168
and suppliers affected by such trans-
fer, and contact information for the 
contractors involved). 
‘‘(D) INCENTIVES FOR QUALITY.—The 
Secretary shall provide incentives for 
medicare administrative contractors 
to provide quality service and to pro-
mote efficiency. 
‘‘(2) 
COMPLIANCE
WITH
REQUIRE-
MENTS.—No contract under this section 
shall be entered into with any medicare 
administrative contractor unless the Sec-
retary finds that such medicare adminis-
trative contractor will perform its obliga-
tions under the contract efficiently and 
effectively and will meet such require-
ments as to financial responsibility, legal 
authority, quality of services provided, 
and other matters as the Secretary finds 
pertinent. 
‘‘(3) PERFORMANCE REQUIREMENTS.—
‘‘(A) 
DEVELOPMENT
OF
SPECIFIC 
PERFORMANCE
REQUIREMENTS.—In de-
veloping contract performance re-
quirements, the Secretary shall de-
169
velop performance requirements ap-
plicable to functions described in 
subsection (a)(4). 
‘‘(B) CONSULTATION.— In devel-
oping such requirements, the Sec-
retary may consult with providers of 
services and suppliers, organizations 
representing individuals entitled to 
benefits under part A or enrolled 
under part B, or both, and organiza-
tions and agencies performing func-
tions necessary to carry out the pur-
poses of this section with respect to 
such performance requirements. 
‘‘(C) INCLUSION IN CONTRACTS.—All 
contractor performance requirements 
shall be set forth in the contract be-
tween the Secretary and the appro-
priate medicare administrative con-
tractor. Such performance require-
ments—
‘‘(i) shall reflect the perform-
ance 
requirements 
developed 
under subparagraph (A), but may
170
include additional performance 
requirements; 
‘‘(ii) shall be used for evalu-
ating 
contractor 
performance 
under the contract; and 
‘‘(iii) shall be consistent with 
the written statement of work 
provided under the contract. 
‘‘(4) INFORMATION REQUIREMENTS.—The 
Secretary shall not enter into a contract 
with a medicare administrative con-
tractor under this section unless the con-
tractor agrees—
‘‘(A) to furnish to the Secretary 
such timely information and reports 
as the Secretary may find necessary 
in performing his functions under 
this title; and 
‘‘(B) to maintain such records and 
afford such access thereto as the Sec-
retary finds necessary to assure the 
correctness and verification of the in-
formation and reports under subpara-
graph (A) and otherwise to carry out 
the purposes of this title.
171
‘‘(5) SURETY BOND.—A contract with a 
medicare 
administrative 
contractor 
under this section may require the medi-
care administrative contractor, and any 
of its officers or employees certifying 
payments or disbursing funds pursuant 
to the contract, or otherwise partici-
pating in carrying out the contract, to 
give surety bond to the United States in 
such amount as the Secretary may deem 
appropriate. 
‘‘(c) TERMS AND CONDITIONS.—
‘‘(1) IN GENERAL.—A contract with any 
medicare 
administrative 
contractor 
under this section may contain such 
terms and conditions as the Secretary 
finds necessary or appropriate and may 
provide for advances of funds to the 
medicare administrative contractor for 
the making of payments by it under sub-
section (a)(4)(B). 
‘‘(2) PROHIBITION
ON
MANDATES
FOR 
CERTAIN DATA COLLECTION.—The Secretary 
may not require, as a condition of enter-
ing into, or renewing, a contract under
172
this section, that the medicare adminis-
trative contractor match data obtained 
other than in its activities under this title 
with data used in the administration of 
this title for purposes of identifying situ-
ations in which the provisions of section 
1862(b) may apply. 
‘‘(d) LIMITATION ON LIABILITY OF MEDICARE 
ADMINISTRATIVE
CONTRACTORS
AND
CERTAIN 
OFFICERS.—
‘‘(1) CERTIFYING
OFFICER.—No indi-
vidual designated pursuant to a contract 
under this section as a certifying officer 
shall, in the absence of the reckless dis-
regard of the individual’s obligations or 
the intent by that individual to defraud 
the United States, be liable with respect 
to any payments certified by the indi-
vidual under this section. 
‘‘(2) 
DISBURSING
OFFICER.—No 
dis-
bursing officer shall, in the absence of 
the reckless disregard of the officer’s ob-
ligations or the intent by that officer to 
defraud the United States, be liable with 
respect to any payment by such officer
173
under this section if it was based upon an 
authorization (which meets the applica-
ble requirements for such internal con-
trols established by the Comptroller Gen-
eral) of a certifying officer designated as 
provided in paragraph (1) of this sub-
section. 
‘‘(3) LIABILITY
OF
MEDICARE
ADMINIS-
TRATIVE CONTRACTOR.—
‘‘(A) IN GENERAL.—No medicare ad-
ministrative contractor shall be liable 
to the United States for a payment by 
a certifying or disbursing officer un-
less, in connection with such pay-
ment, the medicare administrative 
contractor acted with reckless dis-
regard of its obligations under its 
medicare administrative contract or 
with intent to defraud the United 
States. 
‘‘(B) 
RELATIONSHIP
TO
FALSE 
CLAIMS
ACT.—Nothing in this sub-
section shall be construed to limit li-
ability for conduct that would con-
stitute a violation of sections 3729
174
through 3731 of title 31, United States 
Code (commonly known as the ‘False 
Claims Act’). 
‘‘(4) INDEMNIFICATION BY SECRETARY.—
‘‘(A) IN GENERAL.—Subject to sub-
paragraphs (B) and (D), in the case of 
a medicare administrative contractor 
(or a person who is a director, officer, 
or employee of such a contractor or 
who is engaged by the contractor to 
participate directly in the claims ad-
ministration process) who is made a 
party to any judicial or administra-
tive proceeding arising from or relat-
ing directly to the claims administra-
tion process under this title, the Sec-
retary may, to the extent the Sec-
retary determines to be appropriate 
and as specified in the contract with 
the contractor, indemnify the con-
tractor and such persons. 
‘‘(B) CONDITIONS.—The Secretary 
may 
not 
provide 
indemnification 
under subparagraph (A) insofar as 
the liability for such costs arises di-
175
rectly from conduct that is deter-
mined by the judicial proceeding or 
by the Secretary to be criminal in na-
ture, fraudulent, or grossly negligent. 
If indemnification is provided by the 
Secretary with respect to a con-
tractor before a determination that 
such costs arose directly from such 
conduct, the contractor shall reim-
burse the Secretary for costs of in-
demnification. 
‘‘(C) SCOPE OF INDEMNIFICATION.—
Indemnification 
by 
the 
Secretary 
under subparagraph (A) may include 
payment of judgments, settlements 
(subject 
to 
subparagraph 
(D)), 
awards, and costs (including reason-
able legal expenses). 
‘‘(D) WRITTEN
APPROVAL
FOR
SET-
TLEMENTS.—A contractor or other per-
son described in subparagraph (A) 
may not propose to negotiate a settle-
ment or compromise of a proceeding 
described in such subparagraph with-
out the prior written approval of the
176
Secretary to negotiate such settle-
ment or compromise. Any indem-
nification under subparagraph (A) 
with respect to amounts paid under a 
settlement or compromise of a pro-
ceeding described in such subpara-
graph are conditioned upon prior 
written approval by the Secretary of 
the final settlement or compromise. 
‘‘(E) CONSTRUCTION.—Nothing in 
this paragraph shall be construed—
‘‘(i) to change any common 
law immunity that may be avail-
able to a medicare administrative 
contractor or person described in 
subparagraph (A); or 
‘‘(ii) to permit the payment of 
costs 
not 
otherwise 
allowable, 
reasonable, or allocable under the 
Federal Acquisition Regulations.’’. 
(2) CONSIDERATION OF INCORPORATION 
OF
CURRENT
LAW
STANDARDS.—In devel-
oping 
contract 
performance 
require-
ments under section 1874A(b) of the So-
cial Security Act, as inserted by para-
177
graph (1), the Secretary shall consider in-
clusion of the performance standards de-
scribed in sections 1816(f)(2) of such Act 
(relating to timely processing of reconsid-
erations and applications for exemptions) 
and section 1842(b)(2)(B) of such Act (re-
lating to timely review of determinations 
and fair hearing requests), as such sec-
tions were in effect before the date of the 
enactment of this Act. 
(b) CONFORMING AMENDMENTS TO SECTION 
1816 (RELATING TO FISCAL INTERMEDIARIES).—
Section 1816 (42 U.S.C. 1395h) is amended as 
follows: 
(1) The heading is amended to read as 
follows: 
‘‘PROVISIONS RELATING TO THE ADMINISTRATION 
OF PART A’’. 
(2) Subsection (a) is amended to read 
as follows: 
‘‘(a) The administration of this part shall 
be conducted through contracts with medi-
care administrative contractors under section 
1874A.’’. 
(3) Subsection (b) is repealed. 
(4) Subsection (c) is amended—
178
(A) by striking paragraph (1); and
(B) in each of paragraphs (2)(A) 
and (3)(A), by striking ‘‘agreement 
under this section’’ and inserting 
‘‘contract under section 1874A that 
provides for making payments under 
this part’’. 
(5) Subsections (d) through (i) are re-
pealed. 
(6) Subsections (j) and (k) are each 
amended—
(A) by striking ‘‘An agreement 
with an agency or organization under 
this section’’ and inserting ‘‘A con-
tract with a medicare administrative 
contractor under section 1874A with 
respect to the administration of this 
part’’; and 
(B) by striking ‘‘such agency or 
organization’’ 
and 
inserting 
‘‘such 
medicare administrative contractor’’ 
each place it appears. 
(7) Subsection (l) is repealed.
179
(c) CONFORMING AMENDMENTS TO SECTION 
1842 (RELATING
TO CARRIERS).—Section 1842 
(42 U.S.C. 1395u) is amended as follows: 
(1) The heading is amended to read as 
follows: 
‘‘PROVISIONS RELATING TO THE ADMINISTRATION 
OF PART B’’. 
(2) Subsection (a) is amended to read 
as follows: 
‘‘(a) The administration of this part shall 
be conducted through contracts with medi-
care administrative contractors under section 
1874A.’’. 
(3) Subsection (b) is amended—
(A) by striking paragraph (1); 
(B) in paragraph (2)—
(i) by striking subparagraphs 
(A) and (B); 
(ii) in subparagraph (C), by 
striking ‘‘carriers’’ and inserting 
‘‘medicare administrative contrac-
tors’’; and 
(iii) 
by 
striking 
subpara-
graphs (D) and (E); 
(C) in paragraph (3)—