[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1926 Introduced in Senate (IS)]

  1st Session
                                S. 1926

To amend title XVIII of the Social Security Act to restore the medicare 
                    program, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 21, 2003

 Ms. Stabenow (for herself, Mr. Graham of Florida, Mrs. Clinton, Mrs. 
Murray, Mr. Leahy, Mr. Daschle, Mr. Pryor, Mr. Levin, Mr. Schumer, and 
 Ms. Cantwell) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend title XVIII of the Social Security Act to restore 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 ``Support Our Health 
Care Providers Act of 2003''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in division A of 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; table of contents.
                       TITLE I--RURAL PROVISIONS

             Subtitle A--Provisions Relating to Part A Only

Sec. 101. Equalizing urban and rural standardized payment amounts under 
                            the medicare inpatient hospital prospective 
                            payment system.
Sec. 102. Enhanced disproportionate share hospital (DSH) treatment for 
                            rural hospitals and urban hospitals with 
                            fewer than 100 beds.
Sec. 103. Adjustment to the medicare inpatient hospital prospective 
                            payment system wage index to revise the 
                            labor-related share of such index.
Sec. 104. More frequent update in weights used in hospital market 
                            basket.
Sec. 105. Improvements to critical access hospital program.
Sec. 106. Medicare inpatient hospital payment adjustment for low-volume 
                            hospitals.
Sec. 107. Treatment of missing cost reporting periods for sole 
                            community hospitals.
Sec. 108. Recognition of attending nurse practitioners as attending 
                            physicians to serve hospice patients.
Sec. 109. Rural hospice demonstration project.
Sec. 110. Exclusion of certain rural health clinic and federally 
                            qualified health center services from the 
                            prospective payment system for skilled 
                            nursing facilities.
Sec. 110A. Rural community hospital demonstration program.
             Subtitle B--Provisions Relating to Part B Only

Sec. 111. 2-year extension of hold harmless provisions for small rural 
                            hospitals and sole community hospitals 
                            under the prospective payment system for 
                            hospital outpatient department services.
Sec. 112. Establishment of floor on work geographic adjustment.
Sec. 113. Medicare incentive payment program improvements for physician 
                            scarcity.
Sec. 114. Payment for rural and urban ambulance services.
Sec. 115. Providing appropriate coverage of rural air ambulance 
                            services.
Sec. 116. Treatment of certain clinical diagnostic laboratory tests 
                            furnished to hospital outpatients in 
                            certain rural areas.
Sec. 117. Extension of telemedicine demonstration project.
Sec. 118. Report on demonstration project permitting skilled nursing 
                            facilities to be originating telehealth 
                            sites; authority to implement.
            Subtitle C--Provisions Relating to Parts A and B

Sec. 121. 1-year increase for home health services furnished in a rural 
                            area.
Sec. 122. Redistribution of unused resident positions.
                      Subtitle D--Other Provisions

Sec. 131. Providing safe harbor for certain collaborative efforts that 
                            benefit medically underserved populations.
Sec. 132. Office of rural health policy improvements.
Sec. 133. MedPac study on rural hospital payment adjustments.
Sec. 134. Frontier extended stay clinic demonstration project.
                TITLE II--PROVISIONS RELATING TO PART A

                Subtitle A--Inpatient Hospital Services

Sec. 201. Revision of acute care hospital payment updates.
Sec. 202. Revision of the indirect medical education (IME) adjustment 
                            percentage.
Sec. 203. Recognition of new medical technologies under inpatient 
                            hospital prospective payment system.
Sec. 204. Increase in Federal rate for hospitals in Puerto Rico.
Sec. 205. Wage index adjustment reclassification reform.
Sec. 206. Limitation on charges for inpatient hospital contract health 
                            services provided to Indians by medicare 
                            participating hospitals.
Sec. 207. Clarifications to certain exceptions to medicare limits on 
                            physician referrals.
Sec. 208. 1-time appeals process for hospital wage index 
                            classification.
                      Subtitle B--Other Provisions

Sec. 211. Payment for covered skilled nursing facility services.
Sec. 212. Coverage of hospice consultation services.
Sec. 213. Study on portable diagnostic ultrasound services for 
                            beneficiaries in skilled nursing 
                            facilities.
                TITLE III--PROVISIONS RELATING TO PART B

        Subtitle A--Provisions Relating to Physicians' Services

Sec. 301. Revision of updates for physicians' services.
Sec. 302. Treatment of physicians' services furnished in Alaska.
Sec. 303. Inclusion of podiatrists, dentists, and optometrists under 
                            private contracting authority.
Sec. 304. GAO study on access to physicians' services.
Sec. 305. Collaborative demonstration-based review of physician 
                            practice expense geographic adjustment 
                            data.
Sec. 306. MedPac report on payment for physicians' services.
                    Subtitle B--Preventive Services

Sec. 311. Coverage of an initial preventive physical examination.
Sec. 312. Coverage of cardiovascular screening blood tests.
Sec. 313. Coverage of diabetes screening tests.
Sec. 314. Improved payment for certain mammography services.
                      Subtitle C--Other Provisions

Sec. 321. Hospital outpatient department (HOPD) payment reform.
Sec. 322. Limitation of application of functional equivalence standard.
Sec. 323. Payment for renal dialysis services.
Sec. 324. 2-year moratorium on therapy caps; provisions relating to 
                            reports.
Sec. 325. Waiver of part B late enrollment penalty for certain military 
                            retirees; special enrollment period.
Sec. 326. Payment for services furnished in ambulatory surgical 
                            centers.
Sec. 327. Payment for certain shoes and inserts under the fee schedule 
                            for orthotics and prosthetics.
Sec. 328. 5-year authorization of reimbursement for all medicare part B 
                            services furnished by certain Indian 
                            hospitals and clinics.
  Subtitle D--Additional Demonstrations, Studies, and Other Provisions

Sec. 341. Demonstration project for coverage of certain prescription 
                            drugs and biologicals.
Sec. 342. Extension of coverage of intravenous immune globulin (IVIG) 
                            for the treatment of primary immune 
                            deficiency diseases in the home.
Sec. 343. MedPac study of coverage of surgical first assisting services 
                            of certified registered nurse first 
                            assistants.
Sec. 344. MedPac study of payment for cardio-thoracic surgeons.
Sec. 345. Studies relating to vision impairments.
Sec. 346. Medicare health care quality demonstration programs.
Sec. 347. MedPac study on direct access to physical therapy services.
Sec. 348. Demonstration project for consumer-directed chronic 
                            outpatient services.
Sec. 349. Medicare care management performance demonstration.
Sec. 350. GAO study and report on the propagation of concierge care.
Sec. 351. Demonstration of coverage of chiropractic services under 
                            medicare.
             TITLE IV--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

Sec. 401. Demonstration project to clarify the definition of homebound.
Sec. 402. Demonstration project for medical adult day-care services.
Sec. 403. Temporary suspension of oasis requirement for collection of 
                            data on non-medicare and non-medicaid 
                            patients.
Sec. 404. MedPac study on medicare margins of home health agencies.
Sec. 405. Coverage of religious nonmedical health care institution 
                            services furnished in the home.
                 Subtitle B--Graduate Medical Education

Sec. 411. Exception to initial residency period for geriatric residency 
                            or fellowship programs. 
Sec. 412. Treatment of volunteer supervision.
                  Subtitle C--Chronic Care Improvement

Sec. 421. Voluntary chronic care improvement under traditional fee-for-
                            service.
Sec. 422. Medicare advantage quality improvement programs.
Sec. 423. Chronically ill medicare beneficiary research, data, 
                            demonstration strategy.
                      Subtitle D--Other Provisions

Sec. 431. Improvements in national and local coverage determination 
                            process to respond to changes in 
                            technology.
Sec. 432. Extension of treatment of certain physician pathology 
                            services under medicare.
Sec. 433. Payment for pancreatic islet cell investigational transplants 
                            for medicare beneficiaries in clinical 
                            trials.
Sec. 434. Restoration of medicare trust funds.
Sec. 435. Modifications to Medicare Payment Advisory Commission 
                            (MedPac).
Sec. 436. Technical amendments.
    TITLE V--ADMINISTRATIVE IMPROVEMENTS, REGULATORY REDUCTION, AND 
                           CONTRACTING REFORM

Sec. 500. Administrative improvements within the Centers for Medicare & 
                            Medicaid Services (CMS).
                     Subtitle A--Regulatory Reform

Sec. 501. Construction; definition of supplier.
Sec. 502. Issuance of regulations.
Sec. 503. Compliance with changes in regulations and policies.
Sec. 504. Reports and studies relating to regulatory reform.
                     Subtitle B--Contracting Reform

Sec. 511. Increased flexibility in medicare administration.
Sec. 512. Requirements for information security for medicare 
                            administrative contractors.
                   Subtitle C--Education and Outreach

Sec. 521. Provider education and technical assistance.
Sec. 522. Small provider technical assistance demonstration program.
Sec. 523. Medicare beneficiary ombudsman.
Sec. 524. Beneficiary outreach demonstration program.
Sec. 525. Inclusion of additional information in notices to 
                            beneficiaries about skilled nursing 
                            facility benefits.
Sec. 526. Information on medicare-certified skilled nursing facilities 
                            in hospital discharge plans.
                    Subtitle D--Appeals and Recovery

Sec. 531. Transfer of responsibility for medicare appeals.
Sec. 532. Process for expedited access to review.
Sec. 533. Revisions to medicare appeals process.
Sec. 534. Prepayment review.
Sec. 535. Recovery of overpayments.
Sec. 536. Provider enrollment process; right of appeal.
Sec. 537. Process for correction of minor errors and omissions without 
                            pursuing appeals process.
Sec. 538. Prior determination process for certain items and services; 
                            advance beneficiary notices.
Sec. 539. Appeals by providers when there is no other party available.
Sec. 540. Revisions to appeals timeframes and amounts.
Sec. 540A. Mediation process for local coverage determinations.
                  Subtitle E--Miscellaneous Provisions

Sec. 541. Policy development regarding evaluation and management (E & 
                            M) documentation guidelines.
Sec. 542. Improvement in oversight of technology and coverage.
Sec. 543. Treatment of hospitals for certain services under medicare 
                            secondary payor (MSP) provisions.
Sec. 544. EMTALA improvements.
Sec. 545. Emergency Medical Treatment and Labor Act (EMTALA) Technical 
                            Advisory Group.
Sec. 546. Authorizing use of arrangements to provide core hospice 
                            services in certain circumstances.
Sec. 547. Application of OSHA bloodborne pathogens standard to certain 
                            hospitals.
Sec. 548. Bipa-related technical amendments and corrections.
Sec. 549. Conforming authority to waive a program exclusion.
Sec. 550. Treatment of certain dental claims.
Sec. 551. Furnishing hospitals with information to compute DSH formula.
Sec. 552. Revisions to reassignment provisions.
Sec. 553. Other provisions.
            TITLE VI--MEDICAID AND MISCELLANEOUS PROVISIONS

                    Subtitle A--Medicaid Provisions

Sec. 601. Medicaid disproportionate share hospital (DSH) payments.
Sec. 602. Clarification of inclusion of inpatient drug prices charged 
                            to certain public hospitals in the best 
                            price exemptions for the medicaid drug 
                            rebate program.
Sec. 603. Extension of moratorium.
                  Subtitle B--Miscellaneous Provisions

Sec. 611. Federal reimbursement of emergency health services furnished 
                            to undocumented aliens.
Sec. 612. Commission on Systemic Interoperability.
Sec. 613. Research on outcomes of health care items and services.
Sec. 614. Health care that works for all Americans: Citizens Health 
                            Care Working Group.
Sec. 615. Funding start-up administrative costs for medicare reform.
Sec. 616. Health care infrastructure improvement program.

                       TITLE I--RURAL PROVISIONS

             Subtitle A--Provisions Relating to Part A Only

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 subclause (II), for discharges''; and
            (2) by adding at the end the following new subclause:
            ``(II) For discharges occurring in a fiscal year (beginning 
        with fiscal year 2004), the Secretary shall compute a 
        standardized amount for hospitals located in any area within 
        the United States and within each region equal to the 
        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 all hospitals in the 
        previous fiscal year) increased by the applicable percentage 
        increase under subsection (b)(3)(B)(i) for the fiscal year 
        involved.''.
    (b) Conforming Amendments.--
            (1) Computing drg-specific rates.--Section 1886(d)(3)(D) 
        (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'';
                    (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 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,''.
            (3) Additional technical amendment.--Section 
        1886(d)(3)(A)(iii) (42 U.S.C. 1395ww(d)(3)(A)(iii)) is amended 
        by striking ``in an other urban area'' and inserting ``in an 
        urban area''.
    (c) Equalizing Urban and Rural Standardized Payment Amounts Under 
the Medicare Inpatient Hospital Prospective Payment System for 
Hospitals in Puerto Rico.--
            (1) In general.--Section 1886(d)(9)(A) (42 U.S.C. 
        1395ww(d)(9)(A)), as amended by section 204, is amended--
                    (A) in clause (i), by striking ``and'' after the 
                comma at the end; and
                    (B) by striking clause (ii) and inserting the 
                following new clause:
            ``(ii) the applicable Federal percentage (specified in 
        subparagraph (E)) of--
                    ``(I) for discharges beginning in a fiscal year 
                beginning on or after October 1, 1997, and before 
                October 1, 2003, the discharge-weighted average of--
                            ``(aa) the national adjusted DRG 
                        prospective payment rate (determined under 
                        paragraph (3)(D)) for hospitals located in a 
                        large urban area,
                            ``(bb) such rate for hospitals located in 
                        other urban areas, and
                            ``(cc) such rate for hospitals located in a 
                        rural area,
                for such discharges, adjusted in the manner provided in 
                paragraph (3)(E) for different area wage levels; and
                    ``(II) for discharges in a fiscal year beginning on 
                or after October 1, 2003, the national DRG prospective 
                payment rate determined under paragraph (3)(D)(iii) for 
                hospitals located in any area for such discharges, 
                adjusted in the manner provided in paragraph (3)(E) for 
                different area wage levels.
As used in this section, the term `subsection (d) Puerto Rico hospital' 
means a hospital that is located in Puerto Rico and that would be a 
subsection (d) hospital (as defined in paragraph (1)(B)) if it were 
located in one of the 50 States.''.
            (2) Application of puerto rico standardized amount based on 
        large urban areas.--Section 1886(d)(9)(C) (42 U.S.C. 
        1395ww(d)(9)(C)) is amended--
                    (A) in clause (i)--
                            (i) by striking ``(i) The Secretary'' and 
                        inserting ``(i)(I) For discharges in a fiscal 
                        year after fiscal year 1988 and before fiscal 
                        year 2004, the Secretary''; and
                            (ii) by adding at the end the following new 
                        subclause:
            ``(II) For discharges occurring in a fiscal year (beginning 
        with fiscal year 2004), the Secretary shall compute an average 
        standardized amount for hospitals located in any area of Puerto 
        Rico that is equal to the average standardized amount computed 
        under subclause (I) for fiscal year 2003 for hospitals in a 
        large urban area (or, beginning with fiscal year 2005, for all 
        hospitals in the previous fiscal year) increased by the 
        applicable percentage increase under subsection (b)(3)(B) for 
        the fiscal year involved.'';
                    (B) in clause (ii), by inserting ``(or for fiscal 
                year 2004 and thereafter, the average standardized 
                amount)'' after ``each of the average standardized 
                amounts''; and
                    (C) in clause (iii)(I), by striking ``for hospitals 
                located in an urban or rural area, respectively''.
    (d) Implementation.--
            (1) In general.--The amendments made by subsections (a), 
        (b), and (c)(1) of this section shall have no effect on the 
        authority of the Secretary, under subsection (b)(2) of section 
        402 of Public Law 108-89, to delay implementation of the 
        extension of provisions equalizing urban and rural standardized 
        inpatient hospital payments under subsection (a) of such 
        section 402.
            (2) Application of puerto rico standardized amount based on 
        large urban areas.--The authority of the Secretary referred to 
        in paragraph (1) shall apply with respect to the amendments 
        made by subsection (c)(2) of this section in the same manner as 
        that authority applies with respect to the extension of 
        provisions equalizing urban and rural standardized inpatient 
        hospital payments under subsection (a) of such section 402, 
        except that any reference in subsection (b)(2)(A) of such 
        section 402 is deemed to be a reference to April 1, 2004.

SEC. 102. ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH) TREATMENT FOR 
              RURAL HOSPITALS AND URBAN HOSPITALS WITH FEWER THAN 100 
              BEDS.

    (a) Doubling the Cap.--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 occurring on or after April 1, 
2004, 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 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 12 percent for a hospital that is not 
classified as a rural referral center under subparagraph (C).''.
    (b) Conforming Amendments.--Section 1886(d) (42 U.S.C. 1395ww(d)) 
is amended--
            (1) in paragraph (5)(F)--
                    (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''; and
            (2) in paragraph (2)(C)(iv)--
                    (A) by striking ``or'' before ``the enactment of 
                section 303''; and
                    (B) by inserting before the period at the end the 
                following: ``, or the enactment of section 402(a)(1) of 
                the Medicare Provider Restoration Act of 2003''.

SEC. 103. ADJUSTMENT TO THE MEDICARE INPATIENT HOSPITAL PROSPECTIVE 
              PAYMENT SYSTEM WAGE INDEX TO REVISE THE LABOR-RELATED 
              SHARE OF SUCH INDEX.

    (a) Adjustment.--
            (1) In general.--Section 1886(d)(3)(E) (42 U.S.C. 
        1395ww(d)(3)(E)) is amended--
                    (A) by striking ``wage levels.--The Secretary'' and 
                inserting ``wage levels.--
                    ``(i) In general.--Except as provided in clause 
                (ii), the Secretary''; and
                    (B) by adding at the end the following new clause:
                    ``(ii) Alternative proportion to be adjusted 
                beginning in fiscal year 2005.--For discharges 
                occurring on or after October 1, 2004, the Secretary 
                shall substitute `62 percent' for the proportion 
                described in the first sentence of clause (i), unless 
                the application of this clause would result in lower 
                payments to a hospital than would otherwise be made.''.
            (2) 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 103(a)(1) of 
        the Medicare Provider Restoration Act of 2003 had not been 
        enacted.''.
    (b) Application to Puerto Rico Hospitals.--Section 
1886(d)(9)(C)(iv) (42 U.S.C. 1395ww(d)(9)(C)(iv)) is amended--
            (1) by inserting ``(I)'' after ``(iv)'';
            (2) by striking ``paragraph (3)(E)'' and inserting 
        ``paragraph (3)(E)(i)''; and
            (3) by adding at the end the following new subclause:
            ``(II) For discharges occurring on or after October 1, 
        2004, the Secretary shall substitute `62 percent' for the 
        proportion described in the first sentence of clause (i), 
        unless the application of this subclause would result in lower 
        payments to a hospital than would otherwise be made.''.

SEC. 104. MORE FREQUENT UPDATE 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, including the labor share, in such market 
basket to reflect the most current data available more frequently than 
once every 5 years.
    (b) Incorporation of Explanation in Rulemaking.--The Secretary 
shall include in the publication of the final rule for payment for 
inpatient hospital services under section 1886(d) of the Social 
Security Act (42 U.S.C. 1395ww(d)) for fiscal year 2006, an explanation 
of the reasons for, and options considered, in determining frequency 
established under subsection (a).

SEC. 105. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.

    (a) Increase in Payment Amounts.--
            (1) In general.--Sections 1814(l), 1834(g)(1), and 
        1883(a)(3) (42 U.S.C. 1395f(l), 1395m(g)(1), and 1395tt(a)(3)) 
        are each amended by inserting ``equal to 101 percent of'' 
        before ``the reasonable costs''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to payments for services furnished during cost 
        reporting periods beginning on or after January 1, 2004.
    (b) Coverage of Costs for Certain Emergency Room On-Call 
Providers.--
            (1) In general.--Section 1834(g)(5) (42 U.S.C. 1395m(g)(5)) 
        is amended--
                    (A) in the heading--
                            (i) by inserting ``certain'' before 
                        ``emergency''; and
                            (ii) by striking ``physicians'' and 
                        inserting ``providers'';
                    (B) 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
                    (C) by striking ``physicians' services'' and 
                inserting ``services covered under this title''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to costs incurred for services 
        furnished on or after January 1, 2005.
    (c) Authorization of Periodic Interim Payment (PIP).--
            (1) In general.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) 
        is amended--
                    (A) in the matter before subparagraph (A), by 
                inserting ``, in the cases described in subparagraphs 
                (A) through (D)'' after ``1986'';
                    (B) by striking ``and'' at the end of subparagraph 
                (C);
                    (C) by adding ``and'' at the end of subparagraph 
                (D); and
                    (D) by inserting after subparagraph (D) the 
                following new subparagraph:
            ``(E) inpatient critical access hospital services;''.
            (2) Development of alternative timing methods of periodic 
        interim payments.--With respect to periodic interim payments to 
        critical access hospitals for inpatient critical access 
        hospital services under section 1815(e)(2)(E) of the Social 
        Security Act, as added by paragraph (1), the Secretary shall 
        develop alternative methods for the timing of such payments.
            (3) Authorization of pip.--The amendments made by paragraph 
        (1) shall apply to payments made on or after July 1, 2004.
    (d) Condition for Application of Special Professional Service 
Payment Adjustment.--
            (1) In general.--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 or other practitioner providing 
        professional services in the hospital must assign billing 
        rights with respect to such services, except that such 
        subparagraph shall not apply to those physicians and 
        practitioners who have not assigned such billing rights.''.
            (2) Effective date.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the amendment made by paragraph (1) shall apply to 
                cost reporting periods beginning on or after July 1, 
                2004.
                    (B) Rule of application.--In the case of a critical 
                access hospital that made an election under section 
                1834(g)(2) of the Social Security Act (42 U.S.C. 
                1395m(g)(2)) before November 1, 2003, the amendment 
                made by paragraph (1) shall apply to cost reporting 
                periods beginning on or after July 1, 2001.
    (e) Revision of Bed Limitation for Hospitals.--
            (1) In general.--Section 1820(c)(2)(B)(iii) (42 U.S.C. 
        1395i-4(c)(2)(B)(iii)) is amended by striking ``15 (or, in the 
        case of a facility under an agreement described in subsection 
        (f), 25)'' and inserting ``25''.
            (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''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to designations made before, on, or after January 
        1, 2004, but any election made pursuant to regulations 
        promulgated to carry out such amendments shall only apply 
        prospectively.
    (f) Provisions Relating to FLEX Grants.--
            (1) Additional 4-year period of funding.--Section 1820(j) 
        (42 U.S.C. 1395i-4(j)) is amended by inserting before the 
        period at the end the following: ``, and for making grants to 
        all States under paragraphs (1) and (2) of subsection (g), 
        $35,000,000 in each of fiscal years 2005 through 2008''.
            (2) Additional requirements and administration.--Section 
        1820(g) (42 U.S.C. 1395i-4(g)) is amended by adding at the end 
        the following new paragraphs:
            ``(4) Additional requirements with respect to flex 
        grants.--With respect to grants awarded under paragraph (1) or 
        (2) from funds appropriated for fiscal year 2005 and subsequent 
        fiscal years--
                    ``(A) Consultation with the state hospital 
                association and rural hospitals on the most appropriate 
                ways to use grants.--A State shall consult with the 
                hospital association of such State and rural hospitals 
                located in such State on the most appropriate ways to 
                use the funds under such grant.
                    ``(B) Limitation on use of grant funds for 
                administrative expenses.--A State may not expend more 
                than the lesser of--
                            ``(i) 15 percent of the amount of the grant 
                        for administrative expenses; or
                            ``(ii) the State's federally negotiated 
                        indirect rate for administering the grant.
            ``(5) Use of funds for federal administrative expenses.--Of 
        the total amount appropriated for grants under paragraphs (1) 
        and (2) for a fiscal year (beginning with fiscal year 2005), up 
        to 5 percent of such amount shall be available to the Health 
        Resources and Services Administration for purposes of 
        administering such grants.''.
    (g) Authority To Establish Psychiatric and Rehabilitation Distinct 
Part Units.--
            (1) In general.--Section 1820(c)(2) (42 U.S.C. 1395i-
        4(c)(2)) is amended by adding at the end the following:
                    ``(E) Authority to establish psychiatric and 
                rehabilitation distinct part units.--
                            ``(i) In general.--Subject to the 
                        succeeding provisions of this subparagraph, a 
                        critical access hospital may establish--
                                    ``(I) a psychiatric unit of the 
                                hospital that is a distinct part of the 
                                hospital; and
                                    ``(II) a rehabilitation unit of the 
                                hospital that is a distinct part of the 
                                hospital,
                        if the distinct part meets the requirements 
                        (including conditions of participation) that 
                        would otherwise apply to the distinct part if 
                        the distinct part were established by a 
                        subsection (d) hospital in accordance with the 
                        matter following clause (v) of section 
                        1886(d)(1)(B), including any regulations 
                        adopted by the Secretary under such section.
                            ``(ii) Limitation on number of beds.--The 
                        total number of beds that may be established 
                        under clause (i) for a distinct part unit may 
                        not exceed 10.
                            ``(iii) Exclusion of beds from bed count.--
                        In determining the number of beds of a critical 
                        access hospital for purposes of applying the 
                        bed limitations referred to in subparagraph 
                        (B)(iii) and subsection (f), the Secretary 
                        shall not take into account any bed established 
                        under clause (i).
                            ``(iv) Effect of failure to meet 
                        requirements.--If a psychiatric or 
                        rehabilitation unit established under clause 
                        (i) does not meet the requirements described in 
                        such clause with respect to a cost reporting 
                        period, no payment may be made under this title 
                        to the hospital for services furnished in such 
                        unit during such period. Payment to the 
                        hospital for services furnished in the unit may 
                        resume only after the hospital has demonstrated 
                        to the Secretary that the unit meets such 
                        requirements.''.
            (2) Payment on a prospective payment basis.--Section 
        1814(l) (42 U.S.C. 1395f(l)) is amended--
                    (A) by striking ``(l) The amount'' and inserting 
                ``(l)(1) Except as provided in paragraph (2), the 
                amount''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(2) In the case of a distinct part psychiatric or rehabilitation 
unit of a critical access hospital described in section 1820(c)(2)(E), 
the amount of payment for inpatient critical access hospital services 
of such unit shall be equal to the amount of the payment that would 
otherwise be made if such services were inpatient hospital services of 
a distinct part psychiatric or rehabilitation unit, respectively, 
described in the matter following clause (v) of section 
1886(d)(1)(B).''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to cost reporting periods beginning on or after 
        October 1, 2004.
    (h) Waiver Authority.--
            (1) In general.--Section 1820(c)(2)(B)(i)(II) (42 U.S.C. 
        1395i-4(c)(2)(B)(i)(II)) is amended by inserting ``before 
        January 1, 2006,'' after ``is certified''.
            (2) Grandfathering waiver authority for certain 
        facilities.--Section 1820(h) (42 U.S.C. 1395i-4(h)) is 
        amended--
                    (A) in the heading preceding paragraph (1), by 
                striking ``of Certain Facilities'' and inserting 
                ``Provisions''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(3) State authority to waive 35-mile rule.--In the case 
        of a facility that was designated as a critical access hospital 
        before January 1, 2006, and was certified by the State as being 
        a necessary provider of health care services to residents in 
        the area under subsection (c)(2)(B)(i)(II), as in effect before 
        such date, the authority under such subsection with respect to 
        any redesignation of such facility shall continue to apply 
        notwithstanding the amendment made by section 105(h)(1) of the 
        Medicare Provider Restoration Act of 2003.''.

SEC. 106. MEDICARE INPATIENT HOSPITAL PAYMENT ADJUSTMENT FOR LOW-VOLUME 
              HOSPITALS.

    (a) In General.--Section 1886(d) (42 U.S.C. 1395ww(d)) is amended 
by adding at the end the following new paragraph:
            ``(12) Payment adjustment for low-volume hospitals.--
                    ``(A) In general.--In addition to any payments 
                calculated under this section for a subsection (d) 
                hospital, for discharges occurring during a fiscal year 
                (beginning with fiscal year 2005), the Secretary shall 
                provide for an additional payment amount to each low-
                volume hospital (as defined in subparagraph (C)(i)) for 
                discharges occurring during that fiscal year that is 
                equal to the applicable percentage increase (determined 
                under subparagraph (B) for the hospital involved) in 
                the amount paid to such hospital under this section for 
                such discharges (determined without regard to this 
                paragraph).
                    ``(B) Applicable percentage increase.--The 
                Secretary shall determine an applicable percentage 
                increase for purposes of subparagraph (A) as follows:
                            ``(i) The Secretary shall determine the 
                        empirical relationship for subsection (d) 
                        hospitals between the standardized cost-per-
                        case for such hospitals and the total number of 
                        discharges of such hospitals and the amount of 
                        the additional incremental costs (if any) that 
                        are associated with such number of discharges.
                            ``(ii) The applicable percentage increase 
                        shall be determined based upon such 
                        relationship in a manner that reflects, based 
                        upon the number of such discharges for a 
                        subsection (d) hospital, such additional 
                        incremental costs.
                            ``(iii) In no case shall the applicable 
                        percentage increase exceed 25 percent.
                    ``(C) Definitions.--
                            ``(i) Low-volume hospital.--For purposes of 
                        this paragraph, the term `low-volume hospital' 
                        means, for a fiscal year, a subsection (d) 
                        hospital (as defined in paragraph (1)(B)) that 
                        the Secretary determines is located more than 
                        25 road miles from another subsection (d) 
                        hospital and has less than 800 discharges 
                        during the fiscal year.
                            ``(ii) Discharge.--For purposes of 
                        subparagraph (B) and clause (i), the term 
                        `discharge' means an inpatient acute care 
                        discharge of an individual regardless of 
                        whether the individual is entitled to benefits 
                        under part A.''.
    (b) Judicial Review.--Section 1886(d)(7)(A) (42 U.S.C. 
1395ww(d)(7)(A)) is amended by inserting after ``to subsection (e)(1)'' 
the following: ``or the determination of the applicable percentage 
increase under paragraph (12)(A)(ii)''.

SEC. 107. TREATMENT OF MISSING COST REPORTING PERIODS FOR SOLE 
              COMMUNITY HOSPITALS.

    (a) In General.--Section 1886(b)(3)(I) (42 U.S.C. 1395ww(b)(3)(I)) 
is amended by adding at the end the following new clause:
    ``(iii) In no case shall a hospital be denied treatment as a sole 
community hospital or payment (on the basis of a target rate as such as 
a hospital) because data are unavailable for any cost reporting period 
due to changes in ownership, changes in fiscal intermediaries, or other 
extraordinary circumstances, so long as data for at least one 
applicable base cost reporting period is available.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to cost reporting periods beginning on or after January 1, 2004.

SEC. 108. RECOGNITION OF ATTENDING NURSE PRACTITIONERS AS ATTENDING 
              PHYSICIANS TO SERVE HOSPICE PATIENTS.

    (a) In General.--Section 1861(dd)(3)(B) (42 U.S.C. 1395x(dd)(3)(B)) 
is amended by inserting ``or nurse practitioner (as defined in 
subsection (aa)(5))'' after ``the physician (as defined in subsection 
(r)(1))''.
    (b) Clarification of Hospice Role of Nurse Practitioners.--Section 
1814(a)(7)(A)(i)(I) (42 U.S.C. 1395f(a)(7)(A)(i)(I)) is amended by 
inserting ``(which for purposes of this subparagraph does not include a 
nurse practitioner)'' after ``attending physician (as defined in 
section 1861(dd)(3)(B))''.

SEC. 109. RURAL HOSPICE DEMONSTRATION PROJECT.

    (a) In General.--The Secretary shall conduct a demonstration 
project for the delivery of hospice care to medicare beneficiaries in 
rural areas. Under the project medicare beneficiaries who are unable to 
receive hospice care in the facility for lack of an appropriate 
caregiver are provided such care in a facility of 20 or fewer beds 
which offers, within its walls, the full range of services provided by 
hospice programs under section 1861(dd) of the Social Security Act (42 
U.S.C. 1395x(dd)).
    (b) Scope of Project.--The Secretary shall conduct the project 
under this section with respect to no more than 3 hospice programs over 
a period of not longer than 5 years each.
    (c) Compliance with Conditions.--Under the demonstration project--
            (1) the hospice program shall comply with otherwise 
        applicable requirements, except that it shall not be required 
        to offer services outside of the home or to meet the 
        requirements of section 1861(dd)(2)(A)(iii) of the Social 
        Security Act; and
            (2) payments for hospice care shall be made at the rates 
        otherwise applicable to such care under title XVIII of such 
        Act.
The Secretary may require the program to comply with such additional 
quality assurance standards for its provision of services in its 
facility as the Secretary deems appropriate.
    (d) Report.--Upon completion of the project, the Secretary shall 
submit a report to Congress on the project and shall include in the 
report recommendations regarding extension of such project to hospice 
programs serving rural areas.

SEC. 110. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC AND FEDERALLY 
              QUALIFIED HEALTH CENTER SERVICES FROM THE PROSPECTIVE 
              PAYMENT SYSTEM FOR SKILLED NURSING FACILITIES.

    (a) In General.--Section 1888(e)(2)(A) (42 U.S.C. 1395yy(e)(2)(A)) 
is amended--
            (1) in clause (i)(II), by striking ``clauses (ii) and 
        (iii)'' and inserting ``clauses (ii), (iii), and (iv)''; and
            (2) by adding at the end 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 an individual 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 January 1, 2005.

SEC. 110A. RURAL COMMUNITY HOSPITAL DEMONSTRATION PROGRAM.

    (a) Establishment of Rural Community Hospital (RCH) Demonstration 
Program.--
            (1) In general.--The Secretary shall establish a 
        demonstration program to test the feasibility and advisability 
        of the establishment of rural community hospitals (as defined 
        in subsection (f)(1)) to furnish covered inpatient hospital 
        services (as defined in subsection (f)(2)) to medicare 
        beneficiaries.
            (2) Demonstration areas.--The program shall be conducted in 
        rural areas selected by the Secretary in States with low 
        population densities, as determined by the Secretary.
            (3) Application.--Each rural community hospital that is 
        located in a demonstration area selected under paragraph (2) 
        that desires to participate in the demonstration program under 
        this section shall submit an application to the Secretary at 
        such time, in such manner, and containing such information as 
        the Secretary may require.
            (4) Selection of hospitals.--The Secretary shall select 
        from among rural community hospitals submitting applications 
        under paragraph (3) not more than 15 of such hospitals to 
        participate in the demonstration program under this section.
            (5) Duration.--The Secretary shall conduct the 
        demonstration program under this section for a 5-year period.
            (6) Implementation.--The Secretary shall implement the 
        demonstration program not later than January 1, 2005, but may 
        not implement the program before October 1, 2004.
    (b) Payment.--
            (1) In general.--The amount of payment under the 
        demonstration program for covered inpatient hospital services 
        furnished in a rural community hospital, other than such 
        services furnished in a psychiatric or rehabilitation unit of 
        the hospital which is a distinct part, is--
                    (A) for discharges occurring in the first cost 
                reporting period beginning on or after the 
                implementation of the demonstration program, the 
                reasonable costs of providing such services; and
                    (B) for discharges occurring in a subsequent cost 
                reporting period under the demonstration program, the 
                lesser of--
                            (i) the reasonable costs of providing such 
                        services in the cost reporting period involved; 
                        or
                            (ii) the target amount (as defined in 
                        paragraph (2), applicable to the cost reporting 
                        period involved.
            (2) Target amount.--For purposes of paragraph (1)(B)(ii), 
        the term ``target amount'' means, with respect to a rural 
        community hospital for a particular 12-month cost reporting 
        period--
                    (A) in the case of the second such reporting period 
                for which this subsection is in effect, the reasonable 
                costs of providing such covered inpatient hospital 
                services as determined under paragraph (1)(A), and
                    (B) in the case of a later reporting period, the 
                target amount for the preceding 12-month cost reporting 
                period,
        increased by the applicable percentage increase (under clause 
        (i) of section 1886(b)(3)(B) of the Social Security Act (42 
        U.S.C. 1395ww(b)(3)(B))) in the market basket percentage 
        increase (as defined in clause (iii) of such section) for that 
        particular cost reporting period.
    (c) Funding.--
            (1) In general.--The Secretary shall provide for the 
        transfer from the Federal Hospital Insurance Trust Fund under 
        section 1817 of the Social Security Act (42 U.S.C. 1395i) 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.
    (d) Waiver Authority.--The Secretary may waive such requirements of 
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) as may 
be necessary for the purpose of carrying out the demonstration program 
under this section.
    (e) 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.
    (f) Definitions.--In this section:
            (1) Rural community hospital defined.--
                    (A) In general.--The term ``rural community 
                hospital'' means a hospital (as defined in section 
                1861(e) of the Social Security Act (42 U.S.C. 
                1395x(e))) that--
                            (i) is located in a rural area (as defined 
                        in section 1886(d)(2)(D) of such Act (42 U.S.C. 
                        1395ww(d)(2)(D))) or treated as being so 
                        located pursuant to section 1886(d)(8)(E) of 
                        such Act (42 U.S.C. 1395ww(d)(8)(E));
                            (ii) subject to paragraph (2), has fewer 
                        than 51 acute care inpatient beds, as reported 
                        in its most recent cost report;
                            (iii) makes available 24-hour emergency 
                        care services; and
                            (iv) is not eligible for designation, or 
                        has not been designated, as a critical access 
                        hospital under section 1820.
                    (B) Treatment of psychiatric and rehabilitation 
                units.--For purposes of paragraph (1)(B), beds in a 
                psychiatric or rehabilitation unit of the hospital 
                which is a distinct part of the hospital shall not be 
                counted.
            (2) Covered inpatient hospital services.--The term 
        ``covered inpatient hospital services'' means inpatient 
        hospital services, and includes extended care services 
        furnished under an agreement under section 1883 of the Social 
        Security Act (42 U.S.C. 1395tt).

             Subtitle B--Provisions Relating to Part B Only

SEC. 111. 2-YEAR EXTENSION OF HOLD HARMLESS PROVISIONS FOR SMALL RURAL 
              HOSPITALS AND SOLE COMMUNITY HOSPITALS UNDER THE 
              PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT 
              DEPARTMENT SERVICES.

    (a) Hold Harmless Provisions.--
            (1) In general.--Section 1833(t)(7)(D)(i) (42 U.S.C. 
        1395l(t)(7)(D)(i)) is amended--
                    (A) in the heading, by striking ``small'' and 
                inserting ``certain'';
                    (B) by inserting ``or a sole community hospital (as 
                defined in section 1886(d)(5)(D)(iii)) located in a 
                rural area'' after ``100 beds''; and
                    (C) by striking ``2004'' and inserting ``2006''.
            (2) Effective date.--The amendment made by paragraph (1)(B) 
        shall apply with respect to cost reporting periods beginning on 
        and after January 1, 2004.
    (b) Study; Authorization of Adjustment.--Section 1833(t) (42 U.S.C. 
1395l(t)) is amended--
            (1) by redesignating paragraph (13) as paragraph (16); and
            (2) by inserting after paragraph (12) the following new 
        paragraph:
            ``(13) Authorization of adjustment for rural hospitals.--
                    ``(A) Study.--The Secretary shall conduct a study 
                to determine if, under the system under this 
                subsection, costs incurred by hospitals located in 
                rural areas by ambulatory payment classification groups 
                (APCs) exceed those costs incurred by hospitals located 
                in urban areas.
                    ``(B) Authorization of adjustment.--Insofar as the 
                Secretary determines under subparagraph (A) that costs 
                incurred by hospitals located in rural areas exceed 
                those costs incurred by hospitals located in urban 
                areas, the Secretary shall provide for an appropriate 
                adjustment under paragraph (2)(E) to reflect those 
                higher costs by January 1, 2006.''.

SEC. 112. ESTABLISHMENT OF FLOOR ON WORK GEOGRAPHIC ADJUSTMENT.

    Section 1848(e)(1) (42 U.S.C. 1395w-4(e)(1)) is amended--
            (1) in subparagraph (A), by striking ``subparagraphs (B) 
        and (C)'' and inserting ``subparagraphs (B), (C), and (E)''; 
        and
            (2) by adding at the end the following new subparagraph:
                    ``(E) Floor at 1.0 on work geographic index.--After 
                calculating the work geographic index in subparagraph 
                (A)(iii), for purposes of payment for services 
                furnished on or after January 1, 2004, and before 
                January 1, 2007, the Secretary shall increase the work 
                geographic index to 1.00 for any locality for which 
                such work geographic index is less than 1.00.''.

SEC. 113. MEDICARE INCENTIVE PAYMENT PROGRAM IMPROVEMENTS FOR PHYSICIAN 
              SCARCITY.

    (a) Additional Incentive Payment for Certain Physician Scarcity 
Areas.--Section 1833 (42 U.S.C. 1395l) is amended by adding at the end 
the following new subsection:
    ``(u) Incentive Payments for Physician Scarcity Areas.--
            ``(1) In general.--In the case of physicians' services 
        furnished on or after January 1, 2005, and before January 1, 
        2008--
                    ``(A) by a primary care physician in a primary care 
                scarcity county (identified under paragraph (4)); or
                    ``(B) by a physician who is not a primary care 
                physician in a specialist care scarcity county (as so 
                identified),
        in addition to the amount of payment that would otherwise be 
        made for such services under this part, there also shall be 
        paid an amount equal to 5 percent of the payment amount for the 
        service under this part.
            ``(2) Determination of ratios of physicians to medicare 
        beneficiaries in area.--Based upon available data, the 
        Secretary shall establish for each county or equivalent area in 
        the United States, the following:
                    ``(A) Number of physicians practicing in the 
                area.--The number of physicians who furnish physicians' 
                services in the active practice of medicine or 
                osteopathy in that county or area, other than 
                physicians whose practice is exclusively for the 
                Federal Government, physicians who are retired, or 
                physicians who only provide administrative services. Of 
                such number, the number of such physicians who are--
                            ``(i) primary care physicians; or
                            ``(ii) physicians who are not primary care 
                        physicians.
                    ``(B) Number of medicare beneficiaries residing in 
                the area.--The number of individuals who are residing 
in the county and are entitled to benefits under part A or enrolled 
under this part, or both (in this subsection referred to as 
`individuals').
                    ``(C) Determination of ratios.--
                            ``(i) Primary care ratio.--The ratio (in 
                        this paragraph referred to as the `primary care 
                        ratio') of the number of primary care 
                        physicians (determined under subparagraph 
                        (A)(i)), to the number of individuals 
                        determined under subparagraph (B).
                            ``(ii) Specialist care ratio.--The ratio 
                        (in this paragraph referred to as the 
                        `specialist care ratio') of the number of other 
                        physicians (determined under subparagraph 
                        (A)(ii)), to the number of individuals 
                        determined under subparagraph (B).
            ``(3) Ranking of counties.--The Secretary shall rank each 
        such county or area based separately on its primary care ratio 
        and its specialist care ratio.
            ``(4) Identification of counties.--
                    ``(A) In general.--The Secretary shall identify--
                            ``(i) those counties and areas (in this 
                        paragraph referred to as `primary care scarcity 
                        counties') with the lowest primary care ratios 
                        that represent, if each such county or area 
                        were weighted by the number of individuals 
                        determined under paragraph (2)(B), an aggregate 
                        total of 20 percent of the total of the 
                        individuals determined under such paragraph; 
                        and
                            ``(ii) those counties and areas (in this 
                        subsection referred to as `specialist care 
                        scarcity counties') with the lowest specialist 
                        care ratios that represent, if each such county 
                        or area were weighted by the number of 
                        individuals determined under paragraph (2)(B), 
                        an aggregate total of 20 percent of the total 
                        of the individuals determined under such 
                        paragraph.
                    ``(B) Periodic revisions.--The Secretary shall 
                periodically revise the counties or areas identified in 
                subparagraph (A) (but not less often than once every 
                three years) unless the Secretary determines that there 
                is no new data available on the number of physicians 
                practicing in the county or area or the number of 
                individuals residing in the county or area, as 
                identified in paragraph (2).
                    ``(C) Identification of counties where service is 
                furnished.--For purposes of paying the additional 
                amount specified in paragraph (1), if the Secretary 
                uses the 5-digit postal ZIP Code where the service is 
                furnished, the dominant county of the postal ZIP Code 
                (as determined by the United States Postal Service, or 
                otherwise) shall be used to determine whether the 
                postal ZIP Code is in a scarcity county identified in 
                subparagraph (A) or revised in subparagraph (B).
                    ``(D) Judicial review.--There shall be no 
                administrative or judicial review under section 1869, 
                1878, or otherwise, respecting--
                            ``(i) the identification of a county or 
                        area;
                            ``(ii) the assignment of a specialty of any 
                        physician under this paragraph;
                            ``(iii) the assignment of a physician to a 
                        county under paragraph (2); or
                            ``(iv) the assignment of a postal ZIP Code 
                        to a county or other area under this 
                        subsection.
            ``(5) Rural census tracts.--To the extent feasible, the 
        Secretary shall treat 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)), as an equivalent area for purposes of qualifying 
        as a primary care scarcity county or specialist care scarcity 
        county under this subsection.
            ``(6) Physician Defined.--For purposes of this paragraph, 
        the term `physician' means a physician described in section 
        1861(r)(1) and the term `primary care physician' means a 
        physician who is identified in the available data as a general 
        practitioner, family practice practitioner, general internist, 
        or obstetrician or gynecologist.
            ``(7) Publication of list of counties; posting on 
        website.--With respect to a year for which a county or area is 
        identified or revised under paragraph (4), the Secretary shall 
        identify such counties or areas as part of the proposed and 
        final rule to implement the physician fee schedule under 
        section 1848 for the applicable year. The Secretary shall post 
        the list of counties identified or revised under paragraph (4) 
        on the Internet website of the Centers for Medicare & Medicaid 
        Services.''.
    (b) Improvement to Medicare Incentive Payment Program.--
            (1) In general.--Section 1833(m) (42 U.S.C. 1395l(m)) is 
        amended--
                    (A) by inserting ``(1)'' after ``(m)'';
                    (B) in paragraph (1), as designated by subparagraph 
                (A)--
                            (i) by inserting ``in a year'' after ``In 
                        the case of physicians' services furnished''; 
                        and
                            (ii) by inserting ``as identified by the 
                        Secretary prior to the beginning of such year'' 
                        after ``as a health professional shortage 
                        area''; and
                    (C) by adding at the end the following new 
                paragraphs:
    ``(2) For each health professional shortage area identified in 
paragraph (1) that consists of an entire county, the Secretary shall 
provide for the additional payment under paragraph (1) without any 
requirement on the physician to identify the health professional 
shortage area involved. The Secretary may implement the previous 
sentence using the method specified in subsection (u)(4)(C).
    ``(3) The Secretary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services a list of the health 
professional shortage areas identified in paragraph (1) that consist of 
a partial county to facilitate the additional payment under paragraph 
(1) in such areas.
    ``(4) There shall be no administrative or judicial review under 
section 1869, section 1878, or otherwise, respecting--
            ``(A) the identification of a county or area;
            ``(B) the assignment of a specialty of any physician under 
        this paragraph;
            ``(C) the assignment of a physician to a county under this 
        subsection; or
            ``(D) the assignment of a postal zip code to a county or 
        other area under this subsection.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to physicians' services furnished on or after 
        January 1, 2005.
    (c) GAO Study of Geographic Differences in Payments for Physicians' 
Services.--
            (1) 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--
                    (A) an assessment of the validity of the geographic 
                adjustment factors used for each component of the fee 
                schedule;
                    (B) an evaluation of the measures used for such 
                adjustment, including the frequency of revisions;
                    (C) 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; and
                    (D) an evaluation of the effect of the adjustment 
                to the physician work geographic index under section 
                1848(e)(1)(E) of the Social Security Act, as added by 
                section 112, on physician location and retention in 
                areas affected by such adjustment, taking into 
                account--
                            (i) differences in recruitment costs and 
                        retention rates for physicians, including 
                        specialists, between large urban areas and 
                        other areas; and
                            (ii) the mobility of physicians, including 
                        specialists, over the last decade.
            (2) 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 paragraph (1). 
        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. 114. PAYMENT FOR RURAL AND URBAN AMBULANCE SERVICES.

    (a) Phase-In Providing Floor Using Blend of Fee Schedule and 
Regional Fee Schedules.--Section 1834(l) (42 U.S.C. 1395m(l)) is 
amended--
            (1) in paragraph (2)(E), by inserting ``consistent with 
        paragraph (11)'' after ``in an efficient and fair manner''; and
            (2) by redesignating paragraph (8), as added by section 
        221(a) of BIPA (114 Stat. 2763A-486), as paragraph (9); and
            (3) by adding at the end the following new paragraph:
            ``(10) Phase-in providing floor using blend of fee schedule 
        and regional fee schedules.--In carrying out the phase-in under 
        paragraph (2)(E) for each level of ground service furnished in 
        a year, the portion of the payment amount that is based on the 
        fee schedule shall be the greater of the amount determined 
        under such fee schedule (without regard to this paragraph) or 
        the following blended rate of the fee schedule under paragraph 
        (1) and of a regional fee schedule for the region involved:
                    ``(A) For 2004 (for services furnished on or after 
                July 1, 2004), the blended rate shall be based 20 
                percent on the fee schedule under paragraph (1) and 80 
                percent on the regional fee schedule.
                    ``(B) For 2005, the blended rate shall be based 40 
                percent on the fee schedule under paragraph (1) and 60 
                percent on the regional fee schedule.
                    ``(C) For 2006, the blended rate shall be based 60 
                percent on the fee schedule under paragraph (1) and 40 
                percent on the regional fee schedule.
                    ``(D) For 2007, 2008, and 2009, the blended rate 
                shall be based 80 percent on the fee schedule under 
                paragraph (1) and 20 percent on the regional fee 
                schedule.
                    ``(E) For 2010 and each succeeding year, the 
                blended rate shall be based 100 percent on the fee 
                schedule under paragraph (1).
        For purposes of this paragraph, the Secretary shall establish a 
        regional fee schedule for each of the nine census divisions 
        (referred to in section 1886(d)(2)) using the methodology (used 
        in establishing the fee schedule under paragraph (1)) to 
        calculate a regional conversion factor and a regional mileage 
        payment rate and using the same payment adjustments and the 
        same relative value units as used in the fee schedule under 
        such paragraph.''.
    (b) Adjustment in Payment for Certain Long Trips.--Section 1834(l), 
as amended by subsection (a), is amended by adding at the end the 
following new paragraph:
            ``(11) Adjustment in payment for certain long trips.--In 
        the case of ground ambulance services furnished on or after 
        July 1, 2004, and before January 1, 2009, regardless of where 
        the transportation originates, the fee schedule established 
        under this subsection shall provide that, with respect to the 
        payment rate for mileage for a trip above 50 miles the per mile 
        rate otherwise established shall be increased by \1/4\ of the 
        payment per mile otherwise applicable to miles in excess of 50 
        miles in such trip.''.
    (c) Improvement in Payments To Retain Emergency Capacity for 
Ambulance Services in Rural Areas.--
            (1) In general.--Section 1834(l) (42 U.S.C. 1395m(l)), as 
        amended by subsections (a) and (b), is amended by adding at the 
        end the following new paragraph:
            ``(12) Assistance for rural providers furnishing services 
        in low population density areas.--
                    ``(A) In general.--In the case of ground ambulance 
                services furnished on or after July 1, 2004, and before 
                January 1, 2010, for which the transportation 
                originates in a qualified rural area (identified under 
                subparagraph (B)(iii)), the Secretary shall provide for 
                a percent increase in the base rate of the fee schedule 
                for a trip established under this subsection. In 
                establishing such percent increase, the Secretary shall 
                estimate the average cost per trip for such services 
                (not taking into account mileage) in the lowest 
                quartile as compared to the average cost per trip for 
                such services (not taking into account mileage) in the 
                highest quartile of all rural county populations.
                    ``(B) Identification of qualified rural areas.--
                            ``(i) Determination of population density 
                        in area.--Based upon data from the United 
                        States decennial census for the year 2000, the 
                        Secretary shall determine, for each rural area, 
                        the population density for that area.
                            ``(ii) Ranking of areas.--The Secretary 
                        shall rank each such area based on such 
                        population density.
                            ``(iii) Identification of qualified rural 
                        areas.--The Secretary shall identify those 
                        areas (in subparagraph (A) referred to as 
                        `qualified rural areas') with the lowest 
                        population densities that represent, if each 
                        such area were weighted by the population of 
                        such area (as used in computing such population 
                        densities), an aggregate total of 25 percent of 
                        the total of the population of all such areas.
                            ``(iv) Rural area.--For purposes of this 
                        paragraph, the term `rural area' has the 
                        meaning given such term in section 
                        1886(d)(2)(D). If feasible, the Secretary shall 
                        treat 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) as a rural area for purposes of this 
                        paragraph.
                            ``(v) Judicial review.--There shall be no 
                        administrative or judicial review under section 
                        1869, 1878, or otherwise, respecting the 
                        identification of an area under this 
                        subparagraph.''.
            (2) Use of data.--In order to promptly implement section 
        1834(l)(12) of the Social Security Act, as added by paragraph 
        (1), the Secretary may use data furnished by the Comptroller 
        General of the United States.
    (d) Temporary Increase for Ground Ambulance Services.--Section 
1834(l) (42 U.S.C. 1395m(l)), as amended by subsections (a), (b), and 
(c), is amended by adding at the end the following new paragraph:
            ``(13) Temporary increase for ground ambulance services.--
                    ``(A) In general.--After computing the rates with 
                respect to ground ambulance services under the other 
                applicable provisions of this subsection, in the case 
                of such services furnished on or after July 1, 2004, 
                and before January 1, 2007, 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 
                        the application of any increase under 
                        paragraphs (11) and (12), shall be increased by 
                        2 percent; and
                            ``(ii) an area not described in clause (i), 
                        the fee schedule established under this 
                        subsection shall provide that the rate for the 
                        service otherwise established, after the 
                        application of any increase under paragraph 
                        (11), shall be increased by 1 percent.
                    ``(B) Application of increased payments after 
                2006.--The increased payments under subparagraph (A) 
                shall not be taken into account in calculating payments 
                for services furnished after the period specified in 
                such subparagraph.''.
    (e) Implementation.--The Secretary may implement the amendments 
made by this section, and revise the conversion factor applicable under 
section 1834(l) of the Social Security Act (42 U.S.C. 1395m(l)) for 
purposes of implementing such amendments, on an interim final basis, or 
by program instruction.
    (f) GAO Report on Costs and Access.--Not later than December 31, 
2005, the Comptroller General of the United States shall submit to 
Congress an initial report on how costs differ among the types of 
ambulance providers and on access, supply, and quality of ambulance 
services in those regions and States that have a reduction in payment 
under the medicare ambulance fee schedule (under section 1834(l) of the 
Social Security Act, as amended by this Act). Not later than December 
31, 2007, the Comptroller General shall submit to Congress a final 
report on such access and supply.
    (g) Technical Amendments.--(1) Section 221(c) of BIPA (114 Stat. 
2763A-487) is amended by striking ``subsection (b)(2)'' and inserting 
``subsection (b)(3)''.
    (2) Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by moving 
subparagraph (U) 4 ems to the left.

SEC. 115. PROVIDING APPROPRIATE COVERAGE OF RURAL AIR AMBULANCE 
              SERVICES.

    (a) Coverage.--Section 1834(l) (42 U.S.C. 1395m(l)), as amended by 
subsections (a), (b), (c), and (d) of section 114, is amended by adding 
at the end the following new paragraph:
            ``(14) Providing appropriate coverage of rural air 
        ambulance services.--
                    ``(A) In general.--The regulations described in 
                section 1861(s)(7) shall provide, to the extent that 
                any ambulance services (whether ground or air) may be 
                covered under such section, that a rural air ambulance 
                service (as defined in subparagraph (C)) is reimbursed 
                under this subsection at the air ambulance rate if the 
                air ambulance service--
                            ``(i) is reasonable and 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) Satisfaction of requirement of medically 
                necessary.--The requirement of subparagraph (A)(i) is 
                deemed to be met for a rural air ambulance service if--
                            ``(i) subject to subparagraph (D), such 
                        service is requested by a physician or other 
                        qualified medical personnel (as specified by 
                        the Secretary) who reasonably determines or 
                        certifies that the individual's condition is 
                        such that the time needed to transport the 
                        individual by land or the instability of 
                        transportation by land poses a threat to the 
                        individual's survival or seriously endangers 
                        the individual's health; or
                            ``(ii) such service is furnished pursuant 
                        to a protocol that is established by a State or 
                        regional emergency medical service (EMS) agency 
                        and recognized or approved by the Secretary 
                        under which the use of an air ambulance is 
                        recommended, if such agency does not have an 
                        ownership interest in the entity furnishing 
                        such service.
                    ``(C) Rural air ambulance service defined.--For 
                purposes of this paragraph, the term `rural air 
                ambulance service' means fixed wing and rotary wing air 
                ambulance service in which the point of pick up of the 
                individual occurs in a rural area (as defined in 
                section 1886(d)(2)(D)) or in 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)).
                    ``(D) Limitation.--
                            ``(i) In general.--Subparagraph (B)(i) 
                        shall not apply if there is a financial or 
                        employment relationship between the person 
                        requesting the rural air ambulance service and 
                        the entity furnishing the ambulance service, or 
                        an entity under common ownership with the 
                        entity furnishing the air ambulance service, or 
                        a financial relationship between an immediate 
                        family member of such requester and such an 
                        entity.
                            ``(ii) Exception.--Where a hospital and the 
                        entity furnishing rural air ambulance services 
                        are under common ownership, clause (i) shall 
                        not apply to remuneration (through employment 
                        or other relationship) by the hospital of the 
                        requester or immediate family member if the 
                        remuneration is for provider-based physician 
                        services furnished in a hospital (as described 
                        in section 1887) which are reimbursed under 
                        part A and the amount of the remuneration is 
                        unrelated directly or indirectly to the 
                        provision of rural 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)(14),'' after ``but''.
    (c) Effective Date.--The amendments made by this subsection shall 
apply to services furnished on or after January 1, 2005.

SEC. 116. TREATMENT OF CERTAIN CLINICAL DIAGNOSTIC LABORATORY TESTS 
              FURNISHED TO HOSPITAL OUTPATIENTS IN CERTAIN RURAL AREAS.

    (a) In General.--Notwithstanding subsections (a), (b), 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 during a cost reporting period described 
in subsection (b) by a hospital with fewer than 50 beds that is located 
in a qualified rural area (identified under paragraph (12)(B)(iii) of 
section 1834(l) of the Social Security Act (42 U.S.C. 1395m(l)), as 
added by section 114(c)) as part of outpatient services of the 
hospital, the amount of payment for such test shall be 100 percent of 
the reasonable costs of the hospital in furnishing such test.
    (b) Application.--A cost reporting period described in this 
subsection is a cost reporting period beginning during the 2-year 
period beginning on July 1, 2004.
    (c) Provision as Part of Outpatient Hospital Services.--For 
purposes of subsection (a), in determining whether clinical diagnostic 
laboratory services are furnished as part of outpatient services of a 
hospital, the Secretary shall apply the same rules that are used to 
determine whether clinical diagnostic laboratory services are furnished 
as an outpatient critical access hospital service under section 
1834(g)(4) of the Social Security Act (42 U.S.C. 1395m(g)(4)).

SEC. 117. EXTENSION OF TELEMEDICINE DEMONSTRATION PROJECT.

    Section 4207 of the Balanced Budget Act of 1997 (Public Law 105-33) 
is amended--
            (1) in subsection (a)(4), by striking ``4-year'' and 
        inserting ``8-year''; and
            (2) in subsection (d)(3), by striking ``$30,000,000'' and 
        inserting ``$60,000,000''.

SEC. 118. REPORT ON DEMONSTRATION PROJECT PERMITTING SKILLED NURSING 
              FACILITIES TO BE ORIGINATING TELEHEALTH SITES; AUTHORITY 
              TO IMPLEMENT.

    (a) Evaluation.--The Secretary, acting through the Administrator of 
the Health Resources and Services Administration in consultation with 
the Administrator of the Centers for Medicare & Medicaid Services, 
shall evaluate demonstration projects conducted by the Secretary under 
which skilled nursing facilities (as defined in section 1819(a) of the 
Social Security Act (42 U.S.C. 1395i-3(a)) are treated as originating 
sites for telehealth services.
    (b) Report.--Not later than January 1, 2005, the Secretary shall 
submit to Congress a report on the evaluation conducted under 
subsection (a). Such report shall include recommendations on mechanisms 
to ensure that permitting a skilled nursing facility to serve as an 
originating site for the use of telehealth services or any other 
service delivered via a telecommunications system does not serve as a 
substitute for in-person visits furnished by a physician, or for in-
person visits furnished by a physician assistant, nurse practitioner or 
clinical nurse specialist, as is otherwise required by the Secretary.
    (c) Authority To Expand Originating Telehealth Sites To Include 
Skilled Nursing Facilities.--Insofar as the Secretary concludes in the 
report required under subsection (b) that is advisable to permit a 
skilled nursing facility to be an originating site for telehealth 
services under section 1834(m) of the Social Security Act (42 U.S.C. 
1395m(m)), and that the Secretary can establish the mechanisms to 
ensure such permission does not serve as a substitute for in-person 
visits furnished by a physician, or for in-person visits furnished by a 
physician assistant, nurse practitioner or clinical nurse specialist, 
the Secretary may deem a skilled nursing facility to be an originating 
site under paragraph (4)(C)(ii) of such section beginning on January 1, 
2006.

            Subtitle C--Provisions Relating to Parts A and B

SEC. 121. 1-YEAR INCREASE FOR HOME HEALTH SERVICES FURNISHED IN A RURAL 
              AREA.

    (a) In General.--With respect to episodes and visits ending on or 
after April 1, 2004, and before April 1, 2005, in the case of home 
health services furnished in a rural area (as defined in section 
1886(d)(2)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(2)(D))), 
the Secretary shall increase the payment amount otherwise made under 
section 1895 of such Act (42 U.S.C. 1395fff) for such services by 5 
percent.
    (b) Waiving Budget Neutrality.--The Secretary shall not reduce the 
standard prospective payment amount (or amounts) under section 1895 of 
the Social Security Act (42 U.S.C. 1395fff) applicable to home health 
services furnished during a period to offset the increase in payments 
resulting from the application of subsection (a).
    (c) No Effect on Subsequent Periods.--The payment increase provided 
under subsection (a) for a period under such subsection--
            (1) shall not apply to episodes and visits ending after 
        such period; and
            (2) shall not be taken into account in calculating the 
        payment amounts applicable for episodes and visits occurring 
        after such period.

SEC. 122. REDISTRIBUTION OF UNUSED RESIDENT POSITIONS.

    (a) In General.--Section 1886(h) (42 U.S.C. 1395ww(h)(4)) is 
amended--
            (1) in paragraph (4)(F)(i), by inserting ``subject to 
        paragraph (7),'' after ``October 1, 1997,'';
            (2) in paragraph (4)(H)(i), by inserting ``and subject to 
        paragraph (7),'' after ``subparagraphs (F) and (G)''; and
            (3) by adding at the end the following new paragraph:
            ``(7) Redistribution of unused resident positions.--
                    ``(A) Reduction in limit based on unused 
                positions.--
                            ``(i) Programs subject to reduction.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), if a 
                                hospital's reference resident level 
                                (specified in clause (ii)) is less than 
                                the otherwise applicable resident limit 
                                (as defined in subparagraph (C)(ii)), 
                                effective for portions of cost 
                                reporting periods occurring on or after 
                                July 1, 2005, the otherwise applicable 
                                resident limit shall be reduced by 75 
                                percent of the difference between such 
                                otherwise applicable resident limit and 
                                such reference resident level.
                                    ``(II) Exception for small rural 
                                hospitals.--This subparagraph shall not 
                                apply to a hospital located in a rural 
                                area (as defined in subsection 
                                (d)(2)(D)(ii)) with fewer than 250 
                                acute care inpatient beds.
                            ``(ii) Reference resident level.--
                                    ``(I) In general.--Except as 
                                otherwise provided in subclauses (II) 
                                and (III), the reference resident level 
                                specified in this clause for a hospital 
                                is the resident level for the most 
                                recent cost reporting period of the 
                                hospital ending on or before September 
                                30, 2002, for which a cost report has 
                                been settled (or, if not, submitted 
                                (subject to audit)), as determined by 
                                the Secretary.
                                    ``(II) Use of most recent 
                                accounting period to recognize 
                                expansion of existing programs.--If a 
                                hospital submits a timely request to 
                                increase its resident level due to an 
                                expansion of an existing residency 
                                training program that is not reflected 
                                on the most recent settled cost report, 
                                after audit and subject to the 
                                discretion of the Secretary, the 
                                reference resident level for such 
                                hospital is the resident level for the 
                                cost reporting period that includes 
                                July 1, 2003, as determined by the 
                                Secretary.
                                    ``(III) Expansions under newly 
                                approved programs.--Upon the timely 
                                request of a hospital, the Secretary 
                                shall adjust the reference resident 
                                level specified under subclause (I) or 
                                (II) to include the number of medical 
                                residents that were approved in an 
                                application for a medical residency 
                                training program that was approved by 
                                an appropriate accrediting organization 
                                (as determined by the Secretary) before 
                                January 1, 2002, but which was not in 
                                operation during the cost reporting 
                                period used under subclause (I) or 
                                (II), as the case may be, as determined 
                                by the Secretary.
                            ``(iii) Affiliation.--The provisions of 
                        clause (i) shall be applied to hospitals which 
                        are members of the same affiliated group (as 
                        defined by the Secretary under paragraph 
                        (4)(H)(ii)) as of July 1, 2003.
                    ``(B) Redistribution.--
                            ``(i) In general.--The Secretary is 
                        authorized to increase the otherwise applicable 
                        resident limit for each qualifying hospital 
                        that submits a timely application under this 
                        subparagraph by such number as the Secretary 
                        may approve for portions of cost reporting 
                        periods occurring on or after July 1, 2005. The 
                        aggregate number of increases in the otherwise 
                        applicable resident limits under this 
                        subparagraph may not exceed the Secretary's 
                        estimate of the aggregate reduction in such 
                        limits attributable to subparagraph (A).
                            ``(ii) Considerations in redistribution.--
                        In determining for which hospitals the increase 
                        in the otherwise applicable resident limit is 
                        provided under clause (i), the Secretary shall 
                        take into account the demonstrated likelihood 
                        of the hospital filling the positions within 
the first 3 cost reporting periods beginning on or after July 1, 2005, 
made available under this subparagraph, as determined by the Secretary.
                            ``(iii) Priority for rural and small urban 
                        areas.--In determining for which hospitals and 
                        residency training programs an increase in the 
                        otherwise applicable resident limit is provided 
                        under clause (i), the Secretary shall 
                        distribute the increase to programs of 
                        hospitals located in the following priority 
                        order:
                                    ``(I) First, to hospitals located 
                                in rural areas (as defined in 
                                subsection (d)(2)(D)(ii)).
                                    ``(II) Second, to hospitals located 
                                in urban areas that are not large urban 
                                areas (as defined for purposes of 
                                subsection (d)).
                                    ``(III) Third, to other hospitals 
                                in a State if the residency training 
                                program involved is in a specialty for 
                                which there are not other residency 
                                training programs in the State.
                        Increases of residency limits within the same 
                        priority category under this clause shall be 
                        determined by the Secretary.
                            ``(iv) Limitation.--In no case shall more 
                        than 25 full-time equivalent additional 
                        residency positions be made available under 
                        this subparagraph with respect to any hospital.
                            ``(v) Application of locality adjusted 
                        national average per resident amount.--With 
                        respect to additional residency positions in a 
                        hospital attributable to the increase provided 
                        under this subparagraph, notwithstanding any 
                        other provision of this subsection, the 
                        approved FTE resident amount is deemed to be 
                        equal to the locality adjusted national average 
                        per resident amount computed under paragraph 
                        (4)(E) for that hospital.
                            ``(vi) Construction.--Nothing in this 
                        subparagraph shall be construed as permitting 
                        the redistribution of reductions in residency 
                        positions attributable to voluntary reduction 
                        programs under paragraph (6), under a 
                        demonstration project approved as of October 
                        31, 2003, under the authority of section 402 of 
                        Public Law 90-248, or as affecting the ability 
                        of a hospital to establish new medical 
                        residency training programs under paragraph 
                        (4)(H).
                    ``(C) Resident level and limit defined.--In this 
                paragraph:
                            ``(i) Resident level.--The term `resident 
                        level' means, with respect to a hospital, the 
                        total number of full-time equivalent residents, 
                        before the application of weighting factors (as 
                        determined under paragraph (4)), in the fields 
                        of allopathic and osteopathic medicine for the 
                        hospital.
                            ``(ii) Otherwise applicable resident 
                        limit.--The term `otherwise applicable resident 
                        limit' means, with respect to a hospital, the 
                        limit otherwise applicable under subparagraphs 
                        (F)(i) and (H) of paragraph (4) on the resident 
                        level for the hospital determined without 
                        regard to this paragraph.
                    ``(D) Judicial review.--There shall be no 
                administrative or judicial review under section 1869, 
                1878, or otherwise, with respect to determinations made 
                under this paragraph.''.
    (b) Conforming Provisions.--(1) Section 1886(d)(5)(B) (42 U.S.C. 
1395ww(d)(5)(B)) is amended--
            (A) in the second sentence of clause (ii), by striking 
        ``For discharges'' and inserting ``Subject to clause (ix), for 
        discharges''; and
            (B) in clause (v), by adding at the end the following: 
        ``The provisions of subsection (h)(7) shall apply with respect 
        to the first sentence of this clause in the same manner as it 
        applies with respect to subsection (h)(4)(F)(i).''; and
            (C) by adding at the end the following new clause:
            ``(ix) For discharges occurring on or after July 1, 2005, 
        insofar as an additional payment amount under this subparagraph 
        is attributable to resident positions redistributed to a 
        hospital under subsection (h)(7)(B), in computing the indirect 
        teaching adjustment factor under clause (ii) the adjustment 
        shall be computed in a manner as if `c' were equal to 0.66 with 
        respect to such resident positions.''.
    (2) Chapter 35 of title 44, United States Code, shall not apply 
with respect to applications under section 1886(h)(7) of the Social 
Security Act, as added by subsection (a)(3).
    (c) Report on Extension of Applications Under Redistribution 
Program.--Not later than July 1, 2005, the Secretary shall submit to 
Congress a report containing recommendations regarding whether to 
extend the deadline for applications for an increase in resident limits 
under section 1886(h)(4)(I)(ii)(II) of the Social Security Act (as 
added by subsection (a)).

                      Subtitle D--Other Provisions

SEC. 131. PROVIDING SAFE HARBOR FOR CERTAIN COLLABORATIVE EFFORTS THAT 
              BENEFIT MEDICALLY UNDERSERVED POPULATIONS.

    (a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-7(b)(3)), as 
amended by section 101(e)(2), is amended--
            (1) in subparagraph (F), by striking ``and'' after the 
        semicolon at the end;
            (2) in subparagraph (G), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(H) any remuneration between a health center 
                entity described under clause (i) or (ii) of section 
                1905(l)(2)(B) and any individual or entity providing 
                goods, items, services, donations, loans, or a 
                combination thereof, to such health center entity 
                pursuant to a contract, lease, grant, loan, or other 
                agreement, if such agreement contributes to the ability 
                of the health center entity to maintain or increase the 
                availability, or enhance the quality, of services 
                provided to a medically underserved population served 
                by the health center entity.''.
    (b) Rulemaking for Exception for Health Center Entity 
Arrangements.--
            (1) Establishment.--
                    (A) In general.--The Secretary shall establish, on 
                an expedited basis, standards relating to the exception 
                described in section 1128B(b)(3)(H) of the Social 
                Security Act, as added by subsection (a), for health 
                center entity arrangements to the antikickback 
                penalties.
                    (B) Factors to consider.--The Secretary shall 
                consider the following factors, among others, in 
                establishing standards relating to the exception for 
                health center entity arrangements under subparagraph 
                (A):
                            (i) Whether the arrangement between the 
                        health center entity and the other party 
                        results in savings of Federal grant funds or 
                        increased revenues to the health center entity.
                            (ii) Whether the arrangement between the 
                        health center entity and the other party 
                        restricts or limits an individual's freedom of 
                        choice.
                            (iii) Whether the arrangement between the 
                        health center entity and the other party 
                        protects a health care professional's 
                        independent medical judgment regarding 
                        medically appropriate treatment.
                The Secretary may also include other standards and 
                criteria that are consistent with the intent of 
                Congress in enacting the exception established under 
                this section.
            (2) Deadline.--Not later than 1 year after the date of the 
        enactment of this Act the Secretary shall publish final 
        regulations establishing the standards described in paragraph 
        (1).

SEC. 132. OFFICE OF RURAL HEALTH POLICY IMPROVEMENTS.

    Section 711(b) (42 U.S.C. 912(b)) is amended--
            (1) in paragraph (3), by striking ``and'' after the comma 
        at the end;
            (2) in paragraph (4), by striking the period at the end and 
        inserting ``, and''; and
            (3) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) administer grants, cooperative agreements, and 
        contracts to provide technical assistance and other activities 
        as necessary to support activities related to improving health 
        care in rural areas.''.

SEC. 133. MEDPAC STUDY ON RURAL HOSPITAL PAYMENT ADJUSTMENTS.

    (a) In General.--The Medicare Payment Advisory Commission shall 
conduct a study of the impact of sections 401 through 406, 411, 416, 
and 505. The Commission shall analyze the effect on total payments, 
growth in costs, capital spending, and such other payment effects under 
those sections.
    (b) Reports.--
            (1) Interim report.--Not later than 18 months after the 
        date of the enactment of this Act, the Commission shall submit 
        to Congress an interim report on the matters studied under 
        subsection (a) with respect only to changes to the critical 
        access hospital provisions under section 105.
            (2) Final report.--Not later than 3 years after the date of 
        the enactment of this Act, the Commission shall submit to 
        Congress a final report on all matters studied under subsection 
        (a).

SEC. 134. FRONTIER EXTENDED STAY CLINIC DEMONSTRATION PROJECT.

    (a) Authority To Conduct Demonstration Project.--The Secretary 
shall waive such provisions of the medicare program established under 
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) as are 
necessary to conduct a demonstration project under which frontier 
extended stay clinics described in subsection (b) in isolated rural 
areas are treated as providers of items and services under the medicare 
program.
    (b) Clinics Described.--A frontier extended stay clinic is 
described in this subsection if the clinic--
            (1) is located in a community where the closest short-term 
        acute care hospital or critical access hospital is at least 75 
        miles away from the community or is inaccessible by public 
        road; and
            (2) is designed to address the needs of--
                    (A) seriously or critically ill or injured patients 
                who, due to adverse weather conditions or other 
                reasons, cannot be transferred quickly to acute care 
                referral centers; or
                    (B) patients who need monitoring and observation 
                for a limited period of time.
    (c) Specification of Codes.--The Secretary shall determine the 
appropriate life-safety codes for such clinics that treat patients for 
needs referred to in subsection (b)(2).
    (d) Funding.--
            (1) In general.--Subject to paragraph (2), there are 
        authorized to be appropriated, in appropriate part from the 
        Federal Hospital Insurance Trust Fund and the Federal 
        Supplementary Medical Insurance Trust Fund, such sums as are 
        necessary to conduct the demonstration project under this 
        section.
            (2) Budget neutral implementation.--In conducting the 
        demonstration project under this section, the Secretary shall 
        ensure that the aggregate payments made by the Secretary under 
        the medicare program do not exceed the amount which the 
        Secretary would have paid under the medicare program if the 
        demonstration project under this section was not implemented.
    (e) 3-Year Period.--The Secretary shall conduct the demonstration 
under this section for a 3-year period.
    (f) Report.--Not later than the date that is 1 year after the date 
on which the demonstration project concludes, the Secretary shall 
submit to Congress a report on the demonstration project, together with 
such recommendations for legislation or administrative action as the 
Secretary determines appropriate.
    (g) Definitions.--In this section, the terms ``hospital'' and 
``critical access hospital'' have the meanings given such terms in 
subsections (e) and (mm), respectively, of section 1861 of the Social 
Security Act (42 U.S.C. 1395x).

                TITLE II--PROVISIONS RELATING TO PART A

                Subtitle A--Inpatient Hospital Services

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

    (a) In General.--Section 1886(b)(3)(B)(i) (42 U.S.C. 
1395ww(b)(3)(B)(i)) is amended--
            (1) by striking ``and'' at the end of subclause (XVIII);
            (2) by striking subclause (XIX); and
            (3) by inserting after subclause (XVIII) the following new 
        subclauses:
            ``(XIX) for each of fiscal years 2004 through 2007, subject 
        to clause (vii), the market basket percentage increase for 
        hospitals in all areas; and
            ``(XX) for fiscal year 2008 and each subsequent fiscal 
        year, the market basket percentage increase for hospitals in 
        all areas.''.
    (b) Submission of Hospital Quality Data.--Section 1886(b)(3)(B) (42 
U.S.C. 1395ww(b)(3)(B)) is amended by adding at the end the following 
new clause:
    ``(vii)(I) For purposes of clause (i)(XIX) for each of fiscal years 
2005 through 2007, in a case of a subsection (d) hospital that does not 
submit data to the Secretary in accordance with subclause (II) with 
respect to such a fiscal year, the applicable percentage increase under 
such clause for such fiscal year shall be reduced by 0.4 percentage 
points. Such reduction shall apply only with respect to the fiscal year 
involved, and the Secretary shall not take into account such reduction 
in computing the applicable percentage increase under clause (i)(XIX) 
for a subsequent fiscal year.
    ``(II) Each subsection (d) hospital shall submit to the Secretary 
quality data (for a set of 10 indicators established by the Secretary 
as of November 1, 2003) that relate to the quality of care furnished by 
the hospital in inpatient settings in a form and manner, and at a time, 
specified by the Secretary for purposes of this clause, but with 
respect to fiscal year 2005, the Secretary shall provide for a 30-day 
grace period for the submission of data by a hospital.''.
    (c) GAO Study and Report on Appropriateness of Payments 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 in relation to costs 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 in 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, kinds of 
                hospitals, and types of cases.
            (2) Report.--Not later than 24 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. REVISION OF THE INDIRECT MEDICAL EDUCATION (IME) ADJUSTMENT 
              PERCENTAGE.

    (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
1395ww(d)(5)(B)(ii)) is amended--
            (1) in subclause (VI), by striking ``and'' after the 
        semicolon at the end;
            (2) in subclause (VII)--
                    (A) by inserting ``and before April 1, 2004,'' 
                after ``on or after October 1, 2002,''; and
                    (B) by striking the period at the end and inserting 
                a semicolon; and
            (3) by adding at the end the following new subclauses:
                    ``(VIII) on or after April 1, 2004, and before 
                October 1, 2004, `c' is equal to 1.47;
                    ``(IX) during fiscal year 2005, `c' is equal to 
                1.42;
                    ``(X) during fiscal year 2006, `c' is equal to 
                1.37;
                    ``(XI) during fiscal year 2007, `c' is equal to 
                1.32; and
                    ``(XII) on or after October 1, 2007, `c' is equal 
                to 1.35.''.
    (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 the Medicare Provider Restoration 
        Act of 2003'' after ``2000''.
    (c) Effective Date.--The amendments made by this section shall 
apply to discharges occurring on or after April 1, 2004.

SEC. 203. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER INPATIENT 
              HOSPITAL PROSPECTIVE PAYMENT SYSTEM.

    (a) Improving Timeliness of Data Collection.--Section 1886(d)(5)(K) 
(42 U.S.C. 1395ww(d)(5)(K)) is amended by adding at the end the 
following new clause:
    ``(vii) Under the mechanism under this subparagraph, the Secretary 
shall provide for the addition of new diagnosis and procedure codes in 
April 1 of each year, but the addition of such codes shall not require 
the Secretary to adjust the payment (or diagnosis-related group 
classification) under this subsection until the fiscal year that begins 
after such date.''.
    (b) Eligibility Standard for Technology Outliers.--
            (1) Adjustment of threshold.--Section 1886(d)(5)(K)(ii)(I) 
        (42 U.S.C. 1395ww(d)(5)(K)(ii)(I)) is amended by inserting 
        ``(applying a threshold specified by the Secretary that is the 
        lesser of 75 percent of the standardized amount (increased to 
        reflect the difference between cost and charges) or 75 percent 
        of one standard deviation for the diagnosis-related group 
        involved)'' after ``is inadequate''.
            (2) Process for public input.--Section 1886(d)(5)(K) (42 
        U.S.C. 1395ww(d)(5)(K)), as amended by subsection (a), is 
        amended--
                    (A) in clause (i), by adding at the end the 
                following: ``Such mechanism shall be modified to meet 
                the requirements of clause (viii).''; and
                    (B) by adding at the end the following new clause:
    ``(viii) The mechanism established pursuant to clause (i) shall be 
adjusted to provide, before publication of a proposed rule, for public 
input regarding whether a new service or technology represents an 
advance in medical technology that substantially improves the diagnosis 
or treatment of individuals entitled to benefits under part A as 
follows:
            ``(I) The Secretary shall make public and periodically 
        update a list of all the services and technologies for which an 
application for additional payment under this subparagraph is pending.
            ``(II) The Secretary shall accept comments, 
        recommendations, and data from the public regarding whether the 
        service or technology represents a substantial improvement.
            ``(III) The Secretary shall provide for a meeting at which 
        organizations representing hospitals, physicians, such 
        individuals, manufacturers, and any other interested party may 
        present comments, recommendations, and data to the clinical 
        staff of the Centers for Medicare & Medicaid Services before 
        publication of a notice of proposed rulemaking regarding 
        whether service or technology represents a substantial 
        improvement.''.
    (c) Preference for Use of DRG Adjustment.--Section 1886(d)(5)(K) 
(42 U.S.C. 1395ww(d)(5)(K)), as amended by subsections (a) and (b), is 
amended by adding at the end the following new clause:
    ``(ix) Before establishing any add-on payment under this 
subparagraph with respect to a new technology, the Secretary shall seek 
to identify one or more diagnosis-related groups associated with such 
technology, based on similar clinical or anatomical characteristics and 
the cost of the technology. Within such groups the Secretary shall 
assign an eligible new technology into a diagnosis-related group where 
the average costs of care most closely approximate the costs of care of 
using the new technology. No add-on payment under this subparagraph 
shall be made with respect to such new technology and this clause shall 
not affect the application of paragraph (4)(C)(iii).''.
    (d) Establishment of New Funding for Hospital Inpatient 
Technology.--
            (1) In general.--Section 1886(d)(5)(K)(ii)(III) (42 U.S.C. 
        1395ww(d)(5)(K)(ii)(III)) is amended by striking ``subject to 
        paragraph (4)(C)(iii),''.
            (2) Not budget neutral.--There shall be no reduction or 
        other adjustment in payments under section 1886 of the Social 
        Security Act because an additional payment is provided under 
        subsection (d)(5)(K)(ii)(III) of such section.
    (e) Effective Date.--
            (1) In general.--The Secretary shall implement the 
        amendments made by this section so that they apply to 
        classification for fiscal years beginning with fiscal year 
        2005.
            (2) Reconsiderations of applications for fiscal year 2004 
        that are denied.--In the case of an application for a 
        classification of a medical service or technology as a new 
        medical service or technology under section 1886(d)(5)(K) of 
        the Social Security Act (42 U.S.C. 1395ww(d)(5)(K)) that was 
        filed for fiscal year 2004 and that is denied--
                    (A) the Secretary shall automatically reconsider 
                the application as an application for fiscal year 2005 
                under the amendments made by this section; and
                    (B) the maximum time period otherwise permitted for 
                such classification of the service or technology shall 
                be extended by 12 months.

SEC. 204. INCREASE IN 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) on or after October 1, 1987, and before October 1, 
        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 April 1, 
        2004, the applicable Puerto Rico percentage is 50 percent and 
        the applicable Federal percentage is 50 percent;
            ``(iii) on or after April 1, 2004, and before October 1, 
        2004, the applicable Puerto Rico percentage is 37.5 percent and 
        the applicable Federal percentage is 62.5 percent; and
            ``(iv) on or after October 1, 2004, the applicable Puerto 
        Rico percentage is 25 percent and the applicable Federal 
        percentage is 75 percent.''.

SEC. 205. WAGE INDEX ADJUSTMENT RECLASSIFICATION REFORM.

    (a) In General.--Section 1886(d) (42 U.S.C. 1395ww(d)), as amended 
by section 106, is amended by adding at the end the following new 
paragraph:
    ``(13)(A) In order to recognize commuting patterns among geographic 
areas, the Secretary shall establish a process through application or 
otherwise for an increase of the wage index applied under paragraph 
(3)(E) for subsection (d) hospitals located in a qualifying county 
described in subparagraph (B) in the amount computed under subparagraph 
(D) based on out-migration of hospital employees who reside in that 
county to any higher wage index area.
    ``(B) The Secretary shall establish criteria for a qualifying 
county under this subparagraph based on the out-migration referred to 
in subparagraph (A) and differences in the area wage indices. Under 
such criteria the Secretary shall, utilizing such data as the Secretary 
determines to be appropriate, establish--
            ``(i) a threshold percentage, established by the Secretary, 
        of the weighted average of the area wage index or indices for 
        the higher wage index areas involved;
            ``(ii) a threshold (of not less than 10 percent) for 
        minimum out-migration to a higher wage index area or areas; and
            ``(iii) a requirement that the average hourly wage of the 
        hospitals in the qualifying county equals or exceeds the 
        average hourly wage of all the hospitals in the area in which 
        the qualifying county is located.
    ``(C) For purposes of this paragraph, the term `higher wage index 
area' means, with respect to a county, an area with a wage index that 
exceeds that of the county.
    ``(D) The increase in the wage index under subparagraph (A) for a 
qualifying county shall be equal to the percentage of the hospital 
employees residing in the qualifying county who are employed in any 
higher wage index area multiplied by the sum of the products, for each 
higher wage index area of--
            ``(i) the difference between--
                    ``(I) the wage index for such higher wage index 
                area, and
                    ``(II) the wage index of the qualifying county; and
            ``(ii) the number of hospital employees residing in the 
        qualifying county who are employed in such higher wage index 
        area divided by the total number of hospital employees residing 
        in the qualifying county who are employed in any higher wage 
        index area.
    ``(E) The process under this paragraph may be based upon the 
process used by the Medicare Geographic Classification Review Board 
under paragraph (10). As the Secretary determines to be appropriate to 
carry out such process, the Secretary may require hospitals (including 
subsection (d) hospitals and other hospitals) and critical access 
hospitals, as required under section 1866(a)(1)(T), to submit data 
regarding the location of residence, or the Secretary may use data from 
other sources.
    ``(F) A wage index increase under this paragraph shall be effective 
for a period of 3 fiscal years, except that the Secretary shall 
establish procedures under which a subsection (d) hospital may elect to 
waive the application of such wage index increase.
    ``(G) A hospital in a county that has a wage index increase under 
this paragraph for a period and that has not waived the application of 
such an increase under subparagraph (F) is not eligible for 
reclassification under paragraph (8) or (10) during that period.
    ``(H) Any increase in a wage index under this paragraph for a 
county shall not be taken into account for purposes of--
            ``(i) computing the wage index for portions of the wage 
        index area (not including the county) in which the county is 
        located; or
            ``(ii) applying any budget neutrality adjustment with 
        respect to such index under paragraph (8)(D).
    ``(I) The thresholds described in subparagraph (B), data on 
hospital employees used under this paragraph, and any determination of 
the Secretary under the process described in subparagraph (E) shall be 
final and shall not be subject to judicial review.''.
    (b) Conforming Amendments.--Section 1866(a)(1) (42 U.S.C. 
1395cc(a)(1)) is amended--
            (1) in subparagraph (R), by striking ``and'' at the end;
            (2) in subparagraph (S), by striking the period at the end 
        and inserting ``, and''; and
            (3) by inserting after subparagraph (S) the following new 
        subparagraph:
            ``(T) in the case of hospitals and critical access 
        hospitals, to furnish to the Secretary such data as the 
        Secretary determines appropriate pursuant to subparagraph (E) 
        of section 1886(d)(12) to carry out such section.''.
    (c) Effective Date.--The amendments made by this section shall 
first apply to the wage index for discharges occurring on or after 
October 1, 2004. In initially implementing such amendments, the 
Secretary may modify the deadlines otherwise applicable under clauses 
(ii) and (iii)(I) of section 1886(d)(10)(C) of the Social Security Act 
(42 U.S.C. 1395ww(d)(10)(C)), for submission of, and actions on, 
applications relating to changes in hospital geographic 
reclassification.

SEC. 206. LIMITATION ON CHARGES FOR INPATIENT HOSPITAL CONTRACT HEALTH 
              SERVICES PROVIDED TO INDIANS BY MEDICARE PARTICIPATING 
              HOSPITALS.

    (a) In General.--Section 1866(a)(1) (42 U.S.C. 1395cc(a)(1)), as 
amended by section 205(b), is amended--
            (1) in subparagraph (S), by striking ``and'' at the end;
            (2) in subparagraph (T), by striking the period and 
        inserting ``, and''; and
            (3) by inserting after subparagraph (T) the following new 
        subparagraph:
                    ``(U) in the case of hospitals which furnish 
                inpatient hospital services for which payment may be 
                made under this title, to be a participating provider 
                of medical care both--
                            ``(i) under the contract health services 
                        program funded by the Indian Health Service and 
                        operated by the Indian Health Service, an 
                        Indian tribe, or tribal organization (as those 
                        terms are defined in section 4 of the Indian 
                        Health Care Improvement Act), with respect to 
                        items and services that are covered under such 
                        program and furnished to an individual eligible 
                        for such items and services under such program; 
                        and
                            ``(ii) under any program funded by the 
                        Indian Health Service and operated by an urban 
                        Indian organization with respect to the 
                        purchase of items and services for an eligible 
                        urban Indian (as those terms are defined in 
                        such section 4),
                in accordance with regulations promulgated by the 
                Secretary regarding admission practices, payment 
                methodology, and rates of payment (including the 
                acceptance of no more than such payment rate as payment 
                in full for such items and services.''.
    (b) Effective Date.--The amendments made by this section shall 
apply as of a date specified by the Secretary of Health and Human 
Services (but in no case later than 1 year after the date of enactment 
of this Act) to medicare participation agreements in effect (or entered 
into) on or after such date.
    (c) Promulgation of Regulations.--The Secretary shall promulgate 
regulations to carry out the amendments made by subsection (a).

SEC. 207. CLARIFICATIONS TO CERTAIN EXCEPTIONS TO MEDICARE LIMITS ON 
              PHYSICIAN REFERRALS.

    (a) Limits on Physician Referrals.--
            (1) Ownership and investment interests in whole 
        hospitals.--
                    (A) In general.--Section 1877(d)(3) (42 U.S.C. 
                1395nn(d)(3)) is amended--
                            (i) by striking ``, and'' at the end of 
                        subparagraph (A) and inserting a semicolon; and
                            (ii) by redesignating subparagraph (B) as 
                        subparagraph (C) and inserting after 
                        subparagraph (A) the following new 
                        subparagraph:
                    ``(B) effective for the 18-month period beginning 
                on the date of the enactment of the Medicare Provider 
                Restoration Act of 2003, the hospital is not a 
                specialty hospital (as defined in subsection (h)(7)); 
                and''.
                    (B) Definition.--Section 1877(h) (42 U.S.C. 
                1395nn(h)) is amended by adding at the end the 
                following:
            ``(7) Specialty hospital.--
                    ``(A) In general.--For purposes of this section, 
                except as provided in subparagraph (B), the term 
                `specialty hospital' means a subsection (d) hospital 
                (as defined in section 1886(d)(1)(B)) that is primarily 
                or exclusively engaged in the care and treatment of one 
                of the following categories:
                            ``(i) Patients with a cardiac condition.
                            ``(ii) Patients with an orthopedic 
                        condition.
                            ``(iii) Patients receiving a surgical 
                        procedure.
                            ``(iv) Any other specialized category of 
                        services that the Secretary designates as 
                        inconsistent with the purpose of permitting 
                        physician ownership and investment interests in 
                        a hospital under this section.
                    ``(B) Exception.--For purposes of this section, the 
                term `specialty hospital' does not include any 
                hospital--
                            ``(i) determined by the Secretary--
                                    ``(I) to be in operation before 
                                November 18, 2003; or
                                    ``(II) under development as of such 
                                date;
                            ``(ii) for which the number of physician 
                        investors at any time on or after such date is 
                        no greater than the number of such investors as 
                        of such date;
                            ``(iii) for which the type of categories 
                        described in subparagraph (A) at any time on or 
                        after such date is no different than the type 
                        of such categories as of such date;
                            ``(iv) for which any increase in the number 
                        of beds occurs only in the facilities on the 
                        main campus of the hospital and does not exceed 
                        50 percent of the number of beds in the 
                        hospital as of November 18, 2003, or 5 beds, 
                        whichever is greater; and
                            ``(v) that meets such other requirements as 
                        the Secretary may specify.''.
            (2) Ownership and investment interests in a rural 
        provider.--Section 1877(d)(2) (42 U.S.C. 1395nn(d)(2)) is 
        amended to read as follows:
            ``(2) Rural providers.--In the case of designated health 
        services furnished in a rural area (as defined in section 
        1886(d)(2)(D)) by an entity, if--
                    ``(A) substantially all of the designated health 
                services furnished by the entity are furnished to 
                individuals residing in such a rural area; and
                    ``(B) effective for the 18-month period beginning 
                on the date of the enactment of the Medicare Provider 
                Restoration Act of 2003, the entity is not a specialty 
                hospital (as defined in subsection (h)(7)).''.
    (b) Application of Exception for Hospitals Under Development.--For 
purposes of section 1877(h)(7)(B)(i)(II) of the Social Security Act, as 
added by subsection (a)(1)(B), in determining whether a hospital is 
under development as of November 18, 2003, the Secretary shall 
consider--
            (1) whether architectural plans have been completed, 
        funding has been received, zoning requirements have been met, 
        and necessary approvals from appropriate State agencies have 
        been received; and
            (2) any other evidence the Secretary determines would 
        indicate whether a hospital is under development as of such 
        date.
    (c) Studies.--
            (1) MedPAC study.--The Medicare Payment Advisory 
        Commission, in consultation with the Comptroller General of the 
        United States, shall conduct a study to determine--
                    (A) any differences in the costs of health care 
                services furnished to patients by physician-owned 
                specialty hospitals and the costs of such services 
                furnished by local full-service community hospitals 
                within specific diagnosis-related groups;
                    (B) the extent to which specialty hospitals, 
                relative to local full-service community hospitals, 
                treat patients in certain diagnosis-related groups 
                within a category, such as cardiology, and an analysis 
                of the selection;
                    (C) the financial impact of physician-owned 
                specialty hospitals on local full-service community 
                hospitals;
                    (D) how the current diagnosis-related group system 
                should be updated to better reflect the cost of 
                delivering care in a hospital setting; and
                    (E) the proportions of payments received, by type 
                of payer, between the specialty hospitals and local 
                full-service community hospitals.
            (2) HHS study.--The Secretary shall conduct a study of a 
        representative sample of specialty hospitals--
                    (A) to determine the percentage of patients 
                admitted to physician-owned specialty hospitals who are 
                referred by physicians with an ownership interest;
                    (B) to determine the referral patterns of physician 
                owners, including the percentage of patients they 
                referred to physician-owned specialty hospitals and the 
                percentage of patients they referred to local full-
                service community hospitals for the same condition;
                    (C) to compare the quality of care furnished in 
                physician-owned specialty hospitals and in local full-
                service community hospitals for similar conditions and 
                patient satisfaction with such care; and
                    (D) to assess the differences in uncompensated 
                care, as defined by the Secretary, between the 
                specialty hospital and local full-service community 
                hospitals, and the relative value of any tax exemption 
                available to such hospitals.
            (3) Reports.--Not later than 15 months after the date of 
        the enactment of this Act, the Commission and the Secretary, 
        respectively, shall each submit to Congress a report on the 
        studies conducted under paragraphs (1) and (2), respectively, 
        and shall include any recommendations for legislation or 
        administrative changes.

SEC. 208. 1-TIME APPEALS PROCESS FOR HOSPITAL WAGE INDEX 
              CLASSIFICATION.

    (a) Establishment of Process.--
            (1) In general.--The Secretary shall establish not later 
        than January 1, 2004, by instruction or otherwise a process 
        under which a hospital may appeal the wage index classification 
        otherwise applicable to the hospital and select another area 
        within the State (or, at the discretion of the Secretary, 
        within a contiguous State) to which to be reclassified.
            (2) Process requirements.--The process established under 
        paragraph (1) shall be consistent with the following:
                    (A) Such an appeal may be filed as soon as possible 
                after the date of the enactment of this Act but shall 
                be filed by not later than February 15, 2004.
                    (B) Such an appeal shall be heard by the Medicare 
                Geographic Reclassification Review Board.
                    (C) There shall be no further administrative or 
                judicial review of a decision of such Board.
            (3) Reclassification upon successful appeal.--If the 
        Medicare Geographic Reclassification Review Board determines 
        that the hospital is a qualifying hospital (as defined in 
        subsection (c)), the hospital shall be reclassified to the area 
        selected under paragraph (1). Such reclassification shall apply 
        with respect to discharges occurring during the 3-year period 
        beginning with April 1, 2004.
            (4) Inapplicability of certain provisions.--Except as the 
        Secretary may provide, the provisions of paragraphs (8) and 
        (10) of section 1886(d) of the Social Security Act (42 U.S.C. 
        1395ww(d)) shall not apply to an appeal under this section.
    (b) Application of Reclassification.--In the case of an appeal 
decided in favor of a qualifying hospital under subsection (a), the 
wage index reclassification shall not affect the wage index computation 
for any area or for any other hospital and shall not be effected in a 
budget neutral manner. The provisions of this section shall not affect 
payment for discharges occurring after the end of the 3-year-period 
referred to in subsection (a).
    (c) Qualifying Hospital Defined.--For purposes of this section, the 
term ``qualifying hospital'' means a subsection (d) hospital (as 
defined in section 1886(d)(1)(B) of the Social Security Act, 42 U.S.C. 
1395ww(d)(1)(B)) that--
            (1) does not qualify for a change in wage index 
        classification under paragraph (8) or (10) of section 1886(d) 
        of the Social Security Act (42 U.S.C. 1395ww(d)) on the basis 
        of requirements relating to distance or commuting; and
            (2) meets such other criteria, such as quality, as the 
        Secretary may specify by instruction or otherwise.
The Secretary may modify the wage comparison guidelines promulgated 
under section 1886(d)(10)(D) of such Act (42 U.S.C. 1395ww(d)(10)(D)) 
in carrying out this section.
    (d) Wage Index Classification.--For purposes of this section, the 
term ``wage index classification'' means the geographic area in which 
it is classified for purposes of determining for a fiscal year the 
factor used to adjust the DRG prospective payment rate under section 
1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) for area 
differences in hospital wage levels that applies to such hospital under 
paragraph (3)(E) of such section.
    (e) Limitation on Expenditures.--The aggregate amount of additional 
expenditures resulting from the application of this section shall not 
exceed $900,000,000.
    (f) Transitional Extension.--Any reclassification of a county or 
other area made by Act of Congress for purposes of making payments 
under section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) 
that expired on September 30, 2003, shall be deemed to be in effect 
during the period beginning on January 1, 2004, and ending on September 
30, 2004.

                      Subtitle B--Other Provisions

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

    (a) Adjustment to RUGs for AIDS Residents.--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 (determined without regard to any increase under section 101 
of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, or under section 314(a) of Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000), 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.''.
    (b) Effective Date.--The amendment made by paragraph (1) shall 
apply to services furnished on or after October 1, 2004.

SEC. 212. 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, have not made 
        an election under subsection (d)(1), and have not previously 
        received services under this paragraph, services that are 
        furnished by a physician (as defined in section 1861(r)(1)) who 
        is either the medical director or an employee of a hospice 
        program and that--
                    ``(A) consist of--
                            ``(i) an evaluation of the individual's 
                        need for pain and symptom management, including 
                        the individual's need for hospice care; and
                            ``(ii) counseling the individual with 
                        respect to hospice care and other care options; 
                        and
                    ``(B) may include 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 
this part shall be equal to an amount established for an office or 
other outpatient visit for evaluation and management associated with 
presenting problems of moderate severity and requiring medical 
decisionmaking of low complexity under the fee schedule established 
under section 1848(b), other than the portion of such amount 
attributable to the practice expense component.''.
    (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, 
2005.

SEC. 213. STUDY ON PORTABLE DIAGNOSTIC ULTRASOUND SERVICES FOR 
              BENEFICIARIES IN SKILLED NURSING FACILITIES.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of portable diagnostic ultrasound services furnished to 
medicare beneficiaries in skilled nursing facilities. Such study shall 
consider the following:
            (1) Types of equipment; training.--The types of portable 
        diagnostic ultrasound services furnished to such beneficiaries, 
        the types of portable ultrasound equipment used to furnish such 
        services, and the technical skills, or training, or both, 
        required for technicians to furnish such services.
            (2) Clinical appropriateness.--The clinical appropriateness 
        of transporting portable diagnostic ultrasound diagnostic and 
        technicians to patients in skilled nursing facilities as 
        opposed to transporting such patients to a hospital or other 
        facility that furnishes diagnostic ultrasound services.
            (3) Financial impact.--The financial impact if Medicare 
        were make a separate payment for portable ultrasound diagnostic 
        services, including the impact of separate payments--
                    (A) for transportation and technician services for 
                residents during a resident in a part A stay, that 
                would otherwise be paid for under the prospective 
                payment system for covered skilled nursing facility 
                services (under section 1888(e) of the Social Security 
                Act (42 U.S.C. 1395yy(e)); and
                    (B) for such services for residents in a skilled 
                nursing facility after a part A stay.
            (4) Credentialing requirements.--Whether the Secretary 
        should establish credentialing or other requirements for 
        technicians that furnish diagnostic ultrasound services to 
        medicare beneficiaries.
    (b) Report.--Not later than 2 years 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), and shall include any 
recommendations for legislation or administrative change as the 
Comptroller General determines appropriate.

                TITLE III--PROVISIONS RELATING TO PART B

        Subtitle A--Provisions Relating to Physicians' Services

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

    (a) Update for 2004 and 2005.--
            (1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is 
        amended by adding at the end the following new paragraph:
            ``(5) Update for 2004 and 2005.--The update to the single 
        conversion factor established in paragraph (1)(C) for each of 
        2004 and 2005 shall be not less than 1.5 percent.''.
            (2) Conforming amendment.--Paragraph (4)(B) of such section 
        is amended, in the matter before clause (i), by inserting ``and 
        paragraph (5)'' after ``subparagraph (D)''.
            (3) Not treated as change in law and regulation in 
        sustainable growth rate determination.--The amendments made by 
        this subsection 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)).
    (b) Use of 10-Year Rolling Average in Computing Gross Domestic 
Product.--
            (1) In general.--Section 1848(f)(2)(C) (42 U.S.C. 1395w-
        4(f)(2)(C)) is amended--
                    (A) by striking ``projected'' and inserting 
                ``annual average''; and
                    (B) 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''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to computations of the sustainable growth rate for 
        years beginning with 2003.

SEC. 302. TREATMENT OF PHYSICIANS' SERVICES FURNISHED IN ALASKA.

    Section 1848(e)(1) (42 U.S.C. 1395w-4(e)(1)), as amended by section 
121, is amended--
            (1) in subparagraph (A), by striking ``subparagraphs (B), 
        (C), (E), and (F)'' and inserting ``subparagraphs (B), (C), 
        (E), (F) and (G)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(G) Floor for practice expense, malpractice, and 
                work geographic indices for services furnished in 
                alaska.--For purposes of payment for services furnished 
                in Alaska on or after January 1, 2004, and before 
                January 1, 2006, after calculating the practice 
                expense, malpractice, and work geographic indices in 
                clauses (i), (ii), and (iii) of subparagraph (A) and in 
                subparagraph (B), the Secretary shall increase any such 
                index to 1.67 if such index would otherwise be less 
                than 1.67.''.

SEC. 303. INCLUSION OF PODIATRISTS, DENTISTS, AND OPTOMETRISTS UNDER 
              PRIVATE CONTRACTING AUTHORITY.

    Section 1802(b)(5)(B) (42 U.S.C. 1395a(b)(5)(B)) is amended by 
striking ``section 1861(r)(1)'' and inserting ``paragraphs (1), (2), 
(3), and (4) of section 1861(r)''.

SEC. 304. GAO STUDY ON ACCESS TO PHYSICIANS' SERVICES.

    (a) 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--
            (1) 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;
            (2) an examination of changes in the use by beneficiaries 
        of physicians' services over time; and
            (3) an examination of the extent to which physicians are 
        not accepting new medicare beneficiaries as patients.
    (b) 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 subsection (a). The report shall 
include a determination whether--
            (1) 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
            (2) access by medicare beneficiaries to physicians' 
        services may have improved, remained constant, or deteriorated 
        over time.

SEC. 305. COLLABORATIVE DEMONSTRATION-BASED REVIEW OF PHYSICIAN 
              PRACTICE EXPENSE GEOGRAPHIC ADJUSTMENT DATA.

    (a) In General.--Not later than January 1, 2005, the Secretary 
shall, in collaboration with State and other appropriate organizations 
representing physicians, and other appropriate persons, review and 
consider alternative data sources than those currently used in 
establishing the geographic index for the practice expense component 
under the medicare physician fee schedule under section 
1848(e)(1)(A)(i) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)(A)(i)).
    (b) Sites.--The Secretary shall select two physician payment 
localities in which to carry out subsection (a). One locality shall 
include rural areas and at least one locality shall be a statewide 
locality that includes both urban and rural areas.
    (c) Report and Recommendations.--
            (1) Report.--Not later than January 1, 2006, the Secretary 
        shall submit to Congress a report on the review and 
        consideration conducted under subsection (a). Such report shall 
        include information on the alternative developed data sources 
        considered by the Secretary under subsection (a), including the 
        accuracy and validity of the data as measures of the elements 
        of the geographic index for practice expenses under the 
        medicare physician fee schedule as well as the feasibility of 
        using such alternative data nationwide in lieu of current proxy 
        data used in such index, and the estimated impacts of using 
        such alternative data.
            (2) Recommendations.--The report submitted under paragraph 
        (1) shall contain recommendations on which data sources 
        reviewed and considered under subsection (a) are appropriate 
        for use in calculating the geographic index for practice 
        expenses under the medicare physician fee schedule.

SEC. 306. MEDPAC REPORT ON PAYMENT FOR PHYSICIANS' SERVICES.

    (a) Practice Expense Component.--Not later than 1 year after the 
date of the enactment of this Act, the Medicare Payment Advisory 
Commission shall submit to Congress a report on the effect of 
refinements to the practice expense component of payments for 
physicians' services, after the transition to a full resource-based 
payment system in 2002, under section 1848 of the Social Security Act 
(42 U.S.C. 1395w-4). Such report shall examine the following matters by 
physician specialty:
            (1) The effect of such refinements on payment for 
        physicians' services.
            (2) The interaction of the practice expense component with 
        other components of and adjustments to payment for physicians' 
        services under such section.
            (3) The appropriateness of the amount of compensation by 
        reason of such refinements.
            (4) The effect of such refinements on access to care by 
        medicare beneficiaries to physicians' services.
            (5) The effect of such refinements on physician 
        participation under the medicare program.
    (b) Volume of Physicians' Services.--Not later than 1 year after 
the date of the enactment of this Act, the Medicare Payment Advisory 
Commission shall submit to Congress a report on the extent to which 
increases in the volume of physicians' services under part B of the 
medicare program are a result of care that improves the health and 
well-being of medicare beneficiaries. The study shall include the 
following:
            (1) An analysis of recent and historic growth in the 
        components that the Secretary includes under the sustainable 
        growth rate (under section 1848(f) of the Social Security Act 
        (42 U.S.C. 1395w-4(f))).
            (2) An examination of the relative growth of volume in 
        physicians' services between medicare beneficiaries and other 
        populations.
            (3) An analysis of the degree to which new technology, 
        including coverage determinations of the Centers for Medicare & 
        Medicaid Services, has affected the volume of physicians' 
        services.
            (4) An examination of the impact on volume of demographic 
        changes.
            (5) An examination of shifts in the site of service or 
        services that influence the number and intensity of services 
        furnished in physicians' offices and the extent to which 
        changes in reimbursement rates to other providers have effected 
        these changes.
            (6) An evaluation of the extent to which the Centers for 
        Medicare & Medicaid Services takes into account the impact of 
        law and regulations on the sustainable growth rate.

                    Subtitle B--Preventive Services

SEC. 311. COVERAGE OF AN INITIAL PREVENTIVE PHYSICAL EXAMINATION.

    (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) an initial preventive physical examination (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:

               ``Initial Preventive Physical Examination

    ``(ww)(1) The term `initial preventive physical examination' means 
physicians' services consisting of a physical examination (including 
measurement of height, weight, and blood pressure, and an 
electrocardiogram) with the goal of health promotion and disease 
detection and includes education, counseling, and referral with respect 
to screening and other preventive services described in paragraph (2), 
but does not include clinical laboratory tests.
    ``(2) The screening and other preventive services described in this 
paragraph include the following:
            ``(A) Pneumococcal, influenza, and hepatitis B vaccine and 
        administration under subsection (s)(10).
            ``(B) Screening mammography as defined in subsection (jj).
            ``(C) Screening pap smear and screening pelvic exam as 
        defined in subsection (nn).
            ``(D) Prostate cancer screening tests as defined in 
        subsection (oo).
            ``(E) Colorectal cancer screening tests as defined in 
        subsection (pp).
            ``(F) Diabetes outpatient self-management training services 
        as defined in subsection (qq)(1).
            ``(G) Bone mass measurement as defined in subsection (rr).
            ``(H) Screening for glaucoma as defined in subsection (uu).
            ``(I) Medical nutrition therapy services as defined in 
        subsection (vv).
            ``(J) Cardiovascular screening blood tests as defined in 
        subsection (xx)(1).
            ``(K) Diabetes screening tests as defined in subsection 
        (yy).''.
    (c) Payment as Physicians' Services.--Section 1848(j)(3) (42 U.S.C. 
1395w-4(j)(3)) is amended by inserting ``(2)(W),'' after ``(2)(S),''.
    (d) Other Conforming Amendments.--(1) Section 1862(a) (42 U.S.C. 
1395y(a)), as amended by section 303(i)(3)(B), is amended--
            (A) in paragraph (1)--
                    (i) by striking ``and'' at the end of subparagraph 
                (I);
                    (ii) by striking the semicolon at the end of 
                subparagraph (J) and inserting ``, and''; and
                    (iii) by adding at the end the following new 
                subparagraph:
            ``(K) in the case of an initial preventive physical 
        examination, which is performed not later than 6 months after 
        the date the individual's first coverage period begins under 
        part B;''; a
            (B) in paragraph (7), by striking ``or (H)'' and inserting 
        ``(H), or (K)''.
    (2) Clauses (i) and (ii) of section 1861(s)(2)(K) (42 U.S.C. 
1395x(s)(2)(K)) are each amended by inserting ``and services described 
in subsection (ww)(1)'' after ``services which would be physicians' 
services''.
    (e) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 2005, but only for 
individuals whose coverage period under part B begins on or after such 
date.

SEC. 312. COVERAGE OF CARDIOVASCULAR SCREENING BLOOD TESTS.

    (a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), as 
amended by section 311(a), is amended--
            (1) in subparagraph (V)(iii), by striking ``and'' at the 
        end;
            (2) in subparagraph (W), by inserting ``and'' at the end; 
        and
            (3) by adding at the end the following new subparagraph:
            ``(X) cardiovascular screening blood tests (as defined in 
        subsection (xx)(1));''.
    (b) Services Described.--Section 1861 (42 U.S.C. 1395x) is amended 
by adding at the end the following new subsection:

                 ``Cardiovascular Screening Blood Test

    ``(xx)(1) The term `cardiovascular screening blood test' means a 
blood test for the early detection of cardiovascular disease (or 
abnormalities associated with an elevated risk of cardiovascular 
disease) that tests for the following:
            ``(A) Cholesterol levels and other lipid or triglyceride 
        levels.
            ``(B) Such other indications associated with the presence 
        of, or an elevated risk for, cardiovascular disease as the 
        Secretary may approve for all individuals (or for some 
        individuals determined by the Secretary to be at risk for 
        cardiovascular disease), including indications measured by 
        noninvasive testing.
The Secretary may not approve an indication under subparagraph (B) for 
any individual unless a blood test for such is recommended by the 
United States Preventive Services Task Force.
    ``(2) The Secretary shall establish standards, in consultation with 
appropriate organizations, regarding the frequency for each type of 
cardiovascular screening blood 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)), as 
amended by section 311(d), is amended--
            (1) by striking ``and'' at the end of subparagraph (K);
            (2) by striking the semicolon at the end of subparagraph 
        (L) and inserting ``, and''; and
            (3) by adding at the end the following new subparagraph:
            ``(M) in the case of cardiovascular screening blood tests 
        (as defined in section 1861(xx)(1)), which are performed more 
        frequently than is covered under section 1861(xx)(2);''.
    (d) Effective Date.--The amendments made by this section shall 
apply to tests furnished on or after January 1, 2005.

SEC. 313. COVERAGE OF DIABETES SCREENING TESTS.

    (a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), as 
amended by section 312(a), is amended--
            (1) in subparagraph (W), by striking ``and'' at the end;
            (2) in subparagraph (X), by adding ``and'' at the end; and
            (3) by adding at the end the following new subparagraph:
            ``(Y) diabetes screening tests (as defined in subsection 
        (yy));''.
    (b) Services Described.--Section 1861 (42 U.S.C. 1395x), as amended 
by section 312(b), is amended by adding at the end the following new 
subsection:

                       ``Diabetes Screening Tests

    ``(yy)(1) The term `diabetes screening tests' means testing 
furnished to an individual at risk for diabetes (as defined in 
paragraph (2)) for the purpose of early detection of diabetes, 
including--
            ``(A) a fasting plasma glucose test; and
            ``(B) such other tests, and modifications to tests, as the 
        Secretary determines appropriate, in consultation with 
        appropriate organizations.
    ``(2) For purposes of paragraph (1), the term `individual at risk 
for diabetes' means an individual who has any of the following risk 
factors for diabetes:
            ``(A) Hypertension.
            ``(B) Dyslipidemia.
            ``(C) Obesity, defined as a body mass index greater than or 
        equal to 30 kg/m<SUP>2</SUP>.
            ``(D) Previous identification of an elevated impaired 
        fasting glucose.
            ``(E) Previous identification of impaired glucose 
        tolerance.
            ``(F) A risk factor consisting of at least 2 of the 
        following characteristics:
                    ``(i) Overweight, defined as a body mass index 
                greater than 25, but less than 30, kg/m<SUP>2</SUP>.
                    ``(ii) A family history of diabetes.
                    ``(iii) A history of gestational diabetes mellitus 
                or delivery of a baby weighing greater than 9 pounds.
                    ``(iv) 65 years of age or older.
    ``(3) The Secretary shall establish standards, in consultation with 
appropriate organizations, regarding the frequency of diabetes 
screening tests, except that such frequency may not be more often than 
twice within the 12-month period following the date of the most recent 
diabetes screening test of that individual.''.
    (c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)), as 
amended by section 312(c), is amended--
            (1) by striking ``and'' at the end of subparagraph (L);
            (2) by striking the semicolon at the end of subparagraph 
        (M) and inserting ``, and''; and
            (3) by adding at the end the following new subparagraph:
            ``(N) in the case of a diabetes screening test (as defined 
        in section 1861(yy)(1)), which is performed more frequently 
        than is covered under section 1861(yy)(3);''.
    (d) Effective Date.--The amendments made by this section shall 
apply to tests furnished on or after January 1, 2005.

SEC. 314. 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) Conforming Amendment.--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, 2005, diagnostic mammography'' after 
``screening mammography''.
    (c) Effective Date.--The amendments made by this section shall 
apply--
            (1) in the case of screening mammography, to services 
        furnished on or after the date of the enactment of this Act; 
        and
            (2) in the case of diagnostic mammography, to services 
        furnished on or after January 1, 2005.

                      Subtitle C--Other Provisions

SEC. 321. HOSPITAL OUTPATIENT DEPARTMENT (HOPD) PAYMENT REFORM.

    (a) Payment for Drugs.--
            (1) Special rules for certain drugs and biologicals.--
        Section 1833(t) (42 U.S.C. 1395l(t)), as amended by section 
        111(b), is amended by inserting after paragraph (13) the 
        following new paragraphs:
            ``(14) Drug apc payment rates.--
                    ``(A) In general.--The amount of payment under this 
                subsection for a specified covered outpatient drug 
                (defined in subparagraph (B)) that is furnished as part 
                of a covered OPD service (or group of services)--
                            ``(i) in 2004, in the case of--
                                    ``(I) a sole source drug shall in 
                                no case be less than 88 percent, or 
                                exceed 95 percent, of the reference 
                                average wholesale price for the drug;
                                    ``(II) an innovator multiple source 
                                drug shall in no case exceed 68 percent 
                                of the reference average wholesale 
                                price for the drug; or
                                    ``(III) a noninnovator multiple 
                                source drug shall in no case exceed 46 
                                percent of the reference average 
                                wholesale price for the drug;
                            ``(ii) in 2005, in the case of--
                                    ``(I) a sole source drug shall in 
                                no case be less than 83 percent, or 
                                exceed 95 percent, of the reference 
                                average wholesale price for the drug;
                                    ``(II) an innovator multiple source 
                                drug shall in no case exceed 68 percent 
                                of the reference average wholesale 
                                price for the drug; or
                                    ``(III) a noninnovator multiple 
                                source drug shall in no case exceed 46 
                                percent of the reference average 
                                wholesale price for the drug; or
                            ``(iii) in a subsequent year, shall be 
                        equal, subject to subparagraph (E)--
                                    ``(I) to the average acquisition 
                                cost for the drug for that year (which, 
                                at the option of the Secretary, may 
                                vary by hospital group (as defined by 
                                the Secretary based on volume of 
                                covered OPD services or other relevant 
                                characteristics)), as determined by the 
                                Secretary taking into account the 
                                hospital acquisition cost survey data 
                                under subparagraph (D); or
                                    ``(II) if hospital acquisition cost 
                                data are not available, the average 
                                price for the drug in the year 
                                established under section 1842(o), 
                                section 1847A, or section 1847B, as the 
                                case may be, as calculated and adjusted 
                                by the Secretary as necessary for 
                                purposes of this paragraph.
                    ``(B) Specified covered outpatient drug defined.--
                            ``(i) In general.--In this paragraph, the 
                        term `specified covered outpatient drug' means, 
                        subject to clause (ii), a covered outpatient 
                        drug (as defined in section 1927(k)(2)) for 
                        which a separate ambulatory payment 
                        classification group (APC) has been established 
                        and that is--
                                    ``(I) a radiopharmaceutical; or
                                    ``(II) a drug or biological for 
                                which payment was made under paragraph 
                                (6) (relating to pass-through payments) 
                                on or before December 31, 2002.
                            ``(ii) Exception.--Such term does not 
                        include--
                                    ``(I) a drug or biological for 
                                which payment is first made on or after 
                                January 1, 2003, under paragraph (6);
                                    ``(II) a drug or biological for 
                                which a temporary HCPCS code has not 
                                been assigned; or
                                    ``(III) during 2004 and 2005, an 
                                orphan drug (as designated by the 
                                Secretary).
                    ``(C) Payment for designated orphan drugs during 
                2004 and 2005.--The amount of payment under this 
                subsection for an orphan drug designated by the 
                Secretary under subparagraph (B)(ii)(III) that is 
                furnished as part of a covered OPD service (or group of 
                services) during 2004 and 2005 shall equal such amount 
                as the Secretary may specify.
                    ``(D) Acquisition cost survey for hospital 
                outpatient drugs.--
                            ``(i) Annual gao surveys in 2004 and 
                        2005.--
                                    ``(I) In general.--The Comptroller 
                                General of the United States shall 
                                conduct a survey in each of 2004 and 
                                2005 to determine the hospital 
                                acquisition cost for each specified 
                                covered outpatient drug. Not later than 
                                April 1, 2005, the Comptroller General 
                                shall furnish data from such surveys to 
                                the Secretary for use in setting the 
                                payment rates under subparagraph (A) 
                                for 2006.
                                    ``(II) Recommendations.--Upon the 
                                completion of such surveys, the 
                                Comptroller General shall recommend to 
                                the Secretary the frequency and 
                                methodology of subsequent surveys to be 
                                conducted by the Secretary under clause 
                                (ii).
                            ``(ii) Subsequent secretarial surveys.--The 
                        Secretary, taking into account such 
                        recommendations, shall conduct periodic 
                        subsequent surveys to determine the hospital 
                        acquisition cost for each specified covered 
                        outpatient drug for use in setting the payment 
                        rates under subparagraph (A).
                            ``(iii) Survey requirements.--The surveys 
                        conducted under clauses (i) and (ii) shall have 
                        a large sample of hospitals that is sufficient 
                        to generate a statistically significant 
                        estimate of the average hospital acquisition 
                        cost for each specified covered outpatient 
                        drug. With respect to the surveys conducted 
                        under clause (i), the Comptroller General shall 
                        report to Congress on the justification for the 
                        size of the sample used in order to assure the 
                        validity of such estimates.
                            ``(iv) Differentiation in cost.--In 
                        conducting surveys under clause (i), the 
                        Comptroller General shall determine and report 
                        to Congress if there is (and the extent of any) 
                        variation in hospital acquisition costs for 
                        drugs among hospitals based on the volume of 
                        covered OPD services performed by such 
                        hospitals or other relevant characteristics of 
                        such hospitals (as defined by the Comptroller 
                        General).
                            ``(v) Comment on proposed rates.--Not later 
                        than 30 days after the date the Secretary 
                        promulgated proposed rules setting forth the 
                        payment rates under subparagraph (A) for 2006, 
                        the Comptroller General shall evaluate such 
                        proposed rates and submit to Congress a report 
                        regarding the appropriateness of such rates 
                        based on the surveys the Comptroller General 
                        has conducted under clause (i).
                    ``(E) Adjustment in payment rates for overhead 
                costs.--
                            ``(i) Medpac report on drug apc design.--
                        The Medicare Payment Advisory Commission shall 
                        submit to the Secretary, not later than July 1, 
                        2005, a report on adjustment of payment for 
                        ambulatory payment classifications for 
                        specified covered outpatient drugs to take into 
                        account overhead and related expenses, such as 
                        pharmacy services and handling costs. Such 
                        report shall include--
                                    ``(I) a description and analysis of 
                                the data available with regard to such 
                                expenses;
                                    ``(II) a recommendation as to 
                                whether such a payment adjustment 
                                should be made; and
                                    ``(III) if such adjustment should 
                                be made, a recommendation regarding the 
                                methodology for making such an 
                                adjustment.
                            ``(ii) Adjustment authorized.--The 
                        Secretary may adjust the weights for ambulatory 
                        payment classifications for specified covered 
                        outpatient drugs to take into account the 
                        recommendations contained in the report 
                        submitted under clause (i).
                    ``(F) Classes of drugs.--For purposes of this 
                paragraph:
                            ``(i) Sole source drugs.--The term `sole 
                        source drug' means--
                                    ``(I) a biological product (as 
                                defined under section 1861(t)(1)); or
                                    ``(II) a single source drug (as 
                                defined in section 1927(k)(7)(A)(iv)).
                            ``(ii) Innovator multiple source drugs.--
                        The term `innovator multiple source drug' has 
                        the meaning given such term in section 
                        1927(k)(7)(A)(ii).
                            ``(iii) Noninnovator multiple source 
                        drugs.--The term `noninnovator multiple source 
                        drug' has the meaning given such term in 
                        section 1927(k)(7)(A)(iii).
                    ``(G) Reference average wholesale price.--The term 
                `reference average wholesale price' means, with respect 
                to a specified covered outpatient drug, the average 
                wholesale price for the drug as determined under 
                section 1842(o) as of May 1, 2003.
                    ``(H) Inapplicability of expenditures in 
                determining conversion, weighting, and other adjustment 
                factors.--Additional expenditures resulting from this 
                paragraph shall not be taken into account in 
                establishing the conversion, weighting, and other 
                adjustment factors for 2004 and 2005 under paragraph 
                (9), but shall be taken into account for subsequent 
                years.
            ``(15) Payment for new drugs and biologicals until hcpcs 
        code assigned.--With respect to payment under this part for an 
        outpatient drug or biological that is covered under this part 
        and is furnished as part of covered OPD services for which a 
        HCPCS code has not been assigned, the amount provided for 
        payment for such drug or biological under this part shall be 
        equal to 95 percent of the average wholesale price for the drug 
        or biological.''.
            (2) Reduction in threshold for separate apcs for drugs.--
        Section 1833(t)(16), as redesignated section 111(b), is amended 
        by adding at the end the following new subparagraph:
                    ``(B) Threshold for establishment of separate apcs 
                for drugs.--The Secretary shall reduce the threshold 
                for the establishment of separate ambulatory payment 
                classification groups (APCs) with respect to drugs or 
                biologicals to $50 per administration for drugs and 
                biologicals furnished in 2005 and 2006.''.
            (3) Exclusion of separate drug apcs from outlier 
        payments.--Section 1833(t)(5) is amended by adding at the end 
        the following new subparagraph:
                    ``(E) Exclusion of separate drug and biological 
                apcs from outlier payments.--No additional payment 
                shall be made under subparagraph (A) in the case of 
                ambulatory payment classification groups established 
                separately for drugs or biologicals.''.
            (4) Payment for pass through drugs.--Section 
        1833(t)(6)(D)(i) (42 U.S.C. 1395l(t)(6)(D)(i)) is amended by 
        inserting after ``under section 1842(o)'' the following: ``(or 
        if the drug or biological is covered under a competitive 
        acquisition contract under section 1847B, an amount determined 
        by the Secretary equal to the average price for the drug or 
biological for all competitive acquisition areas and year established 
under such section as calculated and adjusted by the Secretary for 
purposes of this paragraph)''.
            (5) Conforming amendment to budget neutrality 
        requirement.--Section 1833(t)(9)(B) (42 U.S.C. 1395l(t)(9)(B)) 
        is amended by adding at the end the following: ``In determining 
        adjustments under the preceding sentence for 2004 and 2005, the 
        Secretary shall not take into account under this subparagraph 
        or paragraph (2)(E) any expenditures that would not have been 
        made but for the application of paragraph (14).''.
            (6) Effective date.--The amendments made by this subsection 
        shall apply to items and services furnished on or after January 
        1, 2004.
    (b) Special Payment for Brachytherapy.--
            (1) In general.--Section 1833(t)(16), as redesignated by 
        section 111(b) and as amended by subsection (a)(2), is amended 
        by adding at the end the following new subparagraph:
                    ``(C) Payment for devices of brachytherapy at 
                charges adjusted to cost.--Notwithstanding the 
                preceding provisions of this subsection, for a device 
                of brachytherapy consisting of a seed or seeds (or 
                radioactive source) furnished on or after January 1, 
                2004, and before January 1, 2007, the payment basis for 
                the device under this subsection shall be equal to the 
                hospital's charges for each device furnished, adjusted 
                to cost. Charges for such devices shall not be included 
                in determining any outlier payment under this 
                subsection.''.
            (2) Specification of groups for brachytherapy devices.--
        Section 1833(t)(2) (42 U.S.C. 1395l(t)(2)) is amended--
                    (A) in subparagraph (F), by striking ``and'' at the 
                end;
                    (B) in subparagraph (G), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(H) with respect to devices of brachytherapy 
                consisting of a seed or seeds (or radioactive source), 
                the Secretary shall create additional groups of covered 
                OPD services that classify such devices separately from 
                the other services (or group of services) paid for 
                under this subsection in a manner reflecting the 
                number, isotope, and radioactive intensity of such 
                devices furnished, including separate groups for 
                palladium-103 and iodine-125 devices.''.
            (3) GAO report.--The Comptroller General of the United 
        States shall conduct a study to determine appropriate payment 
        amounts under section 1833(t)(16)(C) of the Social Security 
        Act, as added by paragraph (1), for devices of brachytherapy. 
        Not later than January 1, 2005, the Comptroller General shall 
        submit to Congress and the Secretary a report on the study 
        conducted under this paragraph, and shall include specific 
        recommendations for appropriate payments for such devices.

SEC. 322. LIMITATION OF APPLICATION OF FUNCTIONAL EQUIVALENCE STANDARD.

    Section 1833(t)(6) (42 U.S.C. 1395l(t)(6)) is amended by adding at 
the end the following new subparagraph:
                    ``(F) Limitation of application of functional 
                equivalence standard.--
                            ``(i) In general.--The Secretary may not 
                        publish regulations that apply a functional 
                        equivalence standard to a drug or biological 
                        under this paragraph.
                            ``(ii) Application.--Clause (i) shall apply 
                        to the application of a functional equivalence 
                        standard to a drug or biological on or after 
                        the date of enactment of the Medicare Provider 
                        Restoration Act of 2003 unless--
                                    ``(I) such application was being 
                                made to such drug or biological prior 
                                to such date of enactment; and
                                    ``(II) the Secretary applies such 
                                standard to such drug or biological 
                                only for the purpose of determining 
                                eligibility of such drug or biological 
                                for additional payments under this 
                                paragraph and not for the purpose of 
                                any other payments under this title.
                            ``(iii) Rule of construction.--Nothing in 
                        this subparagraph shall be construed to effect 
                        the Secretary's authority to deem a particular 
                        drug to be identical to another drug if the 2 
                        products are pharmaceutically equivalent and 
                        bioequivalent, as determined by the 
                        Commissioner of Food and Drugs.''.

SEC. 323. PAYMENT FOR RENAL DIALYSIS SERVICES.

    (a) Increase in Renal Dialysis Composite Rate for Services 
Furnished.--The last sentence of section 1881(b)(7) (42 U.S.C. 
1395rr(b)(7)) is amended--
            (1) by striking ``and'' before ``for such services'' the 
        second place it appears;
            (2) by inserting ``and before January 1, 2005,'' after 
        ``January 1, 2001,''; and
            (3) by inserting before the period at the end the 
        following: ``, and for such services furnished on or after 
        January 1, 2005, by 1.6 percent above such composite rate 
        payment amounts for such services furnished on December 31, 
        2004''.
    (b) Restoring Composite Rate Exceptions for Pediatric Facilities.--
            (1) In general.--Section 422(a)(2) of BIPA 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''.
    (c) Inspector General Studies on ESRD Drugs.--
            (1) In general.--The Inspector General of the Department of 
        Health and Human Services shall conduct two studies with 
        respect to drugs and biologicals (including erythropoietin) 
        furnished to end-stage renal disease patients under the 
        medicare program which are separately billed by end stage renal 
        disease facilities.
            (2) Studies on esrd drugs.--
                    (A) Existing drugs.--The first study under 
                paragraph (1) shall be conducted with respect to such 
                drugs and biologicals for which a billing code exists 
                prior to January 1, 2004.
                    (B) New drugs.--The second study under paragraph 
                (1) shall be conducted with respect to such drugs and 
                biologicals for which a billing code does not exist 
                prior to January 1, 2004.
            (3) Matters studied.--Under each study conducted under 
        paragraph (1), the Inspector General shall--
                    (A) determine the difference between the amount of 
                payment made to end stage renal disease facilities 
                under title XVIII of the Social Security Act for such 
                drugs and biologicals and the acquisition costs of such 
                facilities for such drugs and biologicals and which are 
                separately billed by end stage renal disease 
                facilities, and
                    (B) estimate the rates of growth of expenditures 
                for such drugs and biologicals billed by such 
                facilities.
            (4) Reports.--
                    (A) Existing esrd drugs.--Not later than April 1, 
                2004, the Inspector General shall report to the 
                Secretary on the study described in paragraph (2)(A).
                    (B) New esrd drugs.--Not later than April 1, 2006, 
                the Inspector General shall report to the Secretary on 
                the study described in paragraph (2)(B).
    (d) Basic Case-Mix Adjusted Composite Rate for Renal Dialysis 
Facility Services.--(1) Section 1881(b) (42 U.S.C. 1395rr(b)) is 
amended by adding at the end the following new paragraphs:
    ``(12)(A) In lieu of payment under paragraph (7) beginning with 
services furnished on January 1, 2005, the Secretary shall establish a 
basic case-mix adjusted prospective payment system for dialysis 
services furnished by providers of services and renal dialysis 
facilities in a year to individuals in a facility and to such 
individuals at home. The case-mix under such system shall be for a 
limited number of patient characteristics.
    ``(B) The system described in subparagraph (A) shall include--
            ``(i) the services comprising the composite rate 
        established under paragraph (7); and
            ``(ii) the difference between payment amounts under this 
        title for separately billed drugs and biologicals (including 
        erythropoietin) and acquisition costs of such drugs and 
        biologicals, as determined by the Inspector General reports to 
        the Secretary as required by section 323(c) of the Medicare 
        Provider Restoration Act of 2003--
                    ``(I) beginning with 2005, for such drugs and 
                biologicals for which a billing code exists prior to 
                January 1, 2004; and
                    ``(II) beginning with 2007, for such drugs and 
                biologicals for which a billing code does not exist 
                prior to January 1, 2004,
        adjusted to 2005, or 2007, respectively, as determined to be 
        appropriate by the Secretary.
    ``(C)(i) In applying subparagraph (B)(ii) for 2005, such payment 
amounts under this title shall be determined using the methodology 
specified in paragraph (13)(A)(i).
            ``(ii) For 2006, the Secretary shall provide for an 
        adjustment to the payments under clause (i) to reflect the 
        difference between the payment amounts using the methodology 
        under paragraph (13)(A)(i) and the payment amount determined 
        using the methodology applied by the Secretary under paragraph 
        (13)(A)(iii) of such paragraph, as estimated by the Secretary.
    ``(D) The Secretary shall adjust the payment rates under such 
system by a geographic index as the Secretary determines to be 
appropriate. If the Secretary applies a geographic index under this 
paragraph that differs from the index applied under paragraph (7) the 
Secretary shall phase-in the application of the index under this 
paragraph over a multiyear period.
    ``(E)(i) Such system shall be designed to result in the same 
aggregate amount of expenditures for such services, as estimated by the 
Secretary, as would have been made for 2005 if this paragraph did not 
apply.
    ``(ii) The adjustment made under subparagraph (B)(ii)(II) shall be 
done in a manner to result in the same aggregate amount of expenditures 
after such adjustment as would otherwise have been made for such 
services for 2006 or 2007, respectively, as estimated by the Secretary, 
if this paragraph did not apply.
    ``(F) Beginning with 2006, the Secretary shall annually increase 
the basic case-mix adjusted payment amounts established under this 
paragraph, by an amount determined by--
            ``(i) applying the estimated growth in expenditures for 
        drugs and biologicals (including erythropoietin) that are 
        separately billable to the component of the basic case-mix 
        adjusted system described in subparagraph (B)(ii); and
            ``(ii) converting the amount determined in clause (i) to an 
        increase applicable to the basic case-mix adjusted payment 
        amounts established under subparagraph (B).
Nothing in this paragraph shall be construed as providing for an update 
to the composite rate component of the basic case-mix adjusted system 
under subparagraph (B).
    ``(G) There shall be no administrative or judicial review under 
section 1869, section 1878, or otherwise, of the case-mix system, 
relative weights, payment amounts, the geographic adjustment factor, or 
the update for the system established under this paragraph, or the 
determination of the difference between medicare payment amounts and 
acquisition costs for separately billed drugs and biologicals 
(including erythropoietin) under this paragraph and paragraph (13).
    ``(13)(A) The payment amounts under this title for separately 
billed drugs and biologicals furnished in a year, beginning with 2004, 
are as follows:
            ``(i) For such drugs and biologicals (other than 
        erythropoietin) furnished in 2004, the amount determined under 
        section 1842(o)(1)(A)(v) for the drug or biological.
            ``(ii) For such drugs and biologicals (including 
        erythropoietin) furnished in 2005, the acquisition cost of the 
        drug or biological, as determined by the Inspector General 
        reports to the Secretary as required by section 323(c) of the 
        Medicare Provider Restoration Act of 2003. Insofar as the 
        Inspector General has not determined the acquisition cost with 
        respect to a drug or biological, the Secretary shall determine 
        the payment amount for such drug or biological.
            ``(iii) For such drugs and biologicals (including 
        erythropoietin) furnished in 2006 and subsequent years, such 
        acquisition cost or the amount determined under section 1847A 
        for the drug or biological, as the Secretary may specify.
    ``(B)(i) Drugs and biologicals (including erythropoietin) which 
were separately billed under this subsection on the day before the date 
of the enactment of the Medicare Provider Restoration Act of 2003 shall 
continue to be separately billed on and after such date.
    ``(ii) Nothing in this paragraph, section 1842(o), section 1847A, 
or section 1847B shall be construed as requiring or authorizing the 
bundling of payment for drugs and biologicals into the basic case-mix 
adjusted payment system under this paragraph.''.
    (2) Paragraph (7) of such section is amended in the first sentence 
by striking ``The Secretary'' and inserting ``Subject to paragraph 
(12), the Secretary''.
    (3) Paragraph (11)(B) of such section is amended by inserting 
``subject to paragraphs (12) and (13)'' before ``payment for such 
item''.
    (e) Demonstration of Bundled Case-Mix Adjusted Payment System for 
ESRD Services.--
            (1) In general.--The Secretary shall establish a 
        demonstration project of the use of a fully case-mix adjusted 
        payment system for end stage renal disease services under 
        section 1881 of the Social Security Act (42 U.S.C. 1395rr) for 
        patient characteristics identified in the report under 
        subsection (f) that bundles into such payment rates amounts 
        for--
                    (A) drugs and biologicals (including 
                erythropoietin) furnished to end-stage renal disease 
                patients under the medicare program which are 
                separately billed by end stage renal disease facilities 
                (as of the date of the enactment of this Act); and
                    (B) clinical laboratory tests related to such drugs 
                and biologicals.
            (2) Facilities included in the demonstration.--In 
        conducting the demonstration under this subsection, the 
        Secretary shall ensure the participation of a sufficient number 
        of providers of dialysis services and renal dialysis 
        facilities, but in no case to exceed 500. In selecting such 
        providers and facilities, the Secretary shall ensure that the 
        following types of providers are included in the demonstration:
                    (A) Urban providers and facilities.
                    (B) Rural providers and facilities.
                    (C) Not-for-profit providers and facilities.
                    (D) For-profit providers and facilities.
                    (E) Independent providers and facilities.
                    (F) Specialty providers and facilities, including 
                pediatric providers and facilities and small providers 
                and facilities.
            (3) Temporary add-on payment for dialysis services 
        furnished under the demonstration.--
                    (A) In general.--During the period of the 
                demonstration project, the Secretary shall increase 
                payment rates that would otherwise apply under section 
                1881(b) of such Act (42 U.S.C. 1395rr(b)) by 1.6 
                percent for dialysis services furnished in facilities 
                in the demonstration site.
                    (B) Rules of construction.--Nothing in this 
                subsection shall be construed as--
                            (i) as an annual update under section 
                        1881(b) of the Social Security Act (42 U.S.C. 
                        1395rr(b));
                            (ii) as increasing the baseline for 
                        payments under such section; or
                            (iii) requiring the budget neutral 
                        implementation of the demonstration project 
                        under this subsection.
            (4) 3-year period.--The Secretary shall conduct the 
        demonstration under this subsection for the 3-year period 
        beginning on January 1, 2006.
            (5) Use of advisory board.--
                    (A) In general.--In carrying out the demonstration 
                under this subsection, the Secretary shall establish an 
                advisory board comprised of representatives described 
                in subparagraph (B) to provide advice 
and recommendations with respect to the establishment and operation of 
such demonstration.
                    (B) Representatives.--Representatives referred to 
                in subparagraph (A) include representatives of the 
                following:
                            (i) Patient organizations.
                            (ii) Individuals with expertise in end-
                        stage renal dialysis services, such as 
                        clinicians, economists, and researchers.
                            (iii) The Medicare Payment Advisory 
                        Commission, established under section 1805 of 
                        the Social Security Act (42 U.S.C. 1395b-6).
                            (iv) The National Institutes of Health.
                            (v) Network organizations under section 
                        1881(c) of the Social Security Act (42 U.S.C. 
                        1395rr(c)).
                            (vi) Medicare contractors to monitor 
                        quality of care.
                            (vii) Providers of services and renal 
                        dialysis facilities furnishing end-stage renal 
                        disease services.
                    (C) Termination of advisory panel.--The advisory 
                panel shall terminate on December 31, 2008.
            (6) Authorization of appropriations.--There are authorized 
        to be appropriated, in appropriate part from the Federal 
        Hospital Insurance Trust Fund and the Federal Supplementary 
        Medical Insurance Trust Fund, $5,000,000 in fiscal year 2006 to 
        conduct the demonstration under this subsection.
    (f) Report on a Bundled Prospective Payment System for End Stage 
Renal Disease Services.--
            (1) Report.--
                    (A) In general.--Not later than October 1, 2005, 
                the Secretary shall submit to Congress a report 
                detailing the elements and features for the design and 
                implementation of a bundled prospective payment system 
                for services furnished by end stage renal disease 
                facilities including, to the maximum extent feasible, 
                bundling of drugs, clinical laboratory tests, and other 
                items that are separately billed by such facilities. 
                The report shall include a description of the 
                methodology to be used for the establishment of payment 
                rates, including components of the new system described 
                in paragraph (2).
                    (B) Recommendations.--The Secretary shall include 
                in such report recommendations on elements, features, 
                and methodology for a bundled prospective payment 
                system or other issues related to such system as the 
                Secretary determines to be appropriate.
            (2) Elements and features of a bundled prospective payment 
        system.--The report required under paragraph (1) shall include 
        the following elements and features of a bundled prospective 
        payment system:
                    (A) Bundle of items and services.--A description of 
                the bundle of items and services to be included under 
                the prospective payment system.
                    (B) Case mix.--A description of the case-mix 
                adjustment to account for the relative resource use of 
                different types of patients.
                    (C) Wage index.--A description of an adjustment to 
                account for geographic differences in wages.
                    (D) Rural areas.--The appropriateness of 
                establishing a specific payment adjustment to account 
                for additional costs incurred by rural facilities.
                    (E) Other adjustments.--Such other adjustments as 
                may be necessary to reflect the variation in costs 
                incurred by facilities in caring for patients with end 
                stage renal disease.
                    (F) Update framework.--A methodology for 
                appropriate updates under the prospective payment 
                system.
                    (G) Additional recommendations.--Such other matters 
                as the Secretary determines to be appropriate.

SEC. 324. 2-YEAR MORATORIUM ON THERAPY CAPS; PROVISIONS RELATING TO 
              REPORTS.

    (a) Additional Moratorium on Therapy Caps.--
            (1) 2004 and 2005.--Section 1833(g)(4) (42 U.S.C. 
        1395l(g)(4)) is amended by striking ``and 2002'' and inserting 
        ``2002, 2004, and 2005''.
            (2) Remainder of 2003.--For the period beginning on the 
        date of the enactment of this Act and ending of December 31, 
        2003, the Secretary shall not apply the provisions of 
        paragraphs (1), (2), and (3) of section 1833(g) to expenses 
        incurred with respect to services described in such paragraphs 
        during such period. Nothing in the preceding sentence shall be 
        construed as affecting the application of such paragraphs by 
        the Secretary before the date of the enactment of this Act.
    (b) Prompt Submission of Overdue Reports on Payment and Utilization 
of Outpatient Therapy Services.--Not later than March 31, 2004, the 
Secretary shall submit to Congress the reports required under section 
4541(d)(2) of the Balanced Budget Act of 1997 (Public Law 105-33; 111 
Stat. 457) (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 (Appendix F, 113 Stat. 
1501A-352), as enacted into law by section 1000(a)(6) of Public Law 
106-113 (relating to utilization patterns for outpatient therapy).
    (c) GAO Report Identifying Conditions and Diseases Justifying 
Waiver of Therapy Cap.--
            (1) Study.--The Comptroller General of the United States 
        shall identify conditions or diseases that may justify waiving 
        the application of the therapy caps under section 1833(g) of 
        the Social Security Act (42 U.S.C. 1395l(g)) with respect to 
        such conditions or diseases.
            (2) Report to congress.--Not later than October 1, 2004, 
        the Comptroller General shall submit to Congress a report on 
        the conditions and diseases identified under paragraph (1), and 
        shall include a recommendation of criteria, with respect to 
such conditions and disease, under which a waiver of the therapy caps 
would apply.

SEC. 325. 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 enrolls under this part during 2001, 
        2002, 2003, or 2004 and who demonstrates to the Secretary 
        before December 31, 2004, that the individual is a covered 
        beneficiary (as defined in section 1072(5) of title 10, United 
        States Code). The Secretary of Health and Human Services 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 2004. 
        The Secretary shall establish a method for providing rebates of 
        premium penalties paid for months on or after January 2004 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 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 
        of Health and Human Services 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, 2004.
            (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. 326. PAYMENT FOR SERVICES FURNISHED IN AMBULATORY SURGICAL 
              CENTERS.

    (a) Reductions in Payment Updates.--Section 1833(i)(2)(C) (42 
U.S.C. 1395l(i)(2)(C)) is amended to read as follows:
    ``(C)(i) Notwithstanding the second sentence of each of 
subparagraphs (A) and (B), except as otherwise specified in clauses 
(ii), (iii), and (iv), if the Secretary has not updated amounts 
established under such subparagraphs or under subparagraph (D), with 
respect to facility services furnished during a fiscal year (beginning 
with fiscal year 1986 or a calendar year (beginning with 2006)), such 
amounts shall be increased by the percentage increase in the Consumer 
Price Index for all urban consumers (U.S. city average) as estimated by 
the Secretary for the 12-month period ending with the midpoint of the 
year involved.
    ``(ii) In each of the fiscal years 1998 through 2002, the increase 
under this subparagraph shall be reduced (but not below zero) by 2.0 
percentage points.
    ``(iii) In fiscal year 2004, beginning with April 1, 2004, the 
increase under this subparagraph shall be the Consumer Price Index for 
all urban consumers (U.S. city average) as estimated by the Secretary 
for the 12-month period ending with March 31, 2003, minus 3.0 
percentage points.
    ``(iv) In fiscal year 2005, the last quarter of calendar year 2005, 
and each of calendar years 2006 through 2009, the increase under this 
subparagraph shall be 0 percent.''.
    (b) Repeal of Survey Requirement and Implementation of New 
System.--Section 1833(i)(2) (42 U.S.C. 1395l(i)(2)) is amended--
            (1) in subparagraph (A)--
                    (A) in the matter preceding clause (i), by striking 
                ``The'' and inserting ``For services furnished prior to 
                the implementation of the system described in 
                subparagraph (D), the''; and
                    (B) in clause (i), by striking ``taken not later 
                than January 1, 1995, and every 5 years thereafter,''; 
                and
            (2) by adding at the end the following new subparagraph:
    ``(D)(i) Taking into account the recommendations in the report 
under section 326(d) of Medicare Provider Restoration Act of 2003, the 
Secretary shall implement a revised payment system for payment of 
surgical services furnished in ambulatory surgical centers.
    ``(ii) In the year the system described in clause (i) is 
implemented, such system shall be designed to result in the same 
aggregate amount of expenditures for such services as would be made if 
this subparagraph did not apply, as estimated by the Secretary.
    ``(iii) The Secretary shall implement the system described in 
clause (i) for periods in a manner so that it is first effective 
beginning on or after January 1, 2006, and not later than January 1, 
2008.
    ``(iv) There shall be no administrative or judicial review under 
section 1869, 1878, or otherwise, of the classification system, the 
relative weights, payment amounts, and the geographic adjustment 
factor, if any, under this subparagraph.''.
    (c) Conforming Amendment.--Section 1833(a)(1) (42 U.S.C. 
1395l(a)(1)) is amended by adding the following new subparagraph:
                    ``(G) with respect to facility services furnished 
                in connection with a surgical procedure specified 
                pursuant to subsection (i)(1)(A) and furnished to an 
                individual in an ambulatory surgical center described 
                in such subsection, for services furnished beginning 
                with the implementation date of a revised payment 
                system for such services in such facilities specified 
                in subsection (i)(2)(D), the amounts paid shall be 80 
                percent of the lesser of the actual charge for the 
                services or the amount determined by the Secretary 
under such revised payment system,''.
    (d) GAO Study of Ambulatory Surgical Center Payments.--
            (1) Study.--
                    (A) In general.--The Comptroller General of the 
                United States shall conduct a study that compares the 
                relative costs of procedures furnished in ambulatory 
                surgical centers to the relative costs of procedures 
                furnished in hospital outpatient departments under 
                section 1833(t) of the Social Security Act (42 U.S.C. 
                1395l(t)). The study shall also examine how accurately 
                ambulatory payment categories reflect procedures 
                furnished in ambulatory surgical centers.
                    (B) Consideration of asc data.--In conducting the 
                study under paragraph (1), the Comptroller General 
                shall consider data submitted by ambulatory surgical 
                centers regarding the matters described in clauses (i) 
                through (iii) of paragraph (2)(B).
            (2) Report and recommendations.--
                    (A) Report.--Not later than January 1, 2005, the 
                Comptroller General shall submit to Congress a report 
                on the study conducted under paragraph (1).
                    (B) Recommendations.--The report submitted under 
                subparagraph (A) shall include recommendations on the 
                following matters:
                            (i) The appropriateness of using the groups 
                        of covered services and relative weights 
                        established under the outpatient prospective 
                        payment system as the basis of payment for 
                        ambulatory surgical centers.
                            (ii) If the relative weights under such 
                        hospital outpatient prospective payment system 
                        are appropriate for such purpose--
                                    (I) whether the payment rates for 
                                ambulatory surgical centers should be 
                                based on a uniform percentage of the 
                                payment rates or weights under such 
                                outpatient system; or
                                    (II) whether the payment rates for 
                                ambulatory surgical centers should 
                                vary, or the weights should be revised, 
                                based on specific procedures or types 
                                of services (such as ophthalmology and 
                                pain management services).
                            (iii) Whether a geographic adjustment 
                        should be used for payment of services 
                        furnished in ambulatory surgical centers, and 
                        if so, the labor and nonlabor shares of such 
                        payment.

SEC. 327. PAYMENT FOR CERTAIN SHOES AND INSERTS UNDER THE FEE SCHEDULE 
              FOR ORTHOTICS AND PROSTHETICS.

    (a) In General.--Section 1833(o) (42 U.S.C. 1395l(o)) is amended--
            (1) in paragraph (1)(B), by striking ``no more than the 
        limits established under paragraph (2)'' and inserting ``no 
        more than the amount of payment applicable under paragraph 
        (2)''; and
            (2) in paragraph (2), to read as follows:
    ``(2)(A) Except as provided by the Secretary under subparagraphs 
(B) and (C), the amount of payment under this paragraph for custom 
molded shoes, extra-depth shoes, and inserts shall be the amount 
determined for such items by the Secretary under section 1834(h).
    ``(B) The Secretary may establish payment amounts for shoes and 
inserts that are lower than the amount established under section 
1834(h) if the Secretary finds that shoes and inserts of an appropriate 
quality are readily available at or below the amount established under 
such section.
    ``(C) In accordance with procedures established by the Secretary, 
an individual entitled to benefits with respect to shoes described in 
section 1861(s)(12) may substitute modification of such shoes instead 
of obtaining one (or more, as specified by the Secretary) pair of 
inserts (other than the original pair of inserts with respect to such 
shoes). In such case, the Secretary shall substitute, for the payment 
amount established under section 1834(h), a payment amount that the 
Secretary estimates will assure that there is no net increase in 
expenditures under this subsection as a result of this subparagraph.''.
    (b) Conforming Amendments.--(1) Section 1834(h)(4)(C) (42 U.S.C. 
1395m(h)(4)(C)) is amended by inserting ``(and includes shoes described 
in section 1861(s)(12))'' after ``in section 1861(s)(9)''.
    (2) Section 1842(s)(2) (42 U.S.C. 1395u(s)(2)) is amended by 
striking subparagraph (C).
    (c) Effective Date.--The amendments made by this section shall 
apply to items furnished on or after January 1, 2005.

SEC. 329. 5-YEAR AUTHORIZATION OF REIMBURSEMENT FOR ALL MEDICARE PART B 
              SERVICES FURNISHED BY CERTAIN INDIAN HOSPITALS AND 
              CLINICS.

    Section 1880(e)(1)(A) (42 U.S.C. 1395qq(e)(1)(A)) is amended by 
inserting ``(and for items and services furnished during the 5-year 
period beginning on January 1, 2005, all items and services for which 
payment may be made under part B)'' after ``for services described in 
paragraph (2)''.

  Subtitle D--Additional Demonstrations, Studies, and Other Provisions

SEC. 341. DEMONSTRATION PROJECT FOR COVERAGE OF CERTAIN PRESCRIPTION 
              DRUGS AND BIOLOGICALS.

    (a) Demonstration Project.--The Secretary shall conduct a 
demonstration project under part B of title XVIII of the Social 
Security Act under which payment is made for drugs or biologicals that 
are prescribed as replacements for drugs and biologicals described in 
section 1861(s)(2)(A) or 1861(s)(2)(Q) of such Act (42 U.S.C. 
1395x(s)(2)(A), 1395x(s)(2)(Q)), or both, for which payment is made 
under such part. Such project shall provide for cost-sharing applicable 
with respect to such drugs or biologicals.
    (b) Demonstration Project Sites.--The project established under 
this section shall be conducted in sites selected by the Secretary.
    (c) Duration.--The Secretary shall conduct the demonstration 
project for the 2-year period beginning on the date that is 90 days 
after the date of the enactment of this Act, but in no case may the 
project extend beyond December 31, 2005.
    (d) Limitation.--Under the demonstration project over the duration 
of the project, the Secretary may not provide--
            (1) coverage for more than 50,000 patients; and
            (2) more than $500,000,000 in funding.
    (e) Report.--Not later than July 1, 2006, the Secretary shall 
submit to Congress a report on the project. The report shall include an 
evaluation of patient access to care and patient outcomes under the 
project, as well as an analysis of the cost effectiveness of the 
project, including an evaluation of the costs savings (if any) to the 
medicare program attributable to reduced physicians' services and 
hospital outpatient departments services for administration of the 
biological.

SEC. 342. EXTENSION OF COVERAGE OF INTRAVENOUS IMMUNE GLOBULIN (IVIG) 
              FOR THE TREATMENT OF PRIMARY IMMUNE DEFICIENCY DISEASES 
              IN THE HOME.

    (a) In General.--Section 1861 (42 U.S.C. 1395x), as amended by 
sections 611(a) and 612(a) is amended--
            (1) in subsection (s)(2)--
                    (A) by striking ``and'' at the end of subparagraph 
                (X);
                    (B) by adding ``and'' at the end of subparagraph 
                (Y); and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(Z) intravenous immune globulin for the treatment 
                of primary immune deficiency diseases in the home (as 
                defined in subsection (zz));''; and
            (2) by adding at the end the following new subsection:

                     ``Intravenous Immune Globulin

    ``(zz) The term `intravenous immune globulin' means an approved 
pooled plasma derivative for the treatment in the patient's home of a 
patient with a diagnosed primary immune deficiency disease, but not 
including items or services related to the administration of the 
derivative, if a physician determines administration of the derivative 
in the patient's home is medically appropriate.''.
    (b) Payment as a Drug or Biological.--Section 1833(a)(1)(S) (42 
U.S.C. 1395l(a)(1)(S)) is amended by inserting ``(including intravenous 
immune globulin (as defined in section 1861(zz)))'' after ``with 
respect to drugs and biologicals''.
    (c) Effective Date.--The amendments made by this section shall 
apply to items furnished administered on or after January 1, 2004.

SEC. 343. MEDPAC STUDY OF COVERAGE OF SURGICAL FIRST ASSISTING SERVICES 
              OF CERTIFIED REGISTERED NURSE FIRST ASSISTANTS.

    (a) Study.--The Medicare Payment Advisory Commission (in this 
section referred to as the ``Commission'') shall conduct a study on the 
feasibility and advisability of providing for payment under part B of 
title XVIII of the Social Security Act for surgical first assisting 
services furnished by a certified registered nurse first assistant to 
medicare beneficiaries.
    (b) Report.--Not later than January 1, 2005, the Commission shall 
submit to Congress a report on the study conducted under subsection (a) 
together with recommendations for such legislation or administrative 
action as the Commission determines to be appropriate.
    (c) Definitions.--In this section:
            (1) Surgical first assisting services.--The term ``surgical 
        first assisting services'' means services consisting of first 
        assisting a physician with surgery and related preoperative, 
        intraoperative, and postoperative care (as determined by the 
        Secretary) furnished by a certified registered nurse first 
        assistant (as defined in paragraph (2)) which the certified 
        registered nurse first assistant is legally authorized to 
        perform by the State in which the services are performed.
            (2) Certified registered nurse first assistant.--The term 
        ``certified registered nurse first assistant'' means an 
        individual who--
            (A) is a registered nurse and is licensed to practice 
        nursing in the State in which the surgical first assisting 
        services are performed;
            (B) has completed a minimum of 2,000 hours of first 
        assisting a physician with surgery and related preoperative, 
        intraoperative, and postoperative care; and
            (C) is certified as a registered nurse first assistant by 
        an organization recognized by the Secretary.

SEC. 344. MEDPAC STUDY OF PAYMENT FOR CARDIO-THORACIC SURGEONS.

    (a) Study.--The Medicare Payment Advisory Commission (in this 
section referred to as the ``Commission'') shall conduct a study on the 
practice expense relative values established by the Secretary of Health 
and Human Services under the medicare physician fee schedule under 
section 1848 of the Social Security Act (42 U.S.C. 1395w-4) for 
physicians in the specialties of thoracic and cardiac surgery to 
determine whether such values adequately take into account the 
attendant costs that such physicians incur in providing clinical staff 
for patient care in hospitals.
    (b) Report.--Not later than January 1, 2005, the Commission shall 
submit to Congress a report on the study conducted under subsection (a) 
together with recommendations for such legislation or administrative 
action as the Commission determines to be appropriate.

SEC. 345. STUDIES RELATING TO VISION IMPAIRMENTS.

    (a) Coverage of Outpatient Vision Services Furnished by Vision 
Rehabilitation Professionals Under Part B.--
            (1) Study.--The Secretary shall conduct a study to 
        determine the feasibility and advisability of providing 
for payment for vision rehabilitation services furnished by vision 
rehabilitation professionals.
            (2) Report.--Not later than January 1, 2005, the Secretary 
        shall submit to Congress a report on the study conducted under 
        paragraph (1) together with recommendations for such 
        legislation or administrative action as the Secretary 
        determines to be appropriate.
            (3) Vision rehabilitation professional defined.--In this 
        subsection, the term ``vision rehabilitation professional'' 
        means an orientation and mobility specialist, a rehabilitation 
        teacher, or a low vision therapist.
    (b) Report on Appropriateness of a Demonstration Project To Test 
Feasibility of Using PPO Networks To Reduce Costs of Acquiring 
Eyeglasses for Medicare Beneficiaries After Cataract Surgery.--Not 
later than 1 year after the date of the enactment of this Act, the 
Secretary shall submit to Congress a report on the feasibility of 
establishing a two-year demonstration project under which the Secretary 
enters into arrangements with vision care preferred provider 
organization networks to furnish and pay for conventional eyeglasses 
subsequent to each cataract surgery with insertion of an intraocular 
lens on behalf of Medicare beneficiaries. In such report, the Secretary 
shall include an estimate of potential cost savings to the Medicare 
program through the use of such networks, taking into consideration 
quality of service and beneficiary access to services offered by vision 
care preferred provider organization networks.

SEC. 346. MEDICARE HEALTH CARE QUALITY DEMONSTRATION PROGRAMS.

    Title XVIII (42 U.S.C. 1395 et seq.) is amended by inserting after 
section 1866B the following new section:

``SEC. 1866C. HEALTH CARE QUALITY DEMONSTRATION PROGRAM.

    ``Sec. (a) Definitions.--In this section:
            ``(1) Beneficiary.--The term `beneficiary' means an 
        individual who is entitled to benefits under part A and 
        enrolled under part B, including any individual who is enrolled 
        in a Medicare Advantage plan under part C.
            ``(2) Health care group.--
                    ``(A) In general.--The term `health care group' 
                means--
                            ``(i) a group of physicians that is 
                        organized at least in part for the purpose of 
                        providing physician's services under this 
                        title;
                            ``(ii) an integrated health care delivery 
                        system that delivers care through coordinated 
                        hospitals, clinics, home health agencies, 
                        ambulatory surgery centers, skilled nursing 
                        facilities, rehabilitation facilities and 
                        clinics, and employed, independent, or 
                        contracted physicians; or
                            ``(iii) an organization representing 
                        regional coalitions of groups or systems 
                        described in clause (i) or (ii).
                    ``(B) Inclusion.--As the Secretary determines 
                appropriate, a health care group may include a hospital 
                or any other individual or entity furnishing items or 
                services for which payment may be made under this title 
                that is affiliated with the health care group under an 
                arrangement structured so that such hospital, 
                individual, or entity participates in a demonstration 
                project under this section.
            ``(3) Physician.--Except as otherwise provided for by the 
        Secretary, the term `physician' means any individual who 
        furnishes services that may be paid for as physicians' services 
        under this title.
    ``(b) Demonstration Projects.--The Secretary shall establish a 5-
year demonstration program under which the Secretary shall approve 
demonstration projects that examine health delivery factors that 
encourage the delivery of improved quality in patient care, including--
            ``(1) the provision of incentives to improve the safety of 
        care provided to beneficiaries;
            ``(2) the appropriate use of best practice guidelines by 
        providers and services by beneficiaries;
            ``(3) reduced scientific uncertainty in the delivery of 
        care through the examination of variations in the utilization 
        and allocation of services, and outcomes measurement and 
        research;
            ``(4) encourage shared decision making between providers 
        and patients;
            ``(5) the provision of incentives for improving the quality 
        and safety of care and achieving the efficient allocation of 
        resources;
            ``(6) the appropriate use of culturally and ethnically 
        sensitive health care delivery; and
            ``(7) the financial effects on the health care marketplace 
        of altering the incentives for care delivery and changing the 
        allocation of resources.
    ``(c) Administration by Contract.--
            ``(1) In general.--Except as otherwise provided in this 
        section, the Secretary may administer the demonstration program 
        established under this section in a manner that is similar to 
        the manner in which the demonstration program established under 
        section 1866A is administered in accordance with section 1866B.
            ``(2) Alternative payment systems.--A health care group 
        that receives assistance under this section may, with respect 
        to the demonstration project to be carried out with such 
        assistance, include proposals for the use of alternative 
        payment systems for items and services provided to 
        beneficiaries by the group that are designed to--
                    ``(A) encourage the delivery of high quality care 
                while accomplishing the objectives described in 
                subsection (b); and
                    ``(B) streamline documentation and reporting 
                requirements otherwise required under this title.
            ``(3) Benefits.--A health care group that receives 
        assistance under this section may, with respect to the 
        demonstration project to be carried out with such 
assistance, include modifications to the package of benefits available 
under the original medicare fee-for-service program under parts A and B 
or the package of benefits available through a Medicare Advantage plan 
under part C. The criteria employed under the demonstration program 
under this section to evaluate outcomes and determine best practice 
guidelines and incentives shall not be used as a basis for the denial 
of medicare benefits under the demonstration program to patients 
against their wishes (or if the patient is incompetent, against the 
wishes of the patient's surrogate) on the basis of the patient's age or 
expected length of life or of the patient's present or predicted 
disability, degree of medical dependency, or quality of life.
    ``(d) Eligibility Criteria.--To be eligible to receive assistance 
under this section, an entity shall--
            ``(1) be a health care group;
            ``(2) meet quality standards established by the Secretary, 
        including--
                    ``(A) the implementation of continuous quality 
                improvement mechanisms that are aimed at integrating 
                community-based support services, primary care, and 
                referral care;
                    ``(B) the implementation of activities to increase 
                the delivery of effective care to beneficiaries;
                    ``(C) encouraging patient participation in 
                preference-based decisions;
                    ``(D) the implementation of activities to encourage 
                the coordination and integration of medical service 
                delivery; and
                    ``(E) the implementation of activities to measure 
                and document the financial impact on the health care 
                marketplace of altering the incentives of health care 
                delivery and changing the allocation of resources; and
            ``(3) meet such other requirements as the Secretary may 
        establish.
    ``(e) Waiver Authority.--The Secretary may waive such requirements 
of titles XI and XVIII as may be necessary to carry out the purposes of 
the demonstration program established under this section.
    ``(f) Budget Neutrality.--With respect to the 5-year period of the 
demonstration program under subsection (b), the aggregate expenditures 
under this title for such period shall not exceed the aggregate 
expenditures that would have been expended under this title if the 
program established under this section had not been implemented.
    ``(g) Notice Requirements.--In the case of an individual that 
receives health care items or services under a demonstration program 
carried out under this section, the Secretary shall ensure that such 
individual is notified of any waivers of coverage or payment rules that 
are applicable to such individual under this title as a result of the 
participation of the individual in such program.
    ``(h) Participation and Support by Federal Agencies.--In carrying 
out the demonstration program under this section, the Secretary may 
direct--
            ``(1) the Director of the National Institutes of Health to 
        expand the efforts of the Institutes to evaluate current 
        medical technologies and improve the foundation for evidence-
        based practice;
            ``(2) the Administrator of the Agency for Healthcare 
        Research and Quality to, where possible and appropriate, use 
        the program under this section as a laboratory for the study of 
        quality improvement strategies and to evaluate, monitor, and 
        disseminate information relevant to such program; and
            ``(3) the Administrator of the Centers for Medicare & 
        Medicaid Services and the Administrator of the Center for 
        Medicare Choices to support linkages of relevant medicare data 
        to registry information from participating health care groups 
        for the beneficiary populations served by the participating 
        groups, for analysis supporting the purposes of the 
        demonstration program, consistent with the applicable 
        provisions of the Health Insurance Portability and 
        Accountability Act of 1996.''.

SEC. 347. MEDPAC STUDY ON DIRECT ACCESS TO PHYSICAL THERAPY SERVICES.

    (a) Study.--The Medicare Payment Advisory Commission (in this 
section referred to as the ``Commission'') shall conduct a study on the 
feasibility and advisability of allowing medicare fee-for-service 
beneficiaries direct access to outpatient physical therapy services and 
physical therapy services furnished as comprehensive rehabilitation 
facility services.
    (b) Report.--Not later than January 1, 2005, the Commission shall 
submit to Congress a report on the study conducted under subsection (a) 
together with recommendations for such legislation or administrative 
action as the Commission determines to be appropriate.
    (c) Direct Access Defined.--The term ``direct access'' means, with 
respect to outpatient physical therapy services and physical therapy 
services furnished as comprehensive outpatient rehabilitation facility 
services, coverage of and payment for such services in accordance with 
the provisions of title XVIII of the Social Security Act, except that 
sections 1835(a)(2), 1861(p), and 1861(cc) of such Act (42 U.S.C. 
1395n(a)(2), 1395x(p), and 1395x(cc), respectively) shall be applied--
            (1) without regard to any requirement that--
                    (A) an individual be under the care of (or referred 
                by) a physician; or
                    (B) services be provided under the supervision of a 
                physician; and
            (2) by allowing a physician or a qualified physical 
        therapist to satisfy any requirement for--
                    (A) certification and recertification; and
                    (B) establishment and periodic review of a plan of 
                care.

SEC. 348. DEMONSTRATION PROJECT FOR CONSUMER-DIRECTED CHRONIC 
              OUTPATIENT SERVICES.

    (a) Establishment.--
            (1) In general.--Subject to the succeeding provisions of 
        this section, the Secretary shall establish demonstration 
        projects (in this section referred to as ``demonstration 
projects'') under which the Secretary shall evaluate methods that 
improve the quality of care provided to individuals with chronic 
conditions and that reduce expenditures that would otherwise be made 
under the medicare program on behalf of such individuals for such 
chronic conditions, such methods to include permitting those 
beneficiaries to direct their own health care needs and services.
            (2) Individuals with chronic conditions defined.--In this 
        section, the term ``individuals with chronic conditions'' means 
        an individual entitled to benefits under part A of title XVIII 
        of the Social Security Act, and enrolled under part B of such 
        title, but who is not enrolled under part C of such title who 
        is diagnosed as having one or more chronic conditions (as 
        defined by the Secretary), such as diabetes.
    (b) Design of Projects.--
            (1) Evaluation before implementation of project.--
                    (A) In general.--In establishing the demonstration 
                projects under this section, the Secretary shall 
                evaluate best practices employed by group health plans 
                and practices under State plans for medical assistance 
                under the medicaid program under title XIX of the 
                Social Security Act, as well as best practices in the 
                private sector or other areas, of methods that permit 
                patients to self-direct the provision of personal care 
                services. The Secretary shall evaluate such practices 
                for a 1-year period and, based on such evaluation, 
                shall design the demonstration project.
                    (B) Requirement for estimate of budget neutral 
                costs.--As part of the evaluation under subparagraph 
                (A), the Secretary shall evaluate the costs of 
                furnishing care under the projects. The Secretary may 
                not implement the demonstration projects under this 
                section unless the Secretary determines that the costs 
                of providing care to individuals with chronic 
                conditions under the project will not exceed the costs, 
                in the aggregate, of furnishing care to such 
                individuals under title XVIII of the Social Security 
                Act, that would otherwise be paid without regard to the 
                demonstration projects for the period of the project.
            (2) Scope of services.--The Secretary shall determine the 
        appropriate scope of personal care services that would apply 
        under the demonstration projects.
    (c) Voluntary Participation.--Participation of providers of 
services and suppliers, and of individuals with chronic conditions, in 
the demonstration projects shall be voluntary.
    (d) Demonstration Project Sites.--Not later than 2 years after the 
date of the enactment of this Act, the Secretary shall conduct a 
demonstration project in at least one area that the Secretary 
determines has a population of individuals entitled to benefits under 
part A of title XVIII of the Social Security Act, and enrolled under 
part B of such title, with a rate of incidence of diabetes that 
significantly exceeds the national average rate of all areas.
    (e) Evaluation and Report.--
            (1) Evaluations.--The Secretary shall conduct evaluations 
        of the clinical and cost effectiveness of the demonstration 
        projects.
            (2) Reports.--Not later than 2 years after the commencement 
        of the demonstration projects, and biannually thereafter, the 
        Secretary shall submit to Congress a report on the evaluation, 
        and shall include in the report the following:
                    (A) An analysis of the patient outcomes and costs 
                of furnishing care to the individuals with chronic 
                conditions participating in the projects as compared to 
                such outcomes and costs to other individuals for the 
                same health conditions.
                    (B) Evaluation of patient satisfaction under the 
                demonstration projects.
                    (C) Such recommendations regarding the extension, 
                expansion, or termination of the projects as the 
                Secretary determines appropriate.
    (f) Waiver Authority.--The Secretary shall waive compliance with 
the requirements of title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) to such extent and for such period as the Secretary 
determines is necessary to conduct demonstration projects.
    (g) Authorization of Appropriations.--(1) Payments for the costs of 
carrying out the demonstration project under this section shall be made 
from the Federal Supplementary Medical Insurance Trust Fund under 
section 1841 of such Act (42 U.S.C. 1395t).
    (2) There are authorized to be appropriated from such Trust Fund 
such sums as may be necessary for the Secretary to enter into contracts 
with appropriate organizations for the deign, implementation, and 
evaluation of the demonstration project.
    (3) In no case may expenditures under this section exceed the 
aggregate expenditures that would otherwise have been made for the 
provision of personal care services.

SEC. 349. MEDICARE CARE MANAGEMENT PERFORMANCE DEMONSTRATION.

    (a) Establishment.--
            (1) In general.--The Secretary shall establish a pay-for-
        performance demonstration program with physicians to meet the 
        needs of eligible beneficiaries through the adoption and use of 
        health information technology and evidence-based outcomes 
        measures for--
                    (A) promoting continuity of care;
                    (B) helping stabilize medical conditions;
                    (C) preventing or minimizing acute exacerbations of 
                chronic conditions; and
                    (D) reducing adverse health outcomes, such as 
                adverse drug interactions related to polypharmacy.
            (2) Sites.--The Secretary shall designate no more than 4 
        sites at which to conduct the demonstration program under this 
        section, of which--
                    (A) 2 shall be in an urban area;
                    (B) 1 shall be in a rural area; and
                    (C) 1 shall be in a State with a medical school 
                with a Department of Geriatrics that manages rural 
                outreach sites and is capable of managing patients with 
                multiple chronic conditions, one of which is dementia.
            (3) Duration.--The Secretary shall conduct the 
        demonstration program under this section for a 3-year period.
            (4) Consultation.--In carrying out the demonstration 
        program under this section, the Secretary shall consult with 
        private sector and non-profit groups that are undertaking 
        similar efforts to improve quality and reduce avoidable 
        hospitalizations for chronically ill patients.
    (b) Participation.--
            (1) In general.--A physician who provides care for a 
        minimum number of eligible beneficiaries (as specified by the 
        Secretary) may participate in the demonstration program under 
        this section if such physician agrees, to phase-in over the 
        course of the 3-year demonstration period and with the 
        assistance provided under subsection (d)(2)--
                    (A) the use of health information technology to 
                manage the clinical care of eligible beneficiaries 
                consistent with paragraph (3); and
                    (B) the electronic reporting of clinical quality 
                and outcomes measures in accordance with requirements 
                established by the Secretary under the demonstration 
                program.
            (2) Special rule.--In the case of the sites referred to in 
        subparagraphs (B) and (C) of subsection (a)(2), a physician who 
        provides care for a minimum number of beneficiaries with two or 
        more chronic conditions, including dementia (as specified by 
        the Secretary), may participate in the program under this 
        section if such physician agrees to the requirements in 
        subparagraphs (A) and (B) of paragraph (1).
            (3) Practice standards.--Each physician participating in 
        the demonstration program under this section must demonstrate 
        the ability--
                    (A) to assess each eligible beneficiary for 
                conditions other than chronic conditions, such as 
                impaired cognitive ability and co-morbidities, for the 
                purposes of developing care management requirements;
                    (B) to serve as the primary contact of eligible 
                beneficiaries in accessing items and services for which 
                payment may be made under the medicare program;
                    (C) to establish and maintain health care 
                information system for such beneficiaries;
                    (D) to promote continuity of care across providers 
                and settings;
                    (E) to use evidence-based guidelines and meet such 
                clinical quality and outcome measures as the Secretary 
                shall require;
                    (F) to promote self-care through the provision of 
                patient education and support for patients or, where 
                appropriate, family caregivers;
                    (G) when appropriate, to refer such beneficiaries 
                to community service organizations; and
                    (H) to meet such other complex care management 
                requirements as the Secretary may specify.
        The guidelines and measures required under subparagraph (E) 
        shall be designed to take into account beneficiaries with 
        multiple chronic conditions.
    (c) Payment Methodology.--Under the demonstration program under 
this section the Secretary shall pay a per beneficiary amount to each 
participating physician who meets or exceeds specific performance 
standards established by the Secretary with respect to the clinical 
quality and outcome measures reported under subsection (b)(1)(B). Such 
amount may vary based on different levels of performance or 
improvement.
    (d) Administration.--
            (1) Use of quality improvement organizations.--The 
        Secretary shall contract with quality improvement organizations 
        or such other entities as the Secretary deems appropriate to 
        enroll physicians and evaluate their performance under the 
        demonstration program under this section.
            (2) Technical assistance.--The Secretary shall require in 
        such contracts that the contractor be responsible for technical 
        assistance and education as needed to physicians enrolled in 
        the demonstration program under this section for the purpose of 
        aiding their adoption of health information technology, meeting 
        practice standards, and implementing required clinical and 
        outcomes measures.
    (e) Funding.--
            (1) In general.--The Secretary shall provide for the 
        transfer from the Federal Supplementary Medical 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 estimates would have been 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 12 months after the date of 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) Eligible beneficiary.--The term ``eligible 
        beneficiary'' means any individual who--
                    (A) is entitled to benefits under part A and 
                enrolled for benefits under part B of title XVIII of 
                the Social Security Act and is not enrolled in a plan 
                under part C of such title; and
                    (B) has one or more chronic medical conditions 
                specified by the Secretary (one of which may be 
                cognitive impairment).
            (2) Health information technology.--The term ``health 
        information technology'' means email communication, clinical 
        alerts and reminders, and other information technology that 
        meets such functionality, interoperability, and other standards 
        as prescribed by the Secretary.

SEC. 350. GAO STUDY AND REPORT ON THE PROPAGATION OF CONCIERGE CARE.

    (a) Study.--
            (1) In general.--The Comptroller General of the United 
        States shall conduct a study on concierge care (as defined in 
        paragraph (2)) to determine the extent to which such care--
                    (A) is used by medicare beneficiaries (as defined 
                in section 1802(b)(5)(A) of the Social Security Act (42 
                U.S.C. 1395a(b)(5)(A))); and
                    (B) has impacted upon the access of medicare 
                beneficiaries (as so defined) to items and services for 
                which reimbursement is provided under the medicare 
                program under title XVIII of the Social Security Act 
                (42 U.S.C. 1395 et seq.).
            (2) Concierge care.--In this section, the term ``concierge 
        care'' means an arrangement under which, as a prerequisite for 
        the provision of a health care item or service to an 
        individual, a physician, practitioner (as described in section 
        1842(b)(18)(C) of the Social Security Act (42 U.S.C. 
        1395u(b)(18)(C))), or other individual--
                    (A) charges a membership fee or another incidental 
                fee to an individual desiring to receive the health 
                care item or service from such physician, practitioner, 
                or other individual; or
                    (B) requires the individual desiring to receive the 
                health care item or service from such physician, 
                practitioner, or other individual to purchase an item 
                or service.
    (b) Report.--Not later than the date that is 12 months after the 
date of enactment of this Act, the Comptroller General of the United 
States shall submit to Congress a report on the study conducted under 
subsection (a)(1) together with such recommendations for legislative or 
administrative action as the Comptroller General determines to be 
appropriate.

SEC. 351. DEMONSTRATION OF COVERAGE OF CHIROPRACTIC SERVICES UNDER 
              MEDICARE.

    (a) Definitions.--In this section:
            (1) Chiropractic services.--The term ``chiropractic 
        services'' has the meaning given that term by the Secretary for 
        purposes of the demonstration projects, but shall include, at a 
        minimum--
                    (A) care for neuromusculoskeletal conditions 
                typical among eligible beneficiaries; and
                    (B) diagnostic and other services that a 
                chiropractor is legally authorized to perform by the 
                State or jurisdiction in which such treatment is 
                provided.
            (2) Demonstration project.--The term ``demonstration 
        project'' means a demonstration project established by the 
        Secretary under subsection (b)(1).
            (3) Eligible beneficiary.--The term ``eligible 
        beneficiary'' means an individual who is enrolled under part B 
        of the medicare program.
            (4) Medicare program.--The term ``medicare program'' means 
        the health benefits program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
    (b) Demonstration of Coverage of Chiropractic Services Under 
Medicare.--
            (1) Establishment.--The Secretary shall establish 
        demonstration projects in accordance with the provisions of 
        this section for the purpose of evaluating the feasibility and 
        advisability of covering chiropractic services under the 
        medicare program (in addition to the coverage provided for 
        services consisting of treatment by means of manual 
        manipulation of the spine to correct a subluxation described in 
        section 1861(r)(5) of the Social Security Act (42 U.S.C. 
        1395x(r)(5))).
            (2) No physician approval required.--In establishing the 
        demonstration projects, the Secretary shall ensure that an 
        eligible beneficiary who participates in a demonstration 
        project, including an eligible beneficiary who is enrolled for 
        coverage under a Medicare+Choice plan (or, on and after January 
        1, 2006, under a Medicare Advantage plan), is not required to 
        receive approval from a physician or other health care provider 
        in order to receive a chiropractic service under a 
        demonstration project.
            (3) Consultation.--In establishing the demonstration 
        projects, the Secretary shall consult with chiropractors, 
        organizations representing chiropractors, eligible 
        beneficiaries, and organizations representing eligible 
        beneficiaries.
            (4) Participation.--Any eligible beneficiary may 
        participate in the demonstration projects on a voluntary basis.
    (c) Conduct of Demonstration Projects.--
            (1) Demonstration sites.--
                    (A) Selection of demonstration sites.--The 
                Secretary shall conduct demonstration projects at 4 
                demonstration sites.
                    (B) Geographic diversity.--Of the sites described 
                in subparagraph (A)--
                            (i) 2 shall be in rural areas; and
                            (ii) 2 shall be in urban areas.
                    (C) Sites located in hpsas.--At least 1 site 
                described in clause (i) of subparagraph (B) and at 
                least 1 site described in clause (ii) of such 
                subparagraph shall be located 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.
            (2) Implementation; duration.--
                    (A) Implementation.--The Secretary shall not 
                implement the demonstration projects before October 1, 
                2004.
                    (B) Duration.--The Secretary shall complete the 
                demonstration projects by the date that is 2 years 
                after the date on which the first demonstration project 
                is implemented.
    (d) Evaluation and Report.--
            (1) Evaluation.--The Secretary shall conduct an evaluation 
        of the demonstration projects--
                    (A) to determine whether eligible beneficiaries who 
                use chiropractic services use a lesser overall amount 
                of items and services for which payment is made under 
                the medicare program than eligible beneficiaries who do 
                not use such services;
                    (B) to determine the cost of providing payment for 
                chiropractic services under the medicare program;
                    (C) to determine the satisfaction of eligible 
                beneficiaries participating in the demonstration 
                projects and the quality of care received by such 
                beneficiaries; and
                    (D) to evaluate such other matters as the Secretary 
                determines is appropriate.
            (2) Report.--Not later than the date that is 1 year after 
        the date on which the demonstration projects conclude, the 
        Secretary shall submit to Congress a report on the evaluation 
        conducted under paragraph (1) together with such 
        recommendations for legislation or administrative action as the 
        Secretary determines is appropriate.
    (e) Waiver of Medicare Requirements.--The Secretary shall waive 
compliance with such requirements of the medicare program to the extent 
and for the period the Secretary finds necessary to conduct the 
demonstration projects.
    (f) Funding.--
            (1) Demonstration projects.--
                    (A) In general.--Subject to subparagraph (B) and 
                paragraph (2), the Secretary shall provide for the 
                transfer from the Federal Supplementary Insurance Trust 
                Fund 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 projects under 
                this section.
                    (B) Limitation.--In conducting the demonstration 
                projects under this section, the Secretary shall ensure 
                that the aggregate payments made by the Secretary under 
                the medicare program do not exceed the amount which the 
                Secretary would have paid under the medicare program if 
                the demonstration projects under this section were not 
                implemented.
            (2) Evaluation and report.--There are authorized to be 
        appropriated such sums as are necessary for the purpose of 
        developing and submitting the report to Congress under 
        subsection (d).

             TITLE IV--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

SEC. 401. DEMONSTRATION PROJECT TO CLARIFY THE DEFINITION OF HOMEBOUND.

    (a) Demonstration Project.--Not later than 180 days after the date 
of the enactment of this Act, the Secretary shall conduct a 2-year 
demonstration project under part B of title XVIII of the Social 
Security Act under which medicare beneficiaries with chronic conditions 
described in subsection (b) are deemed to be homebound for purposes of 
receiving home health services under the medicare program.
    (b) Medicare Beneficiary Described.--For purposes of subsection 
(a), a medicare beneficiary is eligible to be deemed to be homebound, 
without regard to the purpose, frequency, or duration of absences from 
the home, if--
            (1) the beneficiary has been certified by one physician as 
        an individual who has a permanent and severe, disabling 
        condition that is not expected to improve;
            (2) the beneficiary is dependent upon assistance from 
        another individual with at least 3 out of the 5 activities of 
        daily living for the rest of the beneficiary's life;
            (3) the beneficiary requires skilled nursing services for 
        the rest of the beneficiary's life and the skilled nursing is 
        more than medication management;
            (4) an attendant is required to visit the beneficiary on a 
        daily basis to monitor and treat the beneficiary's medical 
        condition or to assist the beneficiary with activities of daily 
        living;
            (5) the beneficiary requires technological assistance or 
        the assistance of another person to leave the home; and
            (6) the beneficiary does not regularly work in a paid 
        position full-time or part-time outside the home.
    (c) Demonstration Project Sites.--The demonstration project 
established under this section shall be conducted in 3 States selected 
by the Secretary to represent the Northeast, Midwest, and Western 
regions of the United States.
    (d) Limitation on Number of Participants.--The aggregate number of 
such beneficiaries that may participate in the project may not exceed 
15,000.
    (e) Data.--The Secretary shall collect such data on the 
demonstration project with respect to the provision of home health 
services to medicare beneficiaries that relates to quality of care, 
patient outcomes, and additional costs, if any, to the medicare 
program.
    (f) Report to Congress.--Not later than 1 year after the date of 
the completion of the demonstration project under this section, the 
Secretary shall submit to Congress a report on the project using the 
data collected under subsection (e). The report shall include the 
following:
            (1) An examination of whether the provision of home health 
        services to medicare beneficiaries under the project has had 
        any of the following effects:
                    (A) Has adversely affected the provision of home 
                health services under the medicare program.
                    (B) Has directly caused an increase of expenditures 
                under the medicare program for the provision of such 
                services that is directly attributable to such 
                clarification.
            (2) The specific data evidencing the amount of any increase 
        in expenditures that is directly attributable to the 
        demonstration project (expressed both in absolute dollar terms 
        and as a percentage) above expenditures that would otherwise 
        have been incurred for home health services under the medicare 
        program.
            (3) Specific recommendations to exempt permanently and 
        severely disabled homebound beneficiaries from restrictions on 
        the length, frequency, and purpose of their absences from the 
        home to qualify for home health services without incurring 
        additional costs to the medicare program.
    (g) Waiver Authority.--The Secretary shall waive compliance with 
the requirements of title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) to such extent and for such period as the Secretary 
determines is necessary to conduct demonstration projects.
    (h) Construction.--Nothing in this section shall be construed as 
waiving any applicable civil monetary penalty, criminal penalty, or 
other remedy available to the Secretary under title XI or title XVIII 
of the Social Security Act for acts prohibited under such titles, 
including penalties for false certifications for purposes of receipt of 
items or services under the medicare program.
    (i) Authorization of Appropriations.--Payments for the costs of 
carrying out the demonstration project under this section shall be made 
from the Federal Supplementary Medical Insurance Trust Fund under 
section 1841 of such Act (42 U.S.C. 1395t).
    (j) Definitions.--In this section:
            (1) Medicare beneficiary.--The term ``medicare 
        beneficiary'' means an individual who is enrolled under part B 
        of title XVIII of the Social Security Act.
            (2) Home health services.--The term ``home health 
        services'' has the meaning given such term in section 1861(m) 
        of the Social Security Act (42 U.S.C. 1395x(m)).
            (3) Activities of daily living defined.--The term 
        ``activities of daily living'' means eating, toileting, 
        transferring, bathing, and dressing.

SEC. 402. DEMONSTRATION PROJECT FOR MEDICAL ADULT DAY-CARE SERVICES.

    (a) Establishment.--Subject to the succeeding provisions of this 
section, the Secretary shall establish a demonstration project (in this 
section referred to as the ``demonstration project'') under which the 
Secretary shall, as part of a plan of an episode of care for home 
health services established for a medicare beneficiary, permit a home 
health agency, directly or under arrangements with a medical adult day-
care facility, to provide medical adult day-care services as a 
substitute for a portion of home health services that would otherwise 
be provided in the beneficiary's home.
    (b) Payment.--
            (1) In general.--Subject to paragraph (2), the amount of 
        payment for an episode of care for home health services, a 
        portion of which consists of substitute medical adult day-care 
        services, under the demonstration project shall be made at a 
        rate equal to 95 percent of the amount that would otherwise 
        apply for such home health services under section 1895 of the 
        Social Security Act (42 U.S.C. 1395fff). In no case may a home 
        health agency, or a medical adult day-care facility under 
        arrangements with a home health agency, separately charge a 
        beneficiary for medical adult day-care services furnished under 
        the plan of care.
            (2) Adjustment in case of overutilization of substitute 
        adult day-care services to ensure budget neutrality.--The 
        Secretary shall monitor the expenditures under the 
        demonstration project and under title XVIII of the Social 
        Security Act for home health services. If the Secretary 
        estimates that the total expenditures under the demonstration 
        project and under such title XVIII for home health services for 
        a period determined by the Secretary exceed expenditures that 
        would have been made under such title XVIII for home health 
        services for such period if the demonstration project had not 
        been conducted, the Secretary shall adjust the rate of payment 
        to medical adult day-care facilities under paragraph (1) in 
        order to eliminate such excess.
    (c) Demonstration Project Sites.--The demonstration project 
established under this section shall be conducted in not more than 5 
sites in States selected by the Secretary that license or certify 
providers of services that furnish medical adult day-care services.
    (d) Duration.--The Secretary shall conduct the demonstration 
project for a period of 3 years.
    (e) Voluntary Participation.--Participation of medicare 
beneficiaries in the demonstration project shall be voluntary. The 
total number of such beneficiaries that may participate in the project 
at any given time may not exceed 15,000.
    (f) Preference in Selecting Agencies.--In selecting home health 
agencies to participate under the demonstration project, the Secretary 
shall give preference to those agencies that are currently licensed or 
certified through common ownership and control to furnish medical adult 
day-care services.
    (g) Waiver Authority.--The Secretary may waive such requirements of 
title XVIII of the Social Security Act as may be necessary for the 
purposes of carrying out the demonstration project, other than waiving 
the requirement that an individual be homebound in order to be eligible 
for benefits for home health services.
    (h) Evaluation and Report.--The Secretary shall conduct an 
evaluation of the clinical and cost-effectiveness of the demonstration 
project. Not later than 6 months after the completion of the project, 
the Secretary shall submit to Congress a report on the evaluation, and 
shall include in the report the following:
            (1) An analysis of the patient outcomes and costs of 
        furnishing care to the medicare beneficiaries participating in 
        the project as compared to such outcomes and costs to 
        beneficiaries receiving only home health services for the same 
        health conditions.
            (2) Such recommendations regarding the extension, 
        expansion, or termination of the project as the Secretary 
        determines appropriate.
    (i) Definitions.--In this section:
            (1) Home health agency.--The term ``home health agency'' 
        has the meaning given such term in section 1861(o) of the 
        Social Security Act (42 U.S.C. 1395x(o)).
            (2) Medical adult day-care facility.--The term ``medical 
        adult day-care facility'' means a facility that--
                    (A) has been licensed or certified by a State to 
                furnish medical adult day-care services in the State 
                for a continuous 2-year period;
                    (B) is engaged in providing skilled nursing 
                services and other therapeutic services directly or 
                under arrangement with a home health agency;
                    (C) is licensed and certified by the State in which 
                it operates or meets such standards established by the 
                Secretary to assure quality of care and such other 
                requirements as the Secretary finds necessary in the 
                interest of the health and safety of individuals who 
                are furnished services in the facility; and
                    (D) provides medical adult day-care services.
            (3) Medical adult day-care services.--The term ``medical 
        adult day-care services'' means--
                    (A) home health service items and services 
                described in paragraphs (1) through (7) of section 
                1861(m) furnished in a medical adult day-care facility;
                    (B) a program of supervised activities furnished in 
                a group setting in the facility that--
                            (i) meet such criteria as the Secretary 
                        determines appropriate; and
                            (ii) is designed to promote physical and 
                        mental health of the individuals; and
                    (C) such other services as the Secretary may 
                specify.
            (4) Medicare beneficiary.--The term ``medicare 
        beneficiary'' means an individual entitled to benefits under 
        part A of this title, enrolled under part B of this title, or 
        both.

SEC. 403. TEMPORARY SUSPENSION OF OASIS REQUIREMENT FOR COLLECTION OF 
              DATA ON NON-MEDICARE AND NON-MEDICAID PATIENTS.

    (a) In General.--During the period described in subsection (b), the 
Secretary may not require, under section 4602(e) of the Balanced Budget 
Act of 1997 (Public Law 105-33; 111 Stat. 467) or otherwise under 
OASIS, a home health agency to gather or submit information that 
relates to an individual who is not eligible for benefits under either 
title XVIII or title XIX of the Social Security Act (such information 
in this section referred to as ``non-medicare/medicaid OASIS 
information'').
    (b) Period of Suspension.--The period described in this 
subsection--
            (1) begins on the date of the enactment of this Act; and
            (2) ends on the last day of the second month beginning 
        after the date as of which the Secretary has published final 
        regulations regarding the collection and use by the Centers for 
        Medicare & Medicaid Services of non-medicare/medicaid OASIS 
        information following the submission of the report required 
        under subsection (c).
    (c) Report.--
            (1) Study.--The Secretary shall conduct a study on how non-
        medicare/medicaid OASIS information is and can be used by large 
        home health agencies. Such study shall examine--
                    (A) whether there are unique benefits from the 
                analysis of such information that cannot be derived 
                from other information available to, or collected by, 
                such agencies; and
                    (B) the value of collecting such information by 
                small home health agencies compared to the 
                administrative burden related to such collection.
        In conducting the study the Secretary shall obtain 
        recommendations from quality assessment experts in the use of 
        such information and the necessity of small, as well as large, 
        home health agencies collecting such information.
            (2) Report.--The Secretary shall submit to Congress a 
        report on the study conducted under paragraph (1) by not later 
        than 18 months after the date of the enactment of this Act.
    (d) Construction.--Nothing in this section shall be construed as 
preventing home health agencies from collecting non-medicare/medicaid 
OASIS information for their own use.

SEC. 404. MEDPAC STUDY ON MEDICARE MARGINS OF HOME HEALTH AGENCIES.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct 
a study of payment margins of home health agencies under the home 
health prospective payment system under section 1895 of the Social 
Security Act (42 U.S.C. 1395fff). Such study shall examine whether 
systematic differences in payment margins are related to differences in 
case mix (as measured by home health resource groups (HHRGs)) among 
such agencies. The study shall use the partial or full-year cost 
reports filed by home health agencies.
    (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Commission shall submit to Congress a report on the 
study under subsection (a).

SEC. 405. COVERAGE OF RELIGIOUS NONMEDICAL HEALTH CARE INSTITUTION 
              SERVICES FURNISHED IN THE HOME.

    (a) In General.--Section 1821(a) (42 U.S.C. 1395i-5(a)) is 
amended--
            (1) in the matter preceding paragraph (1), by inserting 
        ``and for home health services furnished an individual by a 
religious nonmedical health care institution'' after ``religious 
nonmedical health care institution''; and
            (2) in paragraph (2)--
                    (A) by striking ``or extended care services'' and 
                inserting ``, extended care services, or home health 
                services''; and
                    (B) by inserting ``, or receiving services from a 
                home health agency,'' after ``skilled nursing 
                facility''.
    (b) Definition.--Section 1861 (42 U.S.C. 1395x), as amended by 
section 342, is amended by adding at the end the following new section:

    ``Extended Care in Religious Nonmedical Health Care Institutions

    ``(aaa)(1) The term `home health agency' also includes a religious 
nonmedical health care institution (as defined in subsection (ss)(1)), 
but only with respect to items and services ordinarily furnished by 
such an institution to individuals in their homes, and that are 
comparable to items and services furnished to individuals by a home 
health agency that is not religious nonmedical health care institution.
    ``(2)(A) Subject to subparagraphs (B), payment may be made with 
respect to services provided by such an institution only to such extent 
and under such conditions, limitations, and requirements (in addition 
to or in lieu of the conditions, limitations, and requirements 
otherwise applicable) as may be provided in regulations consistent with 
section 1821.
    ``(B) Notwithstanding any other provision of this title, payment 
may not be made under subparagraph (A)--
            ``(i) in a year insofar as such payments exceed $700,000; 
        and
            ``(ii) after December 31, 2006.''.

                 Subtitle B--Graduate Medical Education

SEC. 411. EXCEPTION TO INITIAL RESIDENCY PERIOD FOR GERIATRIC RESIDENCY 
              OR FELLOWSHIP PROGRAMS.

    (a) Clarification of Congressional Intent.--Congress intended 
section 1886(h)(5)(F)(ii) of the Social Security Act (42 U.S.C. 
1395ww(h)(5)(F)(ii)), as added by section 9202 of the Consolidated 
Omnibus Budget Reconciliation Act of 1985 (Public Law 99-272), to 
provide an exception to the initial residency period for geriatric 
residency or fellowship programs such that, where a particular approved 
geriatric training program requires a resident to complete 2 years of 
training to initially become board eligible in the geriatric specialty, 
the 2 years spent in the geriatric training program are treated as part 
of the resident's initial residency period, but are not counted against 
any limitation on the initial residency period.
    (b) Interim Final Regulatory Authority and Effective Date.--The 
Secretary shall promulgate interim final regulations consistent with 
the congressional intent expressed in this section after notice and 
pending opportunity for public comment to be effective for cost 
reporting periods beginning on or after October 1, 2003.

SEC. 412. TREATMENT OF VOLUNTEER SUPERVISION.

    (a) Moratorium on Changes in Treatment.--During the 1-year period 
beginning on January 1, 2004, for purposes of applying subsections 
(d)(5)(B) and (h) of section 1886 of the Social Security Act (42 U.S.C. 
1395ww), the Secretary shall allow all hospitals to count residents in 
osteopathic and allopathic family practice programs in existence as of 
January 1, 2002, who are training at non-hospital sites, without regard 
to the financial arrangement between the hospital and the teaching 
physician practicing in the non-hospital site to which the resident has 
been assigned.
    (b) Study and Report.--
            (1) Study.--The Inspector General of the Department of 
        Health and Human Services shall conduct a study of the 
        appropriateness of alternative payment methodologies under such 
        sections for the costs of training residents in non-hospital 
        settings.
            (2) Report.--Not later than 1 year after the date of the 
        enactment of this Act, the Inspector General shall submit to 
        Congress a report on the study conducted under paragraph (1), 
        together with such recommendations as the Inspector General 
        determines appropriate.

                  Subtitle C--Chronic Care Improvement

SEC. 421. VOLUNTARY CHRONIC CARE IMPROVEMENT UNDER TRADITIONAL FEE-FOR-
              SERVICE.

    (a) In General.--Title XVIII is amended by inserting after section 
1806 the following new section:

                       ``chronic care improvement

    ``Sec. 1807. (a) Implementation of Chronic Care Improvement 
Programs.--
            ``(1) In general.--The Secretary shall provide for the 
        phased-in development, testing, evaluation, and implementation 
        of chronic care improvement programs in accordance with this 
        section. Each such program shall be designed to improve 
        clinical quality and beneficiary satisfaction and achieve 
        spending targets with respect to expenditures under this title 
        for targeted beneficiaries with one or more threshold 
        conditions.
            ``(2) Definitions.--For purposes of this section:
                    ``(A) Chronic care improvement program.--The term 
                `chronic care improvement program' means a program 
                described in paragraph (1) that is offered under an 
                agreement under subsection (b) or (c).
                    ``(B) Chronic care improvement organization.--The 
                term `chronic care improvement organization' means an 
                entity that has entered into an agreement under 
                subsection (b) or (c) to provide, directly or through 
                contracts with subcontractors, a chronic care 
                improvement program under this section. Such an entity 
                may be a disease management organization, 
health insurer, integrated delivery system, physician group practice, a 
consortium of such entities, or any other legal entity that the 
Secretary determines appropriate to carry out a chronic care 
improvement program under this section.
                    ``(C) Care management plan.--The term `care 
                management plan' means a plan established under 
                subsection (d) for a participant in a chronic care 
                improvement program.
                    ``(D) Threshold condition.--The term `threshold 
                condition' means a chronic condition, such as 
                congestive heart failure, diabetes, chronic obstructive 
                pulmonary disease (COPD), or other diseases or 
                conditions, as selected by the Secretary as appropriate 
                for the establishment of a chronic care improvement 
                program.
                    ``(E) Targeted beneficiary.--The term `targeted 
                beneficiary' means, with respect to a chronic care 
                improvement program, an individual who--
                            ``(i) is entitled to benefits under part A 
                        and enrolled under part B, but not enrolled in 
                        a plan under part C;
                            ``(ii) has one or more threshold conditions 
                        covered under such program; and
                            ``(iii) has been identified under 
                        subsection (d)(1) as a potential participant in 
                        such program.
            ``(3) Construction.--Nothing in this section shall be 
        construed as--
                    ``(A) expanding the amount, duration, or scope of 
                benefits under this title;
                    ``(B) providing an entitlement to participate in a 
                chronic care improvement program under this section;
                    ``(C) providing for any hearing or appeal rights 
                under section 1869, 1878, or otherwise, with respect to 
                a chronic care improvement program under this section; 
                or
                    ``(D) providing benefits under a chronic care 
                improvement program for which a claim may be submitted 
                to the Secretary by any provider of services or 
                supplier (as defined in section 1861(d)).
    ``(b) Developmental Phase (Phase I).--
            ``(1) In general.--In carrying out this section, the 
        Secretary shall enter into agreements consistent with 
        subsection (f) with chronic care improvement organizations for 
        the development, testing, and evaluation of chronic care 
        improvement programs using randomized controlled trials. The 
        first such agreement shall be entered into not later than 12 
        months after the date of the enactment of this section.
            ``(2) Agreement period.--The period of an agreement under 
        this subsection shall be for 3 years.
            ``(3) Minimum participation.--
                    ``(A) In general.--The Secretary shall enter into 
                agreements under this subsection in a manner so that 
                chronic care improvement programs offered under this 
                section are offered in geographic areas that, in the 
                aggregate, consist of areas in which at least 10 
                percent of the aggregate number of medicare 
                beneficiaries reside.
                    ``(B) Medicare beneficiary defined.--In this 
                paragraph, the term `medicare beneficiary' means an 
                individual who is entitled to benefits under part A, 
                enrolled under part B, or both, and who resides in the 
                United States.
            ``(4) Site selection.--In selecting geographic areas in 
        which agreements are entered into under this subsection, the 
        Secretary shall ensure that each chronic care improvement 
        program is conducted in a geographic area in which at least 
        10,000 targeted beneficiaries reside among other individuals 
        entitled to benefits under part A, enrolled under part B, or 
        both to serve as a control population.
            ``(5) Independent evaluations of phase i programs.--The 
        Secretary shall contract for an independent evaluation of the 
        programs conducted under this subsection. Such evaluation shall 
        be done by a contractor with knowledge of chronic care 
        management programs and demonstrated experience in the 
        evaluation of such programs. Each evaluation shall include an 
        assessment of the following factors of the programs:
                    ``(A) Quality improvement measures, such as 
                adherence to evidence-based guidelines and 
                rehospitalization rates.
                    ``(B) Beneficiary and provider satisfaction.
                    ``(C) Health outcomes.
                    ``(D) Financial outcomes, including any cost 
                savings to the program under this title.
    ``(c) Expanded Implementation Phase (Phase II).--
            ``(1) In general.--With respect to chronic care improvement 
        programs conducted under subsection (b), if the Secretary finds 
        that the results of the independent evaluation conducted under 
        subsection (b)(6) indicate that the conditions specified in 
        paragraph (2) have been met by a program (or components of such 
        program), the Secretary shall enter into agreements consistent 
        with subsection (f) to expand the implementation of the program 
        (or components) to additional geographic areas not covered 
        under the program as conducted under subsection (b), which may 
        include the implementation of the program on a national basis. 
        Such expansion shall begin not earlier than 2 years after the 
        program is implemented under subsection (b) and not later than 
        6 months after the date of completion of such program.
            ``(2) Conditions for expansion of programs.--The conditions 
        specified in this paragraph are, with respect to a chronic care 
        improvement program conducted under subsection (b) for a 
        threshold condition, that the program is expected to--
                    ``(A) improve the clinical quality of care;
                    ``(B) improve beneficiary satisfaction; and
                    ``(C) achieve targets for savings to the program 
                under this title specified by the Secretary in the 
                agreement within a range determined to be appropriate 
                by the Secretary, subject to the application of budget 
                neutrality with respect to the program and not taking 
                into account any payments by the organization under the 
                agreement under the program for risk under subsection 
                (f)(3)(B).
            ``(3) Independent evaluations of phase ii programs.--The 
        Secretary shall carry out evaluations of programs expanded 
        under this subsection as the Secretary determines appropriate. 
        Such evaluations shall be carried out in the similar manner as 
        is provided under subsection (b)(5).
    ``(d) Identification and Enrollment of Prospective Program 
Participants.--
            ``(1) Identification of prospective program participants.--
        The Secretary shall establish a method for identifying targeted 
        beneficiaries who may benefit from participation in a chronic 
        care improvement program.
            ``(2) Initial contact by secretary.--The Secretary shall 
        communicate with each targeted beneficiary concerning 
        participation in a chronic care improvement program. Such 
        communication may be made by the Secretary and shall include 
        information on the following:
                    ``(A) A description of the advantages to the 
                beneficiary in participating in a program.
                    ``(B) Notification that the organization offering a 
                program may contact the beneficiary directly concerning 
                such participation.
                    ``(C) Notification that participation in a program 
                is voluntary.
                    ``(D) A description of the method for the 
                beneficiary to participate or for declining to 
                participate and the method for obtaining additional 
                information concerning such participation.
            ``(3) Voluntary participation.--A targeted beneficiary may 
        participate in a chronic care improvement program on a 
        voluntary basis and may terminate participation at any time.
    ``(e) Chronic Care Improvement Programs.--
            ``(1) In general.--Each chronic care improvement program 
        shall--
                    ``(A) have a process to screen each targeted 
                beneficiary for conditions other than threshold 
                conditions, such as impaired cognitive ability and co-
                morbidities, for the purposes of developing an 
                individualized, goal-oriented care management plan 
                under paragraph (2);
                    ``(B) provide each targeted beneficiary 
                participating in the program with such plan; and
                    ``(C) carry out such plan and other chronic care 
                improvement activities in accordance with paragraph 
                (3).
            ``(2) Elements of care management plans.--A care management 
        plan for a targeted beneficiary shall be developed with the 
        beneficiary and shall, to the extent appropriate, include the 
        following:
                    ``(A) A designated point of contact responsible for 
                communications with the beneficiary and for 
                facilitating communications with other health care 
                providers under the plan.
                    ``(B) Self-care education for the beneficiary 
                (through approaches such as disease management or 
                medical nutrition therapy) and education for primary 
                caregivers and family members.
                    ``(C) Education for physicians and other providers 
                and collaboration to enhance communication of relevant 
                clinical information.
                    ``(D) The use of monitoring technologies that 
                enable patient guidance through the exchange of 
                pertinent clinical information, such as vital signs, 
                symptomatic information, and health self-assessment.
                    ``(E) The provision of information about hospice 
                care, pain and palliative care, and end-of-life care.
            ``(3) Conduct of programs.--In carrying out paragraph 
        (1)(C) with respect to a participant, the chronic care 
        improvement organization shall--
                    ``(A) guide the participant in managing the 
                participant's health (including all co-morbidities, 
                relevant health care services, and pharmaceutical 
                needs) and in performing activities as specified under 
                the elements of the care management plan of the 
                participant;
                    ``(B) use decision-support tools such as evidence-
                based practice guidelines or other criteria as 
                determined by the Secretary; and
                    ``(C) develop a clinical information database to 
                track and monitor each participant across settings and 
                to evaluate outcomes.
            ``(4) Additional responsibilities.--
                    ``(A) Outcomes report.--Each chronic care 
                improvement organization offering a chronic care 
                improvement program shall monitor and report to the 
                Secretary, in a manner specified by the Secretary, on 
                health care quality, cost, and outcomes.
                    ``(B) Additional requirements.--Each such 
                organization and program shall comply with such 
                additional requirements as the Secretary may specify.
            ``(5) Accreditation.--The Secretary may provide that 
        chronic care improvement programs and chronic care improvement 
        organizations that are accredited by qualified organizations 
        (as defined by the Secretary) may be deemed to meet such 
        requirements under this section as the Secretary may specify.
    ``(f) Terms of Agreements.--
            ``(1) Terms and conditions.--
                    ``(A) In general.--An agreement under this section 
                with a chronic care improvement organization shall 
                contain such terms and conditions as the Secretary may 
                specify consistent with this section.
                    ``(B) Clinical, quality improvement, and financial 
                requirements.--The Secretary may not enter into an 
                agreement with such an organization under this section 
                for the operation of a chronic care improvement program 
                unless--
                            ``(i) the program and organization meet the 
                        requirements of subsection (e) and such 
                        clinical, quality improvement, financial, and 
                        other requirements as the Secretary deems to be 
                        appropriate for the targeted beneficiaries to 
                        be served; and
                            ``(ii) the organization demonstrates to the 
                        satisfaction of the Secretary that the 
                        organization is able to assume financial risk 
                        for performance under the agreement (as applied 
                        under paragraph (3)(B)) with respect to 
                        payments made to the organization under such 
                        agreement through available reserves, 
                        reinsurance, withholds, or such other means as 
                        the Secretary determines appropriate.
            ``(2) Manner of payment.--Subject to paragraph (3)(B), the 
        payment under an agreement under--
                    ``(A) subsection (b) shall be computed on a per-
                member per-month basis; or
                    ``(B) subsection (c) may be on a per-member per-
                month basis or such other basis as the Secretary and 
                organization may agree.
            ``(3) Application of performance standards.--
                    ``(A) Specification of performance standards.--Each 
                agreement under this section with a chronic care 
                improvement organization shall specify performance 
                standards for each of the factors specified in 
                subsection (c)(2), including clinical quality and 
                spending targets under this title, against which the 
                performance of the chronic care improvement 
                organization under the agreement is measured.
                    ``(B) Adjustment of payment based on performance.--
                            ``(i) In general.--Each such agreement 
                        shall provide for adjustments in payment rates 
                        to an organization under the agreement insofar 
                        as the Secretary determines that the 
                        organization failed to meet the performance 
                        standards specified in the agreement under 
                        subparagraph (A).
                            ``(ii) Financial risk for performance.--In 
                        the case of an agreement under subsection (b) 
                        or (c), the agreement shall provide for a full 
                        recovery for any amount by which the fees paid 
                        to the organization under the agreement exceed 
                        the estimated savings to the programs under 
                        this title attributable to implementation of 
                        such agreement.
            ``(4) Budget neutral payment condition.--Under this 
        section, the Secretary shall ensure that the aggregate sum of 
        medicare program benefit expenditures for beneficiaries 
        participating in chronic care improvement programs and funds 
        paid to chronic care improvement organizations under this 
        section, shall not exceed the medicare program benefit 
        expenditures that the Secretary estimates would have been made 
        for such targeted beneficiaries in the absence of such 
        programs.
    ``(g) Funding.--(1) Subject to paragraph (2), there are 
appropriated to the Secretary, in appropriate part from the Federal 
Hospital Insurance Trust Fund and the Federal Supplementary Medical 
Insurance Trust Fund, such sums as may be necessary to provide for 
agreements with chronic care improvement programs under this section.
    ``(2) In no case shall the funding under this section exceed 
$100,000,000 in aggregate increased expenditures under this title 
(after taking into account any savings attributable to the operation of 
this section) over the 3-fiscal-year period beginning on October 1, 
2003.''.
    (b) Reports.--The Secretary shall submit to Congress reports on the 
operation of section 1807 of the Social Security Act, as added by 
subsection (a), as follows:
            (1) Not later than 2 years after the date of the 
        implementation of such section, the Secretary shall submit to 
        Congress an interim report on the scope of implementation of 
        the programs under subsection (b) of such section, the design 
        of the programs, and preliminary cost and quality findings with 
        respect to those programs based on the following measures of 
        the programs:
                    (A) Quality improvement measures, such as adherence 
                to evidence-based guidelines and rehospitalization 
                rates.
                    (B) Beneficiary and provider satisfaction.
                    (C) Health outcomes.
                    (D) Financial outcomes.
            (2) Not later than 3 years and 6 months after the date of 
        the implementation of such section the Secretary shall submit 
        to Congress an update to the report required under paragraph 
        (1) on the results of such programs.
            (3) The Secretary shall submit to Congress 2 additional 
        biennial reports on the chronic care improvement programs 
        conducted under such section. The first such report shall be 
        submitted not later than 2 years after the report is submitted 
        under paragraph (2). Each such report shall include information 
        on--
                    (A) the scope of implementation (in terms of both 
                regions and chronic conditions) of the chronic care 
                improvement programs;
                    (B) the design of the programs; and
                    (C) the improvements in health outcomes and 
                financial efficiencies that result from such 
                implementation.

SEC. 422. MEDICARE ADVANTAGE QUALITY IMPROVEMENT PROGRAMS.

    (a) In General.--Section 1852(e) (42 U.S.C. 1395w-22(e)) is 
amended--
            (1) in the heading, by striking ``Assurance'' and inserting 
        ``Improvement'';
            (2) by amending paragraphs (1) through (3) to read as 
        follows:
            ``(1) In general.--Each MA organization shall have an 
        ongoing quality improvement program for the purpose of 
        improving the quality of care provided to enrollees in each MA 
        plan offered by such organization (other than an MA private 
        fee-for-service plan or an MSA plan).
            ``(2) Chronic care improvement programs.--As part of the 
        quality improvement program under paragraph (1), each MA 
        organization shall have a chronic care improvement program. 
        Each chronic care improvement program shall have a method for 
        monitoring and identifying enrollees with multiple or 
        sufficiently severe chronic conditions that meet criteria 
        established by the organization for participation under the 
        program.
            ``(3) Data.--
                    ``(A) Collection, analysis, and reporting.--
                            ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii) with respect to plans 
                        described in such clauses and subject to 
                        subparagraph (B), as part of the quality 
                        improvement program under paragraph (1), each 
                        MA organization shall provide for the 
                        collection, analysis, and reporting of data 
                        that permits the measurement of health outcomes 
                        and other indices of quality.
                            ``(ii) Application to ma regional plans.--
                        The Secretary shall establish as appropriate by 
                        regulation requirements for the collection, 
                        analysis, and reporting of data that permits 
                        the measurement of health outcomes and other 
                        indices of quality for MA organizations with 
                        respect to MA regional plans. Such requirements 
                        may not exceed the requirements under this 
                        subparagraph with respect to MA local plans 
                        that are preferred provider organization plans.
                            ``(iii) Application to preferred provider 
                        organizations.--Clause (i) shall apply to MA 
                        organizations with respect to MA local plans 
                        that are preferred provider organization plans 
                        only insofar as services are furnished by 
                        providers or services, physicians, and other 
                        health care practitioners and suppliers that 
                        have contracts with such organization to 
                        furnish services under such plans.
                            ``(iv) Definition of preferred provider 
                        organization plan.--In this subparagraph, the 
                        term `preferred provider organization plan' 
                        means an MA plan that--
                                    ``(I) has a network of providers 
                                that have agreed to a contractually 
                                specified reimbursement for covered 
                                benefits with the organization offering 
                                the plan;
                                    ``(II) provides for reimbursement 
                                for all covered benefits regardless of 
                                whether such benefits are provided 
                                within such network of providers; and
                                    ``(III) is offered by an 
                                organization that is not licensed or 
                                organized under State law as a health 
                                maintenance organization.
                    ``(B) Limitations.--
                            ``(i) Types of data.--The Secretary shall 
                        not collect under subparagraph (A) data on 
                        quality, outcomes, and beneficiary satisfaction 
                        to facilitate consumer choice and program 
                        administration other than the types of data 
                        that were collected by the Secretary as of 
                        November 1, 2003.
                            ``(ii) Changes in types of data.--Subject 
                        to subclause (iii), the Secretary may only 
                        change the types of data that are required to 
                        be submitted under subparagraph (A) after 
                        submitting to Congress a report on the reasons 
                        for such changes that was prepared in 
                        consultation with MA organizations and private 
                        accrediting bodies.
                            ``(iii) Construction.--Nothing in the 
                        subsection shall be construed as restricting 
                        the ability of the Secretary to carry out the 
                        duties under section 1851(d)(4)(D).'';
            (3) in paragraph (4)(B), by amending clause (i) to read as 
        follows:
                            ``(i) Paragraphs (1) through (3) of this 
                        subsection (relating to quality improvement 
                        programs).''; and
            (4) by striking paragraph (5).
    (b) Conforming Amendment.--Section 1852(c)(1)(I) (42 U.S.C. 1395w-
22(c)(1)(I)) is amended to read as follows:
                    ``(I) Quality improvement program.--A description 
                of the organization's quality improvement program under 
                subsection (e).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to contract years beginning on and after January 1, 
2006.

SEC. 423. CHRONICALLY ILL MEDICARE BENEFICIARY RESEARCH, DATA, 
              DEMONSTRATION STRATEGY.

    (a) Development of Plan.--Not later than 6 months after the date of 
the enactment of this Act, the Secretary shall develop a plan to 
improve quality of care and reduce the cost of care for chronically ill 
medicare beneficiaries.
    (b) Plan Requirements.--The plan will utilize existing data and 
identify data gaps, develop research initiatives, and propose 
intervention demonstration programs to provide better health care for 
chronically ill medicare beneficiaries. The plan shall--
            (1) integrate existing data sets including, the Medicare 
        Current Beneficiary Survey (MCBS), Minimum Data Set (MDS), 
        Outcome and Assessment Information Set (OASIS), data from 
        Quality Improvement Organizations (QIO), and claims data;
            (2) identify any new data needs and a methodology to 
        address new data needs;
            (3) plan for the collection of such data in a data 
        warehouse; and
            (4) develop a research agenda using such data.
    (c) Consultation.--In developing the plan under this section, the 
Secretary shall consult with experts in the fields of care for the 
chronically ill (including clinicians).
    (d) Implementation.--Not later than 2 years after the date of the 
enactment of this Act, the Secretary shall implement the plan developed 
under this section. The Secretary may contract with appropriate 
entities to implement such plan.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary such sums as may be necessary in fiscal 
years 2004 and 2005 to carry out this section.

                      Subtitle D--Other Provisions

SEC. 431. IMPROVEMENTS IN NATIONAL AND LOCAL COVERAGE DETERMINATION 
              PROCESS TO RESPOND TO CHANGES IN TECHNOLOGY.

    (a) National and Local Coverage Determination Process.--
            (1) In general.--Section 1862 (42 U.S.C. 1395y), as amended 
        by sections 948 and 950, is amended--
                    (A) in the third sentence of subsection (a), by 
                inserting ``consistent with subsection (l)'' after 
                ``the Secretary shall ensure''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(l) National and Local Coverage Determination Process.--
            ``(1) Factors and evidence used in making national coverage 
        determinations.--The Secretary shall make available to the 
        public the factors considered in making national coverage 
        determinations of whether an item or service is reasonable and 
        necessary. The Secretary shall develop guidance documents to 
        carry out this paragraph in a manner similar to the development 
        of guidance documents under section 701(h) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 371(h)).
            ``(2) Timeframe for decisions on requests for national 
        coverage determinations.--In the case of a request for a 
        national coverage determination that--
                    ``(A) does not require a technology assessment from 
                an outside entity or deliberation from the Medicare 
                Coverage Advisory Committee, the decision on the 
                request shall be made not later than 6 months after the 
                date of the request; or
                    ``(B) requires such an assessment or deliberation 
                and in which a clinical trial is not requested, the 
                decision on the request shall be made not later than 9 
                months after the date of the request.
            ``(3) Process for public comment in national coverage 
        determinations.--
                    ``(A) Period for proposed decision.--Not later than 
                the end of the 6-month period (or 9-month period for 
                requests described in paragraph (2)(B)) that begins on 
                the date a request for a national coverage 
                determination is made, the Secretary shall make a draft 
                of proposed decision on the request available to the 
                public through the Internet website of the Centers for 
                Medicare & Medicaid Services or other appropriate 
                means.
                    ``(B) 30-day period for public comment.--Beginning 
                on the date the Secretary makes a draft of the proposed 
                decision available under subparagraph (A), the 
                Secretary shall provide a 30-day period for public 
                comment on such draft.
                    ``(C) 60-day period for final decision.--Not later 
                than 60 days after the conclusion of the 30-day period 
                referred to under subparagraph (B), the Secretary 
                shall--
                            ``(i) make a final decision on the request;
                            ``(ii) include in such final decision 
                        summaries of the public comments received and 
                        responses to such comments;
                            ``(iii) make available to the public the 
                        clinical evidence and other data used in making 
                        such a decision when the decision differs from 
                        the recommendations of the Medicare Coverage 
                        Advisory Committee; and
                            ``(iv) in the case of a final decision 
                        under clause (i) to grant the request for the 
                        national coverage determination, the Secretary 
                        shall assign a temporary or permanent code 
                        (whether existing or unclassified) and 
                        implement the coding change.
            ``(4) Consultation with outside experts in certain national 
        coverage determinations.--With respect to a request for a 
        national coverage determination for which there is not a review 
        by the Medicare Coverage Advisory Committee, the Secretary 
        shall consult with appropriate outside clinical experts.
            ``(5) Local coverage determination process.--
                    ``(A) Plan to promote consistency of coverage 
                determinations.--The Secretary shall develop a plan to 
                evaluate new local coverage determinations to determine 
                which determinations should be adopted nationally and 
                to what extent greater consistency can be achieved 
                among local coverage determinations.
                    ``(B) Consultation.--The Secretary shall require 
                the fiscal intermediaries or carriers providing 
                services within the same area to consult on all new 
                local coverage determinations within the area.
                    ``(C) Dissemination of information.--The Secretary 
                should serve as a center to disseminate information on 
                local coverage determinations among fiscal 
                intermediaries and carriers to reduce duplication of 
                effort.
            ``(6) National and local coverage determination defined.--
        For purposes of this subsection--
                    ``(A) National coverage determination.--The term 
                `national coverage determination' means a determination 
                by the Secretary with respect to whether or not a 
particular item or service is covered nationally under this title.
                    ``(B) Local coverage determination.--The term 
                `local coverage determination' has the meaning given 
                that in section 1869(f)(2)(B).''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to national coverage determinations as of January 
        1, 2004, and section 1862(l)(5) of the Social Security Act, as 
        added by such paragraph, shall apply to local coverage 
        determinations made on or after July 1, 2004.
    (b) Medicare Coverage of Routine Costs Associated With Certain 
Clinical Trials of Category A Devices.--
            (1) In general.--Section 1862 (42 U.S.C. 1395y), as amended 
        by subsection (a), is amended by adding at the end the 
        following new subsection:
    ``(m) Coverage of Routine Costs Associated With Certain Clinical 
Trials of Category A Devices.--
            ``(1) In general.--In the case of an individual entitled to 
        benefits under part A, or enrolled under part B, or both who 
        participates in a category A clinical trial, the Secretary 
        shall not exclude under subsection (a)(1) payment for coverage 
        of routine costs of care (as defined by the Secretary) 
        furnished to such individual in the trial.
            ``(2) Category a clinical trial.--For purposes of paragraph 
        (1), a `category A clinical trial' means a trial of a medical 
        device if--
                    ``(A) the trial is of an experimental/
                investigational (category A) medical device (as defined 
                in regulations under section 405.201(b) of title 42, 
                Code of Federal Regulations (as in effect as of 
                September 1, 2003));
                    ``(B) the trial meets criteria established by the 
                Secretary to ensure that the trial conforms to 
                appropriate scientific and ethical standards; and
                    ``(C) in the case of a trial initiated before 
                January 1, 2010, the device involved in the trial has 
                been determined by the Secretary to be intended for use 
                in the diagnosis, monitoring, or treatment of an 
                immediately life-threatening disease or condition.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to routine costs incurred on and after January 1, 
        2005, and, as of such date, section 411.15(o) of title 42, Code 
        of Federal Regulations, is superseded to the extent 
        inconsistent with section 1862(m) of the Social Security Act, 
        as added by such paragraph.
            (3) Rule of construction.--Nothing in the amendment made by 
        paragraph (1) shall be construed as applying to, or affecting, 
        coverage or payment for a nonexperimental/investigational 
        (category B) device.
    (c) Issuance of Temporary National Codes.--Not later than July 1, 
2004, the Secretary shall implement revised procedures for the issuance 
of temporary national HCPCS codes under part B of title XVIII of the 
Social Security Act.

SEC. 432. EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY 
              SERVICES UNDER MEDICARE.

    Section 542(c) of BIPA (114 Stat. 2763A-551) is amended by 
inserting ``, and for services furnished during 2005 and 2006'' before 
the period at the end.

SEC. 433. PAYMENT FOR PANCREATIC ISLET CELL INVESTIGATIONAL TRANSPLANTS 
              FOR MEDICARE BENEFICIARIES IN CLINICAL TRIALS.

    (a) Clinical Trial.--
            (1) In general.--The Secretary, acting through the National 
        Institute of Diabetes and Digestive and Kidney Disorders, shall 
        conduct a clinical investigation of pancreatic islet cell 
        transplantation which includes medicare beneficiaries.
            (2) Authorization of appropriations.--There are authorized 
        to be appropriated to the Secretary such sums as may be 
        necessary to conduct the clinical investigation under paragraph 
        (1).
    (b) Medicare Payment.--Not earlier than October 1, 2004, the 
Secretary shall pay for the routine costs as well as transplantation 
and appropriate related items and services (as described in subsection 
(c)) in the case of medicare beneficiaries who are participating in a 
clinical trial described in subsection (a) as if such transplantation 
were covered under title XVIII of such Act and as would be paid under 
part A or part B of such title for such beneficiary.
    (c) Scope of Payment.--For purposes of subsection (b):
            (1) The term ``routine costs'' means reasonable and 
        necessary routine patient care costs (as defined in the Centers 
        for Medicare & Medicaid Services Coverage Issues Manual, 
        section 30-1), including immunosuppressive drugs and other 
        followup care.
            (2) The term ``transplantation and appropriate related 
        items and services'' means items and services related to the 
        acquisition and delivery of the pancreatic islet cell 
        transplantation, notwithstanding any national noncoverage 
        determination contained in the Centers for Medicare & Medicaid 
        Services Coverage Issues Manual.
            (3) The term ``medicare beneficiary'' means an individual 
        who is entitled to benefits under part A of title XVIII of the 
        Social Security Act, or enrolled under part B of such title, or 
        both.
    (d) Construction.--The provisions of this section shall not be 
construed--
            (1) to permit payment for partial pancreatic tissue or 
        islet cell transplantation under title XVIII of the Social 
        Security Act other than payment as described in subsection (b); 
        or
            (2) as authorizing or requiring coverage or payment 
        conveying--
                    (A) benefits under part A of such title to a 
                beneficiary not entitled to such part A; or
                    (B) benefits under part B of such title to a 
                beneficiary not enrolled in such part B.

SEC. 434. RESTORATION OF MEDICARE TRUST FUNDS.

    (a) Definitions.--In this section:
            (1) Clerical error.--The term ``clerical error'' means a 
        failure that occurs on or after April 15, 2001, to have 
        transferred the correct amount from the general fund of the 
        Treasury to a Trust Fund.
            (2) Trust fund.--The term ``Trust Fund'' means the Federal 
        Hospital Insurance Trust Fund established under section 1817 of 
        the Social Security Act (42 U.S.C. 1395i) and the Federal 
        Supplementary Medical Insurance Trust Fund established under 
        section 1841 of such Act (42 U.S.C. 1395t).
    (b) Correction of Trust Fund Holdings.--
            (1) In general.--The Secretary of the Treasury shall take 
        the actions described in paragraph (2) with respect to the 
        Trust Fund with the goal being that, after such actions are 
        taken, the holdings of the Trust Fund will replicate, to the 
        extent practicable in the judgment of the Secretary of the 
        Treasury, in consultation with the Secretary, the holdings that 
        would have been held by the Trust Fund if the clerical error 
        involved had not occurred.
            (2) Obligations issued and redeemed.--The Secretary of the 
        Treasury shall--
                    (A) issue to the Trust Fund obligations under 
                chapter 31 of title 31, United States Code, that bear 
                issue dates, interest rates, and maturity dates that 
                are the same as those for the obligations that--
                            (i) would have been issued to the Trust 
                        Fund if the clerical error involved had not 
                        occurred; or
                            (ii) were issued to the Trust Fund and were 
                        redeemed by reason of the clerical error 
                        involved; and
                    (B) redeem from the Trust Fund obligations that 
                would have been redeemed from the Trust Fund if the 
                clerical error involved had not occurred.
    (c) Appropriation.--There is appropriated to the Trust Fund, out of 
any money in the Treasury not otherwise appropriated, an amount 
determined by the Secretary of the Treasury, in consultation with the 
Secretary, to be equal to the interest income lost by the Trust Fund 
through the date on which the appropriation is being made as a result 
of the clerical error involved.
    (d) Congressional Notice.--In the case of a clerical error that 
occurs after April 15, 2001, the Secretary of the Treasury, before 
taking action to correct the error under this section, shall notify the 
appropriate committees of Congress concerning such error and the 
actions to be taken under this section in response to such error.
    (e) Deadline.--With respect to the clerical error that occurred on 
April 15, 2001, not later than 120 days after the date of the enactment 
of this Act--
            (1) the Secretary of the Treasury shall take the actions 
        under subsection (b)(1); and
            (2) the appropriation under subsection (c) shall be made.

SEC. 435. 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) Application of Disclosure Requirements.--
            (1) In general.--Section 1805(c)(2)(D) (42 U.S.C. 1395b-
        6(c)(2)(D)) is amended by adding at the end the following: 
        ``Members of the Commission shall be treated as employees of 
        Congress for purposes of applying title I of the Ethics in 
        Government Act of 1978 (Public Law 95-521).''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on January 1, 2004.
    (d) Additional Reports.--
            (1) Data needs and sources.--The Medicare Payment Advisory 
        Commission shall conduct a study, and submit a report to 
        Congress by not later than June 1, 2004, 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) Use of tax-related returns.--Using return information 
        provided under Form 990 of the Internal Revenue Service, the 
        Commission shall submit to Congress, by not later than June 1, 
        2004, a report on the following:
                    (A) Investments, endowments, and fundraising of 
                hospitals participating under the medicare program and 
                related foundations.
                    (B) Access to capital financing for private and for 
                not-for-profit hospitals.
    (e) Representation of Experts in Prescription Drugs.--
            (1) In general.--Section 1805(c)(2)(B) (42 U.S.C. 1395b-
        6(c)(2)(B)) is amended by inserting ``experts in the area of 
        pharmaco-economics or prescription drug benefit programs,'' 
        after ``other health professionals,''.
            (2) Appointment.--The Comptroller General of the United 
        States shall ensure that the membership of the Commission 
        complies with the amendment made by paragraph (1) with respect 
        to appointments made on or after the date of the enactment of 
        this Act.

SEC. 436. TECHNICAL AMENDMENTS.

    (a) Part A.--(1) Section 1814(a) (42 U.S.C. 1395f(a)) is amended--
            (A) by striking the seventh sentence, as added by section 
        322(a)(1) of BIPA (114 Stat. 2763A-501); and
            (B) in paragraph (7)(A)--
                    (i) in clause (i), by inserting before the comma at 
                the end the following: ``based on the physician's or 
                medical director's clinical judgment regarding the 
                normal course of the individual's illness''; and
                    (ii) in clause (ii), by inserting before the 
                semicolon at the end the following: ``based on such 
                clinical judgment''.
    (2) Section 1814(b) (42 U.S.C. 1395f(b)), in the matter preceding 
paragraph (1), is amended by inserting a comma after ``1813''.
    (3) Section 1815(e)(1)(B) (42 U.S.C. 1395g(e)(1)(B)), in the matter 
preceding clause (i), is amended by striking ``of hospital'' and 
inserting ``of a hospital''.
    (4) Section 1816(c)(2)(B)(ii) (42 U.S.C. 1395h(c)(2)(B)(ii)) is 
amended--
            (A) by striking ``and'' at the end of subclause (III); and
            (B) by striking the period at the end of subclause (IV) and 
        inserting ``, and''.
    (5) Section 1817(k)(3)(A) (42 U.S.C. 1395i(k)(3)(A)) is amended--
            (A) in clause (i)(I), by striking the comma at the end and 
        inserting a semicolon; and
            (B) in clause (ii), by striking ``the Medicare and medicaid 
        programs'' and inserting ``the programs under this title and 
        title XIX''.
    (6) Section 1817(k)(6)(B) (42 U.S.C. 1395i(k)(6)(B)) is amended by 
striking ``Medicare program under title XVIII'' and inserting ``program 
under this title''.
    (7) Section 1818 (42 U.S.C. 1395i-2) is amended--
            (A) in subsection (d)(6)(A) is amended by inserting ``of 
        such Code'' after ``3111(b)''; and
            (B) in subsection (g)(2)(B) is amended by striking 
        ``subsection (b).'' and inserting ``subsection (b)''.
    (8) Section 1819 (42 U.S.C. 1395i-3) is amended--
            (A) in subsection (b)(4)(C)(i), by striking ``at least at 
        least'' and inserting ``at least'';
            (B) in subsection (d)(1)(A), by striking ``physical 
        mental'' and inserting ``physical, mental''; and
            (C) in subsection (f)(2)(B)(iii), by moving the last 
        sentence 2 ems to the left.
    (9) Section 1886(b)(3)(I)(i)(I) (42 U.S.C. 1395ww(b)(3)(I)(i)(I)) 
is amended by striking ``the the'' and inserting ``the''.
    (10) The heading of subsection (mm) of section 1861 (42 U.S.C. 
1395x) is amended to read as follows:

    ``Critical Access Hospital; Critical Access Hospital Services''.

    (11) Paragraphs (1) and (2) of section 1861(tt) (42 U.S.C. 
1395x(tt)) are each amended by striking ``rural primary care'' and 
inserting ``critical access''.
    (12) Section 1865(b)(3)(B) (42 U.S.C. 1395bb(b)(3)(B)) is amended 
by striking ``section 1819 and 1861(j)'' and inserting ``sections 1819 
and 1861(j)''.
    (13) Section 1866(b)(2) (42 U.S.C. 1395cc(b)(2)) is amended by 
moving subparagraph (D) 2 ems to the left.
    (14) Section 1867 (42 U.S.C. 1395dd) is amended--
            (A) in the matter following clause (ii) of subsection 
        (d)(1)(B), by striking ``is is'' and inserting ``is'';
            (B) in subsection (e)(1)(B), by striking ``a pregnant 
        women'' and inserting ``a pregnant woman''; and
            (C) in subsection (e)(2), by striking ``means hospital'' 
        and inserting ``means a hospital''.
    (15) Section 1886(g)(3)(B) (42 U.S.C. 1395ww(g)(3)(B)) is amended 
by striking ``(as defined in subsection (d)(5)(D)(iii)'' and inserting 
``(as defined in subsection (d)(5)(D)(iii))''.
    (b) Part B.--(1) Section 1833(h)(5)(D) (42 U.S.C. 1395l(h)(5)(D)) 
is amended by striking ``clinic,,'' and inserting ``clinic,''.
    (2) Section 1833(t)(3)(C)(ii) (42 U.S.C. 1395l(t)(3)(C)(ii)) is 
amended by striking ``clause (iii)'' and inserting ``clause (iv)''.
    (3) Section 1861(v)(1)(S)(ii)(III) (42 U.S.C. 
1395x(v)(1)(S)(ii)(III)) is amended by striking ``(as defined in 
section 1886(d)(5)(D)(iii)'' and inserting ``(as defined in section 
1886(d)(5)(D)(iii))''.
    (4) Section 1834(b)(4)(D)(iv) (42 U.S.C. 1395m(b)(4)(D)(iv)) is 
amended by striking ``clauses (vi)'' and inserting ``clause (vi)''.
    (5) Section 1834(m)(4)(C)(ii)(III) (42 U.S.C. 
1395m(m)(4)(C)(ii)(III)) is amended by striking ``1861(aa)(s)'' and 
inserting ``1861(aa)(2)''.
    (6) Section 1838(a)(1) (42 U.S.C. 1395q(a)(1)) is amended by 
inserting a comma after ``1966''.
    (7) The second sentence of section 1839(a)(4) (42 U.S.C. 
1395r(a)(4)) is amended by striking ``which will'' and inserting 
``will''.
    (8) Section 1842(c)(2)(B)(ii) (42 U.S.C. 1395u(c)(2)(B)(ii)) is 
amended--
            (A) by striking ``and'' at the end of subclause (III); and
            (B) by striking the period at the end of subclause (IV) and 
        inserting ``, and''.
    (9) Section 1842(i)(2) (42 U.S.C. 1395u(i)(2)) is amended by 
striking ``services, a physician'' and inserting ``services, to a 
physician''.
    (10) Section 1848(i)(3)(A) (42 U.S.C. 1395w-4(i)(3)(A)) is amended 
by striking ``a comparable services'' and inserting ``comparable 
services''.
    (11) Section 1861(s)(2)(K)(i) (42 U.S.C. 1395x(s)(2)(K)(i)) is 
amended by striking ``; and but'' and inserting ``, but''.
    (12) Section 1861(aa)(1)(B) (42 U.S.C. 1395x(aa)(1)(B)) is amended 
by striking ``,,'' and inserting a comma.
    (13) Section 128(b)(2) of BIPA (114 Stat. 2763A-480) is amended by 
striking ``Not later that'' and inserting ``Not later than'' each place 
it appears.
    (c) Parts A and B.--(1) Section 1812(a)(3) (42 U.S.C. 1395d(a)(3)) 
is amended--
            (A) by striking ``for individuals not'' and inserting ``in 
        the case of individuals not''; and
            (B) by striking ``for individuals so'' and inserting ``in 
        the case of individuals so''.
    (2)(A) Section 1814(a) (42 U.S.C. 1395f(a)) is amended in the sixth 
sentence by striking ``leave home,'' and inserting ``leave home and''.
    (B) Section 1835(a) (42 U.S.C. 1395n(a)) is amended in the seventh 
sentence by striking ``leave home,'' and inserting ``leave home and''.
    (3) Section 1891(d)(1) (42 U.S.C. 1395bbb(d)(1)) is amended by 
striking ``subsection (c)(2)(C)(I)'' and inserting ``subsection 
(c)(2)(C)(i)(I)''.
    (4) Section 1861(v) (42 U.S.C. 1395x(v)) is amended by moving 
paragraph (8) (including clauses (i) through (v) of such paragraph) 2 
ems to the left.
    (5) Section 1866B(b)(7)(D) (42 U.S.C. 1395cc-2(b)(7)(D)) is amended 
by striking ``(c)(2)(A)(ii)'' and inserting ``(c)(2)(B)''.
    (6) Section 1886(h)(3)(D)(ii)(III) (42 U.S.C. 
1395ww(h)(3)(D)(ii)(III)) is amended by striking ``and'' after the 
comma at the end.
    (7) Section 1893(a) (42 U.S.C. 1395ddd(a)) is amended by striking 
``Medicare program'' and inserting ``medicare program''.
    (8) Section 1896(b)(4) (42 U.S.C. 1395ggg(b)(4)) is amended by 
striking ``701(f)'' and inserting ``712(f)''.
    (d) Part C.--(1) Section 1853 (42 U.S.C. 1395w-23), as amended by 
section 307 of BIPA (114 Stat. 2763A-558), is amended--
            (A) in subsection (a)(3)(C)(ii), by striking ``clause 
        (iii)'' and inserting ``clause (iv)'';
            (B) in subsection (a)(3)(C), by redesignating the clause 
        (iii) added by such section 307 as clause (iv); and
            (C) in subsection (c)(5), by striking ``(a)(3)(C)(iii)'' 
        and inserting ``(a)(3)(C)(iv)''.
    (2) Section 1876 (42 U.S.C. 1395mm) is amended--
            (A) in subsection (c)(2)(B), by striking ``signifcant'' and 
        inserting ``significant''; and
            (B) in subsection (j)(2), by striking ``this setion'' and 
        inserting ``this section''.
    (e) Medigap.--Section 1882 (42 U.S.C. 1395ss) is amended--
            (1) in subsection (d)(3)(A)(i)(II), by striking ``plan a 
        medicare supplemental policy'' and inserting ``plan, a medicare 
        supplemental policy'';
            (2) in subsection (d)(3)(B)(iii)(II), by striking ``to the 
        best of the issuer or seller's knowledge'' and inserting ``to 
        the best of the issuer's or seller's knowledge'';
            (3) in subsection (g)(2)(A), by striking ``medicare 
        supplement policies'' and inserting ``medicare supplemental 
        policies'';
            (4) in subsection (p)(2)(B), by striking ``, and'' and 
        inserting ``; and''; and
            (5) in subsection (s)(3)(A)(iii), by striking ``pre-
        existing'' and inserting ``preexisting''.

    TITLE V--ADMINISTRATIVE IMPROVEMENTS, REGULATORY REDUCTION, AND 
                           CONTRACTING REFORM

SEC. 500. ADMINISTRATIVE IMPROVEMENTS WITHIN THE CENTERS FOR MEDICARE & 
              MEDICAID SERVICES (CMS).

    (a) Coordinated Administration of Medicare Prescription Drug and 
Medicare Advantage Programs.--Title XVIII (42 U.S.C. 1395 et seq.), as 
amended by section 421, is amended by inserting after 1807 the 
following new section:

                ``provisions relating to administration

    ``Sec. 1808. (a) Coordinated Administration of Medicare 
Prescription Drug and Medicare Advantage Programs.--
            ``(1) In general.--There is within the Centers for Medicare 
        & Medicaid Services a center to carry out the duties described 
        in paragraph (3).
            ``(2) Director.--Such center shall be headed by a director 
        who shall report directly to the Administrator of the Centers 
        for Medicare & Medicaid Services.
            ``(3) Duties.--The duties described in this paragraph are 
        the following:
                    ``(A) The administration of parts C and D.
                    ``(B) The provision of notice and information under 
                section 1804.
                    ``(C) Such other duties as the Secretary may 
                specify.
            ``(4) Deadline.--The Secretary shall ensure that the center 
        is carrying out the duties described in paragraph (3) by not 
        later than January 1, 2008.''.
    (b) Management Staff for the Centers for Medicare & Medicaid 
Services.--Such section is further amended by adding at the end the 
following new subsection:
    ``(b) Employment of Management Staff.--
            ``(1) In general.--The Secretary may employ, within the 
        Centers for Medicare & Medicaid Services, such individuals as 
        management staff as the Secretary determines to be appropriate. 
        With respect to the administration of parts C and D, such 
        individuals shall include individuals with private sector 
        expertise in negotiations with health benefits plans.
            ``(2) Eligibility.--To be eligible for employment under 
        paragraph (1) an individual shall be required to have 
        demonstrated, by their education and experience (either in the 
        public or private sector), superior expertise in at least one 
        of the following areas:
            ``(A) The review, negotiation, and administration of health 
        care contracts.
            ``(B) The design of health care benefit plans.
            ``(C) Actuarial sciences.
            ``(D) Compliance with health plan contracts.
            ``(E) Consumer education and decision making.
            ``(F) Any other area specified by the Secretary that 
        requires specialized management or other expertise.
            ``(3) Rates of payment.--
                    ``(A) Performance-related pay.--Subject to 
                subparagraph (B), the Secretary shall establish the 
                rate of pay for an individual employed under paragraph 
                (1). Such rate shall take into account expertise, 
                experience, and performance.
                    ``(B) Limitation.--In no case may the rate of 
                compensation determined under subparagraph (A) exceed 
                the highest rate of basic pay for the Senior Executive 
                Service under section 5382(b) of title 5, United States 
                Code.''.
    (c) Requirement for Dedicated Actuary for Private Health Plans.--
Section 1117(b) (42 U.S.C. 1317(b)) is amended by adding at the end the 
following new paragraph:
    ``(3) In the office of the Chief Actuary there shall be an actuary 
whose duties relate exclusively to the programs under parts C and D of 
title XVIII and related provisions of such title.''.
    (d) Increase in Grade to Executive Level III for the Administrator 
of the Centers for Medicare & Medicaid Services.--
            (1) In general.--Section 5314 of title 5, United States 
        Code, is amended by adding at the end the following:
            ``Administrator of the Centers for Medicare & Medicaid 
        Services.''.
            (2) Conforming amendment.--Section 5315 of such title is 
        amended by striking ``Administrator of the Health Care 
        Financing Administration.''.
            (3) Effective date.--The amendments made by this subsection 
        take effect on January 1, 2004.
    (e) Conforming Amendments Relating to Health Care Financing 
Administration.--
            (1) Amendments to the social security act.--The Social 
        Security Act is amended--
                    (A) in section 1117 (42 U.S.C. 1317)--
                            (i) in the heading to read as follows:

``appointment of the administrator and chief actuary of the centers for 
                    medicare & medicaid services'';

                            (ii) in subsection (a), by striking 
                        ``Health Care Financing Administration'' and 
                        inserting ``Centers for Medicare & Medicaid 
                        Services''; and
                            (iii) in subsection (b)(1)--
                                    (I) by striking ``Health Care 
                                Financing Administration'' and 
                                inserting ``Centers for Medicare & 
                                Medicaid Services''; and
                                    (II) by striking ``Administration'' 
                                and inserting ``Centers'';
                    (B) in section 1140(a) (42 U.S.C. 1320b-10(a))--
                            (i) in paragraph (1), by striking ``Health 
                        Care Financing Administration'' both places it 
                        appears in the
                matter following subparagraph (B) and inserting 
                ``Centers for Medicare & Medicaid Services'';
                            (ii) in paragraph (1)(A)--
                                    (I) by striking ``Health Care 
                                Financing Administration'' and 
                                inserting ``Centers for Medicare & 
                                Medicaid Services''; and
                                    (II) by striking ``HCFA'' and 
                                inserting ``CMS''; and
                            (iii) in paragraph (1)(B), by striking 
                        ``Health Care Financing Administration'' both 
                        places it appears and inserting ``Centers for 
                        Medicare & Medicaid Services'';
                    (C) in section 1142(b)(3) (42 U.S.C. 1320b-
                12(b)(3)), by striking ``Health Care Financing 
                Administration'' and inserting ``Centers for Medicare & 
                Medicaid Services'';
                    (D) in section 1817(b) (42 U.S.C. 1395i(b))--
                            (i) by striking ``Health Care Financing 
                        Administration'', both in the fifth sentence of 
                        the matter preceding paragraph (1) and in the 
                        second sentence of the
                matter following paragraph (4), and inserting ``Centers 
                for Medicare & Medicaid Services''; and
                            (ii) by striking ``Chief Actuarial 
                        Officer'' in the second sentence of the
                matter following paragraph (4) and inserting ``Chief 
                Actuary'';
                    (E) in section 1841(b) (42 U.S.C. 1395t(b))--
                            (i) by striking ``Health Care Financing 
                        Administration'', both in the fifth sentence of 
                        the matter preceding paragraph (1) and in the 
                        second sentence of the
                matter following paragraph (4), and inserting ``Centers 
                for Medicare & Medicaid Services''; and
                            (ii) by striking ``Chief Actuarial 
                        Officer'' in the second sentence of the
                matter following paragraph (4) and inserting ``Chief 
                Actuary'';
                    (F) in section 1852(a)(5) (42 U.S.C. 1395w-
                22(a)(5)), by striking ``Health Care Financing 
                Administration'' in the
                matter following subparagraph (B) and inserting 
                ``Centers for Medicare & Medicaid Services'';
                    (G) in section 1853 (42 U.S.C. 1395w-23)--
                            (i) in subsection (b)(4), by striking 
                        ``Health Care Financing Administration'' in the 
                        first sentence and inserting ``Centers for 
                        Medicare & Medicaid Services''; and
                            (ii) in subsection (c)(7), by striking 
                        ``Health Care Financing Administration'' in the 
                        last sentence and inserting ``Centers for 
                        Medicare & Medicaid Services'';
                    (H) in section 1854(a)(5)(A) (42 U.S.C. 1395w-
                24(a)(5)(A)), by striking ``Health Care Financing 
                Administration''and inserting ``Centers for Medicare & 
                Medicaid Services'';
                    (I) in section 1857(d)(4)(A)(ii) (42 U.S.C. 1395w-
                27(d)(4)(A)(ii)), by striking ``Health Care Financing 
                Administration'' and inserting ``Secretary'';
                    (J) in section 1862(b)(5)(A)(ii) (42 U.S.C. 
                1395y(b)(5)(A)(ii)), by striking ``Health Care 
                Financing Administration'' and inserting ``Centers for 
                Medicare & Medicaid Services'';
                    (K) in section 1927(e)(4) (42 U.S.C. 1396r-
                8(e)(4)), by striking ``HCFA'' and inserting ``The 
                Secretary'';
                    (L) in section 1927(f)(2) (42 U.S.C. 1396r-
                8(f)(2)), by striking ``HCFA'' and inserting ``The 
                Secretary''; and
                    (M) in section 2104(g)(3) (42 U.S.C. 1397dd(g)(3)) 
                by inserting ``or CMS Form 64 or CMS Form 21, as the 
                case may be,'' after ``HCFA Form 64 or HCFA Form 21''
            (2) Amendments to the public health service act.--The 
        Public Health Service Act is amended--
                    (A) in section 501(d)(18) (42 U.S.C. 290aa(d)(18)), 
                by striking ``Health Care Financing Administration'' 
                and inserting ``Centers for Medicare & Medicaid 
                Services'';
                    (B) in section 507(b)(6) (42 U.S.C. 290bb(b)(6)), 
                by striking ``Health Care Financing Administration'' 
                and inserting ``Centers for Medicare & Medicaid 
                Services'';
                    (C) in section 916 (42 U.S.C. 299b-5)--
                            (i) in subsection (b)(2), by striking 
                        ``Health Care Financing Administration'' and 
                        inserting ``Centers for Medicare & Medicaid 
                        Services''; and
                            (ii) in subsection (c)(2), by striking 
                        ``Health Care Financing Administration'' and 
                        inserting ``Centers for Medicare & Medicaid 
                        Services'';
                    (D) in section 921(c)(3)(A) (42 U.S.C. 
                299c(c)(3)(A)), by striking ``Health Care Financing 
                Administration'' and inserting ``Centers for Medicare & 
                Medicaid Services'';
                    (E) in section 1318(a)(2) (42 U.S.C. 300e-
                17(a)(2)), by striking ``Health Care Financing 
                Administration'' and inserting ``Centers for Medicare & 
                Medicaid Services'';
                    (F) in section 2102(a)(7) (42 U.S.C. 300aa-
                2(a)(7)), by striking ``Health Care Financing 
                Administration'' and inserting ``Centers for Medicare & 
                Medicaid Services''; and
                    (G) in section 2675(a) (42 U.S.C. 300ff-75(a)), by 
                striking ``Health Care Financing Administration'' in 
                the first sentence and inserting ``Centers for Medicare 
                & Medicaid Services''.
            (3) Amendments to the internal revenue code of 1986.--
        Section 6103(l)(12) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) in subparagraph (B), by striking ``Health Care 
                Financing Administration'' in the matter preceding 
                clause (i) and inserting ``Centers for Medicare & 
                Medicaid Services''; and
                    (B) in subparagraph (C)--
                            (i) by striking ``health care financing 
                        administration'' in the heading and inserting 
                        ``centers for medicare & medicaid services''; 
                        and
                            (ii) by striking ``Health Care Financing 
                        Administration'' in the matter preceding clause 
                        (i) and inserting ``Centers for Medicare & 
                        Medicaid Services''.
            (4) Amendments to title 10, united states code.--Title 10, 
        United States Code, is amended--
                    (A) in section 1086(d)(4), by striking 
                ``administrator of the Health Care Financing 
                Administration'' in the last sentence and inserting 
                ``Administrator of the Centers for Medicare & Medicaid 
                Services''; and
                    (B) in section 1095(k)(2), by striking ``Health 
                Care Financing Administration'' in the second sentence 
                and inserting ``Centers for Medicare & Medicaid 
                Services''.
            (5) Amendments to the alzheimer's disease and related 
        dementias services research act of 1992.--The Alzheimer's 
        Disease and Related Dementias Research Act of 1992 (42 U.S.C. 
        11271 et seq.) is amended--
                    (A) in the heading of subpart 3 of part D to read 
                as follows:

 ``Subpart 3--Responsibilities of the Centers for Medicare & Medicaid 
                              Services'';

                    (B) in section 937 (42 U.S.C. 11271)--
                            (i) in subsection (a), by striking 
                        ``National Health Care Financing 
                        Administration'' and inserting ``Centers for 
                        Medicare & Medicaid Services'';
                            (ii) in subsection (b)(1), by striking 
                        ``Health Care Financing Administration'' and 
                        inserting ``Centers for Medicare & Medicaid 
                        Services'';
                            (iii) in subsection (b)(2), by striking 
                        ``Health Care Financing Administration'' and 
                        inserting ``Centers for Medicare & Medicaid 
                        Services''; and
                            (iv) in subsection (c), by striking 
                        ``Health Care Financing Administration'' and 
                        inserting ``Centers for Medicare & Medicaid 
                        Services''; and
                    (C) in section 938 (42 U.S.C. 11272), by striking 
                ``Health Care Financing Administration'' and inserting 
                ``Centers for Medicare & Medicaid Services''.
            (6) Miscellaneous amendments.--
                    (A) Rehabilitation act of 1973.--Section 202(b)(8) 
                of the Rehabilitation Act of 1973 (29 U.S.C. 762(b)(8)) 
                is amended by striking ``Health Care Financing 
                Administration'' and inserting ``Centers for Medicare & 
                Medicaid Services''.
                    (B) Indian health care improvement act.--Section 
                405(d)(1) of the Indian Health Care Improvement Act (25 
                U.S.C. 1645(d)(1)) is amended by striking ``Health Care 
                Financing Administration'' in the matter preceding 
subparagraph (A) and inserting ``Centers for Medicare & Medicaid 
Services''.
                    (C) Individuals with disabilities education act.--
                Section 644(b)(5) of the Individuals with Disabilities 
                Education Act (20 U.S.C. 1444(b)(5)) is amended by 
                striking ``Health Care Financing Administration'' and 
                inserting ``Centers for Medicare & Medicaid Services''.
                    (D) The home health care and alzheimer's disease 
                amendments of 1990.--Section 302(a)(9) of the Home 
                Health Care and Alzheimer's Disease Amendments of 1990 
                (42 U.S.C. 242q-1(a)(9)) is amended by striking 
                ``Health Care Financing Administration'' and inserting 
                ``Centers for Medicare & Medicaid Services''.
                    (E) The children's health act of 2000.--Section 
                2503(a) of the Children's Health Act of 2000 (42 U.S.C. 
                247b-3a(a)) is amended by striking ``Health Care 
                Financing Administration'' and inserting ``Centers for 
                Medicare & Medicaid Services''.
                    (F) The national institutes of health 
                revitalization act of 1993.--Section 1909 of the 
                National Institutes of Health Revitalization Act of 
                1993 (42 U.S.C. 299a note) is amended by striking 
                ``Health Care Financing Administration'' and inserting 
                ``Centers for Medicare & Medicaid Services''.
                    (G) The omnibus budget reconciliation act of 
                1990.--Section 4359(d) of the Omnibus Budget 
                Reconciliation Act of 1990 (42 U.S.C. 1395b-3(d)) is 
                amended by striking ``Health Care Financing 
                Administration'' and inserting ``Centers for Medicare & 
                Medicaid Services''.
                    (H) The medicare, medicaid, and schip benefits 
                improvement and protection act of 2000.--Section 
                104(d)(4) of the Medicare, Medicaid, and SCHIP Benefits 
                Improvement and Protection Act of 2000 (42 U.S.C. 1395m 
                note) is amended by striking ``Health Care Financing 
                Administration'' and inserting ``Health Care''.
            (7) Additional amendment.--Section 403 of the Act entitled, 
        ``An Act to authorize certain appropriations for the 
        territories of the United States, to amend certain Acts 
        relating thereto, and for other purposes'', enacted October 15, 
        1977 (48 U.S.C. 1574-1; 48 U.S.C. 1421q-1), is amended by 
        striking ``Health Care Financing Administration'' and inserting 
        ``Centers for Medicare & Medicaid Services''.

                     Subtitle A--Regulatory Reform

SEC. 501. CONSTRUCTION; DEFINITION OF SUPPLIER.

    (a) Construction.--Nothing in this title shall be construed--
            (1) to compromise or affect existing legal remedies for 
        addressing fraud or abuse, whether it be criminal prosecution, 
        civil enforcement, or administrative remedies, including under 
        sections 3729 through 3733 of title 31, United States Code 
        (commonly known as the ``False Claims Act''); or
            (2) to prevent or impede the Department of Health and Human 
        Services in any way from its ongoing efforts to eliminate 
        waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative contracting 
set forth in this division does not constitute consolidation of the 
Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund or reflect any position on that issue.
    (b) Definition of Supplier.--Section 1861 (42 U.S.C. 1395x) is 
amended by inserting after subsection (c) the following new subsection:

                               ``Supplier

    ``(d) The term `supplier' means, unless the context otherwise 
requires, a physician or other practitioner, a facility, or other 
entity (other than a provider of services) that furnishes items or 
services under this title.''.

SEC. 502. ISSUANCE OF REGULATIONS.

    (a) Regular Timeline for Publication of Final Rules.--
            (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is 
        amended by adding at the end the following new paragraph:
    ``(3)(A) The Secretary, in consultation with the Director of the 
Office of Management and Budget, shall establish and publish a regular 
timeline for the publication of final regulations based on the previous 
publication of a proposed regulation or an interim final regulation.
    ``(B) Such timeline may vary among different regulations based on 
differences in the complexity of the regulation, the number and scope 
of comments received, and other relevant factors, but shall not be 
longer than 3 years except under exceptional circumstances. If the 
Secretary intends to vary such timeline with respect to the publication 
of a final regulation, the Secretary shall cause to have published in 
the Federal Register notice of the different timeline by not later than 
the timeline previously established with respect to such regulation. 
Such notice shall include a brief explanation of the justification for 
such variation.
    ``(C) In the case of interim final regulations, upon the expiration 
of the regular timeline established under this paragraph for the 
publication of a final regulation after opportunity for public comment, 
the interim final regulation shall not continue in effect unless the 
Secretary publishes (at the end of the regular timeline and, if 
applicable, at the end of each succeeding 1-year period) a notice of 
continuation of the regulation that includes an explanation of why the 
regular timeline (and any subsequent 1-year extension) was not complied 
with. If such a notice is published, the regular timeline (or such 
timeline as previously extended under this paragraph) for publication 
of the final regulation shall be treated as having been extended for 1 
additional year.
    ``(D) The Secretary shall annually submit to Congress a report that 
describes the instances in which the Secretary failed to publish a 
final regulation within the applicable regular timeline under this 
paragraph and that provides an explanation for such failures.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act. The 
        Secretary shall provide for an appropriate transition to take 
        into account the backlog of previously published interim final 
        regulations.
    (b) Limitations on New Matter in Final Regulations.--
            (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as 
        amended by subsection (a), is amended by adding at the end the 
        following new paragraph:
    ``(4) If the Secretary publishes a final regulation that includes a 
provision that is not a logical outgrowth of a previously published 
notice of proposed rulemaking or interim final rule, such provision 
shall be treated as a proposed regulation and shall not take effect 
until there is the further opportunity for public comment and a 
publication of the provision again as a final regulation.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to final regulations published on or after the date 
        of the enactment of this Act.

SEC. 503. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.

    (a) No Retroactive Application of Substantive Changes.--
            (1) In general.--Section 1871 (42 U.S.C. 1395hh), as 
        amended by section 502(a), is amended by adding at the end the 
        following new subsection:
    ``(e)(1)(A) A substantive change in regulations, manual 
instructions, interpretative rules, statements of policy, or guidelines 
of general applicability under this title shall not be applied (by 
extrapolation or otherwise) retroactively to items and services 
furnished before the effective date of the change, unless the Secretary 
determines that--
            ``(i) such retroactive application is necessary to comply 
        with statutory requirements; or
            ``(ii) failure to apply the change retroactively would be 
        contrary to the public interest.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to substantive changes issued on or after the date 
        of the enactment of this Act.
    (b) Timeline for Compliance With Substantive Changes After 
Notice.--
            (1) In general.--Section 1871(e)(1), as added by subsection 
        (a), is amended by adding at the end the following:
    ``(B)(i) Except as provided in clause (ii), a substantive change 
referred to in subparagraph (A) shall not become effective before 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 such 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.
    ``(C) No action shall be taken against a provider of services or 
supplier with respect to noncompliance with such a substantive change 
for items and services furnished before the effective date of such a 
change.''.
            (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.
    (c) Reliance on Guidance.--
            (1) In general.--Section 1871(e), as added by subsection 
        (a), is further amended by adding at the end the following new 
        paragraph:
    ``(2)(A) If--
            ``(i) a provider of services or supplier follows the 
        written guidance (which may be transmitted electronically) 
        provided by the Secretary or by a medicare contractor (as 
        defined in section 1889(g)) acting within the scope of the 
        contractor's contract authority, with respect to the furnishing 
        of items or services and submission of a claim for benefits for 
        such items or services with respect to such provider or 
        supplier;
            ``(ii) the Secretary determines that the provider of 
        services or supplier has accurately presented the circumstances 
        relating to such items, services, and claim to the contractor 
        in writing; and
            ``(iii) the guidance was in error;
the provider of services 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 (including interest under a 
repayment plan under section 1893 or otherwise) relating to the 
provision of such items or service or such claim if the provider of 
services or supplier reasonably relied on such guidance.
    ``(B) Subparagraph (A) shall not be construed as preventing the 
recoupment or repayment (without any additional penalty) relating to an 
overpayment insofar as the overpayment was solely the result of a 
clerical or technical operational error.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act and 
        shall only apply to a penalty or interest imposed with respect 
        to guidance provided on or after July 24, 2003.

SEC. 504. REPORTS AND STUDIES RELATING TO REGULATORY REFORM.

    (a) GAO Study on Advisory Opinion Authority.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study to determine the feasibility and 
        appropriateness of establishing in the Secretary authority to 
        provide legally binding advisory opinions on appropriate 
        interpretation and application of regulations to carry out the 
        medicare program under title XVIII of the Social Security Act. 
        Such study shall examine the appropriate timeframe for issuing 
        such advisory opinions, as well as the need for additional 
        staff and funding to provide such opinions.
            (2) Report.--The Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1) by 
        not later than 1 year after the date of the enactment of this 
        Act.
    (b) Report on Legal and Regulatory Inconsistencies.--Section 1871 
(42 U.S.C. 1395hh), as amended by section 503(a)(1), is amended by 
adding at the end the following new subsection:
    ``(f)(1) Not later than 2 years after the date of the enactment of 
this subsection, and every 3 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 individuals entitled to benefits 
        under part A or enrolled under part B, or both, providers of 
        services, and suppliers and from the Medicare Beneficiary 
        Ombudsman with respect to such areas of inconsistency and 
        conflict; and
            ``(B) information from medicare contractors that tracks the 
        nature of written and telephone inquiries.
    ``(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--Contracting Reform

SEC. 511. 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 or 
                supplier (or class of such providers of services 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 or supplier or class 
                of provider of services or supplier.
            ``(4) Functions described.--The functions referred to in 
        paragraphs (1) and (2) are payment functions (including the 
        function of developing local coverage determinations, as 
        defined in section 1869(f)(2)(B)), provider services functions, 
        and functions relating to services furnished to individuals 
        entitled to benefits under part A or enrolled under part B, or 
        both, 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, 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.--
                Providing education and outreach to individuals 
                entitled to benefits under part A or enrolled under 
                part B, or both, and providing assistance to those 
                individuals with specific issues, concerns, or 
                problems.
                    ``(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 or 
                suppliers.
                    ``(E) Communication with providers.--Communicating 
                to providers of services and suppliers any information 
                or instructions furnished to the medicare 
                administrative contractor by the Secretary, and 
                facilitating communication between such providers and 
                suppliers and the Secretary.
                    ``(F) Provider education and technical 
                assistance.--Performing the functions relating to 
                provider education, training, and technical assistance.
                    ``(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 duties.--In entering into 
                contracts under this section, the Secretary shall 
                assure that functions of medicare administrative 
                contractors in carrying out activities under parts A 
                and B do not duplicate activities carried out under a 
                contract 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 section, the Federal Acquisition Regulation applies to 
        contracts under this section.
    ``(b) Contracting Requirements.--
            ``(1) Use of competitive procedures.--
                    ``(A) In general.--Except as provided in laws with 
                general applicability to Federal acquisition and 
                procurement or in subparagraph (B), the Secretary shall 
                use competitive procedures when entering into contracts 
                with medicare administrative contractors under this 
                section, taking into account performance quality as 
                well as price and other factors.
                    ``(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 5 years.
                    ``(C) Transfer of functions.--The Secretary may 
                transfer functions among medicare administrative 
                contractors consistent with the provisions of this 
                paragraph. The Secretary shall ensure that performance 
                quality is considered in such transfers. The Secretary 
                shall provide public notice (whether in the Federal 
                Register or otherwise) of any such transfer (including 
                a description of the functions so transferred, a 
                description of the providers of services and suppliers 
                affected by such transfer, and contact information for 
                the contractors involved).
                    ``(D) Incentives for quality.--The Secretary shall 
                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, 
        quality of services provided, and other matters as the 
        Secretary finds pertinent.
            ``(3) Performance requirements.--
                    ``(A) Development of specific performance 
                requirements.--
                            ``(i) In general.--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.
                            ``(ii) Consultation.--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.
                            ``(iii) Publication of standards.--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 developed under subparagraph 
                (A), 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.--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 the United States) of 
        a certifying officer designated as provided in paragraph (1) of 
        this subsection.
            ``(3) Liability of medicare administrative contractor.--
                    ``(A) In general.--No medicare administrative 
                contractor shall be liable to the United States for a 
                payment by a certifying or disbursing officer unless, 
                in connection with such payment, the medicare 
                administrative contractor acted with reckless disregard 
                of its obligations under its medicare administrative 
                contract or with intent to defraud the United States.
                    ``(B) 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.
            ``(4) Indemnification by secretary.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (D), 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 the 
                Secretary determines to be appropriate and as 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 judicial proceeding or by the 
                Secretary to be criminal in nature, fraudulent, or 
                grossly negligent. If indemnification is provided by 
                the Secretary with respect to a contractor before a 
                determination that such costs arose directly from such 
                conduct, the contractor shall reimburse the Secretary 
                for costs of indemnification.
                    ``(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 or 
                compromises.--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 such settlement or 
                compromise. Any indemnification under subparagraph (A) 
                with respect to amounts paid under a settlement or 
                compromise of a proceeding described in such 
                subparagraph are conditioned upon prior written 
                approval by the Secretary of the final settlement or 
                compromise.
                    ``(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 Regulation.''.
            (2) Consideration of incorporation of current law 
        standards.--In developing contract performance requirements 
        under section 1874A(b) of the Social Security Act, as inserted 
        by paragraph (1), the Secretary shall consider inclusion of the 
        performance standards described in sections 1816(f)(2) of such 
        Act (relating to timely processing of reconsiderations and 
        applications for exemptions) and section 1842(b)(2)(B) of such 
        Act (relating to timely review of determinations and fair 
        hearing requests), as such sections were in effect before the 
        date of the enactment of this Act.
    (b) Conforming Amendments to Section 1816 (Relating to Fiscal 
Intermediaries).--Section 1816 (42 U.S.C. 1395h) is amended as follows:
            (1) The heading is amended to read as follows:

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

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

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

            (2) Subsection (a) is amended to read as follows:
    ``(a) The administration of this part shall be conducted through 
contracts with medicare administrative contractors under section 
1874A.''.
            (3) Subsection (b) is amended--
                    (A) by striking paragraph (1);
                    (B) in paragraph (2)--
                            (i) by striking subparagraphs (A) and (B);
                            (ii) in subparagraph (C), by striking 
                        ``carriers'' and inserting ``medicare 
                        administrative contractors''; and
                            (iii) by striking subparagraphs (D) and 
                        (E);
                    (C) in paragraph (3)--
                            (i) in the matter before subparagraph (A), 
                        by striking ``Each such contract shall provide 
                        that the carrier'' and inserting ``The 
                        Secretary'';
                            (ii) by striking ``will'' the first place 
                        it appears in each of subparagraphs (A), (B), 
                        (F), (G), (H), and (L) and inserting ``shall'';
                            (iii) in subparagraph (B), in the matter 
                        before clause (i), by striking ``to the 
                        policyholders and subscribers of the carrier'' 
                        and inserting ``to the policyholders and 
                        subscribers of the medicare administrative 
                        contractor'';
                            (iv) by striking subparagraphs (C), (D), 
                        and (E);
                            (v) in subparagraph (H)--
                                    (I) by striking ``if it makes 
                                determinations or payments with respect 
                                to physicians' services,'' in the 
                                matter preceding clause (i); and
                                    (II) by striking ``carrier'' and 
                                inserting ``medicare administrative 
                                contractor'' in clause (i);
                            (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)(A), 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), in the matter preceding 
                subparagraph (A), by striking ``carrier'' and inserting 
                ``medicare administrative contractor''; and
                    (E) by striking paragraphs (5) and (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, 2005, 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 
                Act, 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, 2011.
            (2) General transition rules.--
                    (A) Authority to continue to enter into new 
                agreements and contracts and waiver of provider 
                nomination provisions during transition.--Prior to 
                October 1, 2005, 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 prior to October 1, 2005, 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 functions under current 
        contracts and agreements and under transition contracts.--
        Notwithstanding the amendments made by this section, 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 during the period that begins on the date of 
        the enactment of this Act and ends on October 1, 2011, and any 
        reference in such provisions to an agreement or contract shall 
        be deemed to include a contract under section 1874A of such 
        Act, as inserted by subsection (a)(1), that continues the 
        activities referred to in such provisions.
    (e) References.--On and after the effective date provided under 
subsection (d)(1), any reference to a fiscal intermediary or carrier 
under title XI or XVIII of the Social Security Act (or any regulation, 
manual instruction, interpretative rule, statement of policy, or 
guideline issued to carry out such titles) shall be deemed a reference 
to a 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) Plan for implementation.--By not later than October 1, 
        2004, the Secretary shall submit a report to Congress and the 
        Comptroller General of the United States that describes the 
        plan for implementation of the amendments made by this section. 
        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, 2008, 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.

SEC. 512. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDICARE 
              ADMINISTRATIVE CONTRACTORS.

    (a) In General.--Section 1874A, as added by section 511(a)(1), is 
amended by adding at the end the following new subsection:
    ``(e) Requirements for Information Security.--
            ``(1) Development of information security program.--A 
        medicare administrative contractor that performs the functions 
        referred to in subparagraphs (A) and (B) of subsection (a)(4) 
        (relating to determining and making payments) shall implement a 
        contractor-wide information security program to provide 
        information security for the operation and assets of the 
        contractor with respect to such functions under this title. An 
        information security program under this paragraph shall meet 
the requirements for information security programs imposed on Federal 
agencies under paragraphs (1) through (8) of section 3544(b) of title 
44, United States Code (other than the requirements under paragraphs 
(2)(D)(i), (5)(A), and (5)(B) of such section).
            ``(2) Independent audits.--
                    ``(A) Performance of annual evaluations.--Each year 
                a medicare administrative contractor that performs the 
                functions referred to in subparagraphs (A) and (B) of 
                subsection (a)(4) (relating to determining and making 
                payments) shall undergo an evaluation of the 
                information security of the contractor with respect to 
                such functions under this title. The evaluation shall--
                            ``(i) be performed by an entity that meets 
                        such requirements for independence as the 
                        Inspector General of the Department of Health 
                        and Human Services may establish; and
                            ``(ii) test the effectiveness of 
                        information security control techniques of an 
                        appropriate subset of the contractor's 
                        information systems (as defined in section 
                        3502(8) of title 44, United States Code) 
                        relating to such functions under this title and 
                        an assessment of compliance with the 
                        requirements of this subsection and related 
                        information security policies, procedures, 
                        standards and guidelines, including policies 
                        and procedures as may be prescribed by the 
                        Director of the Office of Management and Budget 
                        and applicable information security standards 
                        promulgated under section 11331 of title 40, 
                        United States Code.
                    ``(B) Deadline for initial evaluation.--
                            ``(i) New contractors.--In the case of a 
                        medicare administrative contractor covered by 
                        this subsection that has not previously 
                        performed the functions referred to in 
                        subparagraphs (A) and (B) of subsection (a)(4) 
                        (relating to determining and making payments) 
                        as a fiscal intermediary or carrier under 
                        section 1816 or 1842, the first independent 
                        evaluation conducted pursuant to subparagraph 
                        (A) shall be completed prior to commencing such 
                        functions.
                            ``(ii) Other contractors.--In the case of a 
                        medicare administrative contractor covered by 
                        this subsection that is not described in clause 
                        (i), the first independent evaluation conducted 
                        pursuant to subparagraph (A) shall be completed 
                        within 1 year after the date the contractor 
                        commences functions referred to in clause (i) 
                        under this section.
                    ``(C) Reports on evaluations.--
                            ``(i) To the department of health and human 
                        services.--The results of independent 
                        evaluations under subparagraph (A) shall be 
                        submitted promptly to the Inspector General of 
                        the Department of Health and Human Services and 
                        to the Secretary.
                            ``(ii) To congress.--The Inspector General 
                        of the Department of Health and Human Services 
                        shall submit to Congress annual reports on the 
                        results of such evaluations, including 
                        assessments of the scope and sufficiency of 
                        such evaluations.
                            ``(iii) Agency reporting.--The Secretary 
                        shall address the results of such evaluations 
                        in reports required under section 3544(c) of 
                        title 44, United States Code.''.
    (b) Application of Requirements to Fiscal Intermediaries and 
Carriers.--
            (1) In general.--The provisions of section 1874A(e)(2) of 
        the Social Security Act (other than subparagraph (B)), as added 
        by subsection (a), shall apply to each fiscal intermediary 
        under section 1816 of the Social Security Act (42 U.S.C. 1395h) 
        and each carrier under section 1842 of such Act (42 U.S.C. 
        1395u) in the same manner as they apply to medicare 
        administrative contractors under such provisions.
            (2) Deadline for initial evaluation.--In the case of such a 
        fiscal intermediary or carrier with an agreement or contract 
        under such respective section in effect as of the date of the 
        enactment of this Act, the first evaluation under section 
        1874A(e)(2)(A) of the Social Security Act (as added by 
        subsection (a)), pursuant to paragraph (1), shall be completed 
        (and a report on the evaluation submitted to the Secretary) by 
        not later than 1 year after such date.

                   Subtitle C--Education and Outreach

SEC. 521. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.

    (a) Coordination of Education Funding.--
            (1) In general.--Title XVIII 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 (g), including under section 
1893) in order to maximize the effectiveness of Federal education 
efforts for providers of services 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, 2004, 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 
        511(a)(1) and as amended by section 512(a), is amended by 
        adding at the end the following new subsection:
    ``(f) Incentives To Improve Contractor Performance in Provider 
Education and Outreach.--The Secretary shall use specific claims 
payment error rates or similar methodology of medicare administrative 
contractors in the processing or reviewing of medicare claims in order 
to give such contractors an incentive to implement effective education 
and outreach programs for providers of services and suppliers.''.
            (2) Application to fiscal intermediaries and carriers.--The 
        provisions of section 1874A(f) of the Social Security Act, as 
        added by paragraph (1), shall apply to each fiscal intermediary 
        under section 1816 of the Social Security Act (42 U.S.C. 1395h) 
        and each carrier under section 1842 of such Act (42 U.S.C. 
        1395u) in the same manner as they apply to medicare 
        administrative contractors under such provisions.
            (3) GAO report on adequacy of methodology.--Not later than 
        October 1, 2004, the Comptroller General of the United States 
        shall submit to Congress and to the Secretary a report on the 
        adequacy of the methodology under section 1874A(f) of the 
        Social Security Act, as added by paragraph (1), and shall 
        include in the report such recommendations as the Comptroller 
        General determines appropriate with respect to the methodology.
            (4) Report on use of methodology in assessing contractor 
        performance.--Not later than October 1, 2004, the Secretary 
        shall submit to Congress a report that describes how the 
        Secretary intends to use such methodology in assessing medicare 
        contractor performance in implementing effective education and 
        outreach programs, including whether to use such methodology as 
        a basis for performance bonuses. The report shall include an 
        analysis of the sources of identified errors and potential 
        changes in systems of contractors and rules of the Secretary 
        that could reduce claims error rates.
    (c) Provision of Access to and Prompt Responses From Medicare 
Administrative Contractors.--
            (1) In general.--Section 1874A, as added by section 
        511(a)(1) and as amended by section 512(a) and subsection (b), 
        is further amended by adding at the end the following new 
        subsection:
    ``(g) Communications With Beneficiaries, Providers of Services and 
Suppliers.--
            ``(1) Communication strategy.--The Secretary shall develop 
        a strategy for communications with individuals entitled to 
        benefits under part A or enrolled under part B, or both, and 
        with providers of services and suppliers under this title.
            ``(2) Response to written inquiries.--Each medicare 
        administrative contractor shall, for those providers of 
        services and suppliers which submit claims to the contractor 
        for claims processing and for those individuals entitled to 
        benefits under part A or enrolled under part B, or both, with 
        respect to whom claims are submitted for claims processing, 
        provide general written responses (which may be through 
        electronic transmission) in a clear, concise, and accurate 
        manner to inquiries of providers of services, suppliers, and 
        individuals entitled to benefits under part A or enrolled under 
        part B, or both, 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 each medicare administrative contractor shall 
        provide, for those providers of services and suppliers which 
        submit claims to the contractor for claims processing and for 
        those individuals entitled to benefits under part A or enrolled 
        under part B, or both, with respect to whom claims are 
        submitted for claims processing, a toll-free telephone number 
        at which such individuals, providers of services, 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 administrative 
                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 make public standards to monitor 
                        the accuracy, consistency, and timeliness of 
                        the information provided in response to written 
                        and telephone 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 
                        administrative 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) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are necessary to 
        carry out this subsection.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect October 1, 2004.
            (3) Application to fiscal intermediaries and carriers.--The 
        provisions of section 1874A(g) of the Social Security Act, as 
        added by paragraph (1), shall apply to each fiscal intermediary 
        under section 1816 of the Social Security Act (42 U.S.C. 1395h) 
        and each carrier under section 1842 of such Act (42 U.S.C. 
        1395u) in the same manner as they apply to medicare 
        administrative contractors under such provisions.
    (d) Improved Provider Education and Training.--
            (1) In general.--Section 1889, as added by subsection (a), 
        is amended by adding at the end the following new subsections:
    ``(b) Enhanced Education and Training.--
            ``(1) Additional resources.--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) such sums as may be 
        necessary for fiscal years beginning with fiscal year 2005.
            ``(2) Use.--The funds made available under paragraph (1) 
        shall be used to increase the conduct by medicare contractors 
        of education and training of providers of services and 
        suppliers regarding billing, coding, and other appropriate 
        items and may also be used to improve the accuracy, 
        consistency, and timeliness of contractor responses.
    ``(c) Tailoring Education and Training Activities for Small 
Providers or Suppliers.--
            ``(1) In general.--Insofar as a medicare contractor 
        conducts education and training activities, it shall tailor 
        such activities to meet the special needs of small providers of 
        services or suppliers (as defined in paragraph (2)). 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) a provider of services with fewer than 25 
                full-time-equivalent employees; or
                    ``(B) a supplier with fewer than 10 full-time-
                equivalent employees.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2004.
    (e) Requirement To Maintain Internet Websites.--
            (1) In general.--Section 1889, as added by subsection (a) 
        and as amended by subsection (d), is further amended by adding 
        at the end the following new subsection:
    ``(d) Internet Websites; FAQs.--The Secretary, and each medicare 
contractor insofar as it provides services (including claims 
processing) for providers of services or suppliers, shall maintain an 
Internet website which--
            ``(1) provides answers in an easily accessible format to 
        frequently asked questions, and
            ``(2) includes other published materials of the contractor,
that relate to providers of services and suppliers under the programs 
under this title (and title XI insofar as it relates to such 
programs).''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2004.
    (f) Additional Provider Education Provisions.--
            (1) In general.--Section 1889, as added by subsection (a) 
        and as amended by subsections (d) and (e), is further amended 
        by adding at the end the following new subsections:
    ``(e) 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 or 
suppliers for the purpose of conducting any type of audit or prepayment 
review.
    ``(f) 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.
    ``(g) Definitions.--For purposes of this section, the term 
`medicare contractor' includes the following:
            ``(1) A medicare administrative contractor with a contract 
        under section 1874A, including a fiscal intermediary with a 
        contract under section 1816 and a carrier with a contract under 
        section 1842.
            ``(2) An eligible entity with a contract under section 
        1893.
Such term does not include, with respect to activities of a specific 
provider of services or supplier an entity that has no authority under 
this title or title IX with respect to such activities and such 
provider of services or supplier.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of the enactment of this Act.

SEC. 522. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION PROGRAM.

    (a) Establishment.--
            (1) In general.--The Secretary shall establish a 
        demonstration program (in this section referred to as the 
        ``demonstration program'') under which technical assistance 
        described in paragraph (2) is made available, upon request and 
        on a voluntary basis, to small providers of services or 
        suppliers in order to improve compliance with the applicable 
requirements of the programs under the medicare program under title 
XVIII of the Social Security Act (including provisions of title XI of 
such Act insofar as they relate to such title and are not administered 
by the Office of the Inspector General of the Department of Health and 
Human Services).
            (2) Forms of technical assistance.--The technical 
        assistance described in this paragraph is--
                    (A) evaluation and recommendations regarding 
                billing and related systems; and
                    (B) information and assistance regarding policies 
                and procedures under the medicare program, including 
                coding and reimbursement.
            (3) Small providers of services or suppliers.--In this 
        section, the term ``small providers of services or suppliers'' 
        means--
                    (A) a provider of services with fewer than 25 full-
                time-equivalent employees; or
                    (B) a supplier with fewer than 10 full-time-
                equivalent employees.
    (b) Qualification of Contractors.--In conducting the demonstration 
program, the Secretary shall enter into contracts with qualified 
organizations (such as peer review organizations or entities described 
in section 1889(g)(2) of the Social Security Act, as inserted by 
section 521(f)(1)) with appropriate expertise with billing systems of 
the full range of providers of services and suppliers to provide the 
technical assistance. In awarding such contracts, the Secretary shall 
consider any prior investigations of the entity's work by the Inspector 
General of the Department of Health and Human Services or the 
Comptroller General of the United States.
    (c) Description of Technical Assistance.--The technical assistance 
provided under the demonstration program shall include a direct and in-
person examination of billing systems and internal controls of small 
providers of services or suppliers to determine program compliance and 
to suggest more efficient or effective means of achieving such 
compliance.
    (d) GAO Evaluation.--Not later than 2 years after the date the 
demonstration program is first implemented, the Comptroller General, in 
consultation with the Inspector General of the Department of Health and 
Human Services, shall conduct an evaluation of the demonstration 
program. The evaluation shall include a determination of whether claims 
error rates are reduced for small providers of services or suppliers 
who participated in the program and the extent of improper payments 
made as a result of the demonstration program. The Comptroller General 
shall submit a report to the Secretary and the Congress on such 
evaluation and shall include in such report recommendations regarding 
the continuation or extension of the demonstration program.
    (e) Financial Participation by Providers.--The provision of 
technical assistance to a small provider of services or supplier under 
the demonstration program is conditioned upon the small provider of 
services or supplier paying an amount estimated (and disclosed in 
advance of a provider's or supplier's participation in the program) to 
be equal to 25 percent of the cost of the technical assistance.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated, from amounts not otherwise appropriated in the Treasury, 
such sums as may be necessary to carry out this section.

SEC. 523. MEDICARE BENEFICIARY OMBUDSMAN.

    (a) In General.--Section 1808, as added and amended by section 500, 
is amended by adding at the end the following new subsection:
    ``(c) Medicare Beneficiary Ombudsman.--
            ``(1) In general.--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 education of (and assistance to) individuals 
        entitled to benefits under this title.
            ``(2) Duties.--The Medicare Beneficiary Ombudsman shall--
                    ``(A) receive complaints, grievances, and requests 
                for information submitted by individuals entitled to 
                benefits under part A or enrolled under part B, or 
                both, with respect to any aspect of the medicare 
                program;
                    ``(B) provide assistance with respect to 
                complaints, grievances, and requests referred to in 
                subparagraph (A), including--
                            ``(i) assistance in collecting relevant 
                        information for such individuals, to seek an 
                        appeal of a decision or determination made by a 
                        fiscal intermediary, carrier, MA organization, 
                        or the Secretary;
                            ``(ii) assistance to such individuals with 
                        any problems arising from disenrollment from an 
                        MA plan under part C; and
                            ``(iii) assistance to such individuals in 
                        presenting information under section 
                        1839(i)(4)(C) (relating to income-related 
                        premium adjustment); and
                    ``(C) 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.
        The Ombudsman shall not serve as an advocate for any increases 
        in payments or new coverage of services, but may identify 
        issues and problems in payment or coverage policies.
            ``(3) Working with health insurance counseling programs.--
        To the extent possible, the Ombudsman shall work with health 
        insurance counseling programs (receiving funding under section 
        4360 of the Omnibus Budget Reconciliation Act of 1990) to 
        facilitate the provision of information to individuals entitled 
        to benefits under part A or enrolled under part B, or both 
        regarding MA plans and changes to those plans. Nothing in this 
        paragraph shall preclude further collaboration between the 
Ombudsman and such programs.''.
    (b) Deadline for Appointment.--By not later than 1 year after the 
date of the enactment of this Act, the Secretary shall appoint the 
Medicare Beneficiary Ombudsman under section 1808(c) of the Social 
Security Act, as added by subsection (a).
    (c) Funding.--There are authorized to be appropriated to the 
Secretary (in appropriate part from the Federal Hospital Insurance 
Trust Fund, established under section 1817 of the Social Security Act 
(42 U.S.C. 1395i), and the Federal Supplementary Medical Insurance 
Trust Fund, established under section 1841 of such Act (42 U.S.C. 
1395t)) to carry out section 1808(c) of such Act (relating to the 
Medicare Beneficiary Ombudsman), as added by subsection (a), such sums 
as are necessary for fiscal year 2004 and each succeeding fiscal year.
    (d) Use of Central, Toll-Free Number (1-800-MEDICARE).--
            (1) Phone triage system; listing in medicare handbook 
        instead of other toll-free numbers.--Section 1804(b) (42 U.S.C. 
        1395b-2(b)) is amended by adding at the end the following: 
        ``The Secretary shall provide, through the toll-free telephone 
        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.''.
            (2) Monitoring accuracy.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study to monitor the accuracy 
                and consistency of information provided to individuals 
                entitled to benefits under part A or enrolled under 
                part B, or both, through the toll-free telephone number 
                1-800-MEDICARE, including an assessment of whether the 
                information provided is sufficient to answer questions 
                of such individuals. In conducting the study, the 
                Comptroller General shall examine the education and 
                training of the individuals providing information 
                through such number.
                    (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 subparagraph (A).

SEC. 524. 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 individuals 
entitled to benefits under part A of title XVIII of the Social Security 
Act, or enrolled under part B of such title, or both, regarding the 
medicare program 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 
        individuals referred to in subsection (a).
            (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 satisfaction of those 
                individuals referred to in subsection (a) with, the 
                assistance provided under the program; and
                    (B) the cost-effectiveness of providing beneficiary 
                assistance through out-stationing medicare specialists 
                at local offices of the Social Security Administration.
            (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 offices of the Social 
        Security Administration.

SEC. 525. INCLUSION OF ADDITIONAL INFORMATION IN NOTICES TO 
              BENEFICIARIES ABOUT SKILLED NURSING FACILITY BENEFITS.

    (a) In General.--The Secretary shall provide that in medicare 
beneficiary notices provided (under section 1806(a) of the Social 
Security Act, 42 U.S.C. 1395b-7(a)) with respect to the provision of 
post-hospital extended care services under part A of title XVIII of the 
Social Security Act, there shall be included information on the number 
of days of coverage of such services remaining under such part for the 
medicare beneficiary and spell of illness involved.
    (b) Effective Date.--Subsection (a) shall apply to notices provided 
during calendar quarters beginning more than 6 months after the date of 
the enactment of this Act.

SEC. 526. INFORMATION ON MEDICARE-CERTIFIED SKILLED NURSING FACILITIES 
              IN HOSPITAL DISCHARGE PLANS.

    (a) Availability of Data.--The Secretary shall publicly provide 
information that enables hospital discharge planners, medicare 
beneficiaries, and the public to identify skilled nursing facilities 
that are participating in the medicare program.
    (b) Inclusion of Information in Certain Hospital Discharge Plans.--
            (1) In general.--Section 1861(ee)(2)(D) (42 U.S.C. 
        1395x(ee)(2)(D)) is amended--
                    (A) by striking ``hospice services'' and inserting 
                ``hospice care and post-hospital extended care 
                services''; and
                    (B) by inserting before the period at the end the 
                following: ``and, in the case of individuals who are 
                likely to need post-hospital extended care services, 
                the availability of such services through facilities 
                that participate in the program under this title and 
                that serve the area in which the patient resides''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to discharge plans made on or after such date as 
        the Secretary shall specify, but not later than 6 months after 
        the date the Secretary provides for availability of information 
        under subsection (a).

                    Subtitle D--Appeals and Recovery

SEC. 531. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.

    (a) Transition Plan.--
            (1) In general.--Not later than April 1, 2004, 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 2005 and subsequent fiscal 
                years to carry out the functions transferred under the 
                plan.
                    (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 administrative law judges.--The 
                steps that should be taken to ensure the independence 
                of administrative law judges consistent with the 
                requirements of subsection (b)(2).
                    (I) Geographic distribution.--The steps that should 
                be taken to provide for an appropriate geographic 
                distribution of administrative law judges throughout 
                the United States to carry out subsection (b)(3).
                    (J) Hiring.--The steps that should be taken to hire 
                administrative law judges (and support staff) to carry 
                out subsection (b)(4).
                    (K) Performance standards.--The appropriateness of 
                establishing performance standards for administrative 
                law judges with respect to timelines for decisions in 
                cases under title XVIII of the Social Security Act 
                taking into account requirements under subsection 
                (b)(2) for the independence of such judges and 
                consistent with the applicable provisions of title 5, 
                United States Code relating to impartiality.
                    (L) Shared resources.--The steps that should be 
                taken to carry out subsection (b)(6) (relating to the 
                arrangements with the Commissioner of Social Security 
                to share office space, support staff, and other 
                resources, with appropriate reimbursement).
                    (M) Training.--The training that should be provided 
                to administrative law judges with respect to laws and 
                regulations under title XVIII of the Social Security 
                Act.
            (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 (42 U.S.C. 
        1395ff) (as amended by this Act).
            (4) GAO evaluation.--The Comptroller General of the United 
        States shall evaluate the plan and, not later than the date 
        that is 6 months after the date on which the plan is received 
        by the Comptroller General, shall submit to Congress a report 
        on such evaluation.
    (b) Transfer of Adjudication Authority.--
            (1) In general.--Not earlier than July 1, 2005, and not 
        later than October 1, 2005, the Commissioner of Social Security 
        and the Secretary shall implement the transition plan under 
        subsection (a) and transfer the administrative law judge 
        functions described in such subsection from the Social Security 
        Administration to the Secretary.
            (2) Assuring independence of judges.--The Secretary shall 
        assure the independence of administrative law judges performing 
        the administrative law judge functions transferred under 
        paragraph (1) from the Centers for Medicare & Medicaid Services 
        and its contractors. In order to assure such independence, the 
        Secretary shall place such judges in an administrative office 
        that is organizationally and functionally separate from such 
        Centers. Such judges shall report to, and be under the general 
        supervision of, the Secretary, but shall not report to, or be 
        subject to supervision by, another officer of the Department of 
        Health and Human Services.
            (3) Geographic distribution.--The Secretary shall provide 
        for an appropriate geographic distribution of administrative 
        law judges performing the administrative law judge functions 
        transferred under paragraph (1) throughout the United States to 
        ensure timely access to such judges.
            (4) Hiring authority.--Subject to the amounts provided in 
        advance in appropriations Acts, the Secretary shall have 
        authority to hire administrative law judges to hear such cases, 
        taking into consideration those judges with expertise in 
        handling medicare appeals and in a manner consistent with 
        paragraph (3), and to hire support staff for such judges.
            (5) Financing.--Amounts payable under law to the 
        Commissioner for administrative law judges performing the 
        administrative law judge functions transferred under paragraph 
        (1) from the Federal Hospital Insurance Trust Fund and the 
        Federal Supplementary Medical Insurance Trust Fund shall become 
        payable to the Secretary for the functions so transferred.
            (6) Shared resources.--The Secretary shall enter into such 
        arrangements with the Commissioner as may be appropriate with 
        respect to transferred functions of administrative law judges 
        to share office space, support staff, and other resources, with 
        appropriate reimbursement from the Trust Funds described in 
        paragraph (5).
    (c) Increased Financial Support.--In addition to any amounts 
otherwise appropriated, to ensure timely action on appeals before 
administrative law judges and the Departmental Appeals Board consistent 
with section 1869 of the Social Security Act (42 U.S.C. 1395ff) (as 
amended by this Act), there are authorized to be appropriated (in 
appropriate part from the Federal Hospital Insurance Trust Fund, 
established under section 1817 of the Social Security Act (42 U.S.C. 
1395i), and the Federal Supplementary Medical Insurance Trust Fund, 
established under section 1841 of such Act (42 U.S.C. 1395t)) to the 
Secretary such sums as are necessary for fiscal year 2005 and each 
subsequent fiscal year to--
            (1) increase the number of administrative law judges (and 
        their staffs) under subsection (b)(4);
            (2) improve education and training opportunities for 
        administrative law judges (and their staffs); and
            (3) increase the staff of the Departmental Appeals Board.
    (d) Conforming Amendment.--Section 1869(f)(2)(A)(i) (42 U.S.C. 
1395ff(f)(2)(A)(i)) is amended by striking ``of the Social Security 
Administration''.

SEC. 532. PROCESS FOR EXPEDITED ACCESS TO REVIEW.

    (a) Expedited Access to Judicial Review.--
            (1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)) is 
        amended--
                    (A) in paragraph (1)(A), by inserting ``, subject 
                to paragraph (2),'' before ``to judicial review of the 
                Secretary's final decision''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Expedited access to judicial review.--
                    ``(A) In general.--The Secretary shall establish a 
                process under which a provider of services or supplier 
                that furnishes an item or service or an individual 
                entitled to benefits under part A or enrolled under 
                part B, or both, 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 issues to be adjudicated 
                                are ones 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 or suppliers under this title.
                    ``(D) Review entity defined.--For purposes of this 
                subsection, the term `review entity' means an entity of 
                up to three reviewers who are administrative law judges 
                or members of the Departmental Appeals Board selected 
                for purposes of making determinations under this 
                paragraph.''.
            (2) 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).''.
    (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 individuals entitled to benefits 
under part A or enrolled under part B, or both, 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) Expedited Review of Certain Provider Agreement 
Determinations.--
            (1) Termination and certain other immediate remedies.--
        Section 1866(h)(1) (42 U.S.C. 1395cc(h)(1)), as amended by 
        subsection (b), is amended by adding at the end the following 
        new subparagraph:
    ``(C)(i) The Secretary shall develop and implement a process to 
expedite proceedings under this subsection in which--
            ``(I) the remedy of termination of participation has been 
        imposed;
            ``(II) a remedy described in clause (i) or (iii) of section 
        1819(h)(2)(B) has been imposed, but only if such remedy has 
        been imposed on an immediate basis; or
            ``(III) a determination has been made as to a finding of 
        substandard quality of care that results in the loss of 
        approval of a skilled nursing facility's nurse aide training 
        program.
    ``(ii) Under such process under clause (i), priority shall be 
provided in cases of termination described in clause (i)(I).
    ``(iii) 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.''.
            (2) Waiver of disapproval of nurse-aide training 
        programs.--Sections 1819(f)(2) and section 1919(f)(2) (42 
        U.S.C. 1395i-3(f)(2) and 1396r(f)(2)) are each amended--
                    (A) in subparagraph (B)(iii), by striking 
                ``subparagraph (C)'' and inserting ``subparagraphs (C) 
                and (D)''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(D) Waiver of disapproval of nurse-aide training 
                programs.--Upon application of a nursing facility, the 
                Secretary may waive the application of subparagraph 
                (B)(iii)(I)(c) if the imposition of the civil monetary 
                penalty was not related to the quality of care provided 
                to residents of the facility. Nothing in this 
                subparagraph shall be construed as eliminating any 
                requirement upon a facility to pay a civil monetary 
                penalty described in the preceding sentence.''.
            (3) 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, established under 
section 1817 of the Social Security Act (42 U.S.C. 1395i), and the 
Federal Supplementary Medical Insurance Trust Fund, established under 
section 1841 of such Act (42 U.S.C. 1395t)) to the Secretary such 
additional sums for fiscal year 2004 and each subsequent fiscal year as 
may be necessary. The purposes for which such amounts are available 
include increasing the number of administrative law judges (and their 
staffs) and the appellate level staff at the Departmental Appeals Board 
of the Department of Health and Human Services and educating such 
judges and staffs on long-term care issues.
    (d) Effective Date.--The amendments made by this section shall 
apply to appeals filed on or after October 1, 2004.

SEC. 533. REVISIONS TO MEDICARE APPEALS PROCESS.

    (a) Requiring Full and Early Presentation of Evidence.--
            (1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as 
        amended by section 532(a), is further amended by adding at the 
        end the following new paragraph:
            ``(3) Requiring full and early presentation of evidence by 
        providers.--A provider of services or supplier may not 
        introduce evidence in any appeal under this section that was 
        not presented at the reconsideration conducted by the qualified 
        independent contractor under subsection (c), unless there is 
        good cause which precluded the introduction of such evidence at 
        or before that reconsideration.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2004.
    (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 paragraphs:
            ``(4) Requirements of notice of determinations.--With 
        respect to an initial determination insofar as it results in a 
        denial of a claim for benefits--
                    ``(A) the written notice on the determination shall 
                include--
                            ``(i) the reasons for the determination, 
                        including whether a local medical review policy 
                        or a local coverage determination was used;
                            ``(ii) the procedures for obtaining 
                        additional information concerning the 
                        determination, including the information 
                        described in subparagraph (B); and
                            ``(iii) notification of the right to seek a 
                        redetermination or otherwise appeal the 
                        determination and instructions on how to 
                        initiate such a redetermination under this 
                        section;
                    ``(B) such written notice shall be provided in 
                printed form and written in a manner calculated to be 
                understood by the individual entitled to benefits under 
                part A or enrolled under part B, or both; and
                    ``(C) the individual provided such written notice 
                may obtain, upon request, information on the specific 
                provision of the policy, manual, or regulation used in 
                making the redetermination.
            ``(5) Requirements of notice of redeterminations.--With 
        respect to a redetermination insofar as it results in a denial 
        of a claim for benefits--
                    ``(A) the written notice on the redetermination 
                shall include--
                            ``(i) the specific reasons for the 
                        redetermination;
                            ``(ii) as appropriate, a summary of the 
                        clinical or scientific evidence used in making 
                        the redetermination;
                            ``(iii) a description of the procedures for 
                        obtaining additional information concerning the 
                        redetermination; and
                            ``(iv) notification of the right to appeal 
                        the redetermination and instructions on how to 
                        initiate such an appeal under this section;
                    ``(B) such written notice shall be provided in 
                printed form and written in a manner calculated to be 
                understood by the individual entitled to benefits under 
                part A or enrolled under part B, or both; and
                    ``(C) the individual provided such written notice 
                may obtain, upon request, information on the specific 
                provision of the policy, manual, or regulation used in 
                making the redetermination.''.
            (2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C. 
        1395ff(c)(3)(E)) is amended--
                    (A) by inserting ``be written in a manner 
                calculated to be understood by the individual entitled 
                to benefits under part A or enrolled under part B, or 
                both, and shall include (to the extent appropriate)'' 
                after ``in writing,''; and
                    (B) by inserting ``and a notification of the right 
                to appeal such determination and instructions on how to 
                initiate such appeal under this section'' after ``such 
                decision,''.
            (3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)) is 
        amended--
                    (A) in the heading, by inserting ``; Notice'' after 
                ``Secretary''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Notice.--Notice of the decision of an administrative 
        law judge shall be in writing in a manner calculated to be 
        understood by the individual entitled to benefits under part A 
or enrolled under part B, or both, 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) Submission of record for appeal.--Section 
        1869(c)(3)(J)(i) (42 U.S.C. 1395ff(c)(3)(J)(i)) is amended by 
        striking ``prepare'' and inserting ``submit'' and by striking 
        ``with respect to'' and all that follows through ``and relevant 
        policies''.
    (d) Qualified Independent Contractors.--
            (1) Eligibility requirements of qualified independent 
        contractors.--Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)) is 
        amended--
                    (A) in subparagraph (A), by striking ``sufficient 
                training and expertise in medical science and legal 
                matters'' and inserting ``sufficient medical, legal, 
                and other expertise (including knowledge of the program 
                under this title) and sufficient staffing''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(K) Independence requirements.--
                            ``(i) In general.--Subject to clause (ii), 
                        a qualified independent contractor shall not 
                        conduct any activities in a case unless 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.
                            ``(ii) Exception for reasonable 
                        compensation.--Nothing in clause (i) shall be 
                        construed to prohibit receipt by a qualified 
                        independent contractor of compensation from the 
                        Secretary for the conduct of activities under 
                        this section if the compensation is provided 
                        consistent with clause (iii).
                            ``(iii) Limitations on entity 
                        compensation.--Compensation provided by the 
                        Secretary to a qualified independent contractor 
                        in connection with reviews under this section 
                        shall not be contingent on any decision 
                        rendered by the contractor or by any reviewing 
                        professional.''.
            (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'), a reviewing 
                professional meets the qualifications described in 
                paragraph (4) and, where a claim is regarding the 
                furnishing of treatment by a physician (allopathic or 
                osteopathic) or the provision of items or services by a 
                physician (allopathic or osteopathic), a reviewing 
                professional shall be a physician (allopathic or 
                osteopathic).
            ``(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.
                    ``(B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit an individual, solely on the 
                        basis of a participation agreement with a 
                        fiscal intermediary, carrier, or other 
                        contractor, from serving as a reviewing 
                        professional if--
                                    ``(I) the individual is not 
                                involved in the provision of items or 
                                services in the case under review;
                                    ``(II) the fact of such an 
                                agreement is disclosed to the Secretary 
                                and the individual entitled to benefits 
                                under part A or enrolled under part B, 
                                or both, or such individual's 
                                authorized representative, and neither 
                                party objects; and
                                    ``(III) the 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 having such 
                        staff privileges if the existence of such 
                        privileges is disclosed to the Secretary and 
                        such individual (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).
                For purposes of this paragraph, the term `participation 
                agreement' means an agreement relating to the provision 
                of health care services by the individual and does not 
                include the provision of services as a reviewer under 
                this subsection.
            ``(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) a physician (allopathic or osteopathic) who 
                is appropriately credentialed or licensed in one or 
                more States to deliver health care services and has 
                medical expertise in the field of practice that is 
                appropriate for the items or services at issue; or
                    ``(B) a health care professional who is legally 
                authorized in one or more States (in accordance with 
                State law or the State regulatory mechanism provided by 
                State law) to furnish the health care items or services 
                at issue and has medical expertise in the field of 
                practice that is appropriate for such items or 
                services.
            ``(5) Related party defined.--For purposes of this section, 
        the term `related party' means, with respect to a case under 
        this title involving a specific individual entitled to benefits 
        under part A or enrolled under part B, or both, 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) Reducing minimum number of qualified independent 
        contractors.--Section 1869(c)(4) (42 U.S.C. 1395ff(c)(4)) is 
        amended by striking ``not fewer than 12 qualified independent 
        contractors under this subsection'' and inserting ``with a 
        sufficient number of qualified independent contractors (but not 
        fewer than 4 such contractors) to conduct reconsiderations 
        consistent with the timeframes applicable under this 
        subsection''.
            (4) Effective date.--The amendments made by paragraphs (1) 
        and (2) 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).
            (5) Transition.--In applying section 1869(g) of the Social 
        Security Act (as added by paragraph (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. 534. PREPAYMENT REVIEW.

    (a) In General.--Section 1874A, as added by section 511(a)(1) and 
as amended by sections 912(b), 921(b)(1), and 921(c)(1), is further 
amended by adding at the end the following new subsection:
    ``(h) Conduct of Prepayment Review.--
            ``(1) Conduct of random prepayment review.--
                    ``(A) In general.--A medicare administrative 
                contractor may conduct random prepayment review only to 
                develop a contractor-wide or program-wide claims 
                payment error rates or under such additional 
                circumstances as may be provided under regulations, 
                developed in consultation with providers of services 
                and suppliers.
                    ``(B) Use of standard protocols when conducting 
                prepayment reviews.--When a medicare administrative 
                contractor conducts a random prepayment review, the 
                contractor may conduct such review only in accordance 
                with a standard protocol for random prepayment audits 
                developed by the Secretary.
                    ``(C) Construction.--Nothing in this paragraph 
                shall be construed as preventing the denial of payments 
                for claims actually reviewed under a random prepayment 
                review.
                    ``(D) Random prepayment review.--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.
            ``(2) Limitations on non-random prepayment review.--
                    ``(A) Limitations on initiation of non-random 
                prepayment review.--A medicare administrative 
                contractor may not initiate non-random prepayment 
                review of a provider of services or supplier based on 
                the initial identification by that provider of services 
                or supplier of an improper billing practice unless 
                there is a likelihood of sustained or high level of 
payment error under section 1893(f)(3)(A).
                    ``(B) Termination of non-random prepayment 
                review.--The Secretary shall issue regulations relating 
                to the termination, including termination dates, of 
                non-random prepayment review. Such regulations may vary 
                such a termination date based upon the differences in 
                the circumstances triggering prepayment review.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in this subsection, the 
        amendment made by subsection (a) shall take effect 1 year after 
        the date of the enactment of this Act.
            (2) Deadline for promulgation of certain regulations.--The 
        Secretary shall first issue regulations under section 1874A(h) 
        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(h)(1)(B) 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.
    (c) Application to Fiscal Intermediaries and Carriers.--The 
provisions of section 1874A(h) of the Social Security Act, as added by 
subsection (a), shall apply to each fiscal intermediary under section 
1816 of the Social Security Act (42 U.S.C. 1395h) and each carrier 
under section 1842 of such Act (42 U.S.C. 1395u) in the same manner as 
they apply to medicare administrative contractors under such 
provisions.

SEC. 535. RECOVERY OF OVERPAYMENTS.

    (a) In General.--Section 1893 (42 U.S.C. 1395ddd) is amended by 
adding at the end the following new subsection:
    ``(f) Recovery of Overpayments.--
            ``(1) Use of repayment plans.--
                    ``(A) In general.--If the repayment, within 30 days 
                by a provider of services or supplier, of an 
                overpayment under this title would constitute a 
                hardship (as described in subparagraph (B)), subject to 
                subparagraph (C), upon request of the provider of 
                services or supplier the Secretary shall enter into a 
                plan with the provider of services or supplier for the 
                repayment (through offset or otherwise) of such 
                overpayment over a period of at least 6 months but not 
                longer than 3 years (or not longer than 5 years in the 
                case of extreme hardship, as determined by the 
                Secretary). Interest shall accrue on the balance 
                through the period of repayment. Such plan shall meet 
                terms and conditions determined to be appropriate by 
                the Secretary.
                    ``(B) Hardship.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the repayment of an 
                        overpayment (or overpayments) within 30 days is 
                        deemed to constitute a hardship if--
                                    ``(I) in the case of a provider of 
                                services that files cost reports, the 
                                aggregate amount of the overpayments 
                                exceeds 10 percent of the amount paid 
                                under this title to the provider of 
                                services for the cost reporting period 
                                covered by the most recently submitted 
                                cost report; or
                                    ``(II) in the case of another 
                                provider of services or supplier, the 
                                aggregate amount of the overpayments 
                                exceeds 10 percent of the amount paid 
                                under this title to the provider of 
                                services or supplier for the previous 
                                calendar year.
                            ``(ii) Rule of application.--The Secretary 
                        shall establish rules for the application of 
                        this subparagraph in the case of a provider of 
                        services or supplier that was not paid under 
                        this title during the previous year or was paid 
                        under this title only during a portion of that 
                        year.
                            ``(iii) Treatment of previous 
                        overpayments.--If a provider of services or 
                        supplier has entered into a repayment plan 
                        under subparagraph (A) with respect to a 
                        specific overpayment amount, such payment 
                        amount under the repayment plan shall not be 
                        taken into account under clause (i) with 
                        respect to subsequent overpayment amounts.
                    ``(C) Exceptions.--Subparagraph (A) shall not apply 
                if--
                            ``(i) the Secretary has reason to suspect 
                        that the provider of services 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 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) In general.--In the case of a provider of 
                services or supplier that is determined to have 
                received an overpayment under this title and that seeks 
                a reconsideration by a qualified independent contractor 
                on such determination under section 1869(b)(1), the 
                Secretary may not take any action (or authorize any 
                other person, including any medicare contractor, as 
                defined in subparagraph (C)) to recoup the overpayment 
                until the date the decision on the reconsideration has 
                been rendered. If the provisions of section 1869(b)(1) 
(providing for such a reconsideration by a qualified independent 
contractor) are not in effect, in applying the previous sentence any 
reference to such a reconsideration shall be treated as a reference to 
a redetermination by the fiscal intermediary or carrier involved.
                    ``(B) Collection with interest.--Insofar as the 
                determination on such appeal is against the provider of 
                services or supplier, interest on the overpayment shall 
                accrue on and after the date of the original notice of 
                overpayment. Insofar as such determination against the 
                provider of services or supplier is later reversed, the 
                Secretary shall provide for repayment of the amount 
                recouped plus interest at the same rate as would apply 
                under the previous sentence for the period in which the 
                amount was recouped.
                    ``(C) Medicare contractor defined.--For purposes of 
                this subsection, the term `medicare contractor' has the 
                meaning given such term in section 1889(g).
            ``(3) Limitation on use of extrapolation.--A medicare 
        contractor may not use extrapolation to determine overpayment 
        amounts to be recovered by recoupment, offset, or otherwise 
        unless the Secretary determines that--
                    ``(A) there is a sustained or high level of payment 
                error; or
                    ``(B) documented educational intervention has 
                failed to correct the payment error.
There shall be no administrative or judicial review under section 1869, 
section 1878, or otherwise, of determinations by the Secretary of 
sustained or high levels of payment errors under this paragraph.
            ``(4) Provision of supporting documentation.--In the case 
        of a provider of services or supplier with respect to which 
        amounts were previously overpaid, a medicare contractor may 
        request the periodic production of records or supporting 
        documentation for a limited sample of submitted claims to 
        ensure that the previous practice is not continuing.
            ``(5) 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 or supplier a consent settlement, 
                the Secretary shall--
                            ``(i) communicate to the provider of 
                        services or supplier--
                                    ``(I) 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;
                                    ``(II) the nature of the problems 
                                identified in such evaluation; and
                                    ``(III) the steps that the provider 
                                of services or supplier should take to 
                                address the problems; and
                            ``(ii) provide for a 45-day period during 
                        which the provider of services 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 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 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 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 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 or supplier agrees not to appeal the claims 
                involved.
            ``(6) Notice of over-utilization of codes.--The Secretary 
        shall establish, in consultation with organizations 
        representing the classes of providers of services and 
        suppliers, a process under which the Secretary provides for 
        notice to classes of providers of services and suppliers served 
        by the contractor in cases in which the contractor has 
        identified that particular billing codes may be overutilized by 
        that class of providers of services or suppliers under the 
        programs under this title (or provisions of title XI insofar as 
        they relate to such programs).
            ``(7) 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 or supplier under this title, the 
                contractor shall provide the provider of services 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 or supplier under this 
                title, the contractor shall--
                            ``(i) give the provider of services or 
                        supplier a full review and explanation of the 
                        findings of the audit in a manner that is 
                        understandable to the provider of services or 
                        supplier and permits the development of an 
                        appropriate corrective action plan;
                            ``(ii) inform the provider of services or 
                        supplier of the appeal rights under this title 
                        as well as consent settlement options (which 
                        are at the discretion of the Secretary);
                            ``(iii) give the provider of services or 
                        supplier an opportunity to provide additional 
                        information to the contractor; and
                            ``(iv) take into account information 
                        provided, on a timely basis, by the provider of 
                        services or supplier under clause (iii).
                    ``(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.
            ``(8) Standard methodology for probe sampling.--The 
        Secretary shall establish a standard methodology for medicare 
        contractors to use in selecting a sample of claims for review 
        in the case of an abnormal billing pattern.''.
    (b) Effective Dates and Deadlines.--
            (1) Use of repayment plans.--Section 1893(f)(1) of the 
        Social Security Act, as added by subsection (a), shall apply to 
        requests for repayment plans made after the date of the 
        enactment of this Act.
            (2) Limitation on recoupment.--Section 1893(f)(2) of the 
        Social Security Act, as added by subsection (a), shall apply to 
        actions taken after the date of the enactment of this Act.
            (3) Use of extrapolation.--Section 1893(f)(3) of the Social 
        Security Act, as added by subsection (a), shall apply to 
        statistically valid random samples initiated after the date 
        that is 1 year after the date of the enactment of this Act.
            (4) Provision of supporting documentation.--Section 
        1893(f)(4) of the Social Security Act, as added by subsection 
        (a), shall take effect on the date of the enactment of this 
        Act.
            (5) Consent settlement.--Section 1893(f)(5) 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.
            (6) Notice of overutilization.--Not later than 1 year after 
        the date of the enactment of this Act, the Secretary shall 
        first establish the process for notice of overutilization of 
        billing codes under section 1893A(f)(6) of the Social Security 
        Act, as added by subsection (a).
            (7) Payment audits.--Section 1893A(f)(7) of the Social 
        Security Act, as added by subsection (a), shall apply to audits 
        initiated after the date of the enactment of this Act.
            (8) Standard for abnormal billing patterns.--Not later than 
        1 year after the date of the enactment of this Act, the 
        Secretary shall first establish a standard methodology for 
        selection of sample claims for abnormal billing patterns under 
        section 1893(f)(8) of the Social Security Act, as added by 
        subsection (a).

SEC. 536. PROVIDER ENROLLMENT PROCESS; RIGHT OF APPEAL.

    (a) In General.--Section 1866 (42 U.S.C. 1395cc) is amended--
            (1) by adding at the end of the heading the following: ``; 
        enrollment processes''; and
            (2) by adding at the end the following new subsection:
    ``(j) Enrollment Process for Providers of Services and Suppliers.--
            ``(1) Enrollment process.--
                    ``(A) In general.--The Secretary shall establish by 
                regulation a process for the enrollment of providers of 
                services and suppliers under this title.
                    ``(B) Deadlines.--The Secretary shall establish by 
                regulation procedures under which there are deadlines 
                for actions on applications for enrollment (and, if 
                applicable, renewal of enrollment). The Secretary shall 
                monitor the performance of medicare administrative 
                contractors in meeting the deadlines established under 
                this subparagraph.
                    ``(C) Consultation before changing provider 
                enrollment forms.--The Secretary shall consult with 
                providers of services and suppliers before making 
                changes in the provider enrollment forms required of 
                such providers and suppliers to be eligible to submit 
                claims for which payment may be made under this title.
            ``(2) Hearing rights in cases of denial or non-renewal.--A 
        provider of services or supplier whose application to enroll 
        (or, if applicable, to renew enrollment) under this title is 
        denied may have a hearing and judicial review of such denial 
        under the procedures that apply under subsection (h)(1)(A) to a 
        provider of services that is dissatisfied with a determination 
        by the Secretary.''.
    (b) Effective Dates.--
            (1) Enrollment process.--The Secretary shall provide for 
        the establishment of the enrollment process under section 
        1866(j)(1) of the Social Security Act, as added by subsection 
        (a)(2), within 6 months after the date of the enactment of this 
        Act.
            (2) Consultation.--Section 1866(j)(1)(C) of the Social 
        Security Act, as added by subsection (a)(2), shall apply with 
        respect to changes in provider enrollment forms made on or 
        after January 1, 2004.
            (3) Hearing rights.--Section 1866(j)(2) of the Social 
        Security Act, as added by subsection (a)(2), shall apply to 
        denials occurring on or after such date (not later than 1 year 
after the date of the enactment of this Act) as the Secretary 
specifies.

SEC. 537. PROCESS FOR CORRECTION OF MINOR ERRORS AND OMISSIONS WITHOUT 
              PURSUING APPEALS PROCESS.

    (a) Claims.--The Secretary shall develop, in consultation with 
appropriate medicare contractors (as defined in section 1889(g) of the 
Social Security Act, as inserted by section 301(a)(1)) and 
representatives of providers of services 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 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. 538. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND SERVICES; 
              ADVANCE BENEFICIARY NOTICES.

    (a) In General.--Section 1869 (42 U.S.C. 1395ff(b)), as amended by 
section 533(d)(2)(B), is further amended by adding at the end the 
following new subsection:
    ``(h) Prior Determination Process for Certain Items and Services.--
            ``(1) Establishment of process.--
                    ``(A) In general.--With respect to a medicare 
                administrative contractor that has a contract under 
                section 1874A that provides for making payments under 
                this title with respect to physicians' services (as 
                defined in section 1848(j)(3)), the Secretary shall 
                establish a prior determination process that meets the 
                requirements of this subsection and that shall be 
                applied by such contractor in the case of eligible 
                requesters.
                    ``(B) Eligible requester.--For purposes of this 
                subsection, each of the following shall be an eligible 
                requester:
                            ``(i) A participating physician, but only 
                        with respect to physicians' services to be 
                        furnished to an individual who is entitled to 
                        benefits under this title and who has consented 
                        to the physician making the request under this 
                        subsection for those physicians' services.
                            ``(ii) An individual entitled to benefits 
                        under this title, but only with respect to a 
                        physicians' service for which the individual 
                        receives, from a physician, an advance 
                        beneficiary notice under section 1879(a).
            ``(2) Secretarial flexibility.--The Secretary shall 
        establish by regulation reasonable limits on the physicians' 
        services for which a prior determination of coverage may be 
        requested under this subsection. In establishing such limits, 
        the Secretary may consider the dollar amount involved with 
        respect to the physicians' service, administrative costs and 
        burdens, and other relevant factors.
            ``(3) Request for prior determination.--
                    ``(A) In general.--Subject to paragraph (2), under 
                the process established under this subsection an 
                eligible requester may submit to the contractor a 
                request for a determination, before the furnishing of a 
                physicians' service, as to whether the physicians' 
                service is covered under this title consistent with the 
                applicable requirements of section 1862(a)(1)(A) 
                (relating to medical necessity).
                    ``(B) Accompanying documentation.--The Secretary 
                may require that the request be accompanied by a 
                description of the physicians' service, supporting 
                documentation relating to the medical necessity for the 
                physicians' service, and any other appropriate 
                documentation. In the case of a request submitted by an 
                eligible requester who is described in paragraph 
                (1)(B)(ii), the Secretary may require that the request 
                also be accompanied by a copy of the advance 
                beneficiary notice involved.
            ``(4) Response to request.--
                    ``(A) In general.--Under such process, the 
                contractor shall provide the eligible requester with 
                written notice of a determination as to whether--
                            ``(i) the physicians' service is so 
                        covered;
                            ``(ii) the physicians' service is not so 
                        covered; or
                            ``(iii) the contractor lacks sufficient 
                        information to make a coverage determination 
                        with respect to the physicians' service.
                    ``(B) Contents of notice for certain 
                determinations.--
                            ``(i) Noncoverage.--If the contractor makes 
                        the determination described in subparagraph 
                        (A)(ii), the contractor shall include in the 
                        notice a brief explanation of the basis for the 
                        determination, including on what national or 
                        local coverage or noncoverage determination (if 
                        any) the determination is based, and a 
                        description of any applicable rights under 
                        subsection (a).
                            ``(ii) Insufficient information.--If the 
                        contractor makes the determination described in 
                        subparagraph (A)(iii), the contractor shall 
                        include in the notice a description of the 
                        additional information required to make the 
                        coverage determination.
                    ``(C) Deadline to respond.--Such notice shall be 
                provided within the same time period as the time period 
                applicable to the contractor providing notice of 
                initial determinations on a claim for benefits under 
                subsection (a)(2)(A).
                    ``(D) Informing beneficiary in case of physician 
                request.--In the case of a request by a participating 
                physician under paragraph (1)(B)(i), the process shall 
provide that the individual to whom the physicians' service is proposed 
to be furnished shall be informed of any determination described in 
subparagraph (A)(ii) (relating to a determination of non-coverage) and 
the right (referred to in paragraph (6)(B)) to obtain the physicians' 
service and have a claim submitted for the physicians' service.
            ``(5) Binding nature of positive determination.--If the 
        contractor makes the determination described in paragraph 
        (4)(A)(i), such determination shall be binding on the 
        contractor in the absence of fraud or evidence of 
        misrepresentation of facts presented to the contractor.
            ``(6) Limitation on further review.--
                    ``(A) In general.--Contractor determinations 
                described in paragraph (4)(A)(ii) or (4)(A)(iii) 
                (relating to pre-service claims) are not subject to 
                further administrative appeal or judicial review under 
                this section or otherwise.
                    ``(B) Decision not to seek prior determination or 
                negative determination does not impact right to obtain 
                services, seek reimbursement, or appeal rights.--
                Nothing in this subsection shall be construed as 
                affecting the right of an individual who--
                            ``(i) decides not to seek a prior 
                        determination under this subsection with 
                        respect to physicians' services; or
                            ``(ii) seeks such a determination and has 
                        received a determination described in paragraph 
                        (4)(A)(ii),
                from receiving (and submitting a claim for) such 
                physicians' services and from obtaining administrative 
                or judicial review respecting such claim under the 
                other applicable provisions of this section. Failure to 
                seek a prior determination under this subsection with 
                respect to physicians' service shall not be taken into 
                account in such administrative or judicial review.
                    ``(C) No prior determination after receipt of 
                services.--Once an individual is provided physicians' 
                services, there shall be no prior determination under 
                this subsection with respect to such physicians' 
                services.''.
    (b) Effective Date; Sunset; Transition.--
            (1) Effective date.--The Secretary shall establish the 
        prior determination process under the amendment made by 
        subsection (a) in such a manner as to provide for the 
        acceptance of requests for determinations under such process 
        filed not later than 18 months after the date of the enactment 
        of this Act.
            (2) Sunset.--Such prior determination process shall not 
        apply to requests filed after the end of the 5-year period 
        beginning on the first date on which requests for 
        determinations under such process are accepted.
            (3) Transition.--During the period in which the amendment 
        made by subsection (a) has become effective but contracts are 
        not provided under section 1874A of the Social Security Act 
        with medicare administrative contractors, any reference in 
        section 1869(g) of such Act (as added by such amendment) to 
        such a contractor is deemed a reference to a fiscal 
        intermediary or carrier with an agreement under section 1816, 
        or contract under section 1842, respectively, of such Act.
            (4) Limitation on application to sgr.--For purposes of 
        applying section 1848(f)(2)(D) of the Social Security Act (42 
        U.S.C. 1395w-4(f)(2)(D)), the amendment made by subsection (a) 
        shall not be considered to be a change in law or regulation.
    (c) Provisions Relating to Advance Beneficiary Notices; Report on 
Prior Determination Process.--
            (1) Data collection.--The Secretary shall establish a 
        process for the collection of information on the instances in 
        which an advance beneficiary notice (as defined in paragraph 
        (5)) has been provided and on instances in which a beneficiary 
        indicates on such a notice that the beneficiary does not intend 
        to seek to have the item or service that is the subject of the 
        notice furnished.
            (2) Outreach and education.--The Secretary shall establish 
        a program of outreach and education for beneficiaries and 
        providers of services and other persons on the appropriate use 
        of advance beneficiary notices and coverage policies under the 
        medicare program.
            (3) GAO report on use of advance beneficiary notices.--Not 
        later than 18 months after the date on which section 1869(h) of 
        the Social Security Act (as added by subsection (a)) takes 
        effect, the Comptroller General of the United States shall 
        submit to Congress a report on the use of advance beneficiary 
        notices under title XVIII of such Act. Such report shall 
        include information concerning the providers of services and 
        other persons that have provided such notices and the response 
        of beneficiaries to such notices.
            (4) GAO report on use of prior determination process.--Not 
        later than 36 months after the date on which section 1869(h) of 
        the Social Security Act (as added by subsection (a)) takes 
        effect, the Comptroller General of the United States shall 
        submit to Congress a report on the use of the prior 
        determination process under such section. Such report shall 
        include--
                    (A) information concerning--
                            (i) the number and types of procedures for 
                        which a prior determination has been sought;
                            (ii) determinations made under the process;
                            (iii) the percentage of beneficiaries 
                        prevailing;
                            (iv) in those cases in which the 
                        beneficiaries do not prevail, the reasons why 
                        such beneficiaries did not prevail; and
                            (v) changes in receipt of services 
                        resulting from the application of such process;
                    (B) an evaluation of whether the process was useful 
                for physicians (and other suppliers) and beneficiaries, 
                whether it was timely, and whether the amount of 
information required was burdensome to physicians and beneficiaries; 
and
                    (C) recommendations for improvements or 
                continuation of such process.
            (5) Advance beneficiary notice defined.--In this 
        subsection, the term ``advance beneficiary notice'' means a 
        written notice provided under section 1879(a) of the Social 
        Security Act (42 U.S.C. 1395pp(a)) to an individual entitled to 
        benefits under part A or enrolled under part B of title XVIII 
        of such Act before items or services are furnished under such 
        part in cases where a provider of services or other person that 
        would furnish the item or service believes that payment will 
        not be made for some or all of such items or services under 
        such title.

SEC. 539. 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 or 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. 540. REVISIONS TO APPEALS TIMEFRAMES AND AMOUNTS.

    (a) Timeframes.--Section 1869 (42 U.S.C. 1395ff) is amended--
            (1) in subsection (a)(3)(C)(ii), by striking ``30-day 
        period'' each place it appears and inserting ``60-day period''; 
        and
            (2) in subsection (c)(3)(C)(i), by striking ``30-day 
        period'' and inserting ``60-day period''.
    (b) Amounts.--
            (1) In general.--Section 1869(b)(1)(E) (42 U.S.C. 
        1395ff(b)(1)(E)) is amended by adding at the end the following 
        new clause:
                            ``(iii) Adjustment of dollar amounts.--For 
                        requests for hearings or judicial review made 
                        in a year after 2004, the dollar amounts 
                        specified in clause (i) shall be equal to such 
                        dollar amounts increased by the percentage 
                        increase in the medical care component of the 
                        consumer price index for all urban consumers 
                        (U.S. city average) for July 2003 to the July 
                        preceding the year involved. Any amount 
                        determined under the previous sentence that is 
                        not a multiple of $10 shall be rounded to the 
                        nearest multiple of $10.''.
            (2) Conforming amendments.--(A) Section 1852(g)(5) (42 
        U.S.C. 1395w-22(g)(5)) is amended by adding at the end the 
        following: ``The provisions of section 1869(b)(1)(E)(iii) shall 
        apply with respect to dollar amounts specified in the first 2 
        sentences of this paragraph in the same manner as they apply to 
        the dollar amounts specified in section 1869(b)(1)(E)(i).''.
            (B) Section 1876(b)(5)(B) (42 U.S.C. 1395mm(b)(5)(B)) is 
        amended by adding at the end the following: ``The provisions of 
        section 1869(b)(1)(E)(iii) shall apply with respect to dollar 
        amounts specified in the first 2 sentences of this subparagraph 
        in the same manner as they apply to the dollar amounts 
        specified in section 1869(b)(1)(E)(i).''.

SEC. 540A. MEDIATION PROCESS FOR LOCAL COVERAGE DETERMINATIONS.

    (a) In General.--Section 1869 (42 U.S.C. 1395ff), as amended by 
section 538(a), is amended by adding at the end the following new 
subsection:
    ``(i) Mediation Process for Local Coverage Determinations.--
            ``(1) Establishment of process.--The Secretary shall 
        establish a mediation process under this subsection through the 
        use of a physician trained in mediation and employed by the 
        Centers for Medicare & Medicaid Services.
            ``(2) Responsibility of mediator.--Under the process 
        established in paragraph (1), such a mediator shall mediate in 
        disputes between groups representing providers of services, 
        suppliers (as defined in section 1861(d)), and the medical 
        director for a medicare administrative contractor whenever the 
        regional administrator (as defined by the Secretary) involved 
        determines that there was a systematic pattern and a large 
        volume of complaints from such groups regarding decisions of 
        such director or there is a complaint from the co-chair of the 
        advisory committee for that contractor to such regional 
        administrator regarding such dispute.''.
    (b) Inclusion in MAC Contracts.--Section 1874A(b)(3)(A)(i), as 
added by section 511(a)(1), is amended by adding at the end the 
following: ``Such requirements shall include specific performance 
duties expected of a medical director of a medicare administrative 
contractor, including requirements relating to professional relations 
and the availability of such director to conduct medical determination 
activities within the jurisdiction of such a contractor.''.

                  Subtitle E--Miscellaneous Provisions

SEC. 541. POLICY DEVELOPMENT REGARDING EVALUATION AND MANAGEMENT (E & 
              M) DOCUMENTATION GUIDELINES.

    (a) In General.--The Secretary may not implement any new or 
modified documentation guidelines (which for purposes of this section 
includes clinical examples) for evaluation and management physician 
services under the title XVIII of the Social Security Act on or after 
the date of the enactment of this Act unless the Secretary--
            (1) has developed the guidelines in collaboration with 
        practicing physicians (including both generalists and 
        specialists) and provided for an assessment of the proposed 
        guidelines by the physician community;
            (2) has established a plan that contains specific goals, 
        including a schedule, for improving the use of such guidelines;
            (3) has conducted appropriate and representative pilot 
        projects under subsection (b) to test such guidelines;
            (4) finds, based on reports submitted under subsection 
        (b)(5) with respect to pilot projects conducted for such or 
        related guidelines, that the objectives described in subsection 
        (c) will be met in the implementation of such guidelines; and
            (5) has established, and is implementing, a program to 
        educate physicians on the use of such guidelines and that 
        includes appropriate outreach.
The Secretary shall make changes to the manner in which existing 
evaluation and management documentation guidelines are implemented to 
reduce paperwork burdens on physicians.
    (b) Pilot Projects To Test Modified or New Evaluation and 
Management Documentation Guidelines.--
            (1) In general.--With respect to proposed new or modified 
        documentation guidelines referred to in subsection (a), the 
        Secretary shall conduct under this subsection appropriate and 
        representative pilot projects to test the proposed guidelines.
            (2) Length and consultation.--Each pilot project under this 
        subsection shall--
                    (A) be voluntary;
                    (B) be of sufficient length as determined by the 
                Secretary (but in no case to exceed 1 year) to allow 
                for preparatory physician and medicare contractor 
                education, analysis, and use and assessment of 
                potential evaluation and management guidelines; and
                    (C) be conducted, in development and throughout the 
                planning and operational stages of the project, in 
                consultation with practicing physicians (including both 
                generalists and specialists).
            (3) Range of pilot projects.--Of the pilot projects 
        conducted under this subsection with respect to proposed new or 
        modified documentation guidelines--
                    (A) at least one shall focus on a peer review 
                method by physicians (not employed by a medicare 
                contractor) which evaluates medical record information 
                for claims submitted by physicians identified as 
                statistical outliers relative to codes used for billing 
                purposes for such services;
                    (B) at least one shall focus on an alternative 
                method to detailed guidelines based on physician 
                documentation of face to face encounter time with a 
                patient;
                    (C) at least one shall be conducted for services 
                furnished in a rural area and at least one for services 
                furnished outside such an area; and
                    (D) at least one shall be conducted in a setting 
                where physicians bill under physicians' services in 
                teaching settings and at least one shall be conducted 
                in a setting other than a teaching setting.
            (4) Study of impact.--Each pilot project shall examine the 
        effect of the proposed guidelines on--
                    (A) different types of physician practices, 
                including those with fewer than 10 full-time-equivalent 
                employees (including physicians); and
                    (B) the costs of physician compliance, including 
                education, implementation, auditing, and monitoring.
            (5) Report on pilot projects.--Not later than 6 months 
        after the date of completion of pilot projects carried out 
        under this subsection with respect to a proposed guideline 
        described in paragraph (1), the Secretary shall submit to 
        Congress a report on the pilot projects. Each such report shall 
        include a finding by the Secretary of whether the objectives 
        described in subsection (c) will be met in the implementation 
        of such proposed guideline.
    (c) Objectives for Evaluation and Management Guidelines.--The 
objectives for modified evaluation and management documentation 
guidelines developed by the Secretary shall be to--
            (1) identify clinically relevant documentation needed to 
        code accurately and assess coding levels accurately;
            (2) decrease the level of non-clinically pertinent and 
        burdensome documentation time and content in the physician's 
        medical record;
            (3) increase accuracy by reviewers; and
            (4) educate both physicians and reviewers.
    (d) Study of Simpler, Alternative Systems of Documentation for 
Physician Claims.--
            (1) Study.--The Secretary shall carry out a study of the 
        matters described in paragraph (2).
            (2) Matters described.--The matters referred to in 
        paragraph (1) are--
                    (A) the development of a simpler, alternative 
                system of requirements for documentation accompanying 
                claims for evaluation and management physician services 
                for which payment is made under title XVIII of the 
                Social Security Act; and
                    (B) consideration of systems other than current 
                coding and documentation requirements for payment for 
                such physician services.
            (3) Consultation with practicing physicians.--In designing 
        and carrying out the study under paragraph (1), the Secretary 
        shall consult with practicing physicians, including physicians 
        who are part of group practices and including both generalists 
        and specialists.
            (4) Application of hipaa uniform coding requirements.--In 
        developing an alternative system under paragraph (2), the 
        Secretary shall consider requirements of administrative 
        simplification under part C of title XI of the Social Security 
        Act.
            (5) Report to congress.--(A) Not later than October 1, 
        2005, the Secretary shall submit to Congress a report on the 
        results of the study conducted under paragraph (1).
            (B) The Medicare Payment Advisory Commission shall conduct 
        an analysis of the results of the study included in the report 
        under subparagraph (A) and shall submit a report on such 
        analysis to Congress.
    (e) Study on Appropriate Coding of Certain Extended Office 
Visits.--The Secretary shall conduct a study of the appropriateness of 
coding in cases of extended office visits in which there is no 
diagnosis made. Not later than October 1, 2005, the Secretary shall 
submit a report to Congress on such study and shall include 
recommendations on how to code appropriately for such visits in a 
manner that takes into account the amount of time the physician spent 
with the patient.
    (f) Definitions.--In this section--
            (1) the term ``rural area'' has the meaning given that term 
        in section 1886(d)(2)(D) of the Social Security Act (42 U.S.C. 
        1395ww(d)(2)(D)); and
            (2) the term ``teaching settings'' are those settings 
        described in section 415.150 of title 42, Code of Federal 
        Regulations.

SEC. 542. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY AND COVERAGE.

    (a) Council for Technology and Innovation.--Section 1868 (42 U.S.C. 
1395ee), as amended by section 521(a), is amended by adding at the end 
the following new subsection:
    ``(c) Council for Technology and Innovation.--
            ``(1) Establishment.--The Secretary shall establish a 
        Council for Technology and Innovation within the Centers for 
        Medicare & Medicaid Services (in this section referred to as 
        `CMS').
            ``(2) Composition.--The Council shall be composed of senior 
        CMS staff and clinicians and shall be chaired by the Executive 
        Coordinator for Technology and Innovation (appointed or 
        designated under paragraph (4)).
            ``(3) Duties.--The Council shall coordinate the activities 
        of coverage, coding, and payment processes under this title 
        with respect to new technologies and procedures, including new 
        drug therapies, and shall coordinate the exchange of 
        information on new technologies between CMS and other entities 
        that make similar decisions.
            ``(4) Executive coordinator for technology and 
        innovation.--The Secretary shall appoint (or designate) a 
        noncareer appointee (as defined in section 3132(a)(7) of title 
        5, United States Code) who shall serve as the Executive 
        Coordinator for Technology and Innovation. Such executive 
        coordinator shall report to the Administrator of CMS, shall 
        chair the Council, shall oversee the execution of its duties, 
        and shall serve as a single point of contact for outside groups 
        and entities regarding the coverage, coding, and payment 
        processes under this title.''.
    (b) Methods for Determining Payment Basis for New Lab Tests.--
Section 1833(h) (42 U.S.C. 1395l(h)) is amended by adding at the end 
the following:
    ``(8)(A) The Secretary shall establish by regulation procedures for 
determining the basis for, and amount of, payment under this subsection 
for any clinical diagnostic laboratory test with respect to which a new 
or substantially revised HCPCS code is assigned on or after January 1, 
2005 (in this paragraph referred to as `new tests').
    ``(B) Determinations under subparagraph (A) shall be made only 
after the Secretary--
            ``(i) makes available to the public (through an Internet 
        website and other appropriate mechanisms) a list that includes 
        any such test for which establishment of a payment amount under 
        this subsection is being considered for a year;
            ``(ii) on the same day such list is made available, causes 
        to have published in the Federal Register notice of a meeting 
        to receive comments and recommendations (and data on which 
        recommendations are based) from the public on the appropriate 
        basis under this subsection for establishing payment amounts 
        for the tests on such list;
            ``(iii) not less than 30 days after publication of such 
        notice convenes a meeting, that includes representatives of 
        officials of the Centers for Medicare & Medicaid Services 
        involved in determining payment amounts, to receive such 
        comments and recommendations (and data on which the 
        recommendations are based);
            ``(iv) taking into account the comments and recommendations 
        (and accompanying data) received at such meeting, develops and 
        makes available to the public (through an Internet website and 
        other appropriate mechanisms) a list of proposed determinations 
        with respect to the appropriate basis for establishing a 
        payment amount under this subsection for each such code, 
        together with an explanation of the reasons for each such 
        determination, the data on which the determinations are based, 
        and a request for public written comments on the proposed 
        determination; and
            ``(v) taking into account the comments received during the 
        public comment period, develops and makes available to the 
        public (through an Internet website and other appropriate 
        mechanisms) a list of final determinations of the payment 
        amounts for such tests under this subsection, together with the 
        rationale for each such determination, the data on which the 
        determinations are based, and responses to comments and 
        suggestions received from the public.
    ``(C) Under the procedures established pursuant to subparagraph 
(A), the Secretary shall--
            ``(i) set forth the criteria for making determinations 
        under subparagraph (A); and
            ``(ii) make available to the public the data (other than 
        proprietary data) considered in making such determinations.
    ``(D) The Secretary may convene such further public meetings to 
receive public comments on payment amounts for new tests under this 
subsection as the Secretary deems appropriate.
    ``(E) For purposes of this paragraph:
            ``(i) The term `HCPCS' refers to the Health Care Procedure 
        Coding System.
            ``(ii) A code shall be considered to be `substantially 
        revised' if there is a substantive change to the definition 
of the test or procedure to which the code applies (such as a new 
analyte or a new methodology for measuring an existing analyte-specific 
test).''.
    (c) GAO Study on Improvements in External Data Collection for Use 
in the Medicare Inpatient Payment System.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study that analyzes which external data can be 
        collected in a shorter timeframe by the Centers for Medicare & 
        Medicaid Services for use in computing payments for inpatient 
        hospital services. The study may include an evaluation of the 
        feasibility and appropriateness of using quarterly samples or 
        special surveys or any other methods. The study shall include 
        an analysis of whether other executive agencies, such as the 
        Bureau of Labor Statistics in the Department of Commerce, are 
        best suited to collect this information.
            (2) Report.--By not later than October 1, 2004, the 
        Comptroller General shall submit a report to Congress on the 
        study under paragraph (1).

SEC. 543. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER MEDICARE 
              SECONDARY PAYOR (MSP) PROVISIONS.

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

SEC. 544. EMTALA IMPROVEMENTS.

    (a) Payment for EMTALA-Mandated Screening and Stabilization 
Services.--
            (1) In general.--Section 1862 (42 U.S.C. 1395y) is amended 
        by inserting after subsection (c) the following new subsection:
    ``(d) For purposes of subsection (a)(1)(A), in the case of any item 
or service that is required to be provided pursuant to section 1867 to 
an individual who is entitled to benefits under this title, 
determinations as to whether the item or service is reasonable and 
necessary shall be made on the basis of the information available to 
the treating physician or practitioner (including the patient's 
presenting symptoms or complaint) at the time the item or service was 
ordered or furnished by the physician or practitioner (and not on the 
patient's principal diagnosis). When making such determinations with 
respect to such an item or service, the Secretary shall not consider 
the frequency with which the item or service was provided to the 
patient before or after the time of the admission or visit.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items and services furnished on or after January 
        1, 2004.
    (b) Notification of Providers When EMTALA Investigation Closed.--
Section 1867(d) (42 U.S.C. 42 U.S.C. 1395dd(d)) is amended by adding at 
the end the following new paragraph:
            ``(4) Notice upon closing an investigation.--The Secretary 
        shall establish a procedure to notify hospitals and physicians 
        when an investigation under this section is closed.''.
    (c) Prior Review by Peer Review Organizations in EMTALA Cases 
Involving Termination of Participation.--
            (1) In general.--Section 1867(d)(3) (42 U.S.C. 
        1395dd(d)(3)) is amended--
                    (A) in the first sentence, by inserting ``or in 
                terminating a hospital's participation under this 
                title'' after ``in imposing sanctions under paragraph 
                (1)''; and
                    (B) by adding at the end the following new 
                sentences: ``Except in the case in which a delay would 
                jeopardize the health or safety of individuals, the 
                Secretary shall also request such a review before 
                making a compliance determination as part of the 
                process of terminating a hospital's participation under 
                this title for violations related to the 
                appropriateness of a medical screening examination, 
                stabilizing treatment, or an appropriate transfer as 
                required by this section, and shall provide a period of 
                5 days for such review. The Secretary shall provide a 
                copy of the organization's report to the hospital or 
                physician consistent with confidentiality requirements 
                imposed on the organization under such part B.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to terminations of participation initiated on or 
        after the date of the enactment of this Act.

SEC. 545. EMERGENCY MEDICAL TREATMENT AND LABOR ACT (EMTALA) TECHNICAL 
              ADVISORY GROUP.

    (a) Establishment.--The Secretary shall establish a Technical 
Advisory Group (in this section referred to as the ``Advisory Group'') 
to review issues related to the Emergency Medical Treatment and Labor 
Act (EMTALA) and its implementation. In this section, the term 
``EMTALA'' refers to the provisions of section 1867 of the Social 
Security Act (42 U.S.C. 1395dd).
    (b) Membership.--The Advisory Group shall be composed of 19 
members, including the Administrator of the Centers for Medicare & 
Medicaid Services and the Inspector General of the Department of Health 
and Human Services and of which--
            (1) 4 shall be representatives of hospitals, including at 
        least one public hospital, that have experience with 
the application of EMTALA and at least 2 of which have not been cited 
for EMTALA violations;
            (2) 7 shall be practicing physicians drawn from the fields 
        of emergency medicine, cardiology or cardiothoracic surgery, 
        orthopedic surgery, neurosurgery, pediatrics or a pediatric 
        subspecialty, obstetrics-gynecology, and psychiatry, with not 
        more than one physician from any particular field;
            (3) 2 shall represent patients;
            (4) 2 shall be staff involved in EMTALA investigations from 
        different regional offices of the Centers for Medicare & 
        Medicaid Services; and
            (5) 1 shall be from a State survey office involved in 
        EMTALA investigations and 1 shall be from a peer review 
        organization, both of whom shall be from areas other than the 
        regions represented under paragraph (4).
In selecting members described in paragraphs (1) through (3), the 
Secretary shall consider qualified individuals nominated by 
organizations representing providers and patients.
    (c) General Responsibilities.--The Advisory Group--
            (1) shall review EMTALA regulations;
            (2) may provide advice and recommendations to the Secretary 
        with respect to those regulations and their application to 
        hospitals and physicians;
            (3) shall solicit comments and recommendations from 
        hospitals, physicians, and the public regarding the 
        implementation of such regulations; and
            (4) may disseminate information on the application of such 
        regulations to hospitals, physicians, and the public.
    (d) Administrative Matters.--
            (1) Chairperson.--The members of the Advisory Group shall 
        elect a member to serve as chairperson of the Advisory Group 
        for the life of the Advisory Group.
            (2) Meetings.--The Advisory Group shall first meet at the 
        direction of the Secretary. The Advisory Group shall then meet 
        twice per year and at such other times as the Advisory Group 
        may provide.
    (e) Termination.--The Advisory Group shall terminate 30 months 
after the date of its first meeting.
    (f) Waiver of Administrative Limitation.--The Secretary shall 
establish the Advisory Group notwithstanding any limitation that may 
apply to the number of advisory committees that may be established 
(within the Department of Health and Human Services or otherwise).

SEC. 546. AUTHORIZING USE OF ARRANGEMENTS 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:
    ``(D) In extraordinary, exigent, or other non-routine 
circumstances, such as unanticipated periods of high patient loads, 
staffing shortages due to illness or other events, or temporary travel 
of a patient outside a hospice program's service area, a hospice 
program may enter into arrangements with another hospice program for 
the provision by that other program of services described in paragraph 
(2)(A)(ii)(I). The provisions of paragraph (2)(A)(ii)(II) shall apply 
with respect to the services provided under such arrangements.
    ``(E) A hospice program may provide services described in paragraph 
(1)(A) other than directly by the program if the services are highly 
specialized services of a registered professional nurse and are 
provided non-routinely and so infrequently so that the provision of 
such services directly would be impracticable and prohibitively 
expensive.''.
    (b) Conforming Payment Provision.--Section 1814(i) (42 U.S.C. 
1395f(i)), as amended by section 212(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.

SEC. 547. APPLICATION OF OSHA BLOODBORNE PATHOGENS STANDARD TO CERTAIN 
              HOSPITALS.

    (a) In General.--Section 1866 (42 U.S.C. 1395cc), as amended by 
section 206, is amended--
            (1) in subsection (a)(1)--
                    (A) in subparagraph (T), by striking ``and'' at the 
                end;
                    (B) in subparagraph (U), by striking the period at 
                the end and inserting ``, and''; and
                    (C) by inserting after subparagraph (U) the 
                following new subparagraph:
            ``(V) in the case of hospitals that are not otherwise 
        subject to the Occupational Safety and Health Act of 1970 (or a 
        State occupational safety and health plan that is approved 
        under 18(b) of such Act), to comply with the Bloodborne 
        Pathogens standard under section 1910.1030 of title 29 of the 
        Code of Federal Regulations (or as subsequently 
        redesignated).''; and
            (2) by adding at the end of subsection (b) the following 
        new paragraph:
    ``(4)(A) A hospital that fails to comply with the requirement of 
subsection (a)(1)(V) (relating to the Bloodborne Pathogens standard) is 
subject to a civil money penalty in an amount described in subparagraph 
(B), but is not subject to termination of an agreement under this 
section.
    ``(B) The amount referred to in subparagraph (A) is an amount that 
is similar to the amount of civil penalties that may be imposed under 
section 17 of the Occupational Safety and Health Act of 1970 for a 
violation of the Bloodborne Pathogens standard referred to in 
subsection (a)(1)(U) by a hospital that is subject to the provisions of 
such Act.
    ``(C) A civil money penalty under this paragraph shall be imposed 
and collected in the same manner as civil money penalties under 
subsection (a) of section 1128A are imposed and collected under that 
section.''.
    (b) Effective Date.--The amendments made by this subsection (a) 
shall apply to hospitals as of July 1, 2004.

SEC. 548. BIPA-RELATED TECHNICAL AMENDMENTS AND CORRECTIONS.

    (a) Technical Amendments Relating to Advisory Committee Under BIPA 
Section 522.--(1) Subsection (i) of section 1114 (42 U.S.C. 1314)--
            (A) is transferred to section 1862 and added at the end of 
        such section; and
            (B) is redesignated as subsection (j).
    (2) Section 1862 (42 U.S.C. 1395y) is amended--
            (A) in the last sentence of subsection (a), by striking 
        ``established under section 1114(f)''; and
            (B) in subsection (j), as so transferred and redesignated--
                    (i) by striking ``under subsection (f)''; and
                    (ii) by striking ``section 1862(a)(1)'' and 
                inserting ``subsection (a)(1)''.
    (b) Terminology Corrections.--(1) Section 1869(c)(3)(I)(ii) (42 
U.S.C. 1395ff(c)(3)(I)(ii)) is amended--
            (A) in subclause (III), by striking ``policy'' and 
        inserting ``determination''; and
            (B) in subclause (IV), by striking ``medical review 
        policies'' and inserting ``coverage determinations''.
    (2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is amended 
by striking ``policy'' and ``policy'' and inserting ``determination'' 
each place it appears and ``determination'', respectively.
    (c) Reference Corrections.--Section 1869(f)(4) (42 U.S.C. 
1395ff(f)(4)) is amended--
            (1) in subparagraph (A)(iv), by striking ``subclause (I), 
        (II), or (III)'' and inserting ``clause (i), (ii), or (iii)'';
            (2) in subparagraph (B), by striking ``clause (i)(IV)'' and 
        ``clause (i)(III)'' and inserting ``subparagraph (A)(iv)'' and 
        ``subparagraph (A)(iii)'', respectively; and
            (3) in subparagraph (C), by striking ``clause (i)'', 
        ``subclause (IV)'' and ``subparagraph (A)'' and inserting 
        ``subparagraph (A)'', ``clause (iv)'' and ``paragraph (1)(A)'', 
        respectively each place it appears.
    (d) Other Corrections.--Effective as if included in the enactment 
of section 221(c) of BIPA, section 1154(e) (42 U.S.C. 1320c-3(e)) is 
amended by striking paragraph (5).
    (e) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall be effective as if included in the enactment 
of BIPA.

SEC. 549. CONFORMING 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 the administrator of a Federal health care program 
(as defined in section 1128B(f)) who determines that the exclusion 
would impose a hardship on individuals entitled to benefits under part 
A of title XVIII or enrolled under part B of such title, or both, the 
Secretary may, after consulting with the Inspector General of the 
Department of Health and Human Services, 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.''.

SEC. 550. TREATMENT OF CERTAIN DENTAL CLAIMS.

    (a) In General.--Section 1862 (42 U.S.C. 1395y) is amended by 
adding at the end, after the subsection transferred and redesignated by 
section 548(a), the following new subsection:
    ``(k)(1) Subject to paragraph (2), a group health plan (as defined 
in subsection (a)(1)(A)(v)) providing supplemental or secondary 
coverage to individuals also entitled to services under this title 
shall not require a medicare claims determination under this title for 
dental benefits specifically excluded under subsection (a)(12) as a 
condition of making a claims determination for such benefits under the 
group health plan.
    ``(2) A group health plan may require a claims determination under 
this title in cases involving or appearing to involve inpatient dental 
hospital services or dental services expressly covered under this title 
pursuant to actions taken by the Secretary.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date that is 60 days after the date of the enactment 
of this Act.

SEC. 551. FURNISHING HOSPITALS WITH INFORMATION TO COMPUTE DSH FORMULA.

    Beginning not later than 1 year after the date of the enactment of 
this Act, the Secretary shall arrange to furnish to subsection (d) 
hospitals (as defined in section 1886(d)(1)(B) of the Social Security 
Act, 42 U.S.C. 1395ww(d)(1)(B)) the data necessary for such hospitals 
to compute the number of patient days used in computing the 
disproportionate patient percentage under such section for that 
hospital for the current cost reporting year. Such data shall also be 
furnished to other hospitals which would qualify for additional 
payments under part A of title XVIII of the Social Security Act on the 
basis of such data.

SEC. 552. REVISIONS TO REASSIGNMENT PROVISIONS.

    (a) In General.--Section 1842(b)(6)(A) (42 U.S.C. 1395u(b)(6)(A)) 
is amended by striking ``or (ii) (where the service was provided in a 
hospital, critical access hospital, clinic, or other facility) to the 
facility in which the service was provided if there is a contractual 
arrangement between such physician or other person and such facility 
under which such facility submits the bill for such service,'' and 
inserting ``or (ii) where the service was provided under a contractual 
arrangement between such physician or other person and an entity, to 
the entity if, under the contractual arrangement, the entity submits 
the bill for the service and the contractual arrangement meets such 
program integrity and other safeguards as the Secretary may determine 
to be appropriate,''.
    (b) Conforming Amendment.--The second sentence of section 
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended by striking ``except to 
an employer or facility as described in clause (A)'' and inserting 
``except to an employer or entity as described in subparagraph (A)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments made on or after the date of the enactment of this 
Act.

SEC. 553. OTHER PROVISIONS.

    (a) GAO Reports on the Physician Compensation.--
            (1) Sustainable growth rate and updates.--Not later than 6 
        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 appropriateness of the updates in the 
        conversion factor under subsection (d)(3) of section 1848 of 
        the Social Security Act (42 U.S.C. 1395w-4), including the 
        appropriateness of the sustainable growth rate formula under 
        subsection (f) of such section for 2002 and succeeding years. 
        Such report shall examine the stability and predictability of 
        such updates and rate and alternatives for the use of such rate 
        in the updates.
            (2) Physician compensation generally.--Not later than 12 
        months after the date of the enactment of this Act, the 
        Comptroller General shall submit to Congress a report on all 
        aspects of physician compensation for services furnished under 
        title XVIII of the Social Security Act, and how those aspects 
        interact and the effect on appropriate compensation for 
        physician services. Such report shall review alternatives for 
        the physician fee schedule under section 1848 of such title (42 
        U.S.C. 1395w-4).
    (b) Annual Publication of List of National Coverage 
Determinations.--The Secretary shall provide, in an appropriate annual 
publication available to the public, a list of national coverage 
determinations made under title XVIII of the Social Security Act in the 
previous year and information on how to get more information with 
respect to such determinations.
    (c) GAO Report on Flexibility in Applying Home Health Conditions of 
Participation to Patients Who Are Not Medicare Beneficiaries.--Not 
later than 6 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 implications if there were flexibility in the application 
of the medicare conditions of participation for home health agencies 
with respect to groups or types of patients who are not medicare 
beneficiaries. The report shall include an analysis of the potential 
impact of such flexible application on clinical operations and the 
recipients of such services and an analysis of methods for monitoring 
the quality of care provided to such recipients.
    (d) OIG Report on Notices Relating to Use of Hospital Lifetime 
Reserve Days.--Not later than 1 year after the date of the enactment of 
this Act, the Inspector General of the Department of Health and Human 
Services shall submit a report to Congress on--
            (1) the extent to which hospitals provide notice to 
        medicare beneficiaries in accordance with applicable 
        requirements before they use the 60 lifetime reserve days 
        described in section 1812(a)(1) of the Social Security Act (42 
        U.S.C. 1395d(a)(1)); and
            (2) the appropriateness and feasibility of hospitals 
        providing a notice to such beneficiaries before they completely 
        exhaust such lifetime reserve days.

            TITLE VI--MEDICAID AND MISCELLANEOUS PROVISIONS

                    Subtitle A--Medicaid Provisions

SEC. 601. MEDICAID DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS.

    (a) Temporary Increase.--Section 1923(f)(3) (42 U.S.C. 1396r-
4(f)(3)) is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B) and (C)''; and
            (2) by adding at the end the following new subparagraphs:
                    ``(C) Special, temporary increase in allotments on 
                a one-time, non-cumulative basis.--The DSH allotment 
                for any State (other than a State with a DSH allotment 
                determined under paragraph (5))--
                            ``(i) for fiscal year 2004 is equal to 116 
                        percent of the DSH allotment for the State for 
                        fiscal year 2003 under this paragraph, 
                        notwithstanding subparagraph (B); and
                            ``(ii) for each succeeding fiscal year is 
                        equal to the DSH allotment for the State for 
                        fiscal year 2004 or, in the case of fiscal 
                        years beginning with the fiscal year specified 
                        in subparagraph (D) for that State, the DSH 
                        allotment for the State for the previous fiscal 
                        year increased by the percentage change in the 
                        consumer price index for all urban consumers 
                        (all items; U.S. city average), for the 
                        previous fiscal year.
                    ``(D) Fiscal year specified.--For purposes of 
                subparagraph (C)(ii), the fiscal year specified in this 
                subparagraph for a State is the first fiscal year for 
                which the Secretary estimates that the DSH allotment 
                for that State will equal (or no longer exceed) the DSH 
                allotment for that State under the law as in effect 
                before the date of the enactment of this 
                subparagraph.''.
    (b) Increase in Floor for Treatment as a Low DSH State.--Section 
1923(f)(5) (42 U.S.C. 1396r-4(f)(5)) is amended to read as follows:
            ``(5) Special rule for low dsh states.--In the case of a 
        State in which the total expenditures under the State plan 
        (including Federal and State shares) for disproportionate share 
        hospital adjustments under this section for fiscal year 2000, 
        as reported to the Administrator of the Centers for Medicare & 
        Medicaid Services as of August 31, 2003, is greater than 0 but 
        less than 3 percent of the State's total amount of expenditures 
        under the State plan for medical assistance during the fiscal 
        year, the DSH allotment for the State with respect to--
                    ``(A) fiscal year 2004 shall be the DSH allotment 
                for the State for fiscal year 2003 increased by 16 
                percent;
                    ``(B) each succeeding fiscal year before fiscal 
                year 2009 shall be the DSH allotment for the State for 
                the previous fiscal year increased by 16 percent; and
                    ``(C) fiscal year 2009 and any subsequent fiscal 
                year, shall be the DSH allotment for the State for the 
                previous year subject to an increase for inflation as 
                provided in paragraph (3)(A).''.
    (c) Allotment Adjustment.--Section 1923(f) (42 U.S.C. 1396r-4(f)) 
is amended--
            (1) in paragraph (3)(A), by striking ``The DSH'' and 
        inserting ``Except as provided in paragraph (6), the DSH'';
            (2) by redesignating paragraph (6) as paragraph (7); and
            (3) by inserting after paragraph (5) the following:
            ``(6) Allotment adjustment.--Only with respect to fiscal 
        year 2004 or 2005, if a statewide waiver under section 1115 is 
        revoked or terminated before the end of either such fiscal year 
        and there is no DSH allotment for the State, the Secretary 
        shall--
                    ``(A) permit the State whose 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, including children's 
                hospitals and institutions for mental diseases or other 
                mental health facilities (other than State-owned 
                institutions or facilities), on the basis of the 
                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 for fiscal year 2004 or 2005 (or both) that would 
                not exceed the amount allowed under paragraph 
                (3)(B)(ii) and that does not result in greater 
                expenditures under this title than would have been made 
                if such waiver had not been revoked or terminated.
        In determining the amount of an appropriate DSH allotment under 
        subparagraph (B) for a State, the Secretary shall take into 
        account the level of DSH expenditures for the State for the 
        fiscal year preceding the fiscal year in which the waiver 
        commenced.''.
    (d) Increased Reporting and Other Requirements To Ensure the 
Appropriate Use of Medicaid DSH Payment Adjustments.--Section 1923 (42 
U.S.C. 1396r-4) is amended by adding at the end the following new 
subsection:
    ``(j) Annual Reports and Other Requirements Regarding Payment 
Adjustments.--With respect to fiscal year 2004 and each fiscal year 
thereafter, the Secretary shall require a State, as a condition of 
receiving a payment under section 1903(a)(1) with respect to a payment 
adjustment made under this section, to do the following:
            ``(1) Report.--The State shall submit an annual report that 
        includes the following:
                    ``(A) An identification of each disproportionate 
                share hospital that received a payment adjustment under 
                this section for the preceding fiscal year and the 
                amount of the payment adjustment made to such hospital 
                for the preceding fiscal year.
                    ``(B) Such other information as the Secretary 
                determines necessary to ensure the appropriateness of 
                the payment adjustments made under this section for the 
                preceding fiscal year.
            ``(2) Independent certified audit.--The State shall 
        annually submit to the Secretary an independent certified audit 
        that verifies each of the following:
                    ``(A) The extent to which hospitals in the State 
                have reduced their uncompensated care costs to reflect 
                the total amount of claimed expenditures made under 
                this section.
                    ``(B) Payments under this section to hospitals that 
                comply with the requirements of subsection (g).
                    ``(C) Only the uncompensated care costs of 
                providing inpatient hospital and outpatient hospital 
                services to individuals described in paragraph (1)(A) 
                of such subsection are included in the calculation of 
                the hospital-specific limits under such subsection.
                    ``(D) The State included all payments under this 
                title, including supplemental payments, in the 
                calculation of such hospital-specific limits.
                    ``(E) The State has separately documented and 
                retained a record of all of its costs under this title, 
                claimed expenditures under this title, uninsured costs 
                in determining payment adjustments under this section, 
                and any payments made on behalf of the uninsured from 
                payment adjustments under this section.''.
    (e) Clarification Regarding Non-Regulation of Transfers.--
            (1) In general.--Nothing in section 1903(w) of the Social 
        Security Act (42 U.S.C. 1396b(w)) shall be construed by the 
        Secretary as prohibiting a State's use of funds as the non-
        Federal share of expenditures under title XIX of such Act where 
        such funds are transferred from or certified by a publicly-
        owned regional medical center located in another State and 
        described in paragraph (2), so long as the Secretary determines 
        that such use of funds is proper and in the interest of the 
        program under title XIX.
            (2) Center described.--A center described in this paragraph 
        is a publicly-owned regional medical center that--
                    (A) provides level 1 trauma and burn care services;
                    (B) provides level 3 neonatal care services;
                    (C) is obligated to serve all patients, regardless 
                of State of origin;
                    (D) is located within a Standard Metropolitan 
                Statistical Area (SMSA) that includes at least 3 
                States, including the States described in paragraph 
                (1);
                    (E) serves as a tertiary care provider for patients 
                residing within a 125 mile radius; and
                    (F) meets the criteria for a disproportionate share 
                hospital under section 1923 of such Act in at least one 
                State other than the one in which the center is 
                located.
            (3) Effective period.--This subsection shall apply through 
        December 31, 2005.

SEC. 602. 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) Anti-Diversion Protection.--Section 1927(c)(1)(C) (42 U.S.C. 
1396r-8(c)(1)(C)) is amended by adding at the end the following:
                            ``(iii) Application of auditing and 
                        recordkeeping requirements.--With respect to a 
                        covered entity described in section 
                        340B(a)(4)(L) of the Public Health Service Act, 
                        any drug purchased for inpatient use shall be 
                        subject to the auditing and recordkeeping 
                        requirements described in section 340B(a)(5)(C) 
                        of the Public Health Service Act.''.

SEC. 603. EXTENSION OF MORATORIUM.

    (a) In General.--Section 6408(a)(3) of the Omnibus Budget 
Reconciliation Act of 1989, as amended by section 13642 of the Omnibus 
Budget Reconciliation Act of 1993 and section 4758 of the Balanced 
Budget Act of 1997, is amended--
            (1) by striking ``until December 31, 2002'', and
            (2) by striking ``Kent Community Hospital Complex in 
        Michigan or.''
    (b) Effective Dates.--
            (1) Permanent extension.--The amendment made by subsection 
        (a)(1) shall take effect as if included in the amendment made 
        by section 4758 of the Balanced Budget Act of 1997.
            (2) Modification.--The amendment made by subsection (a)(2) 
        shall take effect on the date of enactment of this Act.

                  Subtitle B--Miscellaneous Provisions

SEC. 611. FEDERAL REIMBURSEMENT OF EMERGENCY HEALTH SERVICES FURNISHED 
              TO UNDOCUMENTED ALIENS.

    (a) Total Amount Available for Allotment.--
            (1) In general.--Out of any funds in the Treasury not 
        otherwise appropriated, there are appropriated to the Secretary 
        $250,000,000 for each of fiscal years 2005 through 2008 for the 
        purpose of making allotments under this section for payments to 
        eligible providers in States described in paragraph (1) or (2) 
        of subsection (b).
            (2) Availability.--Funds appropriated under paragraph (1) 
        shall remain available until expended.
    (b) State Allotments.--
            (1) Based on percentage of undocumented aliens.--
                    (A) In general.--Out of the amount appropriated 
                under subsection (a) for a fiscal year, the Secretary 
                shall use $167,000,000 of such amount to make 
                allotments for such fiscal year in accordance with 
                subparagraph (B).
                    (B) Formula.--The amount of the allotment for 
                payments to eligible providers in each State for a 
                fiscal year shall be equal to the product of--
                            (i) the total amount available for 
                        allotments under this paragraph for the fiscal 
                        year; and
                            (ii) the percentage of undocumented aliens 
                        residing in the State as compared to the total 
                        number of such aliens residing in all States, 
                        as determined by the Statistics Division of the 
                        Immigration and Naturalization Service, as of 
                        January 2003, based on the 2000 decennial 
                        census.
            (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 $83,000,000 of such amount to make 
                allotments, in addition to amounts allotted under 
                paragraph (1), for 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 the 
                allotment for each State described in subparagraph (A) 
                for a fiscal year shall be equal to the product of--
                            (i) the total amount available for 
                        allotments under this paragraph for the fiscal 
                        year; and
                            (ii) the percentage of undocumented alien 
                        apprehensions in the State in that fiscal year 
                        as compared to the total of such apprehensions 
                        for all such States for the preceding 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 apprehension rates 
                for the 4-consecutive-quarter period ending before the 
                beginning of the fiscal year for which information is 
                available for undocumented aliens in such States, as 
                reported by the Department of Homeland Security.
    (c) Use of Funds.--
            (1) Authority to make payments.--From the allotments made 
        for a State under subsection (b) for a fiscal year, the 
        Secretary shall pay the amount (subject to the total amount 
        available from such allotments) determined under paragraph (2) 
        directly to eligible providers located in the State for the 
        provision of eligible services to aliens described in paragraph 
        (5) to the extent that the eligible provider was not otherwise 
        reimbursed (through insurance or otherwise) for such services 
        during that fiscal year.
            (2) Determination of payment amounts.--
                    (A) In general.--Subject to subparagraph (B), the 
                payment amount determined under this paragraph shall be 
                an amount determined by the Secretary that is equal to 
                the lesser of--
                            (i) the amount that the provider 
                        demonstrates was incurred for the provision of 
                        such services; or
                            (ii) amounts determined under a methodology 
                        established by the Secretary for purposes of 
                        this subsection.
                    (B) Pro-rata reduction.--If the amount of funds 
                allotted to a State under subsection (b) for a fiscal 
                year is insufficient to ensure that each eligible 
                provider in that State receives the amount of payment 
                calculated under subparagraph (A), the Secretary shall 
                reduce that amount of payment with respect to each 
                eligible provider to ensure that the entire amount 
                allotted to the State for that fiscal year is paid to 
                such eligible providers.
            (3) Methodology.--In establishing a methodology under 
        paragraph (2)(A)(ii), the Secretary--
                    (A) may establish different methodologies for types 
                of eligible providers;
                    (B) may base payments for hospital services on 
                estimated hospital charges, adjusted to estimated cost, 
                through the application of hospital-specific cost-to-
                charge ratios;
                    (C) shall provide for the election by a hospital to 
                receive either payments to the hospital for--
                            (i) hospital and physician services; or
                            (ii) hospital services and for a portion of 
                        the on-call payments made by the hospital to 
                        physicians; and
                    (D) shall make quarterly payments under this 
                section to eligible providers.
        If a hospital makes the election under subparagraph (C)(i), the 
        hospital shall pass on payments for services of a physician to 
        the physician and may not charge any administrative or other 
        fee with respect to such payments.
            (4) Limitation on use of funds.--Payments made to eligible 
        providers in a State from allotments made under subsection (b) 
        for a fiscal year may only be used for costs incurred in 
        providing eligible services to aliens described in paragraph 
        (5).
            (5) Aliens described.--For purposes of paragraphs (1) and 
        (2), aliens described in this paragraph are any of the 
        following:
                    (A) Undocumented aliens.
                    (B) Aliens who have been paroled into the United 
                States at a United States port of entry for the purpose 
                of receiving eligible services.
                    (C) Mexican citizens permitted to enter the United 
                States for not more than 72 hours under the authority 
                of a biometric machine readable border crossing 
                identification card (also referred to as a ``laser 
                visa'') issued in accordance with the requirements of 
                regulations prescribed under section 101(a)(6) of the 
                Immigration and Nationality Act (8 U.S.C. 1101(a)(6)).
    (d) Applications; Advance Payments.--
            (1) Deadline for establishment of application process.--
                    (A) In general.--Not later than September 1, 2004, 
                the Secretary shall establish a process under which 
                eligible providers located in a State may request 
                payments under subsection (c).
                    (B) Inclusion of measures to combat fraud and 
                abuse.--The Secretary shall include in the process 
                established under subparagraph (A) measures to ensure 
                that inappropriate, excessive, or fraudulent payments 
                are not made from the allotments determined under 
                subsection (b), including certification by the eligible 
                provider of the veracity of the payment request.
            (2) Advance payment; retrospective adjustment.--The process 
        established under paragraph (1) may provide for making payments 
        under this section for each quarter of a fiscal year on the 
        basis of advance estimates of expenditures submitted by 
        applicants for such payments and such other investigation as 
        the Secretary may find necessary, and for making reductions or 
        increases in the payments as necessary to adjust for any 
        overpayment or underpayment for prior quarters of such fiscal 
        year.
    (e) Definitions.--In this section:
            (1) Eligible provider.--The term ``eligible provider'' 
        means a hospital, physician, or provider of ambulance services 
        (including an Indian Health Service facility whether operated 
        by the Indian Health Service or by an Indian tribe or tribal 
        organization).
            (2) Eligible services.--The term ``eligible services'' 
        means health care services required by the application of 
        section 1867 of the Social Security Act (42 U.S.C. 1395dd), and 
        related hospital inpatient and outpatient services and 
        ambulance services (as defined by the Secretary).
            (3) 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)), except that such term shall include a 
        critical access hospital (as defined in section 1861(mm)(1) of 
        such Act (42 U.S.C. 1395x(mm)(1)).
            (4) Physician.--The term ``physician'' has the meaning 
        given that term in section 1861(r) of the Social Security Act 
        (42 U.S.C. 1395x(r)).
            (5) Indian tribe; tribal organization.--The terms ``Indian 
        tribe'' and ``tribal organization'' have the meanings given 
        such terms in section 4 of the Indian Health Care Improvement 
        Act (25 U.S.C. 1603).
            (6) State.--The term ``State'' means the 50 States and the 
        District of Columbia.

SEC. 612. COMMISSION ON SYSTEMIC INTEROPERABILITY.

    (a) Establishment.--The Secretary shall establish a commission to 
be known as the ``Commission on Systemic Interoperability'' (in this 
section referred to as the ``Commission'').
    (b) Duties.--
            (1) In general.--The Commission shall develop a 
        comprehensive strategy for the adoption and implementation of 
        health care information technology standards, that includes a 
        timeline and prioritization for such adoption and 
        implementation.
            (2) Considerations.--In developing the comprehensive health 
        care information technology strategy under paragraph (1), the 
        Commission shall consider--
                    (A) the costs and benefits of the standards, both 
                financial impact and quality improvement;
                    (B) the current demand on industry resources to 
                implement this Act and other electronic standards, 
                including HIPAA standards; and
                    (C) the most cost-effective and efficient means for 
                industry to implement the standards.
            (3) Noninterference.--In carrying out this section, the 
        Commission shall not interfere with any standards development 
        of adoption processes underway in the private or public sector 
        and shall not replicate activities related to such standards or 
        the national health information infrastructure underway within 
        the Department of Health and Human Services.
            (4) Report.--Not later than October 31, 2005, the 
        Commission shall submit to the Secretary and to Congress a 
        report describing the strategy developed under paragraph (1), 
        including an analysis of the matters considered under paragraph 
        (2).
    (c) Membership.--
            (1) Number and appointment.--The Commission shall be 
        composed of 11 members appointed as follows:
                    (A) The President shall appoint 3 members, one of 
                whom the President shall designate as Chairperson.
                    (B) The Majority Leader of the Senate shall appoint 
                2 members.
                    (C) The Minority Leader of the Senate shall appoint 
                2 members.
                    (D) The Speaker of the House of Representatives 
                shall appoint 2 members.
                    (E) The Minority Leader of the House of 
                Representatives shall appoint 2 members.
            (2) Qualifications.--The membership of the Commission shall 
        include individuals with national recognition for their 
        expertise in health finance and economics, health plans and 
        integrated delivery systems, reimbursement of health 
        facilities, practicing physicians, practicing pharmacists, and 
        other providers of health services, health care technology and 
        information systems, and other related fields, who provide a 
        mix of different professionals, broad geographic 
        representation, and a balance between urban and rural 
        representatives.
    (d) Terms.--Each member shall be appointed for the life of the 
Commission.
    (e) Compensation.--
            (1) Rates of pay.--Members shall each be paid at a rate not 
        to exceed the daily equivalent of the rate of basic pay for 
        level IV of the Executive Schedule for each day (including 
        travel time) during which they are engaged in the actual 
        performance of duties vested in the Commission.
            (2) Prohibition of compensation of federal employees.--
        Members of the Commission who are full-time officers or 
        employees of the United States or Members of Congress may not 
        receive additional pay, allowances, or benefits by reason of 
        their service on the Commission.
            (3) Travel expenses.--Each member shall receive travel 
        expenses, including per diem in lieu of subsistence, in 
        accordance with applicable provisions under subchapter I of 
        chapter 57 of title 5, United States Code.
    (f) Quorum.--A majority of the members of the Commission shall 
constitute a quorum but a lesser number may hold hearings.
    (g) Director and Staff of Commission; Experts and Consultants.--
            (1) Director.--The Commission shall have a Director who 
        shall be appointed by the Chairperson. The Director shall be 
        paid at a rate not to exceed the rate of basic pay for level IV 
        of the Executive Schedule.
            (2) Staff.--With the approval of the Commission, the 
        Director may appoint and fix the pay of such additional 
        personnel as the Director considers appropriate.
            (3) Applicability of certain civil service laws.--The 
        Director and staff of the Commission may be appointed without 
        regard to the provisions of title 5, United States Code, 
        governing appointments in the competitive service, and may be 
        paid without regard to the provisions of chapter 51 and 
        subchapter III of chapter 53 of that title relating to 
        classification and General Schedule pay rates, except that an 
        individual so appointed may not receive pay in excess of level 
        IV of the Executive Schedule.
            (4) Experts and consultants.--With the approval of the 
        Commission, the Director may procure temporary and intermittent 
        services under section 3109(b) of title 5, United States Code.
            (5) Staff of federal agencies.--Upon request of the 
        Chairperson, the head of any Federal department or agency may 
        detail, on a reimbursable basis, any of the personnel of that 
        department or agency to the Commission to assist it in carrying 
        out its duties under this Act.
    (h) Powers of Commission.--
            (1) Hearings and sessions.--The Commission may, for the 
        purpose of carrying out this Act, hold hearings, sit and act at 
        times and places, take testimony, and receive evidence as the 
        Commission considers appropriate.
            (2) Powers of members and agents.--Any member or agent of 
        the Commission may, if authorized by the Commission, take any 
        action which the Commission is authorized to take by this 
        section.
            (3) Obtaining official data.--The Commission may secure 
        directly from any department or agency of the United States 
        information necessary to enable it to carry out this Act. Upon 
        request of the Chairperson of the Commission, the head of that 
        department or agency shall furnish that information to the 
        Commission.
            (4) Gifts, bequests, and devises.--The Commission may 
        accept, use, and dispose of gifts, bequests, or devises of 
        services or property, both real and personal, for the purpose 
        of aiding or facilitating the work of the Commission. Gifts, 
        bequests, or devises of money and proceeds from sales of other 
        property received as gifts, bequests, or devises shall be 
        deposited in the Treasury and shall be available for 
        disbursement upon order of the Commission. For purposes of 
        Federal income, estate, and gift taxes, property accepted under 
        this subsection shall be considered as a gift, bequest, or 
        devise to the United States.
            (5) Mails.--The Commission may use the United States mails 
        in the same manner and under the same conditions as other 
        departments and agencies of the United States.
            (6) Administrative support services.--Upon the request of 
        the Commission, the Administrator of General Services shall 
        provide to the Commission, on a reimbursable basis, the 
        administrative support services necessary for the Commission to 
        carry out its responsibilities under this Act.
            (7) Contract authority.--The Commission may 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)).
    (i) Termination.--The Commission shall terminate on 30 days after 
submitting its report pursuant to subsection (b)(3).
    (j) Authorization of Appropriations.--There is authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 613. RESEARCH ON OUTCOMES OF HEALTH CARE ITEMS AND SERVICES.

    (a) Research, Demonstrations, and Evaluations.--
            (1) Improvement of effectiveness and efficiency.--
                    (A) In general.--To improve the quality, 
                effectiveness, and efficiency of health care delivered 
                pursuant to the programs established under titles 
                XVIII, XIX, and XXI of the Social Security Act, the 
                Secretary acting through the Director of the Agency for 
                Healthcare Research and Quality (in this section 
                referred to as the ``Director''), shall conduct and 
                support research to meet the priorities and requests 
                for scientific evidence and information identified by 
                such programs with respect to--
                            (i) the outcomes, comparative clinical 
                        effectiveness, and appropriateness of health 
                        care items and services (including prescription 
                        drugs); and
                            (ii) strategies for improving the 
                        efficiency and effectiveness of such programs, 
                        including the ways in which such items and 
                        services are organized, managed, and delivered 
                        under such programs.
                    (B) Specification.--To respond to priorities and 
                information requests in subparagraph (A), the Secretary 
                may conduct or support, by grant, contract, or 
                interagency agreement, research, demonstrations, 
                evaluations, technology assessments, or other 
                activities, including the provision of technical 
                assistance, scientific expertise, or methodological 
                assistance.
            (2) Priorities.--
                    (A) In general.--The Secretary shall establish a 
                process to develop priorities that will guide the 
                research, demonstrations, and evaluation activities 
                undertaken pursuant to this section.
                    (B) Initial list.--Not later than 6 months after 
                the date of the enactment of this Act, the Secretary 
                shall establish an initial list of priorities for 
                research related to health care items and services 
                (including prescription drugs).
                    (C) Process.--In carrying out subparagraph (A), the 
                Secretary--
                            (i) shall ensure that there is broad and 
                        ongoing consultation with relevant stakeholders 
                        in identifying the highest priorities for 
                        research, demonstrations, and evaluations to 
                        support and improve the programs established 
                        under titles XVIII, XIX, and XXI of the Social 
                        Security Act;
                            (ii) may include health care items and 
                        services which impose a high cost on such 
                        programs, as well as those which may be 
                        underutilized or overutilized and which may 
                        significantly improve the prevention, 
                        treatment, or cure of diseases and conditions 
                        (including chronic conditions) which impose 
                        high direct or indirect costs on patients or 
                        society; and
                            (iii) shall ensure that the research and 
                        activities undertaken pursuant to this section 
                        are responsive to the specified priorities and 
                        are conducted in a timely manner.
            (3) Evaluation and synthesis of scientific evidence.--
                    (A) In general.--The Secretary shall--
                            (i) evaluate and synthesize available 
                        scientific evidence related to health care 
                        items and services (including prescription 
                        drugs) identified as priorities in accordance 
                        with paragraph (2) with respect to the 
                        comparative clinical effectiveness, outcomes, 
                        appropriateness, and provision of such items 
                        and services (including prescription drugs);
                            (ii) identify issues for which existing 
                        scientific evidence is insufficient with 
                        respect to such health care items and services 
                        (including prescription drugs);
                            (iii) disseminate to prescription drug 
                        plans and MA-PD plans under part D of title 
                        XVIII of the Social Security Act, other health 
plans, and the public the findings made under clauses (i) and (ii); and
                            (iv) work in voluntary collaboration with 
                        public and private sector entities to 
                        facilitate the development of new scientific 
                        knowledge regarding health care items and 
                        services (including prescription drugs).
                    (B) Initial research.--The Secretary shall complete 
                the evaluation and synthesis of the initial research 
                required by the priority list developed under paragraph 
                (2)(B) not later than 18 months after the development 
                of such list.
                    (C) Dissemination.--
                            (i) In general.--To enhance patient safety 
                        and the quality of health care, the Secretary 
                        shall make available and disseminate in 
                        appropriate formats to prescription drugs plans 
                        under part D, and MA-PD plans under part C, of 
                        title XVIII of the Social Security Act, other 
                        health plans, and the public the evaluations 
                        and syntheses prepared pursuant to subparagraph 
                        (A) and the findings of research conducted 
                        pursuant to paragraph (1). In carrying out this 
                        clause the Secretary, in order to facilitate 
                        the availability of such evaluations and 
                        syntheses or findings at every decision point 
                        in the health care system, shall--
                                    (I) present such evaluations and 
                                syntheses or findings in a form that is 
                                easily understood by the individuals 
                                receiving health care items and 
                                services (including prescription drugs) 
                                under such plans and periodically 
                                assess that the requirements of this 
                                subclause have been met; and
                                    (II) provide such evaluations and 
                                syntheses or findings and other 
                                relevant information through easily 
                                accessible and searchable electronic 
                                mechanisms, and in hard copy formats as 
                                appropriate.
                            (ii) Rule of construction.--Nothing in this 
                        section shall be construed as--
                                    (I) affecting the authority of the 
                                Secretary or the Commissioner of Food 
                                and Drugs under the Federal Food, Drug, 
                                and Cosmetic Act or the Public Health 
                                Service Act; or
                                    (II) conferring any authority 
                                referred to in subclause (I) to the 
                                Director.
                    (D) Accountability.--In carrying out this 
                paragraph, the Secretary shall implement activities in 
                a manner that--
                            (i) makes publicly available all scientific 
                        evidence relied upon and the methodologies 
                        employed, provided such evidence and method are 
                        not protected from public disclosure by section 
                        1905 of title 18, United States Code, or other 
                        applicable law so that the results of the 
                        research, analyses, or syntheses can be 
                        evaluated or replicated; and
                            (ii) ensures that any information needs and 
                        unresolved issues identified in subparagraph 
                        (A)(ii) are taken into account in priority-
                        setting for future research conducted by the 
                        Secretary.
            (4) Confidentiality.--
                    (A) In general.--In making use of administrative, 
                clinical, and program data and information developed or 
                collected with respect to the programs established 
                under titles XVIII, XIX, and XXI of the Social Security 
                Act, for purposes of carrying out the requirements of 
                this section or the activities authorized under title 
                IX of the Public Health Service Act (42 U.S.C. 299 et 
                seq.), such data and information shall be protected in 
                accordance with the confidentiality requirements of 
                title IX of the Public Health Service Act.
                    (B) Rule of construction.--Nothing in this section 
                shall be construed to require or permit the disclosure 
                of data provided to the Secretary that is otherwise 
                protected from disclosure under the Federal Food, Drug, 
                and Cosmetic Act, section 1905 of title 18, United 
                States Code, or other applicable law.
            (5) Evaluations.--The Secretary shall conduct and support 
        evaluations of the activities carried out under this section to 
        determine the extent to which such activities have had an 
        effect on outcomes and utilization of health care items and 
        services.
            (6) Improving information available to health care 
        providers, patients, and policymakers.--Not later than 18 
        months after the date of enactment of this Act, the Secretary 
        shall identify options that could be undertaken in voluntary 
        collaboration with private and public entities (as appropriate) 
        for the--
                    (A) provision of more timely information through 
                the programs established under titles XVIII, XIX, and 
                XXI of the Social Security Act, regarding the outcomes 
                and quality of patient care, including clinical and 
                patient-reported outcomes, especially with respect to 
                interventions and conditions for which clinical trials 
                would not be feasible or raise ethical concerns that 
                are difficult to address;
                    (B) acceleration of the adoption of innovation and 
                quality improvement under such programs; and
                    (C) development of management tools for the 
                programs established under titles XIX and XXI of the 
                Social Security Act, and with respect to the programs 
                established under such titles, assess the feasibility 
                of using administrative or claims data, to--
                            (i) improve oversight by State officials;
                            (ii) support Federal and State initiatives 
                        to improve the quality, safety, and efficiency 
                        of services provided under such programs; and
                            (iii) provide a basis for estimating the 
                        fiscal and coverage impact of Federal or State 
                        program and policy changes.
    (b) Recommendations.--
            (1) Disclaimer.--In carrying out this section, the Director 
        shall--
                    (A) not mandate national standards of clinical 
                practice or quality health care standards; and
                    (B) include in any recommendations resulting from 
                projects funded and published by the Director, a 
                corresponding reference to the prohibition described in 
                subparagraph (A).
            (2) Requirement for implementation.--Research, evaluation, 
        and communication activities performed pursuant to this section 
        shall reflect the principle that clinicians and patients should 
        have the best available evidence upon which to make choices in 
        health care items and services, in providers, and in health 
        care delivery systems, recognizing that patient subpopulations 
        and patient and physician preferences may vary.
            (3) Rule of construction.--Nothing in this section shall be 
        construed to provide the Director with authority to mandate a 
        national standard or require a specific approach to quality 
        measurement and reporting.
    (c) Research With Respect to Dissemination.--The Secretary, acting 
through the Director, may conduct or support research with respect to 
improving methods of disseminating information in accordance with 
subsection (a)(3)(C).
    (d) Limitation on CMS.--The Administrator of the Centers for 
Medicare & Medicaid Services may not use data obtained in accordance 
with this section to withhold coverage of a prescription drug.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section, $50,000,000 for fiscal year 
2004, and such sums as may be necessary for each fiscal year 
thereafter.

SEC. 614. HEALTH CARE THAT WORKS FOR ALL AMERICANS: CITIZENS HEALTH 
              CARE WORKING GROUP.

    (a) Findings.--Congress finds the following:
            (1) In order to improve the health care system, the 
        American public must engage in an informed national public 
        debate to make choices about the services they want covered, 
        what health care coverage they want, and how they are willing 
        to pay for coverage.
            (2) More than a trillion dollars annually is spent on the 
        health care system, yet--
                    (A) 41,000,000 Americans are uninsured;
                    (B) insured individuals do not always have access 
                to essential, effective services to improve and 
                maintain their health; and
                    (C) employers, who cover over 170,000,000 
                Americans, find providing coverage increasingly 
                difficult because of rising costs and double digit 
                premium increases.
            (3) Despite increases in medical care spending that are 
        greater than the rate of inflation, population growth, and 
        Gross Domestic Product growth, there has not been a 
        commensurate improvement in our health status as a nation.
            (4) Health care costs for even just 1 member of a family 
        can be catastrophic, resulting in medical bills potentially 
        harming the economic stability of the entire family.
            (5) Common life occurrences can jeopardize the ability of a 
        family to retain private coverage or jeopardize access to 
        public coverage.
            (6) Innovations in health care access, coverage, and 
        quality of care, including the use of technology, have often 
        come from States, local communities, and private sector 
        organizations, but more creative policies could tap this 
        potential.
            (7) Despite our Nation's wealth, the health care system 
        does not provide coverage to all Americans who want it.
    (b) Purposes.--The purposes of this section are--
            (1) to provide for a nationwide public debate about 
        improving the health care system to provide every American with 
        the ability to obtain quality, affordable health care coverage; 
        and
            (2) to provide for a vote by Congress on the 
        recommendations that result from the debate.
    (c) Establishment.--The Secretary, acting through the Agency for 
Healthcare Research and Quality, shall establish an entity to be known 
as the Citizens' Health Care Working Group (referred to in this section 
as the ``Working Group'').
    (d) Membership.--
            (1) Number and appointment.--The Working Group shall be 
        composed of 15 members. One member shall be the Secretary. The 
        Comptroller General of the United States shall appoint 14 
        members.
            (2) Qualifications.--
                    (A) In general.--The membership of the Working 
                Group shall include--
                            (i) consumers of health services that 
                        represent those individuals who have not had 
                        insurance within 2 years of appointment, that 
                        have had chronic illnesses, including mental 
                        illness, are disabled, and those who receive 
                        insurance coverage through medicare and 
                        medicaid; and
                            (ii) individuals with expertise in 
                        financing and paying for benefits and access to 
                        care, business and labor perspectives, and 
                        providers of health care.
                The membership shall reflect a broad geographic 
                representation and a balance between urban and rural 
                representatives.
                    (B) Prohibited appointments.--Members of the 
                Working Group shall not include Members of Congress or 
                other elected government officials (Federal, State, or 
                local). Individuals appointed to the Working Group 
                shall not be paid employees or representatives of 
                associations or advocacy organizations involved in the 
                health care system.
    (e) Period of Appointment.--Members of the Working Group shall be 
appointed for a life of the Working Group. Any vacancies shall not 
affect the power and duties of the Working Group but shall be filled in 
the same manner as the original appointment.
    (f) Designation of the Chairperson.--Not later than 15 days after 
the date on which all members of the Working Group have been appointed 
under subsection (d)(1), the Comptroller General shall designate the 
chairperson of the Working Group.
    (g) Subcommittees.--The Working Group may establish subcommittees 
if doing so increases the efficiency of the Working Group in completing 
its tasks.
    (h) Duties.--
            (1) Hearings.--Not later than 90 days after the date of the 
        designation of the chairperson under subsection (f), the 
        Working Group shall hold hearings to examine--
                    (A) the capacity of the public and private health 
                care systems to expand coverage options;
                    (B) the cost of health care and the effectiveness 
                of care provided at all stages of disease;
                    (C) innovative State strategies used to expand 
                health care coverage and lower health care costs;
                    (D) local community solutions to accessing health 
                care coverage;
                    (E) efforts to enroll individuals currently 
                eligible for public or private health care coverage;
                    (F) the role of evidence-based medical practices 
                that can be documented as restoring, maintaining, or 
                improving a patient's health, and the use of technology 
                in supporting providers in improving quality of care 
                and lowering costs; and
                    (G) strategies to assist purchasers of health care, 
                including consumers, to become more aware of the impact 
                of costs, and to lower the costs of health care.
            (2) Additional hearings.--The Working Group may hold 
        additional hearings on subjects other than those listed in 
        paragraph (1) so long as such hearings are determined to be 
        necessary by the Working Group in carrying out the purposes of 
this section. Such additional hearings do not have to be completed 
within the time period specified in paragraph (1) but shall not delay 
the other activities of the Working Group under this section.
            (3) The health report to the american people.--Not later 
        than 90 days after the hearings described in paragraphs (1) and 
        (2) are completed, the Working Group shall prepare and make 
        available to health care consumers through the Internet and 
        other appropriate public channels, a report to be entitled, 
        ``The Health Report to the American People''. Such report shall 
        be understandable to the general public and include--
                    (A) a summary of--
                            (i) health care and related services that 
                        may be used by individuals throughout their 
                        life span;
                            (ii) the cost of health care services and 
                        their medical effectiveness in providing better 
                        quality of care for different age groups;
                            (iii) the source of coverage and payment, 
                        including reimbursement, for health care 
                        services;
                            (iv) the reasons people are uninsured or 
                        underinsured and the cost to taxpayers, 
                        purchasers of health services, and communities 
                        when Americans are uninsured or underinsured;
                            (v) the impact on health care outcomes and 
                        costs when individuals are treated in all 
                        stages of disease;
                            (vi) health care cost containment 
                        strategies; and
                            (vii) information on health care needs that 
                        need to be addressed;
                    (B) examples of community strategies to provide 
                health care coverage or access;
                    (C) information on geographic-specific issues 
                relating to health care;
                    (D) information concerning the cost of care in 
                different settings, including institutional-based care 
                and home and community-based care;
                    (E) a summary of ways to finance health care 
                coverage; and
                    (F) the role of technology in providing future 
                health care including ways to support the information 
                needs of patients and providers.
            (4) Community meetings.--
                    (A) In general.--Not later than 1 year after the 
                date on which all the members of the Working Group have 
                been appointed under subsection (d)(1) and 
                appropriations are first made available to carry out 
                this section, the Working Group shall initiate health 
                care community meetings throughout the United States 
                (in this paragraph referred to as ``community 
                meetings''). Such community meetings may be 
                geographically or regionally based and shall be 
                completed within 180 days after the initiation of the 
                first meeting.
                    (B) Number of meetings.--The Working Group shall 
                hold a sufficient number of community meetings in order 
                to receive information that reflects--
                            (i) the geographic differences throughout 
                        the United States;
                            (ii) diverse populations; and
                            (iii) a balance among urban and rural 
                        populations.
                    (C) Meeting requirements.--
                            (i) Facilitator.--A State health officer 
                        may be the facilitator at the community 
                        meetings.
                            (ii) Attendance.--At least 1 member of the 
                        Working Group shall attend and serve as chair 
                        of each community meeting. Other members may 
                        participate through interactive technology.
                            (iii) Topics.--The community meetings 
                        shall, at a minimum, address the following 
                        questions:
                                    (I) What health care benefits and 
                                services should be provided?
                                    (II) How does the American public 
                                want health care delivered?
                                    (III) How should health care 
                                coverage be financed?
                                    (IV) What trade-offs are the 
                                American public willing to make in 
                                either benefits or financing to ensure 
                                access to affordable, high quality 
                                health care coverage and services?
                            (iv) Interactive technology.--The Working 
                        Group may encourage public participation in 
                        community meetings through interactive 
                        technology and other means as determined 
                        appropriate by the Working Group.
                    (D) Interim requirements.--Not later than 180 days 
                after the date of completion of the community meetings, 
                the Working Group shall prepare and make available to 
                the public through the Internet and other appropriate 
                public channels, an interim set of recommendations on 
                health care coverage and ways to improve and strengthen 
                the health care system based on the information and 
                preferences expressed at the community meetings. There 
                shall be a 90-day public comment period on such 
                recommendations.
    (i) Recommendations.--Not later than 120 days after the expiration 
of the public comment period described in subsection (h)(4)(D), the 
Working Group shall submit to Congress and the President a final set of 
recommendations.
    (j) Administration.--
            (1) Executive director.--There shall be an Executive 
        Director of the Working Group who shall be appointed by the 
        chairperson of the Working Group in consultation with the 
        members of the Working Group.
            (2) Compensation.--While serving on the business of the 
        Working Group (including travel time), a member of the Working 
        Group 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 while so serving 
away from home and the member's regular place of business, a member may 
be allowed travel expenses, as authorized by the chairperson of the 
Working Group. For purposes of pay and employment benefits, rights, and 
privileges, all personnel of the Working Group shall be treated as if 
they were employees of the Senate.
            (3) Information from federal agencies.--The Working Group 
        may secure directly from any Federal department or agency such 
        information as the Working Group considers necessary to carry 
        out this section. Upon request of the Working Group, the head 
        of such department or agency shall furnish such information.
            (4) Postal services.--The Working Group may use the United 
        States mails in the same manner and under the same conditions 
        as other departments and agencies of the Federal Government.
    (k) Detail.--Not more than 10 Federal Government employees employed 
by the Department of Labor and 10 Federal Government employees employed 
by the Department of Health and Human Services may be detailed to the 
Working Group under this section without further reimbursement. Any 
detail of an employee shall be without interruption or loss of civil 
service status or privilege.
    (l) Temporary and Intermittent Services.--The chairperson of the 
Working Group may procure temporary and intermittent services under 
section 3109(b) of title 5, United States Code, at rates for 
individuals which do not exceed the daily equivalent of the annual rate 
of basic pay prescribed for level V of the Executive Schedule under 
section 5316 of such title.
    (m) Annual Report.--Not later than 1 year after the date of 
enactment of this Act, and annually thereafter during the existence of 
the Working Group, the Working Group shall report to Congress and make 
public a detailed description of the expenditures of the Working Group 
used to carry out its duties under this section.
    (n) Sunset of Working Group.--The Working Group shall terminate on 
the date that is 2 years after the date on which all the members of the 
Working Group have been appointed under subsection (d)(1) and 
appropriations are first made available to carry out this section.
    (o) Administration Review and Comments.--Not later than 45 days 
after receiving the final recommendations of the Working Group under 
subsection (i), the President shall submit a report to Congress which 
shall contain--
            (1) additional views and comments on such recommendations; 
        and
            (2) recommendations for such legislation and administrative 
        actions as the President considers appropriate.
    (p) Required Congressional Action.--Not later than 45 days after 
receiving the report submitted by the President under subsection (o), 
each committee of jurisdiction of Congress, the Committee on Finance of 
the Senate, the Committee on Health, Education, Labor, and Pensions of 
the Senate, the Committee on Ways and Means of the House of 
Representatives, the Committee on Energy and Commerce of the House of 
Representatives, Committee on Education and the Workforce of the House 
of Representatives, shall hold at least 1 hearing on such report and on 
the final recommendations of the Working Group submitted under 
subsection (i).
    (q) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated to 
        carry out this section, other than subsection (h)(3), 
        $3,000,000 for each of fiscal years 2005 and 2006.
            (2) Health report to the american people.--There are 
        authorized to be appropriated for the preparation and 
        dissemination of the Health Report to the American People 
        described in subsection (h)(3), such sums as may be necessary 
        for the fiscal year in which the report is required to be 
        submitted.

SEC. 615. FUNDING START-UP ADMINISTRATIVE COSTS FOR MEDICARE REFORM.

    (a) In General.--There are appropriated to carry out this Act 
(including the amendments made by this Act), to be transferred from the 
Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund--
            (1) not to exceed $1,000,000,000 for the Centers for 
        Medicare & Medicaid Services; and
            (2) not to exceed $500,000,000 for the Social Security 
        Administration.
    (b) Availability.--Amounts provided under subsection (a) shall 
remain available until September 30, 2005.
    (c) Application.--From amounts provided under subsection (a)(2), 
the Social Security Administration may reimburse the Internal Revenue 
Service for expenses in carrying out this Act (and the amendments made 
by this Act).
    (d) Transfer.--The President may transfer amounts provided under 
subsection (a) between the Centers for Medicare & Medicaid Services and 
the Social Security Administration. Notice of such transfers shall be 
transmitted within 15 days to the authorizing committees of the House 
of Representatives and of the Senate.

SEC. 616. HEALTH CARE INFRASTRUCTURE IMPROVEMENT PROGRAM.

    Title XVIII is amended by adding at the end the following new 
section:

            ``health care infrastructure improvement program

    ``Sec. 1897. (a) Establishment.--The Secretary shall establish a 
loan program that provides loans to qualifying hospitals for payment of 
the capital costs of projects described in subsection (d).
    ``(b) Application.--No loan may be provided under this section to a 
qualifying hospital except pursuant to an application that is submitted 
and approved in a time, manner, and form specified by the Secretary. A 
loan under this section shall be on such terms and conditions and meet 
such requirements as the Secretary determines appropriate.
    ``(c) Selection Criteria.--
            ``(1) In general.--The Secretary shall establish criteria 
        for selecting among qualifying hospitals that apply for a loan 
        under this section. Such criteria shall consider the extent to 
        which the project for which loan is sought is nationally or 
        regionally significant, in terms of expanding or improving the 
        health care infrastructure of the United States or the region 
        or in terms of the medical benefit that the project will have.
            ``(2) Qualifying hospital defined.--For purposes of this 
        section, the term `qualifying hospital' means a hospital that--
                    ``(A) is engaged in research in the causes, 
                prevention, and treatment of cancer; and
                    ``(B) is designated as a cancer center for the 
                National Cancer Institute or is designated by the State 
                as the official cancer institute of the State.
    ``(d) Projects.--A project described in this subsection is a 
project of a qualifying hospital that is designed to improve the health 
care infrastructure of the hospital, including construction, 
renovation, or other capital improvements.
    ``(e) State and Local Permits.--The provision of a loan under this 
section with respect to a project shall not--
            ``(1) relieve any recipient of the loan of any obligation 
        to obtain any required State or local permit or approval with 
        respect to the project;
            ``(2) limit the right of any unit of State or local 
        government to approve or regulate any rate of return on private 
        equity invested in the project; or
            ``(3) otherwise supersede any State or local law (including 
        any regulation) applicable to the construction or operation of 
        the project.
    ``(f) Forgiveness of Indebtedness.--The Secretary may forgive a 
loan provided to a qualifying hospital under this section under terms 
and conditions that are analogous to the loan forgiveness provision for 
student loans under part D of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1087a et seq.), except that the Secretary shall 
condition such forgiveness on the establishment by the hospital of--
                    ``(A) an outreach program for cancer prevention, 
                early diagnosis, and treatment that provides services 
                to a substantial majority of the residents of a State 
                or region, including residents of rural areas;
                    ``(B) an outreach program for cancer prevention, 
                early diagnosis, and treatment that provides services 
                to multiple Indian tribes; and
                    ``(C)(i) unique research resources (such as 
                population databases); or
                    ``(ii) an affiliation with an entity that has 
                unique research resources.
    ``(g) Funding.--
            ``(1) In general.--There are appropriated, out of amounts 
        in the Treasury not otherwise appropriated, to carry out this 
        section, $200,000,000, to remain available during the period 
        beginning on July 1, 2004, and ending on September 30, 2008.
            ``(2) Administrative costs.--From funds made available 
        under paragraph (1), the Secretary may use, for the 
        administration of this section, not more than $2,000,000 for 
        each of fiscal years 2004 through 2008.
            ``(3) Availability.--Amounts appropriated under this 
        section shall be available for obligation on July 1, 2004.
    ``(h) Report to Congress.--Not later than 4 years after the date of 
the enactment of this section, the Secretary shall submit to Congress a 
report on the projects for which loans are provided under this section 
and a recommendation as to whether the Congress should authorize the 
Secretary to continue loans under this section beyond fiscal year 
2008.''.
                                 <all>