230
representative), and neither party objects; 
or 
‘‘(iii) prohibit receipt of compensation 
by a reviewing professional from a con-
tractor if the compensation is provided 
consistent with paragraph (3). 
For purposes of this paragraph, the term ‘par-
ticipation agreement’ means an agreement re-
lating to the provision of health care services by 
the individual and does not include the provi-
sion of services as a reviewer under this sub-
section. 
‘‘(3) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by a qualified inde-
pendent contractor to a reviewer in connection with 
a review under this section shall not be contingent 
on the decision rendered by the reviewer. 
‘‘(4) LICENSURE
AND
EXPERTISE.—Each re-
viewing professional shall be—
‘‘(A) a physician (allopathic or osteopathic) 
who is appropriately credentialed or licensed in 
one or more States to deliver health care serv-
ices and has medical expertise in the field of 
practice that is appropriate for the items or 
services at issue; or
231
‘‘(B) a health care professional who is le-
gally authorized in one or more States (in ac-
cordance with State law or the State regulatory 
mechanism provided by State law) to furnish 
the health care items or services at issue and 
has medical expertise in the field of practice 
that is appropriate for such items or services. 
‘‘(5) RELATED PARTY DEFINED.—For purposes 
of this section, the term ‘related party’ means, with 
respect to a case under this title involving a specific 
individual entitled to benefits under part A or en-
rolled under part B, or both, any of the following: 
‘‘(A) The Secretary, the medicare adminis-
trative contractor involved, or any fiduciary, of-
ficer, director, or employee of the Department 
of Health and Human Services, or of such con-
tractor. 
‘‘(B) The individual (or authorized rep-
resentative). 
‘‘(C) The health care professional that pro-
vides the items or services involved in the case. 
‘‘(D) The institution at which the items or 
services (or treatment) involved in the case are 
provided.
232
‘‘(E) The manufacturer of any drug or 
other item that is included in the items or serv-
ices involved in the case. 
‘‘(F) Any other party determined under 
any regulations to have a substantial interest in 
the case involved.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by paragraphs (1) and (2) shall be effective as if in-
cluded in the enactment of the respective provisions 
of subtitle C of title V of BIPA, (114 Stat. 2763A–
534). 
(4) TRANSITION.—In applying section 1869(g) 
of the Social Security Act (as added by paragraph 
(2)), any reference to a medicare administrative con-
tractor shall be deemed to include a reference to a 
fiscal intermediary under section 1816 of the Social 
Security Act (42 U.S.C. 1395h) and a carrier under 
section 1842 of such Act (42 U.S.C. 1395u). 
SEC. 834. PREPAYMENT REVIEW. 
(a) IN GENERAL.—Section 1874A, as added by sec-
tion 811(a)(1) and as amended by sections 812(b), 
821(b)(1), and 821(c)(1), is further amended by adding 
at the end the following new subsection: 
‘‘(h) CONDUCT OF PREPAYMENT REVIEW.—
233
‘‘(1) CONDUCT OF RANDOM PREPAYMENT RE-
VIEW.—
‘‘(A) IN GENERAL.—A medicare adminis-
trative contractor may conduct random prepay-
ment review only to develop a contractor-wide 
or program-wide claims payment error rates or 
under such additional circumstances as may be 
provided under regulations, developed in con-
sultation with providers of services and sup-
pliers. 
‘‘(B) USE
OF
STANDARD
PROTOCOLS 
WHEN CONDUCTING PREPAYMENT REVIEWS.—
When a medicare administrative contractor con-
ducts a random prepayment review, the con-
tractor may conduct such review only in accord-
ance with a standard protocol for random pre-
payment audits developed by the Secretary. 
‘‘(C) CONSTRUCTION.—Nothing in this 
paragraph shall be construed as preventing the 
denial of payments for claims actually reviewed 
under a random prepayment review. 
‘‘(D) RANDOM
PREPAYMENT
REVIEW.—
For purposes of this subsection, the term ‘ran-
dom prepayment review’ means a demand for
234
the production of records or documentation ab-
sent cause with respect to a claim. 
‘‘(2) LIMITATIONS
ON
NON-RANDOM
PREPAY-
MENT REVIEW.—
‘‘(A) LIMITATIONS ON INITIATION OF NON-
RANDOM
PREPAYMENT
REVIEW.—A medicare 
administrative contractor may not initiate non-
random prepayment review of a provider of 
services or supplier based on the initial identi-
fication by that provider of services or supplier 
of an improper billing practice unless there is a 
likelihood of sustained or high level of payment 
error (as defined in subsection (i)(3)(A)). 
‘‘(B) TERMINATION OF NON-RANDOM PRE-
PAYMENT REVIEW.—The Secretary shall issue 
regulations relating to the termination, includ-
ing termination dates, of non-random prepay-
ment review. Such regulations may vary such a 
termination date based upon the differences in 
the circumstances triggering prepayment re-
view.’’. 
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in this 
subsection, the amendment made by subsection (a)
235
shall take effect 1 year after the date of the enact-
ment of this Act. 
(2) DEADLINE
FOR
PROMULGATION
OF
CER-
TAIN REGULATIONS.—The Secretary shall first issue 
regulations under section 1874A(h) of the Social Se-
curity Act, as added by subsection (a), by not later 
than 1 year after the date of the enactment of this 
Act. 
(3) APPLICATION
OF
STANDARD
PROTOCOLS 
FOR
RANDOM
PREPAYMENT
REVIEW.—Section 
1874A(h)(1)(B) of the Social Security Act, as added 
by subsection (a), shall apply to random prepayment 
reviews conducted on or after such date (not later 
than 1 year after the date of the enactment of this 
Act) as the Secretary shall specify. 
(c) APPLICATION TO FISCAL INTERMEDIARIES AND 
CARRIERS.—The provisions of section 1874A(h) of the So-
cial Security Act, as added by subsection (a), shall apply 
to each fiscal intermediary under section 1816 of the So-
cial Security Act (42 U.S.C. 1395h) and each carrier 
under section 1842 of such Act (42 U.S.C. 1395u) in the 
same manner as they apply to medicare administrative 
contractors under such provisions.
236
SEC. 835. RECOVERY OF OVERPAYMENTS. 
(a) 
IN
GENERAL.—Section 
1893 
(42 
U.S.C. 
1395ddd) is amended by adding at the end the following 
new subsection: 
‘‘(f) RECOVERY OF OVERPAYMENTS.—
‘‘(1) USE OF REPAYMENT PLANS.—
‘‘(A) IN
GENERAL.—If the repayment, 
within 30 days by a provider of services or sup-
plier, of an overpayment under this title would 
constitute a hardship (as defined in subpara-
graph (B)), subject to subparagraph (C), upon 
request of the provider of services or supplier 
the Secretary shall enter into a plan with the 
provider of services or supplier for the repay-
ment (through offset or otherwise) of such over-
payment over a period of at least 6 months but 
not longer than 3 years (or not longer than 5 
years in the case of extreme hardship, as deter-
mined by the Secretary). Interest shall accrue 
on the balance through the period of repay-
ment. Such plan shall meet terms and condi-
tions determined to be appropriate by the Sec-
retary. 
‘‘(B) HARDSHIP.—
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), the repayment of an
237
overpayment (or overpayments) within 30 
days is deemed to constitute a hardship 
if—
‘‘(I) in the case of a provider of 
services that files cost reports, the ag-
gregate amount of the overpayments 
exceeds 10 percent of the amount paid 
under this title to the provider of 
services for the cost reporting period 
covered by the most recently sub-
mitted cost report; or 
‘‘(II) in the case of another pro-
vider of services or supplier, the ag-
gregate amount of the overpayments 
exceeds 10 percent of the amount paid 
under this title to the provider of 
services or supplier for the previous 
calendar year. 
‘‘(ii) RULE
OF
APPLICATION.—The 
Secretary shall establish rules for the ap-
plication of this subparagraph in the case 
of a provider of services or supplier that 
was not paid under this title during the 
previous year or was paid under this title 
only during a portion of that year.
238
‘‘(iii) 
TREATMENT
OF
PREVIOUS 
OVERPAYMENTS.—If a provider of services 
or supplier has entered into a repayment 
plan under subparagraph (A) with respect 
to a specific overpayment amount, such 
payment amount under the repayment plan 
shall not be taken into account under 
clause (i) with respect to subsequent over-
payment amounts. 
‘‘(C) 
EXCEPTIONS.—Subparagraph 
(A) 
shall not apply if—
‘‘(i) the Secretary has reason to sus-
pect that the provider of services or sup-
plier may file for bankruptcy or otherwise 
cease to do business or discontinue partici-
pation in the program under this title; or 
‘‘(ii) there is an indication of fraud or 
abuse committed against the program. 
‘‘(D) IMMEDIATE COLLECTION IF VIOLA-
TION OF REPAYMENT PLAN.—If a provider of 
services or supplier fails to make a payment in 
accordance with a repayment plan under this 
paragraph, the Secretary may immediately seek 
to offset or otherwise recover the total balance
239
outstanding 
(including 
applicable 
interest) 
under the repayment plan. 
‘‘(E) RELATION
TO
NO
FAULT
PROVI-
SION.—Nothing in this paragraph shall be con-
strued as affecting the application of section 
1870(c) (relating to no adjustment in the cases 
of certain overpayments). 
‘‘(2) LIMITATION ON RECOUPMENT.—
‘‘(A) IN GENERAL.—In the case of a pro-
vider of services or supplier that is determined 
to have received an overpayment under this title 
and that seeks a reconsideration by a qualified 
independent contractor on such determination 
under section 1869(b)(1), the Secretary may 
not take any action (or authorize any other per-
son, including any medicare contractor, as de-
fined in subparagraph (C)) to recoup the over-
payment until the date the decision on the re-
consideration has been rendered. If the provi-
sions of section 1869(b)(1) (providing for such 
a reconsideration by a qualified independent 
contractor) are not in effect, in applying the 
previous sentence any reference to such a recon-
sideration shall be treated as a reference to a
240
redetermination by the fiscal intermediary or 
carrier involved. 
‘‘(B) COLLECTION WITH INTEREST.—Inso-
far as the determination on such appeal is 
against the provider of services or supplier, in-
terest on the overpayment shall accrue on and 
after the date of the original notice of overpay-
ment. Insofar as such determination against the 
provider of services or supplier is later reversed, 
the Secretary shall provide for repayment of the 
amount recouped plus interest at the same rate 
as would apply under the previous sentence for 
the period in which the amount was recouped. 
‘‘(C) MEDICARE CONTRACTOR DEFINED.—
For purposes of this subsection, the term ‘medi-
care contractor’ has the meaning given such 
term in section 1889(g). 
‘‘(3) LIMITATION
ON
USE
OF
EXTRAPO-
LATION.—A medicare contractor may not use ex-
trapolation to determine overpayment amounts to be 
recovered by recoupment, offset, or otherwise un-
less—
‘‘(A) there is a sustained or high level of 
payment error (as defined by the Secretary by 
regulation); or
241
‘‘(B) documented educational intervention 
has failed to correct the payment error (as de-
termined by the Secretary). 
‘‘(4) PROVISION OF SUPPORTING DOCUMENTA-
TION.—In the case of a provider of services or sup-
plier with respect to which amounts were previously 
overpaid, a medicare contractor may request the 
periodic production of records or supporting docu-
mentation for a limited sample of submitted claims 
to ensure that the previous practice is not con-
tinuing. 
‘‘(5) CONSENT SETTLEMENT REFORMS.—
‘‘(A) IN
GENERAL.—The Secretary may 
use a consent settlement (as defined in sub-
paragraph (D)) to settle a projected overpay-
ment. 
‘‘(B) OPPORTUNITY
TO
SUBMIT
ADDI-
TIONAL INFORMATION BEFORE CONSENT SET-
TLEMENT OFFER.—Before offering a provider 
of services or supplier a consent settlement, the 
Secretary shall—
‘‘(i) communicate to the provider of 
services or supplier—
‘‘(I) that, based on a review of 
the medical records requested by the