I 
108TH CONGRESS 
1ST SESSION H. R. 3584
To amend title XVIII of the Social Security Act to increase the amount 
of payment for physicians’ services under the Medicare Program and 
to provide regulatory relief and contracting flexibility under the Medicare 
Program. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 21, 2003
Ms. BERKLEY introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committee on 
Ways and Means, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to increase 
the amount of payment for physicians’ services under 
the Medicare Program and to provide regulatory relief 
and contracting flexibility under the Medicare Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU-
RITY ACT; REFERENCES TO BIPA AND SEC-
RETARY; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medicare Regulatory Fairness and Physician Fee Update 
Act’’. 
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in divi-
sion A of this Act an amendment is expressed in terms 
of an amendment to or repeal of a section or other provi-
sion, the reference shall be considered to be made to that 
section or other provision of the Social Security Act. 
(c) BIPA; SECRETARY.—In this Act: 
(1) BIPA.—The term ‘‘BIPA’’ means the 
Medicare, Medicaid, and SCHIP Benefits Improve-
ment and Protection Act of 2000, as enacted into 
law by section 1(a)(6) of Public Law 106–554. 
(2) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services.
(d) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; amendments to Social Security Act; references to BIPA and 
Secretary; table of contents. 
TITLE I—PROVISIONS RELATING TO PAYMENT FOR PHYSICIANS’ 
SERVICES 
Sec. 101. Revision of updates for physicians’ services. 
TITLE II—ADMINISTRATIVE IMPROVEMENTS, REGULATORY 
REDUCTION, AND CONTRACTING REFORM
Subtitle A—Regulatory Reform 
Sec. 201. Construction; definition of supplier. 
Sec. 202. Issuance of regulations. 
Sec. 203. Compliance with changes in regulations and policies. 
Sec. 204. Reports and studies relating to regulatory reform. 
Subtitle B—Contracting Reform 
Sec. 211. Increased flexibility in medicare administration. 
Sec. 212. Requirements for information security for medicare administrative 
contractors. 
Subtitle C—Education and Outreach 
Sec. 221. Provider education and technical assistance. 
Sec. 222. Small provider technical assistance demonstration program. 
Sec. 223. Medicare Beneficiary Ombudsman. 
Sec. 224. Beneficiary outreach demonstration program. 
Sec. 225. Inclusion of additional information in notices to beneficiaries about 
skilled nursing facility benefits. 
Sec. 226. Information on medicare-certified skilled nursing facilities in hospital 
discharge plans. 
Subtitle D—Appeals and Recovery 
Sec. 231. Transfer of responsibility for medicare appeals. 
Sec. 232. Process for expedited access to review. 
Sec. 233. Revisions to medicare appeals process. 
Sec. 234. Prepayment review. 
Sec. 235. Recovery of overpayments. 
Sec. 236. Provider enrollment process; right of appeal. 
Sec. 237. Process for correction of minor errors and omissions without pur-
suing appeals process. 
Sec. 238. Prior determination process for certain items and services; advance 
beneficiary notices. 
Sec. 239. Appeals by providers when there is no other party available. 
Sec. 240. Revisions to appeals timeframes and amounts. 
Sec. 241. Mediation process for local coverage determinations.
TITLE I—PROVISIONS RELATING 
TO 
PAYMENT 
FOR 
PHYSI-
CIANS’ SERVICES
SEC. 101. REVISION OF UPDATES FOR PHYSICIANS’ SERV-
ICES. 
(a) UPDATE FOR 2004 AND 2005.—Section 1848(d) 
of the Social Security Act (42 U.S.C. 1395w–4(d)) is
(1) to compromise or affect existing legal rem-
edies for addressing fraud or abuse, whether it be 
criminal prosecution, civil enforcement, or adminis-
trative remedies, including under sections 3729 
through 3733 of title 31, United States Code (com-
monly known as the ‘‘False Claims Act’’); or 
(2) to prevent or impede the Department of 
Health and Human Services in any way from its on-
going efforts to eliminate waste, fraud, and abuse in 
the medicare program. 
Furthermore, the consolidation of medicare administrative 
contracting set forth in this division does not constitute 
consolidation of the Federal Hospital Insurance Trust 
Fund and the Federal Supplementary Medical Insurance 
Trust Fund or reflect any position 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: 
‘‘Supplier 
‘‘(d) The term ‘supplier’ means, unless the context 
otherwise requires, a physician or other practitioner, a fa-
cility, or other entity (other than a provider of services) 
that furnishes items or services under this title.’’.
SEC. 202. 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 fol-
lowing new paragraph: 
‘‘(3)(A) The Secretary, in consultation with the Di-
rector of the Office of Management and Budget, shall es-
tablish 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 regula-
tions based on differences in the complexity of the regula-
tion, the number and scope of comments received, and 
other relevant factors, but shall not be longer than 3 years 
except under exceptional circumstances. If the Secretary 
intends to vary such timeline with respect to the publica-
tion of a final regulation, the Secretary shall cause to have 
published in the Federal Register notice of the different 
timeline by not later than the timeline previously estab-
lished 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 comment, the interim final 
regulation shall not continue in effect unless the Secretary 
publishes (at the end of the regular timeline and, if appli-
cable, at the end of each succeeding 1-year period) a notice 
of continuation of the regulation that includes an expla-
nation 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 pre-
viously extended under this paragraph) for publication of 
the final regulation shall be treated as having been ex-
tended for 1 additional year. 
‘‘(D) The Secretary shall annually submit to Con-
gress 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 reg-
ulations. 
(b) LIMITATIONS ON NEW MATTER IN FINAL REGU-
LATIONS.—
(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 in-
terim final rule, such provision shall be treated as a pro-
posed regulation and shall not take effect until there is 
the further opportunity for public comment and a publica-
tion of the provision again as a final regulation.’’. 
(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. 203. COMPLIANCE WITH CHANGES IN REGULATIONS 
AND POLICIES. 
(a) NO
RETROACTIVE
APPLICATION
OF
SUB-
STANTIVE CHANGES.—
(1) IN
GENERAL.—Section 1871 (42 U.S.C. 
1395hh), as amended by section 202(a), is amended 
by adding at the end the following new subsection: 
‘‘(e)(1)(A) A substantive change in regulations, man-
ual instructions, interpretative rules, statements of policy, 
or guidelines of general applicability under this title shall
not be applied (by extrapolation or otherwise) retroactively 
to items and services furnished before the effective date 
of the change, unless the Secretary determines that—
‘‘(i) such retroactive application is necessary to 
comply with statutory requirements; or 
‘‘(ii) failure to apply the change retroactively 
would be contrary to the public interest.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to substantive changes 
issued on or after the date of the enactment of this 
Act. 
(b) TIMELINE FOR COMPLIANCE WITH SUBSTANTIVE 
CHANGES AFTER NOTICE.—
(1) IN
GENERAL.—Section 1871(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 sub-
stantive 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 pub-
lished, as the case may be, the substantive change. 
‘‘(ii) The Secretary may provide for such a sub-
stantive 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 pur-
suant 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 section 1889(g)) 
acting within the scope of the contractor’s contract