[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1738 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1738

 To amend title XVIII of the Social Security Act to provide regulatory 
relief, appeals process reforms, contracting flexibility, and education 
    improvements under the medicare program, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 28, 2001

 Mr. Kerry (for himself, Mr. Murkowski, Mr. Baucus, Mr. Grassley, Mr. 
   Jeffords, Mr. Inhofe, Mrs. Lincoln, Mr. Thompson, Mr. Breaux, Mr. 
  Hutchinson, Mr. Daschle, Mr. Craig, Mr. Hollings, Mrs. Murray, Mr. 
   Carper, Mr. Johnson, Mr. Bingaman, and Mr. Hatch) 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, appeals process reforms, contracting flexibility, and education 
    improvements under the medicare program, and for other purposes.

    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 Appeals, 
Regulatory, and Contracting Improvement 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) BIPA; Secretary.--In this Act:
            (1) BIPA.--The term ``BIPA'' means 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.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
    (d) 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. Findings.
Sec. 3. Construction.
                       TITLE I--REGULATORY REFORM

Sec. 101. Issuance of regulations.
Sec. 102. Compliance with changes in regulations and policies.
Sec. 103. Report on legal and regulatory inconsistencies.
                    TITLE II--APPEALS PROCESS REFORM

Sec. 201. Transfer of responsibility for medicare appeals.
Sec. 202. Expedited access to judicial review.
Sec. 203. Expedited review of certain provider agreement 
                            determinations.
Sec. 204. Revisions to medicare appeals process.
Sec. 205. Hearing rights related to decisions by the Secretary to deny 
                            or not renew a medicare enrollment 
                            agreement; consultation before changing 
                            provider enrollment forms.
Sec. 206. Appeals by providers when there is no other party available.
Sec. 207. Study and report to Congress on ways to improve the medicare 
                            appeals processes.
                     TITLE III--CONTRACTING REFORM

Sec. 301. Increased flexibility in medicare administration.
             TITLE IV--EDUCATION AND OUTREACH IMPROVEMENTS

Sec. 401. Provider education and technical assistance.
Sec. 402. Access to and prompt responses from medicare contractors.
Sec. 403. Reliance on guidance.
Sec. 404. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman.
Sec. 405. Beneficiary outreach demonstration program.
           TITLE V--REVIEW, RECOVERY, AND ENFORCEMENT REFORM

Sec. 501. Prepayment review.
Sec. 502. Recovery of overpayments.
Sec. 503. Process for correction of minor errors and omissions on 
                            claims without pursuing appeals process.
Sec. 504. Authority to waive a program exclusion.
                       TITLE VI--OTHER PROVISIONS

Sec. 601. Treatment of hospitals for certain services under medicare 
                            secondary payor (MSP) provisions.
Sec. 602. Emergency Medical Treatment and Active Labor Act (EMTALA) 
                            Task Force.
Sec. 603. Review and report to Congress on reducing medicare reporting 
                            burdens.
Sec. 604. Authorizing use of arrangements with other hospice programs 
                            to provide core hospice services in certain 
                            circumstances.
Sec. 605. One year delay in lock in procedures for Medicare+Choice 
                            plans.
Sec. 606. Temporary moratorium on requirement of home health agencies 
                            to collect OASIS data from non-medicare 
                            patients.
Sec. 607. Coordinated survey demonstration program.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The overwhelming majority of providers of services, 
        physicians, practitioners, and suppliers in the United States 
        are law-abiding persons who provide important health care 
        services to patients each day.
            (2) The Secretary should place greater emphasis on 
        education of, and outreach to, health care providers under the 
        medicare program in order to increase understanding and 
        compliance with the regulations and requirements under such 
        program. The Secretary should also ensure that new Medicare 
        program requirements are communicated clearly and consistently 
        throughout the country.
            (3) Beneficiaries and health care providers under the 
        medicare program currently struggle to navigate the medicare 
        appeals processes for the purpose of settling billing, payment, 
        and enforcement disputes. Such appeals processes suffer from a 
        lack of oversight, inadequate resources, and structural 
        deficiencies. For example, the average adjudication time for a 
        medicare appeal before an administrative law judge is 382 days. 
        Changes to the medicare appeals processes should result in more 
        timely decisions. Further, Congress should create needed 
        oversight of, and reporting requirements for, such appeals 
        process in order to provide information for future 
        improvements.
            (4) Administration of the medicare program is hampered by 
        antiquated restrictions on the contracting authority of the 
        Secretary. These restrictions impose burdens and inefficiencies 
        on contractors, taxpayers, providers, and beneficiaries. The 
        Secretary should have more flexibility in medicare contracting 
and should have contracting authority consistent with other Federal 
agencies.

SEC. 3. CONSTRUCTION.

    (a) No Effect on Legal Authority.--Nothing in this Act shall be 
construed to compromise or affect existing legal remedies 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).
    (b) No Effect on Medicare Waste, Fraud, and Abuse Efforts.--Nothing 
in this Act shall be construed 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.

                       TITLE I--REGULATORY REFORM

SEC. 101. 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)(1) Subject to paragraph (2), the Secretary shall issue 
proposed or final (including interim final) regulations to carry out 
this title only on one business day of every month.
    ``(2) The Secretary may issue a proposed or final regulation 
described in paragraph (1) on any other day than the day described in 
paragraph (1) if the Secretary--
            ``(A) finds that issuance of such regulation on another day 
        is necessary to comply with requirements under law; or
            ``(B) finds that with respect to that regulation the 
        limitation of issuance on the date described in paragraph (1) 
        is contrary to the public interest.
If the Secretary makes a finding under this paragraph, the Secretary 
shall include such finding, and brief statement of the reasons for such 
finding, in the issuance of such regulation.''.
            (2) Report on publication of regulations on a quarterly 
        basis.--Not later than 2 years after the date of the enactment 
        of this Act, the Secretary 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 Regulations.--
            (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is 
        amended by adding at the end the following new paragraph:
    ``(3)(A) 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.
    ``(B) With respect to publication of final regulations based on the 
previous publication of a proposed 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.
    ``(C)(i) With respect to the publication of final regulations based 
on the previous publication of an interim final regulation--
            ``(I) subject to clause (ii), the Secretary shall publish 
        the final regulation within the 12-month period that begins on 
        the date of publication of the interim final regulation;
            ``(II) if a final regulation is not published by the 
        deadline established under this subparagraph, the interim final 
        regulation shall not continue in effect unless the Secretary 
        publishes a notice described in clause (ii) by such deadline; 
        and
            ``(III) the final regulation shall include responses to 
        comments submitted in response to the interim final regulation.
    ``(ii) If the Secretary determines before the deadline otherwise 
established in this subparagraph that there is good cause, specified in 
a notice published before such deadline, for delaying the deadline 
otherwise applicable under this subparagraph, the deadline otherwise 
established under this subparagraph shall be extended for such period 
(not to exceed 12 months) as the Secretary specifies in such notice.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act and 
        shall apply to proposed regulations and interim final 
        regulations published on or after such date.
            (3) Status of pending interim final regulations.--Not later 
        than six months after the date of the enactment of this Act, 
        the Secretary shall publish a notice in the Federal Register 
        that provides the status of each interim final regulation that 
        was published on or before the date of the enactment of this 
        Act and for which no final regulation has been published. Such 
        notice shall include the date by which the Secretary plans to 
        publish the final regulation that is based on the interim final 
        rule.
    (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. 102. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.

    (a) No Retroactive Application of Substantive Changes.--
            (1) In general.--Section 1871 (42 U.S.C. 1395hh), as 
        amended by section 101(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 effective date of the change, unless the Secretary 
determines that--
            ``(i) such retroactive application is necessary to comply 
        with statutory requirements; or
            ``(ii) failure to apply the change retroactively would be 
        contrary to the public interest.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to substantive changes issued on or after the date 
        of the enactment of this Act.
    (b) Timeline for Compliance With Substantive Changes After 
Notice.--
            (1) In general.--Section 1871(e)(1), as added by subsection 
        (a), is further amended by adding at the end the following:
    ``(B) A compliance action may be made against a provider of 
services, physician, practitioner, or other supplier with respect to 
noncompliance with such a substantive change only for items and 
services furnished on or after the effective date of the change.
    ``(C)(i) Except as provided in clause (ii), a substantive change 
may not take effect until not earlier than the date that is the end of 
the 30-day period that begins on the date that the Secretary has issued 
or published, as the case may be, the substantive change.
    ``(ii) The Secretary may provide for a substantive change to take 
effect on a date that precedes the end of the 30-day period under 
clause (i) if the Secretary finds that waiver of such 30-day period is 
necessary to comply with statutory requirements or that the application 
of such 30-day period is contrary to the public interest. If the 
Secretary provides for an earlier effective date pursuant to this 
clause, the Secretary shall include in the issuance or publication of 
the substantive change a finding described in the first sentence, and a 
brief statement of the reasons for such finding.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to compliance actions undertaken on or after the 
        date of the enactment of this Act.

SEC. 103. REPORT ON LEGAL AND REGULATORY INCONSISTENCIES.

    Section 1871 (42 U.S.C. 1395hh), as amended by sections 101(a) and 
102, is amended by adding at the end the following new subsection:
    ``(f)(1) Not later than 2 years after the date of the enactment of 
this subsection, and every 2 years thereafter, the Secretary shall 
submit to Congress a report with respect to the administration of this 
title and areas of inconsistency or conflict among the various 
provisions under law and regulation.
    ``(2) In preparing a report under paragraph (1), the Secretary 
shall collect--
            ``(A) information from beneficiaries, providers of 
        services, physicians, practitioners, and other suppliers with 
        respect to such areas of inconsistency and conflict; and
            ``(B) information from medicare contractors that tracks the 
        nature of all communications and correspondence.
    ``(3) A report under paragraph (1) shall include a description of 
efforts by the Secretary to reduce such inconsistency or conflicts, and 
recommendations for legislation or administrative action that the 
Secretary determines appropriate to further reduce such inconsistency 
or conflicts.''.

                    TITLE II--APPEALS PROCESS REFORM

SEC. 201. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.

    (a) Transition Plan.--
            (1) In general.--Not later than October 1, 2002, the 
        Commissioner of Social Security and the Secretary shall develop 
        and transmit to Congress and the Comptroller General of the 
        United States a plan under which the functions of 
        administrative law judges responsible for hearing cases under 
        title XVIII of the Social Security Act (and related provisions 
        in title XI of such Act) are transferred from the 
        responsibility of the Commissioner and the Social Security 
        Administration to the Secretary and the Department of Health 
        and Human Services.
            (2) Contents.--The plan shall include information on the 
        following:
                    (A) Workload.--The number of such administrative 
                law judges and support staff required now and in the 
                future to hear and decide such cases in a timely 
                manner, taking into account the current and anticipated 
                claims volume, appeals, number of beneficiaries, and 
                statutory changes.
                    (B) Cost projections.--Funding levels required for 
                fiscal year 2004 and subsequent fiscal years under this 
                subsection to hear such cases in a timely manner.
                    (C) Transition timetable.--A timetable for the 
                transition.
                    (D) Regulations.--The establishment of specific 
                regulations to govern the appeals process.
                    (E) Case tracking.--The development of a unified 
                case tracking system that will facilitate the 
                maintenance and transfer of case specific data across 
                both the fee-for-service and managed care components of 
                the medicare program.
                    (F) Feasibility of precedential authority.--The 
                feasibility of developing a process to give decisions 
                of the Departmental Appeals Board in the Department of 
                Health and Human Services addressing broad legal issues 
                binding, precedential authority.
                    (G) Access to administrative law judges.--The 
                feasibility of filing appeals with administrative law 
                judges electronically, and the feasibility of 
conducting hearings using tele- or video-conference technologies.
            (3) Additional information.--The plan may also include 
        recommendations for further Congressional action, including 
        modifications to the requirements and deadlines established 
        under section 1869 of the Social Security Act (as amended by 
        sections 521 and 522 of BIPA, 114 Stat. 2763A-534).
            (4) GAO evaluation.--The Comptroller General of the United 
        States shall evaluate the plan and, not later than April 1, 
        2003, shall submit to Congress a report on such evaluation.
    (b) Transfer of Adjudication Authority.--
            (1) In general.--Not earlier than July 1, 2003, and not 
        later than October 1, 2003, the Commissioner of Social Security 
        and the Secretary shall implement the transition plan developed 
        under subsection (a) and transfer the administrative law judge 
        functions described in such subsection from the Social Security 
        Administration to the Secretary.
            (2) Assuring independence of judges.--The Secretary shall 
        assure the independence of judges performing the administrative 
        law judge functions transferred under paragraph (1) from the 
        Centers for Medicare & Medicaid Services and its contractors.
            (3) Geographic distribution.--The Secretary shall provide 
        for an appropriate geographic distribution of judges performing 
        the administrative law judge functions transferred under 
        paragraph (1) throughout the United States to ensure timely 
        access to such judges.
            (4) Hiring authority.--Subject to the amounts provided in 
        advance in appropriations Act, the Secretary shall have 
        authority to hire administrative law judges to hear cases under 
        title XVIII of the Social Security Act and to hire support 
        staff for such judges.
            (5) Performance standards.--The Secretary shall establish 
        performance standards for administrative law judges hearing 
        cases under title XVIII of the Social Security Act with respect 
        to--
                    (A) timelines for decisions in such cases; and
                    (B) adherence to laws and regulations related to 
                such title.
            (6) Financing.--Amounts payable under law to the 
        Commissioner of Social Security for judges performing the 
        administrative law judge functions transferred under paragraph 
        (1) from the Federal Hospital Insurance Trust Fund and the 
        Federal Supplementary Medical Insurance Trust Fund shall become 
        payable to the Secretary for the functions so transferred.
            (7) Shared resources.--The Secretary shall enter into such 
        arrangements with the Commissioner of Social Security as may be 
        appropriate with respect to transferred functions of 
        administrative law judges to share office space, support staff, 
        and other resources, with appropriate reimbursement from the 
        Trust Funds described in paragraph (5).
    (c) Increased Financial Support.--In addition to any amounts 
otherwise appropriated, to ensure timely action on appeals before 
administrative law judges and the Departmental Appeals Board consistent 
with section 1869 of the Social Security Act (as amended by section 521 
of BIPA, 114 Stat. 2763A-534), 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 such sums as are necessary for fiscal year 2003 and each 
subsequent fiscal year to--
            (1) increase the number of administrative law judges (and 
        their staffs) under subsection (b)(4);
            (2) improve education and training opportunities for 
        administrative law judges (and their staffs); and
            (3) increase the staff of the Departmental Appeals Board.
    (d) Conforming Amendment.--Section 1869(f)(2)(A)(i) (42 U.S.C. 
1395ff(f)(2)(A)(i)), as added by section 522(a) of BIPA 114 Stat. 
2763A-543, is amended by striking ``of the Social Security 
Administration'' in the matter preceding subclause (I).

SEC. 202. EXPEDITED ACCESS TO JUDICIAL REVIEW.

    (a) In General.--Section 1869(b) (42 U.S.C. 1395ff(b)), as amended 
by section 521 of BIPA, 114 Stat. 2763A-534, is amended--
            (1) in paragraph (1)(A), by inserting ``, subject to 
        paragraph (2),'' before ``to judicial review of the Secretary's 
        final decision''; and
            (2) 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 services 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 the 
Departmental Appeals Board 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 for a specific matter in dispute 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 the 
                Departmental Appeals Board does not have 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 the Departmental 
                                Appeals Board does not have 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 clause; 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 any amounts in 
                        controversy.--Where a provider of services or 
                        supplier seeks judicial review pursuant to this 
                        paragraph, the amount in controversy (if any) 
                        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 Supplementary Medical 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, physicians, practitioners, and other 
                        suppliers under this Act.
                    ``(D) Review panel defined.--For purposes of this 
                subsection, a `review panel' is a panel of 3 members 
                from the Departmental Appeals Board, selected for the 
                purpose of making determinations under this 
                paragraph.''.
    (b) Application to Provider Agreement Determinations.--Section 
1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
            (1) by inserting ``(A)'' after ``(h)(1)''; and
            (2) by adding at the end the following new subparagraph:
    ``(B) An institution or agency described in subparagraph (A) that 
has filed for a hearing under subparagraph (A) shall have expedited 
access to judicial review under this subparagraph in the same manner as 
providers of services, suppliers, and beneficiaries may obtain 
expedited access to judicial review under the process established under 
section 1869(b)(2). Nothing in this subparagraph shall be construed to 
affect the application of any remedy imposed under section 1819 during 
the pendency of an appeal under this subparagraph.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to appeals filed on or after October 1, 2003.

SEC. 203. EXPEDITED REVIEW OF CERTAIN PROVIDER AGREEMENT 
              DETERMINATIONS.

    (a) Termination and Certain Other Immediate Remedies.--
            (1) In general.--The Secretary shall develop and implement 
        a process to expedite proceedings under sections 1866(h) of the 
        Social Security Act (42 U.S.C. 1395cc(h)) in which--
                    (A) the remedy of termination of participation has 
                been imposed; or
                    (B) a sanction described in clause (i) or (iii) of 
                section 1819(h)(2)(B) of such Act (42 U.S.C. 1395i-
                3(h)(2)(B)) has been imposed, but only if such sanction 
has been imposed on an immediate basis.
            (2) Priority for cases of termination.--Under the process 
        described in paragraph (1), priority shall be provided in cases 
        of termination described in subparagraph (A) of such paragraph.
    (b) Increased Financial Support.--In addition to any amounts 
otherwise appropriated, to reduce by 50 percent the average time for 
administrative determinations on appeals under section 1866(h) of the 
Social Security Act (42 U.S.C. 1395cc(h)), there are authorized to be 
appropriated (in appropriate part from the Federal Hospital Insurance 
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund) 
to the Secretary such sums for fiscal year 2003 and each subsequent 
fiscal year as may be necessary to increase the number of 
administrative law judges (and their staffs) at the Departmental 
Appeals Board of the Department of Health and Human Services and to 
educate such judges and staff on long-term care issues.

SEC. 204. REVISIONS TO MEDICARE APPEALS PROCESS.

    (a) Timeframes for the Completion of the Record.--Section 1869(b) 
(42 U.S.C. 1395ff(b)), as amended by section 521 of BIPA, 114 Stat. 
2763A-534, and as amended in section 202(a), is further amended by 
adding at the end the following new paragraph:
            ``(3) Timely completion of the record.--
                    ``(A) Deadline.--Subject to subparagraph (B), the 
                deadline to complete the record in a hearing before an 
                administrative law judge or a review by the 
                Departmental Appeals Board is 90 days after the date 
                the request for the appeal is filed.
                    ``(B) Extensions for good cause.--The person filing 
                a request under subparagraph (A) may request an 
                extension of such deadline for good cause. The 
                administrative law judge, in the case of a hearing, and 
                the Departmental Appeals Board, in the case of a 
                review, may extend such deadline based upon a finding 
                of good cause to a date specified by the judge or 
                Board, as the case may be.
                    ``(C) Delay in decision deadlines until completion 
                of record.--Notwithstanding any other provision of this 
                section, the deadlines otherwise established under 
                subsection (d) for the making of determinations in 
                hearings or review under this section shall begin on 
                the date on which the record is complete.
                    ``(D) Complete described.--For purposes of this 
                paragraph, a record is complete when the administrative 
                law judge, in the case of a hearing, or the 
                Departmental Appeals Board, in the case of a review, 
                has received--
                            ``(i) written or testimonial evidence, or 
                        both, submitted by the person filing the 
                        request,
                            ``(ii) written or oral argument, or both, 
                        is presented,
                            ``(iii) the decision of, and the record 
                        for, the prior level of appeal, and
                            ``(iv) such other evidence as such judge or 
                        Board, as the case may be, determines is 
                        required to make a determination on the 
                        request.''.
    (b) Use of Patients' Medical Records.--Section 1869(c)(3)(B)(i) (42 
U.S.C. 1395ff(c)(3)(B)(i)) is amended by inserting ``(including the 
medical records of the individual involved)'' after ``clinical 
experience''.
    (c) Notice Requirements for Medicare Appeals.--
            (1) Initial determinations and redeterminations.--Section 
        1869(a) (42 U.S.C. 1395ff(a)) is amended by adding at the end 
        the following new paragraph:
            ``(4) Requirements of notice of determinations and 
        redeterminations.--A written notice of a determination on an 
        initial determination or on a redetermination, insofar as such 
        determination or redetermination results in a denial of a claim 
        for benefits, shall be provided in printed form and written in 
        a manner calculated to be understood by the beneficiary and 
        shall include--
                    ``(A) the specific reasons for the determination, 
                including, as appropriate--
                            ``(i) upon request in the case of an 
                        initial determination, a summary of the 
                        clinical or scientific evidence used in making 
                        the determination; and
                            ``(ii) in the case of a redetermination, 
                        such a summary;
                    ``(B) the procedures for obtaining additional 
                information concerning the determination or 
                redetermination; and
                    ``(C) notification of the right to seek a 
                redetermination or otherwise appeal the determination 
                and instructions on how to initiate such a 
redetermination or appeal under this section.''.
            (2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C. 
        1395ff(c)(3)(E)) is amended to read as follows:
                    ``(E) Explanation of decision.--Any decision with 
                respect to a reconsideration of a qualified independent 
                contractor shall be in writing in a manner calculated 
                to be understood by the beneficiary and shall include--
                            ``(i) to the extent appropriate, a detailed 
                        explanation of the decision as well as a 
                        discussion of the pertinent facts and 
                        applicable regulations applied in making such 
                        decision,
                            ``(ii) a notification of the right to 
                        appeal such determination and instructions on 
                        how to initiate such appeal under this section; 
                        and
                            ``(iii) in the case of a determination of 
                        whether an item or service is reasonable and 
                        necessary for the diagnosis or treatment of 
                        illness or injury (under section 1862(a)(1)(A)) 
                        an explanation of the medical and scientific 
                        rationale for the decision.''.
            (3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)) is 
        amended--
                    (A) in the heading, by inserting ``; Notice'' after 
                ``Secretary''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Notice.--Notice of the decision of an administrative 
        law judge shall be in writing in a manner calculated to be 
        understood by the beneficiary and shall include--
                    ``(A) the specific reasons for the determination 
                (including, to the extent appropriate, a summary of the 
                clinical or scientific evidence used in making the 
                determination);
                    ``(B) the procedures for obtaining additional 
                information concerning the decision; and
                    ``(C) notification of the right to appeal the 
                decision and instructions on how to initiate such an 
                appeal under this section.''.
            (4) Preparation of record for appeal.--Section 
        1869(c)(3)(J) (42 U.S.C. 1395ff(c)(3)(J)) by striking ``such 
        information as is required for an appeal'' and inserting ``the 
        record for the appeal''.
    (d) Qualified Independent Contractors.--
            (1) Eligibility requirements of qualified independent 
        contractors.--Section 1869(c) (42 U.S.C. 1395ff(c)) is 
        amended--
                    (A) in paragraph (2)--
                            (i) by inserting ``(except in the case of a 
                        utilization and quality control peer review 
                        organization, as defined in section 1152)'' 
                        after ``means an entity or organization that''; 
                        and
                            (ii) by striking the period at the end and 
                        inserting the following: ``and meets the 
                        following requirements:
                    ``(A) General requirements.--
                            ``(i) The entity or organization has 
                        (directly or through contracts or other 
                        arrangements) sufficient medical, legal, and 
                        other expertise (including knowledge of the 
                        program under this title) and sufficient 
                        staffing to carry out duties of a qualified 
                        independent contractor under this section on a 
                        timely basis.
                            ``(ii) The entity or organization has 
                        provided assurances that it will conduct 
                        activities consistent with the applicable 
                        requirements of this section, including that it 
                        will not conduct any activities in a case 
                        unless the independence requirements of 
                        subparagraph (B) are met with respect to the 
                        case.
                            ``(iii) The entity or organization meets 
                        such other requirements as the Secretary 
                        provides by regulation.
                    ``(B) Independence requirements.--
                            ``(i) In general.--Subject to clause (ii), 
                        an entity or organization meets the 
                        independence requirements of this subparagraph 
                        with respect to any case if the entity--
                                    ``(I) is not a related party (as 
                                defined in subsection (g)(5));
                                    ``(II) does not have a material 
                                familial, financial, or professional 
                                relationship with such a party in 
                                relation to such case; and
                                    ``(III) does not otherwise have a 
                                conflict of interest with such a party 
                                (as determined under regulations).
                            ``(ii) Exception for reasonable 
                        compensation.--Nothing in clause (i) shall be 
                        construed to prohibit receipt by a qualified 
                        independent contractor of compensation from the 
                        Secretary for the conduct of activities under 
                        this section if the compensation is provided 
                        consistent with clause (iii).
                            ``(iii) Limitations on entity 
                        compensation.--Compensation provided by the 
                        Secretary to a qualified independent contractor 
                        in connection with reviews under this section 
                        shall--
                                    ``(I) not exceed a reasonable 
                                level; and
                                    ``(II) not be contingent on any 
                                decision rendered by the contractor or 
                                by any reviewing professional.''; and
                    (B) in paragraph (3)(A), by striking ``, and shall 
                have sufficient training and expertise in medical 
                science and legal matters to make reconsiderations 
                under this subsection''.
            (2) Eligibility requirements for reviewers.--Section 1869 
        (42 U.S.C. 1395ff) is amended--
                    (A) by amending subsection (c)(3)(D) to read as 
                follows:
                    ``(D) Qualifications for reviewers.--The 
                requirements of subsection (g) shall be met (relating 
                to qualifications of reviewing professionals).''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(g) Qualifications of Reviewers.--
            ``(1) In general.--In reviewing determinations under this 
        section, a qualified independent contractor shall assure that--
                    ``(A) each individual conducting a review shall 
                meet the qualifications of paragraph (2);
                    ``(B) compensation provided by the contractor to 
                each such reviewer is consistent with paragraph (3); 
                and
                    ``(C) in the case of a review by a panel described 
                in subsection (c)(3)(B) composed of physicians or other 
                health care professionals (each in this subsection 
                referred to as a `reviewing professional'), each 
                reviewing professional meets the qualifications 
                described in paragraph (4) and, if the request for 
                review indicates that the item or service involved was 
                furnished (or ordered to be furnished) by a physician, 
                each reviewing professional shall be a physician.
            ``(2) Independence.--
                    ``(A) In general.--Subject to subparagraph (B), 
                each individual conducting a review in a case shall--
                            ``(i) not be a related party (as defined in 
                        paragraph (5));
                            ``(ii) not have a material familial, 
                        financial, or professional relationship with 
                        such a party in the case under review; and
                            ``(iii) not otherwise have a conflict of 
                        interest with such a party (as determined under 
                        regulations).
                    ``(B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit an individual, solely on the 
                        basis of affiliation with a fiscal 
                        intermediary, carrier, or other contractor, 
                        from serving as an reviewing professional if--
                                    ``(I) a non-affiliated individual 
                                is not reasonably available;
                                    ``(II) the affiliated individual is 
                                not involved in the provision of items 
                                or services in the case under review;
                                    ``(III) the fact of such an 
                                affiliation is disclosed to the 
                                Secretary and the beneficiary (or 
                                authorized representative) and neither 
                                party objects; and
                                    ``(IV) the affiliated individual is 
                                not an employee of the intermediary, 
                                carrier, or contractor and does not 
                                provide services exclusively or 
                                primarily to or on behalf of such 
                                intermediary, carrier, or contractor;
                            ``(ii) prohibit an individual who has staff 
                        privileges at the institution where the 
                        treatment involved takes place from serving as 
                        a reviewer merely on the basis of such 
                        affiliation if the affiliation is disclosed to 
                        the Secretary and the beneficiary (or 
                        authorized representative), and neither party 
                        objects; or
                            ``(iii) prohibit receipt of compensation by 
                        a reviewing professional from a contractor if 
                        the compensation is provided consistent with 
                        paragraph (3).
            ``(3) Limitations on reviewer compensation.--Compensation 
        provided by a qualified independent contractor to a reviewer in 
        connection with a review under this section shall--
                    ``(A) not exceed a reasonable level; and
                    ``(B) not be contingent on the decision rendered by 
                the reviewer.
            ``(4) Licensure and expertise.--Each reviewing professional 
        shall be a physician (allopathic or osteopathic) or health care 
        professional who--
                    ``(A) is appropriately credentialed or licensed in 
                1 or more States to deliver health care services; and
                    ``(B) has medical expertise in the field of 
                practice that is appropriate for the items or services 
                at issue.
            ``(5) Related party defined.--For purposes of this section, 
        the term `related party' means, with respect to a case under 
        this title involving an individual beneficiary, any of the 
        following:
                    ``(A) The Secretary, the medicare administrative 
                contractor involved, or any fiduciary, officer, 
                director, or employee of the Department of Health and 
                Human Services, or of such contractor.
                    ``(B) The individual (or authorized 
                representative).
                    ``(C) The health care professional that provides 
                the items or services involved in the case.
                    ``(D) The institution at which the items or 
                services (or treatment) involved in the case are 
                provided.
                    ``(E) The manufacturer of any drug or other item 
                that is included in the items or services involved in 
                the case.
                    ``(F) Any other party determined under any 
                regulations to have a substantial interest in the case 
                involved.''.
    (e) Implementation of Certain BIPA Reforms.--
            (1) 1-year delay in effective dates.--(A) Section 521(d) of 
        BIPA (114 Stat. 2763A-543) is amended by striking ``October 1, 
        2002'' and inserting ``October 1, 2003''.
            (B) Section 522(d) of BIPA (114 Stat. 2763A-547) is amended 
        by striking ``October 1, 2001'' and inserting ``October 1, 
        2002''.
            (2) Use of peer review organizations to conduct expedited 
        review during transition period.--
                    (A) In general.--Section 1154(e) (42 U.S.C. 1320c-
                3(e)) is amended by adding at the end the following:
    ``(6)(A) In applying this subsection during the transition period 
(described in subparagraph (C)), any reference in this subsection--
            ``(i) to a hospital is deemed a reference to a provider of 
        services;
            ``(ii) to inpatient hospital care or services is deemed a 
        reference to services of such a provider of services;
            ``(iii) a notice under paragraph (1) is deemed to include--
                    ``(I) a notice to discharge the individual from the 
                provider of services; or
                    ``(II) a notice of termination of services by a 
                provider of services, but only in the case in which a 
                physician certifies that failure to continue the 
                provision of such services is likely to place the 
                individual's health at significant risk; and
            ``(iv) an inpatient is deemed a reference to a patient.
    ``(B) After the transition period, paragraphs (2) through (5) shall 
not apply.
    ``(C) For purposes of this paragraph and section 1869(b)(1)(F)(ii), 
the transition period, with respect to an individual who resides in an 
area served by a peer review organization--
            ``(i) begins on the date on which the last triennial 
        contract with any peer review organization under this part 
        becomes effective during 2002; and
            ``(ii) ends on the date that the triennial contract under 
        this part with the organization that serves such area expires 
        in 2006.''.
                    (B) Conforming amendment to bipa.--Subsection (c) 
                of section 521 of BIPA is repealed.
                    (C) Conforming amendment to section 1869.--Section 
                1869(b)(1)(F) (42 U.S.C. 1395ff(b)(1)(F)), as amended 
                by section 521 of BIPA, is amended by striking clause 
                (ii) and inserting the following:
                            ``(ii) No application during transition 
                        period.--Clause (i) shall not apply during the 
                        transition period described in section 
                        1154(e)(6)(C).''.
                    (D) Section 1155 transition.--Section 1155 (42 
                U.S.C. 1320c-4) is amended by adding at the end the 
                following: ``In the case of a determination made under 
                section 1154(e)(6)(A) during the period in which the 
                provisions of subsection (b) of section 1869 (as added 
                by section 521 of 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) are in effect, this section shall not apply but 
                the individual shall be entitled to a hearing on the 
                determination before an administrative law judge under 
                such subsection (b) in the same manner as such section 
                applies to a hearing under subsection (a) of such 
                section 1869.''.
    (f) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of the respective provisions 
of subtitle C of title V of BIPA, 114 Stat. 2763A-534.
    (g) Transition.--In applying section 1869(g) of the Social Security 
Act (as added by subsection (d)(2)), any reference to a medicare 
administrative contractor shall be deemed to include a reference to a 
fiscal intermediary under section 1816 of the Social Security Act (42 
U.S.C. 1395h) and a carrier under section 1842 of such Act (42 U.S.C. 
1395u).

SEC. 205. HEARING RIGHTS RELATED TO DECISIONS BY THE SECRETARY TO DENY 
              OR NOT RENEW A MEDICARE ENROLLMENT AGREEMENT; 
              CONSULTATION BEFORE CHANGING PROVIDER ENROLLMENT FORMS.

    (a) Hearing Rights.--
            (1) In general.--Section 1866 (42 U.S.C. 1395cc) is amended 
        by adding at the end the following new subsection:
    ``(j) Hearing Rights in Cases of Denial or Non-Renewal.--The 
Secretary shall establish by regulation procedures under which--
            ``(1) there are deadlines for actions on applications for 
        enrollment (and, if applicable, renewal of enrollment); and
            ``(2) 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 a deadline for consideration of such 
        appeals.''.
            (2) Effective date.--The Secretary shall provide for the 
        establishment of the procedures under the amendment made by 
        paragraph (1) within 18 months after the date of the enactment 
        of this Act.
    (b) Consultation Before Changing Provider Enrollment Forms.--
Section 1871 (42 U.S.C. 1395hh), as amended by sections 101(a), 102, 
and 103, is further amended by adding at the end the following new 
subsection:
    ``(g) The Secretary shall consult with providers of services, 
physicians, practitioners, and suppliers before making changes in the 
provider enrollment forms required of such providers, physicians, 
practitioners, and suppliers to be eligible to submit claims for which 
payment may be made under this title.''.

SEC. 206. APPEALS BY PROVIDERS WHEN THERE IS NO OTHER PARTY AVAILABLE.

    (a) In General.--Section 1870 (42 U.S.C. 1395gg) is amended by 
adding at the end the following new subsection:
    ``(h) Notwithstanding subsection (f) or any other provision of law, 
the Secretary shall permit a provider of services, physician, 
practitioner, or other supplier to appeal any determination of the 
Secretary under this title relating to services rendered under this 
title to an individual who subsequently dies if there is no other party 
available to appeal such determination.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act and shall apply to 
items and services furnished on or after such date.

SEC. 207. STUDY AND REPORT TO CONGRESS ON WAYS TO IMPROVE THE MEDICARE 
              APPEALS PROCESSES.

    (a) Study.--The Secretary shall conduct a study on ways to improve 
the appeals processes under the medicare program under title XVIII of 
the Social Security Act for both beneficiaries and providers and 
suppliers under such program. In conducting such study, the Secretary 
shall consult with the relevant offices within the Department of Health 
and Human Services that work on issues related to the medicare program.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Secretary shall submit a report on the 
findings of the study conducted under subsection (a) to the Committee 
on Ways and Means and the Committee on Energy and Commerce of the House 
of Representatives and the Committee on Finance of the Senate. Such 
report shall include such recommendations for legislation and 
administrative action that the Secretary determines are appropriate.

                     TITLE III--CONTRACTING REFORM

SEC. 301. 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 eligible entity to serve as a 
        medicare administrative contractor with respect to the 
        performance of any or all of the functions described in 
        paragraph (4) or parts of those functions (or, to the extent 
        provided in a contract, to secure performance thereof by other 
        entities).
            ``(2) Eligibility of entities.--An entity is eligible to 
        enter into a contract with respect to the performance of a 
        particular function described in paragraph (4) only if--
                    ``(A) the entity has demonstrated capability to 
                carry out such function;
                    ``(B) the entity complies with such conflict of 
                interest standards as are generally applicable to 
                Federal acquisition and procurement;
                    ``(C) the entity has sufficient assets to 
                financially support the performance of such function; 
                and
                    ``(D) the entity meets such other requirements as 
                the Secretary may impose.
            ``(3) 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 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, facility, or supplier (or 
                class of such providers of services, physicians, 
                practitioners, facilities, 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 in relation to that individual, provider 
                of services, physician, practitioner, facility, or 
                supplier or class of provider of services, physician, 
                practitioner, facility, or supplier.
            ``(4) Functions described.--The functions referred to in 
        paragraphs (1) and (2) 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, facilities, 
                suppliers, and individuals.
                    ``(B) Making payments.--Making payments described 
                in subparagraph (A) (including receipt, disbursement, 
                and accounting for funds in making such payments).
                    ``(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, facilities, or suppliers.
                    ``(E) Communication with providers.--Serving as a 
                center for, and communicating to providers of services, 
                physicians, practitioners, facilities, 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, facilities, and 
                suppliers to the Secretary.
                    ``(F) Provider education and technical 
                assistance.--Performing the functions described in 
                subsections (e) and (f), relating to education, 
                training, and technical assistance to providers of 
                services, physicians, practitioners, facilities, and 
                suppliers.
                    ``(G) Additional functions.--Performing such other 
                functions as are necessary to carry out the purposes of 
                this title.
            ``(5) 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.
            ``(6) Application of federal acquisition regulation.--
        Except to the extent inconsistent with a specific requirement 
        of this title, the Federal Acquisition Regulation applies to 
        contracts under this title.
    ``(b) Contracting Requirements.--
            ``(1) Use of competitive procedures.--
                    ``(A) In general.--Except as provided in laws with 
                general applicability to Federal acquisition and 
                procurement or 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, except that the 
                Secretary shall provide for the application of 
                competitive procedures under such a contract not less 
                frequently than once every six years.
                    ``(C) Transfer of functions.--The Secretary may 
                transfer functions among medicare administrative 
                contractors without regard to any provision of law 
                requiring competition. The Secretary shall ensure that 
                performance quality is considered in such transfers. 
                The Secretary shall provide notice (whether in the 
                Federal Register or otherwise) of any such transfer 
                (including a description of the functions so 
                transferred and contact information for the contractors 
                involved) to providers of services, physicians, 
                practitioners, facilities, and suppliers affected by 
                the transfer.
                    ``(D) Incentives for quality.--The Secretary may 
                provide incentives 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) Performance requirements.--
                    ``(A) Development of specific performance 
                requirements.--The Secretary shall develop contract 
                performance requirements to carry out the specific 
                requirements applicable under this title to a function 
                described in subsection (a)(4) and shall develop 
                standards for measuring the extent to which a 
                contractor has met such requirements. The Secretary 
                shall publish in the Federal Register such performance 
                requirements and measurement standards.
                    ``(B) Considerations.--The Secretary may include as 
                one of the standards satisfaction level as measured by 
                provider and beneficiary surveys.
                    ``(C) Inclusion in contracts.--All contractor 
                performance requirements shall be set forth in the 
                contract between the Secretary and the appropriate 
                medicare administrative contractor. Such performance 
                requirements--
                            ``(i) shall reflect the performance 
                        requirements published under subparagraph (A), 
                        but may include additional performance 
                        requirements;
                            ``(ii) shall be used for evaluating 
                        contractor performance under the contract; and
                            ``(iii) shall be consistent with the 
                        written statement of work provided under the 
                        contract.
            ``(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)(4)(B).
            ``(2) Prohibition on mandates for certain data 
        collection.--The Secretary may not require, as a condition of 
        entering into, or renewing, 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 gross 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 gross 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.--No 
        medicare administrative contractor shall be liable to the 
        United States for a payment by a certifying or disbursing 
        officer unless in connection with such payment or in the 
        supervision of or selection of such officer the medicare 
        administrative contractor acted with gross negligence.
            ``(4) Indemnification by secretary.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law and subject to the succeeding 
                provisions of this paragraph, in the case of a medicare 
                administrative contractor (or a person who is a 
                director, officer, or employee of such a contractor or 
                who is engaged by the contractor to participate 
                directly in the claims administration process) who is 
                made a party to any judicial or administrative 
                proceeding arising from, or relating directly to, the 
                claims administration process under this title, the 
                Secretary may, to the extent specified in the contract 
                with the contractor, indemnify the contractor (and such 
                persons).
                    ``(B) Conditions.--The Secretary may not provide 
                indemnification under subparagraph (A) insofar as the 
                liability for such costs arises directly from conduct 
                that is determined by the Secretary to be criminal in 
                nature, fraudulent, or grossly negligent.
                    ``(C) Scope of indemnification.--Indemnification by 
                the Secretary under subparagraph (A) may include 
                payment of judgements, settlements (subject to 
                subparagraph (D)), awards, and costs (including 
                reasonable legal expenses).
                    ``(D) Written approval for settlements.--A 
                contractor or other person described in subparagraph 
                (A) may not propose to negotiate a settlement or 
                compromise of a proceeding described in such 
                subparagraph without the prior written approval of the 
                Secretary to negotiate a settlement. Any 
                indemnification under subparagraph (A) with respect to 
                amounts paid under a settlement are conditioned upon 
                the Secretary's prior written approval of the final 
                settlement.
                    ``(E) Construction.--Nothing in this paragraph 
                shall be construed--
                            ``(i) to change any common law immunity 
                        that may be available to a medicare 
                        administrative contractor or person described 
                        in subparagraph (A); or
                            ``(ii) to permit the payment of costs not 
                        otherwise allowable, reasonable, or allocable 
                        under the Federal Acquisition Regulations.''.
            (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 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) by striking ``will'' the first place 
                        it appears in each of subparagraphs (A), (B), 
                        (F), (G), (H), and (L) and inserting ``shall'';
                            (iii) 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'';
                            (iv) by striking subparagraphs (C), (D), 
                        and (E);
                            (v) in subparagraph (H)--
                                    (I) by striking ``if it makes 
                                determinations or payments with respect 
                                to physicians' services,''; and
                                    (II) by striking ``carrier'' and 
                                inserting ``medicare administrative 
                                contractor'';
                            (vi) by striking subparagraph (I);
                            (vii) in subparagraph (L), by striking the 
                        semicolon and inserting a period;
                            (viii) in the first sentence, after 
                        subparagraph (L), by striking ``and shall 
                        contain'' and all that follows through the 
                        period; and
                            (ix) in the seventh sentence, by inserting 
                        ``medicare administrative contractor,'' after 
                        ``carrier,''; and
                    (D) by striking paragraph (5);
                    (E) in paragraph (6)(D)(iv), by striking 
                ``carrier'' and inserting ``medicare administrative 
                contractor''; and
                    (F) in paragraph (7), 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'';
                    (C) in paragraph (3)(A), by striking ``subsection 
                (a)(1)(B)'' and inserting ``section 1874A(a)(3)(B)'';
                    (D) in paragraph (4), by striking ``carrier'' and 
                inserting ``medicare administrative contractor'';
                    (E) 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 ``carrier responses'' and 
                inserting ``contract under section 1874A that provides 
                for making payments under this part shall require the 
                medicare administrative contractor'' and ``contractor 
                responses'', respectively; and
                    (F) 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'';
                    (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'';
                    (C) in paragraph (3)(B)--
                            (i) by striking ``a carrier'' and inserting 
                        ``a medicare administrative contractor'' each 
                        place it appears; and
                            (ii) by striking ``the carrier'' and 
                        inserting ``the contractor'' each place it 
                        appears; and
                    (D) in paragraphs (5)(A) and (5)(B)(iii), by 
                striking ``carriers'' and inserting ``medicare 
                administrative contractors'' each place it appears.
            (8) Subsection (l) is amended--
                    (A) in paragraph (1)(A)(iii), by striking 
                ``carrier'' and inserting ``medicare administrative 
                contractor''; and
                    (B) in paragraph (2), by striking ``carrier'' and 
                inserting ``medicare administrative contractor''.
            (9) Subsection (p)(3)(A) is amended by striking ``carrier'' 
        and inserting ``medicare administrative contractor''.
            (10) Subsection (q)(1)(A) is amended by striking 
        ``carrier''.
    (d) Effective Date; Transition Rule.--
            (1) Effective date.--
                    (A) Application to competitively bid contracts.--
                The amendments made by this section shall apply to 
                contracts that are competitively bid on or after such 
                date (but not later than 2 years after the date of the 
enactment of this Act) as the Secretary specifies.
                    (B) Construction for current contracts.--Such 
                amendments shall not apply to contracts in effect 
                before the date specified under subparagraph (A) that 
                continue to retain the terms and conditions in effect 
                on such date until such date as the contract is let out 
                for competitive bidding under such amendments.
                    (C) Deadline for competitive bidding.--The 
                Secretary shall provide for the letting by competitive 
                bidding of all contracts for functions of medicare 
                administrative contractors for annual contract periods 
                that begin on or after October 1, 2008.
            (2) General transition rules.--
                    (A) Authority to continue to enter into 
                contracts.--Prior to the date described in paragraph 
                (1)(A), the Secretary may, consistent with subparagraph 
                (B), continue to enter into contracts under section 
                1816 and section 1842 of the Social Security Act (42 
                U.S.C. 1395h, 1395u).
                    (B) Appropriate transition.--The Secretary shall 
                take such steps, consistent with paragraph (1)(B) and 
                (1)(C), 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).
            (3) Authorizing continuation of mip activities 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)(1), 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 
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.
    (g) Reports on Implementation.--
            (1) Proposal for implementation.--At least 1 year before 
        the date the Secretary proposes to first implement the plan for 
        implementation of the amendments made by this section, the 
        Secretary shall submit a report to Congress and the Comptroller 
        General of the United States that describes such plan. The 
        Comptroller General shall conduct an evaluation of such plan 
        and shall submit to Congress, not later than 6 months after the 
        date the report is received, a report on such evaluation and 
        shall include in such report such recommendations as the 
        Comptroller General deems appropriate.
            (2) Status of implementation.--The Secretary shall submit a 
        report to Congress not later than October 1, 2006, that 
        describes the status of implementation of such amendments and 
        that includes a description of the following:
                    (A) The number of contracts that have been 
                competitively bid as of such date.
                    (B) The distribution of functions among contracts 
                and contractors.
                    (C) A timeline for complete transition to full 
                competition.
                    (D) A detailed description of how the Secretary has 
                modified oversight and management of medicare 
                contractors to adapt to full competition.

             TITLE IV--EDUCATION AND OUTREACH IMPROVEMENTS

SEC. 401. 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 (e), 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 
        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 
        301(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 contractors (as defined in paragraph 
        (3)) 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) GAO review of methodology.--The Comptroller General 
        of the United States shall review, and make recommendations to 
        the Secretary, regarding the adequacy of such methodology.
            ``(3) Medicare contractor defined.--For purposes of this 
        subsection, the term `medicare contractor' includes a medicare 
        administrative contractor, a fiscal intermediary with a 
        contract under section 1816, and a carrier with a contract 
        under section 1842.''.
            (2) Report.--The Secretary 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 
        a basis for performance bonuses.
    (c) Improved Provider Education and Training.--
            (1) Increased funding for enhanced education and training 
        through medicare integrity program.--Section 1817(k)(4) (42 
        U.S.C. 1395i(k)(4)) is amended--
                    (A) in subparagraph (A), by striking ``subparagraph 
                (B)'' and inserting ``subparagraphs (B) and (C)'';
                    (B) in subparagraph (B), by striking ``The amount 
                appropriated'' and inserting ``Subject to subparagraph 
                (C), the amount appropriated''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(C) Enhanced provider education and training.--
                            ``(i) In general.--In addition to the 
                        amount appropriated under subparagraph (B), the 
                        amount appropriated under subparagraph (A) for 
                        a fiscal year (beginning with fiscal year 2003) 
                        is increased by $35,000,000.
                            ``(ii) Use.--The funds made available under 
                        this subparagraph shall be used only 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 and may also be used to 
                        improve the accuracy, consistency, and 
                        timeliness of contractor responses to written 
                        and phone inquiries from providers of services, 
                        physicians, practitioners, and suppliers.''.
            (2) Tailoring education and training for small providers or 
        suppliers.--
                    (A) In general.--Section 1889, as added by 
                subsection (a), is amended by adding at the end the 
                following new subsection:
    ``(b) 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 take into 
        consideration the special needs of small providers of services 
        or suppliers (as defined in paragraph (2)). Such education and 
        training activities for small providers or services and 
        suppliers may include the provision of technical assistance 
        (such as review of billing systems and internal controls to 
        determine program compliance and to suggest more efficient and 
        effective means of achieving such compliance).
            ``(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.''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall take effect on October 1, 2002.
    (d) Additional Provider Education Provisions.--
            (1) In general.--Section 1889, as added by subsection (a) 
        and as amended by subsection (c)(2), is further amended by 
        adding at the end the following new subsections:
    ``(c) 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.
    ``(d) 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.
    ``(e) Definitions.--For purposes of this section and section 
1817(k)(4)(C), the term `medicare contractor' includes the following:
            ``(1) A medicare administrative contractor with a contract 
        under section 1874A, 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 XI 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. 402. ACCESS TO AND PROMPT RESPONSES FROM MEDICARE CONTRACTORS.

    (a) In General.--Section 1874A, as added by section 301 and as 
amended by section 401(b)(1), is further amended by adding at the end 
the following new subsection:
    ``(f) Communicating With Beneficiaries and Providers.--
            ``(1) Communication process.--The Secretary shall develop a 
        process for communicating with beneficiaries and with providers 
        of services, physicians, practitioners, and suppliers under 
        this title.
            ``(2) Response to written inquiries.--Each medicare 
        contractor (as defined in paragraph (5)) shall provide general 
        written responses (which may be through electronic 
        transmission) in a clear, concise, and accurate manner to 
        inquiries by beneficiaries, providers of services, physicians, 
        practitioners, and suppliers concerning the programs under this 
        title within 45 business days of the date of receipt of such 
        inquiries.
            ``(3) Response to toll-free lines.--The Secretary shall 
        ensure that medicare contractors provide a toll-free telephone 
        number at which beneficiaries, providers, physicians, 
        practitioners, and suppliers may obtain information regarding 
        billing, coding, claims, coverage, and other appropriate 
        information under this title.
            ``(4) Monitoring of contractor responses.--
                    ``(A) In general.--Each medicare contractor shall, 
                consistent with standards developed by the Secretary 
                under subparagraph (B)--
                            ``(i) maintain a system for identifying who 
                        provides the information referred to in 
                        paragraphs (2) and (3); and
                            ``(ii) monitor the accuracy, consistency, 
                        and timeliness of the information so provided.
                    ``(B) Development of standards.--
                            ``(i) In general.--The Secretary shall 
                        establish (and publish in the Federal Register) 
                        standards regarding the accuracy, consistency, 
                        and timeliness of the information provided in 
                        response to inquiries under this subsection. 
                        Such standards shall be consistent with the 
                        performance requirements established under 
                        subsection (b)(3).
                            ``(ii) Evaluation.--In conducting 
                        evaluations of individual medicare contractors, 
                        the Secretary shall take into account the 
                        results of the monitoring conducted under 
                        subparagraph (A) taking into account as 
                        performance requirements the standards 
                        established under clause (i).
                    ``(C) Direct monitoring.--Nothing in this paragraph 
                shall be construed as preventing the Secretary from 
                directly monitoring the accuracy, consistency, and 
                timeliness of the information so provided.
            ``(5) Medicare contractor defined.--For purposes of this 
        subsection, the term `medicare contractor' has the meaning 
        given such term in subsection (e)(3).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect October 1, 2002.

SEC. 403. RELIANCE ON GUIDANCE.

    (a) In General.--Section 1871(e), as added by section 102(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 written guidance provided--
                    ``(i) by the Secretary; or
                    ``(ii) by a medicare contractor (as defined in 
                section 1889(e) and whether in the form of a written 
                response to a written inquiry under section 1874A(f)(1) 
                or otherwise) acting within the scope of the 
                contractor's contract authority,
        in response to a written inquiry with respect to the furnishing 
        of items or services or the submission of a claim for benefits 
        for such items or services;
            ``(B) the Secretary determines that--
                    ``(i) the provider of services, physician, 
                practitioner, or supplier has accurately presented the 
                circumstances relating to such items, services, and 
                claim to the Secretary or the contractor in the written 
                guidance; and
                    ``(ii) there is no indication of fraud or abuse 
                committed by the provider of services, physician, 
                practitioner, or supplier against the program under 
                this title; and
            ``(C) the guidance was in error;
the provider of services, physician, practitioner, or supplier shall 
not be subject to any penalty or interest under this title (or the 
provisions of title XI insofar as they relate to this title) relating 
to the provision of such items or service or such claim if the provider 
of services, physician, practitioner, or supplier reasonably relied on 
such guidance. In applying this paragraph with respect to guidance in 
the form of general responses to frequently asked questions, the 
Secretary retains authority to determine the extent to which such 
general responses apply to the particular circumstances of individual 
claims.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to penalties imposed on or after the date of the enactment of 
this Act.

SEC. 404. MEDICARE PROVIDER OMBUDSMAN; MEDICARE BENEFICIARY OMBUDSMAN.

    (a) Medicare Provider Ombudsman.--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.--By not later than 1 year after 
the date of the enactment of the Medicare Appeals, Regulatory, and 
Contracting Improvement Act of 2001, the Secretary shall appoint a 
Medicare Provider Ombudsman. The Ombudsman shall--
            ``(1) provide assistance, on a confidential basis, to 
        providers of services 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 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 and suppliers.''.
    (b) Medicare Beneficiary Ombudsman.--Title XVIII is amended by 
inserting after section 1806 the following new section:

                    ``medicare beneficiary ombudsman

    ``Sec. 1807. (a) In General.--By not later than 1 year after the 
date of the enactment of the Medicare Appeals, Regulatory, and 
Contracting Improvement Act of 2001, the Secretary shall appoint within 
the Department of Health and Human Services a Medicare Beneficiary 
Ombudsman who shall have expertise and experience in the fields of 
health care and advocacy.
    ``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
            ``(1) receive complaints, grievances, and requests for 
        information submitted by a medicare beneficiary, with respect 
        to any aspect of the medicare program;
            ``(2) provide assistance with respect to complaints, 
        grievances, and requests referred to in paragraph (1), 
        including--
                    ``(A) assistance in collecting relevant information 
                for such beneficiaries, to seek an appeal of a decision 
                or determination made by a fiscal intermediary, 
                carrier, Medicare+Choice organization, or the 
                Secretary; and
                    ``(B) assistance to such beneficiaries with any 
                problems arising from disenrollment from a 
                Medicare+Choice plan under part C; and
            ``(3) submit annual reports to Congress and the Secretary 
        that describe the activities of the Office and that include 
        such recommendations for improvement in the administration of 
        this title as the Ombudsman determines appropriate.''.
    (c) Funding.--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) 
to carry out the provisions of subsection (b) of section 1868 of the 
Social Security Act (relating to the Medicare Provider Ombudsman), as 
added by subsection (a)(5) and section 1807 of such Act (relating to 
the Medicare Beneficiary Ombudsman), as added by subsection (b), such 
sums as are necessary for fiscal year 2002 and each succeeding fiscal 
year.
    (d) Use of Central, Toll-Free Number (1-800-MEDICARE).--Section 
1804(b) (42 U.S.C. 1395b-2(b)) is amended by adding at the end the 
following: ``By not later than 1 year after the date of the enactment 
of the Medicare Appeals, Regulatory, and Contracting Improvement Act of 
2001, the Secretary shall provide, through the toll-free number 1-800-
MEDICARE, for a means by which individuals seeking information about, 
or assistance with, such programs who phone such toll-free number are 
transferred (without charge) to appropriate entities for the provision 
of such information or assistance. Such toll-free number shall be the 
toll-free number listed for general information and assistance in the 
annual notice under subsection (a) instead of the listing of numbers of 
individual contractors.''.

SEC. 405. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.

    (a) In General.--The Secretary 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 medicare specialists at local social security 
        offices.

           TITLE V--REVIEW, RECOVERY, AND ENFORCEMENT REFORM

SEC. 501. PREPAYMENT REVIEW.

    (a) In General.--Section 1874A, as added by section 301 and as 
amended by sections 401(b)(1) and 402, is further amended by adding at 
the end the following new subsection:
    ``(g) Conduct of Prepayment Review.--
            ``(1) Standardization of random prepayment review.--A 
        medicare administrative contractor shall conduct random 
        prepayment review only in accordance with a standard protocol 
        for random prepayment audits developed by the Secretary.
            ``(2) Limitations on initiation of non-random prepayment 
        review.--A medicare administrative 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 likelihood of sustained or high level of 
        payment error (as defined by the Secretary).
            ``(3) 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.
            ``(4) Construction.--Nothing in this subsection shall be 
        construed as preventing the denial of payments for claims 
        actually reviewed under a random prepayment review. In the case 
        of a provider of services, physician, practitioner, or supplier 
        with respect to which amounts were previously overpaid, nothing 
        in this subsection shall be construed as limiting the ability 
        of a medicare administrative contractor to 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.
            ``(5) Random prepayment review defined.--For purposes of 
        this subsection, the term `random prepayment review' means a 
        demand for the production of records or documentation absent 
        cause with respect to a claim.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in this subsection, the 
        amendment made by subsection (a) shall take effect on the date 
        of the enactment of this Act.
            (2) Deadline for promulgation of certain regulations.--The 
        Secretary shall first issue regulations under section 1874A(g) 
        of the Social Security Act, as added by subsection (a), by not 
        later than 1 year after the date of the enactment of this Act.
            (3) Application of standard protocols for random prepayment 
        review.--Section 1874A(g)(1) of the Social Security Act, as 
        added by subsection (a), shall apply to random prepayment 
        reviews conducted on or after such date (not later than 1 year 
        after the date of the enactment of this Act) as the Secretary 
        shall specify. The Secretary shall develop and publish the 
        standard protocol under such section by not later than 1 year 
        after the date of the enactment of this Act.

SEC. 502. RECOVERY OF OVERPAYMENTS.

    (a) In General.--Section 1874A, as added by section 301 and as 
amended by sections 401(b)(1), 402, and 501(a), is further amended by 
adding at the end the following new subsection:
    ``(h) Recovery of Overpayments.--
            ``(1) Use of repayment plans.--
                    ``(A) In general.--If the repayment, within the 
                period otherwise permitted by a provider of services, 
                physician, practitioner, or other supplier, of an 
                overpayment under this title meets the standards 
                developed under subparagraph (B), subject to 
                subparagraph (C), and the provider, physician, 
                practitioner, or supplier requests the Secretary to 
                enter into a repayment plan with respect to such 
                overpayment, the Secretary shall enter into a plan with 
                the provider, physician, practitioner, or supplier for 
                the offset or repayment (at the election of the 
                provider, physician, practitioner, or supplier) of such 
                overpayment over a period of at least one year, but not 
                longer than 3 years. Interest shall accrue on the 
                balance through the period of repayment. The repayment 
                plan shall meet terms and conditions determined to be 
                appropriate by the Secretary.
                    ``(B) Development of standards.--The Secretary 
                shall develop standards for the recovery of 
                overpayments. Such standards shall--
                            ``(i) include a requirement that the 
                        Secretary take into account (and weigh in favor 
                        of the use of a repayment plan) the reliance 
                        (as described in section 1871(e)(2)) by a 
                        provider of services, physician, practitioner, 
                        and supplier on guidance when determining 
                        whether a repayment plan should be offered; and
                            ``(ii) provide for consideration of the 
                        financial hardship imposed on a provider of 
                        services, physician, practitioner, or supplier 
                        in considering such a repayment plan.
                In developing standards with regard to financial 
                hardship with respect to a provider of 
services, physician, practitioner, or supplier, the Secretary shall 
take into account the amount of the proposed recovery as a proportion 
of payments made to that provider, physician, practitioner, or 
supplier.
                    ``(C) Exceptions.--Subparagraph (A) shall not apply 
                if--
                            ``(i) 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 
                        discontinue participation in the program under 
                        this title; or
                            ``(ii) 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.
                    ``(E) Relation to no fault provision.--Nothing in 
                this paragraph shall be construed as affecting the 
                application of section 1870(c) (relating to no 
                adjustment in the cases of certain overpayments).
            ``(2) Limitation on recoupment.--
                    ``(A) No recoupment until reconsideration 
                exercised.--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 by a 
                qualified independent contractor under section 1869(c), 
                the Secretary may not take any action (or authorize any 
                other person, including any medicare contractor, as 
                defined in subparagraph (C)) to recoup the overpayment 
                until the date the decision on the reconsideration has 
                been rendered.
                    ``(B) Payment of interest.--
                            ``(i) Return of recouped amount with 
                        interest in case of reversal.--Insofar as such 
                        determination on appeal against the provider of 
                        services, physician, practitioner, or supplier 
                        is later reversed, the Secretary shall provide 
                        for repayment of the amount recouped plus 
                        interest for the period in which the amount was 
                        recouped.
                            ``(ii) Interest in case of affirmation.--
                        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.
                            ``(iii) Rate of interest.--The rate of 
                        interest under this subparagraph shall be the 
                        rate otherwise applicable under this title in 
                        the case of overpayments.
                    ``(C) Medicare contractor defined.--For purposes of 
                this subsection, the term `medicare contractor' has the 
                meaning given such term in section 1889(e).
            ``(3) 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 (which may be in electronic form) of the 
                intent to conduct such an audit.
                    ``(B) Explanation of findings for all audits.--
                Subject to subparagraph (C), if a medicare contractor 
                audits a provider of 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 as well as 
                        consent settlement options (which are at the 
                        discretion of the Secretary); 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, whether 
                civil or criminal, or reveal findings of law 
                enforcement-related audits.
            ``(4) Notice of over-utilization of codes.--The Secretary 
        shall establish, in consultation with organizations 
        representing the classes of providers of services, physicians, 
        practitioners, and suppliers, a process under which the 
        Secretary provides for notice to classes of providers of 
        services, physicians, practitioners, and suppliers served by a 
        medicare 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).
            ``(5) Standard methodology for probe sampling.--The 
        Secretary shall establish a standard methodology for medicare 
        administrative contractors to use in selecting a sample of 
        claims for review in the case of an abnormal billing pattern.
            ``(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 evaluation of those 
                        records indicates 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.''.
    (b) Effective Dates and Deadlines.--
            (1) Not later than 1 year after the date of the enactment 
        of this Act, the Secretary shall first--
                    (A) develop standards for the recovery of 
                overpayments under section 1874A(h)(1)(B) of the Social 
                Security Act, as added by subsection (a);
                    (B) establish the process for notice of 
                overutilization of billing codes under section 
                1874A(h)(4) of the Social Security Act, as added by 
                subsection (a); and
                    (C) establish a standard methodology for selection 
                of sample claims for abnormal billing patterns under 
                section 1874A(h)(5) of the Social Security Act, as 
                added by subsection (a).
            (2) Section 1874A(h)(2) of the Social Security Act, as 
        added by subsection (a), shall apply to actions taken after the 
        date that is 1 year after the date of the enactment of this 
        Act.
            (3) Section 1874A(h)(3) of the Social Security Act, as 
        added by subsection (a), shall apply to audits initiated after 
        the date of the enactment of this Act.
            (4) Section 1874A(h)(6) of the Social Security Act, as 
        added by subsection (a), shall apply to consent settlements 
        entered into after the date of the enactment of this Act.

SEC. 503. PROCESS FOR CORRECTION OF MINOR ERRORS AND OMISSIONS ON 
              CLAIMS WITHOUT PURSUING APPEALS PROCESS.

    (a) In General.--The Secretary shall develop, in consultation with 
appropriate medicare contractors (as defined in section 1889(f) of the 
Social Security Act, as added by section 401(e)(1)) and representatives 
of providers of services, physicians, practitioners, facilities, and 
suppliers, a process whereby, in the case of minor errors or omissions 
(as defined by the Secretary) that are detected in the submission of 
claims under the programs under title XVIII of such Act, a provider of 
services, physician, practitioner, facility, or supplier is given an 
opportunity to correct such an error or omission without the need to 
initiate an appeal. Such process shall include the ability to resubmit 
corrected claims.
    (b) Deadline.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary shall first develop the process 
under subsection (a).

SEC. 504. AUTHORITY TO WAIVE A PROGRAM EXCLUSION.

    The first sentence of section 1128(c)(3)(B) (42 U.S.C. 1320a-
7(c)(3)(B)) is amended to read as follows: ``Subject to subparagraph 
(G), in the case of an exclusion under subsection (a), the minimum 
period of exclusion shall be not less than five years, except that, 
upon the request of an administrator of a Federal health care program 
(as defined in section 1128B(f)) who determines that the exclusion 
would impose a hardship on beneficiaries of that program, the Secretary 
may waive the exclusion under subsection (a)(1), (a)(3), or (a)(4) with 
respect to that program in the case of an individual or entity that is 
the sole community physician or sole source of essential specialized 
services in a community.''.

                       TITLE VI--OTHER PROVISIONS

SEC. 601. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER MEDICARE 
              SECONDARY PAYOR (MSP) PROVISIONS.

    (a) In General.--The Secretary shall not require a hospital 
(including a critical access hospital) to ask questions (or obtain 
information) relating to the application of section 1862(b) of the 
Social Security Act (relating to medicare secondary payor provisions) 
in the case of reference laboratory services described in subsection 
(b), if the Secretary does not impose such requirement in the case of 
such services furnished by an independent laboratory.
    (b) Reference Laboratory Services Described.--Reference laboratory 
services described in this subsection are clinical laboratory 
diagnostic tests (or the interpretation of such tests, or both) 
furnished without a face-to-face encounter between the beneficiary and 
the hospital involved and in which the hospital submits a claim only 
for such test or interpretation.

SEC. 602. PAYMENT FOR EMTALA-MANDATED SCREENING AND STABILIZATION 
              SERVICES.

    (a) In General.--Section 1862 (42 U.S.C. 1395y) is amended by 
inserting after subsection (c) the following new subsection:
    ``(d) For purposes of subsection (a)(1)(A), in the case of any item 
or service that is required to be provided pursuant to section 1867 to 
an individual who is entitled to benefits under this title, 
determinations as to whether the item or service is reasonable and 
necessary shall be made on the basis of the information available to 
the treating physician or practitioner (including the patient's 
presenting symptoms or complaint) at the time the item or service was 
ordered or furnished by the physician or practitioner (and not on the 
patient's principal diagnosis). When making such determinations with 
respect to such an item or service, the Secretary shall not consider 
the frequency with which the item or service was provided to the 
patient before or after the time of the admission or visit.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to items and services furnished on or after January 1, 2002.

SEC. 603. REVIEW AND REPORT TO CONGRESS ON REDUCING MEDICARE REPORTING 
              BURDENS.

    (a) Review.--The Secretary shall conduct a review of the cost 
reports currently in use under the medicare program under title XVIII 
of the Social Security Act for the purpose of--
            (1) establishing ways for reducing the reporting burden on 
        providers and suppliers under such program; and
            (2) creating documents which can be used for--
                    (A) financial reporting consistent with generally 
                accepted accounting principals; and
                    (B) cost analysis--
                            (i) necessary for the Medicare Payment 
                        Advisory Commission and the Secretary to make 
                        recommendations to Congress regarding payment 
                        rates (including margin analysis and potential 
                        benefit expansion); and
                            (ii) used by the Secretary to perform 
                        audits.
    (b) Report.--Not later than October 1, 2003, the Secretary shall 
submit to Congress a report on the review conducted under subsection 
(a) together with such recommendations for legislation and 
administrative action that the Secretary determines are appropriate.

SEC. 604. AUTHORIZING USE OF ARRANGEMENTS WITH OTHER HOSPICE PROGRAMS 
              TO PROVIDE CORE HOSPICE SERVICES IN CERTAIN 
              CIRCUMSTANCES.

    (a) In General.--Section 1861(dd)(5) (42 U.S.C. 1395x(dd)(5)) is 
amended by adding at the end the following new subparagraph:
    ``(D) In extraordinary, exigent, or other non-routine 
circumstances, such as unanticipated periods of high patient loads, 
staffing shortages due to illness or other events, or temporary travel 
of a patient outside a hospice program's service area, a hospice 
program may enter into arrangements with another hospice program for 
the provision by that other program of services described in paragraph 
(2)(A)(ii)(I). The provisions of paragraph (2)(A)(ii)(II) shall apply 
with respect to the services provided under such arrangements.''.
    (b) Conforming Payment Provision.--Section 1814(i) (42 U.S.C. 
1395f(i)) is amended by adding at the end the following new paragraph:
    ``(4) In the case of hospice care provided by a hospice program 
under arrangements under section 1861(dd)(5)(D) made by another hospice 
program, the hospice program that made the arrangements shall bill and 
be paid for the hospice care.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to hospice care provided on or after the date of the enactment of 
this Act.

SEC. 605. ONE YEAR DELAY IN LOCK IN PROCEDURES FOR MEDICARE+CHOICE 
              PLANS.

    Section 1851(e) (42 U.S.C. 1395w-21(e)) is amended--
            (1) in paragraph (2)(A), by striking ``through 2001'' and 
        ``and 2001'' and inserting ``through 2002'' and ``2001, and 
        2002'', respectively;
            (2) in paragraph (2)(B), by striking ``during 2002'' and 
        inserting ``during 2003'';
            (3) in paragraphs (2)(B)(i) and (2)(C)(i), by striking 
        ``2002'' and inserting ``2003'' each place it appears;
            (4) in paragraph (2)(D), by striking ``2001'' and inserting 
        ``2002''; and
            (5) in paragraph (4), by striking ``2002'' and inserting 
        ``2003'' each place it appears.

SEC. 606. TEMPORARY MORATORIUM ON REQUIREMENT OF HOME HEALTH AGENCIES 
              TO COLLECT OASIS DATA FROM NON-MEDICARE PATIENTS.

    (a) Moratorium.--
            (1) In general.--During the period beginning on the date of 
        enactment of this Act and ending on the date that the Secretary 
        submits to Congress the report described in subsection (b)(2), 
        the data collection and reporting requirements under the 
        Outcome and Assessment Information Set (OASIS), required by 
        reason of section 4602(e) of Balanced Budget Act of 1997 (42 
        U.S.C. 1395fff note), shall be optional with respect to 
        patients of home health agencies who are not beneficiaries 
        under the medicare program under title XVIII of the Social 
        Security Act.
            (2) Rule of construction regarding state law.--Nothing in 
        paragraph (1) shall prohibit a State from requiring a home 
        health agency to collect and report the data described in such 
        paragraph during the period described in such paragraph.
    (b) Study and Report.--
            (1) Study.--The Secretary shall conduct a study on whether 
        the data collection and reporting requirements under OASIS with 
        respect to patients of home health agencies who are not 
        beneficiaries under the medicare program under title XVIII of 
        the Social Security Act should be eliminated. In conducting 
        such study, the Secretary shall consult with home health 
        agencies and entities representing such agencies.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the study conducted under paragraph (1), together 
        with recommendations for such legislation and administrative 
        actions as the Secretary considers appropriate.

SEC. 607. COORDINATED SURVEY DEMONSTRATION PROGRAM.

    (a) Establishment.--
            (1) In general.--The Secretary shall establish a 
        demonstration program to test and evaluate the effectiveness of 
        permitting all the entities within a health care organization 
        to be subject to a coordinated survey for purposes of 
        determining whether such entities are in compliance with the 
        requirements for participation under the medicare and medicaid 
        programs with respect to all items and services provided by 
        those entities under such programs rather than being subject to 
        multiple surveys for different types of items and services 
        provided by such entities under such programs.
            (2) Development of guidelines for coordinated survey.--
                    (A) Submission of proposals by states participating 
                in the demonstration program.--Under the demonstration 
                program under this section a State participating in the 
                demonstration (as determined by the Secretary pursuant 
                to paragraph (3)) shall submit to the Secretary a 
                proposal for guidelines with respect to the coordinated 
                survey described in paragraph (1) that will be 
                applicable to health care organizations located in the 
                State. Such proposal shall be submitted to the 
                Secretary at such time and in such manner as the 
                Secretary determines appropriate.
                    (B) Review and approval.--
                            (i) In general.--Under the demonstration 
                        program under this section the Secretary shall 
                        establish procedures for reviewing and 
                        approving proposals submitted under 
                        subparagraph (A).
                            (ii) Consultation.--The Secretary shall 
                        consult with State hospital associations in 
                        establishing the procedures under clause (i).
            (3) Sites.--The Secretary shall conduct the demonstration 
        program under this section in up to 5 States and shall ensure 
        that all health care organizations located in those States are 
        permitted at the option of the organization to participate in 
        the program.
            (4) Duration.--The demonstration program under this section 
        shall be conducted for not more than 5 years.
    (b) Waiver Authority.--The Secretary may waive such requirements of 
titles XI, XVIII, and XIX of the Social Security Act (42 U.S.C. 1301 et 
seq.; 1395 et seq.; 1396 et seq.) as may be necessary for the purpose 
of carrying out the demonstration program under this section.
    (c) Report.--Not later than 6 months after the completion of the 
demonstration program under this section, the Secretary shall submit to 
Congress a report on such program, together with recommendations 
regarding whether to implement coordinated survey guidelines for health 
care organizations on a permanent basis.
    (d) Definitions.--In this section:
            (1) Critical access hospital.--The term ``critical access 
        hospital'' has the meaning given such term in section 
        1861(mm)(1) of the Social Security Act (42 U.S.C. 
        1395x(mm)(1)).
            (2) Health care organization.--The term ``health care 
        organization'' means a governing entity that includes--
                    (A) a critical access hospital; and
                    (B) at least 1 other provider or supplier that is 
                certified to provide items or services under the 
                medicare or medicaid program.
            (3) Medicaid program.--The term ``medicaid program'' means 
        the health benefits program under title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.).
            (4) Medicare program.--The term ``medicare program'' means 
        the health benefits program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
                                 <all>