232
then the appellant may bring a 
civil action as described in this 
subparagraph. 
‘‘(ii) DEADLINE
FOR
FILING.—
Such action shall be filed, in the 
case described in—
‘‘(I) clause (i)(I), within 60 
days of date of the determina-
tion described in such sub-
paragraph; or 
‘‘(II) clause (i)(II), within 
60 days of the end of the pe-
riod provided under subpara-
graph (B) for the determina-
tion. 
‘‘(iii) 
VENUE.—Such 
action 
shall be brought in the district 
court of the United States for the 
judicial district in which the ap-
pellant is located (or, in the case 
of an action brought jointly by 
more than one applicant, the judi-
cial district in which the greatest 
number of applicants are located)
233
or in the district court for the 
District of Columbia. 
‘‘(iv) INTEREST ON AMOUNTS IN 
CONTROVERSY.—Where a provider 
of services or supplier seeks judi-
cial review pursuant to this para-
graph, the amount in controversy 
shall be subject to annual interest 
beginning on the first day of the 
first month beginning after the 
60-day period as determined pur-
suant to clause (ii) and equal to 
the rate of interest on obligations 
issued for purchase by the Fed-
eral 
Hospital 
Insurance 
Trust 
Fund and by the Federal Supple-
mentary Medical Insurance Trust 
Fund for the month in which the 
civil action authorized under this 
paragraph is commenced, to be 
awarded by the reviewing court 
in favor of the prevailing party. 
No interest awarded pursuant to 
the preceding sentence shall be 
deemed income or cost for the
234
purposes of determining reim-
bursement due providers of serv-
ices or suppliers under this Act. 
‘‘(D) REVIEW
PANELS.—For pur-
poses of this subsection, a ‘review 
panel’ is a panel consisting of 3 mem-
bers (who shall be administrative law 
judges, members of the Departmental 
Appeals Board, or qualified individ-
uals associated with a qualified inde-
pendent contractor (as defined in
subsection (c)(2)) or with another 
independent entity) designated by the 
Secretary for purposes of making de-
terminations under this paragraph.’’. 
(b) APPLICATION TO PROVIDER AGREEMENT 
DETERMINATIONS.—Section 
1866(h)(1) 
(42 
U.S.C. 1395cc(h)(1)) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(h)(1)’’; 
and 
(2) by adding at the end the following 
new subparagraph: 
‘‘(B) An institution or agency described in 
subparagraph (A) that has filed for a hearing 
under subparagraph (A) shall have expedited
235
access to judicial review under this subpara-
graph in the same manner as providers of 
services, suppliers, and individuals entitled to 
benefits under part A or enrolled under part 
B, or both, may obtain expedited access to ju-
dicial review under the process established 
under section 1869(b)(2). Nothing in this sub-
paragraph shall be construed to affect the ap-
plication of any remedy imposed under sec-
tion 1819 during the pendency of an appeal 
under this subparagraph.’’. 
(c) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to appeals 
filed on or after October 1, 2004. 
(d) EXPEDITED REVIEW
OF CERTAIN PRO-
VIDER AGREEMENT DETERMINATIONS.—
(1) TERMINATION
AND
CERTAIN
OTHER 
IMMEDIATE REMEDIES.—The Secretary shall 
develop and implement a process to expe-
dite proceedings under sections 1866(h) 
of the Social Security Act (42 U.S.C. 
1395cc(h)) in which the remedy of termi-
nation of participation, or a remedy de-
scribed in clause (i) or (iii) of section 
1819(h)(2)(B) of such Act (42 U.S.C. 1395i–
236
3(h)(2)(B)) which is applied on an imme-
diate basis, has been imposed. Under 
such process priority shall be provided in 
cases of termination. 
(2) INCREASED FINANCIAL SUPPORT.—In 
addition to any amounts otherwise ap-
propriated, to reduce by 50 percent the 
average time for administrative deter-
minations 
on 
appeals 
under 
section 
1866(h) of the Social Security Act (42 
U.S.C. 1395cc(h)), there are authorized to 
be appropriated (in appropriate part 
from the Federal Hospital Insurance 
Trust Fund and the Federal Supple-
mentary Medical Insurance Trust Fund) 
to the Secretary such additional sums for 
fiscal year 2005 and each subsequent fis-
cal year as may be necessary. The pur-
poses for which such amounts are avail-
able include increasing the number of ad-
ministrative law judges (and their staffs) 
and the appellate level staff at the De-
partmental Appeals Board of the Depart-
ment of Health and Human Services and
237
educating such judges and staffs on long-
term care issues. 
SEC. 403. REVISIONS TO MEDICARE APPEALS PROCESS. 
(a) REQUIRING FULL
AND EARLY PRESEN-
TATION OF EVIDENCE.—
(1) IN
GENERAL.—Section 1869(b) (42 
U.S.C. 1395ff(b)), as amended by BIPA 
and as amended by section 402(a), is fur-
ther amended by adding at the end the 
following new paragraph: 
‘‘(3) REQUIRING FULL AND EARLY PRES-
ENTATION
OF
EVIDENCE
BY
PROVIDERS.—A 
provider of services or supplier may not 
introduce evidence in any appeal under 
this section that was not presented at the 
reconsideration conducted by the quali-
fied independent contractor under sub-
section (c), unless there is good cause 
which precluded the introduction of such 
evidence at or before that reconsider-
ation.’’. 
(2) EFFECTIVE DATE.—The amendment 
made by paragraph (1) shall take effect 
on October 1, 2004.
240
‘‘(ii) as appropriate, a sum-
mary of the clinical or scientific 
evidence used in making the rede-
termination; 
‘‘(iii) a description of the pro-
cedures for obtaining additional 
information concerning the rede-
termination; and 
‘‘(iv) notification of the right 
to appeal the redetermination 
and instructions on how to ini-
tiate such an appeal under this 
section; 
‘‘(B) such written notice shall be 
provided in printed form and written 
in a manner calculated to be under-
stood by the individual entitled to 
benefits under part A or enrolled 
under part B, or both; and 
‘‘(C) the person provided such no-
tice may obtain, upon request, infor-
mation on the specific provision of 
the policy, manual, or regulation used 
in making the redetermination.’’.
241
(2) 
RECONSIDERATIONS.—Section 
1869(c)(3)(E) (42 U.S.C. 1395ff(c)(3)(E)), as 
amended by BIPA, is amended—
(A) by inserting ‘‘be written in a 
manner calculated to be understood 
by the individual entitled to benefits 
under part A or enrolled under part 
B, or both, and shall include (to the 
extent appropriate)’’ after ‘‘in writing, 
’’; and 
(B) by inserting ‘‘and a notifica-
tion of the right to appeal such deter-
mination and instructions on how to 
initiate such appeal under this sec-
tion’’ after ‘‘such decision,’’. 
(3) 
APPEALS.—Section 
1869(d) 
(42 
U.S.C. 1395ff(d)), as amended by BIPA, is 
amended—
(A) in the heading, by inserting ‘‘; 
NOTICE’’ after ‘‘SECRETARY’’; and 
(B) by adding at the end the fol-
lowing new paragraph: 
‘‘(4) NOTICE.—Notice of the decision of 
an administrative law judge shall be in 
writing in a manner calculated to be un-
242
derstood by the individual entitled to 
benefits under part A or enrolled under 
part B, or both, and shall include—
‘‘(A) the specific reasons for the 
determination (including, to the ex-
tent appropriate, a summary of the 
clinical or scientific evidence used in 
making the determination); 
‘‘(B) the procedures for obtaining 
additional 
information 
concerning 
the decision; and 
‘‘(C) notification of the right to 
appeal the decision and instructions 
on how to initiate such an appeal 
under this section.’’.
(4) SUBMISSION
OF
RECORD
FOR
AP-
PEAL.—Section 1869(c)(3)(J)(i) (42 U.S.C. 
1395ff(c)(3)(J)(i)) by striking ‘‘prepare’’ 
and inserting ‘‘submit’’ and by striking 
‘‘with respect to’’ and all that follows 
through ‘‘and relevant policies’’. 
(d) 
QUALIFIED
INDEPENDENT
CONTRAC-
TORS.—
(1) 
ELIGIBILITY
REQUIREMENTS
OF 
QUALIFIED
INDEPENDENT
CONTRACTORS.—
243
Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)), 
as amended by BIPA, is amended—
(A) in subparagraph (A), by strik-
ing ‘‘sufficient training and expertise 
in medical science and legal matters’’ 
and 
inserting 
‘‘sufficient 
medical, 
legal, and other expertise (including 
knowledge of the program under this 
title) and sufficient staffing’’; and 
(B) by adding at the end the fol-
lowing new subparagraph: 
‘‘(K) 
INDEPENDENCE
REQUIRE-
MENTS.—
‘‘(i) IN
GENERAL.—Subject to 
clause 
(ii), 
a 
qualified 
inde-
pendent contractor shall not con-
duct any activities in a case un-
less the entity—
‘‘(I) is not a related party 
(as 
defined 
in 
subsection 
(g)(5)); 
‘‘(II) does not have a mate-
rial familial, financial, or pro-
fessional 
relationship 
with
244
such a party in relation to 
such case; and 
‘‘(III) does not otherwise 
have a conflict of interest 
with such a party. 
‘‘(ii) EXCEPTION
FOR
REASON-
ABLE
COMPENSATION.—Nothing in 
clause (i) shall be construed to 
prohibit receipt by a qualified 
independent contractor of com-
pensation from the Secretary for 
the conduct of activities under 
this section if the compensation is 
provided consistent with clause 
(iii). 
‘‘(iii) LIMITATIONS
ON
ENTITY 
COMPENSATION.—Compensation 
provided by the Secretary to a 
qualified independent contractor 
in connection with reviews under 
this section shall not be contin-
gent on any decision rendered by 
the contractor or by any review-
ing professional.’’.
245
(2) ELIGIBILITY REQUIREMENTS FOR RE-
VIEWERS.—Section 1869 (42 U.S.C. 1395ff), 
as amended by BIPA, is amended—
(A) 
by 
amending 
subsection 
(c)(3)(D) to read as follows: 
‘‘(D) QUALIFICATIONS
FOR
REVIEW-
ERS.—The requirements of subsection 
(g) shall be met (relating to qualifica-
tions of reviewing professionals).’’; 
and 
(B) by adding at the end the fol-
lowing new subsection: 
‘‘(g) QUALIFICATIONS OF REVIEWERS.—
‘‘(1) IN GENERAL.—In reviewing deter-
minations under this section, a qualified 
independent 
contractor 
shall 
assure 
that—
‘‘(A) each individual conducting a 
review shall meet the qualifications 
of paragraph (2); 
‘‘(B) compensation provided by 
the contractor to each such reviewer 
is consistent with paragraph (3); and 
‘‘(C) in the case of a review by a 
panel 
described 
in 
subsection
246
(c)(3)(B) composed of physicians or 
other health care professionals (each 
in this subsection referred to as a ‘re-
viewing professional’), a reviewing 
professional meets the qualifications 
described 
in 
paragraph 
(4) 
and, 
where a claim is regarding the fur-
nishing of treatment by a physician 
(allopathic or osteopathic) or the pro-
vision of items or services by a physi-
cian (allopathic or osteopathic), each 
reviewing professional shall be a phy-
sician (allopathic or osteopathic). 
‘‘(2) INDEPENDENCE.—
‘‘(A) IN GENERAL.—Subject to sub-
paragraph (B), each individual con-
ducting a review in a case shall—
‘‘(i) not be a related party (as 
defined in paragraph (5)); 
‘‘(ii) not have a material famil-
ial, financial, or professional rela-
tionship with such a party in the 
case under review; and
247
‘‘(iii) not otherwise have a 
conflict of interest with such a 
party. 
‘‘(B) EXCEPTION.—Nothing in sub-
paragraph (A) shall be construed to—
‘‘(i) prohibit an individual, 
solely on the basis of a participa-
tion agreement with a fiscal inter-
mediary, carrier, or other con-
tractor, from serving as a review-
ing professional if—
‘‘(I) the individual is not 
involved in the provision of 
items or services in the case 
under review;
‘‘(II) the fact of such an 
agreement is disclosed to the 
Secretary and the individual 
entitled to benefits under part 
A or enrolled under part B, or 
both, 
(or 
authorized 
rep-
resentative) and neither party 
objects; and 
‘‘(III) the individual is not 
an employee of the inter-
248
mediary, 
carrier, 
or 
con-
tractor and does not provide 
services exclusively or pri-
marily to or on behalf of such 
intermediary, carrier, or con-
tractor; 
‘‘(ii) prohibit an individual 
who has staff privileges at the in-
stitution where the treatment in-
volved takes place from serving 
as a reviewer merely on the basis 
of having such staff privileges if 
the existence of such privileges is 
disclosed to the Secretary and 
such individual (or authorized 
representative), and neither party 
objects; or 
‘‘(iii) prohibit receipt of com-
pensation by a reviewing profes-
sional from a contractor if the 
compensation is provided con-
sistent with paragraph (3). 
For purposes of this paragraph, the 
term ‘participation agreement’ means 
an agreement relating to the provi-
249
sion of health care services by the in-
dividual and does not include the 
provision of services as a reviewer 
under this subsection. 
‘‘(3) LIMITATIONS
ON
REVIEWER
COM-
PENSATION.—Compensation provided by a 
qualified independent contractor to a re-
viewer in connection with a review under 
this section shall not be contingent on 
the decision rendered by the reviewer. 
‘‘(4) LICENSURE AND EXPERTISE.—Each 
reviewing professional shall be—
‘‘(A) a physician (allopathic or os-
teopathic) 
who 
is 
appropriately 
credentialed or licensed in one or 
more States to deliver health care 
services and has medical expertise in 
the field of practice that is appro-
priate for the items or services at 
issue; or 
‘‘(B) a health care professional 
who is legally authorized in one or 
more States (in accordance with State 
law or the State regulatory mecha-
nism provided by State law) to fur-
250
nish the health care items or services 
at issue and has medical expertise in 
the field of practice that is appro-
priate 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 indi-
vidual entitled to benefits under part A 
or enrolled under part B, or both, any of 
the following: 
‘‘(A) The Secretary, the medicare 
administrative contractor involved, 
or any fiduciary, officer, director, or 
employee 
of 
the 
Department 
of 
Health and Human Services, or of 
such contractor. 
‘‘(B) The individual (or authorized 
representative). 
‘‘(C) The health care professional 
that provides the items or services in-
volved in the case. 
‘‘(D) The institution at which the 
items or services (or treatment) in-
volved in the case are provided.
251
‘‘(E) The manufacturer of any 
drug or other item that is included in 
the items or services involved in the 
case. 
‘‘(F) Any other party determined 
under any regulations to have a sub-
stantial 
interest 
in 
the 
case 
in-
volved.’’. 
(3) REDUCING
MINIMUM
NUMBER
OF 
QUALIFIED
INDEPENDENT
CONTRACTORS.—
Section 1869(c)(4) (42 U.S.C. 1395ff(c)(4)) 
is amended by striking ‘‘not fewer than 
qualified 
independent 
contractors 
under this subsection’’ and inserting ‘‘a 
sufficient 
number 
of 
qualified 
inde-
pendent contractors (but not fewer than 
4 such contractors) to conduct reconsid-
erations consistent with the timeframes 
applicable under this subsection’’. 
(4) EFFECTIVE DATE.—The amendments 
made by paragraphs (1) and (2) shall be 
effective as if included in the enactment 
of the respective provisions of subtitle C 
of title V of BIPA, (114 Stat. 2763A–534).
252
(5) TRANSITION.—In applying section 
1869(g) of the Social Security Act (as 
added by paragraph (2)), any reference to 
a 
medicare 
administrative 
contractor 
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. 404. PREPAYMENT REVIEW. 
(a) IN GENERAL.—Section 1874A, as added 
by section 201(a)(1) and as amended by sec-
tions 202(b), 301(b)(1), and 301(c)(1), is further 
amended by adding at the end the following 
new subsection: 
‘‘(h) CONDUCT OF PREPAYMENT REVIEW.—
‘‘(1) CONDUCT OF RANDOM PREPAYMENT 
REVIEW.—
‘‘(A) IN GENERAL.—A medicare ad-
ministrative contractor may conduct 
random prepayment review only to 
develop a contractor-wide or pro-
gram-wide 
claims 
payment 
error 
rates or under such additional cir-
cumstances 
as 
may 
be 
provided
253
under regulations, developed in con-
sultation with providers of services 
and suppliers. 
‘‘(B) USE OF STANDARD PROTOCOLS 
WHEN
CONDUCTING
PREPAYMENT
RE-
VIEWS.—When a medicare administra-
tive contractor conducts a random 
prepayment review, the contractor 
may conduct such review only in ac-
cordance with a standard protocol for 
random prepayment 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 ran-
dom prepayment review. 
‘‘(D) 
RANDOM
PREPAYMENT
RE-
VIEW.—For 
purposes 
of 
this 
sub-
section, the term ‘random prepay-
ment review’ means a demand for the 
production of records or documenta-
tion absent cause with respect to a 
claim.
254
‘‘(2) LIMITATIONS ON NON-RANDOM PRE-
PAYMENT REVIEW.—
‘‘(A) LIMITATIONS ON INITIATION OF 
NON-RANDOM
PREPAYMENT
REVIEW.—A 
medicare administrative contractor 
may not initiate non-random prepay-
ment review of a provider of services 
or supplier based on the initial iden-
tification 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 
PREPAYMENT
REVIEW.—The Secretary 
shall issue regulations relating to the 
termination, 
including 
termination 
dates, of non-random prepayment re-
view. Such regulations may vary such 
a termination date based upon the 
differences in the circumstances trig-
gering prepayment review.’’. 
(b) EFFECTIVE DATE.—
255
(1) IN GENERAL.—Except as provided 
in this subsection, the amendment made 
by subsection (a) shall take effect 1 year 
after the date of the enactment of this 
Act. 
(2) DEADLINE
FOR
PROMULGATION
OF 
CERTAIN
REGULATIONS.—The 
Secretary 
shall first issue regulations under section 
1874A(h) of the Social Security 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
PROTO-
COLS FOR RANDOM PREPAYMENT REVIEW.—
Section 1874A(h)(1)(B) of the Social Secu-
rity 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 enact-
ment of this Act) as the Secretary shall 
specify. 
(c) APPLICATION TO FISCAL INTERMEDIARIES 
AND
CARRIERS.—The provisions of section 
1874A(h) of the Social Security Act, as added 
by subsection (a), shall apply to each fiscal
256
intermediary under section 1816 of the Social 
Security Act (42 U.S.C. 1395h) and each car-
rier 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. 
SEC. 405. 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 repay-
ment, within 30 days by a provider of 
services or supplier, of an overpay-
ment under this title would con-
stitute a hardship (as defined in sub-
paragraph (B)), subject to subpara-
graph (C), upon request of the pro-
vider of services or supplier the Sec-
retary shall enter into a plan with the 
provider of services or supplier for 
the repayment (through offset or oth-
erwise) of such overpayment over a 
period of at least 6 months but not