185
(d) EFFECTIVE DATE; TRANSITION RULE.—
(1) EFFECTIVE DATE.—
(A) IN GENERAL.—Except as other-
wise provided in this subsection, the 
amendments made by this section 
shall take effect on October 1, 2005, 
and the Secretary is authorized to 
take such steps before such date as 
may be necessary to implement such 
amendments on a timely basis. 
(B) CONSTRUCTION
FOR
CURRENT 
CONTRACTS.—Such amendments shall 
not apply to contracts in effect before 
the date specified under subpara-
graph (A) that continue to retain the 
terms and conditions in effect on 
such date (except as otherwise pro-
vided under this Act, other than 
under this section) until such date as 
the contract is let out for competitive 
bidding under such amendments. 
(C) 
DEADLINE
FOR
COMPETITIVE 
BIDDING.—The Secretary shall provide 
for the letting by competitive bidding 
of all contracts for functions of medi-
186
care administrative contractors for 
annual contract periods that begin on 
or after October 1, 2010. 
(D) WAIVER OF PROVIDER NOMINA-
TION PROVISIONS DURING TRANSITION.—
During the period beginning on the 
date of the enactment of this Act and 
before the date specified under sub-
paragraph (A), the Secretary may 
enter into new agreements under sec-
tion 1816 of the Social Security Act 
(42 U.S.C. 1395h) without regard to 
any of the provider nomination provi-
sions of such section. 
(2) GENERAL
TRANSITION
RULES.—The 
Secretary shall take such steps, con-
sistent with paragraph (1)(B) and (1)(C), 
as are necessary to provide for an appro-
priate transition from contracts under 
section 1816 and section 1842 of the So-
cial Security Act (42 U.S.C. 1395h, 1395u) 
to contracts under section 1874A, as 
added by subsection (a)(1). 
(3) AUTHORIZING CONTINUATION OF MIP 
FUNCTIONS UNDER CURRENT CONTRACTS AND
187
AGREEMENTS
AND
UNDER
ROLLOVER
CON-
TRACTS.—The provisions contained in the 
exception in section 1893(d)(2) of the So-
cial Security Act (42 U.S.C. 1395ddd(d)(2)) 
shall continue to apply notwithstanding 
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 sec-
tion 1874A of such Act, as inserted by 
subsection (a)(1), that continues the ac-
tivities referred to in such provisions. 
(e) REFERENCES.—On and after the effec-
tive date provided under subsection (d)(1), 
any reference to a fiscal intermediary or car-
rier under title XI or XVIII of the Social Secu-
rity Act (or any regulation, manual instruc-
tion, 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 pro-
vided under section 1874A of the Social Secu-
rity Act). 
(f) REPORTS ON IMPLEMENTATION.—
188
(1) PLAN
FOR
IMPLEMENTATION.—By 
not later than October 1, 2004, the Sec-
retary shall submit a report to Congress 
and the Comptroller General of the 
United States that describes the plan for 
implementation of the amendments made
by this section. The Comptroller General 
shall conduct an evaluation of such plan 
and shall submit to Congress, not later 
than 6 months after the date the report 
is received, a report on such evaluation 
and shall include in such report such rec-
ommendations as the Comptroller Gen-
eral deems appropriate. 
(2) STATUS
OF
IMPLEMENTATION.—The 
Secretary shall submit a report to Con-
gress not later than October 1, 2008, that 
describes the status of implementation of 
such amendments and that includes a de-
scription of the following: 
(A) The number of contracts that 
have been competitively bid as of 
such date. 
(B) The distribution of functions 
among contracts and contractors.
189
(C) A timeline for complete transi-
tion to full competition. 
(D) A detailed description of how 
the Secretary has modified oversight 
and management of medicare con-
tractors to adapt to full competition. 
SEC. 202. REQUIREMENTS FOR INFORMATION SECURITY 
FOR MEDICARE ADMINISTRATIVE CONTRAC-
TORS. 
(a) IN GENERAL.—Section 1874A, as added 
by section 201(a)(1), is amended by adding at 
the end the following new subsection: 
‘‘(e) REQUIREMENTS FOR INFORMATION SECU-
RITY.—
‘‘(1) DEVELOPMENT OF INFORMATION SE-
CURITY PROGRAM.—A medicare administra-
tive contractor that performs the func-
tions referred to in subparagraphs (A) 
and (B) of subsection (a)(4) (relating to 
determining and making payments) shall 
implement a contractor-wide information 
security program to provide information 
security for the operation and assets of 
the contractor with respect to such func-
tions under this title. An information se-
190
curity program under this paragraph 
shall meet the requirements for informa-
tion security programs imposed on Fed-
eral 
agencies 
under 
paragraphs 
(1) 
through (8) of section 3544(b) of title 44, 
United States Code (other than the re-
quirements under paragraph (2)(D)(i) of 
such section). 
‘‘(2) INDEPENDENT AUDITS.—
‘‘(A) 
PERFORMANCE
OF
ANNUAL 
EVALUATIONS.—Each year a medicare 
administrative contractor that per-
forms the functions referred to in 
subparagraphs (A) and (B) of sub-
section (a)(4) (relating to determining 
and making payments) shall undergo 
an evaluation of the information se-
curity of the contractor with respect 
to such functions under this title. The 
evaluation shall—
‘‘(i) be performed by an entity 
that meets such requirements for 
independence as the Inspector 
General of the Department of