[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2555 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2555

To amend title XVIII of the Social Security Act to enhance beneficiary 
   access to quality health care services under the medicare program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 23, 2002

  Mr. Baucus 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 enhance beneficiary 
   access to quality health care services under the medicare program.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Revitalizing 
Underserved Rural Areas and Localities (RURAL) Act of 2002''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                      TITLE I--HOSPITAL PROVISIONS

Sec. 101. Equalizing urban and rural standardized payment amounts under 
                            the medicare inpatient hospital prospective 
                            payment system.
Sec. 102. Full market basket increase in 2003 for medicare hospitals in 
                            rural and small urban areas.
Sec. 103. Medicare inpatient payment adjustment for low-volume 
                            hospitals.
Sec. 104. Adjustment to medicare wage index.
Sec. 105. Coverage of critical access hospital costs for certain 
                            emergency room on-call providers.
Sec. 106. Elimination of 35-mile requirement for cost reimbursement of 
                            ambulance services furnished by critical 
                            access hospitals under the medicare 
                            program.
Sec. 107. Treatment of ambulance services furnished by small rural 
                            hospitals.
Sec. 108. Treatment of certain clinical diagnostic laboratory tests 
                            furnished by a critical access hospital 
                            service.
Sec. 109. Requirement that States awarded certain medicare rural grants 
                            consult with the State hospital association 
                            and rural hospitals on the most appropriate 
                            ways to use such grants.
Sec. 110. GAO study and report on treating critical access hospital 
                            employees as employees of the United States 
                            for purposes of the Federal Tort Claims 
                            Act.
                       TITLE II--OTHER PROVISIONS

Sec. 201. Accelerating the rate of reduction of beneficiary copayment 
                            liability under the medicare hospital 
                            outpatient department prospective payment 
                            system.
Sec. 202. Physician fee schedule wage index revision.
Sec. 203. Temporary increase for home health services furnished in a 
                            frontier or rural area.
Sec. 204. Improvements to the medicare incentive payment program.
Sec. 205. Ensuring appropriate coverage of air ambulance services under 
                            ambulance fee schedule.
Sec. 206. Provider access to review of local coverage determinations 
                            and right to petition for local coverage 
                            determinations.

                      TITLE I--HOSPITAL PROVISIONS

SEC. 101. EQUALIZING URBAN AND RURAL STANDARDIZED PAYMENT AMOUNTS UNDER 
              THE MEDICARE INPATIENT HOSPITAL PROSPECTIVE PAYMENT 
              SYSTEM.

    (a) In General.--Section 1886(d)(3)(A) of the Social Security Act 
(42 U.S.C. 1395ww(d)(3)(A)) is amended--
            (1) in clause (iv)--
                    (A) by inserting ``and ending on or before 
                September 30, 2003,'' after ``October 1, 1995,''; and
                    (B) by striking ``and for hospitals'' and inserting 
                ``and, subject to clause (v), for hospitals''; and
            (2) by redesignating clauses (v) and (vi) as clauses (vii) 
        and (viii), respectively, and inserting after clause (iv) the 
        following new clauses:
            ``(v) For discharges occurring in the fiscal year beginning 
        on October 1, 2002, the operating standardized amount for 
        hospitals located in areas other than a large urban area shall 
        be equal to the operating standardized amount, as determined 
        under clause (iv), applicable to such discharges for hospitals 
        located in a large urban area.
            ``(vi) For discharges occurring in a fiscal year beginning 
        on or after October 1, 2003, the Secretary shall compute an 
        operating standardized amount for hospitals located in all 
        areas within the United States equal to the operating 
        standardized amount computed under clause (v) or this clause 
        for the previous fiscal year increased by the applicable 
        percentage increase under subsection (b)(3)(B)(i) for the 
        fiscal year involved.''.
    (b) Conforming Amendments.--
            (1) Computing drg-specific rates.--Section 1886(d)(3)(D) of 
        the Social Security Act (42 U.S.C. 1395ww(d)(3)(D)) is 
        amended--
                    (A) in the heading, by striking ``in different 
                areas'';
                    (B) in the matter preceding clause (i), by striking 
                ``each of which is'';
                    (C) in clause (i)--
                            (i) in the matter preceding subclause (I), 
                        by inserting ``for fiscal years before fiscal 
                        year 2003,'' before ``for hospitals''; and
                            (ii) in subclause (II), by striking ``and'' 
                        after the semicolon at the end;
                    (D) in clause (ii)--
                            (i) in the matter preceding subclause (I), 
                        by inserting ``for fiscal years before fiscal 
                        year 2003,'' before ``for hospitals''; and
                            (ii) in subclause (II), by striking the 
                        period at the end and inserting ``; and''; and
                    (E) by adding at the end the following new clause:
                    ``(iii) for a fiscal year beginning after fiscal 
                year 2002, for hospitals located in all areas, to the 
                product of--
                            ``(I) the applicable operating standardized 
                        amount (computed under subparagraph (A)), 
                        reduced under subparagraph (B), and adjusted or 
                        reduced under subparagraph (C) for the fiscal 
                        year; and
                            ``(II) the weighting factor (determined 
                        under paragraph (4)(B)) for that diagnosis-
                        related group.''.
            (2) Technical conforming sunset.--Section 1886(d)(3) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(3)) is amended--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``, for fiscal years before fiscal year 
                1997,'' before ``a regional adjusted DRG prospective 
                payment rate''; and
                    (B) in subparagraph (D), in the matter preceding 
                clause (i), by inserting ``, for fiscal years before 
                fiscal year 1997,'' before ``a regional DRG prospective 
                payment rate for each region,''.

SEC. 102. FULL MARKET BASKET INCREASE IN 2003 FOR MEDICARE HOSPITALS IN 
              RURAL AND SMALL URBAN AREAS.

    Section 1886(b)(3)(B)(i)(XVIII) of the Social Security Act (42 
U.S.C. 1395ww(b)(3)(B)(i)(XVIII)) is amended to read as follows:
            ``(XVIII) for fiscal year 2003, the market basket 
        percentage increase minus 0.55 percentage points for hospitals 
        located in a large urban area and the market basket percentage 
        increase for hospitals located in an area other than a large 
        urban area, and''.

SEC. 103. MEDICARE INPATIENT PAYMENT ADJUSTMENT FOR LOW-VOLUME 
              HOSPITALS.

    (a) In General.--Section 1886(d) of the Social Security Act (42 
U.S.C. 1395ww(d)) is amended by adding at the end the following new 
paragraph:
    ``(12) Payment adjustment for low-volume hospitals.--
            ``(A) Payment adjustment.--
                    ``(i) In general.--Notwithstanding any other 
                provision of this section, for each cost reporting 
                period (beginning with the cost reporting period that 
                begins in fiscal year 2003), the Secretary shall 
                provide for an additional payment amount to each low-
                volume hospital (as defined in clause (iii)) for 
                discharges occurring during that cost reporting period 
                to increase the amount paid to such hospital under this 
                section for such discharges by the applicable 
                percentage increase determined under clause (ii).
                    ``(ii) Applicable percentage increase.--The 
                Secretary shall determine a percentage increase 
                applicable under this paragraph that ensures that--
                            ``(I) no percentage increase in payments 
                        under this paragraph exceeds 25 percent of the 
                        amount of payment that would otherwise be made 
                        to a low-volume hospital under this section for 
                        each discharge (but for this paragraph);
                            ``(II) low-volume hospitals that have the 
                        lowest number of discharges during a cost 
                        reporting period receive the highest percentage 
                        increase in payments due to the application of 
                        this paragraph; and
                            ``(III) the percentage increase in payments 
                        due to the application of this paragraph is 
                        reduced as the number of discharges per cost 
                        reporting period increases.
                    ``(iii) Low-volume hospital defined.--For purposes 
                of this paragraph, the term `low-volume hospital' 
                means, for a cost reporting period, a subsection (d) 
                hospital (as defined in paragraph (1)(B)) other than a 
                critical access hospital (as defined in section 
                1861(mm)(1)) that--
                            ``(I) the Secretary determines had an 
                        average of less than 800 discharges (determined 
                        with respect to all patients and not just 
                        individuals receiving benefits under this 
                        title) during the 3 most recent cost reporting 
                        periods for which data are available that 
                        precede the cost reporting period to which this 
                        paragraph applies; and
                            ``(II) is located at least 15 miles from a 
                        similar hospital (or is deemed by the Secretary 
                        to be so located by reason of such factors as 
                        the Secretary determines appropriate, including 
                        the time required for an individual to travel 
                        to the nearest alternative source of 
                        appropriate inpatient care (taking into account 
                        the location of such alternative source of 
                        inpatient care and any weather or travel 
                        conditions that may affect such travel time)).
            ``(B) Prohibiting certain reductions.--Notwithstanding 
        subsection (e), the Secretary shall not reduce the payment 
        amounts under this section to offset the increase in payments 
        resulting from the application of subparagraph (A).''.
    (b) Technical Amendment.--Section 1886(d) of the Social Security 
Act (42 U.S.C. 1395ww(d)) is amended by moving the indentation of 
paragraph (11), and subparagraphs (A) through (D) of such paragraph, 2 
ems to the left.

SEC. 104. ADJUSTMENT TO MEDICARE WAGE INDEX.

    (a) In General.--Section 1886(d)(3)(E) of the Social Security Act 
(42 U.S.C. 1395ww(d)(3)(E)) is amended--
            (1) by striking ``wage levels.--The Secretary'' and 
        inserting ``wage levels.--
            ``(i) In general.--Except as provided in clause (ii), the 
        Secretary''; and
            (2) by adding at the end the following new clause:
            ``(ii) Alternative proportion to be adjusted.--The 
        Secretary shall substitute for the proportion described in the 
        first sentence of clause (i), if such substitution would result 
        in a greater total payment to the hospital, the following:
                    ``(I) For cost reporting periods beginning in 2003, 
                69 percent.
                    ``(II) For cost reporting periods beginning in 
                2004, 66 percent.
                    ``(III) For cost reporting periods beginning in 
                2005 or any subsequent fiscal year, 63 percent.''.
    (b) MedPAC Study and Report.--
            (1) Study.--The Medicare Payment Advisory Commission 
        shall--
                    (A) conduct a study of the methodology used to 
                determine the proportion of hospitals' costs 
                attributable to wages and wage-related costs (as 
                determined under section 1886(d)(3)(E) of the Social 
                Security Act (42 U.S.C. 1395ww(d)(3)(E)), as amended by 
                subsection (a)), which is used to adjust payments under 
                such section, in order to determine whether such 
                methodology is appropriate; and
                    (B) if the Commission determines that such 
                methodology is not appropriate, develop recommendations 
                on the establishment of a methodology to be used by the 
                Secretary of Health and Human Services to determine the 
                appropriate portion of hospitals' costs which are 
                attributable to wages and wage-related for purposes of 
                adjusting payments under such section.
            (2) Report.--Not later than 1 year after the date of 
        enactment of this Act, the Commission shall submit to Congress 
        a report on the study conducted under paragraph (1) together 
        with any recommendation developed under paragraph (1)(B).

SEC. 105. COVERAGE OF CRITICAL ACCESS HOSPITAL COSTS FOR CERTAIN 
              EMERGENCY ROOM ON-CALL PROVIDERS.

    (a) In General.--Section 1834(g)(5) of the Social Security Act (42 
U.S.C. 1395m(g)(5)) is amended--
            (1) in the heading--
                    (A) by inserting ``certain'' before ``emergency''; 
                and
                    (B) by striking ``physicians'' and inserting 
                ``providers'';
            (2) by striking ``emergency room physicians'' and inserting 
        ``emergency room physicians, physician assistants, nurse 
        practitioners, and clinical nurse specialists''; and
            (3) by striking ``physicians' services'' and inserting 
        ``services covered under this title''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to costs incurred on or after the date of enactment of this Act.

SEC. 106. ELIMINATION OF 35-MILE REQUIREMENT FOR COST REIMBURSEMENT OF 
              AMBULANCE SERVICES FURNISHED BY CRITICAL ACCESS HOSPITALS 
              UNDER THE MEDICARE PROGRAM.

    (a) Elimination.--
            (1) In general.--Paragraph (8) of section 1834(l) of the 
        Social Security Act (42 U.S.C. 1395m(l)), as added by section 
        205(a) of the Medicare, Medicaid, and SCHIP Benefits 
        Improvement and Protection Act of 2000 (114 Stat. 2763A-482), 
        as enacted into law by section 1(a)(6) of Public Law 106-554, 
        is amended--
                    (A) in subparagraph (B), by striking the comma at 
                the end and inserting a period; and
                    (B) by striking ``but only if'' and all that 
                follows.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to services furnished on or after the date of 
        enactment of this Act.
    (b) Technical Amendment.--
            (1) In general.--Paragraph (8) of section 1834(l) of the 
        Social Security Act (42 U.S.C. 1395m(l)), as added by section 
        221(a) of the Medicare, Medicaid, and SCHIP Benefits 
        Improvement and Protection Act of 2000 (114 Stat. 2763A-486), 
        as enacted into law by section 1(a)(6) of Public Law 106-554, 
        is redesignated as paragraph (10).
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect as if included in the enactment of such 
        section 221(a).

SEC. 107. TREATMENT OF AMBULANCE SERVICES FURNISHED BY SMALL RURAL 
              HOSPITALS.

    (a) In General.--Section 1834(l) of the Social Security Act (42 
U.S.C. 1395m(l)), as amended by section 106(b)(1), is amended by 
inserting after paragraph (8) the following new paragraph:
            ``(9) Services furnished by small rural hospitals.--
        Notwithstanding any other provision of this subsection, the 
        Secretary shall pay the reasonable costs incurred in furnishing 
        ambulance services if such services are furnished--
                    ``(A) by a hospital (other than a critical access 
                hospital) that is located in a rural area and that has 
                not more than 25 beds, or
                    ``(B) by an entity that is owned and operated by 
                such a hospital.''.
    (b) Conforming Amendment.--Section 1833(a)(1)(R) of the Social 
Security Act (42 U.S.C. 1395l(a)(1)(R)) is amended--
            (1) by striking ``and'' before ``(ii)'' and inserting a 
        comma; and
            (2) by inserting before the comma at the end the following: 
        ``, and (iii) with respect to ambulance services described in 
        section 1834(l)(9), the amounts paid shall be 80 percent of the 
        lesser of the actual charge for the services or the amount 
        determined under such section''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after the date of enactment of this 
Act.

SEC. 108. TREATMENT OF CERTAIN CLINICAL DIAGNOSTIC LABORATORY TESTS 
              FURNISHED BY A CRITICAL ACCESS HOSPITAL SERVICE.

    (a) In General.--Section 1834(g) of the Social Security Act (42 
U.S.C. 1395m(g)) is amended--
            (1) by redesignating paragraph (5), as amended by section 
        105(a), as paragraph (6); and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Treatment of certain clinical diagnostic laboratory 
        tests furnished by a critical access hospital.--Notwithstanding 
        any other provision of this title, any clinical diagnostic 
        laboratory test covered under this part that is furnished by a 
        critical access hospital, regardless of whether such test was 
        requested by such hospital or by a provider not affiliated with 
        such hospital, shall be--
                    ``(A) considered to be an outpatient critical 
                access hospital service; and
                    ``(B) reimbursed on the basis described in this 
                subsection.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to payments for tests furnished on or after the date of enactment 
of this Act.

SEC. 109. REQUIREMENT THAT STATES AWARDED CERTAIN MEDICARE RURAL GRANTS 
              CONSULT WITH THE STATE HOSPITAL ASSOCIATION AND RURAL 
              HOSPITALS ON THE MOST APPROPRIATE WAYS TO USE SUCH 
              GRANTS.

    (a) Required Consultation.--Section 1820(g) of the Social Security 
Act (42 U.S.C. 1395i-4(g)) is amended by adding at the end the 
following new paragraph:
            ``(4) Required consultation for states awarded grants.--A 
        State awarded a grant under paragraph (1) or (2) shall consult 
        with the hospital association of such State and rural hospitals 
        located in such State on the most appropriate ways to use the 
        funds under such grant.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of enactment of this Act and shall apply to 
grants awarded on or after such date and to grants awarded prior to 
such date to the extent that funds under such grants have not been 
obligated as of such date.

SEC. 110. GAO STUDY AND REPORT ON TREATING CRITICAL ACCESS HOSPITAL 
              EMPLOYEES AS EMPLOYEES OF THE UNITED STATES FOR PURPOSES 
              OF THE FEDERAL TORT CLAIMS ACT.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study on the feasibility and advisability of treating 
employees of a critical access hospital (as defined in section 
1861(mm)(1) of the Social Security Act (42 U.S.C. 1395x(mm)(1))) as 
employees of the government (as defined in section 2671 of chapter 171 
of title 28, United States Code) for purposes of such chapter (commonly 
known as the Federal Tort Claims Act), and on the related issue of the 
liability of the critical access hospital with respect to the acts of 
such employees.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Comptroller General shall submit to Congress a report on 
the study conducted under subsection (a) together with such 
recommendations as the Comptroller General determines to be 
appropriate.

                       TITLE II--OTHER PROVISIONS

SEC. 201. ACCELERATING THE RATE OF REDUCTION OF BENEFICIARY COPAYMENT 
              LIABILITY UNDER THE MEDICARE HOSPITAL OUTPATIENT 
              DEPARTMENT PROSPECTIVE PAYMENT SYSTEM.

    Section 1833(t)(8)(C)(ii) of the Social Security Act (42 U.S.C. 
1395l(t)(8)(C)(ii)) is amended--
            (1) in subclause (V), by striking ``and thereafter''; and
            (2) by adding at the end the following new subclauses:
                                    ``(VI) For procedures performed in 
                                2007, 35 percent.
                                    ``(VII) For procedures performed in 
                                2008, 30 percent.
                                    ``(VIII) For procedures performed 
                                in 2009, 25 percent.
                                    ``(IX) For procedures performed in 
                                2010 and thereafter, 20 percent.''.

SEC. 202. PHYSICIAN FEE SCHEDULE WAGE INDEX REVISION.

    Section 1848(e)(1) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)) is amended--
            (1) in subparagraph (A), by striking ``(B) and (C)'' and 
        inserting ``(B), (C), and (D)'' in the matter preceding clause 
        (i);
            (2) by redesignating subparagraph (D) as subparagraph (E); 
        and
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) Floor for work geographic indices.--
                            ``(i) In general.--Notwithstanding the work 
                        geographic index otherwise calculated under 
                        subparagraph (A)(iii) (after the application of 
                        the second sentence of subparagraph (C)), no 
                        such index applied for payment under this 
                        section shall be less than--
                                    ``(I) 0.976 for services furnished 
                                during 2003;
                                    ``(II) 0.987 for services furnished 
                                during 2004;
                                    ``(III) 0.995 for services 
                                furnished during 2005; and
                                    ``(IV) 1.000 for services furnished 
                                during 2006 and subsequent years.
                            ``(ii) Exemption from limitation on annual 
                        adjustments.--The increase in expenditures 
                        attributable to clause (i) shall not be taken 
                        into account in applying subsection 
                        (c)(2)(B)(ii)(II).''.

SEC. 203. TEMPORARY INCREASE FOR HOME HEALTH SERVICES FURNISHED IN A 
              FRONTIER OR RURAL AREA.

    (a) 3-Year Increase Beginning April 1, 2003.--
            (1) Frontier areas.--
                    (A) In general.--In the case of home health 
                services furnished in a frontier area on or after April 
                1, 2003, and before April 1, 2006, the Secretary of 
                Health and Human Services shall increase the payment 
                amount otherwise made under section 1895 of the Social 
                Security Act (42 U.S.C. 1395fff) for such services by 
                20 percent.
                    (B) Frontier area defined.--For purposes of this 
                section, the term ``frontier area'' means a county in 
                which the population density is less than 7 persons per 
                square mile.
            (2) Rural areas that are not frontier areas.--In the case 
        of home health services furnished in a rural area (as defined 
        in section 1886(d)(2)(D) of the Social Security Act (42 U.S.C. 
        1395ww(d)(2)(D))) that is not a frontier area (as defined in 
        paragraph (1)(B)) on or after April 1, 2003, and before April 
        1, 2006, the Secretary of Health and Human Services shall 
        increase the payment amount otherwise made under section 1895 
        of such Act (42 U.S.C. 1395fff) for such services by 10 
        percent.
    (b) Waiving Budget Neutrality.--The Secretary shall not reduce the 
standard prospective payment amount (or amounts) under section 1895 of 
the Social Security Act (42 U.S.C. 1395fff) applicable to home health 
services furnished during a period to offset the increase in payments 
resulting from the application of paragraphs (1) and (2) of subsection 
(a).
    (c) Clarification of Application of Increases.--The payment 
increase provided under paragraphs (1) and (2) of subsection (a) for 
the period beginning on April 1, 2003, and ending on March 31, 2006, 
shall not apply to episodes and visits ending after such period, and 
shall not be taken into account in calculating the payment amounts 
applicable for episodes and visits occurring after such period.
    (d) Technical Amendment to BIPA.--Section 547(c)(2) of the 
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act 
of 2000 (114 Stat. 2763A-553), as enacted into law by section 1(a)(6) 
of Public Law 106-554, is amended by striking ``September 30, 2002'' 
and inserting ``March 31, 2003''.

SEC. 204. IMPROVEMENTS TO THE MEDICARE INCENTIVE PAYMENT PROGRAM.

    (a) Procedures for the Secretary, and Not Physicians, To Determine 
When Bonus Payments Should Be Made.--Section 1833(m) of the Social 
Security Act (42 U.S.C. 1395l(m)) is amended--
            (1) by inserting ``(1)'' after ``(m)''; and
            (2) by adding at the end the following new paragraph:
    ``(2) The Secretary shall establish procedures under which the 
Secretary, and not the physician furnishing the service, is responsible 
for determining when a payment is required to be made under paragraph 
(1).''.
    (b) Educational Program.--The Secretary of Health and Human 
Services shall establish and implement an ongoing educational program 
to provide education to physicians under the medicare program on the 
medicare incentive payment program under section 1833(m) of the Social 
Security Act (42 U.S.C. 1395l(m)).
    (c) Ongoing Study and Annual Report on the Medicare Incentive 
Payment Program.--
            (1) Ongoing study.--The Secretary of Health and Human 
        Services shall conduct an ongoing study on the medicare 
        incentive payment program under section 1833(m) of the Social 
        Security Act (42 U.S.C. 1395l(m)). Such study shall focus on 
        whether such program increases the access of medicare 
        beneficiaries, who reside in an area that is designated as a 
        health professional shortage area (under section 332(a)(1)(A) 
        of the Public Health Service Act (42 U.S.C. 254e(a)(1)(A))), to 
        physicians' services under the medicare program.
            (2) Annual reports.--Not later than 1 year after the date 
        of enactment of this Act, and annually thereafter, the 
        Secretary of Health and Human Services 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. 205. ENSURING APPROPRIATE COVERAGE OF AIR AMBULANCE SERVICES UNDER 
              AMBULANCE FEE SCHEDULE.

    (a) Coverage.--Section 1834(l) of the Social Security Act (42 
U.S.C. 1395m(l)), as amended by section 106(b)(1), is amended by adding 
at the end the following new paragraph:
            ``(11) Ensuring appropriate coverage of air ambulance 
        services.--
                    ``(A) In general.--The regulations described in 
                section 1861(s)(7) shall ensure that air ambulance 
                services (as defined in subparagraph (C)) are 
                reimbursed under this subsection at the air ambulance 
                rate if the air ambulance service--
                            ``(i) is medically necessary based on the 
                        health condition of the individual being 
                        transported at or immediately prior to the time 
                        of the transport; and
                            ``(ii) complies with equipment and crew 
                        requirements established by the Secretary.
                    ``(B) Medically necessary.--An air ambulance 
                service shall be considered to be medically necessary 
                for purposes of subparagraph (A)(i) if such service is 
                requested--
                            ``(i) by a physician or a hospital in 
                        accordance with the physician's or hospital's 
                        responsibilities under section 1867 (commonly 
                        known as the Emergency Medical Treatment and 
                        Active Labor Act);
                            ``(ii) as a result of a protocol 
                        established by a State or regional emergency 
                        medical service (EMS) agency;
                            ``(iii) by a physician, nurse practitioner, 
                        physician assistant, registered nurse, or 
                        emergency medical responder who reasonably 
                        determines that the patient's condition is such 
                        that the time needed to transport the 
                        individual by land or the lack of an 
                        appropriate ground ambulance, significantly 
                        increases the medical risks for the individual; 
                        or
                            ``(iv) by a Federal or State agency to 
                        relocate patients following a natural disaster, 
                        an act of war, or a terrorist attack.
                    ``(C) Air ambulance services defined.--For purposes 
                of this paragraph, the term `air ambulance service' 
                means fixed wing and rotary wing air ambulance 
                services.''.
    (b) Conforming Amendment.--Section 1861(s)(7) of the Social 
Security Act (42 U.S.C. 1395x(s)(7)) is amended by inserting ``, 
subject to section 1834(l)(11),'' after ``but''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after the date of enactment of this 
Act.

SEC. 206. PROVIDER ACCESS TO REVIEW OF LOCAL COVERAGE DETERMINATIONS 
              AND RIGHT TO PETITION FOR LOCAL COVERAGE DETERMINATIONS.

    (a) Provider Access To Review of Local Coverage Determinations.--
Section 1869(f)(5) of the Social Security Act (42 U.S.C. 1395ff(f)(5)), 
as added by section 522 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (114 Stat. 2763A-543), as 
enacted into law by section 1(a)(6) of Public Law 106-554, is amended 
to read as follows:
            ``(5) Aggrieved party defined.--In this section, the term 
        `aggrieved party' means--
                    ``(A) with respect to a national coverage 
                determination, an individual entitled to benefits under 
                part A, or enrolled under part B, or both, who is in 
                need of the items or services that are the subject of 
                the coverage determination; and
                    ``(B) with respect to a local coverage 
                determination--
                            ``(i) an individual who is entitled to 
                        benefits under part A, or enrolled under part 
                        B, or both, who is adversely affected by such a 
                        determination; or
                            ``(ii) a provider of services, physician, 
                        practitioner, or supplier that is adversely 
                        affected by such a determination.''.
    (b) Clarification of Local Coverage Determination Definition.--
Section 1869(f)(2)(B) of the Social Security Act (42 U.S.C. 
1395ff(f)(2)(B)), as added by section 522 of the Medicare, Medicaid, 
and SCHIP Benefits Improvement and Protection Act of 2000 (114 Stat. 
2763A-543), as enacted into law by section 1(a)(6) of Public Law 106-
554, is amended by inserting ``, including, where appropriate, the 
specific criteria relating to the coverage of an item or service'' 
before the period at the end.
    (c) Petition for Local Coverage Determinations by Providers.--
Section 1869 of the Social Security Act (42 U.S.C. 1395ff), as added by 
section 522 of the Medicare, Medicaid, and SCHIP Benefits Improvement 
and Protection Act of 2000 (114 Stat. 2763A-543), as enacted into law 
by section 1(a)(6) of Public Law 106-554, is amended by adding at the 
end the following new subsection:
    ``(g) Petition for Local Coverage Determinations by Providers.--
            ``(1) Establishment of petition process.--The Secretary 
        shall establish a process under which any provider of services, 
        physician, practitioner, or supplier may file a provider local 
        coverage determination petition in accordance with the 
        succeeding provisions of this subsection.
            ``(2) Provider local coverage determination petition 
        defined.--In this subsection, the term `provider local coverage 
        determination petition' means a petition, filed with the 
        Secretary, at such time and in such form and manner as the 
        Secretary may specify, requesting that the Secretary, pursuant 
        to paragraph (4)(A), require a fiscal intermediary or a carrier 
        to make or revise a local coverage determination under this 
        section with respect to an item or service.
            ``(3) Secretarial determination.--Under the process 
        established under paragraph (1), by not later than 30 days 
        after the date on which a provider local coverage determination 
        petition is filed under paragraph (1), the Secretary shall 
determine whether such petition establishes that--
                    ``(A) there have been at least 5 reversals of 
                redeterminations made by a fiscal intermediary or 
                carrier after a hearing before an administrative law 
                judge on claims submitted by the provider;
                    ``(B) each reversal described in subparagraph (A) 
                involves substantially similar material facts;
                    ``(C) each reversal described in subparagraph (A) 
                involves the application of the same policy, manual 
                provision, or other interpretive guidance to the 
                material facts described in subparagraph (B); and
                    ``(D) at least 50 percent of the total number of 
                denied claims involving the substantially similar 
                material facts described in subparagraph (B) and the 
                application of the policy, manual provision, or other 
                interpretive guidance described in subparagraph (C) to 
                such facts have been reversed by an administrative law 
                judge.
            ``(4) Effect of secretarial determination.--
                    ``(A) Approval of petition.--If the Secretary 
                determines that subparagraphs (A) through (D) of 
                paragraph (3) have been satisfied, the Secretary shall 
                require the fiscal intermediary or carrier identified 
                in the provider local coverage determination petition 
                to make or revise a local coverage determination with 
                respect to the item or service that is the subject of 
                the petition not later than the date that is 180 days 
                after the date on which the Secretary makes the 
                determination.
                    ``(B) Rejection of petition.--If the Secretary 
                determines that subparagraphs (A) through (D) of 
                paragraph (3) have not been satisfied, the Secretary 
                shall reject the provider local coverage determination 
                petition and shall notify the provider of services, 
                physician, practitioner, or supplier that filed the 
                petition of the reason for such rejection and no 
                further proceedings in relation to such petition shall 
                be conducted.''.
    (d) Study and Report on the Use of Contractors to Monitor Medicare 
Appeals.--
            (1) Study.--The Secretary of Health and Human Services (in 
        this section referred to as the ``Secretary'') shall conduct a 
        study on the feasibility and advisability of requiring fiscal 
        intermediaries and carriers to monitor and track--
                    (A) the subject matter and status of claims denied 
                by the fiscal intermediary or carrier (as applicable) 
                that are appealed under section 1869 of the Social 
                Security Act (42 U.S.C. 1395ff), as added by section 
                522 of the Medicare, Medicaid, and SCHIP Benefits 
                Improvement and Protection Act of 2000 (114 Stat. 
                2763A-543), as enacted into law by section 1(a)(6) of 
                Public Law 106-554 and amended by section 206; and
                    (B) any final determination made with respect to 
                such claims.
            (2) Report.--Not later than the date that is 1 year after 
        the date of enactment of this Act, the Secretary shall submit 
        to Congress a report on the study conducted under paragraph (1) 
        together with such recommendations for legislation and 
        administrative action as the Commission determines appropriate.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out the amendments 
made by subsections (a), (b), and (c).
    (f) Effective Dates.--
            (1) Provider access to review of local coverage 
        determinations.--The amendments made by subsections (a) and (b) 
        shall apply to--
                    (A) any review of any local coverage determination 
                filed on or after October 1, 2002;
                    (B) any request to make such a determination made 
                on or after such date; and
                    (C) any local coverage determination made on or 
                after such date.
            (2) Provider local coverage determination petitions.--The 
        amendment made by subsection (c) shall apply with respect to 
        provider local coverage determination petitions (as defined in 
        section 1869(g)(2) of the Social Security Act (42 U.S.C. 
        1395ff(g)(2)), as added by subsection (c)) filed on or after 
        the date of enactment of this Act.
                                 <all>