[Congressional Record Volume 147, Number 27 (Monday, March 5, 2001)]
[Senate]
[Pages S1818-S1823]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI (for himself, Mr. Kerry, Mr. Kyl, Mr. Smith of 
        New Hampshire, Mr. Helms, Mr. Reid, Mrs. Lincoln, and Mr. 
        Hagel):
  S. 452. A bill to amend title XVIII of the Social Security Act to 
ensure that the Secretary of Health and Human Services provides 
appropriate guidance to physicians, providers of services, and 
ambulance providers that are attempting to properly submit claims under 
the medicare program to ensure that the Secretary does not target 
inadvertent billing errors; to the Committee on Finance.
  Mr. MURKOWSKI. Mr. President, right now, all across America, Medicare 
beneficiaries are seeking medical care from a flawed health care 
system. Reduced benefit packages, ever escalating costs, and limited 
access in rural areas are just a few of the problems our system faces 
on a daily basis. For these reasons, Congress must continue to move 
towards the modernization of Medicare. But as we address the needs of 
beneficiaries, we must not turn our back upon the very providers that 
seniors rely upon for their care.
  Who are providers? They are the physicians, the hospitals, the 
nursing homes, and others who deliver quality care to our needy 
Medicare population. They are the backbone of our complex health care 
network. When our nation's seniors need care, it is the provider who 
heals, not the health insurer, and certainly not the federal 
government.
  But more, and more often, seniors are being told by providers that 
they don't accept Medicare. This is becoming even more common in rural 
areas, where the number of physicians is limited and access to quality 
care is extremely restricted. Quite simply, beneficiaries are being 
told that their insurance is simply not wanted. Why? Well it's not as 
simple as low reimbursement rates. In fact it's much more complex.
  The infrastructure that manages the Medicare program, the Health Care 
Financing Administration, HCFA, and its network of contractors, have 
built up a system designed to block care and micro-manage independent 
practices. Providers simply cannot afford to keep up with the seemingly 
endless number of complex, redundant, and unnecessary regulations. And 
if providers do participate? Well, a simple administrative error in 
submitting a claim could subject them to heavy-handed audits and the 
financial devastation of their practice. Should we force providers to 
choose between protecting their practice and caring for seniors?
  I believe the answer is no. For this reason, I am introducing the 
``Medicare Education and Regulatory Fairness Act of 2001.'' Co-
sponsored by Senators Kerry, Kyl, Helms, Reid, Lincoln, Hagel, and Bob 
Smith, this legislation will restore fairness to the Medicare system. 
It will allow providers to practice medicine without fearing the 
threats, intimidation, and aggressive tactics of a faceless 
bureaucratic machine.
  Most importantly, this bill will reform the flawed appeals process 
within HCFA. Currently, a provider who allegedly has received an 
overpayment is forced to choose between three options: admit the 
overpayment, submit additional information to mitigate the charge, or 
appeal the decision. However, providers who choose to submit

[[Page S1819]]

additional evidence must subject their entire practice to review and 
waive their appeal rights. That's right--to submit additional evidence 
you must waive your right to an appeal!
  And what is the result of this maddening system that runs contrary to 
our nation's history of fair and just administrative decisions? Often, 
providers are intimidated into accepting the arbitrary decision of an 
auditor employed by a HCFA contractor. Sometimes, they are even forced 
to pull out of the Medicare program. In the end, our senior population 
suffers.
  I was particularly heartened to see that our new President agrees 
with the spirit of this bill. In his recent budget, the administration 
stated that the ``current system is too complex, too centralized, and 
becoming more so each year. Burdensome regulations and other central 
directives force providers to take time away from patients to comply 
with excessive and complex paperwork.'' I completely agree.
  Under my bill, providers will be allowed to retain their appeal 
rights should they choose to first submit additional evidence to 
mitigate the charge. Many providers receive an overpayment as the 
result of a simple administrative mistake. For cases not involving 
fraud, a provider will be able to return that overpayment within twelve 
months without fear of prosecution. This is a common sense approach, 
and will not lead to any additional costs to the Medicare system.
  To bring additional fairness to the system, my bill will prohibit the 
retroactive application of regulations, and allow providers to 
challenge the constitutionality of HCFA regulations. Further, it will 
prohibit the crippling recovery of overpayments during an appeal, and 
bar the unfair method of withholding valid future payments to recover 
past overpayments. These common sense measures maintain the financial 
viability of medical practices during the resolution of payment 
controversies, and restore fundamental fairness to the dispute 
resolution procedures existing within HCFA.
  Like many of our nation's problems, the key to improvement is found 
in education. For this reason, I have included language that stipulates 
that at least 10 percent of the Medicare Integrity Program funds, and 
two percent of carrier funds, must be devoted to provider education 
programs. Providers cannot be expected to comply with the endless 
number of Medicare regulations if they are not shown how to submit 
clean claims. We must ensure that providers are given the information 
needed to eliminate future billing errors, and improve the 
responsiveness of HCFA.
  It is with the goal of protecting our Medicare population, and the 
providers who tend care, that leads me to introduce the ``Medicare 
Education and Regulatory Fairness Act of 2001.'' This bill will ensure 
that providers are treated with the respect that they deserve, and that 
Medicare beneficiaries aren't told that their health insurance isn't 
wanted. We owe it to our nation's seniors. I urge immediate action on 
this worthy bill.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 452

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Medicare 
     Education and Regulatory Fairness Act of 2001''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.

                       TITLE I--REGULATORY REFORM

Sec. 101. Prospective application of certain regulations.
Sec. 102. Requirements for judicial and regulatory challenges of 
              regulations.
Sec. 103. Prohibition of recovering past overpayments by certain means.
Sec. 104. Prohibition of recovering past overpayments if appeal 
              pending.
Sec. 105. Prohibition of random prepayment audits.
Sec. 106. Exception on prohibition of waiving medicare copayment.
Sec. 107. Effective date.

                   TITLE II--APPEALS PROCESS REFORMS

Sec. 201. Construction of hearing rights related to decisions to deny 
              or not renew a physician enrollment agreement.
Sec. 202. Reform of post-payment audit process.
Sec. 203. Definitions relating to physicians, providers of services, 
              and providers of ambulance services.
Sec. 204. Right to appeal on behalf of deceased beneficiaries.
Sec. 205. Effective date.

                    TITLE III--EDUCATION COMPONENTS

Sec. 301. Designated funding levels for physician and provider 
              education.
Sec. 302. Information requests.

               TITLE IV--SUSTAINABLE GROWTH RATE REFORMS

Sec. 401. Inclusion of regulatory costs in the calculation of the 
              sustainable growth rate.

          TITLE V--POLICY DEVELOPMENT REGARDING E&M GUIDELINES

Sec. 501. Policy development regarding E&M Documentation Guidelines.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Congress should focus more resources on and work with 
     physicians and health care providers to combat fraud in the 
     medicare program.
       (2) The overwhelming majority of physicians and other 
     providers in the United States are law-abiding citizens who 
     provide important services and care to patients each day.
       (3) Physicians and other providers of services that 
     participate in the medicare program often have trouble wading 
     through a confusing and sometimes even contradictory maze of 
     medicare regulations. Keeping track of the morass of medicare 
     regulations detracts from the time that physicians have to 
     treat patients.
       (4) Due to the overly complex nature of medicare 
     regulations and the risk of being the subject of an 
     aggressive government investigation, many physicians are 
     leaving the medicare program, limiting the number of medicare 
     patients they see, or refusing to accept new medicare 
     patients at all. If this trend continues, health care for the 
     millions of patients nationwide who depend on medicare will 
     be seriously compromised. Congress has an obligation to 
     prevent this from happening.
       (5) Regulatory fairness for physicians and providers as 
     well as increased access to education about medicare 
     regulations are necessary to preserve the integrity of our 
     health care system and provide for the health of our 
     population.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Billing.--The term ``billing'' includes any requirement 
     related to the content and timing of an order for care or a 
     plan of treatment by a physician, a provider of service, or a 
     provider of ambulance services.
       (2) Carrier.--The term ``carrier'' means a carrier (as 
     defined in section 1842(f) of the Social Security Act (42 
     U.S.C. 1395u(f))) with a contract under title XVIII of such 
     Act to administer benefits under part B of such title.
       (3) Extrapolation.--The term ``extrapolation'' has the 
     meaning given such term in section 1861(ww)(1) of the Social 
     Security Act (as added by section 203(a)).
       (4) Fiscal intermediary.--The term ``fiscal intermediary'' 
     means a fiscal intermediary (as defined in section 1816(a) of 
     the Social Security Act (42 U.S.C. 1395h(a))) with an 
     agreement under section 1816 of such Act to administer 
     benefits under part A or B of such title.
       (5) HCFA.--The term ``HCFA'' means the Health Care 
     Financing Administration.
       (6) 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.).
       (7) Physician.--The term ``physician'' has the meaning 
     given such term in section 1861(r) of the Social Security Act 
     (42 U.S.C. 1395x(r)).
       (8) Prepayment review.--The term ``prepayment review'' has 
     the meaning given such term in section 1861(ww)(2) of the 
     Social Security Act (as added by section 203(a)).
       (9) Provider of services.--The term ``provider of 
     services'' has the meaning given such term in section 1861(u) 
     of the Social Security Act (42 U.S.C. 1395x(u)).
       (10) Provider of ambulance services.--The term ``provider 
     of ambulance services'' means a provider of ambulance 
     services described in section 1861(s)(7) of the Social 
     Security Act (42 U.S.C. 1395x(s)(7)).
       (11) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.

                       TITLE I--REGULATORY REFORM

     SEC. 101. PROSPECTIVE APPLICATION OF CERTAIN REGULATIONS.

       Section 1871(a) of the Social Security Act (42 U.S.C. 
     1395hh(a)) is amended by adding at the end the following new 
     paragraphs:
       ``(3) Any regulation described under paragraph (2) shall 
     not take effect earlier than the effective date of the final 
     regulation. Any regulation described under such paragraph 
     that applies to an agency action, including any agency 
     determination, shall only apply as that regulation is in 
     effect at the time that agency action is taken.
       ``(4) The Secretary shall issue a final rule within 12 
     months of the date of publication

[[Page S1820]]

     of an interim final rule. Such final rule shall provide 
     responses to comments submitted in response to the interim 
     final rule. Such final rule shall not establish or change a 
     legal standard not raised in the interim final rule unless a 
     new 60-day comment period is provided.
       ``(5) Carriers, fiscal intermediaries, and States pursuant 
     to an agreement under section 1864 shall not apply new policy 
     guidances or policy changes retroactively to services 
     provided before the date the new policy was issued.''.

     SEC. 102. REQUIREMENTS FOR JUDICIAL AND REGULATORY CHALLENGES 
                   OF REGULATIONS.

       (a) Right To Challenge Constitutionality and Statutory 
     Authority of HCFA Regulations.--Section 1872 of the Social 
     Security Act (42 U.S.C. 1395ii) is amended to read as 
     follows:


            ``application of certain provisions of title ii

       ``Sec. 1872. Subject to subparagraphs (A), (B), (D), and 
     (E) of section 1848(i)(1), the provisions of sections 206 and 
     216(j), and of subsections (a), (d), (e), (h), (i), (j), (k), 
     and (l) of section 205, shall also apply with respect to this 
     title to the same extent as they are applicable with respect 
     to title II, except that--
       ``(1) in applying such provisions with respect to this 
     title, any reference therein to the Commissioner of Social 
     Security or the Social Security Administration shall be 
     considered a reference to the Secretary or the Department of 
     Health and Human Services, respectively; and
       ``(2) section 205(h) shall not apply with respect to any 
     action brought against the Secretary under section 1331, 
     1346, 1361, or 2201 of title 28, United States Code, 
     regardless of whether such action is unrelated to a specific 
     determination of the Secretary, that challenges--
       ``(A) the constitutionality of any provision of this title;
       ``(B) the constitutionality of substantive or interpretive 
     rules of general applicability issued by the Secretary to 
     carry out this title'';
       ``(C) the Secretary's statutory authority to promulgate 
     such substantive or interpretive rules of general 
     applicability; or
       ``(D) a finding of good cause under subparagraph (B) of the 
     third sentence of section 553(b)(3) of title 5, United States 
     Code, if used in the promulgation of such substantive or 
     interpretive rules of general applicability.''.
       (b) Administrative and Judicial Review of Secretary 
     Determinations.--Section 1866(h) of the Act (42 U.S.C. 
     1395cc(h)) is amended--
       (1) in paragraph (1), by striking ``(1)'' and all that 
     follows and inserting the following: ``(1) Except as provided 
     in paragraph (3), an institution or agency dissatisfied with 
     a determination by the Secretary that it is not a provider of 
     services or with a determination described in subsection 
     (b)(2) (regardless of whether such determination has been 
     made by the Secretary or by a State pursuant to an agreement 
     entered into with the Secretary under section 1864 and 
     regardless of whether the Secretary has imposed or may impose 
     a remedy, penalty, or other sanction on the institution or 
     agency in connection with such determination) shall be 
     entitled to a hearing thereon by the Secretary (after 
     reasonable notice) to the same extent as is provided in 
     section 205(b), and to judicial review of the Secretary's 
     final decision after such hearing as is provided in section 
     205(g), except that, in so applying such sections and in 
     applying section 205(l) thereto, any reference therein to the 
     Commissioner of Social Security or the Social Security 
     Administration shall be considered a reference to the 
     Secretary or the Department of Health and Human Services, 
     respectively, and such hearings are subject to the deadlines 
     specified in paragraph (2)f.'';
       (2) by redesignating paragraph (2) as paragraph (3);
       (3) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2)(A)(i) Except as provided in clause (ii), an 
     administrative law judge shall conduct and conclude a hearing 
     on a determination described in subsection (b)(2) and render 
     a decision on such hearing by not later than the end of the 
     90-day period beginning on the date a request for hearing has 
     been timely filed.
       ``(ii) The 90-day period under clause (i) shall not apply 
     in the case of a motion or stipulation by the party 
     requesting the hearing to waive such period.
       ``(B) The Department Appeals Board of the Department of 
     Health and Human Services shall conduct and conclude a review 
     of the decision on a hearing described in subparagraph (A) 
     and make a decision or remand the case to the administrative 
     law judge for reconsideration by not later than the end of 
     the 90-day period beginning on the date a request for review 
     has been timely filed.
       ``(C) In the case of a failure by an administrative law 
     judge to render a decision by the end of the period described 
     in subparagraph (A)(i), the party requesting the hearing may 
     request a review by the Departmental Appeals Board of the 
     Departmental of Health and Human Services, notwithstanding 
     any requirements for a hearing for purposes of the party's 
     right to such a review.
       ``(D) In the case of a request described in subparagraph 
     (D), the Departmental Appeals Board shall review the case de 
     novo. In the case of the failure of the Departmental Appeals 
     Board to render a decision on such hearing by not later than 
     the end of the 60-day period beginning on the date a request 
     for such a Department Appeals Board hearing has been filed, 
     the party requesting the hearing may seek judicial review of 
     the Secretary's decision, notwithstanding any requirements 
     for a hearing for purposes of the party's right to such 
     review.
       ``(E) In the case of a request described in subparagraph 
     (D), the court shall review the case de novo.''; and
       (4) by adding at the end the following new paragraph:
       ``(4) An institution or agency dissatisfied with a finding 
     or determination by the Secretary, or by a State pursuant to 
     an agreement under section 1864, that the institution of 
     agency if out of compliance with any standard or condition of 
     participation under this title (except a determination 
     described in subsection (b)(2)) shall be entitled to a formal 
     review or reconsideration of the finding or determination, in 
     accordance with the regulations prescribed by the Secretary, 
     prior to the imposition of any remedy, penalty, corrective 
     action, or other sanction in connection with the finding or 
     determination.''.

     SEC. 103. PROHIBITION OF RECOVERING PAST OVERPAYMENTS BY 
                   CERTAIN MEANS.

       (a) In General.--Subject to section 104 and except as 
     provided in subsection (b) and notwithstanding sections 
     1815(a), 1842(b), and 1861(v)(1)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1395g(a), 1395u(a), and 
     1395x(v)(1)(A)(ii)), or any other provision of law, for 
     purposes of applying sections 1842(b)(3)(B)(ii), 
     1866(a)(1)(B)(ii), 1870, and 1893 of such Act (42 U.S.C. 
     1395u(b)(3)(B)(ii), 1395cc(a)(1)(B)(ii), 1395gg, and 1395ddd) 
     to pending and future audits, the Secretary shall give a 
     physician, provider of services, or provider of ambulance 
     services the option of entering into an arrangement to offset 
     alleged overpayments against future payments or entering into 
     a repayment plan with its carrier or fiscal intermediary to 
     recoup such an overpayment. Under such an arrangement or 
     plan, a physician, provider of services, or provider of 
     ambulance services shall have up to 3 years to offset or 
     repay the overpayment if the amount of such overpayment 
     exceeds $5,000.
       (b) Exception.--This section shall not apply to cases in 
     which the Secretary finds clear and convincing evidence of 
     fraud or similar fault on the part of the physician, provider 
     of services, or provider of ambulance services or in the case 
     of overpayments for which an offset arrangement is in place 
     as of the date of the enactment of this Act.

     SEC. 104. PROHIBITION OF RECOVERING PAST OVERPAYMENTS IF 
                   APPEAL PENDING.

       Notwithstanding any provision of law, for purposes of 
     applying sections 1842(b)(3)(B)(ii), 1866(a)(1)(B)(ii), 1870, 
     and 1893 of the Social Security Act (42 U.S.C. 
     1395u(b)(3)(B)(ii), 1395cc(a)(1)(B)(ii), 1395gg, and 
     1395ddd), the Secretary may not take any action (or authorize 
     any other person, including any fiscal intermediary, carrier, 
     and contractor under section 1893 of such Act (42 U.S.C. 
     1395ddd)) to recoup an overpayment or to impose a penalty 
     during the period in which a physician, provider of services, 
     or provider of ambulance services is appealing a 
     determination that such an overpayment has been made or the 
     amount of the overpayment.

     SEC. 105. PROHIBITION OF RANDOM PREPAYMENT AUDITS.

       Carriers may not, prior to paying a claim under the 
     medicare program, demand the production of records or 
     documentation absent cause.

     SEC. 106. EXCEPTION ON PROHIBITION OF WAIVING MEDICARE 
                   COPAYMENT.

       (a) In General.--Section 1128A(i)(6)(A) of the Social 
     Security Act (42 U.S.C. 1320a-7a(i)(6)(A)) is amended by 
     inserting ``, except for written, mailed communication with 
     existing patients,'' before ``waiver is not''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to communications made on or after the date of 
     the enactment of this Act.

     SEC. 107. EFFECTIVE DATE.

       Except as otherwise provided in section 106(b), the 
     amendments made by this title shall take effect 60 days after 
     the date of enactment of this Act.

                   TITLE II--APPEALS PROCESS REFORMS

     SEC. 201. CONSTRUCTION OF HEARING RIGHTS RELATED TO DECISIONS 
                   TO DENY OR NOT RENEW A PHYSICIAN ENROLLMENT 
                   AGREEMENT.

       Section 1842 of the Social Security Act (42 U.S.C. 1395u) 
     is amended by adding at the end the following new subsection:
       ``(u) A carrier decision to deny an initial physician 
     enrollment application and a carrier decision not to renew a 
     physician enrollment agreement shall be treated as an initial 
     determination subject to the same course of appeals as other 
     initial determinations under section 1869.''.

     SEC. 202. REFORM OF POST-PAYMENT AUDIT PROCESS.

       (a) Carriers.--Section 1842 of the Social Security Act (42 
     U.S.C. 1395u), as amended by section 201, is further amended 
     by adding at the end the following new subsection:
       ``(v) In carrying out its contract under subsection (b)(3), 
     with respect to physicians' services or ambulance services, 
     the carrier shall provide for the recoupment of overpayments 
     in the following manner:
       ``(1)(A) During the 1-year period (or 18-month period in 
     the case of a physician who is in a practice with fewer than 
     10 full-time

[[Page S1821]]

     equivalent employees, including physicians) beginning on the 
     date on which a physician or provider of ambulance services 
     receives an overpayment, the physician or provider of 
     ambulance services may return the overpayment without penalty 
     or interest to the carrier making such overpayment if--
       ``(i) the carrier has not requested any relevant record or 
     file; or
       ``(ii) the case has not been referred before the date of 
     repayment to the Department of Justice or the Office of 
     Inspector General.
       ``(B) If a physician or provider of ambulance services 
     returns an overpayment under subparagraph (A), neither the 
     carrier, contractor under section 1893, nor any law 
     enforcement agency may begin an investigation or target such 
     physician or provider of ambulance services based on any 
     claim associated with the amount the physician or provider of 
     ambulance services has repaid.
       ``(2) If a carrier has decided to conduct a post-payment 
     audit of the physician or provider of ambulance services, the 
     carrier shall send written notice to the physician or 
     provider of ambulance services. If the physician or provider 
     of ambulance services practices in a rural area (as defined 
     in section 1886(d)(2)(D)), such notice must be sent by 
     registered mail.
       ``(3) The carrier or a contractor under section 1893 may 
     not recoup or offset payment amounts based on extrapolation 
     (as defined in section 1861(ww)(1)) for the first time that 
     the physician or provider of ambulance services is alleged as 
     a result of a post-payment audit to have received an 
     overpayment.
       ``(4) As part of any written consent settlement 
     communication, the carrier or a contractor under section 1893 
     shall clearly state that the physician or provider of 
     ambulance services may submit additional information 
     (including evidence other than medical records) to dispute 
     the overpayment amount without waiving any administrative 
     remedy or right to appeal the amount of the overpayment.
       ``(5)(A) Each consent settlement communication from the 
     carrier or a contractor under section 1893 shall clearly 
     state that prepayment review (as defined in section 
     1861(ww)(2)) may be imposed where the physician or provider 
     of ambulance services submits an actual or projected 
     repayment to the carrier or a contractor under section 1893. 
     Subject to subparagraph (D), any prepayment review shall 
     cease when the physician or provider of ambulance services 
     has submitted claims, found by carrier to be covered services 
     and coded properly for the same services that were the basis 
     for instituting the prepayment review, in a 180-day period or 
     after processing claims of at least 75 percent of the volume 
     of the claims (whichever occurs first) received by the 
     carrier in the full month preceding the start of the 
     prepayment review. The 180-day period begins with the date of 
     the carrier's written notification that the physician or 
     provider of ambulance services is being placed on prepayment 
     review.
       ``(B) Prepayment review may not be applied under this part 
     as a result of the voluntary submission of a claim or record 
     under section 1897(b)(2) or as a result of information 
     provided pursuant to a request under section 302(b) of the 
     Medicare Education and Regulatory Fairness Act of 2001.
       ``(C) Carrier prepayment and coverage policies and claims 
     processing screens used to identify claims for medical review 
     must be incorporated as part of the education programs on 
     medicare policy and proper coding made available to 
     physicians and providers of ambulance services.
       ``(D) The time and percentage claim limitations in 
     paragraph (5)(A) shall not apply to cases that have been 
     referred to the Department of Justice or the Office of the 
     Inspector General.''.
       (b) Fiscal Intermediaries.--Section 1816 of the Social 
     Security Act (42 U.S.C. 1395h) is amended by adding at the 
     end the following new subsection:
       ``(m) In carrying out its agreement under this section, 
     with respect to payment for items and services furnished 
     under this part, the fiscal intermediary shall provide for 
     the recoupment of overpayments in the following manner:
       ``(1)(A) During the 1-year period beginning on the date on 
     which a provider of services receives an overpayment, the 
     provider of services may return the overpayment without 
     penalty or interest to the fiscal intermediary making such 
     overpayment if--
       ``(i) the fiscal intermediary has not requested any 
     relevant record or file; or
       ``(ii) the case has not been referred before the date of 
     repayment to the Department of Justice or the Office of 
     Inspector General.
       ``(B) If a provider of services returns an overpayment 
     under subparagraph (A), neither the fiscal intermediary, 
     contractor under section 1893, nor any law enforcement agency 
     may begin an investigation or target such provider of 
     services based on any claim associated with the amount the 
     provider of services has repaid.
       ``(2) If a fiscal intermediary has decided to conduct a 
     post-payment audit of the provider of services, the fiscal 
     intermediary shall send written notice to the provider of 
     services. If the provider of services practices in a rural 
     area (as defined in section 1886(d)(2)(D)), such notice must 
     be sent by registered mail.
       ``(3) The fiscal intermediary or a contractor under section 
     1893 may not recoup or offset payment amounts based on 
     extrapolation (as defined in section 1861(ww)(1)) for the 
     first time that the provider of services is alleged as a 
     result of a post-payment audit to have received an 
     overpayment.
       ``(4) As part of any written consent settlement 
     communication, the fiscal intermediary or a contractor under 
     section 1893 shall clearly state that the provider of 
     services may submit additional information (including 
     evidence other than medical records) to dispute the 
     overpayment amount without waiving any administrative remedy 
     or right to appeal the amount of the overpayment.
       ``(5)(A) Each consent settlement communication from the 
     fiscal intermediary or a contractor under section 1893 shall 
     clearly state that prepayment review (as defined in section 
     1861(ww)(2)) may be imposed where the provider of services 
     submits an actual or projected repayment to the fiscal 
     intermediary or a contractor under section 1893. Subject to 
     subparagraph (D), any prepayment review shall cease when the 
     provider of services has submitted claims, found by the 
     fiscal intermediary to be covered services and coded properly 
     for the same services that were the basis for instituting the 
     prepayment review, in a 180-day period or after processing 
     claims of at least 75 percent of the volume of the claims 
     (whichever occurs first) received by the fiscal intermediary 
     in the full month preceding the start of the prepayment 
     review. The 180-day period begins with the date of the fiscal 
     intermediary's written notification that the provider of 
     services is being placed on prepayment review.
       ``(B) Prepayment review may not be applied under this part 
     as a result of the voluntary submission of a claim, cost 
     report, or record under section 1897(b)(2) or as a result of 
     information provided pursuant to a request under section 
     302(b) of the Medicare Education and Regulatory Fairness Act 
     of 2001.
       ``(C) Fiscal intermediary prepayment and coverage policies 
     and claims processing screens used to identify claims for 
     medical review must be incorporated as part of the education 
     programs on medicare policy and proper coding made available 
     to providers of services.
       ``(D) The time and percentage claim limitations in 
     paragraph (5)(A) shall not apply to cases that have been 
     referred to the Department of Justice or the Office of the 
     Inspector General.''.

     SEC. 203. DEFINITIONS RELATING TO PHYSICIANS, PROVIDERS OF 
                   SERVICES, AND PROVIDERS OF AMBULANCE SERVICES.

       (a) In General.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395 et seq.), as amended by section 102(b) and 
     105(b) of the Medicare, Medicaid, and SCHIP Benefits 
     Improvement and Protection Act of 2000 (as enacted into law 
     by section 1(a)(6) of Public Law 106-554), is amended by 
     adding at the end the following new subsection:

   ``Definitions Relating to Physicians, Providers of Services, and 
                    Providers of Ambulance Services

       ``(ww) For purposes of provisions of this title relating to 
     physicians, providers of services, and providers of ambulance 
     services:
       ``(1) Extrapolation.--The term `extrapolation' means the 
     application of an overpayment dollar amount to a larger 
     grouping of claims than those in the audited sample to 
     calculate a projected overpayment figure.
       ``(2) Prepayment review.--The term `prepayment review' 
     means a carrier's and fiscal intermediary's practice of 
     withholding claim reimbursements from physicians, providers 
     of services, and providers of ambulance services pending 
     review of a claim even if the claims have been properly 
     submitted and reflect medical services provided.''.

     SEC. 204. RIGHT TO APPEAL ON BEHALF OF DECEASED 
                   BENEFICIARIES.

       Notwithstanding section 1870 of the Social Security Act (42 
     U.S.C. 1395gg) or any other provision of law, the Secretary 
     shall permit any physician, provider of services, and 
     provider of ambulance services to appeal any determination of 
     the Secretary under the medicare program on behalf of a 
     deceased beneficiary where no substitute party is available.

     SEC. 205. EFFECTIVE DATE.

       The amendments made by this title shall take effect at the 
     end of the 180-day period beginning on the date of the 
     enactment of this Act.

                    TITLE III--EDUCATION COMPONENTS

     SEC. 301. DESIGNATED FUNDING LEVELS FOR PHYSICIAN AND 
                   PROVIDER EDUCATION.

       (a) Education Programs for Physicians, Providers of 
     Services, and Providers of Ambulance Services.--Title XVIII 
     of the Social Security Act (42 U.S.C. 1395 et seq.) is 
     amended by adding at the end the following new section:


    ``education programs for physicians, providers of services, and 
                    providers of ambulance services

       ``Sec. 1897. (a) Education Program Defined.--In this 
     section, the term `education programs' means programs 
     undertaken in conjunction with health care associations that 
     focus on current billing, coding, cost reporting, and 
     documentation laws, regulations, program memoranda, 
     instructions to regional offices, and fiscal intermediary and 
     carrier manual instructions that place special emphasis on 
     billing, coding, cost reporting, and documentation errors 
     that the Secretary has found occur frequently and remedies 
     for these improper billing, coding, cost reporting, and 
     documentation practices.

[[Page S1822]]

       ``(b) Conduct of Education Programs.--
       ``(1) In general.--Carriers, fiscal intermediaries, and 
     contractors under section 1893 shall conduct education 
     programs for any physician (or a designee), provider of 
     services, or provider of ambulance services that submits a 
     claim or cost report under paragraph (2)(A). Such carriers, 
     intermediaries, and contractors under section 1893 shall 
     conduct outreach to specifically contact physicians and their 
     designees, providers of services, and providers of ambulance 
     services with fewer than 10 full-time-equivalent employees 
     (including physicians) to implement education programs 
     tailored to their education needs and in proximity to their 
     practices.
       ``(2) Provider education.--
       ``(A) Submission of claims, cost reports, and records.--Any 
     physician, provider of services, or provider of ambulance 
     services may voluntarily submit any present or prior claim, 
     cost report, or medical record to the carrier or fiscal 
     intermediary to determine whether the billing, coding, and 
     documentation associated with the claim or cost report is 
     appropriate.
       ``(B) Prohibition of extrapolation.--No claim submitted 
     under subparagraph (A) is subject to any type of 
     extrapolation (as defined in section 1861(ww)(1)).
       ``(C) Safe harbor.--No submission of a claim, cost report, 
     or record under this section shall result in the carrier, 
     fiscal intermediary, a contractor under section 1893, or any 
     law enforcement agency beginning an investigation or 
     targeting an investigation based on any claim, cost report, 
     or record submitted under such subparagraph.
       ``(3) Treatment of claims.--If the carrier or fiscal 
     intermediary finds a claim or cost report under paragraph (2) 
     to be improper, the physician, provider of services, or 
     provider of ambulance services shall have the following 
     options:
       ``(A) Correction of problems.--To correct the 
     documentation, coding, or billing problem to appropriately 
     substantiate the claim or cost report and either--
       ``(i) remit the actual overpayment; or
       ``(ii) receive the appropriate additional payment from the 
     carrier or fiscal intermediary.
       ``(B) Repayment.--To repay the actual overpayment amount if 
     the service is excluded from medicare coverage under this 
     title or if adequate documentation does not exist.
       ``(4) Prohibition of physician and provider of services 
     tracking.--Carriers, fiscal intermediaries, and contractors 
     under section 1893 may not use the record of attendance or 
     information gathered during an education program conducted 
     under this section or the inquiry regarding claims or cost 
     reports under paragraph (2)(A) to select, identify, or track 
     such physician, provider of services, or provider of 
     ambulance services for the purpose of conducting any type of 
     audit or prepayment review.''.
       (b) Funding of Education Programs.--
       (1) Medicare integrity program.--Section 1893(b)(4) of such 
     Act (42 U.S.C. 1395ddd(b)(4)) is amended by adding at the end 
     the following new sentence: ``No less than 10 percent of the 
     program funds shall be devoted to the education programs for 
     physicians, providers of services, and providers of ambulance 
     services under section 1897.''.
       (2) Carriers.--Section 1842(b)(3)(H) of such Act (42 U.S.C. 
     1395u(b)(3)(H)) is amended by adding at the end the following 
     new clause:
       ``(iii) No less than 2 percent of carrier funds shall be 
     devoted to the education programs for physicians under 
     section 1897.''.
       (3) Fiscal intermediaries.--Section 1816(b)(1) of such Act 
     (42 U.S.C. 1395h(b)(1)) is amended--
       (A) in subparagraph (A), by striking ``and'' at the end;
       (B) in subparagraph (B), by striking ``; and'' and 
     inserting a comma; and
       (C) by adding at the end the following new subparagraph:
       ``(C) that such agency or organization is using no less 
     than 1 percent of its funding for education programs for 
     providers of services and providers of ambulance services 
     under section 1897.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to fiscal years beginning after the date of the 
     enactment of this Act.

     SEC. 302. INFORMATION REQUESTS.

       (a) Clear, Concise, and Accurate Answers.--Fiscal 
     intermediaries and carriers shall do their utmost to provide 
     physicians, providers of services, and providers of ambulance 
     services with a clear, concise, and accurate answer regarding 
     billing and cost reporting questions under the medicare 
     program, and will give their true first and last names to 
     such physicians, providers of services, and providers of 
     ambulance services.
       (b) Written Requests.--
       (1) In general.--The Secretary shall establish a process 
     under which a physician, provider of services, or provider of 
     ambulance services may request, free of charge and in writing 
     from a fiscal intermediary or carrier, assistance in 
     addressing questions regarding coverage, billing, 
     documentation, coding, and cost reporting procedures under 
     the medicare program and then the fiscal intermediary or 
     carrier shall respond in writing within 30 business days with 
     the correct substantive or procedural answer.
       (2) Use of written statement.--
       (A) In general.--Subject to subparagraph (C), a written 
     statement under paragraph (1) may be used by the physician, 
     provider of services, or provider of ambulance services who 
     submitted the information request and submitted claims in 
     conformance with the answer of the carrier or fiscal 
     intermediary as proof against a future audit or overpayment 
     allegation under the medicare program.
       (B) Extrapolation prohibition.--Subject to subparagraph 
     (C), no claim submitted under this section shall be subject 
     to extrapolation, if the claim adheres to the conditions set 
     forth in the information response.
       (C) Limitation on application.--Subparagraphs (A) and (B) 
     shall not apply to cases of fraudulent billing.
       (3) Safe harbor.--If a physician, provider of services, or 
     provider of ambulance services requests information under 
     this subsection, neither the fiscal intermediary, the 
     carrier, a contractor under section 1893 of the Social 
     Security Act (42 U.S.C. 1395ddd), nor any law enforcement 
     agency may begin an investigation or target such physician or 
     provider based on the request.
       (c) Broad Policy Guidance by the Secretary.--The Secretary 
     shall develop a mechanism to address written questions 
     regarding medicare policy and regulations, which are 
     submitted by health care associations. The Secretary shall 
     issue such answers within 90 calendar days from the date of 
     the receipt of the question and shall make the responses 
     available to the public in an indexed, easily accessible 
     format.
       (d) Notice of Changes in Policy.--Carriers and fiscal 
     intermediaries shall provide written, mailed notice within 30 
     calendar days to physicians, providers of services, and 
     providers of ambulance services of all policy or operational 
     changes to the medicare program. Physicians, providers of 
     services, and providers of ambulance services shall have not 
     less than 30 days to comply with such policy changes.
       (e) Effective Date.--This section shall take effect 180 
     days after the date of the enactment of this Act.

               TITLE IV--SUSTAINABLE GROWTH RATE REFORMS

     SEC. 401. INCLUSION OF REGULATORY COSTS IN THE CALCULATION OF 
                   THE SUSTAINABLE GROWTH RATE.

       (a) In General.--Section 1848(f)(2) of the Social Security 
     Act (42 U.S.C. 1395w-4(f)(2)) is amended--
       (1) by redesignating subparagraphs (A) through (D) as 
     clauses (i) through (iv), respectively;
       (2) by striking ``Specification of growth rate.--The 
     sustainable growth rate'' and inserting ``Specification of 
     growth rate.--
       ``(A) In general.--The sustainable growth rate''; and
       (3) by adding at the end the following new subparagraphs:
       ``(B) Inclusion of sgr regulatory costs.--The estimate 
     established under clause (iv) or any successor thereto shall 
     include--
       ``(i) the impact on costs for physicians' services 
     resulting from regulations implemented by the Secretary 
     during the year for which the sustainable growth rate is 
     estimated, including those regulations that may be 
     implemented during such year; and
       ``(ii) the costs described in subparagraph (C).
       ``(C) Inclusion of other regulatory costs.--The costs 
     described in this subparagraph are per procedure costs 
     incurred by physicians' practices in complying with 
     regulations promulgated by the Secretary, regardless of 
     whether such regulation affects the fee schedule established 
     under subsection (b)(1).
       ``(D) Inclusion of costs in regulatory impact analyses.--
     With respect to any regulation promulgated that may impose a 
     regulatory cost described in subparagraph (B)(i) or (C) on a 
     physician, the Secretary shall include in the regulatory 
     impact analysis accompanying such regulation an estimate of 
     any such cost.
       ``(E) Inclusion of estimated cost on rural physicians.--In 
     promulgating regulations, the Secretary shall specifically 
     estimate the costs to rural physicians and physicians 
     practices in rural areas and the estimated number of hours 
     needed to comply with the regulation.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply with respect to any estimate made (or regulation 
     promulgated) by the Secretary of Health and Human Services on 
     or after 1 year after the date of enactment of this Act.

          TITLE V--POLICY DEVELOPMENT REGARDING E&M GUIDELINES

     SEC. 501. POLICY DEVELOPMENT REGARDING E&M DOCUMENTATION 
                   GUIDELINES.

       (a) In General.--HCFA may not implement any new evaluation 
     and management documentation guidelines (in this section 
     referred to as ``E&M guidelines'') under the medicare 
     program, unless HCFA--
       (1) has provided for an assessment of the proposed 
     guidelines by organizations representing physicians;
       (2) has established a plan that contains specific goals, 
     including a schedule, for improving use of such guidelines;
       (3) has completed a minimum of 4 pilot projects consistent 
     with subsection (b) in at least 4 different HCFA regions 
     administered by 4 different carriers (to be specified by the 
     Secretary) to test such guidelines; and
       (4) finds that the objectives described in subsection (c) 
     will be met in the implementation of such guidelines.
       (b) Pilot Projects.--
       (1) Length and consultation.--Each pilot project under this 
     subsection shall--

[[Page S1823]]

       (A) be of sufficient length to allow for preparatory 
     physician and carrier education, analysis, and use and 
     assessment of potential E&M guidelines; and
       (B) be conducted, throughout the planning and operational 
     stages of the project, in consultation with organizations 
     representing physicians.
       (2) Peer review pilot projects.--Of the pilot projects 
     conducted under this subsection--
       (A) at least one shall focus on a peer review method by 
     physicians (not employed by a carrier) which evaluates 
     medical record information for claims submitted by physicians 
     identified as statistical outliers relative to definitions 
     published in the CPT book;
       (B) at least one shall be conducted for 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)); and
       (C) at least one shall be conducted in a setting where 
     physicians bill under physicians services in teaching 
     settings (described in section 415.150 of title 42, Code of 
     Federal Regulations).
       (3) Banning of targeting of pilot project participants.--
     Data collected under this subsection shall not be used as the 
     basis for overpayment demands or post-payment audits.
       (4) Study of impact.--Each pilot project shall examine the 
     effect of the E&M guidelines on--
       (A) different types of physician practices, including those 
     with few than 10 full-time employees (including physicians); 
     and
       (B) the costs of physician compliance, including education, 
     implementation, auditing, and monitoring.
       (c) Objectives for E&M Guidelines.--The objectives for E&M 
     guidelines specified in this subsection are as follows 
     (relative to the E&M guidelines and review policies in effect 
     as of the date of the enactment of this Act):
       (1) Enhancing clinically relevant documentation needed to 
     code accurately and assess coding levels accurately.
       (2) Decreasing the level of non-clinically pertinent and 
     burdensome documentation time and content in the record.
       (3) Increased accuracy by carrier reviewers.
       (4) Education of both physicians and reviewers.
       (5) Promote appropriate use of E&M codes by physicians and 
     their staffs.
       (6) The extent to which the tested E&M documentation 
     guidelines substantially adhere to the CPT coding definitions 
     and rules.
       (d) Report on How Met Pilot Project Objectives.--HCFA shall 
     submit a report to the Committees on Energy and Commerce and 
     Ways and Means of the House of Representatives, the Committee 
     on Finance of the Senate, and the Practicing Physicians 
     Advisory Council, six months after the conclusion of the 
     pilot projects. Such report shall include the extent to which 
     the pilot projects met the objectives specified in 
     subsections (b)(4) and (c).
                                 ______