualified independent contractors
with respect to inconsistent decisions and an anal-
ysis of the causes of any such inconsistencies.’’.
(b) APPLICABILITY OF REQUIREMENTS AND LIMITA-
TIONS ON LIABILITY OF QUALIFIED INDEPENDENT CON-
TRACTORS
TO MEDICARE+CHOICE INDEPENDENT AP-
PEALS CONTRACTORS.—Section 1852(g)(4) of the Social
Security Act (42 U.S.C. 1395w–22(e)(3)) is amended by
adding at the end the following: ‘‘The provisions of section
1869(c)(5) shall apply to independent outside entities
under contract with the Secretary under this paragraph.’’.
(c) CONFORMING AMENDMENT TO REVIEW BY THE
PROVIDER REIMBURSEMENT REVIEW BOARD.—Section
1878(g) of the Social Security Act (42 U.S.C. 1395oo(g))
145
is amended by adding at the end the following new para-
graph:
‘‘(3) Findings described in paragraph (1) and deter-
minations and other decisions described in paragraph (2)
may be reviewed or appealed under section 1869.’’.
SEC. 222. PROVISIONS WITH RESPECT TO LIMITATIONS ON
LIABILITY OF BENEFICIARIES.
(a) EXPANSION OF LIMITATION OF LIABILITY PRO-
TECTION FOR BENEFICIARIES WITH RESPECT TO MEDI-
CARE CLAIMS NOT PAID OR PAID INCORRECTLY.—
(1) IN GENERAL.—Section 1879 of the Social
Security Act (42 U.S.C. 1395pp) is amended by
adding at the end the following new subsections:
‘‘(i) Notwithstanding any other provision of this Act,
an individual who is entitled to benefits under this title
and is furnished a service or item is not liable for repay-
ment to the Secretary of amounts with respect to such
benefits—
‘‘(1) subject to paragraph (2), in the case of a
claim for such item or service that is incorrectly paid
by the Secretary; and
‘‘(2) in the case of payments made to the indi-
vidual by the Secretary with respect to any claim
under paragraph (1), the individual shall be liable
for repayment of such amount only up to the
146
amount of payment received by the individual from
the Secretary.
‘‘(j)(1) An individual who is entitled to benefits under
this title and is furnished a service or item is not liable
for payment of amounts with respect to such benefits in
the following cases:
‘‘(A) In the case of a benefit for which an ini-
tial determination has not been made by the Sec-
retary under subsection (a) whether payment may be
made under this title for such benefit.
‘‘(B) In the case of a claim for such item or
service that is—
‘‘(i) improperly submitted by the provider
of services or supplier; or
‘‘(ii) rejected by an entity under contract
with the Secretary to review or pay claims for
services and items furnished under this title, in-
cluding an entity under contract with the Sec-
retary under section 1857.
‘‘(2) The limitation on liability under paragraph (1)
shall not apply if the individual signs a waiver provided
by the Secretary under subsection (l) of protections under
this paragraph, except that any such waiver shall not
apply in the case of a denial of a claim for noncompliance
147
with applicable regulations or procedures under this title
or title XI.
‘‘(k) An individual who is entitled to benefits under
this title and is furnished services by a provider of services
is not liable for payment of amounts with respect to such
services prior to noon of the first working day after the
date the individual receives the notice of determination to
discharge and notice of appeal rights under paragraph (1),
unless the following conditions are met:
‘‘(1) The provider of services shall furnish a no-
tice of discharge and appeal rights established by the
Secretary under subsection (l) to each individual en-
titled to benefits under this title to whom such pro-
vider of services furnishes services, upon admission
of the individual to the provider of services and upon
notice of determination to discharge the individual
from the provider of services, of the individual’s limi-
tations of liability under this section and rights of
appeal under section 1869.
‘‘(2) If the individual, prior to discharge from
the provider of services, appeals the determination to
discharge under section 1869 not later than noon of
the first working day after the date the individual
receives the notice of determination to discharge and
notice of appeal rights under paragraph (1), the pro-
148
vider of services shall, by the close of business of
such first working day, provide to the Secretary (or
qualified independent contractor under section 1869,
as determined by the Secretary) the records required
to review the determination.
‘‘(l) The Secretary shall develop appropriate standard
forms for individuals entitled to benefits under this title
to waive limitation of liability protections under subsection
(j) and to receive notice of discharge and appeal rights
under subsection (k). The forms developed by the Sec-
retary under this subsection shall clearly and in plain lan-
guage inform such individuals of their limitations on liabil-
ity, their rights under section 1869(a) to obtain an initial
determination by the Secretary of whether payment may
be made under part A or part B for such benefit, and
their rights of appeal under section 1869(b), and shall in-
form such individuals that they may obtain further infor-
mation or file an appeal of the determination by use of
the toll-free telephone number (1–800–MEDICAR(E))
(1–800–633–4227) maintained by the Secretary. The
forms developed by the Secretary under this subsection
shall be the only manner in which such individuals may
waive such protections under this title or title XI.
‘‘(m) An individual who is entitled to benefits under
this title and is furnished an item or service is not liable
149
for payment of cost sharing amounts of more than $50
with respect to such benefits unless the individual has
been informed in advance of being furnished the item or
service of the estimated amount of the cost sharing for
the item or service using a standard form established by
the Secretary.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1870(a) of the Social Security Act (42 U.S.C.
1395gg(a)) is amended by striking ‘‘Any payment
under this title’’ and inserting ‘‘Except as provided
in section 1879(i), any payment under this title’’.
(b) INCLUSION OF BENEFICIARY LIABILITY INFOR-
MATION IN EXPLANATION OF MEDICARE BENEFITS.—
Section 1806(a) of the Social Security Act (42 U.S.C.
1395b–7(a)) is amended—
(1) in paragraph (1), by striking ‘‘and’’ at the
end;
(2) by redesignating paragraph (2) as para-
graph (3); and
(3) by inserting after paragraph (1) the fol-
lowing new paragraph:
‘‘(2) lists with respect to each item or service
furnished the amount of the individual’s liability for
payment;’’;
150
(4) in paragraph (3), as so redesignated, by
striking the period at the end and inserting ‘‘; and’’;
and
(5) by adding at the end the following new
paragraph:
‘‘(4) includes the toll-free telephone number (1–
800–MEDICAR(E)) (1–800–633–4227) for infor-
mation and questions concerning the statement, li-
ability of the individual for payment, and appeal
rights.’’.
SEC. 223. WAIVERS OF LIABILITY FOR COST SHARING
AMOUNTS.
(a) IN GENERAL.—Section 1128A(i)(6)(A) of the So-
cial Security Act (42 U.S.C. 1320a–7a(i)(6)(A)) is amend-
ed by striking clauses (i) through (iii) and inserting the
following:
‘‘(i) the waiver is offered as a part of
a supplemental insurance policy or retiree
health plan;
‘‘(ii) the waiver is not offered as part
of any advertisement or solicitation, other
than in conjunction with a policy or plan
described in clause (i);
‘‘(iii) the person waives the coinsur-
ance and deductible amount after the bene-
151
ficiary informs the person that payment of
the coinsurance or deductible amount
would pose a financial hardship for the in-
dividual; or
‘‘(iv) the person determines that the
coinsurance and deductible amount would
not justify the costs of collection.’’.
(b) CONFORMING AMENDMENT.—Section 1128B(b)
of the Social Security Act (42 U.S.C. 1320a–7b(b)) is
amended by adding at the end the following new para-
graph:
‘‘(4) In this section, the term ‘remuneration’ in-
cludes the meaning given such term in section
1128A(i)(6).’’.
SEC. 224. ELIMINATION OF MOTIONS BY THE SECRETARY
ON DECISIONS OF THE PROVIDER REIM-
BURSEMENT REVIEW BOARD.
Section 
1878(f)(1) 
of 
such 
Act 
(42 
U.S.C.
1395oo(f)(1)) is amended—
(1) in the first sentence, by striking ‘‘unless the
Secretary, on his own motion, and within 60 days
after the provider of services is notified of the
Board’s decision, reverses, affirms, or modifies the
Board’s decision’’;
152
(2) in the second sentence, by striking ‘‘, or of
any reversal, affirmance, or modification by the Sec-
retary,’’ and ‘‘or of any reversal, affirmance, or
modification by the Secretary’’; and
(3) in the fifth sentence, by striking ‘‘and not
subject to review by the Secretary’’.
SEC. 225. EFFECTIVE DATE OF SUBTITLE.
In no case shall the amendments made by this sub-
title apply before October 1, 2000.
TITLE 
III—MEDICARE+CHOICE
REFORMS; PRESERVATION OF
MEDICARE 
PART 
B 
DRUG
BENEFIT
Subtitle A—Medicare+Choice
Reforms
SEC. 
301. 
INCREASE 
IN 
NATIONAL 
PER 
CAPITA
MEDICARE+CHOICE GROWTH PERCENTAGE
IN 2001 AND 2002.
Section 1853(c)(6)(B) of the Social Security Act (42
U.S.C. 1395w–23(c)(6)(B)) is amended—
(1) in clause (iv), by striking ‘‘for 2001, 0.5
percentage points’’ and inserting ‘‘for 2001, 0 per-
centage points’’; and
153
(2) in clause (v), by striking ‘‘for 2002, 0.3 per-
centage points’’ and inserting ‘‘for 2002, 0 percent-
age points’’.
SEC. 302. PERMANENTLY REMOVING APPLICATION OF
BUDGET NEUTRALITY BEGINNING IN 2002.
Section 1853(c) of the Social Security Act (42 U.S.C.
1395w–23(c)) is amended—
(1) in paragraph (1)(A), in the matter following
clause (ii), by inserting ‘‘(for years before 2002)’’
after ‘‘multiplied’’; and
(2) in paragraph (5), by inserting ‘‘(before
2002)’’ after ‘‘for each year’’.
SEC. 303. INCREASING MINIMUM PAYMENT AMOUNT.
(a) IN GENERAL.—Section 1853(c)(1)(B)(ii) of the
Social Security Act (42 U.S.C. 1395w–23(c)(1)(B)(ii)) is
amended—
(1) by striking ‘‘(ii) For a succeeding year’’ and
inserting ‘‘(ii)(I) Subject to subclause (II), for a suc-
ceeding year’’; and
(2) by adding at the end the following new sub-
clause:
‘‘(II) For 2002 for any of the 50
States and the District of Columbia,
$450.’’.
154
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to years beginning with 2002.
SEC. 304. ALLOWING MOVEMENT TO 50:50 PERCENT BLEND
IN 2002.
Section 1853(c)(2) of the Social Security Act (42
U.S.C. 1395w–23(c)(2)) is amended—
(1) by striking the period at the end of sub-
paragraph (F) and inserting a semicolon; and
(2) by adding after and below subparagraph
(F) the following:
‘‘except that a Medicare+Choice organization may
elect to apply subparagraph (F) (rather than sub-
paragraph (E)) for 2002.’’.
SEC. 305. INCREASED UPDATE FOR PAYMENT AREAS WITH
ONLY ONE OR NO MEDICARE+CHOICE CON-
TRACTS.
(a) IN GENERAL.—Section 1853(c)(1)(C)(ii) of the
Social Security Act (42 U.S.C. 1395w–23(c)(1)(C)(ii)) is
amended—
(1) by striking ‘‘(ii) For a subsequent year’’
and inserting ‘‘(ii)(I) Subject to subclause (II), for
a subsequent year’’; and
(2) by adding at the end the following new sub-
clause:
155
‘‘(II) During 2002, 2003, 2004, and
2005, in the case of a Medicare+Choice
payment area in which there is no more
than one contract entered into under this
part as of July 1 before the beginning of
the year, 102.5 percent of the annual
Medicare+Choice capitation rate under
this paragraph for the area for the pre-
vious year.’’.
(b) CONSTRUCTION.—The amendments made by sub-
section (a) do not affect the payment of a first time bonus
under section 1853(i) of the Social Security Act (42
U.S.C. 1395w–23(i)).
SEC. 306. PERMITTING HIGHER NEGOTIATED RATES IN
CERTAIN 
MEDICARE+CHOICE 
PAYMENT
AREAS BELOW NATIONAL AVERAGE.
Section 1853(c)(1) of the Social Security Act (42
U.S.C. 1395w–23(c)(1)) is amended—
(1) in the matter before subparagraph (A), by
striking ‘‘or (C)’’ and inserting ‘‘(C), or (D)’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(D) 
PERMITTING
HIGHER
RATES
THROUGH NEGOTIATION.—
156
‘‘(i) IN GENERAL.—For each year be-
ginning with 2004, in the case of a
Medicare+Choice payment area for which
the Medicare+Choice capitation rate under
this paragraph would otherwise be less
than the United States per capita cost
(USPCC), as calculated by the Secretary,
a Medicare+Choice organization may ne-
gotiate with the Medicare Benefits Admin-
istrator an annual per capita rate that—
‘‘(I) reflects an annual rate of in-
crease up to the rate of increase speci-
fied in clause (ii);
‘‘(II) takes into account audited
current data supplied by the organiza-
tion on its adjusted community rate
(as defined in section 1854(f)(3)); and
‘‘(III) does not exceed the United
States per capita cost, as projected by
the Secretary for the year involved.
‘‘(ii) MAXIMUM
RATE
DESCRIBED.—
The rate of increase specified in this clause
for a year is the rate of inflation in private
health insurance for the year involved, as
projected by the Medicare Benefits Admin-
157
istrator, and includes such adjustments as
may be necessary—
‘‘(I) to reflect the demographic
characteristics in the population under
this title; and
‘‘(II) to eliminate the costs of
prescription drugs.
‘‘(iii) ADJUSTMENTS
FOR
OVER
OR
UNDER PROJECTIONS.—If subparagraph is
applied to an organization and payment
area for a year, in applying this subpara-
graph for a subsequent year the provisions
of paragraph (6)(C) shall apply in the
same manner as such provisions apply
under this paragraph.’’.
SEC. 307. 10-YEAR PHASE IN OF RISK ADJUSTMENT BASED
ON DATA FROM ALL SETTINGS.
Section 1853(a)(3)(C)(ii) of the Social Security Act
(42 U.S.C. 1395w–23(c)(1)(C)(ii)) is amended—
(1) by striking the period at the end of sub-
clause (II) and inserting a semicolon; and
(2) by adding after and below subclause (II) the
following:
‘‘and, beginning in 2004, insofar as such
risk adjustment is based on data from all
158
settings, the methodology shall be phased
in equal increments over a 10 year period,
beginning with 2004 or (if later) the first
year in which such data is used.’’.
SEC. 308. DELAY FROM JULY TO OCTOBER, 2000 IN DEAD-
LINE FOR OFFERING AND WITHDRAWING
MEDICARE+CHOICE PLANS FOR 2001.
Notwithstanding any other provision of law, the dead-
line for a Medicare+Choice organization to withdraw the
offering of a Medicare+Choice plan under part C of title
XVIII of the Social Security Act (or otherwise to submit
information required for the offering of such a plan) for
2001 is delayed from July 1, 2000, to October 1, 2000,
and any such organization that provided notice of with-
drawal of such a plan during 2000 before the date of the
enactment of this Act may rescind such withdrawal at any
time before October 1, 2000.
Subtitle B—Preservation of Medi-
care Coverage of Drugs and
Biologicals
SEC. 311. PRESERVATION OF COVERAGE OF DRUGS AND
BIOLOGICALS UNDER PART B OF THE MEDI-
CARE PROGRAM.
(a) IN GENERAL.—Section 1861(s)(2) of the Social
Security Act (42 U.S.C. 1395x(s)(2)) is amended, in each
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of subparagraphs (A) and (B), by striking ‘‘(including
drugs and biologicals which cannot, as determined in ac-
cordance with regulations, be self-administered)’’ and in-
serting ‘‘(including injectable and infusable drugs and
biologicals which are not usually self-administered by the
patient)’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to drugs and biologicals adminis-
tered on or after October 1, 2000.
SEC. 312. GAO REPORT ON PART B PAYMENT FOR DRUGS
AND BIOLOGICALS AND RELATED SERVICES.
(a) IN GENERAL.—The Comptroller General of the
United States shall conduct a study to quantify the extent
to which reimbursement for drugs and biologicals under
the current medicare payment methodology (provided
under section 1842(o) of the Social Security Act (42
U.S.C. 1395u(o)) overpays for the cost of such drugs and
biologicals compared to the average acquisition cost paid
by physicians or other suppliers of such drugs.
(B) ELEMENTS.—The study shall also assess the con-
sequences of changing the current medicare payment
methodology to a payment methodology that is based on
the average acquisition cost of the drugs. The study shall,
at a minimum, assess the effects of such a reduction on—
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(1) the delivery of health care services to Medi-
care beneficiaries with cancer;
(2) total Medicare expenditures, including an
estimate of the number of patients who would, as a
result of the payment reduction, receive chemo-
therapy in a hospital rather than in a physician’s of-
fice;
(3) the delivery of dialysis services;
(4) the delivery of vaccines;
(5) the administration in physician offices of
drugs other than cancer therapy drugs; and
(6) the effect on the delivery of drug therapies
by hospital outpatient departments of changing the
average wholesale price as the basis for Medicare
pass-through payments to such departments, as in-
cluded in the Medicare, Medicaid, and SCHIP Bal-
anced Budget Refinement Act of 1999.
(c) PAYMENT FOR RELATED PROFESSIONAL SERV-
ICES.—The study shall also include a review of the extent
to which other payment methodologies under part B of
the medicare program, if any, intended to reimburse phy-
sician and other suppliers of drugs and biologicals de-
scribed in subsection (a) for costs incurred in handling,
storing and administering such drugs and biologicals are
inadequate to cover such costs and whether an additional
161
payment would be required to cover these costs under the
average acquisition cost methodology.
(d) CONSIDERATION OF ISSUES IN IMPLEMENTING
AN AVERAGE ACQUISITION COST METHODOLOGY.—The
study shall assess possible means by which a payment
method based on average acquisition cost could be imple-
mented, including at least the following:
(1) Identification of possible bases for deter-
mining the average acquisition cost of drugs, such as
surveys of wholesaler catalog prices, and determina-
tion of the advantages, disadvantages, and costs (to
the government and public) of each possible ap-
proach.
(2) The impact on individual providers and
practitioners if average or median prices are used as
the payment basis.
(3) Methods for updating and keeping current
the prices used as the payment basis.
(e) COORDINATION
WITH
BBRA STUDY.—The
Comptroller General shall conduct the study under this
section in coordination with the study provided for under
section 213(a) of the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of 1999 (113 Stat.
1501A–350), as enacted into law by section 1000(a)(6)
of Public Law 106–113.
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(f) REPORT.—Not later than 6 months after the date
of the enactment of this Act, the Comptroller General shall
submit a report on the study conducted under this section,
as well as the study referred to in subsection (e). Such
report shall include recommendations regarding such
changes in the medicare reimbursement policies described
in subsections (a) and (c) as the Comptroller General
deems appropriate, as well as the recommendations de-
scribed in section 213(b) of the Medicare, Medicaid, and
SCHIP Balanced Budget Refinement Act of 1999.
Passed the House of Representatives June 28, 2000.
Attest:
Clerk.