[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1545 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1545

 To amend title XVIII of the Social Security Act to provide regulatory 
     relief and contracting flexibility under the Medicare Program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 15, 2001

  Mr. Inhofe introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend title XVIII of the Social Security Act to provide regulatory 
     relief and contracting flexibility under the Medicare Program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; TABLE OF 
              CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare 
Regulatory and Contracting Reform Act of 2001''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act an amendment is expressed 
in terms of an amendment to or repeal of a section or other provision, 
the reference shall be considered to be made to that section or other 
provision of the Social Security Act.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; amendments to Social Security Act; table of 
                            contents.
Sec. 2. Issuance of regulations.
Sec. 3. Compliance with changes in regulations and policies.
Sec. 4. Increased flexibility in medicare administration.
Sec. 5. Provider education and technical assistance.
Sec. 6. Small provider technical assistance demonstration program.
Sec. 7. Medicare Provider Ombudsman.
Sec. 8. Provider appeals.
Sec. 9. Recovery of overpayments and prepayment review; enrollment of 
                            providers.
Sec. 10. Beneficiary outreach demonstration program.
Sec. 11. Policy development regarding evaluation and management (E & M) 
                            documentation guidelines.
    (d) Construction.--Nothing in this Act shall be construed--
            (1) to compromise or affect existing legal authority for 
        addressing fraud or abuse, whether it be criminal prosecution, 
        civil enforcement, or administrative remedies, including under 
        sections 3729 through 3733 of title 31, United States Code 
        (known as the False Claims Act); or
            (2) to prevent or impede the Department of Health and Human 
        Services in any way from its ongoing efforts to eliminate 
        waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative contracting 
set forth in this Act does not constitute consolidation of the Federal 
Hospital Insurance Trust Fund and the Federal Supplementary Medical 
Insurance Trust Fund or reflect any position on that issue.

SEC. 2. ISSUANCE OF REGULATIONS.

    (a) Consolidation of Promulgation to Once a Month.--
            (1) In general.--Section 1871 (42 U.S.C. 1395hh) is amended 
        by adding at the end the following new subsection:
    ``(d) The Secretary shall issue proposed or final (including 
interim final) regulations to carry out this title only on one business 
day of every month unless publication on another date is necessary to 
comply with requirements under law.''.
            (2) Report on publication of regulations on a quarterly 
        basis.--Not later than 3 years after the date of the enactment 
        of this Act, the Secretary of Health and Human Services shall 
        submit to Congress a report on the feasibility of requiring 
        that regulations described in section 1871(d) of the Social 
        Security Act only be promulgated on a single day every calendar 
        quarter.
            (3) Effective date.--The amendment made by paragraph (1) 
        shall apply to regulations promulgated on or after the date 
        that is 30 days after the date of the enactment of this Act.
    (b) Regular Timeline for Publication of Final Rules.--
            (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is 
        amended by adding at the end the following new paragraph:
    ``(3) The Secretary, in consultation with the Director of the 
Office of Management and Budget, shall establish a regular timeline for 
the publication of final regulations based on the previous publication 
of a proposed regulation or an interim final regulation. Such timeline 
may vary among different regulations based on differences in the 
complexity of the regulation, the number and scope of comments 
received, and other relevant factors. In the case of interim final 
regulations, upon the expiration of the regular timeline established 
under this paragraph for the publication of a final regulation after 
opportunity for public comment, the interim final regulation shall not 
continue in effect unless the Secretary publishes a notice of 
continuation of the regulation that includes an explanation of why the 
regular timeline was not complied with. If such a notice is published, 
the regular timeline for publication of the final regulation shall be 
treated as having begun again as of the date of publication of the 
notice.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act. The 
        Secretary of Health and Human Services shall provide for an 
        appropriation transition to take into account the backlog of 
        previously published interim final regulations.
    (c) Limitations on New Matter in Final Regulations.--
            (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as 
        amended by subsection (b), is further amended by adding at the 
        end the following new paragraph:
            ``(4) Insofar as a final regulation (other than an interim 
        final regulation) includes a provision that is not a logical 
        outgrowth of the relevant notice of proposed rulemaking 
        relating to such regulation, that provision shall be treated as 
        a proposed regulation and shall not take effect until there is 
        the further opportunity for public comment and a publication of 
        the provision again as a final regulation.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to final regulations published on or after the date 
        of the enactment of this Act.

SEC. 3. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.

    (a) No Retroactive Application of Substantive Changes; Timeline for 
Compliance With Substantive Changes After Notice.--Section 1871 (42 
U.S.C. 1395hh), as amended by section 2(a), is amended by adding at the 
end the following new subsection:
    ``(e)(1)(A) A substantive change in regulations, manual 
instructions, interpretative rules, statements of policy, or guidelines 
of general applicability under this title shall not be applied (by 
extrapolation or otherwise) retroactively to items and services 
furnished before the date the change was issued, unless the Secretary 
determines that such retroactive application would have a positive 
impact on beneficiaries or providers of services, physicians, 
practitioners, and other suppliers or would be necessary to comply with 
statutory requirements.
    ``(B) No compliance action shall be made against a provider of 
services, physician, practitioner, or other supplier with respect to 
noncompliance with such a substantive change for items and services 
furnished on or before the date that is 30 days after the date of 
issuance of the change, unless the Secretary provides otherwise.''.
    (b) Reliance on Guidance.--Section 1871(e), as added by subsection 
(a), is further amended by adding at the end the following new 
paragraph:
    ``(2) If--
            ``(A) a provider of services, physician, practitioner, or 
        other supplier follows the written guidance provided by the 
        Secretary or by a medicare contractor (as defined in section 
        1889(f)) acting within the scope of the contractor's contract 
        authority with respect to the furnishing of items or services 
        and submission of a claim for benefits for such items or 
        services;
            ``(B) the Secretary determines that the provider of 
        services, physician, practitioner, or supplier has accurately 
        presented the circumstances relating to such items, services, 
        and claim to the contractor in writing; and
            ``(C) the guidance was in error;
the provider of services, physician, practitioner or supplier shall not 
be subject to any sanction if the provider of services, physician, 
practitioner, or supplier reasonably relied on such guidance.''.

SEC. 4. INCREASED FLEXIBILITY IN MEDICARE ADMINISTRATION.

    (a) Consolidation and Flexibility in Medicare Administration.--
            (1) In general.--Title XVIII is amended by inserting after 
        section 1874 the following new section:

          ``contracts with medicare administrative contractors

    ``Sec. 1874A. (a) Authority.--
            ``(1) Authority to enter into contracts.--The Secretary may 
        enter into contracts with any entity to serve as a medicare 
        administrative contractor with respect to the performance of 
        any or all of the functions described in paragraph (3) or parts 
        of those functions (or, to the extent provided in a contract, 
        to secure performance thereof by other entities).
            ``(2) Medicare administrative contractor defined.--For 
        purposes of this title and title XI:
                    ``(A) In general.--The term `medicare 
                administrative contractor' means an agency, 
                organization, or other person with a contract under 
                this section.
                    ``(B) Appropriate medicare administrative 
                contractor.--With respect to the performance of a 
                particular function or activity in relation to an 
                individual entitled to benefits under part A or 
                enrolled under part B, or both, a specific provider of 
                services, physician, practitioner, or supplier (or 
                class of such providers of services, physicians, 
                practitioners, or suppliers), the `appropriate' 
                medicare administrative contractor is the medicare 
                administrative contractor that has a contract under 
                this section with respect to the performance of that 
                function or activity in relation to that individual, 
                provider of services, physician, practitioner, or 
                supplier or class of provider of services, physician, 
                practitioner, or supplier.
            ``(3) Functions described.--The functions referred to in 
        paragraph (1) are payment functions, provider services 
        functions, and beneficiary services functions as follows:
                    ``(A) Determination of payment amounts.--
                Determining (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 title to be made to providers of services, physicians, 
practitioners, and suppliers.
                    ``(B) Making payments.--Making payments described 
                in subparagraph (A).
                    ``(C) Beneficiary education and assistance.--
                Serving as a center for, and communicating to 
                individuals entitled to benefits under part A or 
                enrolled under part B, or both, with respect to 
                education and outreach for those individuals, and 
                assistance with specific issues, concerns or problems 
                of those individuals.
                    ``(D) Provider consultative services.--Providing 
                consultative services to institutions, agencies, and 
                other persons to enable them to establish and maintain 
                fiscal records necessary for purposes of this title and 
                otherwise to qualify as providers of services, 
                physicians, practitioners, or suppliers.
                    ``(E) Communication with providers.--Serving as a 
                center for, and communicating to providers of services, 
                physicians, practitioners, and suppliers, any 
                information or instructions furnished to the medicare 
                administrative contractor by the Secretary, and 
serving as a channel of communication from such providers, physicians, 
practitioners, and suppliers to the Secretary.
                    ``(F) Provider education and technical 
                assistance.--Performing the functions described in 
                subsections (e) and (f), relating to provider 
                education, training, and technical assistance.
                    ``(G) Additional functions.--Performing such other 
                functions as are necessary to carry out the purposes of 
                this title.
            ``(4) Relationship to mip contracts.--
                    ``(A) Nonduplication of duties.--In entering into 
                contracts under this section, the Secretary shall 
                assure that functions of medicare administrative 
                contractors in carrying out activities under parts A 
                and B do not duplicate functions carried out under the 
                Medicare Integrity Program under section 1893. The 
                previous sentence shall not apply with respect to the 
                activity described in section 1893(b)(5) (relating to 
                prior authorization of certain items of durable medical 
                equipment under section 1834(a)(15)).
                    ``(B) Construction.--An entity shall not be treated 
                as a medicare administrative contractor merely by 
                reason of having entered into a contract with the 
                Secretary under section 1893.
    ``(b) Contracting Requirements.--
            ``(1) Use of competitive procedures.--
                    ``(A) In general.--Notwithstanding any law with 
                general applicability to Federal acquisition and 
                procurement and except as provided in subparagraph (B), 
                the Secretary shall use competitive procedures when 
                entering into contracts with medicare administrative 
                contractors under this section.
                    ``(B) Renewal of contracts.--The Secretary may 
                renew a contract with a medicare administrative 
                contractor under this section from term to term without 
                regard to section 5 of title 41, United States Code, or 
                any other provision of law requiring competition, if 
                the medicare administrative contractor has met or 
                exceeded the performance requirements applicable with 
                respect to the contract and contractor.
                    ``(C) Transfer of functions.--Functions may be 
                transferred among medicare administrative contractors 
                in accordance with the provisions of this paragraph. 
                The Secretary shall ensure that performance quality is 
                considered in such transfers.
                    ``(D) Incentives for quality.--The Secretary shall 
                provide financial incentives and such other incentives 
                as the Secretary determines appropriate for medicare 
                administrative contractors to provide quality service 
                and to promote efficiency.
            ``(2) Compliance with requirements.--No contract under this 
        section shall be entered into with any medicare administrative 
        contractor unless the Secretary finds that such medicare 
        administrative contractor will perform its obligations under 
        the contract efficiently and effectively and will meet such 
        requirements as to financial responsibility, legal authority, 
        and other matters as the Secretary finds pertinent.
            ``(3) Development of specific performance requirements.--In 
        developing contract performance requirements, the Secretary 
        shall develop performance requirements to carry out the 
        specific requirements applicable under this title to a function 
        described in subsection (a)(3).
            ``(4) Information requirements.--The Secretary shall not 
        enter into a contract with a medicare administrative contractor 
        under this section unless the contractor agrees--
                    ``(A) to furnish to the Secretary such timely 
                information and reports as the Secretary may find 
                necessary in performing his functions under this title; 
                and
                    ``(B) to maintain such records and afford such 
                access thereto as the Secretary finds necessary to 
                assure the correctness and verification of the 
                information and reports under subparagraph (A) and 
                otherwise to carry out the purposes of this title.
            ``(5) Surety bond.--A contract with a medicare 
        administrative contractor under this section may require the 
        medicare administrative contractor, and any of its officers or 
        employees certifying payments or disbursing funds pursuant to 
        the contract, or otherwise participating in carrying out the 
        contract, to give surety bond to the United States in 
such amount as the Secretary may deem appropriate.
    ``(c) Terms and Conditions.--
            ``(1) In general.--A contract with any medicare 
        administrative contractor under this section may contain such 
        terms and conditions as the Secretary finds necessary or 
        appropriate and may provide for advances of funds to the 
        medicare administrative contractor for the making of payments 
        by it under subsection (a)(3)(B).
            ``(2) Prohibition on mandates for certain data 
        collection.--The Secretary may not require, as a condition of 
        entering into a contract under this section, that the medicare 
        administrative contractor match data obtained other than in its 
        activities under this title with data used in the 
        administration of this title for purposes of identifying 
        situations in which the provisions of section 1862(b) may 
        apply.
    ``(d) Limitation on Liability of Medicare Administrative 
Contractors and Certain Officers.--
            ``(1) Certifying officer.--No individual designated 
        pursuant to a contract under this section as a certifying 
        officer shall, in the absence of negligence or intent to 
        defraud the United States, be liable with respect to any 
        payments certified by the individual under this section.
            ``(2) Disbursing officer.--No disbursing officer shall, in 
        the absence of negligence or intent to defraud the United 
States, be liable with respect to any payment by such officer under 
this section if it was based upon an authorization (which meets the 
applicable requirements for such internal controls established by the 
Comptroller General) of a certifying officer designated as provided in 
paragraph (1) of this subsection.
            ``(3) Liability of medicare administrative contractor.--A 
        medicare administrative contractor shall be liable to the 
        United States for a payment referred to in paragraph (1) or (2) 
        if, in connection with such payment, an individual referred to 
        in either such paragraph acted with gross negligence or intent 
        to defraud the United States.''.
            (2) Consideration of incorporation of current law 
        standards.--In developing contract performance requirements 
        under section 1874A(b) of the Social Security Act, as inserted 
        by paragraph (1), the Secretary of Health and Human Services 
        shall consider inclusion of the performance standards described 
        in sections 1816(f)(2) of such Act (relating to timely 
        processing of reconsiderations and applications for exemptions) 
        and section 1842(b)(2)(B) of such Act (relating to timely 
        review of determinations and fair hearing requests), as such 
        sections were in effect before the date of the enactment of 
        this Act.
    (b) Conforming Amendments to Section 1816 (Relating to Fiscal 
Intermediaries).--Section 1816 (42 U.S.C. 1395h) is amended as follows:
            (1) The heading is amended to read as follows:

        ``provisions relating to the administration of part a''.

            (2) Subsection (a) is amended to read as follows:
    ``(a) The administration of this part shall be conducted through 
contracts with medicare administrative contractors under section 
1874A.''.
            (3) Subsection (b) is repealed.
            (4) Subsection (c) is amended--
                    (A) by striking paragraph (1); and
                    (B) in each of paragraphs (2)(A) and (3)(A), by 
                striking ``agreement under this section'' and inserting 
                ``contract under section 1874A that provides for making 
                payments under this part''.
            (5) Subsections (d) through (i) are repealed.
            (6) Subsections (j) and (k) are each amended--
                    (A) by striking ``An agreement with an agency or 
                organization under this section'' and inserting ``A 
                contract with a medicare administrative contractor 
                under section 1874A with respect to the administration 
                of this part''; and
                    (B) by striking ``such agency or organization'' and 
                inserting ``such medicare administrative contractor'' 
                each place it appears.
            (7) Subsection (l) is repealed.
    (c) Conforming Amendments to Section 1842 (Relating to Carriers).--
Section 1842 (42 U.S.C. 1395u) is amended as follows:
            (1) The heading is amended to read as follows:

        ``provisions relating to the administration of part b''.

            (2) Subsection (a) is amended to read as follows:
    ``(a) The administration of this part shall be conducted through 
contracts with medicare administrative contractors under section 
1874A.''.
            (3) Subsection (b) is amended--
                    (A) by striking paragraph (1);
                    (B) in paragraph (2)--
                            (i) by striking subparagraphs (A) and (B);
                            (ii) in subparagraph (C), by striking 
                        ``carriers'' and inserting ``medicare 
                        administrative contractors''; and
                            (iii) by striking subparagraphs (D) and 
                        (E);
                    (C) in paragraph (3)--
                            (i) in the matter before subparagraph (A), 
                        by striking ``Each such contract shall provide 
                        that the carrier'' and inserting ``The 
                        Secretary'';
                            (ii) in subparagraph (B), in the matter 
                        before clause (i), by striking ``to the 
                        policyholders and subscribers of the carrier'' 
                        and inserting ``to the policyholders and 
                        subscribers of the medicare administrative 
                        contractor'';
                            (iii) by striking subparagraphs (C), (D), 
                        and (E);
                            (iv) in subparagraph (H)--
                                    (I) by striking ``it'' and 
                                inserting ``the Secretary''; and
                                    (II) by striking ``carrier'' and 
                                inserting ``medicare administrative 
                                contractor''; and
                            (v) in the seventh sentence, by inserting 
                        ``medicare administrative contractor,'' after 
                        ``carrier,''; and
                    (D) by striking paragraph (5); and
                    (E) in paragraph (7) and succeeding paragraphs, by 
                striking ``the carrier'' and inserting ``the 
                Secretary'' each place it appears.
            (4) Subsection (c) is amended--
                    (A) by striking paragraph (1);
                    (B) in paragraph (2), by striking ``contract under 
                this section which provides for the disbursement of 
                funds, as described in subsection (a)(1)(B),'' and 
                inserting ``contract under section 1874A that provides 
                for making payments under this part shall provide that 
                the medicare administrative contractor'';
                    (C) in paragraph (4), by striking ``a carrier'' and 
                inserting ``medicare administrative contractor'';
                    (D) in paragraph (5), by striking ``contract under 
                this section which provides for the disbursement of 
                funds, as described in subsection (a)(1)(B), shall 
                require the carrier'' and inserting ``contract under 
                section 1874A that provides for making payments under 
                this part shall require the medicare administrative 
                contractor''; and
                    (E) by striking paragraph (6).
            (5) Subsections (d), (e), and (f) are repealed.
            (6) Subsection (g) is amended by striking ``carrier or 
        carriers'' and inserting ``medicare administrative contractor 
        or contractors''.
            (7) Subsection (h) is amended--
                    (A) in paragraph (2)--
                            (i) by striking ``Each carrier having an 
                        agreement with the Secretary under subsection 
                        (a)'' and inserting ``The Secretary''; and
                            (ii) by striking ``Each such carrier'' and 
                        inserting ``The Secretary''; and
                    (B) in paragraph (3)(A)--
                            (i) by striking ``a carrier having an 
                        agreement with the Secretary under subsection 
                        (a)'' and inserting ``medicare administrative 
                        contractor having a contract under section 
                        1874A that provides for making payments under 
                        this part''; and
                            (ii) by striking ``such carrier'' and 
                        inserting ``such contractor''.
    (d) Effective Date; Transition Rule.--
            (1) Effective date.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall take 
        effect on October 1, 2003, and the Secretary of Health and 
        Human Services is authorized to take such steps before such 
        date as may be necessary to implement such amendments on a 
        timely basis.
            (2) General transition rules.--(A) The Secretary shall take 
        such steps as are necessary to provide for an appropriate 
        transition from contracts under section 1816 and section 1842 
        of the Social Security Act (42 U.S.C. 1395h, 1395u) to 
        contracts under section 1874A, as added by subsection (a)(1).
            (B) Any such contract under such sections 1816 or 1842 
        whose periods begin before or during the 1-year period that 
        begins on the first day of the fourth calendar month that 
        begins after the date of enactment of this Act may be entered 
        into without regard to any provision of law requiring the use 
        of competitive procedures.
            (3) Authorizing continuation of mip functions under current 
        contracts and agreements and under rollover contracts.--The 
        provisions contained in the exception in section 1893(d)(2) of 
        the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall 
        continue to apply notwithstanding the amendments made by this 
        section, and any reference in such provisions to an agreement 
        or contract shall be deemed to include a contract under section 
        1874A of such Act, as inserted by subsection (a)(1), that 
        continues the activities referred to in such provisions.
    (e) References.--On and after the effective date provided under 
subsection (d), any reference to a fiscal intermediary or carrier under 
title XI or XVIII of the Social Security Act (or any regulation, manual 
instruction, interpretative rule, statement of policy, or guideline 
issued to carry out such titles) shall be deemed a reference to an 
appropriate medicare administrative contractor (as provided under 
section 1874A of the Social Security Act).
    (f) Secretarial Submission of Legislative Proposal.--Not later than 
6 months after the date of the enactment of this Act, the Secretary of 
Health and Human Services shall submit to the appropriate committees of 
Congress a legislative proposal providing for such technical and 
conforming amendments in the law as are required by the provisions of 
this section.

SEC. 5. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.

    (a) Coordination of Education Funding.--
            (1) In general.--The Social Security Act is amended by 
        inserting after section 1888 the following new section:

             ``provider education and technical assistance

    ``Sec. 1889. (a) Coordination of Education Funding.--The Secretary 
shall coordinate the educational activities provided through medicare 
contractors (as defined in subsection (i), including under section 
1893) in order to maximize the effectiveness of Federal education 
efforts for providers of services, physicians, practitioners, and 
suppliers.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act.
            (3) Report.--Not later than October 1, 2002, the Secretary 
        of Health and Human Services shall submit to Congress a report 
        that includes a description and evaluation of the steps taken 
        to coordinate the funding of provider education under section 
        1889(a) of the Social Security Act, as added by paragraph (1).
    (b) Incentives To Improve Contractor Performance.--
            (1) In general.--Section 1874A, as added by section 
        4(a)(1), is amended by adding at the end the following new 
        subsection:
    ``(e) Incentives To Improve Contractor Performance in Provider 
Education and Outreach.--
            ``(1) Methodology to measure contractor error rates.--In 
        order to give medicare administrative contractors an incentive 
        to implement effective education and outreach programs for 
        providers of services, physicians, practitioners, and 
        suppliers, the Secretary shall develop and implement by October 
        1, 2002, a methodology to measure the specific claims payment 
        error rates of such contractors in the processing or reviewing 
        of medicare claims.
            ``(2) Identification of best practices.--The Secretary 
        shall identify the best practices developed by individual 
        medicare administrative contractors for educating providers of 
        services, physicians, practitioners, and suppliers and how to 
        encourage the use of such best practices nationwide.''.
            (2) Report.--Not later than October 1, 2003, the Secretary 
        of Health and Human Services shall submit to Congress a report 
        that describes how the Secretary intends to use the methodology 
        developed under section 1874A(e)(1) of the Social Security Act, 
        as added by paragraph (1), in assessing medicare contractor 
        performance in implementing effective education and outreach 
        programs, including whether to use such methodology as the 
        basis for performance bonuses.
    (c) Provision of Access to and Prompt Responses From Medicare 
Administrative Contractors.--
            (1) In general.--Section 1874A, as added by section 4(a)(1) 
        and as amended by subsection (b), is further amended by adding 
        at the end the following new subsection:
    ``(f) Response to Inquiries; Toll-Free Lines.--
            ``(1) Contractor responsibility.--Each medicare 
        administrative contractor shall, for those providers of 
        services, physicians, practitioners, and suppliers which submit 
        claims to the contractor for claims processing--
                    ``(A) respond in a clear, concise, and accurate 
                manner to specific billing and cost reporting questions 
                of providers of services, physicians, practitioners, 
                and suppliers;
                    ``(B) maintain a toll-free telephone number at 
                which providers of services, physicians, practitioners, 
                and suppliers may obtain information regarding billing, 
                coding, and other appropriate information under this 
                title;
                    ``(C) maintain a system for identifying who 
                provides the information referred to in subparagraphs 
                (A) and (B); and
                    ``(D) monitor the accuracy, consistency, and 
                timeliness of the information so provided.
            ``(2) Evaluation.--In conducting evaluations of individual 
        medicare administrative contractors, the Secretary shall take 
        into account the results of the monitoring conducted under 
        paragraph (1)(D). The Secretary shall, in consultation with 
        organizations representing providers of services, physicians, 
        practitioners, and suppliers, establish standards relating to 
        the accuracy, consistency, and timeliness of the information so 
        provided.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect October 1, 2002.
    (d) Improved Provider Education and Training.--
            (1) In general.--Section 1889, as added by subsection (a), 
        is amended by adding at the end the following new subsections:
    ``(b) Enhanced Education and Training.--
            ``(1) Additional resources.--For each of fiscal years 2003 
        and 2004, there are authorized to be appropriated to the 
        Secretary (in appropriate part from the Federal Hospital 
        Insurance Trust Fund and the Federal Supplementary Medical 
        Insurance Trust Fund) $10,000,000.
            ``(2) Use.--The funds made available under paragraph (1) 
        shall be used to increase the conduct by medicare contractors 
        of education and training of providers of services, physicians, 
        practitioners, and suppliers regarding billing, coding, and 
        other appropriate items.
    ``(c) Tailoring Education and Training Activities for Small 
Providers or Suppliers.--
            ``(1) In general.--Insofar as a medicare contractor 
        conducts education and training activities, it shall tailor 
        such activities to meet the special needs of small providers of 
        services or suppliers (as defined in paragraph (2)).
            ``(2) Small provider of services or supplier.--In this 
        subsection, the term `small provider of services or supplier' 
        means--
                    ``(A) an institutional provider of services with 
                fewer than 25 full-time-equivalent employees; or
                    ``(B) a physician, practitioner, or supplier with 
                fewer than 10 full-time-equivalent employees.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2002.
    (e) Requirement To Maintain Internet Sites.--
            (1) In general.--Section 1889, as added by subsection (a) 
        and as amended by subsection (d), is further amended by adding 
        at the end the following new subsection:
    ``(c) Internet Sites; FAQs.--The Secretary, and each medicare 
contractor insofar as it provides services (including claims 
processing) for providers of services, physicians, practitioners, or 
suppliers, shall maintain an Internet site which provides answers in an 
easily accessible format to frequently asked questions relating to 
providers of services, physicians, practitioners, and suppliers under 
the programs under this title and title XI insofar as it relates to 
such programs.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2002.
    (f) Additional Provider Education Provisions.--
            (1) In general.--Section 1889, as added by subsection (a) 
        and as amended by subsections (d) and (e), is further amended 
by adding at the end the following new subsections:
    ``(d) Encouragement of Participation in Education Program 
Activities.--A medicare contractor may not use a record of attendance 
at (or failure to attend) educational activities or other information 
gathered during an educational program conducted under this section or 
otherwise by the Secretary to select or track providers of services, 
physicians, practitioners, or suppliers for the purpose of conducting 
any type of audit or prepayment review.
    ``(e) Construction.--Nothing in this section or section 1893(g) 
shall be construed as providing for disclosure by a medicare 
contractor--
            ``(1) of the screens used for identifying claims that will 
        be subject to medical review; or
            ``(2) of information that would compromise pending law 
        enforcement activities or reveal findings of law enforcement-
        related audits.
    ``(f) Definitions.--For purposes of this section, the term 
`medicare contractor' includes the following:
            ``(1) A medicare administrative contractor with a contract 
        under section 1874A, including a fiscal intermediary with a 
        contract under section 1816 and a carrier with a contract under 
        section 1842.
            ``(2) An eligible entity with a contract under section 
        1893.
Such term does not include, with respect to activities of a specific 
provider of services, physician, practitioner, or supplier an entity 
that has no authority under this title or title IX with respect to such 
activities and such provider of services, physician, practitioner, or 
supplier.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act.

SEC. 6. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION PROGRAM.

    (a) Establishment.--
            (1) In general.--The Secretary of Health and Human Services 
        shall establish a demonstration program (in this section 
        referred to as the ``demonstration program'') under which 
        technical assistance is made available, upon request on a 
        voluntary basis, to small providers of services or suppliers to 
        evaluate their billing and related systems for compliance with 
        the applicable requirements of the programs under medicare 
        program under title XVIII of the Social Security Act (including 
        provisions of title XI of such Act insofar as they relate to 
        such title and are not administered by the Office of the 
        Inspector General of the Department of Health and Human 
        Services).
            (2) Small providers of services or suppliers.--In this 
        section, the term ``small providers of services or suppliers'' 
        means--
                    (A) an institutional provider of services with 
                fewer than 25 full-time-equivalent employees; or
                    (B) a physician, practitioner, or supplier with 
                fewer than 10 full-time-equivalent employees.
    (b) Qualification of Contractors.--In conducting the demonstration 
program, the Secretary of Health and Human Services shall enter into 
contracts with qualified organizations (such as peer review 
organizations or entities described in section 1889(f)(2) of the Social 
Security Act, as inserted by section 5(f)(1)) with appropriate 
expertise with billing systems of the full range of providers of 
services, physicians, practitioners, and suppliers to provide the 
technical assistance. In awarding such contracts, the Secretary shall 
consider any prior investigations of the entity's work by the Inspector 
General of Department of Health and Human Services or the Comptroller 
General of the United States.
    (c) Description of Technical Assistance.--The technical assistance 
provided under the demonstration program shall include a direct and in-
person examination of billing systems and internal controls of small 
providers of services or suppliers to determine program compliance and 
to suggest more efficient or effective means of achieving such 
compliance.
    (d) Avoidance of Recovery Actions for Problems Identified as 
Corrected.--The Secretary of Health and Human Services may provide 
that, absent evidence of fraud and notwithstanding any other provision 
of law, any errors found in a compliance review for a small provider of 
services or supplier that participates in the demonstration program 
shall not be subject to recovery action if the technical assistance 
personnel under the program determine that--
            (1) the problem that is the subject of the compliance 
        review has been corrected to their satisfaction within 30 days 
        of the date of the visit by such personnel to the small 
        provider of services or supplier; and
            (2) such problem remains corrected for such period as is 
        appropriate.
    (e) GAO Evaluation.--Not later than 2 years after the date of the 
date the demonstration program is first implemented, the Comptroller 
General, in consultation with the Inspector General of the Department 
of Health and Human Services, shall conduct an evaluation of the 
demonstration program. The evaluation shall include a determination of 
whether claims error rates are reduced for small providers of services 
or suppliers who participated in the program. The Comptroller General 
shall submit a report to the Secretary and the Congress on such 
evaluation and shall include in such report recommendations regarding 
the continuation or extension of the demonstration program.
    (f) Financial Participation by Providers.--The provision of 
technical assistance to a small provider of services or supplier under 
the demonstration program is conditioned upon the small provider of 
services or supplier paying for 25 percent of the cost of the technical 
assistance.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Health and Human Services (in 
appropriate part from the Federal Hospital Insurance Trust Fund and the 
Federal Supplementary Medical Insurance Trust Fund) to carry out the 
demonstration program--
            (1) for fiscal year 2003, $1,000,000, and
            (2) for fiscal year 2004, $6,000,000.

SEC. 7. MEDICARE PROVIDER OMBUDSMAN.

    (a) In General.--Section 1868 (42 U.S.C. 1395ee) is amended--
            (1) by adding at the end of the heading the following: ``; 
        medicare provider ombudsman'';
            (2) by inserting ``Practicing Physicians Advisory 
        Council.--(1)'' after ``(a)'';
            (3) in paragraph (1), as so redesignated under paragraph 
        (2), by striking ``in this section'' and inserting ``in this 
        subsection'';
            (4) by redesignating subsections (b) and (c) as paragraphs 
        (2) and (3), respectively; and
            (5) by adding at the end the following new subsection:
    ``(b) Medicare Provider Ombudsman.--The Secretary shall appoint a 
Medicare Provider Ombudsman. The Ombudsman shall--
            ``(1) provide assistance, on a confidential basis, to 
        providers of services, physicians, practitioners, and suppliers 
        with respect to complaints, grievances, and requests for 
        information concerning the programs under this title (including 
        provisions of title XI insofar as they relate to this title and 
        are not administered by the Office of the Inspector General of 
        the Department of Health and Human Services) and in the 
        resolution of unclear or conflicting guidance given by the 
        Secretary and medicare contractors to such providers of 
        services, physicians, practitioners, and suppliers regarding 
such programs and provisions and requirements under this title and such 
provisions; and
            ``(2) submit recommendations to the Secretary for 
        improvement in the administration of this title and such 
        provisions, including--
                    ``(A) recommendations to respond to recurring 
                patterns of confusion in this title and such provisions 
                (including recommendations regarding suspending 
                imposition of sanctions where there is widespread 
                confusion in program administration), and
                    ``(B) recommendations to provide for an appropriate 
                and consistent response (including not providing for 
                audits) in cases of self-identified overpayments by 
                providers of services, physicians, practitioners, and 
                suppliers.''.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Health and Human Services (in 
appropriate part from the Federal Hospital Insurance Trust Fund and the 
Federal Supplementary Medical Insurance Trust Fund) to carry out the 
provisions of subsection (b) of section 1868 (relating to the Medicare 
Provider Ombudsman), as added by subsection (a)(5), amounts as follows:
            (1) For fiscal year 2002, such sums as are necessary.
            (2) For fiscal year 2003, $8,000,000.
            (3) For fiscal year 2004, $17,000,000.
    (c) Report on Additional Funding.--Not later than October 1, 2003, 
the Secretary of Health and Human Services shall submit to Congress a 
report that includes the Secretary's estimate of the amount of 
additional funding necessary to carry out such provisions of subsection 
(b) of section 1868, as so added, in fiscal year 2005 and subsequent 
fiscal years.

SEC. 8. PROVIDER APPEALS.

    (a) Medicare Administrative Law Judges.--Section 1869 (42 U.S.C. 
1395ff), as amended by section 521(a) of Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000 (114 Stat. 2763A-534), 
as enacted into law by section 1(a)(6) of Public Law 106-554, is 
amended by adding at the end the following new subsection:
    ``(g) Medicare Administrative Law Judges.--
            ``(1) Transition plan.--Not later than October 1, 2003, the 
        Commissioner of Social Security and the Secretary shall develop 
        and implement a plan under which administrative law judges 
        responsible solely for hearing cases under this title (and 
        related provisions in title XI) shall be transferred from the 
        responsibility of the Commissioner and the Social Security 
        Administration to the Secretary and the Department of Health 
        and Human Services. The plan shall include recommendations with 
        respect to--
                    ``(A) the number of such administrative law judges 
                and support staff required to hear and decide such 
                cases in a timely manner; and
                    ``(B) funding levels required for fiscal year 2004 
                and subsequent fiscal years under this subsection to 
                hear such cases in a timely manner.
            ``(2) Increased financial support.--In addition to any 
        amounts otherwise appropriated, there are authorized to be 
        appropriated (in appropriate part from the Federal Hospital 
        Insurance Trust Fund and the Federal Supplementary Medical 
        Insurance Trust Fund) to the Secretary to increase the number 
        of administrative law judges under paragraph (1) and to improve 
        education and training opportunities for such judges and their 
        staffs, $5,000,000 for fiscal year 2003 and such sums as are 
        necessary for fiscal year 2004 and each subsequent fiscal 
        year.''.
    (b) Process for Expedited Access to Judicial Review.--
            (1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)) as 
        amended by Medicare, Medicaid, and SCHIP Benefits Improvement 
        and Protection Act of 2000 (114 Stat. 2763A-534), as enacted 
        into law by section 1(a)(6) of Public Law 106-554, is amended--
                    (A) in paragraph (1)(A), by inserting ``, subject 
                to paragraph (2),'' before ``to judicial review of the 
                Secretary's final decision''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Expedited access to judicial review.--
                    ``(A) In general.--The Secretary shall establish a 
                process under which a provider of service or supplier 
                that furnishes an item or service or a beneficiary who 
                has filed an appeal under paragraph (1) (other than an 
                appeal filed under paragraph (1)(F)) may obtain access 
                to judicial review when a review panel (described in 
                subparagraph (D)), on its own motion or at the request 
of the appellant, determines that it does not have the authority to 
decide the question of law or regulation relevant to the matters in 
controversy and that there is no material issue of fact in dispute. The 
appellant may make such request only once with respect to a question of 
law or regulation in a case of an appeal.
                    ``(B) Prompt determinations.--If, after or 
                coincident with appropriately filing a request for an 
                administrative hearing, the appellant requests a 
                determination by the appropriate review panel that no 
                review panel has the authority to decide the question 
                of law or regulations relevant to the matters in 
                controversy and that there is no material issue of fact 
                in dispute and if such request is accompanied by the 
                documents and materials as the appropriate review panel 
                shall require for purposes of making such 
                determination, such review panel shall make a 
                determination on the request in writing within 60 days 
                after the date such review panel receives the request 
                and such accompanying documents and materials. Such a 
                determination by such review panel shall be considered 
                a final decision and not subject to review by the 
                Secretary.
                    ``(C) Access to judicial review.--
                            ``(i) In general.--If the appropriate 
                        review panel--
                                    ``(I) determines that there are no 
                                material issues of fact in dispute and 
                                that the only issue is one of law or 
                                regulation that no review panel has the 
                                authority to decide; or
                                    ``(II) fails to make such 
                                determination within the period 
                                provided under subparagraph (B);
                        then the appellant may bring a civil action as 
                        described in this subparagraph.
                            ``(ii) Deadline for filing.--Such action 
                        shall be filed, in the case described in--
                                    ``(I) clause (i)(I), within 60 days 
                                of date of the determination described 
                                in such subparagraph; or
                                    ``(II) clause (i)(II), within 60 
                                days of the end of the period provided 
                                under subparagraph (B) for the 
                                determination.
                            ``(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 
                        controversy.--Where a provider of services or 
                        supplier seeks judicial review pursuant to this 
                        paragraph, the amount in controversy 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 Hospital Insurance Trust Fund for the 
                        month in which the civil action authorized 
                        under this paragraph 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 
                        reimbursement due providers of services or 
                        suppliers under this Act.
                    ``(D) Review panels.--For purposes of this 
                subsection, a `review panel' is an administrative law 
                judge, the Departmental Appeals Board, a qualified 
                independent contractor (as defined in subsection 
                (c)(2)), or an entity designated by the Secretary for 
                purposes of making determinations under this 
                paragraph.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to appeals filed on or after October 1, 2002.
    (c) Requiring Full and Early Presentation of Evidence.--
            (1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as 
        amended by Medicare, Medicaid, and SCHIP Benefits Improvement 
        and Protection Act of 2000 (114 Stat. 2763A-534), as enacted 
        into law by section 1(a)(6) of Public Law 106-554, and as 
        amended by subsection (b), is further amended by adding at the 
        end the following new paragraph:
            ``(3) Requiring full and early presentation 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 first external hearing or appeal at which 
        it could be introduced under this section, unless there is good 
        cause which precluded the introduction of such evidence at a 
        previous hearing or appeal.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2002.
    (d) Provider Appeals on Behalf of Deceased Beneficiaries.--
            (1) In general.--Section 1869(b)(1)(C) (42 U.S.C. 
        1395ff(b)(1)(C)), as amended by Medicare, Medicaid, and SCHIP 
        Benefits Improvement and Protection Act of 2000 (114 Stat. 
        2763A-534), as enacted into law by section 1(a)(6) of Public 
        Law 106-554, is amended by adding at the end the following: 
        ``The Secretary shall establish a process under which, if such 
        an individual is deceased, the individual is deemed to have 
        provided written consent to the assignment of the individual's 
        right of appeal under this section to the provider of services 
        or supplier of the item or service involved, so long as the 
        estate of the individual, and the individual's family and 
        heirs, are not liable for paying for the item or service and 
        are not liable for any increased coinsurance or deductible 
amounts resulting from any decision increasing the reimbursement amount 
for the provider of services or supplier.''.
            (2) Effective date.--Notwithstanding section 521(d) of the 
        Medicare, Medicaid, and SCHIP Benefits Improvement and 
        Protection Act of 2000, as enacted into law by section 1(a)(6) 
        of Public Law 106-554, the amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act.

SEC. 9. RECOVERY OF OVERPAYMENTS AND PREPAYMENT REVIEW; ENROLLMENT OF 
              PROVIDERS.

    (a) Recovery of Overpayments and Prepayment Review.--Section 1893 
(42 U.S.C. 1395ddd) is amended by adding at the end the following new 
subsections:
    ``(f) Recovery of Overpayments and Prepayment Review.--
            ``(1) Use of repayment plans.--
                    ``(A) In general.--If the repayment, within 30 days 
                by a provider of services, physician, practitioner, or 
other supplier, of an overpayment under this title would constitute a 
hardship (as defined in subparagraph (B)), subject to subparagraph (C), 
the Secretary shall enter into a plan (which meets terms and conditions 
determined to be appropriate by the Secretary) with the provider of 
services, physician, practitioner, or supplier for the offset or 
repayment of such overpayment over a period of not longer than 3 years. 
Interest shall accrue on the balance through the period of repayment.
                    ``(B) Hardship.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the repayment of an 
                        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 
                                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 
                                covered by the most recently submitted 
                                cost report; or
                                    ``(II) in the case of another 
                                provider of services, physician, 
                                practitioner, or supplier, the 
                                aggregate 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 application of 
                        this subparagraph in the case of a provider of 
                        services, physician, practitioner, 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.
                            ``(iii) Treatment of previous 
                        overpayments.--If a provider of services, 
                        physician, practitioner, or supplier has 
                        entered into a repayment plan under 
                        subparagraph (A) with respect to a specific 
                        overpayment amount, such payment amount shall 
                        not be taken into account under clause (i) with 
                        respect to subsequent overpayment amounts.
                    ``(C) Exceptions.--Subparagraph (A) shall not apply 
                if the Secretary has reason to suspect that the 
                provider of services, physician, practitioner, or 
                supplier may file for bankruptcy or otherwise cease to 
                do business or if there is an indication of fraud or 
                abuse committed against the program.
                    ``(D) Immediate collection if violation of 
                repayment plan.--If a provider of services, physician, 
                practitioner, 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.
            ``(2) Limitation on recoupment until reconsideration 
        exercised.--
                    ``(A) In general.--In the case of a provider of 
                services, physician, practitioner, or supplier that is 
                determined to have received an overpayment under this 
                title and that seeks a reconsideration of such 
                determination under section 1869(b)(1), the Secretary 
                may not take any action (or authorize any other person, 
                including any medicare contractor, as defined in 
                paragraph (9)) to recoup the overpayment until the date 
                the decision on the reconsideration has been rendered.
                    ``(B) Collection with interest.--Insofar as the 
                determination on such appeal is against the provider of 
                services, physician, practitioner, or supplier, 
                interest on the overpayment shall accrue on and after 
                the date of the original notice of overpayment. Insofar 
                as such determination against the provider of services, 
                physician, practitioner, 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.
            ``(3) Standardization of random prepayment review.--
                    ``(A) In general.--A medicare contractor may 
                conduct random prepayment review only to develop a 
                contractor-wide or program-wide claims payment error 
                rates.
                    ``(B) Construction.--Nothing in subparagraph (A) 
                shall be construed as preventing the denial of payments 
                for claims actually reviewed under a random prepayment 
                review.
            ``(4) Limitation on use of extrapolation.--A medicare 
        contractor may not use extrapolation to determine overpayment 
        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); or
                    ``(B) documented educational intervention has 
                failed to correct the payment error (as determined by 
                the Secretary).
            ``(5) Provision of supporting documentation.--In the case 
        of a provider of services, physician, practitioner, or supplier 
        with respect to which amounts were previously overpaid, a 
        medicare contractor may request the periodic production of 
        records or supporting documentation for a limited sample of 
        submitted claims to ensure that the previous practice is not 
        continuing.
            ``(6) Consent settlement reforms.--
                    ``(A) In general.--The Secretary may use a consent 
                settlement (as defined in subparagraph (D)) to settle a 
                projected overpayment.
                    ``(B) Opportunity to submit additional information 
                before consent settlement offer.--Before offering a 
                provider of services, physician, practitioner, or 
                supplier a consent settlement, the Secretary shall--
                            ``(i) communicate to the provider of 
                        services, physician, practitioner, or supplier 
                        in a non-threatening manner that, based on a 
                        review of the medical records requested by the 
                        Secretary, a preliminary indication appears 
                        that there would be an overpayment; and
                            ``(ii) provide for a 45-day period during 
                        which the provider of services, physician, 
                        practitioner, or supplier 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 information furnished by 
                the provider of services, physician, practitioner, or 
                supplier under subparagraph (B)(ii). Taking into 
                consideration such information, the Secretary shall 
                determine if there still appears to be an overpayment. 
                If so, the Secretary--
                            ``(i) shall provide notice of such 
                        determination to the provider of services, 
                        physician, practitioner, or supplier, including 
                        an explanation of the reason for such 
                        determination; and
                            ``(ii) in order to resolve the overpayment, 
                        may offer the provider of services, physician, 
                        practitioner, 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 appeal rights with respect to the alleged 
                overpayment involved.
                    ``(D) Consent settlement defined.--For purposes of 
                this paragraph, the term `consent settlement' means an 
                agreement between the Secretary and a provider of 
                services, physician, practitioner, 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, physician, 
                practitioner, or supplier agrees not to appeal the 
                claims involved.
            ``(7) Limitations on non-random prepayment review.--
                            ``(A) Limitation on initiation of non-
                        random prepayment review.--A medicare 
                        contractor may not initiate non-random 
                        prepayment review of a provider of services, 
                        physician, practitioner, or supplier based on 
                        the initial identification by that provider of 
                        services, physician, practitioner, or supplier 
                        of an improper billing practice unless there is 
                        a sustained or high level of payment error (as 
                        defined in paragraph (4)(A)).
                            ``(B) Termination of non-random prepayment 
                        review.--The Secretary shall issue regulations 
                        relating to the termination, including 
                        termination dates, of non-random prepayment 
                        review. Such regulations may vary such a 
                        termination date based upon the differences in 
                        the circumstances triggering prepayment review.
            ``(8) Payment audits
                    ``(A) Written notice for post-payment audits.--
                Subject to subparagraph (C), if a medicare contractor 
                decides to conduct a post-payment audit of a provider 
                of services, physician, practitioner, or supplier under 
                this title, the contractor shall provide the provider 
                of services, physician, practitioner, or supplier with 
                written notice 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 services, physician, practitioner, 
                or supplier under this title, the contractor shall--
                            ``(i) give the provider of services, 
                        physician, practitioner, or supplier a full 
                        review and explanation of the findings of the 
                        audit in a manner that is understandable to the 
                        provider of services, physician, practitioner, 
                        or supplier and permits the development of an 
                        appropriate corrective action plan;
                            ``(ii) inform the provider of services, 
                        physician, practitioner, or supplier of the 
                        appeal rights under this title; and
                            ``(iii) give the provider of services, 
                        physician, practitioner, or supplier an 
                        opportunity to provide additional information 
                        to the contractor.
                    ``(C) Exception.--Subparagraphs (A) and (B) shall 
                not apply if the provision of notice or findings would 
                compromise pending law enforcement activities or reveal 
findings of law enforcement-related audits.
            ``(9) Definitions.--For purposes of this subsection:
                    ``(A) Medicare contractor.--The term `medicare 
                contractor' has the meaning given such term in section 
                1889(f).
                    ``(B) Random prepayment review.--The term `random 
                prepayment review' means a demand for the production of 
                records or documentation absent cause with respect to a 
                claim.
    ``(g) Notice of Over-Utilization of Codes.--The Secretary shall 
establish a process under which the Secretary provides for notice to 
classes of providers of services, physicians, practitioners, and 
suppliers served by the contractor in cases in which the contractor has 
identified that particular billing codes may be overutilized by that 
class of providers of services, physicians, practitioners, or suppliers 
under the programs under this title (or provisions of title XI insofar 
as they relate to such programs).''.
    (b) Provider Enrollment Process; Right of Appeal.--
            (1) In general.--Section 1866 (42 U.S.C. 1395cc) is 
        amended--
                    (A) by adding at the end of the heading the 
                following: ``; enrollment processes''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(j) Enrollment Process for Providers of Services, Physicians, 
Practitioners, and Suppliers.--
            ``(1) In general.--The Secretary shall establish by 
        regulation a process for the enrollment of providers of 
        services, physicians, practitioners, and suppliers under this 
        title.
            ``(2) Appeal process.--Such process shall provide--
                    ``(A) a method by which providers of services, 
                physicians, practitioners, and suppliers whose 
                application to enroll (or, if applicable, to renew 
                enrollment) are denied are provided a mechanism to 
                appeal such denial; and
                    ``(B) prompt deadlines for actions on applications 
                for enrollment (and, if applicable, renewal of 
                enrollment) and for consideration of appeals.''.
            (2) Effective date.--The Secretary of Health and Human 
        Services shall provide for the establishment of the enrollment 
        and appeal process under the amendment made by paragraph (1) 
        within 6 months after the date of the enactment of this Act.
    (c) Process for Correction of Minor Errors and Omissions on Claims 
Without Pursuing Appeals Process.--The Secretary of Health and Human 
Services shall develop, in consultation with appropriate medicare 
contractors (as defined in section 1889(f) of the Social Security Act, 
as inserted by section 5(f)(1)) and representatives of providers of 
services, physicians, practitioners, and suppliers, a process whereby, 
in the case of minor errors or omissions that are detected in the 
submission of claims under the programs under title XVIII of such Act, 
a provider of services, physician, practitioner, or supplier is given 
an opportunity to correct such an error or omission without the need to 
initiate an appeal. Such process may include the ability to resubmit 
corrected claims.

SEC. 10. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.

    (a) In General.--The Secretary of Health and Human Services shall 
establish a demonstration program (in this section referred to as the 
``demonstration program'') under which medicare specialists employed by 
the Department of Health and Human Services provide advice and 
assistance to medicare beneficiaries at the location of existing local 
offices of the Social Security Administration.
    (b) Locations.--
            (1) In general.--The demonstration program shall be 
        conducted in at least 6 offices or areas. Subject to paragraph 
        (2), in selecting such offices and areas, the Secretary shall 
        provide preference for offices with a high volume of visits by 
        medicare beneficiaries.
            (2) Assistance for rural beneficiaries.--The Secretary 
        shall provide for the selection of at least 2 rural areas to 
        participate in the demonstration program. In conducting the 
        demonstration program in such rural areas, the Secretary shall 
        provide for medicare specialists to travel among local offices 
        in a rural area on a scheduled basis.
    (c) Duration.--The demonstration program shall be conducted over a 
3-year period.
    (d) Evaluation and Report.--
            (1) Evaluation.--The Secretary shall provide for an 
        evaluation of the demonstration program. Such evaluation shall 
        include an analysis of--
                    (A) utilization of, and beneficiary satisfaction 
                with, the assistance provided under the program; and
                    (B) the cost-effectiveness of providing beneficiary 
                assistance through out-stationing medicare specialists 
                at local social security offices.
            (2) Report.--The Secretary shall submit to Congress a 
        report on such evaluation and shall include in such report 
        recommendations regarding the feasibility of permanently out-
        stationing medical specialists at local social security 
        offices.

SEC. 11. POLICY DEVELOPMENT REGARDING EVALUATION AND MANAGEMENT (E & M) 
              DOCUMENTATION GUIDELINES.

    (a) In General.--The Secretary of Health and Human Services may not 
implement any documentation guidelines for evaluation and management 
physician services under the title XVIII of the Social Security Act on 
or after the date of the enactment of this Act unless the Secretary--
            (1) has developed the guidelines in collaboration with 
        practicing physicians and provided for an assessment of the 
        proposed guidelines by the physician community;
            (2) has established a plan that contains specific goals, 
        including a schedule, for improving the use of such guidelines;
            (3) has conducted appropriate and representative pilot 
        projects under subsection (b) to test modifications to the 
        evaluation and management documentation guidelines; and
            (4) finds that the objectives described in subsection (c) 
        will be met in the implementation of such guidelines.
The Secretary may make changes to the manner in which existing 
evaluation and management documentation guidelines are implemented to 
reduce paperwork burdens on physicians.
    (b) Pilot Projects To Test Evaluation and Management Documentation 
Guidelines.--
            (1) Length and consultation.--Each pilot project under this 
        subsection shall--
                    (A) be of sufficient length to allow for 
                preparatory physician and medicare contractor 
                education, analysis, and use and assessment of 
                potential evaluation and management guidelines; and
                    (B) be conducted, in development and throughout the 
                planning and operational stages of the project, in 
                consultation with practicing physicians.
            (2) Range of pilot projects.--Of the pilot projects 
        conducted under this subsection--
                    (A) at least one shall focus on a peer review 
                method by physicians (not employed by a medicare 
                contractor) which evaluates medical record information 
                for claims submitted by physicians identified as 
                statistical outliers relative to definitions published 
                in the Current Procedures Terminology (CPT) code book 
                of the American Medical Association;
                    (B) at least one shall be conducted for services 
                furnished in a rural area and at least one for services 
                furnished outside such an area; and
                    (C) at least one shall be conducted in a setting 
                where physicians bill under physicians services in 
                teaching settings and at one shall be conducted in a 
                setting other than a teaching setting.
            (3) Banning of targeting of pilot project participants.--
        Data collected under this subsection shall not be used as the 
        basis for overpayment demands or post-payment audits.
            (4) Study of impact.--Each pilot project shall examine the 
        effect of the modified evaluation and management documentation 
        guidelines on--
                    (A) different types of physician practices, 
                including those with fewer than 10 full-time-equivalent 
                employees (including physicians); and
                    (B) the costs of physician compliance, including 
                education, implementation, auditing, and monitoring.
    (c) Objectives for Evaluation and Management Guidelines.--The 
objectives for modified evaluation and management documentation 
guidelines developed by the Secretary shall be to--
            (1) enhance clinically relevant documentation needed to 
        code accurately and assess coding levels accurately;
            (2) decrease the level of non-clinically pertinent and 
        burdensome documentation time and content in the physician's 
        medical record;
            (3) increase accuracy by reviewers; and
            (4) educate both physicians and reviewers.
    (d) Study of Simpler, Alternative Systems of Documentation for 
Physician Claims.--
            (1) Study.--The Secretary of Health and Human Services 
        shall carry out a study of the matters described in paragraph 
        (2).
            (2) Matters described.--The matters referred to in 
        paragraph (1) are--
                    (A) the development of a simpler, alternative 
                system of requirements for documentation accompanying 
                claims for evaluation and management physician services 
                for which payment is made under title XVIII of the 
                Social Security Act; and
                    (B) consideration of systems other than current 
                coding and documentation requirements for payment for 
                such physician services.
            (3) Consultation with practicing physicians.--In designing 
        and carrying out the study under paragraph (1), the Secretary 
        shall consult with practicing physicians, including physicians 
        who are part of group practices.
            (4) Application of hipaa uniform coding requirements.--In 
        developing an alternative system under paragraph (2), the 
        Secretary shall consider requirements of administrative 
        simplification under part C of title XI of the Social Security 
        Act.
            (5) Report to congress.--The Secretary shall submit to 
        Congress a report on the results of the study conducted under 
        paragraph (1).
    (e) Definitions.--In this section--
            (1) the term ``rural area'' has the meaning given that term 
        in section 1886(d)(2)(D) of the Social Security Act, 42 U.S.C. 
        1395ww(d)(2)(D); and
            (2) the term ``teaching settings'' are those settings 
        described in section 415.150 of title 42, Code of Federal 
        Regulations.
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