IB
Union Calendar No. 200
107TH CONGRESS
1ST SESSION
H. R. 2768
[Report No. 107–288, Part I]
To amend title XVIII of the Social Security Act to provide regulatory relief
and contracting flexibility under the Medicare Program.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 2, 2001
Mrs. JOHNSON of Connecticut (for herself, Mr. STARK, Mr. CAMP, Mr.
CARDIN, Mr. CRANE, Ms. DUNN of Washington, Mr. ENGLISH, Mr.
FOLEY, Mr. HAYWORTH, Mr. SAM JOHNSON of Texas, Mr. KLECZKA,
Mr. LEWIS of Georgia, Mr. LEWIS of Kentucky, Mr. MCCRERY, Mr.
MCDERMOTT, Mr. MCNULTY, Mr. RAMSTAD, Mr. SHAW, Mrs. THURMAN,
and Mr. WELLER) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on En-
ergy and Commerce, 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
NOVEMBER 13, 2001
Reported from the Committee on Ways and Means with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
NOVEMBER 13, 2001
Referral to the Committee on Energy and Commerce extended for a period
ending not later than November 16, 2001
NOVEMBER 16, 2001
Referral to the Committee on Energy and Commerce extended for a period
ending not later than December 7, 2001
DECEMBER 7, 2001
Additional sponsors: Mr. PORTMAN, Mr. ABERCROMBIE, Mr. MCHUGH, Mr.
LAMPSON, Mr. CROWLEY, Mr. STENHOLM, and Mr. GEORGE MILLER of
California
DECEMBER 7, 2001
Committee on Energy and Commerce discharged; committed to the Committee
of the Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on August 2, 2001]
A BILL
To amend title XVIII of the Social Security Act 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; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare Regulatory and Contracting Reform Act of
2001’’.
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Except
as otherwise specifically provided, whenever in this Act an
amendment is expressed in terms of an amendment to or
repeal of a section or other provision, the reference shall
be considered to be made to that section or other provision
of the Social Security Act.
(c) TABLE OF CONTENTS.—The table of contents of this
Act is as follows:
Sec. 1. Short title; amendments to Social Security Act; table of contents.
Sec. 2. Issuance of regulations.
Sec. 3. Compliance with changes in regulations and policies.
Sec. 4. Increased flexibility in medicare administration.
Sec. 5. Provider education and technical assistance.
Sec. 6. Small provider technical assistance demonstration program.
Sec. 7. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman.
Sec. 8. Provider appeals.
Sec. 9. Recovery of overpayments and prepayment review; enrollment of pro-
viders.
Sec. 10. Beneficiary outreach demonstration program.
Sec. 11. Policy development regarding evaluation and management (E & M) doc-
umentation guidelines.
Sec. 12. Improvement in oversight of technology and coverage.
Sec. 13. Miscellaneous provisions.
(d) CONSTRUCTION.—Nothing in this Act shall be
construed—
(1) to compromise or affect existing legal author-
ity for addressing fraud or abuse, whether it be crimi-
nal prosecution, civil enforcement, or administrative
remedies, including under sections 3729 through 3733
of title 31, United States Code (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 Act does not constitute consoli-
dation of the Federal Hospital Insurance Trust Fund and
the Federal Supplementary Medical Insurance Trust Fund
or reflect any position on that issue.
(e) USE OF TERM SUPPLIER IN MEDICARE.—Section
1861 (42 U.S.C. 1395x) is amended by inserting after sub-
section (c) the following new subsection:
‘‘Supplier
‘‘(d) The term ‘supplier’ means, unless the context oth-
erwise requires, a physician or other practitioner, a facility,
or other entity (other than a provider of services) that fur-
nishes items or services under this title.’’.
SEC. 2. ISSUANCE OF REGULATIONS.
(a) CONSOLIDATION OF PROMULGATION TO ONCE A
MONTH.—
(1) IN
GENERAL.—Section 1871 (42 U.S.C.
1395hh) is amended by adding at the end the fol-
lowing new subsection:
‘‘(d)(1) The Secretary shall issue proposed or final (in-
cluding interim final) regulations to carry out this title
only on one business day of every month unless publication
on another date is necessary to comply with requirements
under law.
‘‘(2) The Secretary shall coordinate issuance of new
regulations relating to a category of provider of services or
suppliers based on an analysis of the collective impact of
regulatory changes on that category of providers or sup-
pliers.’’.
(2) REPORT ON PUBLICATION OF REGULATIONS
ON A QUARTERLY BASIS.—Not later than 3 years after
the date of the enactment of this Act, the Secretary of
Health and Human Services shall submit to Congress
a report on the feasibility of requiring that regula-
tions described in section 1871(d) of the Social Secu-
rity Act only be promulgated on a single day every
calendar quarter.
(3) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply to regulations promulgated
on or after the date that is 30 days after the date of
the enactment of this Act.
(b) 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 Direc-
tor 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 regula-
tions based on differences in the complexity of the regula-
tion, the number and scope of comments received, and other
relevant factors. If the Secretary intends to vary such
timeline with respect to the publication of a final regula-
tion, the Secretary shall cause to have published in the Fed-
eral Register notice of the different timeline by not later
than the end of the comment period respecting such regula-
tion. 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 regula-
tion shall not continue in effect unless the Secretary pub-
lishes a notice of continuation of the regulation that in-
cludes an explanation of why the regular timeline was not
complied with. If such a notice is published, the regular
timeline for publication of the final regulation shall be
treated as having begun again as of the date of publication
of the notice.
‘‘(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
timeline under this paragraph and that provides an expla-
nation for such failures.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect on the date of the en-
actment of this Act. The Secretary of Health and
Human Services shall provide for an appropriate
transition to take into account the backlog of pre-
viously published interim final regulations.
(c) LIMITATIONS ON NEW MATTER IN FINAL REGULA-
TIONS.—
(1) IN GENERAL.—Section 1871(a) (42 U.S.C.
1395hh(a)), as amended by subsection (b), is further
amended by adding at the end the following new
paragraph:
‘‘(4) If the Secretary publishes notice of proposed rule-
making relating to a regulation (including an interim final
regulation), insofar as such final regulation includes a pro-
vision that is not a logical outgrowth of such notice of pro-
posed rulemaking, that 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 publication
of the provision again as a final regulation.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply to final regulations pub-
lished on or after the date of the enactment of this
Act.
SEC. 3. COMPLIANCE WITH CHANGES IN REGULATIONS AND
POLICIES.
(a) NO RETROACTIVE APPLICATION OF SUBSTANTIVE
CHANGES; TIMELINE FOR COMPLIANCE WITH SUBSTANTIVE
CHANGES
AFTER
NOTICE.—Section 1871 (42 U.S.C.
1395hh), as amended by section 2(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 date the change
was issued, unless the Secretary determines that such retro-
active application would have a positive impact on bene-
ficiaries or providers of services and suppliers or would be
necessary to comply with statutory requirements.
‘‘(B) A substantive change in regulations, manual in-
structions, interpretative rules, statements of policy, or
guidelines of general applicability under this title shall not
become effective until at least 30 days after the Secretary
issues the substantive change.
‘‘(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.’’.
(b) RELIANCE
ON GUIDANCE.—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 elec-
tronically) provided by the Secretary or by a medi-
care contractor (as defined in 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 sanction (including any penalty or requirement for re-
payment of any amount) if the provider of services or sup-
plier reasonably relied on such guidance.
‘‘(B) Subparagraph (A) shall not be construed as pre-
venting the recoupment or repayment (without any addi-
tional penalty) relating to an overpayment insofar as the
overpayment was solely the result of a clerical or technical
operational error.’’.
(c) GAO STUDY ON ADVISORY OPINION AUTHORITY.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study to determine the
feasibility and appropriateness of establishing in the
Secretary of Health and Human Services and the
Secretary’s contractors authority to provide legally
binding advisory opinions on appropriate interpreta-
tion and application of regulations to carry out the
medicare program under title XVIII of the Social Se-
curity Act. Such study shall examine the appropriate
timeframe for issuing such advisory opinions, as well
as the need for additional staff and funding to pro-
vide such opinions.
(2) REPORT.—The Comptroller General shall
submit to Congress a report on the study conducted
under paragraph (1) by not later than January 1,
2003.
SEC. 4. INCREASED FLEXIBILITY IN MEDICARE ADMINIS-
TRATION.
(a) CONSOLIDATION AND FLEXIBILITY IN MEDICARE
ADMINISTRATION.—
(1) IN GENERAL.—Title XVIII is amended by in-
serting after section 1874 the following new section:
‘‘CONTRACTS WITH MEDICARE ADMINISTRATIVE
CONTRACTORS
‘‘SEC. 1874A. (a) AUTHORITY.—
‘‘(1) AUTHORITY TO ENTER INTO CONTRACTS.—
The Secretary may enter into contracts with any en-
tity to serve as a medicare administrative contractor
with respect to the performance of any or all of the
functions described in paragraph (3) or parts of those
functions (or, to the extent provided in a contract, to
secure performance thereof by other entities).
‘‘(2) MEDICARE
ADMINISTRATIVE
CONTRACTOR
DEFINED.—For purposes of this title and title XI—
‘‘(A) IN GENERAL.—The term ‘medicare ad-
ministrative contractor’ means an agency, orga-
nization, or other person with a contract under
this section.
‘‘(B) APPROPRIATE MEDICARE ADMINISTRA-
TIVE CONTRACTOR.—With respect to the perform-
ance of a particular function or activity in rela-
tion to an individual entitled to benefits under
part A or enrolled under part B, or both, a spe-
cific provider of services or supplier (or class of
such providers of services or suppliers), the ‘ap-
propriate’ medicare administrative contractor is
the medicare administrative contractor that has
a contract under this section with respect to the
performance of that function or activity in rela-
tion to that individual, provider of services or
supplier or class of provider of services or sup-
plier.
‘‘(3) FUNCTIONS DESCRIBED.—The functions re-
ferred to in paragraph (1) are payment functions,
provider services functions, and beneficiary services
functions as follows:
‘‘(A) 
DETERMINATION
OF
PAYMENT
AMOUNTS.—Determining (subject to the provi-
sions of section 1878 and to such review by the
Secretary as may be provided for by the con-
tracts) the amount of the payments required pur-
suant to this title to be made to providers of
services, suppliers and individuals.
‘‘(B) MAKING
PAYMENTS.—Making pay-
ments described in subparagraph (A) (including
receipt, disbursement, and accounting for funds
in making such payments).
‘‘(C) BENEFICIARY EDUCATION AND ASSIST-
ANCE.—Providing education and outreach to in-
dividuals entitled to benefits under part A or en-
rolled under part B, or both, and providing as-
sistance to those individuals with specific issues,
concerns or problems.
‘‘(D) 
PROVIDER
CONSULTATIVE
SERV-
ICES.—Providing consultative services to institu-
tions, agencies, and other persons to enable them
to establish and maintain fiscal records nec-
essary for purposes of this title and otherwise to
qualify as providers of services or suppliers.
‘‘(E) COMMUNICATION WITH PROVIDERS.—
Communicating to providers of services and sup-
pliers any information or instructions furnished
to the medicare administrative contractor by the
Secretary and serving as a channel of commu-
nication from providers of services and suppliers
to the Secretary.
‘‘(F) PROVIDER EDUCATION AND TECHNICAL
ASSISTANCE.—Performing the functions relating
to provider education, training, and technical
assistance.
‘‘(G) ADDITIONAL FUNCTIONS.—Performing
such other functions as are necessary to carry
out the purposes of this title.
‘‘(4) RELATIONSHIP TO MIP CONTRACTS.—
‘‘(A) NONDUPLICATION OF DUTIES.—In en-
tering into contracts under this section, the Sec-
retary shall assure that functions of medicare
administrative contractors in carrying out ac-
tivities under parts A and B do not duplicate
activities carried out under the Medicare Integ-
rity Program under section 1893. The previous
sentence shall not apply with respect to the ac-
tivity described in section 1893(b)(5) (relating to
prior authorization of certain items of durable
medical equipment under section 1834(a)(15)).
‘‘(B) CONSTRUCTION.—An entity shall not
be treated as a medicare administrative con-
tractor merely by reason of having entered into
a contract with the Secretary under section
1893.
‘‘(b) CONTRACTING REQUIREMENTS.—
‘‘(1) USE OF COMPETITIVE PROCEDURES.—
‘‘(A) IN GENERAL.—Except as provided in
laws with general applicability to Federal acqui-
sition and procurement or in subparagraph (B),
the Secretary shall use competitive procedures
when entering into contracts with medicare ad-
ministrative contractors under this section, tak-
ing into account performance quality as well as
price and other factors.
‘‘(B) RENEWAL OF CONTRACTS.—The Sec-
retary may renew a contract with a medicare
administrative contractor under this section
from term to term without regard to section 5 of
title 41, United States Code, or any other provi-
sion of law requiring competition, if the medi-
care administrative contractor has met or ex-
ceeded the performance requirements applicable
with respect to the contract and contractor, ex-
cept that the Secretary shall provide for the ap-
plication of competitive procedures under such a
contract not less frequently than once every five
years.
‘‘(C) TRANSFER OF FUNCTIONS.—Functions
may be transferred among medicare administra-
tive contractors consistent with the provisions of
this paragraph. The Secretary shall ensure that
performance quality is considered in such trans-
fers.
‘‘(D) INCENTIVES FOR QUALITY.—The Sec-
retary shall provide incentives for medicare ad-
ministrative contractors to provide quality serv-
ice and to promote efficiency.
‘‘(2) COMPLIANCE
WITH
REQUIREMENTS.—No
contract under this section shall be entered into with
any medicare administrative contractor unless the
Secretary finds that such medicare administrative
contractor will perform its obligations under the con-
tract efficiently and effectively and will meet such re-
quirements as to financial responsibility, legal au-
thority, quality of services provided, and other mat-
ters as the Secretary finds pertinent.
‘‘(3) DEVELOPMENT OF SPECIFIC PERFORMANCE
REQUIREMENTS.—In developing contract performance
requirements, the Secretary shall develop performance
requirements to carry out the specific requirements
applicable under this title to a function described in
subsection (a)(3). In developing such requirements,
the Secretary may consult with providers of services
and suppliers and organizations and agencies per-
forming functions necessary to carry out the purposes
of this section with respect to such performance re-
quirements.
‘‘(4) INFORMATION
REQUIREMENTS.—The Sec-
retary shall not enter into a contract with a medicare
administrative contractor under this section unless
the contractor 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 Secretary finds nec-
essary to assure the correctness and verification
of the information and reports under subpara-
graph (A) and otherwise to carry out the pur-
poses of this title.
‘‘(5) SURETY BOND.—A contract with a medi-
care administrative contractor under this section may
require the medicare administrative contractor, and
any of its officers or employees certifying payments or
disbursing funds pursuant to the contract, or other-
wise participating 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 medi-
care 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 con-
tractor for the making of payments by it under sub-
section (a)(3)(B).
‘‘(2) PROHIBITION ON MANDATES FOR CERTAIN
DATA COLLECTION.—The Secretary may not require,
as a condition of entering into a contract under this
section, that the medicare administrative 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 situations in which
the provisions of section 1862(b) may apply.
‘‘(d) LIMITATION ON LIABILITY OF MEDICARE ADMIN-
ISTRATIVE CONTRACTORS AND CERTAIN OFFICERS.—
‘‘(1) CERTIFYING OFFICER.—No individual des-
ignated pursuant to a contract under this section as
a certifying officer shall, in the absence of gross neg-
ligence or intent to defraud the United States, be lia-
ble with respect to any payments certified by the in-
dividual under this section.
‘‘(2) DISBURSING OFFICER.—No disbursing offi-
cer shall, in the absence of gross negligence or intent
to defraud the United States, be liable with respect to
any payment by such officer under this section if it
was based upon an authorization (which meets the
applicable requirements for such internal controls es-
tablished by the Comptroller General) of a certifying
officer designated as provided in paragraph (1) of
this subsection.
‘‘(3) LIABILITY OF MEDICARE ADMINISTRATIVE
CONTRACTOR.—A medicare administrative contractor
shall be liable to the United States for a payment re-
ferred to in paragraph (1) or (2) if, in connection
with such payment, an individual referred to in ei-
ther such paragraph acted with gross negligence or
intent to defraud the United States.
‘‘(4) INDEMNIFICATION
BY
SECRETARY.—The
Secretary shall make payment to a medicare admin-
istrative contractor under contract with the Secretary
pursuant to this section, or to any member or em-
ployee thereof, or to any person who furnishes legal
counsel or services to such medicare administrative
contractor, in an amount equal to the reasonable
amount of the expenses incurred, as determined by the
Secretary, in connection with the defense of any civil
suit, action, or proceeding brought against such medi-
care administrative contractor or person related to
the performance of any duty, function, or activity
under such contract, if due care was exercised by the
contractor or person in the performance of such duty,
function, or activity.’’.
(2) CONSIDERATION OF INCORPORATION OF CUR-
RENT LAW STANDARDS.—In developing contract per-
formance requirements under section 1874A(b) of the
Social Security Act, as inserted by paragraph (1), the
Secretary of Health and Human Services shall con-
sider inclusion of the performance standards described
in sections 1816(f)(2) of such Act (relating to timely
processing of reconsiderations and applications for ex-
emptions) and section 1842(b)(2)(B) of such Act (re-
lating to timely review of determinations and fair
hearing requests), as such sections were in effect before
the date of the enactment of this Act.
(b) CONFORMING AMENDMENTS TO SECTION 1816 (RE-
LATING 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 medicare administrative contractors
under section 1874A.’’.
(3) Subsection (b) is repealed.
(4) Subsection (c) is amended—
(A) by striking paragraph (1); and
(B) in each of paragraphs (2)(A) and
(3)(A), by striking ‘‘agreement under this sec-
tion’’ and inserting ‘‘contract under section
1874A that provides for making payments under
this part’’.
(5) Subsections (d) through (i) are repealed.
(6) Subsections (j) and (k) are each amended—
(A) by striking ‘‘An agreement with an
agency or organization under this section’’ and
inserting ‘‘A contract with a medicare adminis-
trative contractor under section 1874A with re-
spect to the administration of this part’’; and
(B) by striking ‘‘such agency or organiza-
tion’’ and inserting ‘‘such medicare administra-
tive contractor’’ each place it appears.
(7) Subsection (l) is repealed.
(c) CONFORMING AMENDMENTS TO SECTION 1842 (RE-
LATING 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 medicare 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 admin-
istrative contractors’’; and
(iii) by striking subparagraphs (D)
and (E);
(C) in paragraph (3)—
(i) in the matter before subparagraph
(A), by striking ‘‘Each such contract shall
provide that the carrier’’ and inserting
‘‘The Secretary’’;
(ii) by striking ‘‘will’’ the first place it
appears in each of subparagraphs (A), (B),
(F), (G), (H), and (L) and inserting
‘‘shall’’;
(iii) in subparagraph (B), in the mat-
ter before clause (i), by striking ‘‘to the pol-
icyholders and subscribers of the carrier’’
and inserting ‘‘to the policyholders and sub-
scribers of the medicare administrative con-
tractor’’;
(iv) by striking subparagraphs (C),
(D), and (E);
(v) in subparagraph (H)—
(I) by striking ‘‘if it makes deter-
minations or payments with respect to
physicians’ services,’’; and
(II) by striking ‘‘carrier’’ and in-
serting ‘‘medicare administrative con-
tractor’’;
(vi) by striking subparagraph (I);
(vii) in subparagraph (L), by striking
the semicolon and inserting a period;
(viii) in the first sentence, after sub-
paragraph (L), by striking ‘‘and shall con-
tain’’ and all that follows through the pe-
riod; and
(ix) in the seventh sentence, by insert-
ing ‘‘medicare administrative contractor,’’
after ‘‘carrier,’’; and
(D) by striking paragraph (5);
(E) in paragraph (6)(D)(iv), by striking
‘‘carrier’’ and inserting ‘‘medicare administra-
tive contractor’’;
(F) in paragraph (7), by striking ‘‘the car-
rier’’ and inserting ‘‘the Secretary’’ each place it
appears.
(4) Subsection (c) is amended—
(A) by striking paragraph (1);
(B) in paragraph (2), by striking ‘‘contract
under this section which provides for the dis-
bursement of funds, as described in subsection
(a)(1)(B),’’ and inserting ‘‘contract under section
1874A that provides for making payments under
this part’’;
(C) in paragraph (3)(A), by striking ‘‘sub-
section 
(a)(1)(B)’’ 
and 
inserting 
‘‘section
1874A(a)(3)(B)’’;
(D) in paragraph (4), by striking ‘‘carrier’’
and inserting ‘‘medicare administrative con-
tractor’’;
(E) in paragraph (5), by striking ‘‘contract
under this section which provides for the dis-
bursement of funds, as described in subsection
(a)(1)(B), shall require the carrier’’ and ‘‘carrier
responses’’ and inserting ‘‘contract under section
1874A that provides for making payments under
this part shall require the medicare administra-
tive contractor’’ and ‘‘contractor responses’’, re-
spectively; and
(F) by striking paragraph (6).
(5) Subsections (d), (e), and (f) are repealed.
(6) Subsection (g) is amended by striking ‘‘car-
rier or carriers’’ and inserting ‘‘medicare administra-
tive contractor or contractors’’.
(7) Subsection (h) is amended—
(A) in paragraph (2)—
(i) by striking ‘‘Each carrier having
an agreement with the Secretary under sub-
section (a)’’ and inserting ‘‘The Secretary’’;
and
(ii) by striking ‘‘Each such carrier’’
and inserting ‘‘The Secretary’’;
(B) in paragraph (3)(A)—
(i) by striking ‘‘a carrier having an
agreement with the Secretary under sub-
section (a)’’ and inserting ‘‘medicare ad-
ministrative contractor having a contract
under section 1874A that provides for mak-
ing payments under this part’’; and
(ii) by striking ‘‘such carrier’’ and in-
serting ‘‘such contractor’’;
(C) in paragraph (3)(B)—
(i) by striking ‘‘a carrier’’ and insert-
ing ‘‘a medicare administrative contractor’’
each place it appears; and
(ii) by striking ‘‘the carrier’’ and in-
serting ‘‘the contractor’’ each place it ap-
pears; and
(D) in paragraphs (5)(A) and (5)(B)(iii),
by striking ‘‘carriers’’ and inserting ‘‘medicare
administrative contractors’’ each place it ap-
pears.
(8) Subsection (l) is amended—
(A) in paragraph (1)(A)(iii), by striking
‘‘carrier’’ and inserting ‘‘medicare administra-
tive contractor’’; and
(B) in paragraph (2), by striking ‘‘carrier’’
and inserting ‘‘medicare administrative con-
tractor’’.
(9) Subsection (p)(3)(A) is amended by striking
‘‘carrier’’ and inserting ‘‘medicare administrative
contractor’’.
(10) Subsection (q)(1)(A) is amended by striking
‘‘carrier’’.
(d) EFFECTIVE DATE; TRANSITION RULE.—
(1) EFFECTIVE DATE.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall take effect on October 1, 2003, and
the Secretary of Health and Human Services is au-
thorized to take such steps before such date as may be
necessary to implement such amendments on a timely
basis.
(2) GENERAL
TRANSITION
RULES.—The Sec-
retary shall take such steps as are necessary to pro-
vide for an appropriate transition from contracts
under section 1816 and section 1842 of the Social Se-
curity Act (42 U.S.C. 1395h, 1395u) to contracts
under section 1874A, as added by subsection (a)(1),
consistent with the requirements under such section to
competitively bid all contracts within 5 years after
the effective date in paragraph (1).
(3) AUTHORIZING CONTINUATION OF MIP FUNC-
TIONS
UNDER
CURRENT
CONTRACTS
AND
AGREE-
MENTS AND UNDER ROLLOVER CONTRACTS.—The pro-
visions contained in the exception in section
1893(d)(2) of the Social Security Act (42 U.S.C.
1395ddd(d)(2)) shall continue to apply notwith-
standing the amendments made by this section, and
any reference in such provisions to an agreement or
contract shall be deemed to include a contract under
section 1874A of such Act, as inserted by subsection
(a)(1), that continues the activities referred to in such
provisions.
(e) REFERENCES.—On and after the effective date pro-
vided under subsection (d), any reference to a fiscal inter-
mediary or carrier under title XI or XVIII of the Social
Security Act (or any regulation, manual instruction, inter-
pretative rule, statement of policy, or guideline issued to
carry out such titles) shall be deemed a reference to an ap-
propriate medicare administrative contractor (as provided
under section 1874A of the Social Security Act).
SEC. 5. PROVIDER EDUCATION AND TECHNICAL ASSIST-
ANCE.
(a) COORDINATION OF EDUCATION FUNDING.—
(1) IN GENERAL.—The Social Security Act is
amended by inserting after section 1888 the following
new section:
‘‘PROVIDER EDUCATION AND TECHNICAL ASSISTANCE
‘‘SEC. 1889. (a) COORDINATION OF EDUCATION FUND-
ING.—The Secretary shall coordinate the educational activi-
ties provided through medicare contractors (as defined in
subsection (i), including under section 1893) in order to
maximize the effectiveness of Federal education efforts for
providers of services and suppliers.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect on the date of the en-
actment of this Act.
(3) REPORT.—Not later than October 1, 2002,
the Secretary of Health and Human Services shall
submit to Congress a report that includes a descrip-
tion and evaluation of the steps taken to coordinate
the funding of provider education under section
1889(a) of the Social Security Act, as added by para-
graph (1).
(b) INCENTIVES TO IMPROVE CONTRACTOR PERFORM-
ANCE.—
(1) IN GENERAL.—Section 1874A, as added by
section 4(a)(1), is amended by adding at the end the
following new subsection:
‘‘(e) INCENTIVES TO IMPROVE CONTRACTOR PERFORM-
ANCE IN PROVIDER EDUCATION AND OUTREACH.—
‘‘(1) METHODOLOGY TO MEASURE CONTRACTOR
ERROR RATES.—In order to give medicare adminis-
trative contractors an incentive to implement effective
education and outreach programs for providers of
services and suppliers, the Secretary shall, in con-
sultation with representatives of providers and sup-
pliers, develop and implement by October 1, 2003, a
methodology to measure the specific claims payment
error rates of such contractors in the processing or re-
viewing of medicare claims.
‘‘(2) IDENTIFICATION OF BEST PRACTICES.—The
Secretary shall identify the best practices developed
by individual medicare administrative contractors for
educating providers of services and suppliers and how
to encourage the use of such best practices nation-
wide.’’.
(2) REPORT.—Not later than October 1, 2003,
the Secretary of Health and Human Services shall
submit to Congress a report that describes how the
Secretary intends to use the methodology developed
under section 1874A(e)(1) of the Social Security Act,
as added by paragraph (1), in assessing medicare
contractor performance in implementing effective edu-
cation and outreach programs, including whether to
use such methodology as the basis for performance bo-
nuses. The report shall include an analysis of the
sources of identified errors and potential changes in
systems of contractors and rules of the Secretary that
could reduce claims error rates.
(c) PROVISION
OF ACCESS
TO
AND PROMPT RE-
SPONSES FROM MEDICARE ADMINISTRATIVE CONTRAC-
TORS.—
(1) IN GENERAL.—Section 1874A, as added by
section 4(a)(1) and as amended by subsection (b), is
further amended by adding at the end the following
new subsection:
‘‘(f) RESPONSE TO INQUIRIES; TOLL-FREE LINES.—
‘‘(1) 
CONTRACTOR
RESPONSIBILITY.—Each
medicare administrative contractor shall, for those
providers of services and suppliers which submit
claims to the contractor for claims processing—
‘‘(A) respond in a clear, concise, and accu-
rate manner to specific billing and cost reporting
questions of providers of services and suppliers;
‘‘(B) maintain a toll-free telephone number
at which providers of services and suppliers may
obtain information regarding billing, coding,
and other appropriate information under this
title;
‘‘(C) maintain a system for identifying
(and disclosing, upon request) who provides the
information referred to in subparagraphs (A)
and (B); and
‘‘(D) monitor the accuracy, consistency, and
timeliness of the information so provided.
‘‘(2) EVALUATION.—In conducting evaluations of
individual medicare administrative contractors, the
Secretary shall take into account the results of the
monitoring conducted under paragraph (1)(D). The
Secretary shall, in consultation with organizations
representing providers of services and suppliers, estab-
lish standards relating to the accuracy, consistency,
and timeliness of the information so provided.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect October 1, 2003.
(d) IMPROVED PROVIDER EDUCATION
AND TRAIN-
ING.—
(1) IN GENERAL.—Section 1889, as added by
subsection (a), is amended by adding at the end the
following new subsections:
‘‘(b) ENHANCED EDUCATION AND TRAINING.—
‘‘(1) ADDITIONAL RESOURCES.—For each of fis-
cal years 2003 and 2004, there are authorized to be
appropriated to the Secretary (in appropriate part
from the Federal Hospital Insurance Trust Fund and
the Federal Supplementary Medical Insurance Trust
Fund) $10,000,000.
‘‘(2) USE.—The funds made available under
paragraph (1) shall be used to increase the conduct by
medicare contractors of education and training of
providers of services and suppliers regarding billing,
coding, and other appropriate items.
‘‘(c) TAILORING EDUCATION AND TRAINING ACTIVI-
TIES FOR SMALL PROVIDERS OR SUPPLIERS.—
‘‘(1) IN GENERAL.—Insofar as a medicare con-
tractor conducts education and training activities, it
shall tailor such activities to meet the special needs
of small providers of services or suppliers (as defined
in paragraph (2)).
‘‘(2) SMALL
PROVIDER
OF
SERVICES
OR
SUP-
PLIER.—In this subsection, the term ‘small provider
of services or supplier’ means—
‘‘(A) a provider of services with fewer than
25 full-time-equivalent employees; or
‘‘(B) a supplier with fewer than 10 full-
time-equivalent employees.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect on October 1, 2002.
(e) REQUIREMENT TO MAINTAIN INTERNET SITES.—
(1) IN GENERAL.—Section 1889, as added by
subsection (a) and as amended by subsection (d), is
further amended by adding at the end the following
new subsection:
‘‘(d) INTERNET SITES; FAQS.—The Secretary, and
each medicare contractor insofar as it provides services (in-
cluding claims processing) for providers of services or sup-
pliers, shall maintain an Internet site which—
‘‘(1) provides answers in an easily accessible for-
mat to frequently asked questions, and
‘‘(2) includes other published materials of the
contractor,
that relate to providers of services and suppliers under the
programs under this title (and title XI insofar as it relates
to such programs).’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect on October 1, 2002.
(f) ADDITIONAL PROVIDER EDUCATION PROVISIONS.—
(1) IN GENERAL.—Section 1889, as added by
subsection (a) and as amended by subsections (d) and
(e), is further amended by adding at the end the fol-
lowing new subsections:
‘‘(e) ENCOURAGEMENT OF PARTICIPATION IN EDU-
CATION PROGRAM ACTIVITIES.—A medicare contractor
may not use a record of attendance at (or failure to attend)
educational activities or other information gathered during
an educational program conducted under this section or
otherwise by the Secretary to select or track providers of
services or suppliers for the purpose of conducting any type
of audit or prepayment review.
‘‘(f) CONSTRUCTION.—Nothing in this section or sec-
tion 1893(g) shall be construed as providing for disclosure
by a medicare contractor—
‘‘(1) of the screens used for identifying claims
that will be subject to medical review; or
‘‘(2) of information that would compromise
pending law enforcement activities or reveal findings
of law enforcement-related audits.
‘‘(g) DEFINITIONS.—For purposes of this section, the
term ‘medicare contractor’ includes the following:
‘‘(1) A medicare administrative contractor with
a contract under section 1874A, including a fiscal
intermediary with a contract under section 1816 and
a carrier with a contract under section 1842.
‘‘(2) An eligible entity with a contract under sec-
tion 1893.
Such term does not include, with respect to activities of a
specific provider of services or supplier an entity that has
no authority under this title or title IX with respect to such
activities and such provider of services or supplier.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall take effect on the date of the en-
actment of this Act.
SEC. 6. SMALL PROVIDER TECHNICAL ASSISTANCE DEM-
ONSTRATION PROGRAM.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall establish a demonstration pro-
gram (in this section referred to as the ‘‘demonstra-
tion program’’) under which technical assistance de-
scribed in paragraph (2) is made available, upon re-
quest and on a voluntary basis, to small providers of
services or suppliers in order to improve compliance
with the applicable requirements of the programs
under medicare program under title XVIII of the So-
cial Security Act (including provisions of title XI of
such Act insofar as they relate to such title and are
not administered by the Office of the Inspector Gen-
eral of the Department of Health and Human Serv-
ices).
(2) FORMS
OF
TECHNICAL
ASSISTANCE.—The
technical assistance described in this paragraph is—
(A) evaluation and recommendations re-
garding billing and related systems; and
(B) information and assistance regarding
policies and procedures under the medicare pro-
gram, including coding and reimbursement.
(3) SMALL
PROVIDERS
OF
SERVICES
OR
SUP-
PLIERS.—In this section, the term ‘‘small providers of
services or suppliers’’ means—
(A) a provider of services with fewer than
25 full-time-equivalent employees; or
(B) a supplier with fewer than 10 full-time-
equivalent employees.
(b) QUALIFICATION OF CONTRACTORS.—In conducting
the demonstration program, the Secretary of Health and
Human Services shall enter into contracts with qualified
organizations (such as peer review organizations or entities
described in section 1889(g)(2) of the Social Security Act,
as inserted by section 5(f)(1)) with appropriate expertise
with billing systems of the full range of providers of services
and suppliers to provide the technical assistance. In award-
ing such contracts, the Secretary shall consider any prior
investigations of the entity’s work by the Inspector General
of Department of Health and Human Services or the Comp-
troller General of the United States.
(c) DESCRIPTION OF TECHNICAL ASSISTANCE.—The
technical assistance provided under the demonstration pro-
gram shall include a direct and in-person examination of
billing systems and internal controls of small providers of
services or suppliers to determine program compliance and
to suggest more efficient or effective means of achieving such
compliance.
(d) AVOIDANCE OF RECOVERY ACTIONS FOR PROB-
LEMS
IDENTIFIED
AS
CORRECTED.—The Secretary of
Health and Human Services shall provide that, absent evi-
dence of fraud and notwithstanding any other provision of
law, any errors found in a compliance review for a small
provider of services or supplier that participates in the
demonstration program shall not be subject to recovery ac-
tion if the technical assistance personnel under the program
determine that—
(1) the problem that is the subject of the compli-
ance review has been corrected to their satisfaction
within 30 days of the date of the visit by such per-
sonnel to the small provider of services or supplier;
and
(2) such problem remains corrected for such pe-
riod as is appropriate.
(e) GAO EVALUATION.—Not later than 2 years after
the date of the date the demonstration program is first im-
plemented, the Comptroller General, in consultation with
the Inspector General of the Department of Health and
Human Services, shall conduct an evaluation of the dem-
onstration program. The evaluation shall include a deter-
mination of whether claims error rates are reduced for
small providers of services or suppliers who participated
in the program and the extent of improper payments made
as a result of the demonstration program. The Comptroller
General shall submit a report to the Secretary and the Con-
gress on such evaluation and shall include in such report
recommendations regarding the continuation or extension
of the demonstration program.
(f) FINANCIAL PARTICIPATION BY PROVIDERS.—The
provision of technical assistance to a small provider of serv-
ices or supplier under the demonstration program is condi-
tioned upon the small provider of services or supplier pay-
ing an amount estimated (and disclosed in advance of a
provider’s or supplier’s participation in the program) to
be equal to 25 percent of the cost of the technical assistance.
(g) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated to the Secretary of Health
and Human Services (in appropriate part from the Federal
Hospital Insurance Trust Fund and the Federal Supple-
mentary Medical Insurance Trust Fund) to carry out the
demonstration program—
(1) for fiscal year 2003, $1,000,000, and
(2) for fiscal year 2004, $6,000,000.
SEC. 7. MEDICARE PROVIDER OMBUDSMAN; MEDICARE
BENEFICIARY OMBUDSMAN.
(a) MEDICARE PROVIDER OMBUDSMAN.—Section 1868
(42 U.S.C. 1395ee) is amended—
(1) by adding at the end of the heading the fol-
lowing: ‘‘; MEDICARE PROVIDER OMBUDSMAN’’;
(2) by inserting ‘‘PRACTICING PHYSICIANS ADVI-
SORY COUNCIL.—(1)’’ after ‘‘(a)’’;
(3) in paragraph (1), as so redesignated under
paragraph (2), by striking ‘‘in this section’’ and in-
serting ‘‘in this subsection’’;
(4) by redesignating subsections (b) and (c) as
paragraphs (2) and (3), respectively; and
(5) by adding at the end the following new sub-
section:
‘‘(b) MEDICARE PROVIDER OMBUDSMAN.—The Sec-
retary shall appoint a Medicare Provider Ombudsman. The
Ombudsman shall—
‘‘(1) provide assistance, on a confidential basis,
to providers of services and suppliers with respect to
complaints, grievances, and requests for information
concerning the programs under this title (including
provisions of title XI insofar as they relate to this
title and are not administered by the Office of the In-
spector General of the Department of Health and
Human Services) and in the resolution of unclear or
conflicting guidance given by the Secretary and medi-
care contractors to such providers of services and sup-
pliers regarding such programs and provisions and
requirements under this title and such provisions;
and
‘‘(2) submit recommendations to the Secretary
for improvement in the administration of this title
and such provisions, including—
‘‘(A) recommendations to respond to recur-
ring patterns of confusion in this title and such
provisions (including recommendations regard-
ing suspending imposition of sanctions where
there is widespread confusion in program ad-
ministration), and
‘‘(B) recommendations to provide for an ap-
propriate and consistent response (including not
providing for audits) in cases of self-identified
overpayments by providers of services and sup-
pliers.’’.
(b) MEDICARE
BENEFICIARY
OMBUDSMAN.—Title
XVIII is amended by inserting after section 1806 the fol-
lowing new section:
‘‘MEDICARE BENEFICIARY OMBUDSMAN
‘‘SEC. 1807. (a) IN GENERAL.—The Secretary shall
appoint within the Department of Health and Human
Services a Medicare Beneficiary Ombudsman who shall
have expertise and experience in the fields of health care
and advocacy.
‘‘(b) DUTIES.—The Medicare Beneficiary Ombudsman
shall—
‘‘(1) receive complaints, grievances, and requests
for information submitted by a medicare beneficiary,
with respect to any aspect of the medicare program;
‘‘(2) provide assistance with respect to com-
plaints, grievances, and requests referred to in para-
graph (1), including—
‘‘(A) assistance in collecting relevant infor-
mation for such beneficiaries, to seek an appeal
of a decision or determination made by a fiscal
intermediary, carrier, Medicare+Choice organi-
zation, or the Secretary; and
‘‘(B) assistance to such beneficiaries with
any problems arising from disenrollment from a
Medicare+Choice plan under part C; and
‘‘(3) submit annual reports to Congress and the
Secretary that describe the activities of the Office and
that include such recommendations for improvement
in the administration of this title as the Ombudsman
determines appropriate.’’.
(c) FUNDING.—There are authorized to be appro-
priated to the Secretary of Health and Human Services (in
appropriate part from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insur-
ance Trust Fund) to carry out the provisions of subsection
(b) of section 1868 of the Social Security Act (relating to
the Medicare Provider Ombudsman), as added by subsection
(a)(5) and section 1807 of such Act (relating to the Medi-
care Beneficiary Ombudsman), as added by subsection (b),
such sums as are necessary for fiscal year 2002 and each
succeeding fiscal year.
(d) USE OF CENTRAL, TOLL-FREE NUMBER (1–800–
MEDICARE).—Section 1804(b) (42 U.S.C. 1395b–2(b)) is
amended by adding at the end the following: ‘‘The Secretary
shall provide, through the toll-free number 1–800–MEDI-
CARE, for a means by which individuals seeking informa-
tion about, or assistance with, such programs who phone
Union Calendar No. 200
107TH CONGRESS
1ST SESSION
H. R. 2768
[Report No. 107–288, Part I]
A BILL
To amend title XVIII of the Social Security Act to
provide regulatory relief and contracting flexi-
bility under the Medicare Program.
DECEMBER 7, 2001
Committee on Energy and Commerce discharged; com-
mitted to the Committee of the Whole House on the
State of the Union and ordered to be printed