160
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 and by the 
Federal Supplementary Medical Insurance 
Trust Fund for the month in which the 
civil action authorized under this para-
161
graph 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 purposes of determining re-
imbursement due providers of services or 
suppliers under this Act. 
‘‘(D) REVIEW PANELS.—For purposes of 
this subsection, a ‘review panel’ is a panel con-
sisting of 3 members (who shall be administra-
tive law judges, members of the Departmental 
Appeals Board, or qualified individuals associ-
ated with a qualified independent contractor (as 
defined in subsection (c)(2)) or with another 
independent entity) designated by the Secretary 
for purposes of making determinations under 
this paragraph.’’. 
(b) APPLICATION TO PROVIDER AGREEMENT DETER-
MINATIONS.—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 sub-
paragraph: 
‘‘(B) An institution or agency described in subpara-
graph (A) that has filed for a hearing under subparagraph
162
(A) shall have expedited access to judicial review under 
this subparagraph 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 ob-
tain expedited access to judicial review under the process 
established under section 1869(b)(2). Nothing in this sub-
paragraph shall be construed to affect the application of 
any remedy imposed under section 1819 during the pend-
ency 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, 2003. 
(d) EXPEDITED REVIEW
OF CERTAIN PROVIDER 
AGREEMENT DETERMINATIONS.—
(1) TERMINATION AND CERTAIN OTHER IMME-
DIATE REMEDIES.—The Secretary shall develop and 
implement a process to expedite 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 described in 
clause (i) or (iii) of section 1819(h)(2)(B) of such 
Act (42 U.S.C. 1395i–3(h)(2)(B)) which is applied 
on an immediate basis, has been imposed. Under 
such process priority shall be provided in cases of 
termination.
163
(2) INCREASED FINANCIAL SUPPORT.—In addi-
tion to any amounts otherwise appropriated, to re-
duce by 50 percent the average time for administra-
tive determinations 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 In-
surance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund) to the Secretary 
such additional sums for fiscal year 2004 and each 
subsequent fiscal year as may be necessary. The 
purposes for which such amounts are available in-
clude increasing the number of administrative law 
judges (and their staffs) and the appellate level staff 
at the Departmental Appeals Board of the Depart-
ment of Health and Human Services and educating 
such judges and staffs on long-term care issues. 
SEC. 533. REVISIONS TO MEDICARE APPEALS PROCESS. 
(a) REQUIRING FULL AND EARLY PRESENTATION OF 
EVIDENCE.—
(1) IN GENERAL.—Section 1869(b) (42 U.S.C. 
1395ff(b)), as amended by BIPA and as amended by 
section 532(a), is further amended by adding at the 
end the following new paragraph:
164
‘‘(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 reconsideration conducted by the qualified 
independent contractor under subsection (c), unless 
there is good cause which precluded the introduction 
of such evidence at or before that reconsideration.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on October 1, 
2003. 
(b) USE OF PATIENTS’ MEDICAL RECORDS.—Section 
1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)), as 
amended by BIPA, is amended by inserting ‘‘(including 
the medical records of the individual involved)’’ after 
‘‘clinical experience’’. 
(c) NOTICE REQUIREMENTS
FOR MEDICARE AP-
PEALS.— 
(1) INITIAL DETERMINATIONS AND REDETER-
MINATIONS.—Section 
1869(a) 
(42 
U.S.C. 
1395ff(a)), as amended by BIPA, is amended by 
adding at the end the following new paragraph:
‘‘(4) REQUIREMENTS
OF
NOTICE
OF
DETER-
MINATIONS
AND
REDETERMINATIONS.—A written 
notice of a determination on an initial determination
165
or on a redetermination, insofar as such determina-
tion or redetermination results in a denial of a claim 
for benefits, shall include—
‘‘(A) the specific reasons for the deter-
mination, including—
‘‘(i) upon request, the provision of the 
policy, manual, or regulation used in mak-
ing the determination; and 
‘‘(ii) as appropriate in the case of a 
redetermination, a summary of the clinical 
or scientific evidence used in making the 
determination; 
‘‘(B) the procedures for obtaining addi-
tional information concerning the determination 
or redetermination; and 
‘‘(C) notification of the right to seek a re-
determination or otherwise appeal the deter-
mination and instructions on how to initiate 
such a redetermination or appeal under this 
section. 
The written notice on a redetermination shall be 
provided in printed form and written in a manner 
calculated to be understood by the individual entitled 
to benefits under part A or enrolled under part B, 
or both.’’.
166
(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 notification of the 
right to appeal such determination and instruc-
tions on how to initiate such appeal under this 
section’’ 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 ‘‘; NO-
TICE’’ after ‘‘SECRETARY’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) NOTICE.—Notice of the decision of an ad-
ministrative law judge shall be in writing in a man-
ner calculated to be understood by the individual en-
titled to benefits under part A or enrolled under part 
B, or both, and shall include—
‘‘(A) the specific reasons for the deter-
mination (including, to the extent appropriate,
167
a summary of the clinical or scientific evidence 
used in making the determination); 
‘‘(B) the procedures for obtaining addi-
tional 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
APPEAL.—
Section 
1869(c)(3)(J)(i) 
(42 
U.S.C. 
1395ff(c)(3)(J)(i)) by striking ‘‘prepare’’ and insert-
ing ‘‘submit’’ and by striking ‘‘with respect to’’ and 
all that follows through ‘‘and relevant policies’’. 
(d) QUALIFIED INDEPENDENT CONTRACTORS.—
(1) ELIGIBILITY REQUIREMENTS OF QUALIFIED 
INDEPENDENT
CONTRACTORS.—Section 1869(c)(3) 
(42 U.S.C. 1395ff(c)(3)), as amended by BIPA, is 
amended—
(A) in subparagraph (A), by striking ‘‘suf-
ficient 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 following new 
subparagraph:
168
‘‘(K) INDEPENDENCE REQUIREMENTS.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii), a qualified independent contractor 
shall not conduct any activities in a case 
unless the entity—
‘‘(I) is not a related party (as de-
fined in subsection (g)(5)); 
‘‘(II) does not have a material fa-
milial, financial, or professional rela-
tionship with 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
REASONABLE 
COMPENSATION.—Nothing in clause (i) 
shall be construed to prohibit receipt by a 
qualified independent contractor of com-
pensation from the Secretary for the con-
duct of activities under this section if the 
compensation is provided consistent with 
clause (iii). 
‘‘(iii) LIMITATIONS ON ENTITY COM-
PENSATION.—Compensation provided by 
the Secretary to a qualified independent 
contractor in connection with reviews
169
under this section shall not be contingent 
on any decision rendered by the contractor 
or by any reviewing professional.’’. 
(2) ELIGIBILITY REQUIREMENTS FOR REVIEW-
ERS.—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 REVIEWERS.—
The requirements of subsection (g) shall be met 
(relating to qualifications of reviewing profes-
sionals).’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(g) QUALIFICATIONS OF REVIEWERS.—
‘‘(1) IN
GENERAL.—In reviewing determina-
tions under this section, a qualified independent con-
tractor shall assure that—
‘‘(A) each individual conducting a review 
shall meet the qualifications of paragraph (2); 
‘‘(B) compensation provided by the con-
tractor to each such reviewer is consistent with 
paragraph (3); and 
‘‘(C) in the case of a review by a panel de-
scribed in subsection (c)(3)(B) composed of
170
physicians or other health care professionals 
(each in this subsection referred to as a ‘review-
ing professional’), each 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 provision of items or 
services by a physician (allopathic or osteo-
pathic), each reviewing professional shall be a 
physician (allopathic or osteopathic). 
‘‘(2) INDEPENDENCE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), each individual conducting a review 
in a case shall—
‘‘(i) not be a related party (as defined 
in paragraph (5)); 
‘‘(ii) not have a material familial, fi-
nancial, or professional relationship with 
such a party in the case under review; and 
‘‘(iii) not otherwise have a conflict of 
interest with such a party. 
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to—
‘‘(i) prohibit an individual, solely on 
the basis of a participation agreement with
171
a fiscal intermediary, carrier, or other con-
tractor, from serving as a reviewing profes-
sional 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 agree-
ment is disclosed to the Secretary and 
the individual entitled to benefits 
under part A or enrolled under part 
B, or both, (or authorized representa-
tive) and neither party objects; and 
‘‘(III) the individual is not an 
employee of the intermediary, carrier, 
or contractor and does not provide 
services exclusively or primarily to or 
on behalf of such intermediary, car-
rier, or contractor; 
‘‘(ii) prohibit an individual who has 
staff privileges at the institution where the 
treatment involved takes place from serv-
ing as a reviewer merely on the basis of 
having such staff privileges if the existence 
of such privileges is disclosed to the Sec-
retary and such individual (or authorized
172
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
173
‘‘(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.
174
‘‘(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. 534. PREPAYMENT REVIEW. 
(a) IN GENERAL.—Section 1874A, as added by sec-
tion 511(a)(1) and as amended by sections 512(b), 
521(b)(1), and 521(c)(1), is further amended by adding 
at the end the following new subsection: 
‘‘(h) CONDUCT OF PREPAYMENT REVIEW.—
175
‘‘(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
176
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)
177
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.
178
SEC. 535. 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
179
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.
180
‘‘(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
181
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
182
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
183
‘‘(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
184
Secretary, a preliminary evaluation of 
those records indicates that there 
would be an overpayment; 
‘‘(II) the nature of the problems 
identified in such evaluation; and 
‘‘(III) the steps that the provider 
of services or supplier should take to 
address the problems; and 
‘‘(ii) provide for a 45-day period dur-
ing which the provider of services or sup-
plier may furnish additional information 
concerning the medical 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 or 
supplier under subparagraph (B)(ii). Taking 
into consideration such information, the Sec-
retary 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 or sup-
plier, including an explanation of the rea-
son for such determination; and
185
‘‘(ii) in order to resolve the overpay-
ment, may offer the provider of services 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 or sup-
plier whereby both parties agree to settle a pro-
jected overpayment based on less than a statis-
tically valid sample of claims and the provider 
of services or supplier agrees not to appeal the 
claims involved. 
‘‘(6) 
NOTICE
OF
OVER-UTILIZATION
OF 
CODES.—The Secretary shall establish, in consulta-
tion with organizations representing the classes of 
providers of services and suppliers, a process under 
which the Secretary provides for notice to classes of 
providers of services and suppliers served by the con-
tractor in cases in which the contractor has identi-
186
fied that particular billing codes may be overutilized 
by that class of providers of services or suppliers 
under the programs under this title (or provisions of 
title XI insofar as they relate to such programs). 
‘‘(7) PAYMENT AUDITS.—
‘‘(A) WRITTEN
NOTICE
FOR
POST-PAY-
MENT AUDITS.—Subject to subparagraph (C), if 
a medicare contractor decides to conduct a 
post-payment audit of a provider of services or 
supplier under this title, the contractor shall 
provide the provider of services or supplier with 
written notice (which may be in electronic form) 
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 or supplier under this title, the contractor 
shall—
‘‘(i) give the provider of services or 
supplier a full review and explanation of 
the findings of the audit in a manner that 
is understandable to the provider of serv-
ices or supplier and permits the develop-
ment of an appropriate corrective action 
plan;
187
‘‘(ii) inform the provider of services or 
supplier of the appeal rights under this 
title as well as consent settlement options 
(which are at the discretion of the Sec-
retary); 
‘‘(iii) give the provider of services or 
supplier an opportunity to provide addi-
tional information to the contractor; and 
‘‘(iv) take into account information 
provided, on a timely basis, by the provider 
of services or supplier under clause (iii). 
‘‘(C) 
EXCEPTION.—Subparagraphs 
(A) 
and (B) shall not apply if the provision of no-
tice or findings would compromise pending law 
enforcement activities, whether civil or criminal, 
or reveal findings of law enforcement-related 
audits. 
‘‘(8) STANDARD
METHODOLOGY
FOR
PROBE 
SAMPLING.—The Secretary shall establish a stand-
ard methodology for medicare contractors to use in 
selecting a sample of claims for review in the case 
of an abnormal billing pattern.’’. 
(b) EFFECTIVE DATES AND DEADLINES.—
(1) USE
OF
REPAYMENT
PLANS.—Section 
1893(f)(1) of the Social Security Act, as added by
188
subsection (a), shall apply to requests for repayment 
plans made after the date of the enactment of this 
Act. 
(2) LIMITATION
ON
RECOUPMENT.—Section 
1893(f)(2) of the Social Security Act, as added by 
subsection (a), shall apply to actions taken after the 
date of the enactment of this Act. 
(3) 
USE
OF
EXTRAPOLATION.—Section 
1893(f)(3) of the Social Security Act, as added by 
subsection (a), shall apply to statistically valid ran-
dom samples initiated after the date that is 1 year 
after the date of the enactment of this Act. 
(4) PROVISION
OF
SUPPORTING
DOCUMENTA-
TION.—Section 1893(f)(4) of the Social Security 
Act, as added by subsection (a), shall take effect on 
the date of the enactment of this Act. 
(5) 
CONSENT
SETTLEMENT.—Section 
1893(f)(5) of the Social Security Act, as added by 
subsection (a), shall apply to consent settlements en-
tered into after the date of the enactment of this 
Act. 
(6) NOTICE OF OVERUTILIZATION.—Not later 
than 1 year after the date of the enactment of this 
Act, the Secretary shall first establish the process 
for notice of overutilization of billing codes under
189
section 1893A(f)(6) of the Social Security Act, as 
added by subsection (a). 
(7) PAYMENT AUDITS.—Section 1893A(f)(7) of 
the Social Security Act, as added by subsection (a), 
shall apply to audits initiated after the date of the 
enactment of this Act. 
(8) STANDARD FOR ABNORMAL BILLING PAT-
TERNS.—Not later than 1 year after the date of the 
enactment of this Act, the Secretary shall first es-
tablish a standard methodology for selection of sam-
ple claims for abnormal billing patterns under sec-
tion 1893(f)(8) of the Social Security Act, as added 
by subsection (a). 
SEC. 536. PROVIDER ENROLLMENT PROCESS; RIGHT OF AP-
PEAL. 
(a) IN GENERAL.—Section 1866 (42 U.S.C. 1395cc) 
is amended—
(1) by adding at the end of the heading the fol-
lowing: ‘‘; ENROLLMENT PROCESSES’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(j) ENROLLMENT PROCESS
FOR PROVIDERS
OF 
SERVICES AND SUPPLIERS.—
‘‘(1) ENROLLMENT PROCESS.—
190
‘‘(A) IN
GENERAL.—The Secretary shall 
establish by regulation a process for the enroll-
ment of providers of services and suppliers 
under this title.
‘‘(B) DEADLINES.—The Secretary shall es-
tablish by regulation procedures under which 
there are deadlines for actions on applications 
for enrollment (and, if applicable, renewal of 
enrollment). The Secretary shall monitor the 
performance of medicare administrative con-
tractors in meeting the deadlines established 
under this subparagraph. 
‘‘(C) CONSULTATION
BEFORE
CHANGING 
PROVIDER
ENROLLMENT
FORMS.—The Sec-
retary shall consult with providers of services 
and suppliers before making changes in the pro-
vider enrollment forms required of such pro-
viders and suppliers to be eligible to submit 
claims for which payment may be made under 
this title. 
‘‘(2) HEARING RIGHTS IN CASES OF DENIAL OR 
NON-RENEWAL.—A provider of services or supplier 
whose application to enroll (or, if applicable, to 
renew enrollment) under this title is denied may 
have a hearing and judicial review of such denial
191
under the procedures that apply under subsection 
(h)(1)(A) to a provider of services that is dissatisfied 
with a determination by the Secretary.’’. 
(b) EFFECTIVE DATES.—
(1) ENROLLMENT
PROCESS.—The Secretary 
shall provide for the establishment of the enrollment 
process under section 1866(j)(1) of the Social Secu-
rity Act, as added by subsection (a)(2), within 6 
months after the date of the enactment of this Act. 
(2) CONSULTATION.—Section 1866(j)(1)(C) of 
the Social Security Act, as added by subsection 
(a)(2), shall apply with respect to changes in pro-
vider enrollment forms made on or after January 1, 
2003. 
(3) HEARING RIGHTS.—Section 1866(j)(2) of 
the Social Security Act, as added by subsection 
(a)(2), shall apply to denials occurring on or after 
such date (not later than 1 year after the date of 
the enactment of this Act) as the Secretary specifies. 
SEC. 537. PROCESS FOR CORRECTION OF MINOR ERRORS 
AND OMISSIONS ON CLAIMS WITHOUT PUR-
SUING APPEALS PROCESS. 
The Secretary shall develop, in consultation with ap-
propriate medicare contractors (as defined in section 
1889(g) of the Social Security Act, as inserted by section