I
106TH CONGRESS
1ST SESSION
H. R. 312
To amend title XVIII of the Social Security Act to provide for Medicare
contracting reforms, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1999
Mr. TOWNS introduced the following bill; which was referred to the Committee
on Ways and Means, and in addition to the Committee on Commerce,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
for Medicare contracting reforms, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND REFERENCES IN ACT.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare Contractor Reform Amendments of 1999’’.
(b) REFERENCES IN ACT.—Except as otherwise ex-
pressly provided, whenever in this Act an amendment or
repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be con-
sidered to be made a section or other provision of the So-
cial Security Act.
SEC. 2. INCREASED FLEXIBILITY IN CONTRACTING FOR
MEDICARE CLAIMS PROCESSING.
(a) CARRIERS TO INCLUDE ENTITIES THAT ARE
NOT INSURANCE COMPANIES.—
(1) Section 1842(a) (42 U.S.C. 1395u(a)) is
amended in the matter preceding paragraph (1) by
striking ‘‘with carriers’’ and inserting ‘‘with agencies
and organizations (hereafter in this section referred
to as ‘carriers’)’’.
(2) Section 1842 (42 U.S.C. 1395u) is amend-
ed by striking subsection (f).
(b) CHOICE OF FISCAL INTERMEDIARIES BY PROVID-
ERS OF SERVICES; SECRETARIAL FLEXIBILITY IN ASSIGN-
ING FUNCTIONS TO INTERMEDIARIES AND CARRIERS.—
(1) Section 1816(a) (42 U.S.C. 1395h(a)) to
read as follows:
‘‘(a)(1) The Secretary may enter into contracts with
agencies or organizations to perform any or all of the fol-
lowing functions, or parts of those functions (or, to the
extent provided in a contract, to secure performance there-
of by other organizations):
‘‘(A) Determination (subject to the provisions
of section 1878 and to such review by the Secretary
as may be provided for by the contracts) the amount
of the payments required pursuant to this part to be
made to providers of services.
‘‘(B) Making payments described in subpara-
graph (A).
‘‘(C) Provision of consultative services to insti-
tutions or agencies to enable them to establish and
maintain fiscal records necessary for purposes of
this part and otherwise to qualify as providers of
services.
‘‘(D) Serving as a center for, and communicate
to individuals entitled to benefits under this part
and to providers of services, any information or in-
structions furnished to the agency or organization by
the Secretary, and serve as a channel of communica-
tion from individuals entitled to benefits under this
part and from providers of services to the Secretary.
‘‘(E) Making such audits of the records of pro-
viders of services as may be necessary to ensure that
proper payments are made under this part.
‘‘(F) Performance of the functions described
under subsection (d).
‘‘(G) Performance of such other functions as
are necessary to carry out the purposes of this part.
‘‘(2) As used in this title and title XI, the term ‘fiscal
intermediary’ means an agency or organization with a con-
tract under this section.’’.
(2) Subsections (d) and (e) of section 1816 (42
U.S.C. 1395h) are amended to read as follows:
‘‘(d) Each provider of services shall have a fiscal
intermediary that—
‘‘(1) acts as a single point of contact for the
provider of services under this part,
‘‘(2) makes its services sufficiently available to
meet the needs of the provider of services, and
‘‘(3) is responsible and accountable for arrang-
ing the resolution of issues raised under this part by
the provider of services.
‘‘(e)(1)(A) The Secretary shall, at least every 5 years,
permit each provider of services (other than a home health
agency or a hospice program) to choose an agency or orga-
nization (from at least 3 proposed by the Secretary, of
which at least 1 shall have an office in the geographic area
of the provider of services, except as provided by subpara-
graph (B)(ii)(II)) as the fiscal intermediary under sub-
section (d) for that provider of services. If a contract with
that fiscal intermediary is discontinued, the Secretary
shall permit the provider of services to choose under the
same conditions from 3 other agencies or organizations.
‘‘(B)(i) The Secretary, in carrying out subparagraph
(A), shall permit a group of hospitals (or a group of an-
other class of providers other than home health agencies
or hospice programs) under common ownership by, or con-
trol of, a particular entity to choose one agency or organi-
zation (from at least 3 proposed by the Secretary) as the
fiscal intermediary under subsection (d) for all the provid-
ers in that group if the conditions specified in clause (ii)
are met.
‘‘(ii) The conditions specified in this clause are that—
‘‘(I) the group includes all the providers of serv-
ices of that class that are under common ownership
by, or control of, that particular entity, and
‘‘(II) all the providers of services in that group
agree that none of the agencies or organizations pro-
posed by the Secretary is required to have an office
in any particular geographic area.
‘‘(2) The Secretary, in evaluating the performance of
a fiscal intermediary, shall solicit comments from provid-
ers of services.’’.
(3)(A) 
Section 
1816(b)(1)(A) 
(42 
U.S.C.
1395h(b)(1)(A)) is amended by striking ‘‘after ap-
plying the standards, criteria, and procedures’’ and
inserting ‘‘after evaluating the ability of the agency
or organization to fulfill the contract performance
requirements’’.
(B) The first sentence of section 1816(f)(1) (42
U.S.C. 1395h(f)(1)) is amended—
(i) by striking ‘‘develop standards, criteria,
and procedures’’ and inserting ‘‘, after public
notice and opportunity for comment, develop
contract performance requirements’’, and
(ii) by striking ‘‘, and the Secretary shall
establish standards and criteria with respect to
the efficient and effective administration of this
part’’.
(C) 
The 
second 
sentence 
of 
section
1842(b)(2)(A) 
(42 
U.S.C. 
1395u(b)(2)(A)) 
is
amended to read as follows: ‘‘The Secretary shall,
after public notice and opportunity for comment, de-
velop contract performance requirements for the effi-
cient and effective performance of contract obliga-
tions under this section.’’.
(D) 
Section 
1842(b)(2)(A) 
(42 
U.S.C.
1395u(b)(2)(A)) is amended by striking the third
sentence.
(E) 
Section 
1842(b)(2)(B) 
(42 
U.S.C.
1395u(b)(2)(B)) is amended in the matter preceding
clause (i) by striking ‘‘establish standards’’ and in-
serting ‘‘develop contract performance require-
ments’’.
(F) 
Section 
1842(b)(2)(D) 
(42 
U.S.C.
1395u(b)(2)(D)) is amended by striking ‘‘standards
and criteria’’ each place is appears and inserting
‘‘contract performance requirements’’.
(4)(A) Section 1816(b) (42 U.S.C. 1395h(b)) is
amended in the matter preceding paragraph (1) by
striking ‘‘an agreement’’ and inserting ‘‘a contract’’.
(B) Paragraphs (1)(B) and (2)(A) of section
1816(b) (42 U.S.C. 1395h(b)) are each amended by
striking ‘‘agreement’’ and inserting ‘‘contract’’.
(C) Section 1816(c)(1) (42 U.S.C. 1395h(c)(1))
is amended—
(i) in the first sentence by striking ‘‘An
agreement’’ and inserting ‘‘A contract’’, and
(ii) in the last sentence, by striking ‘‘an
agreement’’ and inserting ‘‘a contract’’.
(D) 
Section 
1816(c)(2)(A) 
(42 
U.S.C.
1395h(c)(2)(A)) is amended in the matter preceding
clause (i) by striking ‘‘agreement’’ and inserting
‘‘contract’’.
(E) 
Section 
1816(c)(3)(A) 
(42 
U.S.C.
1395h(c)(3)(A)) is amended by striking ‘‘agree-
ment’’ and inserting ‘‘contract’’.
(F) The first sentence of section 1816(f)(1) (42
U.S.C. 1395h(f)(1)) is amended by striking ‘‘an
agreement’’ and inserting ‘‘a contract’’.
(G) Section 1816(h) (42 U.S.C. 1395h(h)) is
amended—
(i) by striking ‘‘An agreement’’ and insert-
ing ‘‘A contract’’, and
(ii) by striking ‘‘the agreement’’ each place
it appears and inserting ‘‘the contract’’.
(H) Section 1816(i)(1) (42 U.S.C. 1395h(i)(1))
is amended by striking ‘‘an agreement’’ and insert-
ing ‘‘a contract’’.
(I) Section 1816(j) (42 U.S.C. 1395h(j)) is
amended by striking ‘‘An agreement’’ and inserting
‘‘A contract’’.
(J) Section 1816(k) (42 U.S.C. 1395h(k)) is
amended by striking ‘‘An agreement’’ and inserting
‘‘A contract’’.
(K) Section 1816(l) (42 U.S.C. 1395h(l)) is
amended by striking ‘‘an agreement’’ and inserting
‘‘a contract’’.
(L) Section 1842(a) (42 U.S.C. 1395u(a)) is
amended in the matter preceding paragraph (1) is
amended by striking ‘‘agreements’’ and inserting
‘‘contracts’’.
(M) 
Section 
1842(h)(3) 
(42 
U.S.C.
1395u(h)(3)) is amended—
(i) in subparagraph (A), by striking ‘‘an
agreement’’ and inserting ‘‘a contract’’, and
(ii) in subparagraph (B), by striking
‘‘agreements’’ and inserting ‘‘contracts’’.
(N) 
Section 
1842(h)(8) 
(42 
U.S.C.
1395u(h)(8)) is amended—
(i) by striking ‘‘an agreement’’ and insert-
ing ‘‘a contract’’,
(ii) by striking ‘‘such agreement’’ and in-
serting ‘‘such contract’’.
(5) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1))
is amended by striking the second sentence.
(6)(A) 
Section 
1816(c)(2)(A) 
(42 
U.S.C.
1395h(c)(2)(A)) is amended in the matter preceding
clause (i) by inserting ‘‘that provides for making
payments under this part’’ after ‘‘this section’’.
(B) 
Section 
1816(c)(3)(A) 
(42 
U.S.C.
1395h(c)(3)(A)) is amended by inserting ‘‘that pro-
vides for making payments under this part’’ after
‘‘this section’’.
(C) Section 1816(k) (42 U.S.C. 1395h(k)) is
amended by inserting ‘‘(as appropriate)’’ after ‘‘sub-
mit’’.
(D) Section 1842(a) (42 U.S.C. 1395u(a)) is
amended in the matter preceding paragraph (1) by
striking ‘‘some or all of the following functions’’ and
inserting ‘‘any or all of the following functions, or
parts of those functions’’.
(E) The first sentence of section 1842(b)(2)(C)
(42 U.S.C. 1395u(b)((2)(C)) is amended by insert-
ing ‘‘(as appropriate)’’ after ‘‘carriers’’.
(F) 
Section 
1842(b)(3) 
(42 
U.S.C.
1395u(b)(3)) is amended in the matter preceding
subparagraph (A) by inserting ‘‘(as appropriate)’’
after ‘‘contract’’.
(G) 
Section 
1842(b)(7)(A) 
(42 
U.S.C.
1395u(b)(7)(A)) is amended in the matter preceding
clause (i) by striking ‘‘the carrier’’ and inserting ‘‘a
carrier’’.
(H) 
Section 
1842(b)(11)(A) 
(42 
U.S.C.
1395u(b)(11)(A)) is amended in the matter preced-
ing clause (i) by inserting ‘‘(as appropriate)’’ after
‘‘each carrier’’.
(I) Section 1842(h)(2) (42 U.S.C. 1395u(h)(2))
is amended in the first sentence by inserting ‘‘(as
appropriate)’’ after ‘‘shall’’.
(J) 
Section 
1842(h)(5)(A) 
(42 
U.S.C.
1395u(h)(5)(A)) is amended by inserting ‘‘(as ap-
propriate)’’ after ‘‘carriers’’.
(7)(A) 
Section 
1816(c)(2)(C) 
(42 
U.S.C.
1395h(c)(2)(C)) is amended by striking ‘‘hospital,
critical access hospital, skilled nursing facility, home
health agency, hospice program, comprehensive out-
patient rehabilitation facility, or rehabilitation agen-
cy’’ and inserting ‘‘provider of services’’.
(B) Section 1816(j) (42 U.S.C. 1395h)(j)) is
amended in the matter preceding paragraph (1) by
striking ‘‘for home health services, extended care
services, or post-hospital extended care services’’.
(8) Section 1842(a)(3) (42 U.S.C. 1395u(a)(3))
is amended by inserting ‘‘(to and from individuals
enrolled under this part and to and from physicians
and other entities that furnish items and services)’’
after ‘‘communication’’.
(c) ELIMINATION OF SPECIAL PROVISIONS FOR TER-
MINATIONS OF CONTRACTS.—
(1) Section 1816(b) (42 U.S.C. 1395h(b)) is
amended in the matter preceding paragraph (1) is
amended by striking ‘‘or renew’’.