(v) in the seventh sentence, by insert-
ing ‘‘medicare administrative contractor,’’
after ‘‘carrier,’’; and
(D) by striking paragraph (5); and
(E) in paragraph (7) and succeeding para-
graphs, by striking ‘‘the carrier’’ 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 sec-
tion 1874A that provides for making payments
under this part shall provide that the medicare
administrative contractor’’;
(C) in paragraph (4), by striking ‘‘a car-
rier’’ and inserting ‘‘medicare administrative
contractor’’;
(D) 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 insert-
ing ‘‘contract under section 1874A that pro-
vides for making payments under this part shall
require 
the 
medicare 
administrative 
con-
tractor’’; and
(E) 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(5) Subsections (d), (e), and (f) are repealed.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
subsection (a)’’ and inserting ‘‘The Sec-
retary’’; and
(ii) by striking ‘‘Each such carrier’’
and inserting ‘‘The Secretary’’; and
(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
making payments under this part’’; and
(ii) by striking ‘‘such carrier’’ and in-
serting ‘‘such contractor’’.
(d) EFFECTIVE DATE; TRANSITION RULE.—
(1) EFFECTIVE
DATE.—Except as otherwise
provided 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
authorized to take such steps before such date as
may be necessary to implement such amendments on
a timely basis.
(2) GENERAL
TRANSITION
RULES.—(A) The
Secretary shall take such steps as are necessary to
provide for an appropriate transition from contracts
under section 1816 and section 1842 of the Social
Security Act (42 U.S.C. 1395h, 1395u) to contracts
under section 1874A, as added by subsection (a)(1).
(B) Any such contract under such sections
1816 or 1842 whose periods begin before or during
the 1-year period that begins on the first day of the
fourth calendar month that begins after the date of
enactment of this Act may be entered into without
regard to any provision of law requiring the use of
competitive procedures.
(3) AUTHORIZING
CONTINUATION
OF
MIP
FUNCTIONS
UNDER
CURRENT
CONTRACTS
AND
AGREEMENTS AND UNDER ROLLOVER CONTRACTS.—
The provisions 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
provided under subsection (d), any reference to a fiscal
intermediary or carrier under title XI or XVIII of the So-
cial Security Act (or any regulation, manual instruction,
interpretative rule, statement of policy, or guideline issued
to carry out such titles) shall be deemed a reference to
an appropriate medicare administrative contractor (as
provided under section 1874A of the Social Security Act).
(f) SECRETARIAL SUBMISSION OF LEGISLATIVE PRO-
POSAL.—Not later than 6 months after the date of the
enactment of this Act, the Secretary of Health and
Human Services shall submit to the appropriate commit-
tees of Congress a legislative proposal providing for such
technical and conforming amendments in the law as are
required by the provisions of this section.
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 fol-
lowing new section:
‘‘PROVIDER EDUCATION AND TECHNICAL ASSISTANCE
‘‘SEC. 1889. (a) COORDINATION
OF EDUCATION
FUNDING.—The Secretary shall coordinate the edu-
cational activities 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, physicians,
practitioners, and suppliers.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on the date of the
enactment 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
paragraph (1).
(b) INCENTIVES TO IMPROVE CONTRACTOR PER-
FORMANCE.—
(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 PER-
FORMANCE IN PROVIDER EDUCATION AND OUTREACH.—
‘‘(1) METHODOLOGY TO MEASURE CONTRACTOR
ERROR RATES.—In order to give medicare adminis-
trative contractors an incentive to implement effec-
tive education and outreach programs for providers
of services, physicians, practitioners, and suppliers,
the Secretary shall develop and implement by Octo-
ber 1, 2002, a methodology to measure the specific
claims payment error rates of such contractors in
the processing or reviewing of medicare claims.
‘‘(2) IDENTIFICATION OF BEST PRACTICES.—
The Secretary shall identify the best practices devel-
oped by individual medicare administrative contrac-
tors for educating providers of services, physicians,
practitioners, and suppliers and how to encourage
the use of such best practices nationwide.’’.
(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 medi-
care contractor performance in implementing effec-
tive education and outreach programs, including
whether to use such methodology as the basis for
performance bonuses.
(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, physicians, practitioners, 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 report-
ing questions of providers of services, physi-
cians, practitioners, and suppliers;
‘‘(B) maintain a toll-free telephone number
at which providers of services, physicians, prac-
titioners, and suppliers may obtain information
regarding billing, coding, and other appropriate
information under this title;
‘‘(C) maintain a system for identifying who
provides the information referred to in subpara-
graphs (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 organiza-
tions representing providers of services, physicians,
practitioners, and suppliers, establish standards re-
lating 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, 2002.
(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
fiscal 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 In-
surance 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, physicians, practitioners, and
suppliers regarding billing, coding, and other appro-
priate 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) an institutional provider of services
with fewer than 25 full-time-equivalent employ-
ees; or
‘‘(B) a physician, practitioner, or supplier
with fewer than 10 full-time-equivalent employ-
ees.’’.
(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:
‘‘(c) INTERNET SITES; FAQS.—The Secretary, and
each medicare contractor insofar as it provides services
(including claims processing) for providers of services,
physicians, practitioners, or suppliers, shall maintain an
Internet site which provides answers in an easily accessible
format to frequently asked questions relating to providers
of services, physicians, practitioners, 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
PROVI-
SIONS.—
(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 following new subsections:
‘‘(d) ENCOURAGEMENT OF PARTICIPATION IN EDU-
CATION PROGRAM ACTIVITIES.—A medicare contractor
may not use a record of attendance at (or failure to at-
tend) educational activities or other information gathered
during an educational program conducted under this sec-
tion or otherwise by the Secretary to select or track pro-
viders of services, physicians, practitioners, or suppliers
for the purpose of conducting any type of audit or prepay-
ment review.
‘‘(e) 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.
‘‘(f) 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
section 1893.
Such term does not include, with respect to activities of
a specific provider of services, physician, practitioner, or
supplier an entity that has no authority under this title
or title IX with respect to such activities and such provider
of services, physician, practitioner, or supplier.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on the date of the
enactment 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 is
made available, upon request on a voluntary basis,
to small providers of services or suppliers to evaluate
their billing and related systems for compliance with
the applicable requirements of the programs under
medicare program under title XVIII of the Social
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 General
of the Department of Health and Human Services).
(2) SMALL PROVIDERS OF SERVICES OR SUP-
PLIERS.—In this section, the term ‘‘small providers
of services or suppliers’’ means—
(A) an institutional provider of services
with fewer than 25 full-time-equivalent employ-
ees; or
(B) a physician, practitioner, or supplier
with fewer than 10 full-time-equivalent employ-
ees.
(b) QUALIFICATION
OF
CONTRACTORS.—In con-
ducting the demonstration program, the Secretary of
Health and Human Services shall enter into contracts
with qualified organizations (such as peer review organiza-
tions or entities described in section 1889(f)(2) of the So-
cial Security Act, as inserted by section 5(f)(1)) with ap-
propriate expertise with billing systems of the full range
of providers of services, physicians, practitioners, and sup-
pliers to provide the technical assistance. In awarding such
contracts, the Secretary shall consider any prior investiga-
tions of the entity’s work by the Inspector General of De-
partment 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
program 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 achiev-
ing such compliance.
(d) AVOIDANCE OF RECOVERY ACTIONS FOR PROB-
LEMS IDENTIFIED
AS CORRECTED.—The Secretary of
Health and Human Services may 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
action if the technical assistance personnel under the pro-
gram determine that—
(1) the problem that is the subject of the com-
pliance review has been corrected to their satisfac-
tion within 30 days of the date of the visit by such
personnel to the small provider of services or sup-
plier; 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
implemented, the Comptroller General, in consultation
with the Inspector General of the Department of Health
and Human Services, shall conduct an evaluation of the
demonstration program. The evaluation shall include a de-
termination of whether claims error rates are reduced for
small providers of services or suppliers who participated
in the program. The Comptroller General shall submit a
report to the Secretary and the Congress on such evalua-
tion and shall include in such report recommendations re-
garding the continuation or extension of the demonstra-
tion program.
(f) FINANCIAL PARTICIPATION BY PROVIDERS.—The
provision of technical assistance to a small provider of
services or supplier under the demonstration program is
conditioned upon the small provider of services or supplier
paying for 25 percent of the cost of the technical assist-
ance.
(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
Supplementary 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.
(a) IN GENERAL.—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 AD-
VISORY 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, physicians, practitioners,
and suppliers with respect to complaints, grievances,
and requests for information concerning the pro-
grams under this title (including provisions of title
XI insofar as they relate to this title and are not ad-
ministered by the Office of the Inspector General of
the Department of Health and Human Services) and
in the resolution of unclear or conflicting guidance
given by the Secretary and medicare contractors to
such providers of services, physicians, practitioners,
and suppliers regarding such programs and provi-
sions 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
appropriate and consistent response (including
not providing for audits) in cases of self-identi-
fied overpayments by providers of services, phy-
sicians, practitioners, and suppliers.’’.
(b) 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
Supplementary Medical Insurance Trust Fund) to carry
out the provisions of subsection (b) of section 1868 (relat-
ing to the Medicare Provider Ombudsman), as added by
subsection (a)(5), amounts as follows:
(1) For fiscal year 2002, such sums as are nec-
essary.
(2) For fiscal year 2003, $8,000,000.
(3) For fiscal year 2004, $17,000,000.
(c) REPORT ON ADDITIONAL FUNDING.—Not later
than October 1, 2003, the Secretary of Health and
Human Services shall submit to Congress a report that
includes the Secretary’s estimate of the amount of addi-
tional funding necessary to carry out such provisions of
subsection (b) of section 1868, as so added, in fiscal year
2005 and subsequent fiscal years.
SEC. 8. PROVIDER APPEALS.
(a) MEDICARE ADMINISTRATIVE LAW JUDGES.—
Section 1869 (42 U.S.C. 1395ff), as amended by section
521(a) of Medicare, Medicaid, and SCHIP Benefits Im-
provement and Protection Act of 2000 (114 Stat. 2763A–
534), as enacted into law by section 1(a)(6) of Public Law
106–554, is amended by adding at the end the following
new subsection:
‘‘(g) MEDICARE ADMINISTRATIVE LAW JUDGES.—
‘‘(1) TRANSITION PLAN.—Not later than Octo-
ber 1, 2003, the Commissioner of Social Security
and the Secretary shall develop and implement a
plan under which administrative law judges respon-
sible solely for hearing cases under this title (and re-
lated provisions in title XI) shall be transferred from
the responsibility of the Commissioner and the So-
cial Security Administration to the Secretary and
the Department of Health and Human Services. The
plan shall include recommendations with respect
to—
‘‘(A) the number of such administrative
law judges and support staff required to hear
and decide such cases in a timely manner; and
‘‘(B) funding levels required for fiscal year
2004 and subsequent fiscal years under this
subsection to hear such cases in a timely man-
ner.
‘‘(2) INCREASED FINANCIAL SUPPORT.—In ad-
dition to any amounts otherwise appropriated, there
are authorized to be appropriated (in appropriate
part from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical In-
surance Trust Fund) to the Secretary to increase
the number of administrative law judges under para-
graph (1) and to improve education and training op-
portunities for such judges and their staffs,
$5,000,000 for fiscal year 2003 and such sums as
are necessary for fiscal year 2004 and each subse-
quent fiscal year.’’.
(b) PROCESS FOR EXPEDITED ACCESS TO JUDICIAL
REVIEW.—
(1) IN GENERAL.—Section 1869(b) (42 U.S.C.
1395ff(b)) as amended by Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of
2000 (114 Stat. 2763A–534), as enacted into law by
section 
1(a)(6) 
of 
Public 
Law 
106–554, 
is
amended—
(A) in paragraph (1)(A), by inserting ‘‘,
subject to paragraph (2),’’ before ‘‘to judicial
review of the Secretary’s final decision’’; and
(B) by adding at the end the following new
paragraph:
‘‘(2) EXPEDITED
ACCESS
TO
JUDICIAL
RE-
VIEW.—
‘‘(A) IN
GENERAL.—The Secretary shall
establish a process under which a provider of
service or supplier that furnishes an item or
service or a beneficiary who has filed an appeal
under paragraph (1) (other than an appeal filed
under paragraph (1)(F)) may obtain access to
judicial review when a review panel (described
in subparagraph (D)), on its own motion or at
the request of the appellant, determines that it
does not have the authority to decide the ques-
tion of law or regulation relevant to the matters
in controversy and that there is no material
issue of fact in dispute. The appellant may
make such request only once with respect to a
question of law or regulation in a case of an
appeal.
‘‘(B) PROMPT DETERMINATIONS.—If, after
or coincident with appropriately filing a request
for an administrative hearing, the appellant re-
quests a determination by the appropriate re-
view panel that no review panel has the author-
ity to decide the question of law or regulations
relevant to the matters in controversy and that
there is no material issue of fact in dispute and
if such request is accompanied by the docu-
ments and materials as the appropriate review
panel shall require for purposes of making such
determination, such review panel shall make a
determination on the request in writing within
60 days after the date such review panel re-
ceives the request and such accompanying docu-
ments and materials. Such a determination by
such review panel shall be considered a final de-
cision and not subject to review by the Sec-
retary.
‘‘(C) ACCESS TO JUDICIAL REVIEW.—
‘‘(i) IN GENERAL.—If the appropriate
review panel—
‘‘(I) determines that there are no
material issues of fact in dispute and
that the only issue is one of law or
regulation that no review panel has
the authority to decide; or
‘‘(II) fails to make such deter-
mination within the period provided
under subparagraph (B);
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 determination described
in such subparagraph; or
‘‘(II) clause (i)(II), within 60
days of the end of the period provided
under subparagraph (B) for the deter-
mination.
‘‘(iii) VENUE.—Such action shall be
brought in the district court of the United
States for the judicial district in which the
appellant is located (or, in the case of an
action brought jointly by more than one
applicant, the judicial district in which the
greatest number of applicants are located)
or in the district court for the District of
Columbia.
‘‘(iv) INTEREST ON AMOUNTS IN CON-
TROVERSY.—Where a provider of services
or supplier seeks judicial review pursuant
to this paragraph, the amount in con-
troversy shall be subject to annual interest
beginning on the first day of the first
month beginning after the 60-day period
as determined pursuant to clause (ii) and
equal to the rate of interest on obligations
issued for purchase by the Federal Hos-
pital Insurance Trust Fund for the month
in which the civil action authorized under
this paragraph is commenced, to be award-
ed by the reviewing court in favor of the
prevailing party. No interest awarded pur-
suant to the preceding sentence shall be
deemed income or cost for the purposes of
determining reimbursement due providers
of services or suppliers under this Act.
‘‘(D) REVIEW PANELS.—For purposes of
this subsection, a ‘review panel’ is an adminis-
trative law judge, the Departmental Appeals
Board, a qualified independent contractor (as
defined in subsection (c)(2)), or an entity des-
ignated by the Secretary for purposes of mak-
ing determinations under this paragraph.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to appeals filed on or
after October 1, 2002.
(c) REQUIRING FULL AND EARLY PRESENTATION OF
EVIDENCE.—
(1) IN GENERAL.—Section 1869(b) (42 U.S.C.
1395ff(b)), as amended by Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of
2000 (114 Stat. 2763A–534), as enacted into law by
section 1(a)(6) of Public Law 106–554, and as
amended by subsection (b), is further amended by
adding at the end the following new paragraph:
‘‘(3) REQUIRING
FULL
AND
EARLY
PRESEN-
TATION 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 first external hearing or appeal at which it
could be introduced under this section, unless there
is good cause which precluded the introduction of
such evidence at a previous hearing or appeal.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on October 1,
2002.
(d) PROVIDER APPEALS ON BEHALF OF DECEASED
BENEFICIARIES.—
(1) IN GENERAL.—Section 1869(b)(1)(C) (42
U.S.C. 1395ff(b)(1)(C)), as amended by Medicare,
Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (114 Stat. 2763A–534), as
enacted into law by section 1(a)(6) of Public Law
106–554, is amended by adding at the end the fol-
lowing: ‘‘The Secretary shall establish a process
under which, if such an individual is deceased, the
individual is deemed to have provided written con-
sent to the assignment of the individual’s right of
appeal under this section to the provider of services
or supplier of the item or service involved, so long
as the estate of the individual, and the individual’s
family and heirs, are not liable for paying for the
item or service and are not liable for any increased
coinsurance or deductible amounts resulting from
any decision increasing the reimbursement amount
for the provider of services or supplier.’’.
(2) EFFECTIVE
DATE.—Notwithstanding sec-
tion 521(d) of the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000,
as enacted into law by section 1(a)(6) of Public Law
106–554, the amendment made by paragraph (1)
shall take effect on the date of the enactment of this
Act.
SEC. 9. RECOVERY OF OVERPAYMENTS AND PREPAYMENT
REVIEW; ENROLLMENT OF PROVIDERS.
(a) RECOVERY
OF OVERPAYMENTS
AND PREPAY-
MENT REVIEW.—Section 1893 (42 U.S.C. 1395ddd) is
amended by adding at the end the following new sub-
sections:
‘‘(f) RECOVERY OF OVERPAYMENTS AND PREPAY-
MENT REVIEW.—
‘‘(1) USE OF REPAYMENT PLANS.—
‘‘(A) IN
GENERAL.—If the repayment,
within 30 days by a provider of services, physi-
cian, practitioner, or other supplier, of an over-
payment under this title would constitute a
hardship (as defined in subparagraph (B)), sub-
ject to subparagraph (C), the Secretary shall
enter into a plan (which meets terms and condi-
tions determined to be appropriate by the Sec-
retary) with the provider of services, physician,
practitioner, or supplier for the offset or repay-
ment of such overpayment over a period of not
longer than 3 years. Interest shall accrue on the
balance through the period of repayment.
‘‘(B) HARDSHIP.—
‘‘(i) IN
GENERAL.—For purposes of
subparagraph (A), the repayment of an
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, physician, practi-
tioner, or supplier, the aggregate
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, physician, practi-
tioner, 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.
‘‘(iii) 
TREATMENT
OF
PREVIOUS
OVERPAYMENTS.—If a provider of services,
physician, practitioner, or supplier has en-
tered into a repayment plan under sub-
paragraph (A) with respect to a specific
overpayment 
amount, 
such 
payment
amount shall not be taken into account
under clause (i) with respect to subsequent
overpayment amounts.
‘‘(C) 
EXCEPTIONS.—Subparagraph 
(A)
shall not apply if the Secretary has reason to
suspect that the provider of services, physician,
practitioner, or supplier may file for bankruptcy
or otherwise cease to do business or if 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, physician, practitioner, or supplier fails
to make a payment in accordance with a repay-
ment plan under this paragraph, the Secretary
may immediately seek to offset or otherwise re-
cover the total balance outstanding (including
applicable interest) under the repayment plan.
‘‘(2) LIMITATION ON RECOUPMENT UNTIL RE-
CONSIDERATION EXERCISED.—
‘‘(A) IN GENERAL.—In the case of a pro-
vider of services, physician, practitioner, or sup-
plier that is determined to have received an
overpayment under this title and that seeks a
reconsideration of such determination under
section 1869(b)(1), the Secretary may not take
any action (or authorize any other person, in-
cluding any medicare contractor, as defined in
paragraph (9)) to recoup the overpayment until
the date the decision on the reconsideration has
been rendered.
‘‘(B) COLLECTION WITH INTEREST.—Inso-
far as the determination on such appeal is
against the provider of services, physician, prac-
titioner, or supplier, interest on the overpay-
ment shall accrue on and after the date of the
original notice of overpayment. Insofar as such
determination against the provider of services,
physician, practitioner, or supplier is later re-
versed, the Secretary shall provide for repay-
ment of the amount recouped plus interest at
the same rate as would apply under the pre-
vious sentence for the period in which the
amount was recouped.
‘‘(3) STANDARDIZATION OF RANDOM PREPAY-
MENT REVIEW.—
‘‘(A) IN GENERAL.—A medicare contractor
may conduct random prepayment review only to
develop a contractor-wide or program-wide
claims payment error rates.
‘‘(B) CONSTRUCTION.—Nothing in sub-
paragraph (A) shall be construed as preventing
the denial of payments for claims actually re-
viewed under a random prepayment review.
‘‘(4) 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
unless—
‘‘(A) there is a sustained or high level of
payment error (as defined by the Secretary); or
‘‘(B) documented educational intervention
has failed to correct the payment error (as de-
termined by the Secretary).
‘‘(5) PROVISION OF SUPPORTING DOCUMENTA-
TION.—In the case of a provider of services, physi-
cian, practitioner, or supplier with respect to which
amounts were previously overpaid, a medicare con-
tractor may request the periodic production of
records or supporting documentation for a limited
sample of submitted claims to ensure that the pre-
vious practice is not continuing.
‘‘(6) 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, physician, practitioner, or supplier a
consent settlement, the Secretary shall—
‘‘(i) communicate to the provider of
services, physician, practitioner, or supplier
in a non-threatening manner that, based
on a review of the medical records re-
quested by the Secretary, a preliminary in-
dication appears that there would be an
overpayment; and
‘‘(ii) provide for a 45-day period dur-
ing which the provider of services, physi-
cian, practitioner, or supplier may furnish
additional information concerning the med-
ical records for the claims that had been
reviewed.
‘‘(C) CONSENT SETTLEMENT OFFER.—The
Secretary shall review any additional informa-
tion furnished by the provider of services, physi-
cian, practitioner, or supplier under subpara-
graph (B)(ii). Taking into consideration such
information, the Secretary shall determine if
there still appears to be an overpayment. If so,
the Secretary—
‘‘(i) shall provide notice of such deter-
mination to the provider of services, physi-
cian, practitioner, or supplier, including an
explanation of the reason for such deter-
mination; and
‘‘(ii) in order to resolve the overpay-
ment, may offer the provider of services,
physician, practitioner, or supplier—
‘‘(I) the opportunity for a statis-
tically valid random sample; or
‘‘(II) a consent settlement.
The opportunity provided under clause (ii)(I)
does not waive any appeal rights with respect to
the alleged overpayment involved.
‘‘(D) CONSENT SETTLEMENT DEFINED.—
For purposes of this paragraph, the term ‘con-
sent settlement’ means an agreement between
the Secretary and a provider of services, physi-
cian, practitioner, or supplier whereby both par-
ties agree to settle a projected overpayment
based on less than a statistically valid sample of
claims and the provider of services, physician,
practitioner, or supplier agrees not to appeal
the claims involved.
‘‘(7) LIMITATIONS
ON
NON-RANDOM
PREPAY-
MENT REVIEW.—
title, the contractor shall provide the provider of
services, physician, practitioner, or supplier
with written notice of the intent to conduct
such an audit.
‘‘(B) EXPLANATION OF FINDINGS FOR ALL
AUDITS.—Subject to subparagraph (C), if a
medicare contractor audits a provider of serv-
ices, physician, practitioner, or supplier under
this title, the contractor shall—
‘‘(i) give the provider of services, phy-
sician, practitioner, or supplier a full re-
view and explanation of the findings of the
audit in a manner that is understandable
to the provider of services, physician, prac-
titioner, or supplier and permits the devel-
opment of an appropriate corrective action
plan;
‘‘(ii) inform the provider of services,
physician, practitioner, or supplier of the
appeal rights under this title; and
‘‘(iii) give the provider of services,
physician, practitioner, or supplier an op-
portunity to provide additional information
to the contractor.
‘‘(C) 
EXCEPTION.—Subparagraphs 
(A)
and (B) shall not apply if the provision of no-
tice or findings would compromise pending law
enforcement activities or reveal findings of law
enforcement-related audits.
‘‘(9) DEFINITIONS.—For purposes of this sub-
section:
‘‘(A) MEDICARE CONTRACTOR.—The term
‘medicare contractor’ has the meaning given
such term in section 1889(f).
‘‘(B) RANDOM
PREPAYMENT
REVIEW.—
The term ‘random prepayment review’ means a
demand for the production of records or docu-
mentation absent cause with respect to a claim.
‘‘(g) NOTICE OF OVER-UTILIZATION OF CODES.—
The Secretary shall establish a process under which the
Secretary provides for notice to classes of providers of
services, physicians, practitioners, and suppliers served by
the contractor in cases in which the contractor has identi-
fied that particular billing codes may be overutilized by
that class of providers of services, physicians, practi-
tioners, or suppliers under the programs under this title
(or provisions of title XI insofar as they relate to such
programs).’’.
(b) PROVIDER ENROLLMENT PROCESS; RIGHT OF
APPEAL.—
(1) IN
GENERAL.—Section 1866 (42 U.S.C.
1395cc) is amended—
(A) by adding at the end of the heading
the following: ‘‘; ENROLLMENT
PROCESSES’’;
and
(B) by adding at the end the following new
subsection:
‘‘(j) ENROLLMENT PROCESS
FOR PROVIDERS
OF
SERVICES, PHYSICIANS, PRACTITIONERS, 
AND
SUP-
PLIERS.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish by regulation a process for the enrollment of
providers of services, physicians, practitioners, and
suppliers under this title.
‘‘(2) APPEAL
PROCESS.—Such process shall
provide—
‘‘(A) a method by which providers of serv-
ices, physicians, practitioners, and suppliers
whose application to enroll (or, if applicable, to
renew enrollment) are denied are provided a
mechanism to appeal such denial; and
‘‘(B) prompt deadlines for actions on ap-
plications for enrollment (and, if applicable, re-
newal of enrollment) and for consideration of
appeals.’’.
(2) 
EFFECTIVE
DATE.—The 
Secretary 
of
Health and Human Services shall provide for the es-
tablishment of the enrollment and appeal process
under the amendment made by paragraph (1) within
6 months after the date of the enactment of this
Act.
(c) PROCESS FOR CORRECTION OF MINOR ERRORS
AND OMISSIONS ON CLAIMS WITHOUT PURSUING AP-
PEALS PROCESS.—The Secretary of Health and Human
Services shall develop, in consultation with appropriate
medicare contractors (as defined in section 1889(f) of the
Social Security Act, as inserted by section 5(f)(1)) and
representatives of providers of services, physicians, practi-
tioners, and suppliers, a process whereby, in the case of
minor errors or omissions that are detected in the submis-
sion of claims under the programs under title XVIII of
such Act, a provider of services, physician, practitioner,
or supplier is given an opportunity to correct such an error
or omission without the need to initiate an appeal. Such
process may include the ability to resubmit corrected
claims.
SEC. 10. BENEFICIARY OUTREACH DEMONSTRATION PRO-
GRAM.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall establish a demonstration program
(in this section referred to as the ‘‘demonstration pro-
gram’’) under which medicare specialists employed by the
Department of Health and Human Services provide advice
and assistance to medicare beneficiaries at the location of
existing local offices of the Social Security Administration.
(b) LOCATIONS.—
(1) IN GENERAL.—The demonstration program
shall be conducted in at least 6 offices or areas.
Subject to paragraph (2), in selecting such offices
and areas, the Secretary shall provide preference for
offices with a high volume of visits by medicare
beneficiaries.
(2) ASSISTANCE FOR RURAL BENEFICIARIES.—
The Secretary shall provide for the selection of at
least 2 rural areas to participate in the demonstra-
tion program. In conducting the demonstration pro-
gram in such rural areas, the Secretary shall provide
for medicare specialists to travel among local offices
in a rural area on a scheduled basis.
(c) DURATION.—The demonstration program shall be
conducted over a 3-year period.
(d) EVALUATION AND REPORT.—
(1) EVALUATION.—The Secretary shall provide
for an evaluation of the demonstration program.
Such evaluation shall include an analysis of—
(A) utilization of, and beneficiary satisfac-
tion with, the assistance provided under the
program; and
(B) the cost-effectiveness of providing ben-
eficiary assistance through out-stationing medi-
care specialists at local social security offices.
(2) REPORT.—The Secretary shall submit to
Congress a report on such evaluation and shall in-
clude in such report recommendations regarding the
feasibility of permanently out-stationing medical spe-
cialists at local social security offices.
SEC. 11. POLICY DEVELOPMENT REGARDING EVALUATION
AND MANAGEMENT (E & M) DOCUMENTATION
GUIDELINES.
(a) IN GENERAL.—The Secretary of Health and
Human Services may not implement any documentation
guidelines for evaluation and management physician serv-
ices under the title XVIII of the Social Security Act on
or after the date of the enactment of this Act unless the
Secretary—
(1) has developed the guidelines in collaboration
with practicing physicians and provided for an as-
sessment of the proposed guidelines by the physician
community;
(2) has established a plan that contains specific
goals, including a schedule, for improving the use of
such guidelines;
(3) has conducted appropriate and representa-
tive pilot projects under subsection (b) to test modi-
fications to the evaluation and management docu-
mentation guidelines; and
(4) finds that the objectives described in sub-
section (c) will be met in the implementation of such
guidelines.
The Secretary may make changes to the manner in which
existing evaluation and management documentation guide-
lines are implemented to reduce paperwork burdens on
physicians.
(b) PILOT PROJECTS TO TEST EVALUATION AND
MANAGEMENT DOCUMENTATION GUIDELINES.—
(1) LENGTH AND CONSULTATION.—Each pilot
project under this subsection shall—
(A) be of sufficient length to allow for pre-
paratory physician and medicare contractor
education, analysis, and use and assessment of
potential evaluation and management guide-
lines; and
(B) be conducted, in development and
throughout the planning and operational stages
of the project, in consultation with practicing
physicians.
(2) RANGE OF PILOT PROJECTS.—Of the pilot
projects conducted under this subsection—
(A) at least one shall focus on a peer re-
view method by physicians (not employed by a
medicare contractor) which evaluates medical
record information for claims submitted by phy-
sicians identified as statistical outliers relative
to definitions published in the Current Proce-
dures Terminology (CPT) code book of the
American Medical Association;
(B) at least one shall be conducted for
services furnished in a rural area and at least
one for services furnished outside such an area;
and
(C) at least one shall be conducted in a
setting where physicians bill under physicians
services in teaching settings and at one shall be
conducted in a setting other than a teaching
setting.
(3) 
BANNING
OF
TARGETING
OF
PILOT
PROJECT PARTICIPANTS.—Data collected under this
subsection shall not be used as the basis for overpay-
ment demands or post-payment audits.
(4) STUDY
OF
IMPACT.—Each pilot project
shall examine the effect of the modified evaluation
and management documentation guidelines on—
(A) different types of physician practices,
including those with fewer than 10 full-time-
equivalent employees (including physicians);
and
(B) the costs of physician compliance, in-
cluding education, implementation, auditing,
and monitoring.
(c) OBJECTIVES FOR EVALUATION AND MANAGE-
MENT GUIDELINES.—The objectives for modified evalua-
tion and management documentation guidelines developed
by the Secretary shall be to—
(1) enhance clinically relevant documentation
needed to code accurately and assess coding levels
accurately;
(2) decrease the level of non-clinically pertinent
and burdensome documentation time and content in
the physician’s medical record;
(3) increase accuracy by reviewers; and
(4) educate both physicians and reviewers.
(d) STUDY OF SIMPLER, ALTERNATIVE SYSTEMS OF
DOCUMENTATION FOR PHYSICIAN CLAIMS.—
(1) STUDY.—The Secretary of Health and
Human Services shall carry out a study of the mat-
ters described in paragraph (2).
(2) MATTERS
DESCRIBED.—The matters re-
ferred to in paragraph (1) are—
(A) the development of a simpler, alter-
native system of requirements for documenta-
tion accompanying claims for evaluation and
management physician services for which pay-
ment is made under title XVIII of the Social
Security Act; and
(B) consideration of systems other than
current coding and documentation requirements
for payment for such physician services.
(3) CONSULTATION
WITH
PRACTICING
PHYSI-
CIANS.—In designing and carrying out the study
under paragraph (1), the Secretary shall consult
with practicing physicians, including physicians who
are part of group practices.
(4) APPLICATION OF HIPAA UNIFORM CODING
REQUIREMENTS.—In developing an alternative sys-
tem under paragraph (2), the Secretary shall con-
sider requirements of administrative simplification
under part C of title XI of the Social Security Act.
(5) REPORT
TO
CONGRESS.—The Secretary
shall submit to Congress a report on the results of
the study conducted under paragraph (1).
(e) DEFINITIONS.—In this section—
(1) the term ‘‘rural area’’ has the meaning
given that term in section 1886(d)(2)(D) of the So-
cial Security Act, 42 U.S.C. 1395ww(d)(2)(D); and
(2) the term ‘‘teaching settings’’ are those set-
tings described in section 415.150 of title 42, Code
of Federal Regulations.
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