[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 3018 Placed on Calendar Senate (PCS)]






                                                       Calendar No. 627
107th CONGRESS
  2d Session
                                S. 3018

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 1, 2002

   Mr. Baucus (for himself, Mr. Grassley, Mr. Bingaman, Mr. Kyl, Mr. 
Rockefeller, and Mr. Jeffords) introduced the following bill; which was 
                          read the first time

                            October 2, 2002

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
To amend title XVIII of the Social Security Act to enhance beneficiary 
access to quality health care services 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; REFERENCES 
              TO BIPA AND SECRETARY; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Beneficiary Access 
to Care and Medicare Equity Act of 2002''.
    (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; references to 
                            BIPA and Secretary; table of contents.
                TITLE I--RURAL HEALTH CARE IMPROVEMENTS

Sec. 101. Equalizing urban and rural standardized payment amounts under 
                            the medicare inpatient hospital prospective 
                            payment system.
Sec. 102. Adjustment to wage index.
Sec. 103. Enhanced disproportionate share hospital (DSH) treatment for 
                            rural hospitals and urban hospitals with 
                            fewer than 100 beds.
Sec. 104. One-year extension of hold harmless provisions for small 
                            rural hospitals under medicare prospective 
                            payment system for hospital outpatient 
                            department services.
Sec. 105. Temporary increase in payments for certain services furnished 
                            by small rural hospitals under medicare 
                            prospective payment system for hospital 
                            outpatient department services.
Sec. 106. Two-year treatment of certain clinical diagnostic laboratory 
                            tests furnished by a sole community 
                            hospital.
Sec. 107. Improvements to critical access hospital program.
Sec. 108. Temporary relief for certain non-teaching hospitals.
Sec. 109. Physician fee schedule geographic adjustment factor revision.
Sec. 110. Medicare incentive payment program improvements.
Sec. 111. GAO study of geographic differences in payments for 
                            physicians' services.
Sec. 112. Extension of temporary increase for home health services 
                            furnished in a rural area.
Sec. 113. Ten percent increase in payment for hospice care furnished in 
                            a frontier area.
Sec. 114. Exclusion of certain rural health clinic and Federally 
                            qualified health center services from the 
                            medicare PPS for skilled nursing 
                            facilities.
Sec. 115. Capital infrastructure revolving loan program.
                TITLE II--PROVISIONS RELATING TO PART A

                Subtitle A--Inpatient Hospital Services

Sec. 201. Revision of acute care hospital payment updates.
Sec. 202. More frequent updates in weights used in hospital market 
                            basket.
Sec. 203. Three-year increase in level of adjustment for indirect costs 
                            of medical education (IME).
Sec. 204. Revision of Federal rate for hospitals in Puerto Rico.
Sec. 205. Increase in graduate medical education limitations for 
                            certain geriatric residents.
Sec. 206. Increase for hospitals with disproportionate indigent care 
                            revenues.
             Subtitle B--Skilled Nursing Facility Services

Sec. 211. Payment for covered skilled nursing facility services.
Sec. 212. Improving the availability of nursing facility staffing 
                            information.
                          Subtitle C--Hospice

Sec. 221. Coverage of hospice consultation services.
Sec. 222. Authorizing use of arrangements with other hospice programs 
                            to provide core hospice services in certain 
                            circumstances.
                TITLE III--PROVISIONS RELATING TO PART B

                    Subtitle A--Physicians' Services

Sec. 301. Revision of updates for physicians' services.
Sec. 302. Three-year extension of treatment of certain physician 
                            pathology services under medicare.
                       Subtitle B--Other Services

Sec. 311. Competitive acquisition of certain items and services.
Sec. 312. Two-year extension of moratorium on therapy caps; provisions 
                            relating to reports.
Sec. 313. Acceleration of reduction of beneficiary copayment for 
                            hospital outpatient department services.
Sec. 314. Renal dialysis services.
Sec. 315. Improved payment for certain mammography services.
Sec. 316. Waiver of part B late enrollment penalty for certain military 
                            retirees; special enrollment period.
Sec. 317. Coverage of cholesterol and blood lipid screening.
Sec. 318. Temporary increase for ground ambulance services.
Sec. 319. Ensuring appropriate coverage of air ambulance services under 
                            ambulance fee schedule.
Sec. 320. Adjustments to local fee schedules for clinical laboratory 
                            tests for improvement in cervical cancer 
                            detection.
Sec. 321. Coverage of immunosuppressive drugs for all medicare 
                            beneficiaries.
Sec. 322. Medicare complex clinical care management payment 
                            demonstration.
Sec. 323. Study and report on new technology payments under the 
                            prospective payment system for hospital 
                            outpatient department services.
             TITLE IV--PROVISION RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

Sec. 401. Elimination of 15 percent reduction in payment rates under 
                            the prospective payment system.
Sec. 402. Update in home health services.
                      Subtitle B--Other Provisions

Sec. 411. Information technology demonstration project.
Sec. 412. Modifications to Medicare Payment Advisory Commission 
                            (MedPAC).
Sec. 413. Retaining diversity of local coverage determinations.
            TITLE V--MEDICARE+CHOICE AND RELATED PROVISIONS

Sec. 501. Revision in minimum percentage increase for 2003 and 2004.
Sec. 502. Clarification of authority regarding disapproval of 
                            unreasonable beneficiary cost-sharing.
Sec. 503. Extension of reasonable cost contracts.
Sec. 504. Extension of social health maintenance organization (SHMO) 
                            demonstration project.
Sec. 505. Specialized Medicare+Choice plans for special needs 
                            beneficiaries.
Sec. 506. Extension of new entry bonus.
Sec. 507. Payment by PACE providers for medicare and medicaid services 
                            furnished by noncontract providers.
Sec. 508. Reference to implementation of certain Medicare+Choice 
                            program provisions in 2003.
  TITLE VI--MEDICARE APPEALS, REGULATORY, AND CONTRACTING IMPROVEMENTS

                     Subtitle A--Regulatory Reform

Sec. 601. Rules for the publication of a final regulation based on the 
                            previous publication of an interim final 
                            regulation.
Sec. 602. Compliance with changes in regulations and policies.
Sec. 603. Report on legal and regulatory inconsistencies.
                   Subtitle B--Appeals Process Reform

Sec. 611. Submission of plan for transfer of responsibility for 
                            medicare appeals.
Sec. 612. Expedited access to judicial review.
Sec. 613. Expedited review of certain provider agreement 
                            determinations.
Sec. 614. Revisions to medicare appeals process.
Sec. 615. Hearing rights related to decisions by the Secretary to deny 
                            or not renew a medicare enrollment 
                            agreement; consultation before changing 
                            provider enrollment forms.
Sec. 616. Appeals by providers when there is no other party available.
Sec. 617. Provider access to review of local coverage determinations.
                     Subtitle C--Contracting Reform

Sec. 621. Increased flexibility in medicare administration.
            Subtitle D--Education and Outreach Improvements

Sec. 631. Provider education and technical assistance.
Sec. 632. Access to and prompt responses from medicare contractors.
Sec. 633. Reliance on guidance.
Sec. 634. Medicare provider ombudsman; medicare beneficiary ombudsman.
Sec. 635. Beneficiary outreach demonstration program.
          Subtitle E--Review, Recovery, and Enforcement Reform

Sec. 641. Prepayment review.
Sec. 642. Recovery of overpayments.
Sec. 643. Process for correction of minor errors and omissions on 
                            claims without pursuing appeals process.
Sec. 644. Authority to waive a program exclusion.
                       TITLE VII--MEDICAID/SCHIP

Sec. 701. Medicaid DSH allotments.
Sec. 702. Temporary increase in floor for treatment as an extremely low 
                            DSH State.
Sec. 703. Extension of medicare cost-sharing for part B premium for 
                            certain additional low-income medicare 
                            beneficiaries.
Sec. 704. Clarification of inclusion of inpatient drug prices charged 
                            to certain public hospitals in the best 
                            price exemptions for the medicaid drug 
                            rebate program.
Sec. 705. SCHIP allotments.
Sec. 706. Improvement of the process for the development and 
                            implementation of medicaid and SCHIP 
                            waivers.
Sec. 707. Temporary State fiscal relief.
                      TITLE VIII--OTHER PROVISIONS

Sec. 801. Increase in appropriations for special diabetes programs for 
                            type I diabetes and Indians.
Sec. 802. Disregard of certain payments under the Emergency 
                            Supplemental Act, 2000 in the 
                            administration of Federal programs and 
                            federally assisted programs.
Sec. 803. Safety Net Organizations and Patient Advisory Commission.
Sec. 804. Publication on final written guidance concerning prohibitions 
                            against discrimination by national origin 
                            with respect to health care services.
Sec. 805. Federal reimbursement of emergency health services furnished 
                            to undocumented aliens.
Sec. 806. Extension of medicare municipal health services demonstration 
                            projects.
Sec. 807. Delayed implementation of certain provisions.

                TITLE I--RURAL HEALTH CARE IMPROVEMENTS

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)(iv) (42 U.S.C. 
1395ww(d)(3)(A)(iv)) is amended--
            (1) by striking ``(iv) For discharges'' and inserting 
        ``(iv)(I) Subject to the succeeding provisions of this clause, 
        for discharges''; and
            (2) by adding at the end the following new subclauses:
            ``(II) For discharges occurring during fiscal year 2003, 
        the operating standardized amount for hospitals located other 
        than in a large urban area shall be increased by \1/2\ of the 
        difference between the operating standardized amount determined 
        under subclause (I) for hospitals located in large urban areas 
        for such fiscal year and such amount determined (without regard 
        to this subclause) for other hospitals for such fiscal year.
            ``(III) For discharges occurring in a fiscal year beginning 
        with fiscal year 2004, the Secretary shall compute an operating 
        standardized amount for hospitals located in any area within 
        the United States and within each region equal to the operating 
        standardized amount computed for the previous fiscal year under 
        this subparagraph for hospitals located in a large urban area 
        (or, beginning with fiscal year 2005, for hospitals located in 
        any area) 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) 
        (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 2004,'' 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 2004,'' 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 2003, 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) (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. ADJUSTMENT TO WAGE INDEX.

    (a) In General.--Section 1886(d)(3)(E) (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 in fiscal 
        years 2003, 2004, and 2005.--
                    ``(I) In general.--Except as provided in subclause 
                (II), for discharges occurring on or after October 1, 
                2002, and before October 1, 2005, the Secretary shall 
                substitute `68 percent' for the proportion described in 
                the first sentence of clause (i).
                    ``(II) Hold harmless for certain hospitals.--For 
                discharges occurring on or after October 1, 2002, and 
                before October 1, 2005, if the application of subclause 
                (I) would result in lower payments to a hospital than 
                would otherwise be made, then this subparagraph shall 
                be applied as if this clause had not been enacted.
    (b) Waiving Budget Neutrality.--Section 1886(d)(3)(E) (42 U.S.C. 
1395ww(d)(3)(E)), as amended by subsection (a), is amended by adding at 
the end of clause (i) the following new sentence: ``The Secretary shall 
apply the previous sentence for any period as if the amendments made by 
section 102(a) of the Beneficiary Access to Care and Medicare Equity 
Act of 2002 had not been enacted.''.
    (c) 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 
                subsections (a) and (b)), 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 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 the 
        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. 103. ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH) TREATMENT FOR 
              RURAL HOSPITALS AND URBAN HOSPITALS WITH FEWER THAN 100 
              BEDS.

    (a) Blending of Payment Amounts.--
            (1) In general.--Section 1886(d)(5)(F) (42 U.S.C. 
        1395ww(d)(5)(F)) is amended by adding at the end the following 
        new clause:
    ``(xiv)(I) In the case of discharges in a fiscal year beginning on 
or after October 1, 2002, subject to subclause (II), there shall be 
substituted for the disproportionate share adjustment percentage 
otherwise determined under clause (iv) (other than subclause (I)) or 
under clause (viii), (x), (xi), (xii), or (xiii), the old blend 
proportion (specified under subclause (III)) of the disproportionate 
share adjustment percentage otherwise determined under the respective 
clause and 100 percent minus such old blend proportion of the 
disproportionate share adjustment percentage determined under clause 
(vii) (relating to large, urban hospitals).
    ``(II) Under subclause (I), the disproportionate share adjustment 
percentage shall not exceed 10 percent for a hospital that is not 
classified as a rural referral center under subparagraph (C).
    ``(III) For purposes of subclause (I), the old blend proportion for 
fiscal year 2003 is 90 percent, for each subsequent year (through 2011) 
is the old blend proportion under this subclause for the previous year 
minus 10 percentage points, and for each year beginning with 2012 is 0 
percent.''.
            (2) Conforming amendments.--Section 1886(d)(5)(F) (42 
        U.S.C. 1395ww(d)(5)(F)) is amended--
                    (A) in each of subclauses (II), (III), (IV), (V), 
                and (VI) of clause (iv), by inserting ``subject to 
                clause (xiv) and'' before ``for discharges occurring'';
                    (B) in clause (viii), by striking ``The formula'' 
                and inserting ``Subject to clause (xiv), the formula''; 
                and
                    (C) in each of clauses (x), (xi), (xii), and 
                (xiii), by striking ``For purposes'' and inserting 
                ``Subject to clause (xiv), for purposes''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to discharges occurring on or after October 1, 2002.

SEC. 104. ONE-YEAR EXTENSION OF HOLD HARMLESS PROVISIONS FOR SMALL 
              RURAL HOSPITALS UNDER MEDICARE PROSPECTIVE PAYMENT SYSTEM 
              FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

    Section 1833(t)(7)(D)(i) (42 U.S.C. 1395l(t)(7)(D)(i)) is amended 
by striking ``2004'' and inserting ``2005''.

SEC. 105. TEMPORARY INCREASE IN PAYMENTS FOR CERTAIN SERVICES FURNISHED 
              BY SMALL RURAL HOSPITALS UNDER MEDICARE PROSPECTIVE 
              PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT 
              SERVICES.

    (a) Increase.--
            (1) In general.--In the case of an applicable covered OPD 
        service (as defined in paragraph (2)) that is furnished by a 
        hospital described in paragraph (7)(D)(i) of section 1833(t) of 
        the Social Security Act (42 U.S.C. 1395l(t)) on or after 
        January 1, 2003, and before January 1, 2006, the Secretary of 
        Health and Human Services shall increase the medicare OPD fee 
        schedule amount (as determined under paragraph (4)(A) of such 
        section) that is applicable for such service in that year 
        (determined without regard to any increase under this section 
        in a previous year) by 5 percent.
            (2) Applicable covered opd services defined.--For purposes 
        of this section, the term ``applicable covered OPD service'' 
        means a covered clinic or emergency room visit that is 
        classified within the groups of covered OPD services (as 
        defined in paragraph (1)(B) of section 1833(t) of the Social 
        Security Act (42 U.S.C. 1395l(t))) established under paragraph 
        (2)(B) of such section.
    (b) No Effect on Copayment Amount.--The Secretary of Health and 
Human Services shall compute the copayment amount for applicable 
covered OPD services under section 1833(t)(8)(A) of the Social Security 
Act (42 U.S.C. 1395l(t)(8)(A)) as if this section had not been enacted.
    (c) No Effect on Increase Under Hold Harmless or Outlier 
Provisions.--The Secretary of Health and Human Services shall apply the 
temporary hold harmless provision under paragraph (7)(D)(i) of section 
1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) and the outlier 
provision under paragraph (5) of such section as if this section had 
not been enacted.
    (d) Waiving Budget Neutrality and No Revision or Adjustments.--The 
Secretary of Health and Human Services shall not make any revision or 
adjustment under subparagraph (A), (B), or (C) of section 1833(t)(9) of 
the Social Security Act (42 U.S.C. 1395l(t)(9)) because of the 
application of subsection (a)(1).
    (e) No Effect on Payments After Increase Period Ends.--The 
Secretary of Health and Human Services shall not take into account any 
payment increase provided under subsection (a)(1) in determining 
payments for covered OPD services (as defined in paragraph (1)(B) of 
section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t))) under 
such section that are furnished after January 1, 2006.
    (f) Technical Amendment.--Section 1833(t)(2)(B) (42 U.S.C. 
1395l(t)(2)(B)) is amended by inserting ``(and periodically revise such 
groups pursuant to paragraph (9)(A))'' after ``establish groups''.

SEC. 106. TWO-YEAR TREATMENT OF CERTAIN CLINICAL DIAGNOSTIC LABORATORY 
              TESTS FURNISHED BY A SOLE COMMUNITY HOSPITAL.

    Notwithstanding subsections (a)(1)(D) and (h) of section 1833 of 
the Social Security Act (42 U.S.C. 1395l) and section 1834(d)(1) of 
such Act (42 U.S.C. 1395m(d)(1)), in the case of a clinical diagnostic 
laboratory test covered under part B of title XVIII of such Act that is 
furnished in 2004 or 2005 by a sole community hospital (as defined in 
section 1886(d)(5)(D)(iii) of such Act (42 U.S.C. 
1395ww(d)(5)(D)(iii))) as part of services provided to patients of the 
hospital, the following rules shall apply:
            (1) Payment based on reasonable costs.--The amount of 
        payment for such test shall be 100 percent of the reasonable 
        costs of the hospital in furnishing such test.
            (2) No beneficiary cost-sharing.--No coinsurance, 
        deductible, copayment, or other cost-sharing otherwise 
        applicable under such part B shall apply with respect to such 
        test.

SEC. 107. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.

    (a) Authorization of Periodic Interim Payment (PIP).--Section 
1815(e)(2) (42 U.S.C. 1395g(e)(2)) is amended--
            (1) by striking ``and'' at the end of subparagraph (C);
            (2) by adding ``and'' at the end of subparagraph (D); and
            (3) by inserting after subparagraph (D) the following new 
        subparagraph:
            ``(E) inpatient critical access hospital services;''.
    (b) Condition for Application of Special Physician Payment 
Adjustment.--Section 1834(g)(2) (42 U.S.C. 1395m(g)(2)) is amended by 
adding after and below subparagraph (B) the following:
        ``The Secretary may not require, as a condition for applying 
        subparagraph (B) with respect to a critical access hospital, 
        that each physician providing professional services in the 
        critical access hospital must assign billing rights with 
        respect to such services, except that such subparagraph shall 
        not apply to those physicians who have not assigned such 
        billing rights.''.
    (c) Coverage of Costs for Certain Emergency Room On-Call 
Providers.--Section 1834(g)(5) (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 who are on-call 
        (as defined by the Secretary)'' and inserting ``physicians, 
        physician assistants, nurse practitioners, and clinical nurse 
        specialists who are on-call (as defined by the Secretary) to 
        provide emergency services''; and
            (3) by striking ``physicians' services'' and inserting 
        ``services covered under this title''.
    (d) Prohibition of Retroactive Recoupment.--The Secretary shall not 
recoup (or otherwise seek to recover) overpayments made for outpatient 
critical access hospital services under part B of title XVIII of the 
Social Security Act, for services furnished in cost reporting periods 
that began before October 1, 2002, insofar as such overpayments are 
attributable to payment being based on 80 percent of reasonable costs 
(instead of 100 percent of reasonable costs minus 20 percent of 
charges).
    (e) Increased Flexibility for States With Respect to Certain 
Frontier Critical Access Hospitals.--Section 1820(c) (42 U.S.C. 1395i-
4(c)) is amended--
            (1) in paragraph (2)(B)(ii), by striking ``makes'' and 
        inserting ``subject to paragraph (3), makes''; and
            (2) by adding at the end the following new paragraph:
            ``(3) State authority to temporarily waive emergency 
        coverage requirement.--
                    ``(A) In general.--A State may establish procedures 
                under which the requirement under paragraph (2)(B)(ii) 
                is temporarily waived with respect to a critical access 
                hospital designated under paragraph (2) if such 
                hospital--
                            ``(i) complies with alternative emergency 
                        care procedures established by the State;
                            ``(ii) is located in a frontier area (as 
                        defined in section 1814(i)(1)(D)); and
                            ``(iii) has less than 500 emergency room 
                        visits (determined with respect to all patients 
                        and not just individuals receiving benefits 
                        under this title) per year (as determined by 
                        the State).''.
    (f) Permitting Hospitals to Allocate Swing Beds and Acute Care 
Inpatient Beds Subject to A Total Limit of 25 Beds.--
            (1) In general.--Section 1820(c)(2)(B)(iii) (42 U.S.C. 
        1395i-4(c)(2)(B)(iii)) is amended to read as follows:
                            ``(iii) provides not more than a total of 
                        25 extended care service beds (pursuant to an 
                        agreement under subsection (f)) or acute care 
                        inpatient beds (meeting such standards as the 
                        Secretary may establish) for providing 
                        inpatient care for a period that does not 
                        exceed, as determined on an annual, average 
                        basis, 96 hours per patient;''.
            (2) Conforming amendment.--Section 1820(f) (42 U.S.C. 
        1395i-4(f)) is amended by striking ``and the number of beds 
        used at any time for acute care inpatient services does not 
        exceed 15 beds''.
    (g) Provisions Related to Certain Rural Grants.--
            (1) Small rural hospital improvement program.--Section 
        1820(g) (42 U.S.C. 1395i-4(g)) is amended--
                    (A) by redesignating paragraph (3)(F) as paragraph 
                (5) and redesignating and indenting appropriately; and
                    (B) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) Small rural hospital improvement program.--
                    ``(A) Grants to hospitals.--The Secretary may award 
                grants to hospitals that have submitted applications in 
                accordance with subparagraph (B) to assist eligible 
                small rural hospitals (as defined in paragraph (3)(B)) 
                in meeting the costs of reducing medical errors, 
                increasing patient safety, protecting patient privacy, 
                and improving hospital quality and performance.
                    ``(B) Application.--A hospital seeking a grant 
                under this paragraph shall submit an application to the 
                Secretary on or before such date and in such form and 
                manner as the Secretary specifies.
                    ``(C) Amount of grant.--A grant to a hospital under 
                this paragraph may not exceed $50,000.
                    ``(D) Use of funds.--A hospital receiving a grant 
                under this paragraph may use the funds for the purchase 
                of computer software and hardware, the education and 
                training of hospital staff, and obtaining technical 
                assistance.''.
            (2) Five-year authorization for appropriations.--Section 
        1820(j) (42 U.S.C. 1395i-4(j)) is amended to read as follows:
    ``(j) Authorization of Appropriations.--
            ``(1) HI trust fund.--There are authorized to be 
        appropriated from the Federal Hospital Insurance Trust Fund for 
        making grants to all States under--
                    ``(A) subsection (g), $25,000,000 in each of the 
                fiscal years 1998 through 2002; and
                    ``(B) paragraphs (1) and (2) of subsection (g), 
                $40,000,000 in each of the fiscal years 2003 through 
                2007.
            ``(2) General revenues.--There are authorized to be 
        appropriated from amounts in the treasury not otherwise 
        appropriated for making grants to all States under subsection 
        (g)(4), $25,000,000 in each of the fiscal years 2003 through 
        2007.''.
            (3) Requirement that states awarded grants consult with the 
        state hospital association and rural hospitals on the most 
        appropriate ways to use such grants.--Section 1820(g) (42 
        U.S.C. 1395i-4(g)), as amended by paragraph (1), is amended by 
        adding at the end the following new paragraph:
            ``(6) 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.''.
    (h) Coordinated Survey Demonstration Program.--
            (1) Establishment.--
                    (A) 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.
                    (B) Development of guidelines for coordinated 
                survey.--
                            (i) Submission of proposals by states 
                        participating in the demonstration program.--
                        Under the demonstration program under this 
                        subsection a State participating in the 
                        demonstration (as determined by the Secretary 
                        pursuant to subparagraph (C)) shall submit to 
                        the Secretary a proposal for guidelines with 
                        respect to the coordinated survey described in 
                        subparagraph (A) 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.
                            (ii) Review and approval.--
                                    (I) In general.--Under the 
                                demonstration program under this 
                                subsection the Secretary shall 
                                establish procedures for reviewing and 
                                approving proposals submitted under 
                                clause (i).
                                    (II) Consultation.--The Secretary 
                                shall consult with State hospital 
                                associations in establishing the 
                                procedures under subclause (I).
                    (C) Sites.--The Secretary shall conduct the 
                demonstration program under this subsection 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.
                    (D) Duration.--The demonstration program under this 
                subsection shall be conducted for not more than 5 
                years.
            (2) 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 subsection.
            (3) Report.--Not later than 6 months after the completion 
        of the demonstration program under this subsection, 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.
            (4) Definitions.--In this subsection:
                    (A) 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)).
                    (B) Health care organization.--The term ``health 
                care organization'' means a governing entity that 
                includes--
                            (i) a critical access hospital; and
                            (ii) at least 1 other provider or supplier 
                        that is certified to provide items or services 
                        under the medicare or medicaid program.
                    (C) 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.).
                    (D) 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.).
    (i) Effective Dates.--
            (1) Authorization of pip.--The amendments made by 
        subsection (a) shall apply to payments made on or after January 
        1, 2003.
            (2) Physician payment adjustment condition.--The amendment 
        made by subsection (b) shall take effect on January 1, 2003.
            (3) Emergency room on-call provider costs.--The amendments 
        made by subsection (c) shall apply to costs incurred on or 
        after the date of the enactment of this Act.
            (4) Required consultation for certain rural grants.--The 
        amendment made by subsection (g)(3) shall take effect on the 
        date of the 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. 108. TEMPORARY RELIEF FOR CERTAIN NON-TEACHING HOSPITALS.

    (a) In General.--In the case of a non-teaching hospital that meets 
the condition of subsection (b), in each of fiscal years 2003, 2004, 
and 2005, the amount of payment made to the hospital under section 
1886(d) of the Social Security Act for discharges occurring during such 
fiscal year only shall be increased as though the applicable percentage 
increase (otherwise applicable to discharges occurring during such 
fiscal year under section 1886(b)(3)(B)(i) of the Social Security Act 
(42 U.S.C. 1395ww(b)(3)(B)(i)) had been increased by 5 percentage 
points. The previous sentence shall be applied for each such fiscal 
year separately without regard to its application in a previous fiscal 
year and shall not affect payment for discharges for any hospital 
occurring during a fiscal year after fiscal year 2005.
    (b) Condition.--A non-teaching hospital meets the condition of this 
subsection if--
            (1) it is located in a rural area and the amount of the 
        aggregate payments under subsection (d) of section 1886 of the 
        Social Security Act for hospitals located in rural areas in the 
        State for their cost reporting periods beginning during fiscal 
        year 1999 is less than the aggregate allowable operating costs 
        of inpatient hospital services (as defined in subsection (a)(4) 
        of such section) for all subsection (d) hospitals in such areas 
        in such State with respect to such cost reporting periods; or
            (2) it is located in an urban area and the amount of the 
        aggregate payments under subsection (d) of such section for 
        hospitals located in urban areas in the State for their cost 
        reporting periods beginning during fiscal year 1999 is less 
        than 103 percent of the aggregate allowable operating costs of 
        inpatient hospital services (as defined in subsection (a)(4) of 
        such section) for all subsection (d) hospitals in such areas in 
        such State with respect to such cost reporting periods.
The amounts under paragraphs (1) and (2) shall be determined by the 
Secretary of Health and Human Services based on data of the Medicare 
Payment Advisory Commission.
    (c) Definitions.--For purposes of this section:
            (1) Non-teaching hospital.--The term ``non-teaching 
        hospital'' means, for a cost reporting period, a subsection (d) 
        hospital (as defined in subsection (d)(1)(B) of section 1886 of 
        the Social Security Act, 42 U.S.C. 1395ww)) that is not 
        receiving any additional payment under subsection (d)(5)(B) of 
        such section or a payment under subsection (h) of such section 
        for discharges occurring during the period. A subsection (d) 
        hospital that receives additional payments under subsection 
        (d)(5)(B) or (h) of such section shall, for purposes of this 
        section, also be treated as a non-teaching hospital unless a 
        chairman of a department in the medical school with which the 
        hospital is affiliated is serving or has been appointed as a 
        clinical chief of service in the hospital.
            (2) Rural; urban.--The terms ``rural'' and ``urban'' have 
        the meanings given such terms for purposes of section 1886(d) 
        of the Social Security Act (42 U.S.C. 1395ww(d)).

SEC. 109. PHYSICIAN FEE SCHEDULE GEOGRAPHIC ADJUSTMENT FACTOR REVISION.

    Section 1848(e)(1) (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 1.000 for services 
                        furnished during 2003, 2004, and 2005.
                            ``(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. 110. MEDICARE INCENTIVE PAYMENT PROGRAM IMPROVEMENTS.

    (a) Procedures for Secretary, and Not Physicians, To Determine When 
Bonus Payments Under Medicare Incentive Payment Program Should Be 
Made.--Section 1833(m) (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 Regarding the Medicare Incentive Payment 
Program.--The Secretary 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 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 (under section 332(a)(1)(A) of the Public Health 
        Service Act (42 U.S.C. 254e(a)(1)(A))) as a health professional 
        shortage area to physicians' services under the medicare 
        program.
            (2) Annual reports.--Not later than 1 year after the date 
        of the enactment of this Act, and annually thereafter, the 
        Secretary shall submit to Congress a report on the study 
        conducted under paragraph (1), together with recommendations 
        for such legislation and administrative action as the Secretary 
        considers appropriate.

SEC. 111. GAO STUDY OF GEOGRAPHIC DIFFERENCES IN PAYMENTS FOR 
              PHYSICIANS' SERVICES.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of differences in payment amounts under the physician 
fee schedule under section 1848 of the Social Security Act (42 U.S.C. 
1395w-4) for physicians' services in different geographic areas. Such 
study shall include--
            (1) an assessment of the validity of the geographic 
        adjustment factors used for each component of the fee schedule;
            (2) an evaluation of the measures used for such adjustment, 
        including the frequency of revisions;
            (3) an evaluation of the methods used to determine 
        professional liability insurance costs used in computing the 
        malpractice component, including a review of increases in 
        professional liability insurance premiums and variation in such 
        increases by State and physician specialty and methods used to 
        update the geographic cost of practice index and relative 
        weights for the malpractice component;
            (4) an evaluation of whether there is a sound economic 
        basis for the implementation of the adjustment under section 
        1848(e)(1)(D) of the Social Security Act, as added by section 
        109, in those areas in which the adjustment applies;
            (5) an evaluation of the effect of such adjustment on 
        physician location and retention in areas affected by such 
        adjustment, taking into account--
                    (A) differences in recruitment costs and retention 
                rates for physicians, including specialists, between 
                large urban areas and other areas; and
                    (B) the mobility of physicians, including 
                specialists, over the last decade; and
            (6) an evaluation of appropriateness of extending such 
        adjustment or making such adjustment permanent.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Comptroller General shall submit to Congress a report 
on the study conducted under subsection (a). The report shall include 
recommendations regarding the use of more current data in computing 
geographic cost of practice indices as well as the use of data directly 
representative of physicians' costs (rather than proxy measures of such 
costs).

SEC. 112. EXTENSION OF TEMPORARY INCREASE FOR HOME HEALTH SERVICES 
              FURNISHED IN A RURAL AREA.

    (a) In General.--Section 508(a) of BIPA (114 Stat. 2763A-533) is 
amended--
            (1) by striking ``24-Month Increase Beginning April 1, 
        2001'' and inserting ``In General''; and
            (2) by striking ``April 1, 2003'' and inserting ``January 
        1, 2005''.
    (b) Conforming Amendment.--Section 547(c)(2) of BIPA (114 Stat. 
2763A-553) is amended by striking ``the period beginning on April 1, 
2001, and ending on September 30, 2002,'' and inserting ``a period 
under such section''.

SEC. 113. TEN PERCENT INCREASE IN PAYMENT FOR HOSPICE CARE FURNISHED IN 
              A FRONTIER AREA.

    Section 1814(i)(1) (42 U.S.C. 1395f(i)(1)) is amended by adding at 
the end the following new subparagraph:
    ``(D) With respect to hospice care furnished in a frontier area on 
or after January 1, 2003, and before January 1, 2008, the payment rates 
otherwise established for such care shall be increased by 10 percent. 
For purposes of this subparagraph, the term `frontier area' means an 
area with fewer than 6 residents per square mile (based on the latest 
population data published by the Bureau of the Census) and that does 
not include a metropolitan statistical area.''.

SEC. 114. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC AND FEDERALLY 
              QUALIFIED HEALTH CENTER SERVICES FROM THE MEDICARE PPS 
              FOR SKILLED NURSING FACILITIES.

    (a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)) is amended--
            (1) in paragraph (2)(A)(i)(II), by striking ``clauses (ii) 
        and (iii)'' and inserting ``clauses (ii), (iii), and (iv)''; 
        and
            (2) by adding at the end of paragraph (2)(A) the following 
        new clause:
                            ``(iv) Exclusion of certain rural health 
                        clinic and federally qualified health center 
                        services.--Services described in this clause 
                        are--
                                    ``(I) rural health clinic services 
                                (as defined in paragraph (1) of section 
                                1861(aa)); and
                                    ``(II) Federally qualified health 
                                center services (as defined in 
                                paragraph (3) of such section);
                        that would be described in clause (ii) if such 
                        services were furnished by a physician or 
                        practitioner not affiliated with a rural health 
                        clinic or a Federally qualified health 
                        center.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to services furnished on or after July 1, 2003.

SEC. 115. CAPITAL INFRASTRUCTURE REVOLVING LOAN PROGRAM.

    (a) In General.--Part A of title XVI of the Public Health Service 
Act (42 U.S.C. 300q et seq.) is amended by adding at the end the 
following new section:

            ``capital infrastructure revolving loan program

    ``Sec. 1603. (a) Authority To Make and Guarantee Loans.--
            ``(1) Authority to make loans.--The Secretary may make 
        loans from the fund established under section 1602(d) to any 
        rural entity for projects for capital improvements, including--
                    ``(A) the acquisition of land necessary for the 
                capital improvements;
                    ``(B) the renovation or modernization of any 
                building;
                    ``(C) the acquisition or repair of fixed or major 
                movable equipment; and
                    ``(D) such other project expenses as the Secretary 
                determines appropriate.
            ``(2) Authority to guarantee loans.--
                    ``(A) In general.--The Secretary may guarantee the 
                payment of principal and interest for loans made to 
                rural entities for projects for any capital improvement 
                described in paragraph (1) to any non-Federal lender.
                    ``(B) Interest subsidies.--In the case of a 
                guarantee of any loan made to a rural entity under 
                subparagraph (A), the Secretary may pay to the holder 
                of such loan and for and on behalf of the project for 
                which the loan was made, amounts sufficient to reduce 
                by not more than 3 percent of the net effective 
                interest rate otherwise payable on such loan.
    ``(b) Amount of Loan.--The principal amount of a loan directly made 
or guaranteed under subsection (a) for a project for capital 
improvement may not exceed $5,000,000.
    ``(c) Funding Limitations.--
            ``(1) Government credit subsidy exposure.--The total of the 
        Government credit subsidy exposure under the Credit Reform Act 
        of 1990 scoring protocol with respect to the loans outstanding 
        at any time with respect to which guarantees have been issued, 
        or which have been directly made, under subsection (a) may not 
        exceed $50,000,000 per year.
            ``(2) Total amounts.--Subject to paragraph (1), the total 
        of the principal amount of all loans directly made or 
        guaranteed under subsection (a) may not exceed $250,000,000 per 
        year.
    ``(d) Capital Assessment and Planning Grants.--
            ``(1) Nonrepayable grants.--Subject to paragraph (2), the 
        Secretary may make a grant to a rural entity, in an amount not 
        to exceed $50,000, for purposes of capital assessment and 
        business planning.
            ``(2) Limitation.--The cumulative total of grants awarded 
        under this subsection may not exceed $2,500,000 per year.
    ``(e) Termination of Authority.--The Secretary may not directly 
make or guarantee any loan under subsection (a) or make a grant under 
subsection (d) after September 30, 2006.''.
    (b) Rural Entity Defined.--Section 1624 of the Public Health 
Service Act (42 U.S.C. 300s-3) is amended by adding at the end the 
following new paragraph:
            ``(15)(A) The term `rural entity' includes--
                    ``(i) a rural health clinic, as defined in section 
                1861(aa)(2) of the Social Security Act;
                    ``(ii) any medical facility with at least 1, but 
                less than 50 beds that is located in--
                            ``(I) a county that is not part of a 
                        metropolitan statistical area; or
                            ``(II) a rural census tract of a 
                        metropolitan statistical area (as determined 
                        under the most recent modification of the 
                        Goldsmith Modification, originally published in 
                        the Federal Register on February 27, 1992 (57 
                        Fed. Reg. 6725));
                    ``(iii) a hospital that is classified as a rural, 
                regional, or national referral center under section 
                1886(d)(5)(C) of the Social Security Act; and
                    ``(iv) a hospital that is a sole community hospital 
                (as defined in section 1886(d)(5)(D)(iii) of the Social 
                Security Act).
            ``(B) For purposes of subparagraph (A), the fact that a 
        clinic, facility, or hospital has been geographically 
        reclassified under the medicare program under title XVIII of 
        the Social Security Act shall not preclude a hospital from 
        being considered a rural entity under clause (i) or (ii) of 
        subparagraph (A).''.
    (c) Conforming Amendments.--Section 1602 of the Public Health 
Service Act (42 U.S.C. 300q-2) is amended--
            (1) in subsection (b)(2)(D), by inserting ``or 
        1603(a)(2)(B)'' after ``1601(a)(2)(B)''; and
            (2) in subsection (d)--
                    (A) in paragraph (1)(C), by striking ``section 
                1601(a)(2)(B)'' and inserting ``sections 1601(a)(2)(B) 
                and 1603(a)(2)(B)''; and
                    (B) in paragraph (2)(A), by inserting ``or 
                1603(a)(2)(B)'' after ``1601(a)(2)(B)''.

                TITLE II--PROVISIONS RELATING TO PART A

                Subtitle A--Inpatient Hospital Services

SEC. 201. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATES.

    (a) In General.--Subclause (XVIII) of section 1886(b)(3)(B)(i) (42 
U.S.C. 1395ww(b)(3)(B)(i)) is amended to read as follows:
            ``(XVIII) for fiscal year 2003, the market basket 
        percentage increase for sole community hospitals and such 
        increase minus 0.25 percentage points for other hospitals, 
        and''.
    (b) GAO Study and Report on Appropriateness and Need to Rebase 
Under the Prospective Payment System for Inpatient Hospital Services.--
            (1) Study.--The Comptroller General of the United States, 
        using the most current data available, shall conduct a study to 
        determine--
                    (A) the appropriate level and distribution of 
                payments under the prospective payment system under 
                section 1886 of the Social Security Act (42 U.S.C. 
                1395ww) for inpatient hospital services furnished by 
                subsection (d) hospitals (as defined subsection 
                (d)(1)(B) of such section); and
                    (B) whether there is a need to adjust such payments 
                under such system to reflect legitimate differences in 
                costs across different geographic areas and different 
                hospitals.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Comptroller General of the United 
        States shall submit to Congress a report on the study conducted 
        under paragraph (1) together with such recommendations for 
        legislative and administrative action as the Comptroller 
        General determines appropriate.

SEC. 202. MORE FREQUENT UPDATES IN WEIGHTS USED IN HOSPITAL MARKET 
              BASKET.

    (a) More Frequent Updates in Weights.--After revising the weights 
used in the hospital market basket under section 1886(b)(3)(B)(iii) of 
the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(iii)) to reflect the 
most current data available, the Secretary shall establish a frequency 
for revising such weights in such market basket to reflect the most 
current data available more frequently than once every 5 years.
    (b) Report.--Not later than October 1, 2003, the Secretary shall 
submit a report to Congress on the frequency established under 
subsection (a), including an explanation of the reasons for, and 
options considered, in determining such frequency.

SEC. 203. THREE-YEAR INCREASE IN LEVEL OF ADJUSTMENT FOR INDIRECT COSTS 
              OF MEDICAL EDUCATION (IME).

    (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
1395ww(d)(5)(B)(ii)) is amended--
            (1) in subclause (VI)--
                    (A) by striking ``fiscal year 2002'' and inserting 
                ``fiscal years 2002, 2003, and 2004''; and
                    (B) by striking ``and'' at the end;
            (2) by redesignating subclause (VII) as subclause (VIII);
            (3) in subclause (VIII) as so redesignated, by striking 
        ``2002'' and inserting ``2005''; and
            (4) by inserting after subclause (VI) the following new 
        subclause:
                    ``(VII) during fiscal year 2005, `c' is equal to 
                1.47; and''.
    (b) Conforming Amendment Relating to Determination of Standardized 
Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is 
amended--
            (1) by striking ``1999 or'' and inserting ``1999,''; and
            (2) by inserting ``, or of section 203(a) of the 
        Beneficiary Access to Care and Medicare Equity Act of 2002'' 
        after ``2000''.

SEC. 204. REVISION OF FEDERAL RATE FOR HOSPITALS IN PUERTO RICO.

    Section 1886(d)(9) (42 U.S.C. 1395ww(d)(9)) is amended--
            (1) in subparagraph (A)--
                    (A) in clause (i), by striking ``for discharges 
                beginning on or after October 1, 1997, 50 percent (and 
                for discharges between October 1, 1987, and September 
                30, 1997, 75 percent)'' and inserting ``the applicable 
                Puerto Rico percentage (specified in subparagraph 
                (E))''; and
                    (B) in clause (ii), by striking ``for discharges 
                beginning in a fiscal year beginning on or after 
                October 1, 1997, 50 percent (and for discharges between 
                October 1, 1987, and September 30, 1997, 25 percent)'' 
                and inserting ``the applicable Federal percentage 
                (specified in subparagraph (E))''; and
            (2) by adding at the end the following new subparagraph:
    ``(E) For purposes of subparagraph (A), for discharges occurring--
            ``(i) between October 1, 1987, and September 30, 1997, the 
        applicable Puerto Rico percentage is 75 percent and the 
        applicable Federal percentage is 25 percent;
            ``(ii) on or after October 1, 1997, and before October 1, 
        2002, the applicable Puerto Rico percentage is 50 percent and 
        the applicable Federal percentage is 50 percent; and
            ``(iii) on or after October 1, 2002, the applicable Puerto 
        Rico percentage is 25 percent and the applicable Federal 
        percentage is 75 percent.''.

SEC. 205. INCREASE IN GRADUATE MEDICAL EDUCATION LIMITATIONS FOR 
              CERTAIN GERIATRIC RESIDENTS.

    (a) Direct Graduate Medical Education.--Section 1886(h)(4)(F) (42 
U.S.C. 1395ww(h)(4)(F)) is amended by adding at the end the following 
new clauses:
                            ``(iii) Increase in limitation for 
                        geriatric fellowships.--For cost reporting 
                        periods beginning on or after July 1, 2003, in 
                        applying the limitations regarding the total 
                        number of full-time equivalent residents in the 
                        field of allopathic or osteopathic medicine 
                        under clause (i) for a hospital, the Secretary 
                        shall not take into account a maximum of the 
                        applicable number of residents (as defined in 
                        clause (iv)) enrolled in a fellowship in 
                        geriatric medicine within an approved medical 
                        residency training program to the extent that 
                        the hospital increases the number of geriatric 
                        residents above the number of such residents 
                        for the hospital's most recent cost reporting 
                        period ending before July 1, 2003.
                            ``(iv) Applicable number of residents.--For 
                        purposes of clause (i), the term `applicable 
                        number of residents' means--
                                    ``(I) for the period beginning on 
                                July 1, 2003, and ending on June 30, 
                                2005, one;
                                    ``(II) for the period beginning on 
                                July 1, 2005, and ending on June 30, 
                                2007, two; and
                                    ``(II) on or after July 1, 2007, 
                                three.''.
    (b) Indirect Medical Education.--Section 1886(d)(5)(B) of the 
Social Security Act (42 U.S.C. 1395ww(d)(5)(B)) is amended by adding at 
the end the following new clause:
            ``(ix) Clause (iii) of subsection (h)(4)(F) shall apply to 
        clause (v) in the same manner and for the same period as such 
        clause (iii) applies to clause (i) of such subsection.''.

SEC. 206. INCREASE FOR HOSPITALS WITH DISPROPORTIONATE INDIGENT CARE 
              REVENUES.

    (a) Disproportionate Share Adjustment Percentage.--Section 
1886(d)(5)(F)(iii) (42 U.S.C. 1395ww(d)(5)(F)(iii)) is amended by 
striking ``35 percent'' and inserting ``35 percent (or, for discharges 
occurring on or after April 1, 2003, 40 percent)''.
    (b) Capital Costs.--Section 1886(g)(1)(B) (42 U.S.C. 
1395ww(g)(1)(B)) is amended--
            (1) in clause (iii), by striking ``and'' at the end;
            (2) in clause (iv), by striking the period at the end and 
        inserting ``, and''; and
            (3) by adding at the end the following new clause:
            ``(v) in the case of cost reporting periods beginning on or 
        after October 1, 2003, shall provide for a disproportionate 
        share adjustment in the same manner as section 
        1886(d)(5)(F)(iii).''.

             Subtitle B--Skilled Nursing Facility Services

SEC. 211. PAYMENT FOR COVERED SKILLED NURSING FACILITY SERVICES.

    (a) Temporary Increase in Nursing Component of PPS Federal Rate.--
Section 312(a) of BIPA (114 Stat. 2763A-498) is amended by adding at 
the end the following new sentence: ``The Secretary of Health and Human 
Services shall increase by 15, 13, and 11 percent the nursing component 
of the case-mix adjusted Federal prospective payment rate specified in 
Tables 3 and 4 of the final rule published in the Federal Register by 
the Health Care Financing Administration on July 31, 2000 (65 Fed. Reg. 
46770) and as subsequently updated under section 1888(e)(4)(E)(ii) of 
the Social Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)), effective for 
services furnished during fiscal years 2003, 2004, and 2005, 
respectively.''.
    (b) Adjustment to RUGs for AIDS Residents.--
            (1) In general.--Paragraph (12) of section 1888(e) (42 
        U.S.C. 1395yy(e)) is amended to read as follows:
            ``(12) Adjustment for residents with aids.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                the case of a resident of a skilled nursing facility 
                who is afflicted with acquired immune deficiency 
                syndrome (AIDS), the per diem amount of payment 
                otherwise applicable shall be increased by 128 percent 
                to reflect increased costs associated with such 
                residents.
                    ``(B) Sunset.--Subparagraph (A) shall not apply on 
                and after such date as the Secretary certifies that 
                there is an appropriate adjustment in the case mix 
                under paragraph (4)(G)(i) to compensate for the 
                increased costs associated with residents described in 
                such subparagraph.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to services furnished on or after October 1, 2003.
    (c) GAO Audit of Nurse Staffing Ratios.--
            (1) Audit.--The Comptroller General of the United States 
        shall conduct an audit of nurse staffing ratios in a 
        representative sample of medicare skilled nursing facilities. 
        Such sample shall cover selected States and shall include broad 
        representation with respect to size, ownership, location, and 
        medicare volume. Such audit shall include an examination of 
        payroll records and medicaid cost reports of individual 
        facilities and the nurse staffing data submitted under sections 
        1819(b)(8)(D) and 1919(b)(8)(D) of the Social Security Act (as 
        added by paragraphs (1)(B) and (2)(B), respectively, of section 
        212(a)).
            (2) Report.--Not later than June 1, 2004, the Comptroller 
        General shall submit to Congress a report on the audits 
        conducted under paragraph (1). Such report shall include an 
        assessment of the impact of the increased payments by reason of 
        the amendments made by subsections (a) and (b) on increased 
        nurse staffing ratios and shall make recommendations as to 
        whether increased payments under section 312(a) of BIPA (114 
        Stat. 2763A-498), as amended by subsection (a), should be 
        continued.

SEC. 212. IMPROVING THE AVAILABILITY OF NURSING FACILITY STAFFING 
              INFORMATION.

    (a) Nursing Facility Staffing Information.--
            (1) Medicare.--Section 1819(b)(8) (42 U.S.C. 1395i-3(b)) is 
        amended--
                    (A) in subparagraph (A), by adding at the end the 
                following new sentence: ``The information posted under 
                this subparagraph shall include information regarding 
                nurse staffing with respect to beds made available by 
                reason of an agreement under section 1883.''; and
                    (B) by adding at the end the following new 
                subparagraphs:
                    ``(C) Submission and posting of data.--Beginning on 
                July 1, 2003, a skilled nursing facility shall submit 
                to the Secretary in a uniform manner (as prescribed by 
                the Secretary) the nurse staffing data described in 
                subparagraph (A) through electronic data submission not 
                less frequently than quarterly and the Secretary shall 
                make such data publicly available, including by posting 
                such data on an Internet website.
                    ``(D) Audit of data.--As part of each standard 
                survey conducted under subsection (g)(2)(A), there 
                shall be an audit of the nurse staffing data reported 
                under subparagraph (C) to ensure that such data are 
                accurate.''.
            (2) Medicaid.--Section 1919(b)(8) (42 U.S.C. 1395r(b)(8)) 
        is amended--
                    (A) in subparagraph (A), by adding at the end the 
                following new sentence: ``The information posted under 
                this subparagraph shall include information regarding 
                nurse staffing with respect to beds made available by 
                reason of an agreement under section 1883.''; and
                    (B) by adding at the end the following new 
                subparagraphs:
                    ``(C) Submission and posting of data.--Beginning on 
                July 1, 2003, a nursing facility shall submit to the 
                Secretary in a uniform manner (as prescribed by the 
                Secretary) the nurse staffing data described in 
                subparagraph (A) through electronic data submission not 
                less frequently than quarterly and the Secretary shall 
                make such data publicly available, including by posting 
                such data on an Internet website.
                    ``(D) Audit of data.--As part of each standard 
                survey conducted under subsection (g)(2)(A), there 
                shall be an audit of the nurse staffing data reported 
                under subparagraph (C) to ensure that such data are 
                accurate.''.
            (3) Report.--Not later than October 1, 2003, the Secretary 
        shall submit to Congress a report on--
                    (A) the manner in which the Secretary intends to 
                implement reporting of additional nurse staffing 
                variables such as unit worked, day of week (weekday and 
                weekend), and type of care (direct or administrative) 
                provided; and
                    (B) the most effective mechanisms for auditing 
                nurse staffing data under sections 1819(b)(8)(D) and 
                1919(b)(8)(D) of the Social Security Act (as added by 
                paragraphs (1)(B) and (2)(B), respectively).
            (4) Effective date.--The amendments made by this subsection 
        shall apply with respect to calendar quarters beginning on and 
        after January 1, 2003.
    (b) Creating a Staffing Quality Measure for Consumers To Compare 
Nursing Facilities.--
            (1) In General.--Beginning on October 1, 2003, and for as 
        long as the Secretary publishes quality measures to help the 
        public compare the quality of care that nursing facilities 
        provide, these quality measures shall include a quality measure 
        for nurse staffing that--
                    (A) includes the average daily total nursing hours 
                worked for the quarterly reporting period for which 
                data is submitted under sections 1819(b)(8)(C) and 
                1919(b)(8)(C) of the Social Security Act (as added by 
                paragraphs (1)(B) and (2)(B), respectively, of 
                subsection (a));
                    (B) is sensitive to case mix and quality outcomes; 
                and
                    (C) indicates the percentile in which each nursing 
                facility falls compared with other nursing facilities 
                in the State.
        The Secretary shall not be required to comply with the 
        requirements of subparagraph (B) to the extent that the 
        development of a methodology to comply with such requirement 
        would delay the implementation of this section.
            (2) Form and manner.--The nursing facility staffing measure 
        described in paragraph (1) shall be displayed in the same form 
        and manner as information that the Secretary displays to help 
        the public compare the quality of care that nursing facilities 
        provide.
            (3) Periodic revisions.--The Secretary may revise the 
        nursing facility staffing measure described in paragraph (1) 
        from time to time to improve the accuracy of such measure.

                          Subtitle C--Hospice

SEC. 221. COVERAGE OF HOSPICE CONSULTATION SERVICES.

    (a) Coverage of Hospice Consultation Services.--Section 1812(a) (42 
U.S.C. 1395d(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (3);
            (2) by striking the period at the end of paragraph (4) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) for individuals who are terminally ill and who have 
        not made an election under subsection (d)(1), services that are 
        furnished by a physician who is either the medical director or 
        an employee of a hospice program and that consist of--
                    ``(A) an evaluation of the individual's need for 
                pain and symptom management, including the need for 
                hospice care;
                    ``(B) counseling the individual with respect to 
                end-of-life issues, the benefits of hospice care, and 
                care options; and
                    ``(C) if appropriate, advising the individual 
                regarding advanced care planning.''.
    (b) Payment.--Section 1814(i) (42 U.S.C. 1395f(i)) is amended by 
adding at the end the following new paragraph:
    ``(4) The amount paid to a hospice program with respect to the 
services under section 1812(a)(5) for which payment may be made under 
part A shall be the amount determined under a fee schedule established 
by the Secretary.''.
    (c) Conforming Amendment.--Section 1861(dd)(2)(A)(i) (42 U.S.C. 
1395x(dd)(2)(A)(i)) is amended by inserting before the comma at the end 
the following: ``and services described in section 1812(a)(5)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to services provided by a hospice program on or after January 1, 
2004.

SEC. 222. 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 nonroutine 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)), as amended by section 221(b), is amended by adding at the 
end the following new paragraph:
    ``(5) 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.

                TITLE III--PROVISIONS RELATING TO PART B

                    Subtitle A--Physicians' Services

SEC. 301. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.

    (a) Revision.--
            (1) Update for 2003 through 2005.--
                    (A) In general.--Section 1848(d) (42 U.S.C. 1395w-
                4(d)) is amended by adding at the end the following new 
                paragraphs:
            ``(5) Update for 2003.--Notwithstanding paragraph (4) and 
        subject to the budget-neutrality factor determined by the 
        Secretary under subsection (c)(2)(B)(ii), the update to the 
        single conversion factor established in paragraph (1)(C) for 
        2003 is 2 percent.
            ``(6) Special rules for update for 2004 and 2005.--The 
        following rules apply in determining the update adjustment 
        factors under paragraph (4)(B) for 2004 and 2005:
                    ``(A) Use of 2002 data in determining allowable 
                costs.--
                            ``(i) The reference in clause (ii)(I) of 
                        such paragraph to April 1, 1996, is deemed to 
                        be a reference to January 1, 2002.
                            ``(ii) The allowed expenditures for 2002 is 
                        deemed to be equal to the actual expenditures 
                        for physicians' services furnished during 2002, 
                        as estimated by the Secretary.
                    ``(B) 1 percentage point increase in gdp under 
                sgr.--The annual average percentage growth in real 
                gross domestic product per capita under subsection 
                (f)(2)(C) for each of 2003, 2004, and 2005 is deemed to 
                be increased by 1 percentage point.''.
                    (B) Conforming amendment.--Section 1848(d)(4)(B) is 
                amended, in the matter preceding clause (i), by 
                inserting ``and paragraph (6)'' after ``subparagraph 
                (D)''.
                    (C) Not treated as change in law and regulation in 
                sustainable growth rate determination.--The amendments 
                made by this paragraph shall not be treated as a change 
                in law for purposes of applying section 1848(f)(2)(D) 
                of the Social Security Act (42 U.S.C. 1395w-
                4(f)(2)(D)).
            (2) Use of 10-year rolling average in computing gross 
        domestic product.--
                    (A) In general.--Section 1848(f)(2)(C) (42 U.S.C. 
                1395w-4(f)(2)(C)) is amended--
                            (i) by striking ``projected'' and inserting 
                        ``annual average''; and
                            (ii) by striking ``from the previous 
                        applicable period to the applicable period 
                        involved'' and inserting ``during the 10-year 
                        period ending with the applicable period 
                        involved''.
                    (B) Effective date.--The amendments made by 
                subparagraph (A) shall apply to computations of the 
                sustainable growth rate for years beginning with 2002.
            (3) Elimination of transitional adjustment.--Section 
        1848(d)(4)(F) (42 U.S.C. 1395w-4(d)(4)(F)) is amended by 
        striking ``subparagraph (A)'' and all that follows and 
        inserting ``subparagraph (A), for each of 2001 and 2002, of 
        -0.2 percent.''.
    (b) GAO Study on Beneficiary Access to Physicians' Services.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on access of medicare beneficiaries to 
        physicians' services under the medicare program. The study 
        shall include--
                    (A) an assessment of the use by beneficiaries of 
                such services through an analysis of claims submitted 
                by physicians for such services under part B of the 
                medicare program;
                    (B) an examination of changes in the use by 
                beneficiaries of physicians' services over time; and
                    (C) an examination of the extent to which 
                physicians are not accepting new medicare beneficiaries 
                as patients.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1). 
        The report shall include a determination whether--
                    (A) data from claims submitted by physicians under 
                part B of the medicare program indicate potential 
                access problems for medicare beneficiaries in certain 
                geographic areas; and
                    (B) access by medicare beneficiaries to physicians' 
                services may have improved, remained constant, or 
                deteriorated over time.

SEC. 302. THREE-YEAR EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN 
              PATHOLOGY SERVICES UNDER MEDICARE.

    Section 542(c) of BIPA (114 Stat. 2763A-550) is amended by striking 
``2-year period'' and inserting ``5-year period''.

                       Subtitle B--Other Services

SEC. 311. COMPETITIVE ACQUISITION OF CERTAIN ITEMS AND SERVICES.

    (a) Program Authorized.--Title XVIII (42 U.S.C. 1395 et seq.) is 
amended by redesignating section 1866B as section 1866C and by 
inserting after section 1866A the following new section:

           ``competitive item and service acquisition program

    ``Sec. 1866B. (a) Program Authority.--
            ``(1) In general.--The Secretary shall implement programs 
        and demonstration projects to purchase, on behalf of 
        individuals enrolled under part B, certain competitively priced 
        items and services in competitive acquisition areas (in 
        accordance with the succeeding provisions of this section) for 
        which payment is made under such part. Such areas may differ in 
        the items and services provided.
            ``(2) Rules applicable to programs and demonstration 
        projects.--With respect to each program and demonstration 
        project implemented under this section, the following rules 
        shall apply:
                    ``(A) The Secretary may reject unreasonably low 
                bids.
                    ``(B) If the Secretary determines that the product 
                quality or service quality of an entity with a contract 
                has deteriorated since the contract was entered into, 
                the Secretary may cancel the contract prior to the date 
                on which the contract is scheduled to end and award a 
                contract to a different entity for the remainder of the 
                term of the contract.
                    ``(C) No device that is in a class of devices 
                described in section 513(a)(1)(C) of the Federal Food 
                Drug and Cosmetic Act (21 U.S.C. 360c(a)(1)(C)) may be 
                furnished under such a program or demonstration 
                project.
            ``(3) Phased-in implementation.--The programs implemented 
        under paragraph (1) shall be phased-in among competitive 
        acquisition areas over a period of not longer than 4 years in a 
        manner so that the competition under the programs occurs in--
                    ``(A) at least \1/4\ of such areas in 2003;
                    ``(B) at least \2/4\ of such areas in 2004; and
                    ``(C) at least \3/4\ of such areas in 2005.
    ``(b) Implementation of Programs in Competitive Acquisition 
Areas.--
            ``(1) Types of programs.--The Secretary shall implement 
        programs under which competitive acquisition areas are 
        established for contract award purposes for the furnishing 
        under part B of--
                    ``(A) covered items (as defined in section 
                1834(a)(13)) and inhalation drugs used in conjunction 
                with durable medical equipment (other than items used 
                in infusion therapy); and
                    ``(B) leg, arm, back, and neck braces described in 
                section 1861(s)(9), other than custom fabricated 
                orthotics (as defined by the Secretary).
            ``(2) Program requirements.--Each program implemented under 
        paragraph (1) shall--
                    ``(A) include such categories of items and services 
                as the Secretary may prescribe; and
                    ``(B) be conducted in such competitive acquisition 
                areas as the Secretary determines are appropriate.
            ``(3) Criteria for establishment of competitive acquisition 
        areas.--Each competitive acquisition area established under a 
        program implemented under paragraph (1) shall--
                    ``(A)(i) be, or shall be within, a metropolitan 
                statistical area (as defined by the Director of the 
                Office of Management and Budget and the Secretary of 
                Commerce) with a population in excess of 500,000; or
                    ``(ii) be an area that was designated as a 
                competitive acquisition area under section 1847 as of 
                the date of the enactment of the Beneficiary Access to 
                Care and Medicare Equity Act of 2002;
                    ``(B) be chosen based on the availability and 
                accessibility of entities able to furnish items and 
                services, and the probable savings to be realized by 
                the use of competitive bidding in the furnishing of 
                items and services in such area; and
                    ``(C) have multiple suppliers for each product 
                category.
    ``(c) Awarding of Contracts in Competitive Acquisition Areas.--
            ``(1) In general.--The Secretary shall conduct a 
        competition among entities supplying the items and services to 
        be furnished under the program implemented under subsection 
        (b)(1) for each competitive acquisition area established under 
        subsection (b)(3) for that program.
            ``(2) Administration by contract.--
                    ``(A) In general.--The Secretary shall administer 
                the programs under this section by entering into 
                contracts with entities.
                    ``(B) Conditions for awarding contract.--The 
                Secretary may not award a contract to any entity under 
                the competition conducted under paragraph (1) to 
                furnish an item or service unless the Secretary finds 
                that--
                            ``(i) the entity meets quality and 
                        financial standards specified by the Secretary 
                        or developed by accreditation entities or 
                        organizations recognized by the Secretary;
                            ``(ii) beneficiary liability is limited to 
                        the applicable percentage of the contract award 
                        price;
                            ``(iii) the entity has an agreement in 
                        effect under section 1866 and has an active 
                        National Supplier Clearinghouse identification 
                        number;
                            ``(iv) the entity complies with all Federal 
                        and State licensure and regulatory 
                        requirements;
                            ``(v) the entity is in compliance with all 
                        the provisions of title XI and this title, such 
                        provisions of title XIX as the Secretary 
                        determines are relevant to competitive bidding, 
                        and any regulations relating thereto;
                            ``(vi) the entity is in compliance with all 
                        billing guidelines relating to the program 
                        under this title;
                            ``(vii) the entity has not been suspended 
                        within the 12 months preceding the date on 
                        which a bid is submitted by any DMERC antifraud 
                        unit for billing for items or services not 
                        furnished; and
                            ``(viii) the total amounts to be paid under 
                        the contract (including costs associated with 
                        the administration of the contract) are 
                        expected to be less than the total amounts that 
                        would otherwise be paid.
            ``(3) Contents of contract.--A contract entered into with 
        an entity under the competition conducted under paragraph (1) 
        shall be subject to such terms and conditions as the Secretary 
        may specify.
            ``(4) Limit on number of contractors.--The Secretary may 
        limit the number of contractors in a competitive acquisition 
        area to the number needed to meet projected demand for items 
        and services covered under the contracts.
            ``(5) Small business protections.--Notwithstanding any 
        other provision of this section, the Secretary shall allow--
                    ``(A) an entity to bid to become a supplier in a 
                portion of the competitive acquisition area if the 
                entity does not have the capacity to service an entire 
                competitive acquisition area;
                    ``(B) small suppliers to bid for only 1 or a few 
                product categories instead of all the products in a 
                competitive acquisition area; and
                    ``(C) small suppliers to join together to form 
                networks for bidding purposes, as long as the combined 
                market share of such suppliers does not exceed 25 
                percent.
    ``(d) Evaluations and Annual Reports.--
            ``(1) Evaluations.--The Secretary shall evaluate the impact 
        of the implementation of the programs implemented under 
        subsection (b)(1) on--
                    ``(A) payments made and savings realized under this 
                title;
                    ``(B) the access of beneficiaries to items and 
                services furnished under such programs and 
                demonstration projects;
                    ``(C) the diversity of product selection under such 
                programs and demonstration projects; and
                    ``(D) the quality of items and services furnished 
                under such programs and demonstration projects.
            ``(2) Annual reports.--Not less frequently than annually, 
        the Secretary shall submit to the Committees on Ways and Means 
        and Energy and Commerce of the House of Representatives and the 
        Committee on Finance of the Senate a report on the results of 
        the evaluation conducted under paragraph (1).
    ``(e) Diagnostic Tests and Surgical Dressings.--
            ``(1) In general.--The Secretary shall implement 
        demonstration projects under which competitive acquisition 
        areas are established for contract award purposes for the 
        furnishing under part B of--
                    ``(A) diagnostic x-ray tests, clinical diagnostic 
                laboratory tests, and other diagnostic tests described 
                in paragraph (3) of section 1861(s); and
                    ``(B) surgical dressings, splints, casts, and other 
                devices described in paragraph (5) of such section.
            ``(2) Project requirements.--Each demonstration project 
        under paragraph (1) shall--
                    ``(A) be conducted in not more than 3 competitive 
                acquisition areas;
                    ``(B) be operated over a 3-year period; and
                    ``(C) otherwise be subject to the conditions under 
                subsections (b)(3) and (c) in the same manner as such 
                conditions apply to the programs established under 
                subsection (a).
            ``(3) Reports.--
                    ``(A) Initial report.--Not later than December 31, 
                2004, the Secretary shall submit to the Committees on 
                Ways and Means and Energy and Commerce of the House of 
                Representatives and the Committee on Finance of the 
                Senate an initial report on the demonstration projects 
                conducted under this subsection.
                    ``(B) Progress and final reports.--The Secretary 
                shall submit such progress and final reports to the 
                committees described in subparagraph (A) after the date 
                described in such subparagraph as the Secretary 
                determines appropriate.
    ``(f) Other Part B Items and Services.--
            ``(1) In general.--The Secretary may implement not more 
        than 5 demonstration projects under which competitive 
        acquisition areas are established for contract award purposes 
        for the furnishing under part B of any item or service covered 
        under such part that the Secretary may specify other than--
                    ``(A) any item or service described in subparagraph 
                (A) or (B) of subsection (e)(1); or
                    ``(B) physicians' services (as defined in section 
                1861(r)(1)).
            ``(2) Project requirements.--Each demonstration project 
        under paragraph (1) shall--
                    ``(A) be conducted in not more than 3 competitive 
                acquisition areas;
                    ``(B) be operated over a 3-year period; and
                    ``(C) otherwise be subject to the conditions under 
                subsections (b)(3) and (c) in the same manner as such 
                conditions apply to the programs established under 
                subsection (a).
            ``(3) Reports.--
                    ``(A) Initial report.--Not later than December 31, 
                2004, the Secretary shall submit to the Committees on 
                Ways and Means and Energy and Commerce of the House of 
                Representatives and the Committee on Finance of the 
                Senate an initial report on the demonstration projects 
                conducted under this subsection.
                    ``(B) Progress and final reports.--The Secretary 
                shall submit such progress and final reports to the 
                committees described in subparagraph (A) after the date 
                described in such subparagraph as the Secretary 
                determines appropriate.
    ``(g) Expansion of Programs and Demonstration Projects.--The 
Secretary may expand a program or demonstration project implemented 
under subsection (b)(1) to additional competitive acquisition areas if 
the Secretary determines, based on the evaluations conducted under 
subsection (d)(1), that there is clear evidence that any program or 
demonstration project--
            ``(1) results in a decrease in Federal expenditures under 
        this title; and
            ``(2) does not reduce program access, diversity of product 
        selection, and quality under this title.
    ``(h) Duration of Programs and Demonstration Projects.--
            ``(1) Durable medical equipment and orthotics.--The 
        programs implemented under subparagraph (A) or (B) of 
        subsection (b)(1) shall terminate on such date as the Secretary 
        may specify or may continue indefinitely (as determined by the 
        Secretary).
            ``(2) Diagnostic tests and surgical dressings.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any demonstration project implemented 
                under subsection (e)(1) shall terminate not later than 
                December 31, 2007.
                    ``(B) Exception.--If the Secretary determines that 
                a demonstration project implemented under subsection 
                (e)(1) meets the requirements of paragraphs (1) and (2) 
                of subsection (g), such project shall terminate on such 
                date as the Secretary may specify or may continue 
                indefinitely (as determined by the Secretary).
            ``(3) Other part b items and services.--Any demonstration 
        project implemented under subsection (f)(1) shall terminate not 
        later than December 31, 2007.''.
    (b) Continuation of Original Demonstration Projects.--Section 
1847(e) (42 U.S.C. 1395w-3(e)) is amended to read as follows:
    ``(e) Termination.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section, except as provided in paragraph (2), all projects 
        under this section shall terminate not later than December 31, 
        2002.
            ``(2) Extension of certain projects.--An project 
        implemented under this section as of the date of enactment of 
        the Beneficiary Access to Care and Medicare Equity Act of 2002 
        shall continue under the same terms and conditions applicable 
        under this section until such time as the competitive 
        acquisition area under such a project is designated as a 
        competitive acquisition area for purposes of section 1866B, 
        except that no project may continue under this section after 
        December 31, 2006.''.
    (c) Items and Services To Be Furnished Only Through Competitive 
Acquisition.--Section 1862(a) (42 U.S.C. 1395y(a)), as amended by 
section 3(a) of the Administrative Simplification Compliance Act 
(Public Law 107-105; 115 Stat. 1006), is amended--
            (1) by striking ``or'' at the end of paragraph (21);
            (2) by striking the period at the end of paragraph (22) and 
        inserting ``; or''; and
            (3) by inserting after paragraph (22) the following new 
        paragraph:
            ``(23) except in such cases of emergency or urgent need as 
        the Secretary shall prescribe, where the expenses are for an 
        item or service described in section 1866B(d) that is furnished 
        in a competitive acquisition area (as established by the 
        Secretary under section 1866B(b)) by an entity other than an 
        entity with which the Secretary has entered into an agreement 
        under section 1866B(c) for the furnishing of such an item or 
        service in that area.''.
    (d) Conforming Amendments Relating to General Provisions for 
Administration.--
            (1) General administrative authority.--Section 1866C(a) (as 
        redesignated by subsection (a)) is amended--
                    (A) in paragraph (1)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``the program under section 
                        1866A (in this section referred to as the 
                        `demonstration program')'' and inserting ``a 
                        program or demonstration project under section 
                        1866A or 1866B'';
                            (ii) in subparagraph (A), by striking ``and 
                        entitled to benefits under part A; and'' and 
                        inserting a semicolon;
                            (iii) in subparagraph (B), by striking the 
                        period at the end and inserting ``; and''; and
                            (iv) by adding at the end the following new 
                        subparagraph:
                    ``(C) in the case of the demonstration program 
                under section 1866A, is entitled to benefits under part 
                A.'';
                    (B) in paragraph (3), by striking ``Items and 
                services shall'' and inserting ``Except as provided in 
                the authority for the programs and demonstration 
                projects under section 1866B, items and services 
                shall'';
                    (C) in paragraph (4), by striking ``individuals or 
                entities'' and inserting ``entities (or, in the case of 
                the demonstration program under section 1866A, 
                individuals or entities)'';
                    (D) in paragraph (5)--
                            (i) in the first sentence, by striking 
                        ``the demonstration program'' and inserting 
                        ``the programs and demonstration projects under 
                        sections 1866A and 1866B''; and
                            (ii) in the second sentence, by striking 
                        ``individuals or entities'' and inserting 
                        ``entities (or, in the case of the 
                        demonstration program under section 1866A, 
                        individuals or entities)'';
                    (E) in paragraph (6)--
                            (i) by striking ``individual or entity'' 
                        and inserting ``entity (or, in the case of the 
                        demonstration program under section 1866A, an 
                        individual or entity)''; and
                            (ii) by striking ``the demonstration 
                        program'' and inserting ``the programs and 
                        demonstration projects under sections 1866A and 
                        1866B'';
                    (F) in paragraph (7), by striking ``individual or 
                entity'' each place it appears and inserting ``entity 
                (or, in the case of the demonstration program under 
                section 1866A, an individual or entity)''; and
                    (G) in paragraph (8)--
                            (i) in subparagraph (A), by striking ``the 
                        demonstration program'' and inserting ``the 
                        programs and demonstration projects under 
                        sections 1866A and 1866B''; and
                            (ii) in subparagraph (B), by striking 
                        ``individual or entity'' and inserting ``entity 
                        (or, in the case of the demonstration program 
                        under section 1866A, an individual or 
                        entity)''.
            (2) Contracts for program administration.--Section 1866C(b) 
        (as so redesignated) is amended--
                    (A) in paragraph (1), by striking ``the 
                demonstration program'' and inserting ``the programs 
                and demonstration projects under sections 1866A and 
                1866B'';
                    (B) in paragraph (2), by striking ``contracts.--The 
                Secretary'' and inserting the following: ``contracts.--
                A contract under this subsection may, at the 
                Secretary's discretion, relate to the administration of 
                either the program under section 1866A or a program or 
                demonstration project under section 1866B, or both. The 
                Secretary''; and
                    (C) in paragraph (7)--
                            (i) in subparagraph (D), by inserting 
                        ``under section 1866A'' before the period at 
                        the end;
                            (ii) by redesignating subparagraphs (E) 
                        through (H) as subparagraphs (G) through (J), 
                        respectively; and
                            (iii) by inserting after subparagraph (D) 
                        the following new subparagraphs:
                    ``(E) List of program participants.--Maintain and 
                regularly update a list of entities with agreements to 
                provide health care items and services under the 
                program under section 1866B, and ensure that such list, 
                in electronic and hard copy formats, is readily 
                available, as applicable, to--
                            ``(i) individuals residing in the service 
                        area who are entitled to benefits under part A 
                        or enrolled in the program under part B;
                            ``(ii) the entities responsible under 
                        sections 1816 and 1842 for administering 
                        payments for health care items and services 
                        furnished; and
                            ``(iii) entities providing health care 
                        items and services in the service area.
                    ``(F) Beneficiary enrollment.--Determine 
                eligibility of individuals to enroll under a program or 
                demonstration project under section 1866B and provide 
                enrollment-related services (but only if the Secretary 
                finds that the program administrator has no conflict of 
                interest caused by a financial relationship with any 
                entity furnishing items or services for which payment 
                may be made under any such program, or any other 
                conflict of interest with respect to such function).''.
            (3) Rules applicable to both program agreements and program 
        administration contracts.--Section 1866C(c) (as so 
        redesignated) is amended--
                    (A) in paragraph (1), by striking ``the 
                demonstration program'' and inserting ``the programs 
                and demonstration projects under sections 1866A and 
                1866B'';
                    (B) in paragraph (2)--
                            (i) in the matter preceding subparagraph 
                        (A), by inserting ``under section 1866A'' after 
                        ``the demonstration program'';
                            (ii) in subparagraph (A), by striking ``the 
                        program'' and inserting ``such a program''; and
                            (iii) in subparagraph (B)(i), by inserting 
                        ``under section 1866A'' after ``the 
                        demonstration program''; and
                    (C) in paragraph (3)--
                            (i) by striking ``the demonstration 
                        program'' and inserting ``the programs and 
                        demonstration projects under sections 1866A and 
                        1866B''; and
                            (ii) by striking ``administer the program'' 
                        and inserting ``administer such a program or 
                        project''.
            (4) Limitations on judicial review.--Section 1866C(d) (as 
        so redesignated) is amended--
                    (A) in the matter preceding paragraph (1), by 
                striking ``the demonstration program'' and inserting 
                ``the programs and demonstration projects under 
                sections 1866A and 1866B'' in the matter preceding 
                subparagraph (A);
                    (B) in paragraph (1), by striking ``the program'' 
                and inserting ``a program or demonstration project 
                under section 1866A or 1866B'';
                    (C) in paragraph (2), by striking ``program'' each 
                place it appears and inserting ``program or 
                demonstration project''; and
                    (D) in paragraph (5)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``to the program'' and 
                        inserting ``to a program or demonstration 
                        project'';
                            (ii) in subparagraph (A), by striking 
                        ``or'' after the semicolon at the end; and
                            (iii) in subparagraph (B), by inserting 
                        ``with respect to the demonstration program 
                        under section 1866A,'' before ``as to 
                        whether''.
            (5) Application limited to parts a and b.--Section 1866C(e) 
        (as so redesignated) is amended by striking ``or of the 
        demonstration program'' and inserting ``, section 1866A, or 
        section 1866B''.
            (6) Other conforming amendments.--
                    (A) Section 1866A(a)(2) (42 U.S.C. 1395cc-1) is 
                amended by striking ``section 1866B'' and inserting 
                ``section 1866C''.
                    (B) The heading of section 1866C (as so 
                redesignated) is amended to read as follows:

 ``general provisions for the administration of certain private sector 
             purchasing and quality improvement programs''.

    (e) GAO Study and Report.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on the coverage under the medicare 
        program under title XVIII of the Social Security Act of new and 
        innovative durable medical equipment, prosthetics, orthotics, 
        supplies, and equipment and the coding of such items for 
        purposes of payment under such program. Such study shall 
        include an analysis of the review and approval process for the 
        new and innovative items described in the preceding sentence, 
        the coding process for such items, and beneficiary access to 
        such items if such items are not covered under the medicare 
        program.
            (2) Report.--Not later than the date that is 2 years after 
        the date of the enactment of this Act, the Comptroller General 
        shall submit a report on the study conducted under paragraph 
        (1) 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 together with such 
        recommendations for legislative and administrative action as 
        the Comptroller General determines appropriate.

SEC. 312. TWO-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS; PROVISIONS 
              RELATING TO REPORTS.

    (a) 2-Year Extension of Moratorium on Therapy Caps.--Section 
1833(g)(4) (42 U.S.C. 1395l(g)(4)) is amended by striking ``and 2002'' 
and inserting ``2002, 2003, and 2004''.
    (b) Prompt Submission of Overdue Reports on Payment and Utilization 
of Outpatient Therapy Services.--Not later than December 31, 2002, the 
Secretary shall submit to Congress the reports required under section 
4541(d)(2) of the Balanced Budget Act of 1997 (42 U.S.C. 1395l note) 
(relating to alternatives to a single annual dollar cap on outpatient 
therapy) and under section 221(d) of the Medicare, Medicaid, and SCHIP 
Balanced Budget Refinement Act of 1999 (113 Stat. 1501A-352) (relating 
to utilization patterns for outpatient therapy).
    (c) Identification of Conditions and Diseases Justifying Waiver of 
Therapy Cap.--
            (1) Study.--The Secretary, in consultation with clinicians, 
        shall conduct a study to identify conditions or diseases that 
        should be excluded from the therapy caps under section 
        1833(g)(4) of the Social Security Act (42 U.S.C. 1395l(g)(4)).
            (2) Reports to congress.--Not later than January 1, 2004, 
        the Secretary shall submit a report to Congress on the study 
        conducted under paragraph (1) together with recommendations for 
        such legislation and administrative action as the Secretary 
        determines appropriate.

SEC. 313. ACCELERATION OF REDUCTION OF BENEFICIARY COPAYMENT FOR 
              HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

    Section 1833(t)(8)(C)(ii) (42 U.S.C. 1395l(t)(8)(C)(ii)) is 
amended--
            (1) in subclause (V), by striking ``and thereafter'' and 
        inserting ``through 2011''; and
            (2) by adding at the end the following new subclause:
                                    ``(VI) For procedures performed in 
                                2012 and thereafter, 30 percent.''.

SEC. 314. RENAL DIALYSIS SERVICES.

    (a) Increase in Renal Dialysis Composite Rate for Services 
Furnished in 2003 and 2004.--Notwithstanding any other provision of 
law, with respect to payment under part B of title XVIII of the Social 
Security Act for renal dialysis services furnished in 2003 and 2004, 
the composite payment rate otherwise established under section 
1881(b)(7) of such Act (42 U.S.C. 1395rr(b)(7)) shall be increased by 
1.2 percent.
    (b) Restoring Composite Rate Exceptions for Pediatric Facilities.--
            (1) In general.--Section 422(a)(2) of BIPA (114 Stat. 
        2763A-516) is amended--
                    (A) in subparagraph (A), by striking ``and (C)'' 
                and inserting ``, (C), and (D)'';
                    (B) in subparagraph (B), by striking ``In the 
                case'' and inserting ``Subject to subparagraph (D), in 
                the case''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(D) Inapplicability to pediatric facilities.--
                Subparagraphs (A) and (B) shall not apply, as of 
                October 1, 2002, to pediatric facilities that do not 
                have an exception rate described in subparagraph (C) in 
                effect on such date. For purposes of this subparagraph, 
                the term `pediatric facility' means a renal facility at 
                least 50 percent of whose patients are individuals 
                under 18 years of age.''.
            (2) Conforming amendment.--The fourth sentence of section 
        1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is amended by striking 
        ``The Secretary'' and inserting ``Subject to section 422(a)(2) 
        of the Medicare, Medicaid, and SCHIP Benefits Improvement and 
        Protection Act of 2000, the Secretary''.

SEC. 315. IMPROVED PAYMENT FOR CERTAIN MAMMOGRAPHY SERVICES.

    (a) Exclusion From OPD Fee Schedule.--Section 1833(t)(1)(B)(iv) (42 
U.S.C. 1395l(t)(1)(B)(iv)) is amended by inserting before the period at 
the end the following: ``and does not include screening mammography (as 
defined in section 1861(jj)) and diagnostic mammography''.
    (b) Payment.--Section 1833(a)(2)(E)(i) (42 U.S.C. 
1395l(a)(2)(E)(i)) is amended by inserting ``, and for services 
furnished on or after January 1, 2004, diagnostic mammography'' after 
``screening mammography''.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to mammography performed on or after January 1, 2004.

SEC. 316. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR CERTAIN MILITARY 
              RETIREES; SPECIAL ENROLLMENT PERIOD.

    (a) Waiver of Penalty.--
            (1) In general.--Section 1839(b) (42 U.S.C. 1395r(b)) is 
        amended by adding at the end the following new sentence: ``No 
        increase in the premium shall be effected for a month in the 
        case of an individual who is 65 years of age or older, who 
        enrolls under this part during 2001, 2002, or 2003, and who 
        demonstrates to the Secretary before December 31, 2003, that 
        the individual is a covered beneficiary (as defined in section 
        1072(5) of title 10, United States Code). The Secretary shall 
        consult with the Secretary of Defense in identifying 
        individuals described in the previous sentence.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to premiums for months beginning with January 2003. 
        The Secretary shall establish a method for providing rebates of 
        premium penalties paid for months on or after January 2003 for 
        which a penalty does not apply under such amendment but for 
        which a penalty was previously collected.
    (b) Medicare Part B Special Enrollment Period.--
            (1) In general.--In the case of any individual who, as of 
        the date of the enactment of this Act, is 65 years of age or 
        older, is eligible to enroll but is not enrolled under part B 
        of title XVIII of the Social Security Act, and is a covered 
        beneficiary (as defined in section 1072(5) of title 10, United 
        States Code), the Secretary shall provide for a special 
        enrollment period during which the individual may enroll under 
        such part. Such period shall begin as soon as possible after 
        the date of the enactment of this Act and shall end on December 
        31, 2003.
            (2) Coverage period.--In the case of an individual who 
        enrolls during the special enrollment period provided under 
        paragraph (1), the coverage period under part B of title XVIII 
        of the Social Security Act shall begin on the first day of the 
        month following the month in which the individual enrolls.

SEC. 317. COVERAGE OF CHOLESTEROL AND BLOOD LIPID SCREENING.

    (a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is 
amended--
            (1) in subparagraph (U), by striking ``and'' at the end;
            (2) in subparagraph (V)(iii), by inserting ``and'' at the 
        end; and
            (3) by adding at the end the following new subparagraph:
                    ``(W) cholesterol and other blood lipid screening 
                tests (as defined in subsection (ww));''.
    (b) Services Described.--Section 1861 (42 U.S.C. 1395x) is amended 
by adding at the end the following new subsection:

           ``Cholesterol and Other Blood Lipid Screening Test

    ``(ww)(1) The term `cholesterol and other blood lipid screening 
test' means diagnostic testing of cholesterol and other lipid levels of 
the blood for the purpose of early detection of abnormal cholesterol 
and other lipid levels.
    ``(2) The Secretary shall establish standards, in consultation with 
appropriate organizations, regarding the frequency and type of 
cholesterol and other blood lipid screening tests, except that such 
frequency may not be more often than once every 2 years.''.
    (c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)) is 
amended--
            (1) by striking ``and'' at the end of subparagraph (H);
            (2) by striking the semicolon at the end of subparagraph 
        (I) and inserting ``, and''; and
            (3) by adding at the end the following new subparagraph:
            ``(J) in the case of a cholesterol and other blood lipid 
        screening test (as defined in section 1861(ww)(1)), which is 
        performed more frequently than is covered under section 
        1861(ww)(2).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to tests furnished on or after January 1, 2004.

SEC. 318. TEMPORARY INCREASE FOR GROUND AMBULANCE SERVICES.

    Section 1834(l) (42 U.S.C. 1395m(l)) is amended--
            (1) by redesignating paragraph (8), as added by section 
        221(a) of BIPA (114 Stat. 2763A-486), as paragraph (9); and
            (2) by adding at the end the following new paragraph:
            ``(10) Temporary increase for ground ambulance services.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, in the case of ground 
                ambulance services furnished on or after January 1, 
                2003, and before January 1, 2006 for which the 
                transportation originates in--
                            ``(i) a rural area described in paragraph 
                        (9) or in a rural census tract described in 
                        such paragraph, the fee schedule established 
                        under this section shall provide that the rate 
                        for the service otherwise established, after 
                        application of any increase under such 
                        paragraph, shall be increased by 5 percent; and
                            ``(ii) an area not described in clause (i), 
                        the fee schedule established under this section 
                        shall provide that the rate for the service 
                        otherwise established shall be increased by 2 
                        percent
                    ``(B) Application of increased payments after 
                2005.--The increased payments under subparagraph (A) 
                shall not be taken into account in calculating payments 
                for services furnished on or after the period specified 
                in such subparagraph.''.

SEC. 319. ENSURING APPROPRIATE COVERAGE OF AIR AMBULANCE SERVICES UNDER 
              AMBULANCE FEE SCHEDULE.

    (a) Coverage.--Section 1834(l) (42 U.S.C. 1395m(l)), as amended by 
section 318, 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 or certifies 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) (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 the enactment of 
this Act.

SEC. 320. ADJUSTMENTS TO LOCAL FEE SCHEDULES FOR CLINICAL LABORATORY 
              TESTS FOR IMPROVEMENT IN CERVICAL CANCER DETECTION.

    Section 1833(h)(2) (42 U.S.C. 1395l(h)(2)) is amended by adding at 
the end the following new subparagraph:
    ``(C) Notwithstanding any other provision of law, in the case of a 
diagnostic test for the detection of cervical cancer utilizing 
automated thin layer preparation techniques for specimens collected in 
fluid medium, and for which a national limitation amount has been set 
pursuant to the parenthetical in paragraph (4)(B)(viii), furnished on 
or after July 1, 2003, and before June 30, 2005, the Secretary shall 
permit carriers and medicare administrative contractors, as the case 
may be, to raise their local fee schedule amount for purposes of 
determining payment for such tests under this section, up to, but not 
to exceed the national limitation amount previously established for 
that test. Any such adjustment shall not affect such national 
limitation amount.

SEC. 321. COVERAGE OF IMMUNOSUPPRESSIVE DRUGS FOR ALL MEDICARE 
              BENEFICIARIES.

    (a) In General.--Section 1861(s)(2)(J) (42 U.S.C. 1395x(s)(2)(J)) 
is amended by striking ``, to an individual who receives'' and all that 
follows before the semicolon at the end and inserting ``to an 
individual who has received an organ transplant''.
    (b) Effective Date.--The amendments made by this section shall 
apply to drugs furnished on or after the date of the enactment of this 
Act.

SEC. 322. MEDICARE COMPLEX CLINICAL CARE MANAGEMENT PAYMENT 
              DEMONSTRATION.

    (a) Establishment.--
            (1) In general.--The Secretary shall establish a 
        demonstration program to make the medicare program more 
        responsive to needs of eligible beneficiaries by promoting 
        continuity of care, helping stabilize medical conditions, 
        preventing or minimizing acute exacerbations of chronic 
        conditions, and reducing adverse health outcomes, such as 
        adverse drug interactions related to polypharmacy.
            (2) Sites.--The Secretary shall designate 4 sites at which 
        to conduct the demonstration program under this section, of 
        which 3 shall be in an urban area and 1 shall be in a rural 
        area.
            (3) Duration.--The Secretary shall conduct the 
        demonstration program under this section for a 3-year period.
    (b) Participants.--Any eligible beneficiary who resides in an area 
designated by the Secretary as a demonstration site under subsection 
(a)(2) may participate in the demonstration program under this section 
if such beneficiary identifies a principal care physician who agrees to 
manage the complex clinical care of the eligible beneficiary under the 
demonstration program.
    (c) Principal Care Physician Responsibilities.--The Secretary shall 
enter into an agreement with each principal care physician who agrees 
to manage the complex clinical care of an eligible beneficiary under 
subsection (b) under which the principal care physician shall--
            (1) serve as the primary contact of the eligible 
        beneficiary in accessing items and services for which payment 
        may be made under the medicare program;
            (2) maintain medical information related to care provided 
        by other health care providers who provide health care items 
        and services to the eligible beneficiary, including clinical 
        reports, medication and treatments prescribed by other 
        physicians, hospital and hospital outpatient services, skilled 
        nursing home care, home health care, and medical equipment 
        services;
            (3) monitor and advocate for the continuity of care of the 
        eligible beneficiary and the use of evidence-based guidelines;
            (4) promote self-care and family caregiver involvement 
        where appropriate;
            (5) have appropriate staffing arrangements to conduct 
        patient self-management and other care coordination activities 
        as specified by the Secretary; and
            (6) meet such other complex care management requirements as 
        the Secretary may specify.
    (d) Complex Clinical Care Management Fee.--
            (1) Payment.--Under an agreement entered into under 
        subsection (c), the Secretary shall pay to each principal care 
        physician, on behalf of each eligible beneficiary under the 
        care of that physician, the complex clinical care management 
        fee developed by the Secretary under paragraph (2).
            (2) Development of fee.--The Secretary shall develop a 
        complex care management fee under this paragraph that is paid 
        on a monthly basis and which shall be payment in full for all 
        the functions performed by the principal care physician under 
        the demonstration program, including any functions performed by 
        other qualified practitioners acting on behalf of the 
        physician, appropriate staff under the supervision of the 
        physician, and any other person under a contract with the 
        physician, including any person who conducts patient self-
        management and caregiver education under subsection (c)(4).
    (e) Funding.--
            (1) In general.--The Secretary shall provide for the 
        transfer from the Federal Supplementary Insurance Trust Fund 
        established under section 1841 of the Social Security Act (42 
        U.S.C. 1395t) of such funds as are necessary for the costs of 
        carrying out the demonstration program under this section.
            (2) Budget neutrality.--In conducting the demonstration 
        program under this section, the Secretary shall ensure that the 
        aggregate payments made by the Secretary do not exceed the 
        amount which the Secretary would have paid if the demonstration 
        program under this section was not implemented.
    (f) Waiver authority.--The Secretary may waive such requirements of 
titles XI and XVIII of the Social Security Act (42 U.S.C. 1301 et seq.; 
1395 et seq.;) as may be necessary for the purpose of carrying out the 
demonstration program under this section.
    (g) 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 for 
such legislation and administrative action as the Secretary determines 
to be appropriate.
    (h) Definitions.--In this section:
            (1) Activity of daily living.--The term ``activity of daily 
        living'' means eating, toiling, transferring, bathing, 
        dressing, and continence.
            (2) Chronic condition.--The term ``chronic condition'' 
        means a biological, physical, or mental condition that is 
        likely to last a year or more, for which there is no known 
        cure, for which there is a need for ongoing medical care, and 
        which may affect an individual's ability to carry out 
        activities of daily living or instrumental activities of daily 
        living, or both.
            (3) Eligible beneficiary.--The term ``eligible 
        beneficiary'' means any individual who--
                    (A) is enrolled for benefits under part B of the 
                medicare program;
                    (B) has at least 4 complex medical conditions; and
                    (C) has--
                            (i) an inability to self-manage their care; 
                        or
                            (ii) a functional limitation defined as an 
                        impairment in 1 or more activity of daily 
                        living or instrumental activity of daily 
                        living.
            (4) Instrumental activity of daily living.--The term 
        ``instrumental activity of daily living'' means meal 
        preparation, shopping, housekeeping, laundry, money management, 
        telephone use, and transportation use.
            (5) Medicare program.--The term ``medicare program'' means 
        the health care program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
            (6) Principal care physician.--The term ``principal care 
        physician'' means the physician with primary responsibility for 
        overall coordination of the care of an eligible beneficiary (as 
        specified in a written plan of care) who may be a primary care 
        physician or a specialist.

SEC. 323. STUDY AND REPORT ON NEW TECHNOLOGY PAYMENTS UNDER THE 
              PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT 
              DEPARTMENT SERVICES.

    (a) Study.--
            (1) In general.--The Secretary shall conduct a study of the 
        methods by which new medical devices, new drugs, biologicals, 
        and other new technologies are recognized for payment under the 
        hospital outpatient department prospective payment system 
        established under section 1833(t) of the Social Security Act 
        (42 U.S.C. 1395l(t)) and on possible changes to those methods.
            (2) Issues examined.--The study conducted under paragraph 
        (1) shall examine the following:
                    (A) The experience to date of the transitional 
                pass-through payment mechanism for additional costs of 
                innovative medical devices, drugs, and biologicals 
                (provided under section 1833(t)(6) of the Social 
                Security Act (42 U.S.C. 1395l(t)(6))) and of the 
                provision for new technology ambulatory payment 
                classifications provided through regulations. In 
                particular, the study should examine the effect of such 
                payment mechanism on access of medicare beneficiaries 
                to orphan and single source drugs.
                    (B) The impact of transitional pass-through 
                payments of payment rates for procedures not using new 
                medical devices, drugs, biologicals, and other new 
                technologies.
                    (C) The impact of transitional pass-through 
                payments on various types of hospitals, including 
                teaching hospitals, rural hospitals, and small urban 
                hospitals.
                    (D) The extent to which additional payments are 
                necessary to facilitate access to improved treatments 
                by medicare beneficiaries.
            (3) Options considered.--In conducting the study under 
        paragraph (1), the Secretary shall consider the following 
        options:
                    (A) Statutory, regulatory, or administrative 
                changes that may be desirable to assure appropriate 
                recognition of the costs to hospitals of delivering 
                such services. In considering such changes, the 
                Secretary shall take into account the effect of such 
                changes on the payment for new technology services, on 
                payment for services that do not employ such technology 
                services, and on administrative resources of both the 
                Department of Health and Human Services and hospitals 
                that may be necessary to implement various changes in a 
                reliable fashion.
                    (B) Appropriate methods for assuring that decisions 
                concerning the eligibility of new technologies for 
                additional payment are made and implemented 
                expeditiously (including possible methods for 
                shortening the interval between approval of a 
                technology by the Food and Drug Administration and 
                commencement of additional payment in instances when a 
                new technology qualifies for such payment) and for 
                assuring that additional payments are directed to those 
                services that add value for medicare beneficiaries by 
                comparison to other technologies for which they may 
                substitute.
                    (C) Methods of setting additional payment rates 
                that may reasonably reflect hospital costs in 
                furnishing new technology services, including 
                alternatives to pricing new drugs based on average 
                wholesale price.
                    (D) Methods for appropriately reflecting the costs 
                of new technology services in payment rates under the 
                hospital outpatient department prospective payment 
                system after the period during which additional 
                payments are made.
    (b) Report.--Not later than July 1, 2003, the Secretary shall 
submit a report on the study conducted under paragraph (1) 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 
together with such recommendations for legislative and administrative 
action as the Secretary determines appropriate.

             TITLE IV--PROVISION RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

SEC. 401. ELIMINATION OF 15 PERCENT REDUCTION IN PAYMENT RATES UNDER 
              THE PROSPECTIVE PAYMENT SYSTEM.

    (a) In General.--Section 1895(b)(3)(A) (42 U.S.C. 1395fff(b)(3)(A)) 
is amended to read as follows:
                    ``(A) Initial basis.--Under such system the 
                Secretary shall provide for computation of a standard 
                prospective payment amount (or amounts) as follows:
                            ``(i) Such amount (or amounts) shall 
                        initially be based on the most current audited 
                        cost report data available to the Secretary and 
                        shall be computed in a manner so that the total 
                        amounts payable under the system for fiscal 
                        year 2001 shall be equal to the total amount 
                        that would have been made if the system had not 
                        been in effect and if section 1861(v)(1)(L)(ix) 
                        had not been enacted.
                            ``(ii) For fiscal year 2002 and for the 
                        first quarter of fiscal year 2003, such amount 
                        (or amounts) shall be equal to the amount (or 
                        amounts) determined under this paragraph for 
                        the previous fiscal year, updated under 
                        subparagraph (B).
                            ``(iii) For 2003, such amount (or amounts) 
                        shall be equal to the amount (or amounts) 
                        determined under this paragraph for fiscal year 
                        2002, updated under subparagraph (B) for 2003.
                            ``(iv) For 2004 and each subsequent year, 
                        such amount (or amounts) shall be equal to the 
                        amount (or amounts) determined under this 
                        paragraph for the previous year, updated under 
                        subparagraph (B).
                Each such amount shall be standardized in a manner that 
                eliminates the effect of variations in relative case 
                mix and area wage adjustments among different home 
                health agencies in a budget neutral manner consistent 
                with the case mix and wage level adjustments provided 
                under paragraph (4)(A). Under the system, the Secretary 
                may recognize regional differences or differences based 
                upon whether or not the services or agency are in an 
                urbanized area.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the amendments made by section 501 of 
BIPA (114 Stat. 2763A-529).

SEC. 402. UPDATE IN HOME HEALTH SERVICES.

    (a) Change to Calendar Year Update.--
            (1) In general.--Section 1895(b) (42 U.S.C. 1395fff(b)(3)) 
        is amended--
                    (A) in paragraph (3)(B)(i)--
                            (i) by striking ``each fiscal year 
                        (beginning with fiscal year 2002)'' and 
                        inserting ``fiscal year 2002 and for each 
                        subsequent year (beginning with 2003)''; and
                            (ii) by inserting ``or year'' after ``the 
                        fiscal year'';
                    (B) in paragraph (3)(B)(ii)--
                            (i) in subclause (II), by striking ``fiscal 
                        year'' and inserting ``year'' and by 
                        redesignating such subclause as subclause 
                        (III); and
                            (ii) in subclause (I), by striking ``each 
                        of fiscal years 2002 and 2003'' and inserting 
                        the following: ``fiscal year 2002, the home 
                        health market basket percentage increase (as 
                        defined in clause (iii)) minus 1.1 percentage 
                        points;
                                    ``(II) 2003'';
                    (C) in paragraph (3)(B)(iii), by inserting ``or 
                year'' after ``fiscal year'' each place it appears;
                    (D) in paragraph (3)(B)(iv)--
                            (i) by inserting ``or year'' after ``fiscal 
                        year'' each place it appears; and
                            (ii) by inserting ``or years'' after 
                        ``fiscal years''; and
                    (E) in paragraph (5), by inserting ``or year'' 
                after ``fiscal year''.
            (2) Transition rule.--The standard prospective payment 
        amount (or amounts) under section 1895(b)(3) of the Social 
        Security Act for the calendar quarter beginning on October 1, 
        2002, shall be such amount (or amounts) for the previous 
        calendar quarter.
    (b) Changes in Updates for 2003, 2004, and 2005.--Section 
1895(b)(3)(B)(ii) (42 U.S.C. 1395fff(b)(3)(B)(ii)), as amended by 
subsection (a)(1)(B), is amended--
            (1) in subclause (II), by striking ``the home health market 
        basket percentage increase (as defined in clause (iii)) minus 
        1.1 percentage points'' and inserting ``2.0 percentage 
        points'';
            (2) by striking ``or'' at the end of subclause (II);
            (3) by redesignating subclause (III) as subclause (V); and
            (4) by inserting after subclause (II) the following new 
        subclause:
                                    ``(III) 2004, 1.1 percentage 
                                points;
                                    ``(IV) 2005, 2.7 percentage points; 
                                or''.
    (c) Payment Adjustment.--
            (1) In general.--Section 1895(b)(5) (42 U.S.C. 
        1395fff(b)(5)) is amended by striking ``5 percent'' and 
        inserting ``3 percent''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to years beginning with 2003.

                      Subtitle B--Other Provisions

SEC. 411. INFORMATION TECHNOLOGY DEMONSTRATION PROJECT.

    (a) In General.--The Secretary shall conduct a demonstration 
project to demonstrate the use of third-party software contractors in 
claims processing and quality improvement activities under parts A and 
B of title XVIII of the Social Security Act. The Secretary shall enter 
into up to 4 contracts with third-party software contractors to carry 
out the purposes of the project.
    (b) Duration.--The demonstration project under this section shall 
last for not longer than 2 years.
    (c) Waiver.--The Secretary may waive such provisions of titles XI 
and XVIII of the Social Security Act (42 U.S.C. 1301 et seq.; 1395) as 
may be necessary to carry out the demonstration project under this 
section.
    (d) Report to Congress.--Not later than 6 months after the 
completion of the demonstration project under this section, the 
Secretary shall submit to Congress a report on the project. Such report 
shall include information on the cost-effectiveness of using third-
party software contractors for claims processing and quality 
improvement activities under the medicare program and recommendations 
for such legislation and administrative actions as the Secretary 
considers appropriate.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 412. MODIFICATIONS TO MEDICARE PAYMENT ADVISORY COMMISSION 
              (MEDPAC).

    (a) Examination of Budget Consequences.--Section 1805(b) (42 U.S.C. 
1395b-6(b)) is amended by adding at the end the following new 
paragraph:
            ``(8) Examination of budget consequences.--Before making 
        any recommendations, the Commission shall examine the budget 
        consequences of such recommendations, directly or through 
        consultation with appropriate expert entities.''.
    (b) Consideration of Efficient Provision of Services.--Section 
1805(b)(2)(B)(i) (42 U.S.C. 1395b-6(b)(2)(B)(i)) is amended by 
inserting ``the efficient provision of'' after ``expenditures for''.
    (c) Additional Report.--
            (1) Data needs and sources.--The Medicare Payment Advisory 
        Commission shall conduct a study, and submit a report to 
        Congress by not later than September 1, 2003, on the need for 
        current data, and sources of current data available, to 
        determine the solvency and financial circumstances of hospitals 
        and other medicare providers of services.
            (2) Reports in addition to annual report.--The report 
        required under paragraph (1) shall be in addition to the report 
        required to be submitted by June 15, 2003, under section 
        1805(b)(1)(D) of the Social Security Act (42 U.S.C. 1395b-
        6(b)(1)(D)).
    (d) Reduction in Number of Members.--
            (1) Reduction.--Section 1805(c)(1) (42 U.S.C. 1395b-
        6(c)(1)) is amended by striking ``17'' and inserting ``15''.
            (2) Application.--In order to carry out the amendment made 
        by paragraph (1), in each of the first 2 calendar years in 
        which the terms of 2 or more of the members of the Medicare 
        Payment Advisory Commission would expire (as provided in 
        section 1805(c)(3)(A) of the Social Security Act (42 U.S.C. 
        1395b-6(c)(3)(A)), the Comptroller General of the United States 
        shall not appoint an individual to fill 1 of such vacancies.

SEC. 413. RETAINING DIVERSITY OF LOCAL COVERAGE DETERMINATIONS.

    (a) In General.--Section 1874A(b) of the Social Security Act, as 
added by section 621, is amended by adding at the end the following new 
paragraph:
            ``(6) Retaining diversity of local coverage 
        determinations.--A contract with a medicare administrative 
        contractor under this section to perform the function of 
        developing local coverage determinations (as defined in section 
        1869(f)(2)(B)) shall provide that the contractor shall--
                    ``(A) designate at least 1 different individual to 
                serve as medical director for every 2 States for which 
                such contract performs such function;
                    ``(B) utilize such medical director in the 
                performance of such function; and
                    ``(C) appoint a contractor advisory committee with 
                respect to each such State to provide a formal 
                mechanism for physicians in the State to be informed 
                of, and participate in, the development of a local 
                coverage determination in an advisory capacity.''.
    (b) Conforming Amendment.--Section 1874A(a)(4) of the Social 
Security Act, as added by section 621, is amended by inserting 
``including the function of developing local coverage determinations, 
as defined in section 1869(f)(2)(B))'' after ``payment functions''.
    (c) Effective Date.--The amendment made by subsection (a) shall 
take effect on October 1, 2004.

            TITLE V--MEDICARE+CHOICE AND RELATED PROVISIONS

SEC. 501. REVISION IN MINIMUM PERCENTAGE INCREASE FOR 2003 AND 2004.

    Section 1853(c)(1)(C) (42 U.S.C. 1395w-23(c)(1)(C)) is amended by 
striking clause (iv) and inserting the following:
                            ``(iv) For 2002, 102 percent of the annual 
                        Medicare+Choice capitation rate under this 
                        paragraph for the area for 2001.
                            ``(v) For 2003, 104 percent of the annual 
                        Medicare+Choice capitation rate under this 
                        paragraph for the area for 2002.
                            ``(vi) For 2004, 103 percent of the annual 
                        Medicare+Choice capitation rate under this 
                        paragraph for the area for 2003.
                            ``(vii) For 2005 and each succeeding year, 
                        102 percent of the annual Medicare+Choice 
                        capitation rate under this paragraph for the 
                        area for the previous year (determined as if 
                        the amendment made by section 501 of the 
                        Beneficiary Access to Care and Medicare Equity 
                        Act of 2002 had not been enacted).''.

SEC. 502. CLARIFICATION OF AUTHORITY REGARDING DISAPPROVAL OF 
              UNREASONABLE BENEFICIARY COST-SHARING.

    (a) In General.--Section 1854(a)(5) (42 U.S.C. 1395w-24(a)(5)) is 
amended by adding at the end the following new subparagraph:
                    ``(C) Clarification of authority regarding 
                disapproval of unreasonable beneficiary cost-sharing.--
                Under the authority under subparagraph (A), the 
                Secretary may disapprove the values submitted under 
                paragraphs (2)(A)(iii) and (4)(A)(iii) if the Secretary 
                determines that the deductibles, coinsurance, or 
                copayments applicable under the plan discourage access 
                to covered services or are likely to result in 
                favorable selection of Medicare+Choice eligible 
                individuals.''.
    (b) Study and Report.--
            (1) Study.--The Secretary, in consultation with 
        beneficiaries, consumer groups, employers, and Medicare+Choice 
        organizations, shall conduct a study to determine the extent to 
        which the cost-sharing structures under Medicare+Choice plans 
        under part C of title XVIII of the Social Security Act 
        discourage access to covered services or discriminate based on 
        the health status of Medicare+Choice eligible individuals (as 
        defined in section 1851(a)(3) (42 U.S.C. 1395w-21(a)(3))).
            (2) Report.--Not later than December 31, 2004, the 
        Secretary shall submit a report to Congress on the study 
        conducted under paragraph (1) together with recommendations for 
        such legislation and administrative actions as the Secretary 
        considers appropriate.

SEC. 503. EXTENSION OF REASONABLE COST CONTRACTS.

    (a) Five-Year Extension.--Section 1876(h)(5)(C) (42 U.S.C. 
1395mm(h)(5)(C)) is amended by striking ``2004'' and inserting 
``2009''.
    (b) Application of Certain Medicare+Choice Requirements to Cost 
Contracts Extended or Renewed After 2003.--Section 1876(h) (42 U.S.C. 
1395mm(h)(5)), as amended by subsection (a), is amended--
            (1) by redesignating paragraph (5) as paragraph (6); and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
    ``(5) Any reasonable cost reimbursement contract with an eligible 
organization under this subsection that is extended or renewed on or 
after the date of the enactment of the Beneficiary Access to Care and 
Medicare Equity Act of 2002 for plan years beginning on or after 
January 1, 2004, shall provide that the following provisions of the 
Medicare+Choice program under part C shall apply to such organization 
and such contract in a substantially similar manner as such provisions 
apply to Medicare+Choice organizations and Medicare+Choice plans under 
such part:
            ``(A) Paragraph (1) of section 1852(e) (relating to the 
        requirement of having an ongoing quality assurance program) and 
        paragraph (2)(B) of such section (relating to the required 
        elements for such a program).
            ``(B) Section 1852(j)(4) (relating to limitations on 
        physician incentive plans).
            ``(C) Section 1854(c) (relating to the requirement of 
        uniform premiums among individuals enrolled in the plan).
            ``(D) Section 1854(g) (relating to restrictions on 
        imposition of premium taxes with respect to payments to 
        organizations).
            ``(E) Section 1856(b) (regarding compliance with the 
        standards established by regulation pursuant to such section, 
        including the provisions of paragraph (3) of such section 
        relating to relation to State laws).
            ``(F) Section 1852(a)(3)(A) (regarding the authority of 
        organizations to include supplemental health care benefits 
        under the plan subject to the approval of the Secretary).
            ``(G) The provisions of part C relating to timelines for 
        benefit filings, contract renewal, and beneficiary 
        notification.
            ``(H) Section 1854(a)(5)(C) (relating to proposed cost-
        sharing under the contract being subject to review by the 
        Secretary).''.

SEC. 504. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION (SHMO) 
              DEMONSTRATION PROJECT.

    (a) In General.--Section 4018(b)(1) of the Omnibus Budget 
Reconciliation Act of 1987 is amended by striking ``the date that is 30 
months after the date that the Secretary submits to Congress the report 
described in section 4014(c) of the Balanced Budget Act of 1997'' and 
inserting ``December 31, 2006''.
    (b) SHMOs Offering Medicare+Choice Plans.--Nothing in such section 
4018 shall be construed as preventing a social health maintenance 
organization from offering a Medicare+Choice plan under part C of title 
XVIII of the Social Security Act.

SEC. 505. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS 
              BENEFICIARIES.

    (a) Treatment as Coordinated Care Plan.--Section 1851(a)(2)(A) (42 
U.S.C. 1395w-21(a)(2)(A)) is amended by adding at the end the following 
new sentence: ``Specialized Medicare+Choice plans for special needs 
beneficiaries (as defined in section 1859(b)(4)) may be any type of 
coordinated care plan.''.
    (b) Specialized Medicare+Choice Plan for Special Needs 
Beneficiaries Defined.--Section 1859(b) (42 U.S.C. 1395w-29(b)) is 
amended by adding at the end the following new paragraph:
            ``(4) Specialized medicare+choice plans for special needs 
        beneficiaries.--
                    ``(A) In general.--The term `specialized 
                Medicare+Choice plan for special needs beneficiaries' 
                means a Medicare+Choice plan that exclusively serves 
                special needs beneficiaries (as defined in subparagraph 
                (B)).
                    ``(B) Special needs beneficiary.--The term `special 
                needs beneficiary' means a Medicare+Choice eligible 
                individual who--
                            ``(i) is institutionalized (as defined by 
                        the Secretary);
                            ``(ii) is entitled to medical assistance 
                        under a State plan under title XIX; or
                            ``(iii) meets such requirements as the 
                        Secretary may determine would benefit from 
                        enrollment in such a specialized 
                        Medicare+Choice plan described in subparagraph 
                        (A) for individuals with severe or disabling 
                        chronic conditions.''.
    (c) Restriction on Enrollment Permitted.--Section 1859 (42 U.S.C. 
1395w-29) is amended by adding at the end the following new subsection:
    ``(f) Restriction on Enrollment for Specialized Medicare+Choice 
Plans for Special Needs Beneficiaries.--In the case of a specialized 
Medicare+Choice plan (as defined in subsection (b)(4)), notwithstanding 
any other provision of this part and in accordance with regulations of 
the Secretary and for periods before January 1, 2007, the plan may 
restrict the enrollment of individuals under the plan to individuals 
who are within one or more classes of special needs beneficiaries.''.
    (d) Report to Congress.--Not later than December 31, 2005, the 
Secretary shall submit to Congress a report that assesses the impact of 
specialized Medicare+Choice plans for special needs beneficiaries on 
the cost and quality of services provided to enrollees. Such report 
shall include an assessment of the costs and savings to the medicare 
program as a result of amendments made by subsections (a), (b), and 
(c).
    (e) Effective Dates.--
            (1) In general.--The amendments made by subsections (a), 
        (b), and (c) shall take effect upon the date of the enactment 
        of this Act.
            (2) Deadline for issuance of requirements for special needs 
        beneficiaries; transition.--No later than 1 year after the date 
        of the enactment of this Act, the Secretary shall issue final 
        regulations to establish requirements for special needs 
        beneficiaries under section 1859(b)(4)(B)(iii) of the Social 
        Security Act, as added by subsection (b).

SEC. 506. EXTENSION OF NEW ENTRY BONUS.

    Section 1853(i) (42 U.S.C. 1395w-23(i)) is amended--
            (1) in paragraph (1), by inserting ``, or filed notice with 
        the Secretary as of October 3, 2002, that they will not be 
        offering such a plan as of January 1, 2002, or as of January 1, 
        2003'' after ``January 1, 2001'' in the matter preceding 
        subparagraph (A); and
            (2) in paragraph (2), by inserting ``(or 4-year period in 
        the case of a Medicare+Choice plan that is not a 
        Medicare+Choice private fee-for-service plan or a plan 
        operating under demonstration project authority)'' after ``2-
        year period''.

SEC. 507. PAYMENT BY PACE PROVIDERS FOR MEDICARE AND MEDICAID SERVICES 
              FURNISHED BY NONCONTRACT PROVIDERS.

    (a) Medicare Services.--
            (1) Medicare services furnished by Providers of Services.--
        Section 1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O)) is amended--
                    (A) by striking ``part C or'' and inserting ``part 
                C, with a PACE provider under section 1894 or 1934, 
                or'';
                    (B) by striking ``(i)'';
                    (C) by striking ``and (ii)''; and
                    (D) by striking ``members of the organization'' and 
                inserting ``members of the organization or PACE program 
                eligible individuals enrolled with the PACE 
                provider,''.
            (2) Medicare services furnished by physicians and other 
        entities.--Section 1894(b) (42 U.S.C. 1395eee(b)) is amended by 
        adding at the end the following new paragraphs:
            ``(3) Treatment of medicare services furnished by 
        noncontract physicians and other entities.--
                    ``(A) Application of medicare+choice requirement 
                with respect to medicare services furnished by 
                noncontract physicians and other entities.--Section 
                1852(k)(1) (relating to limitations on balance billing 
                against Medicare+Choice organizations for noncontract 
                physicians and other entities with respect to services 
                covered under this title) shall apply to PACE 
                providers, PACE program eligible individuals enrolled 
                with such PACE providers, and physicians and other 
                entities that do not have a contract establishing 
                payment amounts for services furnished to such an 
                individual in the same manner as such section applies 
                to Medicare+Choice organizations, individuals enrolled 
                with such organizations, and physicians and other 
                entities referred to in such section.
                    ``(B) Reference to related provision for 
                noncontract providers of services.--For the provision 
                relating to limitations on balance billing against PACE 
                providers for services covered under this title 
                furnished by noncontract providers of services, see 
                section 1866(a)(1)(O).
                    ``(4) Reference to related provision for services 
                covered under title xix but not under this title.--For 
                provisions relating to limitations on payments to 
                providers participating under the State plan under 
                title XIX that do not have a contract with a PACE 
                provider establishing payment amounts for services 
                covered under such plan (but not under this title) when 
                such services are furnished to enrollees of that PACE 
                provider, see section 1902(a)(66).''.
    (b) Medicaid Services.--
            (1) Requirement under state plan.--Section 1902(a) (42 
        U.S.C. 1396a(a) is amended--
                    (A) in paragraph (64), by striking ``and'' at the 
                end;
                    (B) in paragraph (65), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by inserting after paragraph (65) the following 
                new paragraph:
                    ``(66) provide, with respect to services covered 
                under the State plan (but not under title XVIII) that 
                are furnished to a PACE program eligible individual 
                enrolled with a PACE provider by a provider 
                participating under the State plan that does not have a 
                contract with the PACE provider that establishes 
                payment amounts for such services, that such 
                participating provider may not require the PACE 
                provider to pay the participating provider an amount 
                greater than the amount that would otherwise be payable 
                for the service to the participating provider under the 
                State plan for the State where the PACE provider is 
                located (in accordance with regulations issued by the 
                Secretary).''.
            (2) Reference in medicaid statute.--Section 1934(b) (42 
        U.S.C. 1396u-4(b)) is amended by adding at the end the 
        following new paragraphs:
            ``(3) Treatment of medicare services furnished by 
        noncontract physicians and other entities.--
                    ``(A) Application of medicare+choice requirement 
                with respect to medicare services furnished by 
                noncontract physicians and other entities.--Section 
                1852(k)(1) (relating to limitations on balance billing 
                against Medicare+Choice organizations for noncontract 
                physicians and other entities with respect to services 
                covered under title XVIII) shall apply to PACE 
                providers, PACE program eligible individuals enrolled 
                with such PACE providers, and physicians and other 
                entities that do not have a contract establishing 
                payment amounts for services furnished to such an 
                individual in the same manner as such section applies 
                to Medicare+Choice organizations, individuals enrolled 
                with such organizations, and physicians and other 
                entities referred to in such section.
                    ``(B) Reference to related provision for 
                noncontract providers of services.--For the provision 
                relating to limitations on balance billing against PACE 
                providers for services covered under title XVIII 
                furnished by noncontract providers of services, see 
                section 1866(a)(1)(O).
                    ``(4) Reference to related provision for services 
                covered under this title but not under title xviii.--
                For provisions relating to limitations on payments to 
                providers participating under the State plan under this 
                title that do not have a contract with a PACE provider 
                establishing payment amounts for services covered under 
                such plan (but not under title XVIII) when such 
                services are furnished to enrollees of that PACE 
                provider, see section 1902(a)(66).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 2003.

SEC. 508. REFERENCE TO IMPLEMENTATION OF CERTAIN MEDICARE+CHOICE 
              PROGRAM PROVISIONS IN 2003.

    For the provisions related to the implementation of certain 
Medicare+Choice program provisions in 2003, see section 807(c).

  TITLE VI--MEDICARE APPEALS, REGULATORY, AND CONTRACTING IMPROVEMENTS

                     Subtitle A--Regulatory Reform

SEC. 601. RULES FOR THE PUBLICATION OF A FINAL REGULATION BASED ON THE 
              PREVIOUS PUBLICATION OF AN INTERIM FINAL REGULATION.

    (a) In General.--Section 1871(a) (42 U.S.C. 1395hh(a)) is amended 
by adding at the end the following new paragraph:
    ``(3)(A) With respect to the publication of a final regulation 
based on the previous publication of an interim final regulation--
            ``(i) subject to subparagraph (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 paragraph, the interim final 
        regulation shall not continue in effect unless the Secretary 
        publishes a notice described in subparagraph (B) by such 
        deadline; and
            ``(iii) the final regulation shall include responses to 
        comments submitted in response to the interim final regulation.
    ``(B) If the Secretary determines before the deadline otherwise 
established in this paragraph that there is good cause, specified in a 
notice published before such deadline, for delaying the deadline 
otherwise applicable under this paragraph, the deadline otherwise 
established under this paragraph shall be extended for such period (not 
to exceed 12 months) as the Secretary specifies in such notice.''.
    (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 
interim final regulations published on or after such date.
            (c) Status of Pending Interim Final Regulations.--Not later 
        than 6 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 
        regulation.

SEC. 602. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.

    (a) No Retroactive Application of Substantive Changes.--
            (1) In general.--Section 1871 (42 U.S.C. 1395hh) is amended 
        by adding at the end the following new subsection:
    ``(d)(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(d)(1), as added by subsection 
        (a), is 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. 603. REPORT ON LEGAL AND REGULATORY INCONSISTENCIES.

    Section 1871 (42 U.S.C. 1395hh), as amended by section 602(a)(1), 
is amended by adding at the end the following new subsection:
    ``(e)(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.''.

                   Subtitle B--Appeals Process Reform

SEC. 611. SUBMISSION OF PLAN FOR TRANSFER OF RESPONSIBILITY FOR 
              MEDICARE APPEALS.

    (a) Submission of Transition Plan.--
            (1) In general.--Not later than April 1, 2003, 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 and financing.--Funding levels 
                required for fiscal year 2004 and subsequent fiscal 
                years to carry out the functions transferred under the 
                plan and how such transfer should be financed.
                    (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--
                            (i) filing appeals with administrative law 
                        judges electronically; and
                            (ii) conducting hearings using tele- or 
                        video-conference technologies.
                    (H) Independence of judges.--The steps that should 
                be taken to ensure the independence of judges 
                performing the administrative law judge functions that 
                are transferred under the plan from the Centers for 
                Medicare & Medicaid Services and its contractors.
                    (I) Geographic distribution.--The steps that should 
                be taken to provide for an appropriate geographic 
                distribution of judges performing the administrative 
                law judge functions that are transferred under the plan 
                throughout the United States to ensure timely access to 
                such judges.
                    (J) Hiring.--The steps that should be taken to hire 
                judges (and support staff) to perform the 
                administrative law judge functions that are transferred 
                under the plan.
                    (K) Performance standards.--The establishment of 
                performance standards for judges performing the 
                administrative law judge functions that are transferred 
                under the plan with respect to timelines for decisions 
                in cases under title XVIII.
                    (L) Shared resources.--The feasibility of the 
                Secretary entering into such arrangements with the 
                Commissioner of Social Security as may be appropriate 
                with respect to transferred functions under the plan to 
                share office space, support staff, and other resources, 
                with appropriate reimbursement.
                    (M) Training.--The training that should be provided 
                to judges performing the administrative law judge 
                functions that are transferred under the plan with 
                respect to laws and regulations under title XVIII.
            (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) and this 
        Act).
    (b) GAO Evaluation.--The Comptroller General of the United States 
shall--
            (1) evaluate the plan submitted under subsection (a); and
            (2) not later than 6 months after such submission, submit 
        to Congress a report on such evaluation.

SEC. 612. EXPEDITED ACCESS TO JUDICIAL REVIEW.

    (a) In General.--Section 1869(b) (42 U.S.C. 1395ff(b)) 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)(i)) may obtain 
                access to judicial review when a review entity 
                (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 entity 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 entity shall require for purposes of 
                making such determination, such review entity shall 
                make a determination on the request in writing within 
                60 days after the date such review entity receives the 
                request and such accompanying documents and materials. 
                Such a determination by such review entity 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 entity--
                                    ``(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 the 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 is granted 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 entity defined.--For purposes of this 
                subsection, a `review entity' is a panel of no more 
                than 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) Conforming Amendment.--Section 1869(b)(1)(F)(ii) (42 U.S.C. 
1395ff(b)(1)(F)(ii)) is amended to read as follows:
                            ``(ii) Reference to expedited access to 
                        judicial review.--For the provision relating to 
                        expedited access to judicial review, see 
                        paragraph (2).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to appeals filed on or after October 1, 2003.

SEC. 613. 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;
                    (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; or
                    (C) the Secretary has required a skilled nursing 
                facility to suspend operations of a nurse aide training 
                program.
            (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. 614. 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 612(a)(2), is 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 review or hearing 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 are 90 days after 
                the date on which the record is complete.
                    ``(D) Complete record 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,
                            ``(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 to be understood by the beneficiary and shall 
        include--
                    ``(A) the reasons for the determination, including, 
                as appropriate--
                            ``(i) upon request in the case of an 
                        initial determination, the provision of the 
                        policy, manual, or regulation that resulted in 
                        the denial; and
                            ``(ii) in the case of a redetermination, a 
                        summary of the clinical or scientific evidence 
                        used in making the determination (as 
                        appropriate);
                    ``(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 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 or 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 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)) is amended 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 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 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).
            ``(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 a reviewing professional if--
                                    ``(I) a nonaffiliated 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 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.''.
            (3) Number of qualified independent contractors.--Section 
        1869(c)(4) (42 U.S.C. 1395ff(c)(4)) is amended by striking 
        ``12'' and inserting ``4''.
    (e) Implementation of Certain BIPA Reforms.--
            (1) Delay in certain bipa reforms.--Section 521(d) of BIPA 
        (114 Stat. 2763A-543) is amended to read as follows:
    ``(d) Effective Date.--
            ``(1) In general.--Except as specified in paragraph (2), 
        the amendments made by this section shall apply with respect to 
        initial determinations made on or after December 1, 2003.
            ``(2) Expedited proceedings and reconsideration 
        requirements.--For the following provisions, the amendments 
        made by subsection (a) shall apply with respect to initial 
        determinations made on or after October 1, 2002:
                    ``(A) Subsection (b)(1)(F)(i) of section 1869 of 
                the Social Security Act.
                    ``(B) Subsection (c)(3)(C)(iii) of such section.
                    ``(C) Subsection (c)(3)(C)(iv) of such section to 
                the extent that it applies to expedited 
                reconsiderations under subsection (c)(3)(C)(iii) of 
                such section.
            ``(3) Transitional use of peer review organizations to 
        conduct expedited reconsiderations until qics are 
        operational.--Expedited reconsiderations of initial 
        determinations under section 1869(c)(3)(C)(iii) of the Social 
        Security Act shall be made by peer review organizations until 
        qualified independent contractors are available for such 
        expedited reconsiderations.''.
            (2) Conforming amendment.--Section 521(c) of BIPA (114 
        Stat. 2763A-543) and section 1869(c)(3)(C)(iii)(III) of the 
        Social Security Act (42 U.S.C. 1395ff(c)(3)(C)(iii)(III)), as 
        added by section 521 of BIPA, are repealed.
    (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. 615. 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 Nonrenewal.--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 602 and 603, is 
amended by adding at the end the following new subsection:
    ``(f) 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. 616. 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. 617. PROVIDER ACCESS TO REVIEW OF LOCAL COVERAGE DETERMINATIONS.

    (a) Provider Access To Review of Local Coverage Determinations.--
Section 1869(f)(5) (42 U.S.C. 1395ff(f)(5)) 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) (42 U.S.C. 1395ff(f)(2)(B)) is amended by 
inserting ``, including, where appropriate, the specific requirements 
and clinical indications relating to the medical necessity of an item 
or service'' before the period at the end.
    (c) Request for Local Coverage Determinations by Providers.--
Section 1869 (42 U.S.C. 1395ff), as amended by section 614(d)(2)(B), is 
amended by adding at the end the following new subsection:
    ``(h) Request for Local Coverage Determinations by Providers.--
            ``(1) Establishment of process.--The Secretary shall 
        establish a process under which a provider of services, 
        physician, practitioner, or supplier who certifies that they 
        meet the requirements established in paragraph (3) may request 
        a local coverage determination in accordance with the 
        succeeding provisions of this subsection.
            ``(2) Provider local coverage determination request 
        defined.--In this subsection, the term `provider local coverage 
        determination request' means a request, filed with the 
        Secretary, at such time and in such form and manner as the 
        Secretary may specify, that the Secretary, pursuant to 
        paragraph (4)(A), require a fiscal intermediary, carrier, or 
        program safeguard contractor to make or revise a local coverage 
        determination under this section with respect to an item or 
        service.
            ``(3) Request requirements.--Under the process established 
        under paragraph (1), by not later than 30 days after the date 
        on which a provider local coverage determination request is 
        filed under paragraph (1), the Secretary shall determine 
        whether such request 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 in at least 2 
                different cases before an administrative law judge;
                    ``(B) each reversal described in subparagraph (A) 
                involves substantially similar material facts;
                    ``(C) each reversal described in subparagraph (A) 
                involves the same medical necessity issue; and
                    ``(D) at least 50 percent of the total number of 
                claims submitted by such provider within the past year 
                involving the substantially similar material facts 
                described in subparagraph (B) and the same medical 
                necessity issue described in subparagraph (C) have been 
                denied and have been reversed by an administrative law 
                judge.
            ``(4) Approval or rejection of request.--
                    ``(A) Approval of request.--If the Secretary 
                determines that subparagraphs (A) through (D) of 
                paragraph (3) have been satisfied, the Secretary shall 
                require the fiscal intermediary, carrier, or program 
                safeguard contractor identified in the provider local 
                coverage determination request, to make or revise a 
                local coverage determination with respect to the item 
                or service that is the subject of the request not later 
                than the date that is 210 days after the date on which 
                the Secretary makes the determination. Such fiscal 
                intermediary, carrier, or program safeguard contractor 
                shall retain the discretion to determine whether or 
                not, and/or the circumstances under which, to cover the 
                item or service for which a local coverage 
                determination is requested. Nothing in this subsection 
                shall be construed to require a fiscal intermediary, 
                carrier or program safeguard contractor to develop a 
                local coverage determination that is inconsistent with 
                any national coverage determination, or any coverage 
                provision in this title or in regulation, manual, or 
                interpretive guidance of the Secretary.
                    ``(B) Rejection of request.--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 
                request and shall notify the provider of services, 
                physician, practitioner, or supplier that filed the 
                request of the reason for such rejection and no further 
                proceedings in relation to such request 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 BIPA (114 Stat. 2763A-543) and amended by this 
                Act; 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 the 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; or
                    (C) any local coverage determination made on or 
                after such date.
            (2) Provider local coverage determination requests.--The 
        amendment made by subsection (c) shall apply with respect to 
        provider local coverage determination requests (as defined in 
        section 1869(h)(2) of the Social Security Act, as added by 
        subsection (c)) filed on or after the date of the enactment of 
        this Act.

                     Subtitle C--Contracting Reform

SEC. 621. 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, including (subject to paragraph (5)) 
                functions under the Medicare Integrity Program under 
                section 1893, as are necessary to carry out the 
                purposes of this title.
            ``(5) Relationship to mip contracts.--
                    ``(A) Nonduplication of activities.--In entering 
                into contracts under this section, the Secretary shall 
                assure that activities of medicare administrative 
                contractors do not duplicate activities carried out 
                under contracts entered into 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, the Federal Acquisition Regulation, 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 6 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. In developing 
                such performance requirements and standards for 
                measurement, the Secretary shall consult with providers 
                of services, organizations representative of 
                beneficiaries under this title, and organizations and 
                agencies performing functions necessary to carry out 
                the purposes of this section with respect to such 
                performance requirements. The Secretary shall make such 
                performance requirements and measurement standards 
                available to the public.
                    ``(B) Considerations.--The Secretary shall include, 
                as one of the standards, provider and beneficiary 
                satisfaction levels.
                    ``(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.--Subject to subsection (a)(6), 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 the reckless disregard of the 
        individual's obligations or the intent by that individual 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 the reckless disregard of the officer's 
        obligations or the intent by that officer 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 a payment, the medicare 
        administrative contractor acted with reckless disregard of its 
        obligations under its medicare administrative contract or with 
        intent to defraud the United States.
            ``(4) Relationship to false claims act.--Nothing in this 
        subsection shall be construed to limit liability for conduct 
        that would constitute a violation of sections 3729 through 3731 
        of title 31, United States Code (commonly known as the ``False 
        Claims Act'').
            ``(5) 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 judgments, 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 added 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,'';
                    (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) In general.--Except as otherwise provided in 
                this subsection, the amendments made by this section 
                shall take effect on October 1, 2004, and the Secretary 
                is authorized to take such steps before such date as 
                may be necessary to implement such amendments on a 
                timely basis.
                    (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 (except as otherwise provided under this 
                title, other than under this section) 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, 2010.
            (2) General transition rules.--
                    (A) Authority to continue to enter into agreements 
                new and contracts and waiver of provider nomination 
                provisions during transition.--Prior to the date 
                specified in paragraph (1)(A), the Secretary may, 
                consistent with subparagraph (B), continue to enter 
                into agreements under section 1816 and contracts under 
                section 1842 of the Social Security Act (42 U.S.C. 
                1395h, 1395u). The Secretary may enter into new 
                agreements under section 1816 during the time period 
                without regard to any of the provider nomination 
                provisions of such section.
                    (B) Appropriate transition.--The Secretary shall 
                take such steps as are necessary to provide for an 
                appropriate transition from agreements under section 
                1816 and contracts under 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 transition 
        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 agreements and contracts entered into pursuant to 
        paragraph (2)(A).
    (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 specified in subsection (d)(1)(A), the Secretary shall 
        submit a report to Congress and the Comptroller General of the 
        United States that describes a plan for an appropriate 
        transition. 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, 2007, 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.

            Subtitle D--Education and Outreach Improvements

SEC. 631. 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, 2003, 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 
        621(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, 2003, 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 of 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 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. 632. ACCESS TO AND PROMPT RESPONSES FROM MEDICARE CONTRACTORS.

    (a) In General.--Section 1874A, as added by section 621(a)(1) and 
as amended by section 631(b)(1), is 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 medicare contractors to communicate 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). The Secretary 
                        shall, in consultation with organizations 
                        representing providers of services, suppliers, 
                        and individuals entitled to benefits under part 
                        A or enrolled under part B, or both, establish 
                        standards relating to the accuracy, 
                        consistency, and timeliness of the information 
                        so provided.
                    ``(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, 2003.

SEC. 633. RELIANCE ON GUIDANCE.

    (a) In General.--Section 1871(d), as added by section 602(a), is 
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. 634. 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 Beneficiary Access to Care and 
Medicare Equity Act of 2002, 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 Beneficiary Access to Care and Medicare 
Equity Act of 2002, 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 Beneficiary Access to Care and Medicare Equity Act of 2002, 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. 635. 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.

          Subtitle E--Review, Recovery, and Enforcement Reform

SEC. 641. PREPAYMENT REVIEW.

    (a) In General.--Section 1874A, as added by section 621(a)(1) and 
as amended by sections 631(b)(1) and 632(a), is 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 nonrandom prepayment 
        review.--A medicare administrative contractor may not initiate 
        nonrandom 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 nonrandom prepayment review.--The 
        Secretary shall establish protocols or standards relating to 
        the termination, including termination dates, of nonrandom 
        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. 642. RECOVERY OF OVERPAYMENTS.

    (a) In General.--Section 1874A, as added by section 621(a)(1) and 
as amended by sections 631(b)(1), 632(a), and 641(a), is 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 1 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(d)(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 nonthreatening 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. 643. 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(e) of the 
Social Security Act, as added by section 631(d)(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. 644. 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 VII--MEDICAID AND SCHIP

SEC. 701. MEDICAID DSH ALLOTMENTS.

    (a) Continuation of BIPA Rule for Determination of Allotments for 
Fiscal Years 2003 through 2005.--
            (1) In general.--Section 1923(f)(4) (42 U.S.C. 1396r-
        4(f)(4)) is amended--
                    (A) in the paragraph heading, by striking ``and 
                2002'' and inserting ``through 2005'';
                    (B) in subparagraph (A)--
                            (i) in clause (i), by striking ``and'' at 
                        the end;
                            (ii) in clause (ii), by striking the period 
                        and inserting a semicolon; and
                            (iii) by adding at the end the following:
                            ``(iii) fiscal year 2003, shall be the DSH 
                        allotment determined under clause (ii) 
                        increased, subject to subparagraph (B) and 
                        paragraph (5), by the percentage change in the 
                        Consumer Price Index for all urban consumers 
                        (all items; U.S. city average) for fiscal year 
                        2002;
                            ``(iv) fiscal year 2004, shall be the DSH 
                        allotment determined under clause (iii) 
                        increased, subject to subparagraph (B) and 
                        paragraph (5), by the percentage change in the 
                        Consumer Price Index for all urban consumers 
                        (all items; U.S. city average) for fiscal year 
                        2003; and
                            ``(v) fiscal year 2005, shall be the DSH 
                        allotment determined under clause (iv) 
                        increased, subject to subparagraph (B) and 
                        paragraph (5), by the percentage change in the 
                        Consumer Price Index for all urban consumers 
                        (all items; U.S. city average) for fiscal year 
                        2004.''; and
                    (C) in subparagraph (C)--
                            (i) in the subparagraph heading, by 
                        striking ``2002'' and inserting ``2005''; and
                            (ii) by striking ``2003'' and inserting 
                        ``2006''.
            (2) DSH allotment for the district of columbia.--Section 
        1923(f)(4) (42 U.S.C. 1396r-4(f)(4)), as amended by paragraph 
        (1), is amended--
                    (A) in subparagraph (A), by inserting ``and except 
                as provided in subparagraph (C)'' after ``paragraph 
                (2)'';
                    (B) by redesignating subparagraph (C) as 
                subparagraph (D);
                    (C) in subparagraph (D) (as so redesignated), by 
                inserting ``or (C)'' after ``(A)''; and
                    (D) by inserting after subparagraph (B) the 
                following:
                    ``(C) DSH allotment for the district of columbia.--
                Notwithstanding subparagraph (A), the DSH allotment for 
                the District of Columbia for--
                            ``(i) fiscal year 2003, shall be determined 
                        by substituting ``49'' for ``32'' in the item 
                        in the table contained in paragraph (2) with 
                        respect to the DSH allotment for FY 00 (fiscal 
                        year 2000) for the District of Columbia, and 
                        then increasing such allotment, subject to 
                        subparagraph (B) and paragraph (5), by the 
                        percentage change in the Consumer Price Index 
                        for all urban consumers (all items; U.S. city 
                        average) for each of fiscal years 2000, 2001, 
                        and 2002;
                            ``(ii) fiscal year 2004, shall be the DSH 
                        allotment determined under clause (i) 
                        increased, subject to subparagraph (B) and 
                        paragraph (5), by the percentage change in the 
                        Consumer Price Index for all urban consumers 
                        (all items; U.S. city average) for fiscal year 
                        2003; and
                            ``(iii) fiscal year 2005, shall be the DSH 
                        allotment determined under clause (ii) 
                        increased, subject to subparagraph (B) and 
                        paragraph (5), by the percentage change in the 
                        Consumer Price Index for all urban consumers 
                        (all items; U.S. city average) for fiscal year 
                        2004.''.
            (3) Conforming amendments.--Section 1923(f)(3) (42 U.S.C. 
        1396r-4(f)(3)) is amended--
                    (A) in the paragraph heading, by striking ``2003'' 
                and inserting ``2006''; and
                    (B) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) In general.--The DSH allotment for any 
                State--
                            ``(i) for fiscal year 2006, is equal to the 
                        DSH allotment determined for the State for 
                        fiscal year 2002 under the table set forth in 
                        paragraph (2), increased, subject to 
                        subparagraph (B) and paragraph (5), by the 
                        percentage change in the Consumer Price Index 
                        for all urban consumers (all items; U.S. city 
                        average), for each of fiscal years 2002 through 
                        2005; and
                            ``(ii) for fiscal year 2007 and each 
                        succeeding fiscal year, is equal to the DSH 
                        allotment determined for the State for the 
                        preceding fiscal year under this paragraph, 
                        increased, subject to subparagraph (B) and 
                        paragraph (5), by the percentage change in the 
                        Consumer Price Index for all urban consumers 
                        (all items; U.S. city average), for the 
                        previous fiscal year.''.
            (4) Effective date.--The amendments made by this subsection 
        shall take effect as if included in the enactment of section 
        701 of BIPA (114 Stat. 2763A-569).
    (b) Contingent Allotment.--
            (1) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)) is 
        amended--
                    (A) by redesignating paragraph (6) as paragraph 
                (7); and
                    (B) by inserting after paragraph (5) the following:
            ``(6) Contingent allotment adjustment for certain states.--
        In the case of a State that, as of the date of enactment of 
        this subsection, has a DSH allotment equal to 0, and that has a 
        State-wide waiver approved under section 1115 with respect to 
        the requirements of this title (as in effect on such date of 
        enactment) that is revoked or terminated after such date of 
        enactment, the Secretary shall--
                    ``(A) permit the State for which the waiver was 
                revoked or terminated to submit an amendment to its 
                State plan that would describe the methodology to be 
                used by the State (after the effective date of such 
                revocation or termination) to identify and make 
                payments to disproportionate share hospitals on the 
                basis of their proportion of patients served by such 
                hospitals that are low-income patients with special 
                needs; and
                    ``(B) provide for purposes of this subsection for 
                computation of an appropriate DSH allotment for the 
                State that provides for the maximum amount (permitted 
                consistent with paragraph (3)(B)(ii)) that does not 
                result in greater expenditures under this title than 
                would have been made if such waiver had not been 
                revoked or terminated.''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if enacted on October 1, 2002.

SEC. 702. TEMPORARY INCREASE IN FLOOR FOR TREATMENT AS AN EXTREMELY LOW 
              DSH STATE.

    (a) Temporary Increase.--Section 1923(f)(5) (42 U.S.C. 1396r-
4(f)(5)) is amended--
            (1) by striking ``In the case of'' and inserting the 
        following:
                    ``(A) In general.--In the case of''; and
            (2) by adding at the end the following:
                    ``(B) Temporary increase in floor.--During the 
                period that begins on October 1, 2002, and ends on 
                September 30, 2005, subparagraph (A) shall be applied--
                            ``(i) by substituting `fiscal year 2003' 
                        for `fiscal year 2001';
                            ``(ii) by substituting `Centers for 
                        Medicare & Medicaid Services' for `Health Care 
                        Financing Administration';
                            ``(iii) by substituting `August 31, 2002' 
                        for `August 31, 2000';
                            ``(iv) by substituting `3 percent' for `1 
                        percent' each place it appears;
                            ``(v) by substituting `fiscal year 2001' 
                        for `fiscal year 1999'; and
                            ``(vi) by substituting for the second 
                        sentence the following: ``With respect to each 
                        of fiscal years 2004 and 2005, such increased 
                        allotment is subject to an increase for 
                        inflation as provided in paragraph (4).''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 701 of BIPA (114 
Stat. 2763A-569).

SEC. 703. EXTENSION OF MEDICARE COST-SHARING FOR PART B PREMIUM FOR 
              CERTAIN ADDITIONAL LOW-INCOME MEDICARE BENEFICIARIES.

    (a) In General.--Section 1902(a)(10)(E)(iv) (42 U.S.C. 
1396a(a)(10)(E)(iv)) is amended to read as follows:
                    ``(iv) subject to sections 1933 and 1905(p)(4), for 
                making medical assistance available (but only for 
                premiums payable with respect to months during the 
                period beginning with January 1998, and ending with 
                December 2007) for medicare cost-sharing described in 
                section 1905(p)(3)(A)(ii) for individuals who would be 
                qualified medicare beneficiaries described in section 
                1905(p)(1) but for the fact that their income exceeds 
                the income level established by the State under section 
                1905(p)(2) and is at least 120 percent, but less than 
                135 percent, of the official poverty line (referred to 
                in such section) for a family of the size involved and 
                who are not otherwise eligible for medical assistance 
                under the State plan;''.
    (b) Total Amount Available for Allocation.--Section 1933(c) (42 
U.S.C. 1396u-3(c)) is amended--
            (1) in paragraph (1)(E), by striking ``fiscal year 2002'' 
        and inserting ``each of fiscal years 2002 through 2007''; and
            (2) in paragraph (2)(A), by striking ``the sum of'' and all 
        that follows through ``1902(a)(10)(E)(iv)(II) in the State; 
        to'' and inserting ``twice the total number of individuals 
        described in section 1902(a)(10)(E)(iv) in the State; to''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if enacted on October 1, 2002.

SEC. 704. CLARIFICATION OF INCLUSION OF INPATIENT DRUG PRICES CHARGED 
              TO CERTAIN PUBLIC HOSPITALS IN THE BEST PRICE EXEMPTIONS 
              FOR THE MEDICAID DRUG REBATE PROGRAM.

    (a) In General.--Section 1927(c)(1)(C)(i)(I) (42 U.S.C. 1396r-
8(c)(1)(C)(i)(I)) is amended by inserting before the semicolon the 
following: ``(including inpatient prices charged to hospitals described 
in section 340B(a)(4)(L) of the Public Health Service Act)''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if enacted on October 1, 2002.

SEC. 705. SCHIP ALLOTMENTS.

    (a) Changes to Rules for Redistribution and Extended Availability 
of Fiscal Year 2000 and Subsequent Fiscal Year Allotments.--Section 
2104(g) (42 U.S.C. 1397dd(g)) is amended--
            (1) in the subsection heading--
                    (A) by striking ``and'' after ``1998'' and 
                inserting a comma; and
                    (B) by inserting ``, 2000, and Subsequent Fiscal 
                Year'' after ``1999'';
            (2) in paragraph (1)--
                    (A) in subparagraph (A)--
                            (i) in the matter preceding clause (i)--
                                    (I) by inserting ``or for fiscal 
                                year 2000 by the end of fiscal year 
                                2002, or allotments for fiscal year 
                                2001 and subsequent fiscal years by the 
                                end of the last fiscal year for which 
                                such allotments are available under 
                                subsection (e), subject to paragraph 
                                (2)(C),'' after ``2001,''; and
                                    (II) by striking ``1998 or 1999'' 
                                and inserting ``1998, 1999, 2000, or 
                                subsequent fiscal year'';
                            (ii) in clause (i)--
                                    (I) in subclause (I), by striking 
                                ``or'' at the end;
                                    (II) in subclause (II), by striking 
                                the period and inserting a semicolon; 
                                and
                                    (III) by adding at the end the 
                                following:
                                    ``(III) subject to paragraph 
                                (2)(C), the fiscal year 2000 allotment, 
                                the amount by which the State's 
                                expenditures under this title in fiscal 
                                years 2000, 2001, and 2002 exceed the 
                                State's allotment for fiscal year 2000 
                                under subsection (b);
                                    ``(IV) subject to paragraph (2)(C), 
                                the fiscal year 2001 allotment, the 
                                amount by which the State's 
                                expenditures under this title in fiscal 
                                years 2001, 2002, and 2003 exceed the 
                                State's allotment for fiscal year 2001 
                                under subsection (b); or
                                    ``(V) subject to paragraph (2)(C), 
                                the allotment for any subsequent fiscal 
                                year, the amount by which the State's 
                                expenditures under this title in the 
                                period such allotment is available 
                                under subsection (e) exceeds the 
                                State's allotment for that fiscal year 
                                under subsection (b).''; and
                            (iii) in clause (ii), by striking ``1998 or 
                        1999 allotment'' and inserting ``1998, 1999, 
                        2000, or subsequent fiscal year allotment''; 
                        and
                    (B) in subparagraph (B)--
                            (i) in the matter preceding clause (i), by 
                        striking ``with respect to fiscal year 1998 or 
                        1999'';
                            (ii) in clause (ii)--
                                    (I) by inserting ``with respect to 
                                fiscal year 1998 or 1999,'' after 
                                ``subsection (e),''; and
                                    (II) by striking ``2002; and'' and 
                                inserting ``2003;'';
                            (iii) by redesignating clause (iii) as 
                        clause (iv); and
                            (iv) by inserting after clause (ii), the 
                        following:
                            ``(iii) notwithstanding subsection (e), 
                        with respect to fiscal year 2000 or any 
                        subsequent fiscal year, shall remain available 
                        for expenditure by the State through the end of 
                        the fiscal year in which the State is allotted 
                        a redistribution under this paragraph; and'';
            (3) in paragraph (2)--
                    (A) in the paragraph heading, by striking ``1998 
                and 1999'' and inserting ``1998, 1999, 2000, and 
                subsequent fiscal year'';
                    (B) in subparagraph (A)--
                            (i) in clause (i), by striking ``2002'' and 
                        inserting ``2003'';
                            (ii) in clause (ii), by striking ``2002'' 
                        and inserting ``2003''; and
                            (iii) by adding at the end the following:
                            ``(iii) Fiscal year 2000 allotment.--Of the 
                        amounts allotted to a State pursuant to this 
                        section for fiscal year 2000 that were not 
                        expended by the State by the end of fiscal year 
                        2002, the amount specified in subparagraph (B) 
                        for fiscal year 2000 for such State shall 
                        remain available for expenditure by the State 
                        through the end of fiscal year 2003.
                            ``(iv) Fiscal year 2001 allotment.--Of the 
                        amounts allotted to a State pursuant to this 
                        section for fiscal year 2001 that were not 
                        expended by the State by the end of fiscal year 
                        2003, the amount specified in subparagraph (B) 
                        for fiscal year 2001 for such State shall 
                        remain available for expenditure by the State 
                        through the end of fiscal year 2004.
                            ``(v) Subsequent fiscal year allotments.--
                        Of the amounts allotted to a State pursuant to 
                        this section for any fiscal year after 2001, 
                        that were not expended by the State by the end 
                        of the last fiscal year such amounts are 
                        available under subsection (e), the amount 
                        specified in subparagraph (B) for that fiscal 
                        year for such State shall remain available for 
                        expenditure by the State through the end of the 
                        fiscal year following the last fiscal year such 
                        amounts are available under subsection (e).'';
                    (C) in subparagraph (B), by striking ``The'' and 
                inserting ``Subject to subparagraph (C), the'';
                    (D) by redesignating subparagraph (C) as 
                subparagraph (D); and
                    (E) by inserting after subparagraph (B), the 
                following:
                    ``(C) Floor for allotment for fiscal year 2000 or 
                any subsequent fiscal year.--
                            ``(i) In general.--With respect to the 
                        allotments for each of fiscal years 2000 
                        through 2003, if the total amounts that would 
                        otherwise be redistributed under paragraph (1) 
                        exceed 60 percent of the total amount available 
                        for redistribution under subsection (f) for the 
                        fiscal year, the amount remaining available for 
                        expenditure by the State under subparagraph (A) 
                        for such fiscal years shall be--
                                    ``(I) the amount equal to--
                                            ``(aa) the applicable 
                                        percent (as determined under 
                                        clause (ii)) of the total 
                                        amount available for 
                                        redistribution under subsection 
                                        (f) from the allotments for the 
                                        applicable fiscal year; 
                                        multiplied by
                                    ``(II) the ratio of the amount of 
                                such State's unexpended allotment for 
                                that fiscal year to the total amount 
                                available for redistribution under 
                                subsection (f) from the allotments for 
                                the fiscal year.
                            ``(ii) Applicable percent.--For purposes of 
                        clause (i)(I)(aa), the applicable percent is--
                                    ``(I) 40 percent, with respect to 
                                the allotments for each of fiscal years 
                                2000 and 2001;
                                    ``(II) 30 percent, with respect to 
                                the allotment for fiscal year 2002; and
                                    ``(III) 20 percent, with respect to 
                                the allotment for fiscal year 2003.''; 
                                and
            (4) in paragraph (3), by adding at the end the following: 
        ``For purposes of calculating the amounts described in 
        paragraphs (1) and (2) relating to the allotment for any fiscal 
        year after 1999, the Secretary shall use the amount reported by 
        the States not later than November 30 of the applicable 
        calendar year on HCFA Form 64 or HCFA Form 21, as approved by 
        the Secretary.''.
    (b) Establishment of Caseload Stabilization Pool and Additional 
Redistribution of Allotments.--Section 2104 (42 U.S.C. 1397dd) is 
amended by adding at the end the following:
    ``(h) Redistribution of Caseload Stabilization Pool Amounts.--
            ``(1) Additional redistribution to stabilize caseloads.--
                    ``(A) In general.--With respect to fiscal year 2004 
                and each fiscal year thereafter, the Secretary shall 
                redistribute to an eligible State (as defined in 
                subparagraph (B)) the amount available for 
                redistribution to the State (as determined under 
                subparagraph (C)) from the caseload stabilization pool 
                established under paragraph (3).
                    ``(B) Definition of eligible state.--For purposes 
                of subparagraph (A), an eligible State is a State whose 
                total expenditures under this title through the end of 
                the previous fiscal year exceed the total allotments 
                made available to the State under subsection (b) or (c) 
                (not including amounts made available under subsection 
                (f)) through the previous fiscal year.
                    ``(C) Amount of additional redistribution.--For 
                purposes of subparagraph (A), the amount available for 
                redistribution to a State under subparagraph (A) is 
                equal to--
                            ``(i) the ratio of the State's allotment 
                        for the previous fiscal year under subsection 
                        (b) or (c) to the total allotments made 
                        available under such subsections to eligible 
                        States as defined under subparagraph (A) for 
                        the previous fiscal year; multiplied by
                            ``(ii) the total amounts available in the 
                        caseload stabilization pool established under 
                        paragraph (3).
            ``(2) Period of availability.--Amounts redistributed under 
        this subsection shall remain available for expenditure by the 
        State through the end of the fiscal year in which the State 
        receives any such amounts.
            ``(3) Caseload stabilization pool.--For purposes of making 
        a redistribution under paragraph (1), the Secretary shall 
        establish a caseload stabilization pool that includes the 
        following amounts:
                    ``(A) Any amount made available to a State under 
                subsection (g) but not expended within the periods 
                required under paragraph (1)(B)(ii), (1)(B)(iii), or 
                (2)(A) of that subsection.
                    ``(B) Any amount made available to a State under 
                this subsection but not expended within the period 
                required under paragraph (2).''.
    (c) Authority for Qualifying States To Use Portion of SCHIP Funds 
for Medicaid Expenditures.--Section 2105 (42 U.S.C. 1397ee) is amended 
by adding at the end the following:
    ``(g) Authority for Qualifying States To Use Certain Funds for 
Medicaid Expenditures.--
            ``(1) State option.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, with respect to fiscal year 2003 and 
                each fiscal year thereafter, a qualifying State (as 
                defined in paragraph (2)) may elect to use not more 
                than 20 percent of the amount allotted to the State 
                under subsection (b) or (c) of section 2104 for the 
                fiscal year (instead of for expenditures under this 
                title) for payments for such fiscal year under title 
                XIX in accordance with subparagraph (B).
                    ``(B) Payments to states.--
                            ``(i) In general.--In the case of a 
                        qualifying State that has elected the option 
                        described in subparagraph (A), subject to the 
                        total amount of funds described with respect to 
                        the State in subparagraph (A), the Secretary 
                        shall pay the State an amount each quarter 
                        equal to the additional amount that would have 
                        been paid to the State under title XIX for 
                        expenditures of the State for the fiscal year 
                        described in clause (ii) if the enhanced FMAP 
                        (as determined under subsection (b)) had been 
                        substituted for the Federal medical assistance 
                        percentage (as defined in section 1905(b)) of 
                        such expenditures.
                            ``(ii) Expenditures described.--For 
                        purposes of clause (i), the expenditures 
                        described in this clause are expenditures for 
                        such fiscal years for providing medical 
                        assistance under title XIX to individuals who 
                        have not attained age 19 and whose family 
                        income exceeds 150 percent of the poverty line.
            ``(2) Qualifying state.--In this subsection, the term 
        `qualifying State' means a State that--
                    ``(A) as of March 31, 1997, has an income 
                eligibility standard with respect to any 1 or more 
                categories of children (other than infants) who are 
                eligible for medical assistance under section 
                1902(a)(10)(A) that is at least 185 percent of the 
                poverty line; and
                    ``(B) satisfies the requirements described in 
                paragraph (3).
            ``(3) Requirements.--The requirements described in this 
        paragraph are the following:
                    ``(A) SCHIP income eligibility.--The State has a 
                State child health plan that (whether implemented under 
                title XIX or this title)--
                            ``(i) as of January 1, 2001, has an income 
                        eligibility standard that is at least 200 
                        percent of the poverty line;
                            ``(ii) subject to subparagraph (B), does 
                        not limit the acceptance of applications for 
                        children; and
                            ``(iii) provides benefits to all children 
                        in the State who apply for and meet eligibility 
                        standards on a statewide basis.
                    ``(B) No waiting list imposed.--With respect to 
                children whose family income is at or below 200 percent 
                of the poverty line, the State does not impose any 
                numerical limitation, waiting list, or similar 
                limitation on the eligibility of such children for 
                child health assistance under such State plan.
                    ``(C) Additional requirements.--The State has 
                implemented at least 4 of the following policies and 
                procedures (relating to coverage of children under 
                title XIX and this title):
                            ``(i) Uniform, simplified application 
                        form.--With respect to children who are 
                        eligible for medical assistance under section 
                        1902(a)(10)(A), the State uses the same 
                        uniform, simplified application form 
                        (including, if applicable, permitting 
                        application other than in person) for purposes 
                        of establishing eligibility for benefits under 
                        title XIX and this title.
                            ``(ii) Elimination of asset test.--The 
                        State does not apply any asset test for 
                        eligibility under section 1902(l) or this title 
                        with respect to children.
                            ``(iii) Adoption of 12-month continuous 
                        enrollment.--The State provides that 
                        eligibility shall not be regularly redetermined 
                        more often than once every year under this 
                        title or for children described in section 
                        1902(a)(10)(A).
                            ``(iv) Same verification and 
                        redetermination policies; automatic 
                        reassessment of eligibility.--With respect to 
                        children who are eligible for medical 
                        assistance under section 1902(a)(10)(A), the 
                        State provides for initial eligibility 
                        determinations and redeterminations of 
                        eligibility using the same verification 
                        policies (including with respect to face-to-
                        face interviews), forms, and frequency as the 
                        State uses for such purposes under this title, 
                        and, as part of such redeterminations, provides 
                        for the automatic reassessment of the 
                        eligibility of such children for assistance 
                        under title XIX and this title.
                            ``(v) Outstationing enrollment staff.--The 
                        State provides for the receipt and initial 
                        processing of applications for benefits under 
                        this title and for children under title XIX at 
                        facilities defined as disproportionate share 
                        hospitals under section 1923(a)(1)(A) and 
                        Federally-qualified health centers described in 
                        section 1905(l)(2)(B) consistent with section 
                        1902(a)(55).''.
    (d) GAO Study and Report Regarding Expenditure of SCHIP 
Allotments.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study regarding the expenditure of State 
        allotments under the State children's health insurance program 
        under title XXI of the Social Security Act (42 U.S.C. 1397aa et 
        seq.) to determine, with respect to States that have not 
        expended all of their allotment under that program for fiscal 
        year 1998, 1999, or 2000, the reasons why the States have not 
        expended such allotments and to identify any impediments in 
        title XXI of such Act or under regulations implemented to carry 
        out such title to the full expenditure of such allotments. As 
        part of the study, the Comptroller General--
                    (A) shall evaluate--
                            (i) the methods used to redistribute 
                        unexpended allotments under title XXI of such 
                        Act as of the date of enactment of this Act;
                            (ii) the caseload stabilization pool 
                        established under section 2104(h) of the Social 
                        Security Act (as added by subsection (b)); and
                            (iii) the adequacy of the funding and 
                        resources for the State children's health 
                        insurance program under title XXI of such Act; 
                        and
                    (B) shall identify the potential benefits and 
                problems with respect to the matters evaluated under 
                subparagraph (A).
            (2) Reports.--
                    (A) Interim report.--Not later than October 1, 
                2004, the Comptroller General of the United States 
                shall submit an interim report to Congress on the study 
                conducted under paragraph (1).
                    (B) Final report.--Not later than October 1, 2005, 
                the Comptroller General of the United States shall 
                submit a final report to Congress on the study 
                conducted under paragraph (1), along with such 
                recommendations for legislative action as the 
                Comptroller General determines appropriate.
    (e) Effective Date.--This section and the amendments made by this 
section shall take effect as if enacted on October 1, 2002.

SEC. 706. IMPROVEMENT OF THE PROCESS FOR THE DEVELOPMENT AND 
              IMPLEMENTATION OF MEDICAID AND SCHIP WAIVERS.

    (a) In General.--Section 1115 (42 U.S.C. 1315) is amended by 
inserting after subsection (c) the following:
    ``(d) In the case of any experimental, pilot, or demonstration 
project undertaken under subsection (a) to assist in promoting the 
objectives of title XIX or XXI in a State that would result in a 
nontrivial impact on eligibility, enrollment, benefits, cost-sharing, 
or financing with respect to a State program under title XIX or XXI (in 
this subsection referred to as a `medicaid waiver' and a `SCHIP 
waiver', respectively,) the following shall apply:
            ``(1) The Secretary may not approve a proposal for a 
        medicaid waiver, SCHIP waiver, or an amendment to a previously 
        approved medicaid waiver or SCHIP waiver unless the State 
        requesting approval certifies that the following process was 
        used to develop the proposal:
                    ``(A) Prior to publication of the notice required 
                under subparagraph (B), the State--
                            ``(i) provided notice (which may have been 
                        accomplished by electronic mail) of the State's 
                        intent to develop the proposal to the medical 
                        care advisory committee established for the 
                        State for purposes of complying with section 
                        1902(a)(4) and any individual or organization 
                        that requests such notice; and
                            ``(ii) convened at least 1 meeting of such 
                        medical care advisory committee at which the 
                        proposal and any modifications of the proposal 
                        were considered and discussed.
                    ``(B) At least 60 days prior to the date that the 
                State submits the proposal to the Secretary, the State 
                published for written comment (in accordance with the 
                State's procedure for issuing regulations) a notice of 
                the proposal that contains at least the following:
                            ``(i) Information regarding how the public 
                        may submit comments to the State on the 
                        proposal.
                            ``(ii) A statement of the State's 
                        projections regarding the likely effect and 
                        impact of the proposal on any individuals who 
                        are eligible for, or receiving, medical 
                        assistance, child health assistance, or other 
                        health benefits coverage under a State program 
                        under title XIX or XXI and the State's 
                        assumptions on which such projections are 
                        based.
                            ``(iii) A statement of the State's 
                        projections regarding the likely effect and 
                        impact of the proposal on any providers or 
                        suppliers of items or services for which 
                        payment may be made under title XIX or XXI and 
                        the State's assumptions on which such 
                        projections are based.
                    ``(C) Concurrent with the publication of the notice 
                required under subparagraph (B), the State--
                            ``(i) posted the proposal (and any 
                        modifications of the proposal) on the State's 
                        Internet website; and
                            ``(ii) provided the notice (which may have 
                        been accomplished by electronic mail) to the 
                        medical care advisory committee referred to in 
                        subparagraph (A)(i) and to any individual or 
                        organization that requested such notice.
                    ``(D) Not later than 30 days after publication of 
                the notice required under subparagraph (B), the State 
                convened at least 1 open meeting of the medical care 
                advisory committee referred to in subparagraph (A)(i), 
                at which the proposal and any modifications of the 
                proposal were the primary items considered and 
                discussed.
                    ``(E) After publication of the notice required 
                under subparagraph (B), the State--
                            ``(i) held at least 2 public hearings on 
                        the proposal and any modifications of the 
                        proposal; and
                            ``(ii) held the last such public hearing at 
                        least 15 days before the State submitted the 
                        proposal to the Secretary.
                    ``(F) The State has a record of all public comments 
                submitted in response to the notice required under 
                subparagraph (B) or at any hearings or meetings 
                required under this paragraph regarding the proposal.
            ``(2) A State shall include with any proposal submitted to 
        the Secretary for a medicaid waiver, SCHIP waiver, or an 
        amendment to a previously approved medicaid waiver or SCHIP 
        waiver the following:
                    ``(A) A detailed description of the public notice 
                and input process used to develop the proposal in 
                accordance with the requirements of paragraph (1).
                    ``(B) Copies of all notices required under 
                paragraph (1).
                    ``(C) The dates of all meetings and hearings 
                required under paragraph (1).
                    ``(D) A summary of the public comments received in 
                response to the notices required under paragraph (1) or 
                at any hearings or meetings required under that 
                paragraph regarding the proposal and the State's 
                response to the comments.
                    ``(E) A certification that the State complied with 
                any applicable notification requirements with respect 
                to Indian tribes during the development of the proposal 
                in accordance with paragraph (1).
            ``(3) The Secretary shall return to a State without action 
        any proposal for a medicaid waiver, SCHIP waiver, or an 
        amendment to a previously approved medicaid waiver or SCHIP 
        waiver that fails to satisfy the requirements of paragraphs (1) 
        and (2).
            ``(4) With respect to all proposals for medicaid waivers, 
        SCHIP waivers, or amendments to a previously approved medicaid 
        waiver or SCHIP waiver received by the Secretary the following 
        shall apply:
                    ``(A) Each month the Secretary shall publish a 
                notice in the Federal Register identifying all of the 
                proposals for such waivers or amendments that were 
                received by the Secretary during the preceding month.
                    ``(B) The notice required under subparagraph (A) 
                shall provide information regarding the method by which 
                comments on the proposals will be received from the 
                public.
                    ``(C) Not later than 7 days after receipt of a 
                proposal for a medicaid waiver, SCHIP waiver, or an 
                amendment to a previously approved medicaid waiver or 
                SCHIP waiver, the Secretary shall--
                            ``(i) provide notice (which may be 
                        accomplished by electronic mail) to any 
                        individual or organization that has requested 
                        such notification;
                            ``(ii) publish on the Internet website of 
                        the Centers for Medicare & Medicaid Services a 
                        copy of the proposal, including any appendices 
                        or modifications of the proposal; and
                            ``(iii) ensure that the information posted 
                        on the website is updated to accurately reflect 
                        the proposal.
                    ``(D) The Secretary shall provide for a period of 
                not less than 30 days from the later of the date of 
                publication of the notice required under subparagraph 
                (A) that first identifies receipt of the proposal or 
                the date on which an Internet website containing the 
                information required under subparagraph (C)(ii) with 
                respect to the proposal is first published, in which 
                written comments on the proposal may be submitted from 
                all interested parties.
                    ``(E) After the completion of the public comment 
                period required under subparagraph (D), if the 
                Secretary intends to approve the proposal, as 
                originally submitted or revised, the Secretary shall--
                            ``(i) publish and post on the Internet 
                        website for the Centers for Medicare & Medicaid 
                        Services the proposed terms and conditions for 
                        such approval and updated versions of the 
                        statements required to be published by the 
                        State under clauses (ii) and (iii) of paragraph 
                        (1)(B);
                            ``(ii) provide at least a 15-day period for 
                        the submission of written comments on such 
                        proposed terms and conditions and such 
                        statements; and
                            ``(iii) retain, and make available upon 
                        request, all comments received concerning the 
                        proposal, the terms and conditions for approval 
                        of the proposal, or such statements.
                    ``(F) In no event may the Secretary approve or deny 
                a proposal for a medicaid waiver, SCHIP waiver, or an 
                amendment to a previously approved medicaid waiver or 
                SCHIP waiver until the Secretary--
                            ``(i) reviews and considers all comments 
                        submitted in response to the notices required 
                        under this paragraph; and
                            ``(ii) considers the nature and impact of 
                        the proposal; and
                            ``(iii) determines that the proposal--
                                    ``(I) is based on a reasonable 
                                hypothesis which the proposal is 
                                designed to test in a methodologically 
                                sound manner; and
                                    ``(II) will be evaluated on a 
                                yearly basis utilizing a sound 
                                methodology to determine whether the 
                                proposal has resulted in a change in 
                                access to health care or in health 
                                outcomes for any beneficiaries of 
                                medical assistance, child health 
                                assistance, or other health benefits 
                                coverage whose assistance or coverage 
                                would be altered as a result of the 
                                proposal.
                    ``(G) Not later than 3 days after the approval of 
                any proposal for a medicaid waiver, SCHIP waiver, or 
                amendment to a previously approved medicaid waiver or 
                SCHIP waiver, the Secretary shall post on the Internet 
                website for the Centers for Medicare & Medicaid 
                Services the following:
                            ``(i) The text of the approved medicaid 
                        waiver, SCHIP waiver, or amendment to a 
                        previously approved medicaid waiver or SCHIP 
                        waiver.
                            ``(ii) A list identifying each provision of 
                        title XIX or XXI, and each regulation relating 
                        to either such title, for which compliance is 
                        waived under the approved waiver or amendment 
                        or for which costs that would otherwise not be 
                        permitted under the provision will be allowed.
                            ``(iii) The terms and conditions for 
                        approval of the waiver or amendment.
                            ``(v) The approval letter.
                            ``(vi) The protocol for the waiver or 
                        amendment.
                            ``(vii) The evaluation design for the 
                        waiver or amendment.
                            ``(viii) The results of the evaluation of 
                        the waiver or amendment.
                Any item required to be posted under this subparagraph 
                that is not available within 3 days of the approval of 
                the waiver or amendment shall be posted as soon as the 
                item becomes available.
                    ``(H) Each month the Secretary shall publish a 
                notice in the Federal Register that identifies any 
                proposals for medicaid waivers, SCHIP waivers, or 
                amendments to a previously approved medicaid waiver or 
                SCHIP waiver that were approved, denied, or returned to 
                the State without action during the preceding month.
            ``(5) Any provision under title XIX or XXI, or under any 
        regulation in effect that relates to either such title, that is 
        not explicitly waived by the Secretary when the medicaid 
        waiver, SCHIP waiver, or amendment is approved and identified 
        in the list required under paragraph (4)(G)(ii), is not waived 
        and a State shall continue to comply with any such 
        requirement.''.
    (b) Clarification of Limitations of Waiver Authority.--
            (1) Section 1115 waivers.--Paragraphs (1) and (2) of 
        section 1115(a) (42 U.S.C. 1315(a)) are each amended by 
        inserting ``and only to the extent that waiving such 
        requirements is likely to assist in promoting the objectives of 
        the title in which such section is located,'' after ``as the 
        case may be,''.
            (2) EPSDT.--Section 1902(e) (42 U.S.C. 1396a(e)) is amended 
        by adding at the end the following:
    ``(13) Notwithstanding section 1115(a), with respect to any waiver, 
experimental, pilot, or demonstration project that involves the use of 
funds made available under this title, or an amendment to such a 
project that has been approved as of the date of enactment of this 
paragraph, the Secretary may not waive compliance with the requirements 
of subsection (a)(43) (relating to early and periodic screening, 
diagnostic, and treatment services as described in section 1905(r)).''.
            (3) Use of schip funds.--
                    (A) In general.--Section 2107 (42 U.S.C. 1397gg) is 
                amended by adding at the end the following:
    ``(f) Limitation of Waiver Authority.--Notwithstanding subsection 
(e)(2)(A) and section 1115(a), the Secretary may not approve a waiver, 
experimental, pilot, or demonstration project, or an amendment to such 
a project that has been approved as of the date of enactment of this 
subsection, that would allow funds made available under this title to 
be used to provide child health assistance or other health benefits 
coverage to childless adults. For purposes of the preceding sentence, a 
caretaker relative (as such term is defined for purposes of carrying 
out section 1931) shall not be considered a childless adult.''.
                    (B) Conforming Amendment.--Section 2105(c)(1) (42 
                U.S.C. 1397ee(c)(1)) is amended by inserting before the 
                period the following: ``and may not include coverage of 
                childless adults. For purposes of the preceding 
                sentence, a caretaker relative (as such term is defined 
                for purposes of carrying out section 1931) shall not be 
                considered a childless adult.''.
    (c) Rule of Construction.--Nothing in this section or the 
amendments made by this section shall be construed to--
            (1) authorize the waiver of any provision of title XIX or 
        XXI of the Social Security Act (42 U.S.C. 1396 et seq., 1397aa 
        et seq.) that is not otherwise authorized to be waived under 
        such titles or under title XI of such Act (42 U.S.C. 1301 et 
        seq.) as of the date of enactment of this Act; or
            (2) imply congressional approval of any waiver, 
        experimental, pilot, or demonstration project affecting the 
        medicaid program under title XIX of the Social Security Act or 
        the State children's health insurance program under title XXI 
        of such Act that has been approved as of such date of 
        enactment.
    (d) Effective Date.--This section and the amendments made by this 
section take effect on the date of enactment of this Act and apply to 
proposals to conduct a waiver, experimental, pilot, or demonstration 
project affecting the medicaid program under title XIX of the Social 
Security Act or the State children's health insurance program under 
title XXI of such Act, and to any proposals to amend such projects, 
that are approved or extended on or after such date of enactment.

SEC. 707. TEMPORARY STATE FISCAL RELIEF.

    (a) Temporary Increase of Medicaid FMAP.--
            (1) Permitting maintenance of fiscal year 2002 fmap for 
        fiscal year 2003.--Notwithstanding any other provision of law, 
        but subject to paragraphs (4) and (6), if the FMAP determined 
        without regard to this subsection for a State for fiscal year 
        2003 is less than the FMAP as so determined for fiscal year 
        2002, the FMAP for the State for fiscal year 2002 shall be 
        substituted for the State's FMAP for fiscal year 2003, before 
        the application of this subsection.
            (2) General 1.3 percentage points increase for fiscal year 
        2003.--Notwithstanding any other provision of law, but subject 
        to paragraphs (4), (5), and (6), for each State for fiscal year 
        2003, the FMAP (taking into account the application of 
        paragraph (1)) shall be increased by 1.3 percentage points.
            (3) Increase in cap on medicaid payments to territories.--
                    (A) In general.--Notwithstanding any other 
                provision of law, but subject to paragraph (5) and 
                subparagraph (B), with respect to fiscal year 2003, the 
                amounts otherwise determined for Puerto Rico, the 
                Virgin Islands, Guam, the Northern Mariana Islands, and 
                American Samoa under subsections (f) and (g) of section 
                1108 of the Social Security Act (42 U.S.C. 1308) shall 
                each be increased by an amount equal to 2.6 percent of 
                such amounts.
                    (B) No application after fiscal year 2003.--The 
                amounts determined for Puerto Rico, the Virgin Islands, 
                Guam, the Northern Mariana Islands, and American Samoa 
                under subsections (f) and (g) of section 1108 of the 
                Social Security Act (42 U.S.C. 1308) for fiscal year 
                2004 and each fiscal year thereafter shall be 
                determined without regard to the increase under 
                subparagraph (A) in such amounts for fiscal year 2003.
            (4) Scope of application.--The increases in the FMAP for a 
        State under this subsection shall apply only for purposes of 
        title XIX of the Social Security Act and shall not apply with 
        respect to--
                    (A) disproportionate share hospital payments 
                described in section 1923 of such Act (42 U.S.C. 1396r-
                4); or
                    (B) payments under title IV or XXI of such Act (42 
                U.S.C. 601 et seq. and 1397aa et seq.).
            (5) State eligibility.--
                    (A) In general.--Subject to subparagraph (B), a 
                State is eligible for an increase in its FMAP under 
                paragraph (2) or an increase in a cap amount under 
                paragraph (3) only if the eligibility under its State 
                plan under title XIX of the Social Security Act 
                (including any waiver under such title or under section 
                1115 of such Act (42 U.S.C. 1315)) is no more 
                restrictive than the eligibility under such plan (or 
                waiver) as in effect on January 1, 2002.
                    (B) State reinstatement of eligibility permitted.--
                A State that has restricted eligibility under its State 
                plan under title XIX of the Social Security Act 
                (including any waiver under such title or under section 
                1115 of such Act (42 U.S.C. 1315)) after January 1, 
                2002, but prior to the date of enactment of this Act is 
                eligible for an increase in its FMAP under paragraph 
                (2) or an increase in a cap amount under paragraph (3) 
                in the first calendar quarter (and subsequent calendar 
                quarters) in which the State has reinstated eligibility 
                that is no more restrictive than the eligibility under 
                such plan (or waiver) as in effect on January 1, 2002.
                    (C) Rule of construction.--Nothing in subparagraph 
                (A) or (B) shall be construed as affecting a State's 
                flexibility with respect to benefits offered under the 
                State medicaid program under title XIX of the Social 
                Security Act (42 U.S.C. 1396 et seq.) (including any 
                waiver under such title or under section 1115 of such 
                Act (42 U.S.C. 1315)).
            (6) Limitation.--Notwithstanding paragraphs (1) and (2), 
        the FMAP determined for a State under this section for fiscal 
        year 2003 may not exceed 100 percent.
            (7) Definitions.--In this subsection:
                    (A) FMAP.--The term ``FMAP'' means the Federal 
                medical assistance percentage, as defined in section 
                1905(b) of the Social Security Act (42 U.S.C. 
                1396d(b)).
                    (B) State.--The term ``State'' has the meaning 
                given such term for purposes of title XIX of the Social 
                Security Act (42 U.S.C. 1396 et seq.).
            (8) Repeal.--Effective as of October 1, 2003, this 
        subsection is repealed.
    (b) Additional Temporary State Fiscal Relief.--
            (1) In general.--Title XX of the Social Security Act (42 
        U.S.C. 1397-1397f) is amended by adding at the end the 
        following:

``SEC. 2008. ADDITIONAL TEMPORARY GRANTS FOR STATE FISCAL RELIEF.

    ``(a) In General.--For the purpose of providing State fiscal relief 
allotments to States under this section, there are hereby appropriated, 
out of any funds in the Treasury not otherwise appropriated, 
$1,000,000,000. Such funds shall be available for obligation by the 
State through June 30, 2003, and for expenditure by the State through 
September 30, 2003. This section constitutes budget authority in 
advance of appropriations Acts and represents the obligation of the 
Federal Government to provide for the payment to States of amounts 
provided under this section.
    ``(b) Allotment.--Funds appropriated under subsection (a) shall be 
allotted by the Secretary among the States in accordance with the 
following table:

      

------------------------------------------------------------------------
               ``State                       Allotment (in dollars)
------------------------------------------------------------------------
 Alabama                                $11,154,135
 
 Alaska                                 $2,840,803
 
 Amer. Samoa                            $29,438
 
 Arizona                                $16,220,383
 
 Arkansas                               $9,163,338
 
 California                             $100,833,576
 
 Colorado                               $9,331,095
 
 Connecticut                            $13,994,165
 
 Delaware                               $2,767,146
 
 District of Columbia                   $4,059,080
 
 Florida                                $44,008,674
 
 Georgia                                $21,937,652
 
 Guam                                   $45,247
 
 Hawaii                                 $3,373,790
 
 Idaho                                  $3,471,124
 
 Illinois                               $34,733,333
 
 Indiana                                $17,207,622
 
 Iowa                                   $8,513,126
 
 Kansas                                 $6,919,819
 
 Kentucky                               $14,548,137
 
 Louisiana                              $17,118,506
 
 Maine                                  $5,979,575
 
 Maryland                               $14,684,167
 
 Massachusetts                          $34,248,540
 
 Michigan                               $29,836,794
 
 Minnesota                              $19,370,869
 
 Mississippi                            $12,153,821
 
 Missouri                               $20,314,882
 
 Montana                                $2,838,819
 
 Nebraska                               $5,613,219
 
 Nevada                                 $3,808,574
 
 New Hampshire                          $3,550,440
 
 New Jersey                             $29,327,902
 
 New Mexico                             $7,255,647
 
 New York                               $157,469,433
 
 North Carolina                         $26,223,106
 
 North Dakota                           $1,874,707
 
 N. Mariana Islands                     $16,630
 
 Ohio                                   $39,106,122
 
 Oklahoma                               $10,452,381
 
 Oregon                                 $11,647,633
 
 Pennsylvania                           $53,862,604
 
 Puerto Rico                            $1,308,459
 
 Rhode Island                           $5,492,778
 
 South Carolina                         $12,652,401
 
 South Dakota                           $1,994,912
 
 Tennessee                              $27,222,837
 
 Texas                                  $54,043,284
 
 Utah                                   $4,254,036
 
 Vermont                                $2,655,179
 
 Virgin Islands                         $42,210
 
 Virginia                               $14,289,158
 
 Washington                             $20,884,225
 
 West Virginia                          $6,542,196
 
 Wisconsin                              $15,441,057
 
 Wyoming                                $1,271,214
 
------------------------------------------------------------------------
 
 Total                                  $1,000,000,000
------------------------------------------------------------------------

    ``(c) Use of Funds.--Funds appropriated under this section may be 
used by a State for services directed at the goals set forth in section 
2001, subject to the requirements of this title.
    ``(d) Payment to States.--Not later than 30 days after amounts are 
appropriated under subsection (a), in addition to any payment made 
under section 2002 or 2007, the Secretary shall make a lump sum payment 
to a State of the total amount of the allotment for the State as 
specified in subsection (b).
    ``(e) Definition.--For purposes of this section, the term `State' 
means the 50 States, the District of Columbia, and the territories 
contained in the list under subsection (b).''.
            (2) Repeal.--Effective as of January 1, 2004, section 2008 
        of the Social Security Act, as added by paragraph (1), is 
        repealed.

                      TITLE VIII--OTHER PROVISIONS

SEC. 801. INCREASE IN APPROPRIATIONS FOR SPECIAL DIABETES PROGRAMS FOR 
              TYPE I DIABETES AND INDIANS.

    (a) Special Diabetes Programs for Type I Diabetes.--Section 
330B(b)(2) of the Public Health Service Act (42 U.S.C. 254c-2(b)(2)) is 
amended--
            (1) in subparagraph (A), by striking ``and'' at the end;
            (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(C) $150,000,000 for each of fiscal years 2004, 
                2005, and 2006.''.
    (b) Special Diabetes Programs for Indians.--Section 330C(c)(2) of 
the Public Health Service Act (42 U.S.C. 254c-3(c)(2)) is amended--
            (1) in subparagraph (A), by striking ``and'' at the end;
            (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(C) $150,000,000 for each of fiscal years 2004, 
                2005, and 2006.''.
    (c) Extension of Final Report on Grant Programs.--Section 
4923(b)(2) of the Balanced Budget Act of 1997 (Public Law 105-33; 111 
Stat. 251), as amended by section 931(c) of BIPA (114 Stat. 2763A-585), 
is amended by striking ``2003'' and inserting ``2005''.

SEC. 802. DISREGARD OF CERTAIN PAYMENTS UNDER THE EMERGENCY 
              SUPPLEMENTAL ACT, 2000 IN THE ADMINISTRATION OF FEDERAL 
              PROGRAMS AND FEDERALLY ASSISTED PROGRAMS.

    (a) In General.--Chapter 2 of title II of the Emergency 
Supplemental Act, 2000 (Public Law 106-246; 114 Stat. 547) is amended 
by adding at the end the following new section:
    ``Sec. 2205. Certain Payments Disregarded in the Administration of 
Federal Programs and Federally Assisted Programs.--Any payment under 
this chapter with respect to west coast groundfish fishery shall not be 
taken into account as income or resources for purposes of determining 
the eligibility of such individual or any other individual for benefits 
or assistance, or the amount or extent of benefits or assistance, under 
any Federal program or under any State or local program financed in 
whole or in part with Federal funds.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the enactment of the Emergency Supplemental 
Act, 2000.

SEC. 803. SAFETY NET ORGANIZATIONS AND PATIENT ADVISORY COMMISSION.

    (a) In General.--Title XI (42 U.S.C. 1320 et seq.) is amended by 
adding at the end the following new part:

   ``Part D--Safety Net Organizations and Patient Advisory Commission

       ``safety net organizations and patient advisory commission

    ``Sec. 1181. (a) Establishment.--There is hereby established the 
Safety Net Organizations and Patient Advisory Commission (in this 
section referred to as the `Commission').
    ``(b) Review of Health Care Safety Net Programs and Reporting 
Requirements.--
            ``(1) Review.--The Commission shall conduct an ongoing 
        review of the health care safety net programs (as described in 
        paragraph (3)(C)) by--
                    ``(A) monitoring each health care safety net 
                program to document and analyze the effects of changes 
                in these programs on the core health care safety net;
                    ``(B) evaluating the impact of the Emergency 
                Medical Treatment and Labor Act, the Health Insurance 
                Portability and Accountability Act of 1996, the 
                Balanced Budget Act of 1997, the Medicare, Medicaid, 
                and SCHIP Balanced Budget Refinement Act of 1999, the 
                Medicare, Medicaid, and SCHIP Benefits Protection and 
                Improvement Act of 2000, the Beneficiary Access to Care 
                and Medicare Equity Act of 2002, and other forces on 
                the capacity of the core health care safety net to 
                continue their roles in the core health care safety net 
                system to care for uninsured individuals, medicaid 
                beneficiaries, and other vulnerable populations;
                    ``(C) monitoring existing data sets to assess the 
                status of the core health care safety net and health 
                outcomes for vulnerable populations;
                    ``(D) wherever possible, linking and integrating 
                existing data systems to enhance the ability of the 
                core health care safety net to track changes in the 
                status of the core health care safety net and health 
                outcomes for vulnerable populations;
                    ``(E) supporting the development of new data 
                systems where existing data are insufficient or 
                inadequate;
                    ``(F) developing criteria and indicators of 
                impending core health care safety net failure;
                    ``(G) establishing an early-warning system to 
                identify impending failures of core health care safety 
                net systems and providers;
                    ``(H) providing accurate and timely information to 
                Federal, State, and local policymakers on the 
                indicators that may lead to the failure of the core 
                health care safety net and an estimate of the projected 
                consequences of such failures and the impact of such a 
                failure on the community;
                    ``(I) monitoring and providing oversight for the 
                transition of individuals receiving supplemental 
                security income benefits, medical assistance under 
                title XIX, or child health assistance under title XXI 
                who enroll with a managed care entity (as defined in 
                section 1932(a)(1)(B)), including the review of--
                            ``(i) the degree to which health plans have 
                        the capacity (including case management and 
                        management information system infrastructure) 
                        to provide quality managed care services to 
                        such an individual;
                            ``(ii) the degree to which these plans may 
                        be overburdened by adverse selection; and
                            ``(iii) the degree to which emergency 
                        departments are used by enrollees of these 
                        plans; and
                    ``(J) identifying and disseminating the best 
                practices for more effective application of the lessons 
                that have been learned.
            ``(2) Reports.--
                    ``(A) Annual reports.--Not later than June 1 of 
                each year (beginning with 2004), the Commission shall, 
                based on the review conducted under paragraph (1), 
                submit to the appropriate committees of Congress a 
                report on--
                            ``(i) the health care needs of the 
                        uninsured; and
                            ``(ii) the financial and infrastructure 
                        stability of the Nation's core health care 
                        safety net.
                    ``(B) Agenda and additional reviews.--
                            ``(i) Agenda.--The Chair of the Commission 
                        shall consult periodically with the 
                        Chairpersons and Ranking Minority Members of 
                        the appropriate committees of Congress 
                        regarding the Commission's agenda and progress 
                        toward achieving the agenda.
                            ``(ii) Additional reviews.--The Commission 
                        shall conduct additional reviews and submit 
                        additional reports to the appropriate 
                        committees of Congress on topics relating to 
                        the health care safety net programs under the 
                        following circumstances:
                                    ``(I) If requested by the 
                                Chairpersons or Ranking Minority 
                                Members of such committees.
                                    ``(II) If the Commission deems such 
                                additional reviews and reports 
                                appropriate.
                    ``(C) Availability of reports.--The Commission 
                shall transmit to the Comptroller General and the 
                Secretary a copy of each report submitted under this 
                subsection and shall make such reports available to the 
                public.
            ``(3) Definitions.--In this section:
                    ``(A) Appropriate committees of congress.--The term 
                `appropriate committees of Congress' means the 
                Committees on Ways and Means and Energy and Commerce of 
                the House of Representatives and the Committees on 
                Finance and Health, Education, Labor, and Pensions of 
                the Senate.
                    ``(B) Core health care safety net.--The term `core 
                health care safety net' means any health care provider 
                that--
                            ``(i) by legal mandate or explicitly 
                        adopted mission, offers access to health care 
                        services to patients, regardless of the ability 
                        of the patient to pay for such services; and
                            ``(ii) has a case mix that is substantially 
                        comprised of patients who are uninsured, 
                        covered under the medicaid program, covered 
                        under any other public health care program, or 
                        are otherwise vulnerable populations.
                Such term includes disproportionate share hospitals, 
                Federally qualified health centers, other Federal, 
                State, and locally supported clinics, rural health 
                clinics, local health departments, and providers 
                covered under the Emergency Medical Treatment and Labor 
                Act.
                    ``(C) Health care safety net programs.--The term 
                `health care safety net programs' includes the 
                following:
                            ``(i) Medicaid.--The medicaid program under 
                        title XIX.
                            ``(ii) SCHIP.--The State children's health 
                        insurance program under title XXI.
                            ``(iii) Maternal and child health services 
                        block grant program.--The maternal and child 
                        health services block grant program under title 
                        V.
                            ``(iv) FQHC programs.--Each federally 
                        funded program under which a health center (as 
                        defined in section 330(1) of the Public Health 
                        Service Act), a Federally qualified health 
                        center (as defined in section 1861(aa)(4)), or 
                        a Federally-qualified health center (as defined 
                        in section 1905(l)(2)(B)) receives funds.
                            ``(v) RHC programs.--Each federally funded 
                        program under which a rural health clinic (as 
                        defined in section 1861(aa)(4) or 1905(l)(1)) 
                        receives funds.
                            ``(vi) DSH payment programs.--Each 
                        federally funded program under which a 
                        disproportionate share hospital receives funds.
                            ``(vii) Emergency medical treatment and 
                        active labor act.--All care provided under 
                        section 1867 for the uninsured, underinsured, 
                        beneficiaries under title XIX, and other 
                        vulnerable individuals.
                            ``(viii) Other health care safety net 
                        programs.--Such term also includes any other 
                        health care program that the Commission 
                        determines to be appropriate.
                    ``(D) Vulnerable populations.--The term `vulnerable 
                populations' includes uninsured and underinsured 
                individuals, low-income individuals, farm workers, 
                homeless individuals, individuals with disabilities, 
                individuals with HIV or AIDS, and such other 
                individuals as the Commission may designate.
    ``(c) Membership.--
            ``(1) Number and appointment.--The Commission shall be 
        composed of 13 members appointed by the Comptroller General of 
        the United States (in this section referred to as the 
        `Comptroller General'), in consultation with the appropriate 
        committees of Congress.
            ``(2) Qualifications.--
                    ``(A) In general.--The membership of the Commission 
                shall include individuals with national recognition for 
                their expertise in health finance and economics, health 
                care safety net research and program management, 
                actuarial science, health facility management, health 
                plans and integrated delivery systems, reimbursement of 
                health facilities, allopathic and osteopathic medicine 
                (including emergency medicine), and other providers of 
                health services, and other related fields, who provide 
                a mix of different professionals, broad geographic 
                representation, and a balance between urban and rural 
                representatives.
                    ``(B) Inclusion.--The membership of the Commission 
                shall include health professionals, employers, third-
                party payers, individuals skilled in the conduct and 
                interpretation of biomedical, health services, and 
                health economics research and expertise in outcomes and 
                effectiveness research and technology assessment. Such 
                membership shall also include recipients of care from 
                core health care safety net and individuals who provide 
                and manage the delivery of care by the core health care 
                safety net.
                    ``(C) Majority nonproviders.--Individuals who are 
                directly involved in the provision, or management of 
                the delivery, of items and services covered under the 
                health care safety net programs shall not constitute a 
                majority of the membership of the Commission.
                    ``(D) Ethical disclosure.--The Comptroller General 
                shall establish a system for public disclosure by 
                members of the Commission of financial and other 
                potential conflicts of interest relating to such 
                members.
            ``(3) Terms.--
                    ``(A) In general.--The terms of members of the 
                Commission shall be for 3 years except that of the 
                members first appointed, the Comptroller General shall 
                designate--
                            ``(i) four to serve a term of 1 year;
                            ``(ii) four to serve a term of 2 years; and
                            ``(iii) five to serve a term of 3 years.
                    ``(B) Vacancies.--
                            ``(i) In general.--A vacancy in the 
                        Commission shall be filled in the same manner 
                        in which the original appointment was made.
                            ``(ii) Appointment.--Any member appointed 
                        to fill a vacancy occurring before the 
                        expiration of the term for which the member's 
                        predecessor was appointed shall be appointed 
                        only for the remainder of that term.
                            ``(iii) Terms.--A member may serve after 
                        the expiration of that member's term until a 
                        successor has taken office.
            ``(4) Compensation.--
                    ``(A) Members.--While serving on the business of 
                the Commission (including travel time), a member of the 
                Commission--
                            ``(i) shall be entitled to compensation at 
                        the per diem equivalent of the rate provided 
                        for level IV of the Executive Schedule under 
                        section 5315 of title 5, United States Code; 
                        and
                            ``(ii) while so serving away from home and 
                        the member's regular place of business, may be 
                        allowed travel expenses, as authorized by the 
                        Commission.
                    ``(B) Treatment.--For purposes of pay (other than 
                pay of members of the Commission) and employment 
                benefits, rights, and privileges, all personnel of the 
                Commission shall be treated as if they were employees 
                of the United States Senate.
            ``(5) Chair; vice chair.--The Comptroller General shall 
        designate a member of the Commission, at the time of 
        appointment of the member as Chair and a member as Vice Chair 
        for that term of appointment, except that in the case of 
        vacancy of the Chair or Vice Chair, the Comptroller General may 
        designate another member for the remainder of that member's 
        term.
            ``(6) Meetings.--The Commission shall meet at the call of 
        the Chair or upon the written request of a majority of its 
        members.
    ``(d) Director and Staff; Experts and Consultants.--Subject to such 
review as the Comptroller General determines necessary to ensure the 
efficient administration of the Commission, the Commission may--
            ``(1) employ and fix the compensation of an Executive 
        Director (subject to the approval of the Comptroller General) 
        and such other personnel as may be necessary to carry out the 
        duties of the Commission under this section (without regard to 
        the provisions of title 5, United States Code, governing 
        appointments in the competitive service);
            ``(2) seek such assistance and support as may be required 
        in the performance of the duties of the Commission under this 
        section from appropriate Federal departments and agencies;
            ``(3) enter into contracts or make other arrangements, as 
        may be necessary for the conduct of the work of the Commission 
        (without regard to section 3709 of the Revised Statutes (41 
        U.S.C. 5));
            ``(4) make advance, progress, and other payments which 
        relate to the work of the Commission;
            ``(5) provide transportation and subsistence for persons 
        serving without compensation; and
            ``(6) prescribe such rules and regulations as it deems 
        necessary with respect to the internal organization and 
        operation of the Commission.
    ``(e) Powers.--
            ``(1) Obtaining official data.--
                    ``(A) In general.--The Commission may secure 
                directly from any department or agency of the United 
                States information necessary for the Commission to 
                carry the duties under this section.
                    ``(B) Request of chair.--Upon request of the Chair, 
                the head of that department or agency shall furnish 
                that information to the Commission on an agreed upon 
                schedule.
            ``(2) Data collection.--In order to carry out the duties of 
        the Commission under this section, the Commission shall--
                    ``(A) use existing information, both published and 
                unpublished, where possible, collected and assessed 
                either by the staff of the Commission or under other 
                arrangements made in accordance with this section;
                    ``(B) carry out, or award grants or contracts for, 
                original research and experimentation, where existing 
                information is inadequate; and
                    ``(C) adopt procedures allowing any interested 
                party to submit information for the Commission's use in 
                making reports and recommendations.
            ``(3) Access of gao to information.--The Comptroller 
        General shall have unrestricted access to all deliberations, 
        records, and nonproprietary data that pertains to the work of 
        the Commission, immediately upon request. The expense of 
        providing such information shall be borne by the General 
        Accounting Office.
            ``(4) Periodic audit.--The Commission shall be subject to 
        periodic audit by the Comptroller General.
    ``(f) Application of FACA.--Section 14 of the Federal Advisory 
Committee Act (5 U.S.C. App.) does not apply to the Commission.
    ``(g) Authorization of Appropriations.--
            ``(1) Request for appropriations.--The Commission shall 
        submit requests for appropriations in the same manner as the 
        Comptroller General submits requests for appropriations, but 
        amounts appropriated for the Commission shall be separate from 
        amounts appropriated for the Comptroller General.
            ``(2) Authorization.--There are authorized to be 
        appropriated such sums as may be necessary to carry out the 
        provisions of this section.''.
    (b) Effective Date.--The Comptroller General of the United States 
shall appoint the initial members of the Safety Net Organizations and 
Patient Advisory Commission established under subsection (a) not later 
than June 1, 2003.

SEC. 804. PUBLICATION ON FINAL WRITTEN GUIDANCE CONCERNING PROHIBITIONS 
              AGAINST DISCRIMINATION BY NATIONAL ORIGIN WITH RESPECT TO 
              HEALTH CARE SERVICES.

    Not later than January 1, 2003, the Secretary shall issue final 
written guidance concerning the application of the prohibition in title 
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.) against 
national origin discrimination as it affects persons with limited 
English proficiency with respect to access to health care services 
under the medicare program under title XVIII of the Social Security 
Act, the medicaid program under title XIX of such Act, and the SCHIP 
program under title XXI of such Act.

SEC. 805. FEDERAL REIMBURSEMENT OF EMERGENCY HEALTH SERVICES FURNISHED 
              TO UNDOCUMENTED ALIENS.

    Section 4723 of the Balanced Budget Act of 1997 (8 U.S.C. 1611 
note) is amended to read as follows:

``SEC. 4723. FEDERAL REIMBURSEMENT OF EMERGENCY HEALTH SERVICES 
              FURNISHED TO UNDOCUMENTED ALIENS.

    ``(a) Total Amount Available for Allotment.--There is appropriated, 
out of any funds in the Treasury not otherwise appropriated, 
$48,000,000 for each of fiscal years 2003 and 2004, for the purpose of 
making allotments under this section to States described in paragraph 
(1) or (2) of subsection (b).
    ``(b) State Allotments.--
            ``(1) Based on highest number of undocumented aliens.--
                    ``(A) Determination of allotments.--
                            ``(i) In general.--Out of the amount 
                        appropriated under subsection (a) for a fiscal 
                        year, the Secretary shall use $32,000,000 of 
                        such amount to compute an allotment for each 
                        such fiscal year for each of the 17 States with 
                        the highest number of undocumented aliens.
                            ``(ii) Formula.--The amount of such 
                        allotment for each such State for a fiscal year 
                        shall bear the same ratio to the total amount 
                        available for allotments under this paragraph 
                        for the fiscal year as the ratio of the number 
                        of undocumented aliens in the State in the 
                        fiscal year bears to the total of such numbers 
                        for all such States for such fiscal year.
                            ``(iii) Availability of funds.--The amount 
                        of an allotment provided to a State under this 
                        paragraph for a fiscal year that is not paid 
                        out under subsection (c) shall be available for 
                        payment during the subsequent fiscal year.
                    ``(B) Data.--For purposes of subparagraph (A), the 
                number of undocumented aliens in a State shall be 
                determined based on estimates of the resident 
                undocumented alien population residing in each State 
                prepared by the Statistics Division of the Immigration 
                and Naturalization Service as of October 1992 (or as of 
                such later date if such date is at least 1 year before 
                the beginning of the fiscal year involved).
            ``(2) Based on number of undocumented alien apprehension 
        states.--
                    ``(A) In general.--Out of the amount appropriated 
                under subsection (a) for a fiscal year, the Secretary 
                shall use $16,000,000 of such amount to compute an 
                allotment for each such fiscal year for each of the 6 
                States with the highest number of undocumented alien 
                apprehensions for such fiscal year.
                    ``(B) Determination of allotments.--The amount of 
                such allotment for each such State for a fiscal year 
                shall bear the same ratio to the total amount available 
                for allotments under this paragraph for the fiscal year 
                as the ratio of the number of undocumented alien 
                apprehensions in the State in the fiscal year bears to 
                the total of such numbers for all such States for such 
                fiscal year.
                    ``(C) Data.--For purposes of this paragraph, the 
                highest number of undocumented alien apprehensions for 
                a fiscal year shall be based on the 4 most recent 
                quarterly apprehension rates for undocumented aliens in 
                such States, as reported by the Immigration and 
                Naturalization Service.
                    ``(D) Availability of funds.--The amount of an 
                allotment provided to a State under this paragraph for 
                a fiscal year that is not paid out under subsection (c) 
                shall be available for payment during the subsequent 
                fiscal year.
            ``(3) Rule of construction.--Nothing in this section shall 
        be construed as prohibiting a State that is described in both 
        of paragraphs (1) and (2) from receiving an allotment under 
        both such paragraphs for a fiscal year.
    ``(c) Use of Funds.--The Secretary shall pay, from the allotments 
made for a State under paragraphs (1) and, if applicable, (2) of 
subsection (b) for a fiscal year, to each State and directly to local 
governments, hospitals, or other providers located in the State 
(including providers of services received through an Indian Health 
Service facility whether operated by the Indian Health Service or by an 
Indian tribe or tribal organization (as defined in section 4 of the 
Indian Health Care Improvement Act)) that provide uncompensated 
emergency health services furnished to undocumented aliens during that 
fiscal year, such amounts (subject to the total amount available from 
such allotments) as the State, local governments, hospitals, or 
providers demonstrate were incurred for the provision of such services 
during that fiscal year.
    ``(d) Definitions.--In this section:
            ``(1) Hospital.--The term `hospital' has the meaning given 
        such term in section 1861(e) of the Social Security Act (42 
        U.S.C. 1395x(e)).
            ``(2) Provider.--The term `provider' includes a physician, 
        any other health care professional licensed under State law, 
        and any other entity that furnishes emergency health services, 
        including ambulance services.
            ``(3) Secretary.--The term `Secretary' means the Secretary 
        of Health and Human Services.
            ``(4) State.--The term `State' means the 50 States and the 
        District of Columbia.
    ``(e) Entitlement.--This section constitutes budget authority in 
advance of appropriations Acts and represents the obligation of the 
Federal Government to provide for the payment of amounts provided under 
this section.''.

SEC. 806. EXTENSION OF MEDICARE MUNICIPAL HEALTH SERVICES DEMONSTRATION 
              PROJECTS.

    Section 9215(a) of the Consolidated Omnibus Budget Reconciliation 
Act of 1985 (42 U.S.C. 1395b-1 note), as amended by section 6135 of the 
Omnibus Budget Reconciliation Act of 1989, section 13557 of the Omnibus 
Budget Reconciliation Act of 1993, section 4017 of the Balance Budget 
Act of 1997 (111 Stat. 345, section 534 of the Medicare, Medicaid, and 
SCHIP Balanced Budget Refinement Act of 1999 (113 Stat. 1501A-390), and 
section 633 of BIPA (114 Stat. 2763A-568), is amended by striking 
``December 31, 2004'' and inserting ``December 31, 2005''.

SEC. 807. DELAYED IMPLEMENTATION OF CERTAIN PROVISIONS.

    (a) Authority To Delay Implementation of Certain Fee-For-Service 
Payment Changes.--
            (1) In general.--If the Secretary determines that it is not 
        administratively feasible to implement a covered payment change 
        on the date otherwise applicable, notwithstanding any other 
        provision of this Act and in order to comply with Congressional 
        intent, the Secretary may delay the implementation of such 
        change in accordance with subsection (b).
            (2) Covered payment change defined.--For purposes of this 
        section, the term ``covered payment change'' means a provision 
        contained in titles I through IV of this Act that--
                    (A) changes the amount of payment made for an item 
                or service furnished under the medicare program; and
                    (B) has an effective date during the period 
                beginning on October 1, 2002, and ending on March 31, 
                2003.
    (b) Rules for Delayed Implementation.--
            (1) Period of delay.--In the case of a covered payment 
        change in which medicare payment rates change on a--
                    (A) fiscal year basis (or a cost reporting period 
                basis that relates to a fiscal year), the Secretary may 
                delay the implementation of the change until such time 
                as the Secretary determines to be appropriate, but in 
                no case later than April 1, 2003; or
                    (B) calendar year basis (or a cost reporting period 
                basis that relates to a calendar year), the Secretary 
                may delay the implementation of the change until such 
                time as the Secretary determines to be appropriate, but 
                in no case later than July 1, 2003.
            (2) Temporary adjustment for remainder of fiscal year or 
        calendar year 2003 to effect full rate change.--If the 
        Secretary delays implementation of a covered payment change 
        under paragraph (1), the Secretary shall make such adjustment 
        to the amount of payments affected by such change, for the 
        portion of fiscal year 2003 (or, in the case of a delay under 
        paragraph (1)(B), calendar year 2003) after the date of the 
        delayed implementation, in such manner as the Secretary 
        estimates will ensure that the total payments so affected (for 
        a type of service) with respect to such fiscal or calendar 
        year, respectively, is the same as would have been made if this 
        section had not been enacted.
            (3) No effect on payments for subsequent payment periods.--
        The application of paragraphs (1) and (2) shall not affect 
        payment rates and shall not be taken into account in 
        calculating payment amounts for services furnished for periods 
        after September 30, 2003 (or, in the case of a delay under 
        paragraph (1)(B), December 31, 2003).
    (c) Implementation of Medicare+Choice Provisions.--
            (1) Transition to revised medicare+choice payment rates.--
        In order to comply with Congressional intent, the provisions of 
        section 604 of BIPA (114 Stat. 2763A-555) shall apply to the 
        provisions of title V of this Act for 2003 in the same manner 
        as the provisions of such section applied to the provisions of 
        BIPA for 2001.
            (2) Special rule for medicare+choice payment rates in 
        2003.--
                    (A) January and february.--Notwithstanding the 
                amendments made by sections 501 and 506, for purposes 
                of making payments under section 1853 of the Social 
                Security Act (42 U.S.C. 1395w-23) for January and 
                February 2003, the annual Medicare+Choice capitation 
                rate for a Medicare+Choice payment area shall be 
                calculated, the new entry bonus amount under section 
                1853(i) under such Act (42 U.S.C. 1395w-23(i)) shall be 
                determined, and the excess amount under section 
                1854(f)(1)(B) of such Act (42 U.S.C. 1395w-24(f)(1)(B)) 
                shall be determined, as if such amendments had not been 
                enacted.
                    (B) March through december.--Notwithstanding the 
                amendments made by sections 501 and 506, for purposes 
                of making payments under section 1853 of the Social 
                Security Act (42 U.S.C. 1395w-23) for March through 
                February 2003, the annual Medicare+Choice capitation 
                rate for a Medicare+Choice payment area shall be 
                calculated, the new entry bonus amount under section 
                1853(i) under such Act (42 U.S.C. 1395w-23(i)) shall be 
                determined, and the excess amount under section 
                1854(f)(1)(B) of such Act (42 U.S.C. 1395w-24(f)(1)(B)) 
                shall be determined, in such manner as the Secretary 
                estimates will ensure that the total of such payments 
                with respect to 2003 is the same as the amounts that 
                would have been if subparagraph (A) had not been 
                enacted.
                    (C) Construction.--Subparagraph (A) shall not be 
                taken into account in computing such capitation rate 
                for 2004 and subsequent years.
            (3) Plans required to provide notice of changes in plan 
        benefits.--If a Medicare+Choice organization offering a 
        Medicare+Choice plan revises its submission of the information 
        described in section 1854(a)(1)(B) of the Social Security Act 
        (42 U.S.C. 1395w-23(a)(1)(B)) for a plan pursuant to the 
        application of paragraph (1), and such revision results in 
        reduced beneficiary premiums, reduced beneficiary cost-sharing, 
        or enhanced benefits under the plan, then by not later than the 
        date that is 3 weeks after the Secretary approves such 
        submission, the Medicare+Choice organization offering the plan 
        shall provide each beneficiary enrolled in the plan with 
        written notice of such changes.
    (d) Administration of Provisions.--
            (1) No rulemaking or notice required.--The Secretary may 
        carry out the authority under this section by program 
        memorandum or otherwise and is not required to prescribe 
        regulations or to provide notice in the Federal Register in 
        order to carry out such authority.
            (2) Limitation on review.--There shall be no administrative 
        or judicial review under section 1869 or 1878 of the Social 
        Security Act, or otherwise of any determination made by the 
        Secretary under this section or the application of the payment 
        rates determined under this section.




                                                       Calendar No. 627

107th CONGRESS

  2d Session

                                S. 3018

_______________________________________________________________________

                                 A BILL

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

_______________________________________________________________________

                            October 2, 2002

            Read the second time and placed on the calendar