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 
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 
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-
100
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 unless 
the Secretary determines that—
‘‘(A) there is a sustained or high level of 
payment error; or 
‘‘(B) documented educational intervention 
has failed to correct the payment error. 
There shall be no administrative or judicial review 
under section 1869, section 1878, or otherwise, of 
determinations by the Secretary of sustained or high 
levels of payment errors under this paragraph.
101
‘‘(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 
Secretary, a preliminary evaluation of 
those records indicates that there 
would be an overpayment;
102
‘‘(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 
‘‘(ii) in order to resolve the overpay-
ment, may offer the provider of services or 
supplier—
103
‘‘(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-
fied that particular billing codes may be overutilized 
by that class of providers of services or suppliers
104
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; 
‘‘(ii) inform the provider of services or 
supplier of the appeal rights under this
105
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 
subsection (a), shall apply to requests for repayment
106
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
107
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. 236. 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.—
108
‘‘(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
110
serted by section 301(a)(1)) and representatives of pro-
viders of services and suppliers, a process whereby, in the 
case of minor errors or omissions (as defined by the Sec-
retary) that are detected in the submission of claims under 
the programs under title XVIII of such Act, a provider 
of services or supplier is given an opportunity to correct 
such an error or omission without the need to initiate an 
appeal. Such process shall include the ability to resubmit 
corrected claims. 
(b) DEADLINE.—Not later than 1 year after the date 
of the enactment of this Act, the Secretary shall first de-
velop the process under subsection (a). 
SEC. 238. PRIOR DETERMINATION PROCESS FOR CERTAIN 
ITEMS 
AND 
SERVICES; 
ADVANCE 
BENE-
FICIARY NOTICES. 
(a) 
IN
GENERAL.—Section 
1869 
(42 
U.S.C. 
1395ff(b)), as amended by section 233(d)(2)(B), is fur-
ther amended by adding at the end the following new sub-
section: 
‘‘(h) PRIOR DETERMINATION PROCESS FOR CERTAIN 
ITEMS AND SERVICES.—
‘‘(1) ESTABLISHMENT OF PROCESS.—
‘‘(A) IN
GENERAL.—With respect to a 
medicare administrative contractor that has a 
contract under section 1874A that provides for
111
making payments under this title with respect 
to physicians’ services (as defined in section 
1848(j)(3)), the Secretary shall establish a 
prior determination process that meets the re-
quirements of this subsection and that shall be 
applied by such contractor in the case of eligible 
requesters. 
‘‘(B) ELIGIBLE
REQUESTER.—For pur-
poses of this subsection, each of the following 
shall be an eligible requester: 
‘‘(i) A participating physician, but 
only with respect to physicians’ services to 
be furnished to an individual who is enti-
tled to benefits under this title and who 
has consented to the physician making the 
request under this subsection for those 
physicians’ services. 
‘‘(ii) An individual entitled to benefits 
under this title, but only with respect to a 
physicians’ service for which the individual 
receives, from a physician, an advance ben-
eficiary notice under section 1879(a). 
‘‘(2) SECRETARIAL
FLEXIBILITY.—The Sec-
retary shall establish by regulation reasonable limits 
on the physicians’ services for which a prior deter-
112
mination of coverage may be requested under this 
subsection. In establishing such limits, the Secretary 
may consider the dollar amount involved with re-
spect to the physicians’ service, administrative costs 
and burdens, and other relevant factors. 
‘‘(3) REQUEST FOR PRIOR DETERMINATION.—
‘‘(A) IN GENERAL.—Subject to paragraph 
(2), under the process established under this 
subsection an eligible requester may submit to 
the contractor a request for a determination, 
before the furnishing of a physicians’ service, as 
to whether the physicians’ service is covered 
under this title consistent with the applicable 
requirements of section 1862(a)(1)(A) (relating 
to medical necessity). 
‘‘(B) ACCOMPANYING DOCUMENTATION.—
The Secretary may require that the request be 
accompanied by a description of the physicians’ 
service, supporting documentation relating to
the medical necessity for the physicians’ service, 
and any other appropriate documentation. In 
the case of a request submitted by an eligible 
requester who is described in paragraph 
(1)(B)(ii), the Secretary may require that the
113
request also be accompanied by a copy of the 
advance beneficiary notice involved. 
‘‘(4) RESPONSE TO REQUEST.—
‘‘(A) IN GENERAL.—Under such process, 
the contractor shall provide the eligible re-
quester with written notice of a determination 
as to whether—
‘‘(i) the physicians’ service is so cov-
ered; 
‘‘(ii) the physicians’ service is not so 
covered; or 
‘‘(iii) the contractor lacks sufficient 
information to make a coverage determina-
tion with respect to the physicians’ service. 
‘‘(B) CONTENTS OF NOTICE FOR CERTAIN 
DETERMINATIONS.—
‘‘(i) 
NONCOVERAGE.—If 
the 
con-
tractor makes the determination described 
in subparagraph (A)(ii), the contractor 
shall include in the notice a brief expla-
nation of the basis for the determination, 
including on what national or local cov-
erage or noncoverage determination (if 
any) the determination is based, and a de-
114
scription of any applicable rights under 
subsection (a). 
‘‘(ii) INSUFFICIENT
INFORMATION.—
If the contractor makes the determination 
described in subparagraph (A)(iii), the 
contractor shall include in the notice a de-
scription of the additional information re-
quired to make the coverage determination.
‘‘(C) DEADLINE TO RESPOND.—Such no-
tice shall be provided within the same time pe-
riod as the time period applicable to the con-
tractor providing notice of initial determinations 
on a claim for benefits under subsection 
(a)(2)(A). 
‘‘(D) INFORMING BENEFICIARY IN CASE OF 
PHYSICIAN REQUEST.—In the case of a request 
by a participating physician under paragraph 
(1)(B)(i), the process shall provide that the in-
dividual to whom the physicians’ service is pro-
posed to be furnished shall be informed of any 
determination described in subparagraph (A)(ii) 
(relating to a determination of non-coverage) 
and the right (referred to in paragraph (6)(B)) 
to obtain the physicians’ service and have a 
claim submitted for the physicians’ service.
115
‘‘(5) BINDING
NATURE
OF
POSITIVE
DETER-
MINATION.—If the contractor makes the determina-
tion described in paragraph (4)(A)(i), such deter-
mination shall be binding on the contractor in the 
absence of fraud or evidence of misrepresentation of 
facts presented to the contractor. 
‘‘(6) LIMITATION ON FURTHER REVIEW.—
‘‘(A) IN GENERAL.—Contractor determina-
tions described in paragraph (4)(A)(ii) or 
(4)(A)(iii) (relating to pre-service claims) are 
not subject to further administrative appeal or 
judicial review under this section or otherwise. 
‘‘(B) DECISION NOT TO SEEK PRIOR DE-
TERMINATION
OR
NEGATIVE
DETERMINATION 
DOES NOT IMPACT RIGHT TO OBTAIN SERVICES, 
SEEK REIMBURSEMENT, OR APPEAL RIGHTS.—
Nothing in this subsection shall be construed as 
affecting the right of an individual who—
‘‘(i) decides not to seek a prior deter-
mination under this subsection with re-
spect to physicians’ services; or 
‘‘(ii) seeks such a determination and 
has received a determination described in 
paragraph (4)(A)(ii),
116
from receiving (and submitting a claim for) 
such physicians’ services and from obtaining 
administrative or judicial review respecting such 
claim under the other applicable provisions of 
this section. Failure to seek a prior determina-
tion under this subsection with respect to physi-
cians’ service shall not be taken into account in 
such administrative or judicial review. 
‘‘(C) NO
PRIOR
DETERMINATION
AFTER 
RECEIPT OF SERVICES.—Once an individual is 
provided physicians’ services, there shall be no 
prior determination under this subsection with 
respect to such physicians’ services.’’. 
(b) EFFECTIVE DATE; SUNSET; TRANSITION.—
(1) EFFECTIVE DATE.—The Secretary shall es-
tablish the prior determination process under the 
amendment made by subsection (a) in such a man-
ner as to provide for the acceptance of requests for 
determinations under such process filed not later 
than 18 months after the date of the enactment of 
this Act. 
(2) SUNSET.—Such prior determination process 
shall not apply to requests filed after the end of the 
5-year period beginning on the first date on which
117
requests for determinations under such process are 
accepted. 
(3) TRANSITION.—During the period in which 
the amendment made by subsection (a) has become 
effective but contracts are not provided under sec-
tion 1874A of the Social Security Act with medicare 
administrative contractors, any reference in section 
1869(g) of such Act (as added by such amendment) 
to such a contractor is deemed a reference to a fiscal 
intermediary or carrier with an agreement under 
section 1816, or contract under section 1842, re-
spectively, of such Act. 
(4) LIMITATION ON APPLICATION TO SGR.—For 
purposes of applying section 1848(f)(2)(D) of the 
Social Security Act (42 U.S.C. 1395w–4(f)(2)(D)), 
the amendment made by subsection (a) shall not be 
considered to be a change in law or regulation. 
(c) PROVISIONS RELATING
TO ADVANCE BENE-
FICIARY NOTICES; REPORT ON PRIOR DETERMINATION 
PROCESS.—
(1) DATA
COLLECTION.—The Secretary shall 
establish a process for the collection of information
on the instances in which an advance beneficiary no-
tice (as defined in paragraph (5)) has been provided 
and on instances in which a beneficiary indicates on
118
such a notice that the beneficiary does not intend 
to seek to have the item or service that is the subject 
of the notice furnished. 
(2) OUTREACH
AND
EDUCATION.—The Sec-
retary shall establish a program of outreach and 
education for beneficiaries and providers of services 
and other persons on the appropriate use of advance 
beneficiary notices and coverage policies under the 
medicare program. 
(3) GAO REPORT ON USE OF ADVANCE BENE-
FICIARY NOTICES.—Not later than 18 months after 
the date on which section 1869(h) of the Social Se-
curity Act (as added by subsection (a)) takes effect, 
the Comptroller General of the United States shall 
submit to Congress a report on the use of advance 
beneficiary notices under title XVIII of such Act. 
Such report shall include information concerning the 
providers of services and other persons that have 
provided such notices and the response of bene-
ficiaries to such notices. 
(4) GAO REPORT ON USE OF PRIOR DETER-
MINATION
PROCESS.—Not later than 36 months 
after the date on which section 1869(h) of the Social 
Security Act (as added by subsection (a)) takes ef-
fect, the Comptroller General of the United States
119
shall submit to Congress a report on the use of the 
prior determination process under such section. Such 
report shall include—
(A) information concerning—
(i) the number and types of proce-
dures for which a prior determination has 
been sought; 
(ii) determinations made under the 
process; 
(iii) the percentage of beneficiaries 
prevailing; 
(iv) in those cases in which the bene-
ficiaries do not prevail, the reasons why 
such beneficiaries did not prevail; and
(v) changes in receipt of services re-
sulting from the application of such proc-
ess; 
(B) an evaluation of whether the process 
was useful for physicians (and other suppliers) 
and beneficiaries, whether it was timely, and 
whether the amount of information required 
was burdensome to physicians and beneficiaries; 
and 
(C) recommendations for improvements or 
continuation of such process.
120
(5) 
ADVANCE
BENEFICIARY
NOTICE
DE-
FINED.—In this subsection, the term ‘‘advance bene-
ficiary notice’’ means a written notice provided 
under section 1879(a) of the Social Security Act (42 
U.S.C. 1395pp(a)) to an individual entitled to bene-
fits under part A or enrolled under part B of title 
XVIII of such Act before items or services are fur-
nished under such part in cases where a provider of 
services or other person that would furnish the item 
or service believes that payment will not be made for 
some or all of such items or services under such 
title. 
SEC. 239. APPEALS BY PROVIDERS WHEN THERE IS NO 
OTHER PARTY AVAILABLE. 
(a) IN GENERAL.—Section 1870 (42 U.S.C. 1395gg) 
is amended by adding at the end the following new sub-
section: 
‘‘(h) Notwithstanding subsection (f) or any other pro-
vision of law, the Secretary shall permit a provider of serv-
ices or supplier to appeal any determination of the Sec-
retary under this title relating to services rendered under 
this title to an individual who subsequently dies if there 
is no other party available to appeal such determination.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on the date of the enact-
121
ment of this Act and shall apply to items and services fur-
nished on or after such date. 
SEC. 240. REVISIONS TO APPEALS TIMEFRAMES AND 
AMOUNTS. 
(a) TIMEFRAMES.—Section 1869 (42 U.S.C. 1395ff) 
is amended—
(1) in subsection (a)(3)(C)(ii), by striking ‘‘30-
day period’’ each place it appears and inserting ‘‘60-
day period’’; and 
(2) in subsection (c)(3)(C)(i), by striking ‘‘30-
day period’’ and inserting ‘‘60-day period’’. 
(b) AMOUNTS.—
(1) IN GENERAL.—Section 1869(b)(1)(E) (42 
U.S.C. 1395ff(b)(1)(E)) is amended by adding at 
the end the following new clause: 
‘‘(iii) 
ADJUSTMENT
OF
DOLLAR 
AMOUNTS.—For requests for hearings or 
judicial review made in a year after 2004, 
the dollar amounts specified in clause (i) 
shall be equal to such dollar amounts in-
creased by the percentage increase in the 
medical care component of the consumer 
price index for all urban consumers (U.S. 
city average) for July 2003 to the July 
preceding the year involved. Any amount