1230
this section if the compensation is 
provided consistent with clause 
(iii). 
‘‘(iii) LIMITATIONS
ON
ENTITY 
COMPENSATION.—Compensation 
provided by the Secretary to a 
qualified independent contractor 
in connection with reviews under 
this section shall not be contin-
gent on any decision rendered by 
the contractor or by any review-
ing professional.’’. 
(2) ELIGIBILITY REQUIREMENTS FOR RE-
VIEWERS.—Section 1869 (42 U.S.C. 1395ff), 
as amended by BIPA, is amended—
(A) 
by 
amending 
subsection 
(c)(3)(D) to read as follows: 
‘‘(D) QUALIFICATIONS
FOR
REVIEW-
ERS.—The requirements of subsection 
(g) shall be met (relating to qualifica-
tions of reviewing professionals).’’; 
and 
(B) by adding at the end the fol-
lowing new subsection: 
‘‘(g) QUALIFICATIONS OF REVIEWERS.—
1231
‘‘(1) IN GENERAL.—In reviewing deter-
minations under this section, a qualified 
independent 
contractor 
shall 
assure 
that—
‘‘(A) each individual conducting a 
review shall meet the qualifications 
of paragraph (2); 
‘‘(B) compensation provided by 
the contractor to each such reviewer 
is consistent with paragraph (3); and 
‘‘(C) in the case of a review by a 
panel 
described 
in 
subsection 
(c)(3)(B) composed of physicians or 
other health care professionals (each 
in this subsection referred to as a ‘re-
viewing professional’), a reviewing 
professional meets the qualifications 
described 
in 
paragraph 
(4) 
and, 
where a claim is regarding the fur-
nishing of treatment by a physician 
(allopathic or osteopathic) or the pro-
vision of items or services by a physi-
cian (allopathic or osteopathic), a re-
viewing professional shall be a physi-
cian (allopathic or osteopathic).
1232
‘‘(2) INDEPENDENCE.—
‘‘(A) IN GENERAL.—Subject to sub-
paragraph (B), each individual con-
ducting a review in a case shall—
‘‘(i) not be a related party (as 
defined in paragraph (5)); 
‘‘(ii) not have a material famil-
ial, financial, or professional rela-
tionship with such a party in the 
case under review; and 
‘‘(iii) not otherwise have a 
conflict of interest with such a 
party. 
‘‘(B) EXCEPTION.—Nothing in sub-
paragraph (A) shall be construed to—
‘‘(i) prohibit an individual, 
solely on the basis of a participa-
tion agreement with a fiscal inter-
mediary, carrier, or other con-
tractor, from serving as a review-
ing professional if—
‘‘(I) the individual is not 
involved in the provision of 
items or services in the case 
under review;
1233
‘‘(II) the fact of such an 
agreement is disclosed to the 
Secretary and the individual 
entitled to benefits under part 
A or enrolled under part B, or 
both, 
(or 
authorized 
rep-
resentative) and neither party 
objects; and 
‘‘(III) the individual is not 
an employee of the inter-
mediary, 
carrier, 
or 
con-
tractor and does not provide 
services exclusively or pri-
marily to or on behalf of such 
intermediary, carrier, or con-
tractor; 
‘‘(ii) prohibit an individual 
who has staff privileges at the in-
stitution where the treatment in-
volved takes place from serving 
as a reviewer merely on the basis 
of having such staff privileges if 
the existence of such privileges is 
disclosed to the Secretary and 
such individual (or authorized
1234
representative), and neither party 
objects; or 
‘‘(iii) prohibit receipt of com-
pensation by a reviewing profes-
sional from a contractor if the 
compensation is provided con-
sistent with paragraph (3). 
For purposes of this paragraph, the 
term ‘participation agreement’ means 
an agreement relating to the provi-
sion of health care services by the in-
dividual and does not include the 
provision of services as a reviewer 
under this subsection. 
‘‘(3) LIMITATIONS
ON
REVIEWER
COM-
PENSATION.—Compensation provided by a 
qualified independent contractor to a re-
viewer in connection with a review under 
this section shall not be contingent on 
the decision rendered by the reviewer. 
‘‘(4) LICENSURE AND EXPERTISE.—Each 
reviewing professional shall be—
‘‘(A) a physician (allopathic or os-
teopathic) 
who 
is 
appropriately 
credentialed or licensed in one or
1235
more States to deliver health care 
services and has medical expertise in 
the field of practice that is appro-
priate for the items or services at 
issue; or 
‘‘(B) a health care professional 
who is legally authorized in one or 
more States (in accordance with State 
law or the State regulatory mecha-
nism provided by State law) to fur-
nish the health care items or services 
at issue and has medical expertise in 
the field of practice that is appro-
priate for such items or services. 
‘‘(5) 
RELATED
PARTY
DEFINED.—For 
purposes of this section, the term ‘related 
party’ means, with respect to a case 
under this title involving a specific indi-
vidual entitled to benefits under part A 
or enrolled under part B, or both, any of 
the following: 
‘‘(A) The Secretary, the medicare 
administrative contractor involved, 
or any fiduciary, officer, director, or 
employee 
of 
the 
Department 
of
1236
Health and Human Services, or of 
such contractor. 
‘‘(B) The individual (or authorized 
representative). 
‘‘(C) The health care professional 
that provides the items or services in-
volved in the case. 
‘‘(D) The institution at which the 
items or services (or treatment) in-
volved in the case are provided. 
‘‘(E) The manufacturer of any 
drug or other item that is included in 
the items or services involved in the 
case. 
‘‘(F) Any other party determined 
under any regulations to have a sub-
stantial 
interest 
in 
the 
case 
in-
volved.’’. 
(3) REDUCING
MINIMUM
NUMBER
OF 
QUALIFIED
INDEPENDENT
CONTRACTORS.—
Section 1869(c)(4) (42 U.S.C. 1395ff(c)(4)) 
is amended by striking ‘‘not fewer than 
qualified 
independent 
contractors 
under this subsection’’ and inserting 
‘‘with a sufficient number of qualified
1237
independent contractors (but not fewer 
than 4 such contractors) to conduct re-
considerations consistent with the time-
frames applicable under this subsection’’. 
(4) EFFECTIVE DATE.—The amendments 
made by paragraphs (1) and (2) shall be 
effective as if included in the enactment 
of the respective provisions of subtitle C 
of title V of BIPA, (114 Stat. 2763A–534). 
(5) TRANSITION.—In applying section 
1869(g) of the Social Security Act (as 
added by paragraph (2)), any reference to 
a 
medicare 
administrative 
contractor 
shall be deemed to include a reference to 
a fiscal intermediary under section 1816 
of the Social Security Act (42 U.S.C. 
1395h) and a carrier under section 1842 
of such Act (42 U.S.C. 1395u). 
SEC. 934. PREPAYMENT REVIEW. 
(a) IN GENERAL.—Section 1874A, as added 
by section 911(a)(1) and as amended by sec-
tions 912(b), 921(b)(1), and 921(c)(1), is further 
amended by adding at the end the following 
new subsection: 
‘‘(h) CONDUCT OF PREPAYMENT REVIEW.—
1238
‘‘(1) CONDUCT OF RANDOM PREPAYMENT 
REVIEW.—
‘‘(A) IN GENERAL.—A medicare ad-
ministrative contractor may conduct 
random prepayment review only to 
develop a contractor-wide or pro-
gram-wide 
claims 
payment 
error 
rates or under such additional cir-
cumstances 
as 
may 
be 
provided 
under regulations, developed in con-
sultation with providers of services 
and suppliers. 
‘‘(B) USE OF STANDARD PROTOCOLS 
WHEN
CONDUCTING
PREPAYMENT
RE-
VIEWS.—When a medicare administra-
tive contractor conducts a random 
prepayment review, the contractor 
may conduct such review only in ac-
cordance with a standard protocol for 
random prepayment audits developed 
by the Secretary. 
‘‘(C) CONSTRUCTION.—Nothing in 
this paragraph shall be construed as 
preventing the denial of payments for
1240
shall issue regulations relating to the 
termination, 
including 
termination 
dates, of non-random prepayment re-
view. Such regulations may vary such 
a termination date based upon the 
differences in the circumstances trig-
gering prepayment review.’’. 
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided 
in this subsection, the amendment made 
by subsection (a) shall take effect 1 year 
after the date of the enactment of this 
Act. 
(2) DEADLINE
FOR
PROMULGATION
OF 
CERTAIN
REGULATIONS.—The 
Secretary 
shall first issue regulations under section 
1874A(h) of the Social Security Act, as 
added by subsection (a), by not later than 
1 year after the date of the enactment of 
this Act. 
(3) APPLICATION
OF
STANDARD
PROTO-
COLS FOR RANDOM PREPAYMENT REVIEW.—
Section 1874A(h)(1)(B) of the Social Secu-
rity Act, as added by subsection (a), shall 
apply to random prepayment reviews
1241
conducted on or after such date (not later 
than 1 year after the date of the enact-
ment of this Act) as the Secretary shall 
specify. 
(c) APPLICATION TO FISCAL INTERMEDIARIES 
AND
CARRIERS.—The provisions of section 
1874A(h) of the Social Security Act, as added 
by subsection (a), shall apply to each fiscal 
intermediary under section 1816 of the Social 
Security Act (42 U.S.C. 1395h) and each car-
rier under section 1842 of such Act (42 U.S.C. 
1395u) in the same manner as they apply to 
medicare administrative contractors under 
such provisions. 
SEC. 935. RECOVERY OF OVERPAYMENTS. 
(a) IN GENERAL.—Section 1893 (42 U.S.C. 
1395ddd) is amended by adding at the end the 
following new subsection: 
‘‘(f) RECOVERY OF OVERPAYMENTS.—
‘‘(1) USE OF REPAYMENT PLANS.—
‘‘(A) IN
GENERAL.—If the repay-
ment, within 30 days by a provider of 
services or supplier, of an overpay-
ment under this title would con-
stitute a hardship (as defined in sub-
1242
paragraph (B)), subject to subpara-
graph (C), upon request of the pro-
vider of services or supplier the Sec-
retary shall enter into a plan with the 
provider of services or supplier for 
the repayment (through offset or oth-
erwise) of such overpayment over a 
period of at least 6 months but not 
longer than 3 years (or not longer 
than 5 years in the case of extreme 
hardship, as determined by the Sec-
retary). Interest shall accrue on the 
balance through the period of repay-
ment. Such plan shall meet terms and 
conditions determined to be appro-
priate by the Secretary. 
‘‘(B) HARDSHIP.—
‘‘(i) IN GENERAL.—For purposes 
of subparagraph (A), the repay-
ment of an overpayment (or over-
payments) 
within 
days 
is 
deemed to constitute a hardship 
if—
‘‘(I) in the case of a pro-
vider of services that files
1243
cost reports, the aggregate 
amount of the overpayments 
exceeds 10 percent of the 
amount paid under this title 
to the provider of services for 
the cost reporting period cov-
ered by the most recently sub-
mitted cost report; or 
‘‘(II) in the case of another 
provider of services or sup-
plier, the aggregate amount of 
the overpayments exceeds 10 
percent of the amount paid 
under this title to the pro-
vider of services or supplier 
for 
the 
previous 
calendar 
year. 
‘‘(ii) RULE
OF
APPLICATION.—
The 
Secretary 
shall 
establish 
rules for the application 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
1244
paid under this title only during a 
portion of that year. 
‘‘(iii) TREATMENT
OF
PREVIOUS 
OVERPAYMENTS.—If a provider of 
services or supplier has entered 
into a repayment plan under sub-
paragraph (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 overpay-
ment amounts. 
‘‘(C) 
EXCEPTIONS.—Subparagraph 
(A) shall not apply if—
‘‘(i) the Secretary has reason 
to suspect that the provider of 
services or supplier may file for 
bankruptcy or otherwise cease to 
do business or discontinue par-
ticipation in the program under 
this title; or 
‘‘(ii) there is an indication of 
fraud or abuse committed against 
the program.
1245
‘‘(D) IMMEDIATE COLLECTION IF VIO-
LATION OF REPAYMENT PLAN.—If a pro-
vider of services or supplier fails to 
make a payment in accordance with a 
repayment plan under this para-
graph, 
the 
Secretary 
may 
imme-
diately seek to offset or otherwise re-
cover the total balance outstanding 
(including applicable interest) under 
the repayment plan. 
‘‘(E) RELATION TO NO FAULT PROVI-
SION.—Nothing 
in 
this 
paragraph 
shall be construed as affecting the ap-
plication of section 1870(c) (relating 
to no adjustment in the cases of cer-
tain overpayments). 
‘‘(2) LIMITATION ON RECOUPMENT.—
‘‘(A) IN GENERAL.—In the case of a 
provider 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 de-
termination under section 1869(b)(1), 
the Secretary may not take any ac-
1246
tion (or authorize any other person, 
including any medicare contractor, as 
defined in subparagraph (C)) to re-
coup the overpayment until the date 
the decision on the reconsideration 
has been rendered. If the provisions 
of section 1869(b)(1) (providing for 
such a reconsideration by a qualified 
independent contractor) are not in ef-
fect, in applying the previous sen-
tence any reference to such a recon-
sideration shall be treated as a ref-
erence to a redetermination by the 
fiscal intermediary or carrier in-
volved. 
‘‘(B) COLLECTION WITH INTEREST.—
Insofar as the determination on such 
appeal is against the provider of serv-
ices or supplier, interest on the over-
payment 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 Sec-
retary shall provide for repayment of
1247
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
DE-
FINED.—For purposes of this sub-
section, 
the 
term 
‘medicare 
con-
tractor’ has the meaning given such 
term in section 1889(g). 
‘‘(3) LIMITATION
ON
USE
OF
EXTRAPO-
LATION.—A medicare contractor may not 
use extrapolation to determine overpay-
ment 
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 by regulation); or 
‘‘(B) 
documented 
educational 
intervention has failed to correct the 
payment error (as determined by the 
Secretary). 
‘‘(4) PROVISION
OF
SUPPORTING
DOCU-
MENTATION.—In the case of a provider of 
services or supplier with respect to 
which amounts were previously overpaid,
1248
a medicare contractor may request the 
periodic production of records or sup-
porting documentation for a limited sam-
ple of submitted claims to ensure that the 
previous practice is not continuing. 
‘‘(5) CONSENT SETTLEMENT REFORMS.—
‘‘(A) IN
GENERAL.—The Secretary 
may use a consent settlement (as de-
fined in subparagraph (D)) to settle a 
projected overpayment. 
‘‘(B) OPPORTUNITY TO SUBMIT ADDI-
TIONAL
INFORMATION
BEFORE
CONSENT 
SETTLEMENT OFFER.—Before offering a 
provider of services or supplier a con-
sent settlement, the Secretary shall—
‘‘(i) communicate to the pro-
vider of services or supplier—
‘‘(I) that, based on a re-
view of the medical records 
requested by the Secretary, a 
preliminary 
evaluation 
of 
those records indicates that 
there would be an overpay-
ment;
1249
‘‘(II) the nature of the 
problems identified in such 
evaluation; and 
‘‘(III) the steps that the 
provider of services or sup-
plier should take to address 
the problems; and 
‘‘(ii) provide for a 45-day pe-
riod during which the provider of 
services or supplier may furnish 
additional 
information 
con-
cerning the medical records for 
the claims that had been re-
viewed. 
‘‘(C) CONSENT SETTLEMENT OFFER.—
The Secretary shall review any addi-
tional information furnished by the 
provider of services or supplier under 
subparagraph (B)(ii). Taking into con-
sideration 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 determination to the pro-
1250
vider of services or supplier, in-
cluding an explanation of the rea-
son for such determination; and 
‘‘(ii) in order to resolve the 
overpayment, may offer the pro-
vider of services or supplier—
‘‘(I) the opportunity for a 
statistically 
valid 
random 
sample; or 
‘‘(II) a consent settlement. 
The 
opportunity 
provided 
under 
clause (ii)(I) does not waive any ap-
peal rights with respect to the alleged 
overpayment involved. 
‘‘(D) 
CONSENT
SETTLEMENT
DE-
FINED.—For purposes of this para-
graph, the term ‘consent settlement’ 
means an agreement between the Sec-
retary and a provider of services or 
supplier whereby both parties agree 
to settle a projected overpayment 
based on less than a statistically valid 
sample of claims and the provider of 
services or supplier agrees not to ap-
peal the claims involved.
1251
‘‘(6) NOTICE
OF
OVER-UTILIZATION
OF 
CODES.—The Secretary shall establish, in 
consultation 
with 
organizations 
rep-
resenting the classes of providers of serv-
ices and suppliers, a process under which 
the Secretary provides for notice to class-
es of providers of services and suppliers 
served by the contractor in cases in 
which the contractor has identified that 
particular billing codes may be overuti-
lized 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 subpara-
graph (C), if a medicare contractor 
decides to conduct a post-payment 
audit of a provider of services or sup-
plier 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.
1252
‘‘(B) EXPLANATION OF FINDINGS FOR 
ALL AUDITS.—Subject to subparagraph 
(C), if a medicare contractor audits a 
provider of services or supplier under 
this title, the contractor shall—
‘‘(i) give the provider of serv-
ices or supplier a full review and 
explanation of the findings of the 
audit in a manner that is under-
standable to the provider of serv-
ices or supplier and permits the 
development of an appropriate 
corrective action plan; 
‘‘(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 serv-
ices or supplier an opportunity to 
provide additional information to 
the contractor; and 
‘‘(iv) take into account infor-
mation provided, on a timely
1253
basis, by the provider of services 
or supplier under clause (iii). 
‘‘(C) 
EXCEPTION.—Subparagraphs 
(A) and (B) shall not apply if the pro-
vision of notice or findings would 
compromise pending law enforcement 
activities, whether civil or criminal, 
or reveal findings of law enforce-
ment-related audits. 
‘‘(8) 
STANDARD
METHODOLOGY
FOR 
PROBE SAMPLING.—The Secretary shall es-
tablish a standard methodology for medi-
care 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 re-
quests for repayment plans made after 
the date of the enactment of this Act. 
(2) LIMITATION ON RECOUPMENT.—Sec-
tion 1893(f)(2) of the Social Security Act, 
as added by subsection (a), shall apply to
1254
actions taken after the date of the enact-
ment 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 random samples initi-
ated after the date that is 1 year after the 
date of the enactment of this Act. 
(4) PROVISION
OF
SUPPORTING
DOCU-
MENTATION.—Section 1893(f)(4) of the So-
cial Security Act, as added by subsection 
(a), shall take effect on the date of the en-
actment 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 entered into after the 
date of the enactment of this Act. 
(6) NOTICE
OF
OVERUTILIZATION.—Not 
later than 1 year after the date of the en-
actment of this Act, the Secretary shall 
first establish the process for notice of 
overutilization of billing codes under sec-
tion 1893A(f)(6) of the Social Security Act, 
as added by subsection (a).
1255
(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 en-
actment of this Act. 
(8) STANDARD
FOR
ABNORMAL
BILLING 
PATTERNS.—Not later than 1 year after the 
date of the enactment of this Act, the Sec-
retary shall first establish a standard 
methodology 
for 
selection 
of 
sample 
claims for abnormal billing patterns 
under section 1893(f)(8) of the Social Se-
curity Act, as added by subsection (a). 
SEC. 936. 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 head-
ing the following: ‘‘; ENROLLMENT
PROC-
ESSES’’; and 
(2) by adding at the end the following 
new subsection: 
‘‘(j) ENROLLMENT PROCESS FOR PROVIDERS 
OF SERVICES AND SUPPLIERS.—
‘‘(1) ENROLLMENT PROCESS.—
1256
‘‘(A) IN
GENERAL.—The Secretary 
shall establish by regulation a proc-
ess for the enrollment of providers of 
services and suppliers under this 
title. 
‘‘(B) 
DEADLINES.—The 
Secretary 
shall establish by regulation proce-
dures under which there are dead-
lines for actions on applications for 
enrollment (and, if applicable, re-
newal of enrollment). The Secretary 
shall monitor the performance of 
medicare administrative contractors 
in meeting the deadlines established 
under this subparagraph. 
‘‘(C) CONSULTATION BEFORE CHANG-
ING
PROVIDER
ENROLLMENT
FORMS.—
The Secretary shall consult with pro-
viders of services and suppliers be-
fore making changes in the provider 
enrollment forms required of such 
providers and suppliers to be eligible 
to submit claims for which payment 
may be made under this title.
1257
‘‘(2) HEARING RIGHTS IN CASES OF DE-
NIAL
OR
NON-RENEWAL.—A provider of 
services or supplier whose application to 
enroll (or, if applicable, to renew enroll-
ment) under this title is denied may have 
a hearing and judicial review of such de-
nial under the procedures that apply 
under subsection (h)(1)(A) to a provider 
of services that is dissatisfied with a de-
termination by the Secretary.’’. 
(b) EFFECTIVE DATES.—
(1) ENROLLMENT
PROCESS.—The Sec-
retary shall provide for the establishment 
of the enrollment process under section 
1866(j)(1) of the Social Security 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 provider en-
rollment forms made on or after January 
1, 2004.
1258
(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 Sec-
retary specifies. 
SEC. 937. PROCESS FOR CORRECTION OF MINOR ERRORS 
AND OMISSIONS WITHOUT PURSUING AP-
PEALS PROCESS. 
(a) CLAIMS.—The Secretary shall develop, 
in consultation with appropriate medicare 
contractors (as defined in section 1889(g) of 
the Social Security Act, as inserted by section 
301(a)(1)) and representatives of providers of 
services and suppliers, a process whereby, in 
the case of minor errors or omissions (as de-
fined by the Secretary) 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.
1259
(b) PERMITTING USE
OF CORRECTED
AND 
SUPPLEMENTARY DATA.—
(1) 
IN
GENERAL.—Section 
1886(d)(10)(D)(vi) 
(42 
U.S.C. 
1395ww(d)(10)(D)(vi)) is amended by add-
ing after subclause (II) at the end the fol-
lowing: 
‘‘Notwithstanding subclause (I), a hospital 
may submit, and the Secretary may accept 
upon verification, data that corrects or sup-
plements the data described in such sub-
clause without regard to whether the cor-
rected or supplementary data relate to a cost 
report that has been settled.’’. 
(2) EFFECTIVE DATE.—The amendment 
made by paragraph (1) shall apply to fis-
cal years beginning with fiscal year 2004. 
(3) SUBMITTAL AND RESUBMITTAL OF AP-
PLICATIONS
PERMITTED
FOR
FISCAL
YEAR 
2004.—
(A) IN GENERAL.—Notwithstanding 
any other provision of law, a hospital 
may submit (or resubmit) an applica-
tion for a change described in section 
1886(d)(10)(C)(i)(II) of the Social Se-
1260
curity Act for fiscal year 2004 if the 
hospital demonstrates on a timely 
basis to the satisfaction of the Sec-
retary that the use of corrected or 
supplementary 
data 
under 
the 
amendment made by paragraph (1) 
would materially affect the approval 
of such an application. 
(B) APPLICATION
OF
BUDGET
NEU-
TRALITY.—If one or more hospital’s ap-
plications are approved as a result of 
paragraph (1) and subparagraph (A) 
for fiscal year 2004, the Secretary 
shall make a proportional adjustment 
in the standardized amounts deter-
mined under section 1886(d)(3) of the 
Social 
Security 
Act 
(42 
U.S.C. 
1395ww(d)(3)) for fiscal year 2004 to 
assure that approval of such applica-
tions does not result in aggregate 
payments under section 1886(d) of 
such Act that are greater or less than 
those that would otherwise be made 
if paragraph (1) and subparagraph 
(A) did not apply.
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SEC. 938. 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 sections 521 and 522 
of BIPA and section 933(d)(2)(B), is further 
amended by adding at the end the following 
new subsection: 
‘‘(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 making pay-
ments under this title with respect to 
eligible items and services described 
in subparagraph (C), the Secretary 
shall establish a prior determination 
process that meets the requirements 
of this subsection and that shall be 
applied by such contractor in the 
case of eligible requesters. 
‘‘(B) 
ELIGIBLE
REQUESTER.—For 
purposes of this subsection, each of
1262
the following shall be an eligible re-
quester: 
‘‘(i) A physician, but only with 
respect to eligible items and serv-
ices for which the physician may 
be paid directly. 
‘‘(ii) An individual entitled to 
benefits under this title, but only 
with respect to an item or service 
for which the individual receives, 
from the physician who may be 
paid directly for the item or serv-
ice, an advance beneficiary notice 
under section 1879(a) that pay-
ment may not be made (or may no 
longer be made) for the item or 
service under this title. 
‘‘(C) ELIGIBLE
ITEMS
AND
SERV-
ICES.—For purposes of this subsection 
and subject to paragraph (2), eligible 
items and services are items and 
services which are physicians’ serv-
ices (as defined in paragraph (4)(A) of 
section 1848(f) for purposes of calcu-