[Congressional Record Volume 147, Number 138 (Monday, October 15, 2001)]
[Senate]
[Pages S10694-S10701]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. INHOFE:
  S. 1545. A bill to amend title XVIII of the Social Security Act to 
provide regulatory relief and contracting flexibility under the 
Medicare Program; to the Committee on Finance.
  Mr. INHOFE. Mr. President, Today I rise to introduce the Medicare 
Regulatory and Contracting Reform Act of 2001.
  I do so at this time because, within the past month, I have received 
two letters from Medicare Contractors who are withdrawing their 
services from some Oklahoma counties and other markets across the 
country. One letter reads, ``. . .over-regulation will force health 
plans to make the difficult decision to withdraw from some markets. . 
.''. Nearly half a million seniors will lose their Medicare+Choice 
health coverage this year. This is unacceptable. Over-regulation and 
reimbursement issues plague many Medicare contractors and providers. If 
we do not act to alleviate the ills of this system, more and more 
Americans will suffer the consequence.
  This legislation will substantially alter the current system to 
reduce the regulatory burden on Medicare providers, carriers, fiscal 
intermediaries and beneficiaries, and it will improve the efficiency 
and quality of the contracting system by which Medicare operates on a 
daily basis.
  In order to help providers, carriers, and beneficiaries understand 
and implement Medicare regulations, this legislation consolidates the 
rule-making

[[Page S10695]]

process for the Secretary of the Department of Health and Human 
Services, HHS. It also provides for the education and training of all 
parties involved. Should this bill become law, the Secretary of HHS 
will be required to utilize the mechanisms of competition and 
incentives in the Medicare contracting process. Both competition and 
incentives increase performance and quality of service. Streamlining 
the claims-appeals process to expedite reviews and amending the process 
of payment recovery will further benefit providers. This legislation 
enhances the technical support for small rural providers that currently 
do not have the resources to comply with electronic billing 
requirements. Finally, to directly assist Medicare recipients, this 
bill establishes a resource person to answer questions and work through 
obstacles that arise in the health care process.
  Passage of this legislation is necessary to stabilize and strengthen 
a Medicare system that is disintegrating. I am confident that we can 
bring about beneficial change for millions of Americans who depend on 
Medicare. I hope that my colleagues will join me in this effort.
  Mr. INHOFE. Mr. President, 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. 1545

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

     SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; 
                   TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Medicare 
     Regulatory and Contracting Reform Act of 2001''.
       (b) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this Act an amendment is 
     expressed in terms of an amendment to or repeal of a section 
     or other provision, the reference shall be considered to be 
     made to that section or other provision of the Social 
     Security Act.
       (c) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; amendments to Social Security Act; table of 
              contents.
Sec. 2. Issuance of regulations.
Sec. 3. Compliance with changes in regulations and policies.
Sec. 4. Increased flexibility in medicare administration.
Sec. 5. Provider education and technical assistance.
Sec. 6. Small provider technical assistance demonstration program.
Sec. 7. Medicare Provider Ombudsman.
Sec. 8. Provider appeals.
Sec. 9. Recovery of overpayments and prepayment review; enrollment of 
              providers.
Sec. 10. Beneficiary outreach demonstration program.
Sec. 11. Policy development regarding evaluation and management (E & M) 
              documentation guidelines.

       (d) Construction.--Nothing in this Act shall be construed--
       (1) to compromise or affect existing legal authority for 
     addressing fraud or abuse, whether it be criminal 
     prosecution, civil enforcement, or administrative remedies, 
     including under sections 3729 through 3733 of title 31, 
     United States Code (known as the False Claims Act); 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 Act 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.

     SEC. 2. ISSUANCE OF REGULATIONS.

       (a) Consolidation of Promulgation to Once a Month.--
       (1) In general.--Section 1871 (42 U.S.C. 1395hh) is amended 
     by adding at the end the following new subsection:
       ``(d) The Secretary shall issue proposed or final 
     (including interim final) regulations to carry out this title 
     only on one business day of every month unless publication on 
     another date is necessary to comply with requirements under 
     law.''.
       (2) Report on publication of regulations on a quarterly 
     basis.--Not later than 3 years after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress a report on the feasibility 
     of requiring that regulations described in section 1871(d) of 
     the Social Security Act only be promulgated on a single day 
     every calendar quarter.
       (3) Effective date.--The amendment made by paragraph (1) 
     shall apply to regulations promulgated on or after the date 
     that is 30 days after the date of the enactment of this Act.
       (b) Regular Timeline for Publication of Final 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) The Secretary, in consultation with the Director of 
     the Office of Management and Budget, shall establish a 
     regular timeline for the publication of final regulations 
     based on the previous publication of a proposed regulation or 
     an interim final regulation. 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. 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 a notice of continuation of 
     the regulation that includes an explanation of why the 
     regular timeline was not complied with. If such a notice 
     is published, the regular timeline for publication of the 
     final regulation shall be treated as having begun again as 
     of the date of publication of the notice.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of the enactment of this Act. 
     The Secretary of Health and Human Services shall provide for 
     an appropriation transition to take into account the backlog 
     of previously published interim final regulations.
       (c) Limitations on New Matter in Final Regulations.--
       (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as 
     amended by subsection (b), is further amended by adding at 
     the end the following new paragraph:
       ``(4) Insofar as a final regulation (other than an interim 
     final regulation) includes a provision that is not a logical 
     outgrowth of the relevant notice of proposed rulemaking 
     relating to such regulation, that provision shall be treated 
     as a proposed regulation and shall not take effect until 
     there is the further opportunity for public comment and a 
     publication of the provision again as a final regulation.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to final regulations published on or after the 
     date of the enactment of this Act.

     SEC. 3. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.

       (a) No Retroactive Application of Substantive Changes; 
     Timeline for Compliance With Substantive Changes After 
     Notice.--Section 1871 (42 U.S.C. 1395hh), as amended by 
     section 2(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 date the change 
     was issued, unless the Secretary determines that such 
     retroactive application would have a positive impact on 
     beneficiaries or providers of services, physicians, 
     practitioners, and other suppliers or would be necessary to 
     comply with statutory requirements.
       ``(B) No compliance action shall be made against a provider 
     of services, physician, practitioner, or other supplier with 
     respect to noncompliance with such a substantive change for 
     items and services furnished on or before the date that is 30 
     days after the date of issuance of the change, unless the 
     Secretary provides otherwise.''.
       (b) Reliance on Guidance.--Section 1871(e), as added by 
     subsection (a), is further amended by adding at the end the 
     following new paragraph:
       ``(2) If--
       ``(A) a provider of services, physician, practitioner, or 
     other supplier follows the written guidance provided by the 
     Secretary or by a medicare contractor (as defined in section 
     1889(f)) 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;
       ``(B) the Secretary determines that the provider of 
     services, physician, practitioner, or supplier has accurately 
     presented the circumstances relating to such items, services, 
     and claim to the contractor in writing; and
       ``(C) the guidance was in error;

     the provider of services, physician, practitioner or supplier 
     shall not be subject to any sanction if the provider of 
     services, physician, practitioner, or supplier reasonably 
     relied on such guidance.''.

     SEC. 4. 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 entity to serve as a medicare 
     administrative contractor with respect to the performance of 
     any or all of the functions described in paragraph (3) or 
     parts of those functions (or, to the extent provided in a 
     contract, to secure performance thereof by other entities).
       ``(2) Medicare administrative contractor defined.--For 
     purposes of this title and title XI:

[[Page S10696]]

       ``(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 or 
     activity in relation to an individual entitled to benefits 
     under part A or enrolled under part B, or both, a specific 
     provider of services, physician, practitioner, or supplier 
     (or class of such providers of services, physicians, 
     practitioners, 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 or activity in 
     relation to that individual, provider of services, physician, 
     practitioner, or supplier or class of provider of services, 
     physician, practitioner, or supplier.
       ``(3) Functions described.--The functions referred to in 
     paragraph (1) are payment functions, provider services 
     functions, and beneficiary services functions as follows:
       ``(A) Determination of payment amounts.--Determining 
     (subject to the provisions of section 1878 and to such review 
     by the Secretary as may be provided for by the contracts) the 
     amount of the payments required pursuant to this title to 
     be made to providers of services, physicians, 
     practitioners, and suppliers.
       ``(B) Making payments.--Making payments described in 
     subparagraph (A).
       ``(C) Beneficiary education and assistance.--Serving as a 
     center for, and communicating to individuals entitled to 
     benefits under part A or enrolled under part B, or both, with 
     respect to education and outreach for those individuals, and 
     assistance with specific issues, concerns or problems of 
     those individuals.
       ``(D) Provider consultative services.--Providing 
     consultative services to institutions, agencies, and other 
     persons to enable them to establish and maintain fiscal 
     records necessary for purposes of this title and otherwise to 
     qualify as providers of services, physicians, practitioners, 
     or suppliers.
       ``(E) Communication with providers.--Serving as a center 
     for, and communicating to providers of services, physicians, 
     practitioners, and suppliers, any information or instructions 
     furnished to the medicare administrative contractor by the 
     Secretary, and serving as a channel of communication from 
     such providers, physicians, practitioners, and suppliers to 
     the Secretary.
       ``(F) Provider education and technical assistance.--
     Performing the functions described in subsections (e) and 
     (f), relating to provider education, training, and technical 
     assistance.
       ``(G) Additional functions.--Performing such other 
     functions as are necessary to carry out the purposes of this 
     title.
       ``(4) Relationship to mip contracts.--
       ``(A) Nonduplication of duties.--In entering into contracts 
     under this section, the Secretary shall assure that functions 
     of medicare administrative contractors in carrying out 
     activities under parts A and B do not duplicate functions 
     carried out under the Medicare Integrity Program under 
     section 1893. The previous sentence shall not apply with 
     respect to the activity described in section 1893(b)(5) 
     (relating to prior authorization of certain items of durable 
     medical equipment under section 1834(a)(15)).
       ``(B) Construction.--An entity shall not be treated as a 
     medicare administrative contractor merely by reason of having 
     entered into a contract with the Secretary under section 
     1893.
       ``(b) Contracting Requirements.--
       ``(1) Use of competitive procedures.--
       ``(A) In general.--Notwithstanding any law with general 
     applicability to Federal acquisition and procurement and 
     except as provided in subparagraph (B), the Secretary shall 
     use competitive procedures when entering into contracts with 
     medicare administrative contractors under this section.
       ``(B) Renewal of contracts.--The Secretary may renew a 
     contract with a medicare administrative contractor under this 
     section from term to term without regard to section 5 of 
     title 41, United States Code, or any other provision of law 
     requiring competition, if the medicare administrative 
     contractor has met or exceeded the performance requirements 
     applicable with respect to the contract and contractor.
       ``(C) Transfer of functions.--Functions may be transferred 
     among medicare administrative contractors in accordance with 
     the provisions of this paragraph. The Secretary shall ensure 
     that performance quality is considered in such transfers.
       ``(D) Incentives for quality.--The Secretary shall provide 
     financial incentives and such other incentives as the 
     Secretary determines appropriate for medicare administrative 
     contractors to provide quality service and to promote 
     efficiency.
       ``(2) Compliance with requirements.--No contract under this 
     section shall be entered into with any medicare 
     administrative contractor unless the Secretary finds that 
     such medicare administrative contractor will perform its 
     obligations under the contract efficiently and effectively 
     and will meet such requirements as to financial 
     responsibility, legal authority, and other matters as the 
     Secretary finds pertinent.
       ``(3) Development of specific performance requirements.--In 
     developing contract performance requirements, the Secretary 
     shall develop performance requirements to carry out the 
     specific requirements applicable under this title to a 
     function described in subsection (a)(3).
       ``(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)(3)(B).
       ``(2) Prohibition on mandates for certain data 
     collection.--The Secretary may not require, as a condition of 
     entering into 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 negligence or intent to 
     defraud the United States, be liable with respect to any 
     payments certified by the individual under this section.
       ``(2) Disbursing officer.--No disbursing officer shall, in 
     the absence of negligence or intent to defraud the United 
     States, be liable with respect to any payment by such officer 
     under this section if it was based upon an authorization 
     (which meets the applicable requirements for such internal 
     controls established by the Comptroller General) of a 
     certifying officer designated as provided in paragraph (1) of 
     this subsection.
       ``(3) Liability of medicare administrative contractor.--A 
     medicare administrative contractor shall be liable to the 
     United States for a payment referred to in paragraph (1) or 
     (2) if, in connection with such payment, an individual 
     referred to in either such paragraph acted with gross 
     negligence or intent to defraud the United States.''.
       (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 of Health and Human 
     Services 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:

[[Page S10697]]

        ``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) 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'';
       (iii) by striking subparagraphs (C), (D), and (E);
       (iv) in subparagraph (H)--

       (I) by striking ``it'' and inserting ``the Secretary''; and
       (II) by striking ``carrier'' and inserting ``medicare 
     administrative contractor''; and

       (v) in the seventh sentence, by inserting ``medicare 
     administrative contractor,'' after ``carrier,''; and
       (D) by striking paragraph (5); and
       (E) in paragraph (7) and succeeding paragraphs, by striking 
     ``the carrier'' and inserting ``the Secretary'' each place it 
     appears.
       (4) Subsection (c) is amended--
       (A) by striking paragraph (1);
       (B) in paragraph (2), by striking ``contract under this 
     section which provides for the disbursement of funds, as 
     described in subsection (a)(1)(B),'' and inserting ``contract 
     under section 1874A that provides for making payments under 
     this part shall provide that the medicare administrative 
     contractor'';
       (C) in paragraph (4), by striking ``a carrier'' and 
     inserting ``medicare administrative contractor'';
       (D) in paragraph (5), by striking ``contract under this 
     section which provides for the disbursement of funds, as 
     described in subsection (a)(1)(B), shall require the 
     carrier'' and inserting ``contract under section 1874A that 
     provides for making payments under this part shall require 
     the medicare administrative contractor''; and
       (E) by striking paragraph (6).
       (5) Subsections (d), (e), and (f) are repealed.
       (6) Subsection (g) is amended by striking ``carrier or 
     carriers'' and inserting ``medicare administrative contractor 
     or contractors''.
       (7) Subsection (h) is amended--
       (A) in paragraph (2)--
       (i) by striking ``Each carrier having an agreement with the 
     Secretary under subsection (a)'' and inserting ``The 
     Secretary''; and
       (ii) by striking ``Each such carrier'' and inserting ``The 
     Secretary''; and
       (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''.
       (d) Effective Date; Transition Rule.--
       (1) Effective date.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall take 
     effect on October 1, 2003, and the Secretary of Health and 
     Human Services is authorized to take such steps before such 
     date as may be necessary to implement such amendments on a 
     timely basis.
       (2) General transition rules.--(A) The Secretary shall take 
     such steps as are necessary to provide for an appropriate 
     transition from contracts under section 1816 and section 1842 
     of the Social Security Act (42 U.S.C. 1395h, 1395u) to 
     contracts under section 1874A, as added by subsection (a)(1).
       (B) Any such contract under such sections 1816 or 1842 
     whose periods begin before or during the 1-year period that 
     begins on the first day of the fourth calendar month that 
     begins after the date of enactment of this Act may be entered 
     into without regard to any provision of law requiring the use 
     of competitive procedures.
       (3) Authorizing continuation of mip functions under current 
     contracts and agreements and under rollover contracts.--The 
     provisions contained in the exception in section 1893(d)(2) 
     of the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall 
     continue to apply notwithstanding the amendments made by this 
     section, and any reference in such provisions to an agreement 
     or contract shall be deemed to include a contract under 
     section 1874A of such Act, as inserted by subsection (a)(1), 
     that continues the activities referred to in such provisions.
       (e) References.--On and after the effective date provided 
     under subsection (d), any reference to a fiscal intermediary 
     or carrier under title XI or XVIII of the Social Security Act 
     (or any regulation, manual instruction, interpretative rule, 
     statement of policy, or guideline issued to carry out such 
     titles) shall be deemed a reference to an appropriate 
     medicare administrative contractor (as provided under section 
     1874A of the Social Security Act).
       (f) Secretarial Submission of Legislative Proposal.--Not 
     later than 6 months after the date of the enactment of this 
     Act, the Secretary of Health and Human Services 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.

     SEC. 5. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.

       (a) Coordination of Education Funding.--
       (1) In general.--The Social Security Act is amended by 
     inserting after section 1888 the following new section:


             ``provider education and technical assistance

       ``Sec. 1889. (a) Coordination of Education Funding.--The 
     Secretary shall coordinate the educational activities 
     provided through medicare contractors (as defined in 
     subsection (i), including under section 1893) in order to 
     maximize the effectiveness of Federal education efforts for 
     providers of services, physicians, practitioners, and 
     suppliers.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of the enactment of this Act.
       (3) Report.--Not later than October 1, 2002, the Secretary 
     of Health and Human Services 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 
     4(a)(1), is amended by adding at the end the following new 
     subsection:
       ``(e) Incentives To Improve Contractor Performance in 
     Provider Education and Outreach.--
       ``(1) Methodology to measure contractor error rates.--In 
     order to give medicare administrative contractors an 
     incentive to implement effective education and outreach 
     programs for providers of services, physicians, 
     practitioners, and suppliers, the Secretary shall develop and 
     implement by October 1, 2002, a methodology to measure the 
     specific claims payment error rates of such contractors in 
     the processing or reviewing of medicare claims.
       ``(2) Identification of best practices.--The Secretary 
     shall identify the best practices developed by individual 
     medicare administrative contractors for educating providers 
     of services, physicians, practitioners, and suppliers and how 
     to encourage the use of such best practices nationwide.''.
       (2) Report.--Not later than October 1, 2003, the Secretary 
     of Health and Human Services shall submit to Congress a 
     report that describes how the Secretary intends to use the 
     methodology developed under section 1874A(e)(1) of the Social 
     Security Act, as added by paragraph (1), in assessing 
     medicare contractor performance in implementing effective 
     education and outreach programs, including whether to use 
     such methodology as the basis for performance bonuses.
       (c) Provision of Access to and Prompt Responses From 
     Medicare Administrative Contractors.--
       (1) In general.--Section 1874A, as added by section 4(a)(1) 
     and as amended by subsection (b), is further amended by 
     adding at the end the following new subsection:
       ``(f) Response to Inquiries; Toll-Free Lines.--
       ``(1) Contractor responsibility.--Each medicare 
     administrative contractor shall, for those providers of 
     services, physicians, practitioners, and suppliers which 
     submit claims to the contractor for claims processing--
       ``(A) respond in a clear, concise, and accurate manner to 
     specific billing and cost reporting questions of providers of 
     services, physicians, practitioners, and suppliers;
       ``(B) maintain a toll-free telephone number at which 
     providers of services, physicians, practitioners, and 
     suppliers may obtain information regarding billing, coding, 
     and other appropriate information under this title;
       ``(C) maintain a system for identifying who provides the 
     information referred to in subparagraphs (A) and (B); and
       ``(D) monitor the accuracy, consistency, and timeliness of 
     the information so provided.
       ``(2) Evaluation.--In conducting evaluations of individual 
     medicare administrative contractors, the Secretary shall take 
     into account the results of the monitoring conducted under 
     paragraph (1)(D). The Secretary shall, in consultation with 
     organizations representing providers of services, physicians, 
     practitioners, and suppliers, establish standards relating to 
     the accuracy, consistency, and timeliness of the information 
     so provided.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect October 1, 2002.
       (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.--For each of fiscal years 2003 
     and 2004, there are authorized to be appropriated to the 
     Secretary (in appropriate part from the Federal Hospital

[[Page S10698]]

     Insurance Trust Fund and the Federal Supplementary Medical 
     Insurance Trust Fund) $10,000,000.
       ``(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, 
     physicians, practitioners, and suppliers regarding billing, 
     coding, and other appropriate items.
       ``(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)).
       ``(2) Small provider of services or supplier.--In this 
     subsection, the term `small provider of services or supplier' 
     means--
       ``(A) an institutional provider of services with fewer than 
     25 full-time-equivalent employees; or
       ``(B) a physician, practitioner, or supplier with fewer 
     than 10 full-time-equivalent employees.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on October 1, 2002.
       (e) Requirement To Maintain Internet Sites.--
       (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:
       ``(c) Internet Sites; FAQs.--The Secretary, and each 
     medicare contractor insofar as it provides services 
     (including claims processing) for providers of services, 
     physicians, practitioners, or suppliers, shall maintain an 
     Internet site which provides answers in an easily accessible 
     format to frequently asked questions relating to providers of 
     services, physicians, practitioners, 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, 2002.
       (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:
       ``(d) Encouragement of Participation in Education Program 
     Activities.--A medicare contractor may not use a record of 
     attendance at (or failure to attend) educational activities 
     or other information gathered during an educational program 
     conducted under this section or otherwise by the Secretary to 
     select or track providers of services, physicians, 
     practitioners, or suppliers for the purpose of conducting any 
     type of audit or prepayment review.
       ``(e) 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.
       ``(f) 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, physician, practitioner, or 
     supplier an entity that has no authority under this title or 
     title IX with respect to such activities and such provider of 
     services, physician, practitioner, or supplier.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of the enactment of this Act.

     SEC. 6. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION 
                   PROGRAM.

       (a) Establishment.--
       (1) In general.--The Secretary of Health and Human Services 
     shall establish a demonstration program (in this section 
     referred to as the ``demonstration program'') under which 
     technical assistance is made available, upon request on a 
     voluntary basis, to small providers of services or suppliers 
     to evaluate their billing and related systems for compliance 
     with the applicable requirements of the programs under 
     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) Small providers of services or suppliers.--In this 
     section, the term ``small providers of services or 
     suppliers'' means--
       (A) an institutional provider of services with fewer than 
     25 full-time-equivalent employees; or
       (B) a physician, practitioner, or supplier with fewer than 
     10 full-time-equivalent employees.
       (b) Qualification of Contractors.--In conducting the 
     demonstration program, the Secretary of Health and Human 
     Services shall enter into contracts with qualified 
     organizations (such as peer review organizations or entities 
     described in section 1889(f)(2) of the Social Security Act, 
     as inserted by section 5(f)(1)) with appropriate expertise 
     with billing systems of the full range of providers of 
     services, physicians, practitioners, 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 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) Avoidance of Recovery Actions for Problems Identified 
     as Corrected.--The Secretary of Health and Human Services may 
     provide that, absent evidence of fraud and notwithstanding 
     any other provision of law, any errors found in a compliance 
     review for a small provider of services or supplier that 
     participates in the demonstration program shall not be 
     subject to recovery action if the technical assistance 
     personnel under the program determine that--
       (1) the problem that is the subject of the compliance 
     review has been corrected to their satisfaction within 30 
     days of the date of the visit by such personnel to the small 
     provider of services or supplier; and
       (2) such problem remains corrected for such period as is 
     appropriate.
       (e) GAO Evaluation.--Not later than 2 years after the date 
     of 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. 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.
       (f) 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 for 25 
     percent of the cost of the technical assistance.
       (g) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Health and Human 
     Services (in appropriate part from the Federal Hospital 
     Insurance Trust Fund and the Federal Supplementary Medical 
     Insurance Trust Fund) to carry out the demonstration 
     program--
       (1) for fiscal year 2003, $1,000,000, and
       (2) for fiscal year 2004, $6,000,000.

     SEC. 7. MEDICARE PROVIDER OMBUDSMAN.

       (a) In General.--Section 1868 (42 U.S.C. 1395ee) is 
     amended--
       (1) by adding at the end of the heading the following: ``; 
     medicare provider ombudsman'';
       (2) by inserting ``Practicing Physicians Advisory 
     Council.--(1)'' after ``(a)'';
       (3) in paragraph (1), as so redesignated under paragraph 
     (2), by striking ``in this section'' and inserting ``in this 
     subsection'';
       (4) by redesignating subsections (b) and (c) as paragraphs 
     (2) and (3), respectively; and
       (5) by adding at the end the following new subsection:
       ``(b) Medicare Provider Ombudsman.--The Secretary shall 
     appoint a Medicare Provider Ombudsman. The Ombudsman shall--
       ``(1) provide assistance, on a confidential basis, to 
     providers of services, physicians, practitioners, and 
     suppliers with respect to complaints, grievances, and 
     requests for information concerning the programs under this 
     title (including provisions of title XI insofar as they 
     relate to this title and are not administered by the Office 
     of the Inspector General of the Department of Health and 
     Human Services) and in the resolution of unclear or 
     conflicting guidance given by the Secretary and medicare 
     contractors to such providers of services, physicians, 
     practitioners, and suppliers regarding such programs and 
     provisions and requirements under this title and such 
     provisions; and
       ``(2) submit recommendations to the Secretary for 
     improvement in the administration of this title and such 
     provisions, including--
       ``(A) recommendations to respond to recurring patterns of 
     confusion in this title and such provisions (including 
     recommendations regarding suspending imposition of sanctions 
     where there is widespread confusion in program 
     administration), and
       ``(B) recommendations to provide for an appropriate and 
     consistent response (including not providing for audits) in 
     cases of self-identified overpayments by providers of 
     services, physicians, practitioners, and suppliers.''.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Health and Human 
     Services (in appropriate part from the Federal Hospital 
     Insurance Trust Fund and the Federal Supplementary Medical 
     Insurance Trust Fund) to carry out the provisions of 
     subsection (b) of section 1868 (relating to the Medicare 
     Provider Ombudsman), as added by subsection (a)(5), amounts 
     as follows:

[[Page S10699]]

       (1) For fiscal year 2002, such sums as are necessary.
       (2) For fiscal year 2003, $8,000,000.
       (3) For fiscal year 2004, $17,000,000.
       (c) Report on Additional Funding.--Not later than October 
     1, 2003, the Secretary of Health and Human Services shall 
     submit to Congress a report that includes the Secretary's 
     estimate of the amount of additional funding necessary to 
     carry out such provisions of subsection (b) of section 1868, 
     as so added, in fiscal year 2005 and subsequent fiscal years.

     SEC. 8. PROVIDER APPEALS.

       (a) Medicare Administrative Law Judges.--Section 1869 (42 
     U.S.C. 1395ff), as amended by section 521(a) of Medicare, 
     Medicaid, and SCHIP Benefits Improvement and Protection Act 
     of 2000 (114 Stat. 2763A-534), as enacted into law by section 
     1(a)(6) of Public Law 106-554, is amended by adding at the 
     end the following new subsection:
       ``(g) Medicare Administrative Law Judges.--
       ``(1) Transition plan.--Not later than October 1, 2003, the 
     Commissioner of Social Security and the Secretary shall 
     develop and implement a plan under which administrative law 
     judges responsible solely for hearing cases under this title 
     (and related provisions in title XI) shall be transferred 
     from the responsibility of the Commissioner and the Social 
     Security Administration to the Secretary and the Department 
     of Health and Human Services. The plan shall include 
     recommendations with respect to--
       ``(A) the number of such administrative law judges and 
     support staff required to hear and decide such cases in a 
     timely manner; and
       ``(B) funding levels required for fiscal year 2004 and 
     subsequent fiscal years under this subsection to hear such 
     cases in a timely manner.
       ``(2) Increased financial support.--In addition to any 
     amounts otherwise appropriated, there are authorized to be 
     appropriated (in appropriate part from the Federal Hospital 
     Insurance Trust Fund and the Federal Supplementary Medical 
     Insurance Trust Fund) to the Secretary to increase the number 
     of administrative law judges under paragraph (1) and to 
     improve education and training opportunities for such judges 
     and their staffs, $5,000,000 for fiscal year 2003 and such 
     sums as are necessary for fiscal year 2004 and each 
     subsequent fiscal year.''.
       (b) Process for Expedited Access to Judicial Review.--
       (1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)) as 
     amended by Medicare, Medicaid, and SCHIP Benefits Improvement 
     and Protection Act of 2000 (114 Stat. 2763A-534), as enacted 
     into law by section 1(a)(6) of Public Law 106-554, 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 service or supplier that furnishes 
     an item or service or a beneficiary who has filed an appeal 
     under paragraph (1) (other than an appeal filed under 
     paragraph (1)(F)) may obtain access to judicial review when a 
     review panel (described in subparagraph (D)), on its own 
     motion or at the request of the appellant, determines that it 
     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 in a case of an appeal.
       ``(B) Prompt determinations.--If, after or coincident with 
     appropriately filing a request for an administrative hearing, 
     the appellant requests a determination by the appropriate 
     review panel that no review panel has the authority to decide 
     the question of law or regulations relevant to the matters in 
     controversy and that there is no material issue of fact in 
     dispute and if such request is accompanied by the documents 
     and materials as the appropriate review panel shall require 
     for purposes of making such determination, such review panel 
     shall make a determination on the request in writing within 
     60 days after the date such review panel receives the request 
     and such accompanying documents and materials. Such a 
     determination by such review panel shall be considered a 
     final decision and not subject to review by the Secretary.
       ``(C) Access to judicial review.--
       ``(i) In general.--If the appropriate review panel--

       ``(I) determines that there are no material issues of fact 
     in dispute and that the only issue is one of law or 
     regulation that no review panel has the authority to decide; 
     or
       ``(II) fails to make such determination within the period 
     provided under subparagraph (B);

     then the appellant may bring a civil action as described in 
     this subparagraph.
       ``(ii) Deadline for filing.--Such action shall be filed, in 
     the case described in--

       ``(I) clause (i)(I), within 60 days of date of the 
     determination described in such subparagraph; 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 amounts in controversy.--Where a 
     provider of services or supplier seeks judicial review 
     pursuant to this paragraph, the amount in controversy 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 
     Hospital 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 Act.
       ``(D) Review panels.--For purposes of this subsection, a 
     `review panel' is an administrative law judge, the 
     Departmental Appeals Board, a qualified independent 
     contractor (as defined in subsection (c)(2)), or an entity 
     designated by the Secretary for purposes of making 
     determinations under this paragraph.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to appeals filed on or after October 1, 2002.
       (c) Requiring Full and Early Presentation of Evidence.--
       (1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as 
     amended by Medicare, Medicaid, and SCHIP Benefits Improvement 
     and Protection Act of 2000 (114 Stat. 2763A-534), as enacted 
     into law by section 1(a)(6) of Public Law 106-554, and as 
     amended by subsection (b), 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 first external hearing or appeal at 
     which it could be introduced under this section, unless there 
     is good cause which precluded the introduction of such 
     evidence at a previous hearing or appeal.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on October 1, 2002.
       (d) Provider Appeals on Behalf of Deceased Beneficiaries.--
       (1) In general.--Section 1869(b)(1)(C) (42 U.S.C. 
     1395ff(b)(1)(C)), as amended by Medicare, Medicaid, and SCHIP 
     Benefits Improvement and Protection Act of 2000 (114 Stat. 
     2763A-534), as enacted into law by section 1(a)(6) of Public 
     Law 106-554, is amended by adding at the end the following: 
     ``The Secretary shall establish a process under which, if 
     such an individual is deceased, the individual is deemed to 
     have provided written consent to the assignment of the 
     individual's right of appeal under this section to the 
     provider of services or supplier of the item or service 
     involved, so long as the estate of the individual, and the 
     individual's family and heirs, are not liable for paying for 
     the item or service and are not liable for any 
     increased coinsurance or deductible amounts resulting from 
     any decision increasing the reimbursement amount for the 
     provider of services or supplier.''.
       (2) Effective date.--Notwithstanding section 521(d) 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, the amendment made by 
     paragraph (1) shall take effect on the date of the enactment 
     of this Act.

     SEC. 9. RECOVERY OF OVERPAYMENTS AND PREPAYMENT REVIEW; 
                   ENROLLMENT OF PROVIDERS.

       (a) Recovery of Overpayments and Prepayment Review.--
     Section 1893 (42 U.S.C. 1395ddd) is amended by adding at the 
     end the following new subsections:
       ``(f) Recovery of Overpayments and Prepayment Review.--
       ``(1) Use of repayment plans.--
       ``(A) In general.--If the repayment, within 30 days by a 
     provider of services, physician, practitioner, or other 
     supplier, of an overpayment under this title would 
     constitute a hardship (as defined in subparagraph (B)), 
     subject to subparagraph (C), the Secretary shall enter 
     into a plan (which meets terms and conditions determined 
     to be appropriate by the Secretary) with the provider of 
     services, physician, practitioner, or supplier for the 
     offset or repayment of such overpayment over a period of 
     not longer than 3 years. Interest shall accrue on the 
     balance through the period of repayment.
       ``(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, 
     physician, practitioner, 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

[[Page S10700]]

     services, physician, practitioner, 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, physician, practitioner, or supplier has entered 
     into a repayment plan under subparagraph (A) with respect to 
     a specific overpayment amount, such payment amount shall not 
     be taken into account under clause (i) with respect to 
     subsequent overpayment amounts.
       ``(C) Exceptions.--Subparagraph (A) shall not apply if the 
     Secretary has reason to suspect that the provider of 
     services, physician, practitioner, or supplier may file for 
     bankruptcy or otherwise cease to do business or if there is 
     an indication of fraud or abuse committed against the 
     program.
       ``(D) Immediate collection if violation of repayment 
     plan.--If a provider of services, physician, practitioner, or 
     supplier fails to make a payment in accordance with a 
     repayment plan under this paragraph, the Secretary may 
     immediately seek to offset or otherwise recover the total 
     balance outstanding (including applicable interest) under the 
     repayment plan.
       ``(2) Limitation on recoupment until reconsideration 
     exercised.--
       ``(A) In general.--In the case of a provider of services, 
     physician, practitioner, or supplier that is determined to 
     have received an overpayment under this title and that seeks 
     a reconsideration of such determination under section 
     1869(b)(1), the Secretary may not take any action (or 
     authorize any other person, including any medicare 
     contractor, as defined in paragraph (9)) to recoup the 
     overpayment until the date the decision on the 
     reconsideration has been rendered.
       ``(B) Collection with interest.--Insofar as the 
     determination on such appeal is against the provider of 
     services, physician, practitioner, or supplier, interest on 
     the overpayment shall accrue on and after the date of the 
     original notice of overpayment. Insofar as such determination 
     against the provider of services, physician, practitioner, 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.
       ``(3) Standardization of random prepayment review.--
       ``(A) In general.--A medicare contractor may conduct random 
     prepayment review only to develop a contractor-wide or 
     program-wide claims payment error rates.
       ``(B) Construction.--Nothing in subparagraph (A) shall be 
     construed as preventing the denial of payments for claims 
     actually reviewed under a random prepayment review.
       ``(4) 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--
       ``(A) there is a sustained or high level of payment error 
     (as defined by the Secretary); or
       ``(B) documented educational intervention has failed to 
     correct the payment error (as determined by the Secretary).
       ``(5) Provision of supporting documentation.--In the case 
     of a provider of services, physician, practitioner, 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.
       ``(6) Consent settlement reforms.--
       ``(A) In general.--The Secretary may use a consent 
     settlement (as defined in subparagraph (D)) to settle a 
     projected overpayment.
       ``(B) Opportunity to submit additional information before 
     consent settlement offer.--Before offering a provider of 
     services, physician, practitioner, or supplier a consent 
     settlement, the Secretary shall--
       ``(i) communicate to the provider of services, physician, 
     practitioner, or supplier in a non-threatening manner that, 
     based on a review of the medical records requested by the 
     Secretary, a preliminary indication appears that there would 
     be an overpayment; and
       ``(ii) provide for a 45-day period during which the 
     provider of services, physician, practitioner, or supplier 
     may furnish additional information concerning the medical 
     records for the claims that had been reviewed.
       ``(C) Consent settlement offer.--The Secretary shall review 
     any additional information furnished by the provider of 
     services, physician, practitioner, or supplier under 
     subparagraph (B)(ii). Taking into consideration such 
     information, the Secretary shall determine if there still 
     appears to be an overpayment. If so, the Secretary--
       ``(i) shall provide notice of such determination to the 
     provider of services, physician, practitioner, or supplier, 
     including an explanation of the reason for such 
     determination; and
       ``(ii) in order to resolve the overpayment, may offer the 
     provider of services, physician, practitioner, or supplier--

       ``(I) the opportunity for a statistically valid random 
     sample; or
       ``(II) a consent settlement.

     The opportunity provided under clause (ii)(I) does not waive 
     any appeal rights with respect to the alleged overpayment 
     involved.
       ``(D) Consent settlement defined.--For purposes of this 
     paragraph, the term `consent settlement' means an agreement 
     between the Secretary and a provider of services, physician, 
     practitioner, or supplier whereby both parties agree to 
     settle a projected overpayment based on less than a 
     statistically valid sample of claims and the provider of 
     services, physician, practitioner, or supplier agrees not to 
     appeal the claims involved.
       ``(7) Limitations on non-random prepayment review.--
       ``(A) Limitation on initiation of non-random prepayment 
     review.--A medicare contractor may not initiate non-random 
     prepayment review of a provider of services, physician, 
     practitioner, or supplier based on the initial identification 
     by that provider of services, physician, practitioner, or 
     supplier of an improper billing practice unless there is a 
     sustained or high level of payment error (as defined in 
     paragraph (4)(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.
       ``(8) Payment audits
       ``(A) Written notice for post-payment audits.--Subject to 
     subparagraph (C), if a medicare contractor decides to conduct 
     a post-payment audit of a provider of services, physician, 
     practitioner, or supplier under this title, the contractor 
     shall provide the provider of services, physician, 
     practitioner, or supplier with written notice of the intent 
     to conduct such an audit.
       ``(B) Explanation of findings for all audits.--Subject to 
     subparagraph (C), if a medicare contractor audits a provider 
     of services, physician, practitioner, or supplier under this 
     title, the contractor shall--
       ``(i) give the provider of services, physician, 
     practitioner, or supplier a full review and explanation of 
     the findings of the audit in a manner that is understandable 
     to the provider of services, physician, practitioner, or 
     supplier and permits the development of an appropriate 
     corrective action plan;
       ``(ii) inform the provider of services, physician, 
     practitioner, or supplier of the appeal rights under this 
     title; and
       ``(iii) give the provider of services, physician, 
     practitioner, or supplier an opportunity to provide 
     additional information to the contractor.
       ``(C) Exception.--Subparagraphs (A) and (B) shall not apply 
     if the provision of notice or findings would compromise 
     pending law enforcement activities or reveal findings of law 
     enforcement-related audits.
       ``(9) Definitions.--For purposes of this subsection:
       ``(A) Medicare contractor.--The term `medicare contractor' 
     has the meaning given such term in section 1889(f).
       ``(B) Random prepayment review.--The term `random 
     prepayment review' means a demand for the production of 
     records or documentation absent cause with respect to a 
     claim.
       ``(g) Notice of Over-Utilization of Codes.--The Secretary 
     shall establish a process under which the Secretary provides 
     for notice to classes of providers of services, physicians, 
     practitioners, 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, physicians, practitioners, or suppliers under 
     the programs under this title (or provisions of title XI 
     insofar as they relate to such programs).''.
       (b) Provider Enrollment Process; Right of Appeal.--
       (1) In general.--Section 1866 (42 U.S.C. 1395cc) is 
     amended--
       (A) by adding at the end of the heading the following: ``; 
     enrollment processes''; and
       (B) by adding at the end the following new subsection:
       ``(j) Enrollment Process for Providers of Services, 
     Physicians, Practitioners, and Suppliers.--
       ``(1) In general.--The Secretary shall establish by 
     regulation a process for the enrollment of providers of 
     services, physicians, practitioners, and suppliers under this 
     title.
       ``(2) Appeal process.--Such process shall provide--
       ``(A) a method by which providers of services, physicians, 
     practitioners, and suppliers whose application to enroll (or, 
     if applicable, to renew enrollment) are denied are provided a 
     mechanism to appeal such denial; and
       ``(B) prompt deadlines for actions on applications for 
     enrollment (and, if applicable, renewal of enrollment) and 
     for consideration of appeals.''.
       (2) Effective date.--The Secretary of Health and Human 
     Services shall provide for the establishment of the 
     enrollment and appeal process under the amendment made by 
     paragraph (1) within 6 months after the date of the enactment 
     of this Act.
       (c) Process for Correction of Minor Errors and Omissions on 
     Claims Without Pursuing Appeals Process.--The Secretary of 
     Health and Human Services shall develop, in consultation with 
     appropriate medicare contractors (as defined in section 
     1889(f) of the Social Security Act, as inserted by section 
     5(f)(1)) and representatives of providers of services, 
     physicians, practitioners, and suppliers, a process whereby, 
     in the case of minor errors or omissions that are detected in 
     the submission of claims under the programs under title XVIII 
     of such Act, a provider of services, physician, practitioner, 
     or

[[Page S10701]]

     supplier is given an opportunity to correct such an error or 
     omission without the need to initiate an appeal. Such process 
     may include the ability to resubmit corrected claims.

     SEC. 10. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.

       (a) In General.--The Secretary of Health and Human Services 
     shall establish a demonstration program (in this section 
     referred to as the ``demonstration program'') under which 
     medicare specialists employed by the Department of Health and 
     Human Services provide advice and assistance to medicare 
     beneficiaries at the location of existing local offices of 
     the Social Security Administration.
       (b) Locations.--
       (1) In general.--The demonstration program shall be 
     conducted in at least 6 offices or areas. Subject to 
     paragraph (2), in selecting such offices and areas, the 
     Secretary shall provide preference for offices with a high 
     volume of visits by medicare beneficiaries.
       (2) Assistance for rural beneficiaries.--The Secretary 
     shall provide for the selection of at least 2 rural areas to 
     participate in the demonstration program. In conducting the 
     demonstration program in such rural areas, the Secretary 
     shall provide for medicare specialists to travel among local 
     offices in a rural area on a scheduled basis.
       (c) Duration.--The demonstration program shall be conducted 
     over a 3-year period.
       (d) Evaluation and Report.--
       (1) Evaluation.--The Secretary shall provide for an 
     evaluation of the demonstration program. Such evaluation 
     shall include an analysis of--
       (A) utilization of, and beneficiary satisfaction with, the 
     assistance provided under the program; and
       (B) the cost-effectiveness of providing beneficiary 
     assistance through out-stationing medicare specialists at 
     local social security offices.
       (2) Report.--The Secretary shall submit to Congress a 
     report on such evaluation and shall include in such report 
     recommendations regarding the feasibility of permanently out-
     stationing medical specialists at local social security 
     offices.

     SEC. 11. POLICY DEVELOPMENT REGARDING EVALUATION AND 
                   MANAGEMENT (E & M) DOCUMENTATION GUIDELINES.

       (a) In General.--The Secretary of Health and Human Services 
     may not implement any documentation guidelines 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 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 modifications to the 
     evaluation and management documentation guidelines; and
       (4) finds that the objectives described in subsection (c) 
     will be met in the implementation of such guidelines.

     The Secretary may 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 Evaluation and Management 
     Documentation Guidelines.--
       (1) Length and consultation.--Each pilot project under this 
     subsection shall--
       (A) be of sufficient length to allow for preparatory 
     physician and medicare contractor education, analysis, and 
     use and assessment of potential evaluation and management 
     guidelines; and
       (B) be conducted, in development and throughout the 
     planning and operational stages of the project, in 
     consultation with practicing physicians.
       (2) Range of 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 medicare contractor) which 
     evaluates medical record information for claims submitted by 
     physicians identified as statistical outliers relative to 
     definitions published in the Current Procedures Terminology 
     (CPT) code book of the American Medical Association;
       (B) 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
       (C) at least one shall be conducted in a setting where 
     physicians bill under physicians services in teaching 
     settings and at one shall be conducted in a setting other 
     than a teaching setting.
       (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 modified evaluation and management 
     documentation 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.
       (c) Objectives for Evaluation and Management Guidelines.--
     The objectives for modified evaluation and management 
     documentation guidelines developed by the Secretary shall be 
     to--
       (1) enhance 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 of Health and Human Services 
     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.
       (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.--The Secretary shall submit to 
     Congress a report on the results of the study conducted under 
     paragraph (1).
       (e) 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.
                                 ______