[Congressional Record Volume 149, Number 170 (Friday, November 21, 2003)]
[Senate]
[Pages S15408-S15475]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. JEFFORDS (for himself, Ms. Snowe, and Mr. Hatch):
S. 1912. A bill to amend the Internal Revenue Code of 1986 to expand
pension coverage and savings opportunities and to provide other pension
reforms; to the Committee on Finance.
Mr. JEFFORDS. Mr. President, today, together with Senators Hatch and
Snowe, I am introducing, the Retirement Account Portability and
Improvement Act of 2003. This legislation improves the portability of
retirement savings by eliminating unnecessary complexities and barriers
in the retirement savings system, and helps preserve retirement savings
by giving American workers tools that will help them consolidate their
retirement savings into one easily managed account.
In brief, this bill will make a number of improvements in the
retirement savings system to help families preserve retirement assets.
It will, for example, enhance the portability of retirement savings by
expanding rollover options in traditional IRAs, Roth IRAs, and SIMPLE
Plans. The bill also clarifies that when employees are permitted to
make after-tax contributions to retirement plans, those after-tax
amounts may be rolled over into other retirement plans eligible to
receive such rollovers. This clarification will make it easier for
workers to move all elements of their 401(k) of 403(b) savings when
they change jobs and move between private sector and the tax-exempt
sector.
In addition, the bill builds on defined contribution plan reforms
enacted in 2001 by requiring a shortened vesting schedule for employer
non-elective contributions, such as profit-sharing contributions, to
defined contribution plans. As a result, employer contributions will
become employee property more quickly, helping workers to build more
meaningful retirement benefits. This new vesting schedule corresponds
to rules for 401(k) matching contributions enacted in 2001.
Another provision in the bill would end an unfair tax penalty faced
by non-spouse beneficiaries. Today, when an employee dies, the benefits
in that employee's retirement account are paid out to a non-spouse
beneficiary in one payment. The beneficiary must pay tax on the entire
amount, and is often forced into a higher tax bracket as a result of
the payment. A provision in this bill would allow non-spouse
beneficiaries--siblings, children, domestic partners, parents--to roll
over the money from the plan to an IRA. This will prevent an immediate
tax bite to grieving beneficiaries and allow them to withdraw the money
from their IRA over five years or over their own life expectancy.
The bill also helps preserve retirement savings by allowing plans to
designate default IRAs or annuity contracts to which employee rollovers
may be directed. Employers should be more willing to establish default
IRA and annuity rollover options as a result, making it easier for
employees to keep savings in the retirement system when they change
jobs.
For workers who leave a job without claiming their retirement
benefits, the bill improves on the automatic rollover provisions
enacted in 2001, by allowing certain small distributions from
retirement plans to be sent to the Pension Benefit Guaranty Corporation
(PBGC), ensuring that participants are ultimately reunited with their
earned benefits. The bill also expands the scope of the PBGC's
successful Missing Participants program that matches workers with lost
pension benefits.
Employees of state and local governments, including teachers, will
benefit from a number of this bill's technical corrections that will
facilitate the purchase of service credits in public pension programs,
allowing state and local employees to more easily attain a full pension
in the jurisdiction where they conclude their career. The bill also
contains provisions that would clarify eligibility rights of certain
state and local employees who participate in a Section 457 deferred
compensation plan.
Congress must take every opportunity to encourage American workers
not only to save for retirement, but also to preserve those hard-earned
retirement savings. These portability improvements offer one set of
tools for making it easier to navigate the retirement savings system
and reach retirement with an adequate nest egg. There are many pressing
and complex retirement issues that demand attention, but I am hopeful
that this legislation, narrowly focused on portability, can be
considered quickly and on its own merits.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1912
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Retirement
Acount Portability Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal 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 a section or other provision of the Internal
Revenue Code of 1986.
[[Page S15409]]
(c) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I--BUILDING AND PRESERVING RETIREMENT ASSETS AND ENHANCING
PORTABILITY
Sec. 101. Allow rollovers by nonspouse beneficiaries of certain
retirement plan distributions.
Sec. 102. Facilitation under fiduciary rules of certain rollovers and
annuity distributions.
Sec. 103. Faster vesting of employer nonelective contributions.
Sec. 104. Allow rollover of after-tax amounts in annuity contracts.
TITLE II--EXPANDING RETIREMENT PLAN COVERAGE TO EMPLOYEES OF SMALL
BUSINESSES
Sec. 201. Elimination of higher penalty on certain Simple
distributions.
Sec. 202. Simple plan portability.
TITLE III--EXPANDING RETIREMENT SAVINGS FOR TAX-EXEMPT ORGANIZATION AND
GOVERNMENT EMPLOYEES
Sec. 301. Clarifications regarding purchase of permissive service
credit.
Sec. 302. Eligibility for participation in retirement plans.
TITLE IV--SIMPLIFICATION AND EQUITY
Sec. 401. Allow direct rollovers from retirement plans to Roth IRAs.
Sec. 402. Transfers to the PBGC.
TITLE I--BUILDING AND PRESERVING RETIREMENT ASSETS AND ENHANCING
PORTABILITY
SEC. 101. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF
CERTAIN RETIREMENT PLAN DISTRIBUTIONS.
(a) In General.--
(1) Qualified plans.--Section 402(c) (relating to rollovers
from exempt trusts) is amended by adding at the end the
following new paragraph:
``(11) Distributions to inherited individual retirement
plan of nonspouse beneficiary.--
``(A) In general.--If, with respect to any portion of a
distribution from an eligible retirement plan of a deceased
employee, a direct trustee-to-trustee transfer is made to an
individual retirement plan described in clause (i) or (ii) of
paragraph (8)(B) established for the purposes of receiving
the distribution on behalf of an individual who is a
designated beneficiary (as defined by section 401(a)(9)(E))
of the employee and who is not the surviving spouse of the
employee--
``(i) the transfer shall be treated as an eligible rollover
distribution for purposes of this subsection,
``(ii) the individual retirement plan shall be treated as
an inherited individual retirement account or individual
retirement annuity (within the meaning of section
408(d)(3)(C)) for purposes of this title, and
``(iii) section 401(a)(9)(B) (other than clause (iv)
thereof) shall apply to such plan.
``(B) Certain trusts treated as beneficiaries.--For
purposes of this paragraph, to the extent provided in rules
prescribed by the Secretary, a trust maintained for the
benefit of one or more designated beneficiaries shall be
treated in the same manner as a trust designated
beneficiary.''.
(2) Section 403(a) plans.--Subparagraph (B) of section
403(a)(4) (relating to rollover amounts) is amended by
inserting ``and (11)'' after ``(7)''.
(3) Section 403(b) plans.--Subparagraph (B) of section
403(b)(8) (relating to rollover amounts) is amended by
striking ``and (9)'' and inserting ``, (9), and (11)''.
(4) Section 457 plans.--Subparagraph (B) of section
457(e)(16) (relating to rollover amounts) is amended by
striking ``and (9)'' and inserting ``, (9), and (11)''.
(b) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2003.
SEC. 102. FACILITATION UNDER FIDUCIARY RULES OF CERTAIN
ROLLOVERS AND ANNUITY DISTRIBUTIONS.
(a) In General.--Section 404(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended by
adding at the end the following new paragraph:
``(4)(A) In the case of a pension plan which makes a
transfer under section 401(a)(31)(A) of the Internal Revenue
Code of 1986 to an individual retirement plan (as defined in
section 7701(a)(37) of such Code) in connection with a
participant or beneficiary or makes a distribution to a
participant or beneficiary of an annuity contract described
in subparagraph (B), the participant or beneficiary shall,
for purposes of paragraph (1), be treated as exercising
control over the transfer or distribution if--
``(i) the participant or beneficiary elected such transfer
or distribution, and
``(ii) in connection with such election, the participant or
beneficiary was given an opportunity to elect any other
individual retirement plan (in the case of a transfer) or any
other annuity contract described in subparagraph (B) (in the
case of a distribution).
``(B) An annuity contract is described in this subparagraph
if it provides, either on an immediate or deferred basis, a
series of substantially equal periodic payments (not less
frequently than annually) for the life of the participant or
beneficiary or the joint lives of the participant or
beneficiary and such individual's designated beneficiary.
Annuity payments shall not fail to be treated as part of a
series of substantially equal periodic payments because the
amount of the periodic payments may vary in accordance with
investment experience, reallocations among investment
options, actuarial gains or losses, cost of living indices,
or similar fluctuating criteria. The availability of a
commutation benefit, a minimum period of payments certain, or
a minimum amount to be paid in any event shall not affect the
treatment of an annuity contract as an annuity contract
described in this subparagraph.
``(C) Under regulations prescribed by the Secretary, this
paragraph shall apply without regard to whether the
particular individual retirement plan receiving the transfer
or the particular annuity contract being distributed is
specifically identified by the pension plan as available to
the participant or beneficiary.
``(D) Notwithstanding the preceding provisions of this
paragraph, paragraph (1)(B) shall not apply with respect to
liability under section 406 in connection with the specific
identification of any individual retirement plan or annuity
contract as being available to the participant or
beneficiary.''.
(b) Effective Date and Related Rules.--
(1) Effective date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
(2) Issuance of final regulations.--Final regulations under
section 404(c)(4) of the Employee Retirement Income Security
Act of 1974 (added by this section) shall be issued no later
than 1 year after the date of the enactment of this Act.
SEC. 103. FASTER VESTING OF EMPLOYER NONELECTIVE
CONTRIBUTIONS.
(a) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Paragraph (2) of section 411(a) (relating
to employer contributions) is amended to read as follows:
``(2) Employer contributions.--
``(A) Defined benefit plans.--
``(i) In general.--In the case of a defined benefit plan, a
plan satisfies the requirements of this paragraph if it
satisfies the requirements of clause (ii) or (iii).
``(ii) 5-year vesting.--A plan satisfies the requirements
of this clause if an employee who has completed at least 5
years of service has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from employer
contributions.
``(iii) 3 to 7 year vesting.--A plan satisfies the
requirements of this clause if an employee has a
nonforfeitable right to a percentage of the employee's
accrued benefit derived from employer contributions
determined under the following table:
The nonforfeitable
``Years of service: percentage is:
3.............................................................20
4.............................................................40
5.............................................................60
6.............................................................80
7 or more....................................................100.
``(B) Defined contribution plans.--
``(i) In general.--In the case of a defined contribution
plan, a plan satisfies the requirements of this paragraph if
it satisfies the requirements of clause (ii) or (iii).
``(ii) 3-year vesting.--A plan satisfies the requirements
of this clause if an employee who has completed at least 3
years of service has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from employer
contributions.
``(iii) 2 to 6 year vesting.--A plan satisfies the
requirements of this clause if an employee has a
nonforfeitable right to a percentage of the employee's
accrued benefit derived from employer contributions
determined under the following table:
The nonforfeitable
``Years of service: percentage is:
2.............................................................20
3.............................................................40
4.............................................................60
5.............................................................80
6.........................................................100.''.
(2) Conforming amendment.--Section 411(a) (relating to
general rule for minimum vesting standards) is amended by
striking paragraph (12).
(b) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) In general.--Paragraph (2) of section 203(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1053(a)(2)) is amended to read as follows:
``(2)(A)(i) In the case of a defined benefit plan, a plan
satisfies the requirements of this paragraph if it satisfies
the requirements of clause (ii) or (iii).
``(ii) A plan satisfies the requirements of this clause if
an employee who has completed at least 5 years of service has
a nonforfeitable right to 100 percent of the employee's
accrued benefit derived from employer contributions.
``(iii) A plan satisfies the requirements of this clause if
an employee has a nonforfeitable right to a percentage of the
employee's accrued benefit derived from employer
contributions determined under the following table:
The nonforfeitable
``Years of service: percentage is:
3.............................................................20
4.............................................................40
5.............................................................60
6.............................................................80
7 or more....................................................100.
``(B)(i) In the case of an individual account plan, a plan
satisfies the requirements of this paragraph if it satisfies
the requirements of clause (ii) or (iii).
``(ii) A plan satisfies the requirements of this clause if
an employee who has completed at least 3 years of service has
a nonforfeitable right to 100 percent of the employee's
accrued benefit derived from employer contributions.
[[Page S15410]]
``(iii) A plan satisfies the requirements of this clause if
an employee has a nonforfeitable right to a percentage of the
employee's accrued benefit derived from employer
contributions determined under the following table:
The nonforfeitable
``Years of service: percentage is:
2.............................................................20
3.............................................................40
4.............................................................60
5.............................................................80
6.........................................................100.''.
(2) Conforming amendment.--Section 203(a) of such Act is
amended by striking paragraph (4).
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to contributions
for plan years beginning after December 31, 2003.
(2) Collective bargaining agreements.--In the case of a
plan maintained pursuant to one or more collective bargaining
agreements between employee representatives and one or more
employers ratified before the date of the enactment of this
Act, the amendments made by this section shall not apply to
contributions on behalf of employees covered by any such
agreement for plan years beginning before the earlier of--
(A) the later of--
(i) the date on which the last of such collective
bargaining agreements terminates (determined without regard
to any extension thereof on or after such date of the
enactment); or
(ii) January 1, 2004; or
(B) January 1, 2006.
(3) Service required.--With respect to any plan, the
amendments made by this section shall not apply to any
employee before the date that such employee has 1 hour of
service under such plan in any plan year to which the
amendments made by this section apply.
SEC. 104. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN ANNUITY
CONTRACTS.
(a) In General.--Subparagraph (A) of section 402(c)(2)
(maximum amount which may be rolled over) is amended by
striking ``and which'' and inserting ``or to an annuity
contract described in section 403(b) and such plan or
contract''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2003.
TITLE II--EXPANDING RETIREMENT PLAN COVERAGE TO EMPLOYEES OF SMALL
BUSINESSES
SEC. 201. ELIMINATION OF HIGHER PENALTY ON CERTAIN SIMPLE
DISTRIBUTIONS.
(a) In General.--Subsection (t) of section 72 (relating to
10-percent additional tax on early distributions from
qualified retirement plans) is amended by striking paragraph
(6) and redesignating paragraphs (7), (8), and (9) as
paragraphs (6), (7), and (8), respectively.
(b) Conforming Amendments.--
(1) Section 72(t)(2)(E) is amended by striking ``paragraph
(7)'' and inserting ``paragraph (6)''.
(2) Section 72(t)(2)(F) is amended by striking ``paragraph
(8)'' and inserting ``paragraph (7)''.
(3) Section 408(d)(3)(G) is amended by striking ``applies''
and inserting ``applied on the day before the date of the
enactment of the Retirement Account Portability Act of
2003)''.
(4) Section 457(a)(2) is amended by striking ``section
72(t)(9)'' and inserting ``section 72(t)(8)''.
(c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2003.
SEC. 202. SIMPLE PLAN PORTABILITY.
(a) Repeal of Limitation.--Paragraph (3) of section 408(d)
(relating to rollover contributions), as amended by this Act,
is amended by striking subparagraph (G) and redesignating
subparagraph (H) as subparagraph (G).
(b) Section 402(c)(8)(B) is amended by adding at the end
the following new sentence: ``Individual retirement accounts
and individual retirement annuities described in clauses (i)
and (ii) shall be treated as eligible retirement plans
without regard to whether they are part of a simplified
employee pension (within the meaning of section 408(k)) or a
simplified retirement account (within the meaning of section
408(p)).''.
(c) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2003.
TITLE III--EXPANDING RETIREMENT SAVINGS FOR TAX-EXEMPT ORGANIZATION AND
GOVERNMENT EMPLOYEES
SEC. 301. CLARIFICATIONS REGARDING PURCHASE OF PERMISSIVE
SERVICE CREDIT.
(a) In General.--Subparagraph (A) of section 457(e)(17)
(relating to trustee-to-trustee transfers to purchase
permissive service credit), and subparagraph (A) of section
403(b)(13) (relating to trustee-to-trustee transfers to
purchase permissive service credit), are both amended by
striking ``section 415(n)(3)(A)'' and inserting ``section
415(n)(3) (without regard to subparagraphs (B) and (C)
thereof)''.
(b) Distribution Requirements.--Section 457(e)(17) and
section 403(b)(13) are both amended by adding at the end the
following sentence: ``Amounts transferred under this
paragraph shall be distributed solely in accordance with
section 401(a) as applicable to such defined benefit plan.''.
(c) Service Credit.--Clause (ii) of section 415(n)(3)(A) is
amended to read as follows:
``(ii) which relates to benefits with respect to which such
-participant is not otherwise entitled, and''.
(d) Effective Date.--The amendments made by this section
shall take effect as if included in the amendments made by
section 647 of the Economic Growth and Tax Relief
Reconciliation Act of 2001.
SEC. 302. ELIGIBILITY FOR PARTICIPATION IN RETIREMENT PLANS.
An individual shall not be precluded from participating in
an eligible deferred compensation plan by reason of having
received a distribution under section 457(e)(9) of the
Internal Revenue Code of 1986, as in effect prior to the
enactment of the Small Business Job Protection Act of 1996.
TITLE IV--SIMPLIFICATION AND EQUITY
SEC. 401. ALLOW DIRECT ROLLOVERS FROM RETIREMENT PLANS TO
ROTH IRAS.
(a) In General.--Subsection (e) of section 408A (defining
qualified rollover contribution) is amended to read as
follows:
``(e) Qualified Rollover Contribution.--For purposes of
this section, the term `qualified rollover contribution'
means a rollover contribution--
``(1) to a Roth IRA from another such account,
``(2) from an eligible retirement plan, but only if--
``(A) in the case of an individual retirement plan, such
rollover contribution meets the requirements of section
408(d)(3), and
``(B) in the case of any eligible retirement plan (as
defined in section 402(c)(8)(B) other than clauses (i) and
(ii) thereof), such rollover contribution meets the
requirements of section 402(c), 403(b)(8), or 457(e)(16), as
applicable.
For purposes of section 408(d)(3)(B), there shall be
disregarded any qualified rollover contribution from an
individual retirement plan (other than a Roth IRA) to a Roth
IRA.''.
(b) Conforming Amendments.--
(1) Section 408A(c)(3)(B) is amended--
(A) in the text by striking ``individual retirement plan''
and inserting ``an eligible retirement plan (as defined by
section 402(c)(8)(B))'', and
(B) in the heading by striking ``IRA'' and inserting
``eligible retirement plan''.
(2) Section 408A(d)(3) is amended--
(A) in subparagraph (A) by striking ``section 408(d)(3)''
inserting ``sections 402(c), 403(b)(8), 408(d)(3), and
457(e)(16)'',
(B) in subparagraph (B) by striking ``individual retirement
plan'' and inserting ``eligible retirement plan (as defined
by section 402(c)(8)(B))'',
(C) in subparagraph (D) by striking ``or 6047'' after
``408(i)'',
(D) in subparagraph (D) by striking ``or both'' and
inserting ``persons subject to section 6047(d)(1), or all of
the foregoing persons'', and
(E) in the heading by striking ``IRA'' and inserting
``eligible retirement plan''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2003.
SEC. 402. TRANSFERS TO THE PBGC.
(a) Mandatory Distributions to PBGC.--Clause (i) of section
401(a)(31)(B) (relating to general rule for certain mandatory
distributions) is amended by inserting ``to the Pension
Benefit Guaranty Corporation in accordance with section
4050(e) of the Employee Retirement Income Security Act of
1974 or'' after ``such transfer''.
(b) Tax Treatment of Distributions.--Subparagraph (B) of
section 401(a)(31) is amended by adding at the end the
following new clause:
``(iii) Income tax treatment of transfers to pbgc.--For
purposes of determining the income tax treatment relating to
transfers to the Pension Benefit Guaranty Corporation under
clause (i)--
``(I) the transfer of amounts to the Pension Benefit
Guaranty Corporation pursuant to clause (i) shall be treated
as a transfer to an individual retirement plan under such
clause, and
``(II) the distribution of such amounts from the Pension
Benefit Guaranty Corporation shall be treated as a
distribution from an individual retirement plan.''.
(c) Missing participants and beneficiaries.--
(1) In general.--Section 4050 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1350) is amended by
redesignating subsection (c) as subsection (f) and by
inserting after subsection (b) the following new subsections:
``(c) Multiemployer Plans.--The corporation shall prescribe
rules similar to the rules in subsection (a) for
multiemployer plans covered by this title that terminate
under section 4041A.
``(d) Plans Not Otherwise Subject to Title.--
``(1) Transfer to corporation.--The plan administrator of a
plan described in paragraph (4) may elect to transfer the
benefits of a missing participant or beneficiary to the
corporation upon termination of the plan.
``(2) Information to the corporation.--To the extent
provided in regulations, the plan administrator of a plan
described in paragraph (4) shall, upon termination of the
plan, provide the corporation information with respect to
benefits of a missing participant or beneficiary if the plan
transfers such benefits--
``(A) to the corporation, or
``(B) to an entity other than the corporation or a plan
described in paragraph (4)(B)(ii).
[[Page S15411]]
``(3) Payment by the corporation.--If benefits of a missing
participant or beneficiary were transferred to the
corporation under paragraph (1), the corporation shall, upon
location of the participant or beneficiary, pay to the
participant or beneficiary the amount transferred (or the
appropriate survivor benefit) either--
``(A) in a single sum (plus interest), or
``(B) in such other form as is specified in regulations of
the corporation.
``(4) Plans described.--A plan is described in this
paragraph if--
``(A) the plan is a pension plan (within the meaning of
section 3(2))--
``(i) to which the provisions of this section do not apply
(without regard to this subsection), and
``(ii) which is not a plan described in paragraphs (2)
through (11) of section 4021(b), and
``(B) at the time the assets are to be distributed upon
termination, the plan--
``(i) has one or more missing participants or
beneficiaries, and
``(ii) has not provided for the transfer of assets to pay
the benefits of all missing participants and beneficiaries to
another pension plan (within the meaning of section 3(2)).
``(5) Certain provisions not to apply.--Subsections (a)(1)
and (a)(3) shall not apply to a plan described in paragraph
(4).
``(e) Involuntary Cashouts.--
``(1) Payment by the corporation.--If benefits under a plan
described in paragraph (2) were transferred to the
corporation under section 401(a)(31)(B) of the Internal
Revenue Code of 1986, the corporation shall, upon application
filed by the participant or beneficiary with the corporation
in such form and manner as may be prescribed in regulations
of the corporation, pay to the participant or beneficiary the
amount transferred (or the appropriate survivor benefit)
either--
``(A) in a single sum (plus interest), or
``(B) in such other form as is specified in regulations of
the corporation.
``(2) Information to the corporation.--To the extent
provided in regulations, the plan administrator of a plan
described in paragraph (3) shall, upon transferred to the
corporation under section 401(a)(31)(B) of such Code, provide
the corporation information with respect to benefits of the
participant or beneficiary so transferred.
``(3) Plans described.--A plan is described in this
paragraph if the plan is a pension plan (within the meaning
of section 3(2))--
``(A) which provides for mandatory distributions under
section 401(a)(31)(B) of the Internal Revenue Code of 1986,
and
``(B) which is not a plan described in paragraphs (2)
through (11) of section 4021(b).
``(4) Certain provisions not to apply.--Subsections (a)(1)
and (a)(3) shall not apply to a plan described in paragraph
(2).''.
(2) Conforming amendments.--Section 206(f) of such Act (29
U.S.C. 1056(f)) is amended--
(A) by striking ``title IV'' and inserting ``section
4050''; and
(B) by striking ``the plan shall provide that,''.
(d) Effective Date.--
(1) Internal revenue code of 1986 provisions.--The
amendments made by subsections (a) and (b) shall take effect
as if included in the amendments made by section 657 of the
Economic Growth and Tax Relief Reconciliation Act of 2001.
(2) Employee retirement income security act of 1974
provisions.--The amendments made by subsection (c) shall
apply to distributions made after final regulations
implementing subsections (c), (d), and (e) of section 4050 of
the Employee Retirement Income Security Act of 1974 (as added
by subsection (c)), respectively, are prescribed.
(3) Regulations.--The Pension Benefit Guaranty Corporation
shall issue regulations necessary to carry out the amendments
made by subsection (c) not later than December 31, 2004.
______
By Mr. McCAIN (for himself and Mr. Feingold):
S. 1913. A bill to amend the Internal Revenue Code of 1986 to reform
the system of public financing for Presidential elections, and for
other purposes; to the Committee on Finance.
Mr. McCAIN. Mr. President, along with Senator Russ Feingold, I am
proud today to introduce the Presidential Funding Act of 2003. This
legislation will improve and reform the presidential public financing
system. With major presidential candidates opting out of public
financing for their 2004 primary campaigns, reform of the system of
financing presidential nominations is needed more than ever.
The presidential public financing system has been in place for three
decades and has achieved broad public acceptance. From 1976 to 2000,
every major party presidential nominee has accepted public financing
for the general election and, nearly all of the nominees have also
accepted it for their primary elections. A total of 46 Democrats and 29
Republicans have accepted public financing for the presidential
primaries during this period.
Since its creation, the presidential financing system has worked non-
ideologically, with victories for three Republicans and two Democrats.
It has also provided for competitive elections. In the five races that
have been run under the system involving an incumbent president,
challengers have won in three of those elections. This system of
voluntary spending limits in exchange for public funding has been a
nonpartisan success.
Last year's enactment of a ban on soft money addressed what had
become a basic problem for the effectiveness and credibility of the
presidential system. For the system to continue serving the nation
effectively, its remaining problems now must be solved. This
legislation will repair and revitalize the presidential campaign
finance system in the following ways.
First, our legislation increases the overall spending limit for the
presidential primaries and provide more public matching funds for
presidential primary candidates.
The overall spending limit in the primaries for publicly financed
candidates has failed to keep pace with reality. This was demonstrated
when in 2000, public financing and spending limits for the primaries
were rejected and a record $100 million in private contributions was
spent to gain the Republican party's nomination--more than twice the
amount that the publicly financed candidates were allowed to spend.
During the 2004 presidential primary period, it is expected that
Republicans will raise and spend as much as $200 million.
Our legislation increases the individual contribution limit from
$1,000 to $2,000. Therefore, it will be easier over time for other
candidates to reject public financing and raise private money in excess
of the overall primary spending limit, thereby worsening the
competitive disadvantage of publicly-financed candidates.
In addition, the ``front-loading'' of presidential primaries has
created a much shorter nominating period--now likely to end by early
March--and a longer actual general election period than existed when
the presidential financing system was created in 1974. As a result, a
potential ``gap'' exists in funds available for a publicly financed
nominee to spend between gaining the party nomination in March and the
party's summer nominating convention, when the nominee receives public
funds for the general election. This creates a further competitive
disadvantage.
To address these problems, our legislation increases the overall
spending limit for the presidential primaries to $75 million from the
$45 million limit in effect for the 2004 presidential election. This
would equal the $75 million spending limit in effect for the general
election, which applies to a much shorter period than the primaries.
The amount of public matching funds for individual contributions in
the primaries is also increased from the current one-to-one match to a
four-to-one match for up to $250 of each individual contribution. This
would greatly increase the value of smaller contributions in the
presidential nominating process, as was intended by the presidential
financing system. It would decrease the reliance on larger
contributions, provide more public funds to meet the higher spending
limit, and improve the ability of publicly financed candidates to run
competitive elections.
When the $1000 individual contribution limit was doubled last year,
increasing the potential role of private contributions in the
presidential financing system, no similar adjustment was made to
increase the role of public matching funds. A new four-to-one multiple
match for up to $250 of each individual contribution would accomplish
that goal.
In addition, the threshold for qualifying for matching public funds
in the primary has not changed since the system was established. Our
legislation increases the qualifying threshold should be increased by
more than doubling the threshold to require candidates to raise $15,000
in each of 20 states in amounts of no more than $250 per individual
donor. Although the existing threshold has worked well during the
history of the current system, a higher qualifying amount is
appropriate for the future, especially since candidates would now be
eligible to receive greater amounts of matching funds.
Second, our legislation requires a candidate to opt in or out of the
public financing system for the entire presidential election, including
both the primary and general election.
[[Page S15412]]
The purpose of the presidential public financing system is to allow
candidates to run competitive races for the presidency without becoming
dependent on or obligated to campaign donors. That purpose is
undermined when a candidate opts out of the system to raise and spend
large amounts of private money for a primary or general election race.
Such candidates should not be able to reject public financing and then
get the system's benefits when it suits their tactical advantage. A
candidate should have to opt in or out of the system for the whole
election.
Third, our legislation repeals the state-by-state primary spending
limits and allows publicly financed primary candidates to receive their
public matching funds before January 1st of the presidential election
year.
The State-by-State primary spending limits have not worked. The
limits have proven to be ineffective and have served to unjustifiably
micromanage presidential campaigns.
Under current law, primary candidates can begin to raise private
contributions eligible to be matched beginning on January 1 of the year
before a presidential election year. They are not eligible, however, to
receive any of the matching public funds until January 1 of the
presidential election year. With the current ``front-loaded'' primary
system, and with the nomination likely to be decided in the early
months of a presidential election year, primary candidates need to be
able to spend more funds at an earlier period than before. As a result,
under our legislation, presidential primary candidates will be eligible
to start receiving matching public funds on July 1 of the year before a
presidential election year.
Fourth, our legislation provides additional public funds in the
presidential general election for a publicly financed candidate facing
a privately financed candidate who has substantially outspent the
combined primary and general election spending limits.
As more wealthy individuals decide to spend their personal wealth to
run for public office, the potential grows for an individual to spend
an enormous amount of personal wealth to seek the presidency. There
already have been candidates for the U.S. Senate and in mayoral races,
for example, who have spent as much in personal wealth on their races
as each major party presidential nominee received in public funds in
2000 to run their general election campaign.
In addition, with the increased individual contribution limit, a
presidential candidate could decide to forgo public funding and raise
and spend private contributions far in excess of the spending limits
for publicly financed candidates.
To address this potential problem, our legislation makes a publicly
financed major party nominee eligible to receive an additional $75
million for the general election race, when a privately financed
general election candidate has spent more than 50 percent above the
total primary and general election spending limit for the publicly
financed candidate.
In other words, once a presidential general election candidate has
spent more than a total of $225 million to seek the presidency, a
publicly financed major party nominee, subject to a spending limit of
$75 million for the primaries and $75 million for the general election,
would receive an additional $75 million for the general election race.
Fifth, our legislation increases the funds available to finance the
presidential public financing system.
Currently, the public financing system is funded by a voluntary $3
check-off available to taxpayers on their tax forms on an annual basis.
This mechanism will not raise sufficient resources in the long term to
finance the costs of a revised presidential system.
The $3 tax check-off is increased to $6 and indexed for inflation to
help ensure there are sufficient funds available for future
presidential elections. In addition, the Federal Election Commission
(FEC) is authorized to conduct a public education campaign to explain
to citizens why the check-off exists and how it works, including the
fact that it does not increase the tax liability of taxpayers.
The current presidential public financing law creates a priority
system that allocates available public funds from the check-off to the
nomination conventions, the presidential general election and the
presidential primaries in that order. This order of priority does not
make sense.
Our legislation revises the order of priority for use of public funds
to make funding of the general election candidates the first priority,
funding of the primary election candidates the second priority, and
funding of the nomination conventions the third priority.
Furthermore, a U.S. Department of the Treasury ruling prohibits
taking into account the tax check-off revenues that will be received in
April of the presidential election year in determining at the start of
each presidential election year the total amount of funds available to
be given to eligible candidates from the fund. This has had the effect
of artificially lowering the amount of funds available and creating
temporary shortfalls for primary candidates during the opening months
of the presidential election year at the time when they need the funds
the most.
Our legislation revises the law to require the U.S. Department of the
Treasury (as it used to do) to estimate at the end of the year prior to
a presidential election year the amount of check-off funds that will be
received in the presidential election year and to take these funds into
account in determining the total amount of funds available under the
presidential system.
Finally, our legislation implements the soft money ban to ensure that
the parties and federal officeholders and candidates do not raise or
spend soft money in connection with the presidential nominating
conventions.
Despite the passage of the new campaign finance law and its ban on
soft money, federal officeholders and national party officials have
continued to raise soft money to finance the national nomination
conventions on the fictional premise that such funds are not in
connection with a ``federal election'' but rather are for municipal or
civic purposes.
The reality is that a presidential nominating convention is defined
as a ``federal election'' election under the campaign finance law.
Furthermore, federal officeholders and candidates and national party
officials who raise soft money for the conventions are subject to
precisely the same kind of problems of corruption and the appearance of
corruption that the new law prevents by banning soft money.
To reaffirm that the soft money ban applies to the presidential
nominating conventions, our legislation explicitly prohibits the
national parties and federal officeholders and candidates from raising
and spending soft money to pay for the presidential nominating
conventions, including for a host committee, civic committee or
municipality.
The highly expensive, front-loaded, nationalized, primary system
requires that we more than ever fix the presidential public funding
system. We must continue to promote competition in order to give voters
choices. Our legislation not only saves the existing system but
improves it as well. It not only shores up the financial foundations of
the system but it would also bring more donors into the system, making
financial participation more democratic. It would give our citizens a
stake in their government. It is our hope that with the enactment of
this legislation, candidates will no longer take small donors for
granted and finally hear their voices. In return, all of our citizens
will feel reconnected to the presidential financing process that at
times, has left them behind.
Mr. FEINGOLD. Mr. President, it is pleasure to join my friend and
colleague Senator McCain in introducing a bill to repair and strengthen
the presidential public financing system. The Presidential Funding Act
of 2003 will ensure that this system that has served our country so
well for over a generation will continue to fulfill its promise in the
21st century.
The presidential public financing system was put into place in the
wake of the Watergate scandals as part of the Federal Election Campaign
Act of 1974. It was held to be constitutional by the Supreme Court in
Buckley v. Valeo. Every major party nominee for President since 1976
has participated in the
[[Page S15413]]
system for the general election. The system, of course, is voluntary,
as the Supreme Court required. In the last election, then-Governor
George W. Bush opted out of the system for the presidential primaries,
but elected to take the taxpayer funded grant in the general election.
He appears ready to make the same choice in this election, and so far
two of the Democratic presidential candidates have decided not to seek
federal matching funds in the primaries. Before 2000, almost all
serious candidates for President had participated in the system.
It is unfortunate that the matching funds system for the primaries is
becoming less viable. The system reduces the fundraising pressures on
candidates and levels the playing field between candidates. It allows
candidates to run viable campaigns without becoming overly dependent on
private donors. The system has worked well in the past, and its
advantages for candidates and for the country make it worth repairing
so that it can work in the future. If we don't repair it, the pressures
on candidates to opt out because their opponents are opting out will
increase until the system collapse from disuse.
At the outset, I want to emphasize that this bill is not designed to
have any impact on the ongoing presidential race. It will take effect
only after the 2004 elections. Therefore, there is no partisan purpose
here. Once again, Senator McCain and I are working together to try to
improve the campaign finance system, regardless of any partisan impact
that these reforms might have. Second, we do not expect Congress to
take action on this bill during an election year. Instead, our hope is
that by introducing a bill now we can begin a conversation with our
colleagues and with the public that will allow us to take quick action
beginning in 2005 so that a new system can be in place for the 2008
election.
The bill makes changes to both the primary and general election
system to address the weaknesses and problems that have been identified
by both participants in the system and experts on the presidential
election financing process. First and most important, it eliminates the
state-by-state spending limits in the current law and substantially
increases the overall spending limit from the current limit of
approximately $45 million to $75 million. This should make the system
more viable for serious candidates facing opponents who are capable of
raising significant sums outside the system. The bill also makes
available significantly more public money for participating candidates
by increasing the match of small contributions from 1:1 to 4:1. Thus,
significantly more public money will be available to those candidates
who choose to participate in the system.
One very important provision of this bill ties the primary and
general election systems together and requires candidates to make a
single decision on whether to participate. Candidates who opt out of
the primary system and decide to rely solely on private money cannot
return to the system for the general election. And candidates must
commit to participate in the system in the general election if they
want to receive federal matching funds in the primaries. The bill also
increases the spending limits for participating candidates in the
primaries who face a non-participating opponent if that opponent raises
more than 33 percent more than the spending limit. This provides some
protection against being far outspent by a non-participating opponent.
The bill also sets the general election spending limit at $75
million, indexed for inflation, which is about what it is projected to
be in 2008. And if a general election candidate does not participate in
the system and spends more than 33 percent more than the combined
primary and general election spending limits, a participating candidate
will receive a grant equal to twice the general election spending
limit.
This bill also addresses what some have called the ``gap'' between
the primary and general election seasons. Presumptive presidential
nominees have emerged earlier in the election year over the life of the
public financing system. This had led to some nominees being
essentially out of money between the time that they nail down the
nomination and the convention where they are formally nominated and
become eligible for the general election grant. For a few cycles, soft
money raised by the parties filled in that gap, but the Bipartisan
Campaign Reform Act of 2002 thankfully has now closed that loophole.
This bill doubles the amount of hard money that parties can spend in
coordination with their candidates, allowing them to fill the gap once
the party has a presumptive nominee.
Fixing the presidential public financing system will obviously cost
money, but our best calculations at the present time indicate that the
changes to the system in this bill can be paid for by doubling the
income tax check-off on an individual return from $3 to just $6. The
total cost of the changes to the system is projected to be around $175
million over the four-year election cycle. Of course, these projections
may change as we get more data from the 2004 elections. But even a
somewhat larger cost would be a very small investment to make to
protect the health of our democracy and integrity of our presidential
elections. The American people do not want to see a return to the pre-
Watergate days of unlimited spending on presidential elections and
candidates entirely beholden to private donors. We must act now to
preserve the crown jewel of the Watergate reforms and assure the
fairness of our elections and the confidence of our citizens in the
process.
______
By Ms. STABENOW (for herself and Mr. Levin):
S. 1914. A bill to prohibit the closure or realignment of inpatient
services at the Aleda E. Lutz Department of Veterans Affairs Medical
Center in Saginaw, Michigan, as proposed under the Capital Asset
Realignment for Enhanced Services initiatives; to the Committee on
Veterans' Affairs.
Ms. STABENOW. Mr. President, I rise today to introduce legislation
that would prevent the closure of the Saginaw Veterans Administration
Medical Center in Saginaw, MI.
As of August 2003, there were almost one million veterans in lower
Michigan and Northwestern Ohio. These one million veterans are served
by four V.A. Medical Centers--Saginaw, Detroit, Ann Arbor and Battle
Creek--and 12 Community Based Outpatient Clinics (CBOCs), all located
in lower Michigan or Toledo, OH.
Regrettably, the Department of Veterans Affairs' Capitol Asset
Realignment for Enhanced Services (CARES) Commission is recommending
closing all acute care beds at the Aleda E. Lutz Department of Veterans
Affairs Medical Center in Saginaw, MI. The geographic range for the
acute services in Saginaw is vast. The facility essentially covers half
of Michigan's Lower Peninsula. Therefore, closing these inpatient beds
in Saginaw would have a devastating impact on veterans who live in
Central and Northern Michigan.
If the Saginaw facility were to close, a veteran who lived in
Mackinaw City would have to drive 281 miles to the Detroit facility or
272 miles to the Ann Arbor facility for medical care. Under ideal
conditions these trips would take six hours instead of the current two
hour trip that it would take to reach the existing Saginaw facility.
Asking a veteran to go from Mackinaw City to Detroit is like asking a
veteran to go from southeast Michigan to Buffalo, New York to get acute
care.
How can we ask veterans, many of whom are sick and frail, to travel
six hours to get necessary inpatient services? Going through a major
illness is tough enough for our veterans. The closing of this hospital
would add insult to injury.
This bill seeks to stop this closure and ensure that the thousands of
veterans who live in central and northern Michigan have access to the
medical services they deserve. I urge my colleagues to support this
bill.
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. 1914
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
[[Page S15414]]
SECTION 1. PROHIBITION ON CLOSURE OR REALIGNMENT OF INPATIENT
SERVICES AT ALEDA E. LUTZ DEPARTMENT OF
VETERANS AFFAIRS MEDICAL CENTER IN SAGINAW,
MICHIGAN.
The Secretary of Veterans Affairs shall not carry out the
closure or realignment of inpatient services at the Aleda E.
Lutz Department of Veterans Affairs Medical Center in
Saginaw, Michigan, as proposed under the Capital Asset
Realignment for Enhanced Services (CARES) initiative.
______
By Mrs. HUTCHISON:
S. 1917. A bill to amend the Internal Revenue Code of 1986 to permit
the issuance of tax-exempt bonds for certain air and water pollution
control facilities, and to provide that the volume cap for private
activity bonds shall not apply to bonds for facilities for the
furnishing of water, sewage facilities, and air or water pollution
control facilities; to the Committee on Finance.
Mrs. HUTCHISON. Mr. President, I am proud to offer the Clean Air and
Water Investment and Infrastructure Act.
Texas, like many States, faces increasingly difficult challenges in
improving air and water quality.
The Clean Air Act requires the Environmental Protection Agency to set
air quality standards and establishes deadlines for State and local
governments to achieve those levels. Today, more than 90 communities
across the country are out of compliance with the Clean Air Act. These
so-called ``non-attainment'' areas are threated with regulatory
sanctions, such as loss of federal highway funding, if they do not meet
mandated ozone levels by 2007.
Texas has four non-attainment areas: Beaumont-Port Arthur, Dallas-
Fort Worth, El Paso and Houston. The Houston area alone needs an
estimated $4.1 billion annually in order to meet Federal air quality
standards.
These communities will not achieve compliance without assistance. Too
many industrial plants need to install expensive equipment. If these
environmental investments do not become more affordable, communities
will either suffer sanctions or force industrial facilities to close
and move offshore, causing substantial economic hardship.
Texas and many areas of the country, especially in the Southwest and
West, also face critical water and wastewater problems. Investments in
sources of clean water must be made or we will face shortages in the
coming decades. However, necessary water infrastructure improvements
are extremely expensive. According to the Texas State water plan, the
cost of water supply acquisition projects, water and wastewater
treatment, and other infrastructure projects in Texas through 2050 will
be more than $100 billion.
Currently, air and water pollution control facilities cannot be
financed by tax-exempt bonds. Even if they could, they would be limited
by a cap which sets the total amount of tax-exempt private activity
bonds issued by a state. Given the demands of other projects, such as
housing, relatively few of the air and water pollution projects would
have an opportunity to access this financing option.
In order to help us meet the challenges, I am introducing the Clear
Air and Water Investment and Infrastructure Act. My bill will allow
federal tax-exempt bonds to be used by private firms for air and water
pollution control projects. Given the importance of these critical
projects, these bonds also would be issued outside the constraints of
the private-activity bond caps. The Texas Water Development Board
estimates this could save 30 percent in financing costs for water
projects.
For example, this bill would allow tax-exempt debt to be used to
finance private systems along the Gulf Coast that desalinate seawater
and brackish groundwater, and to install air pollution facilities on
electric utility plants. States and communities would have an important
new tool for addressing air and water pollution control needs.
Pollution control is a problem for all of us. It is to everyone's
benefit to develop ways to promote public and private partnerships
which can finance projects to improve air and water quality. I hope my
colleagues will support this effort.
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. 1917
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Clean Air and Water
Investment and Infrastructure Act''.
SEC. 2. TAX-EXEMPT BONDS FOR AIR AND WATER POLLUTION CONTROL
FACILITIES.
(a) In General.--Subsection (a) of section 142 of the
Internal Revenue Code of 1986 (defining exempt facility bond)
is amended by striking ``or'' at the end of paragraph (12),
by striking the period at the end of paragraph (13) and
inserting ``, or'', and by adding at the end the following
new paragraph:
``(14) air or water pollution control facilities.''.
(b) Air or Water Pollution Control Facilities.--Section 142
of the Internal Revenue Code of 1986 (relating to exempt
facility bond) is amended by adding at the end the following
new subsection:
``(l) Pollution Control Facilities Acquired by Regional
Pollution Control Authorities.--
``(1) In general.--For purposes of paragraph (14) of
subsection (a), a bond shall be treated as described in such
paragraph if it is part of an issue substantially all of the
proceeds of which are used by a qualified regional pollution
control authority to acquire existing air or water pollution
control facilities which the authority itself will operate in
order to maintain or improve the control of pollutants.
``(2) Restrictions.--Paragraph (1) shall apply only if--
``(A) the amount paid, directly or indirectly, for a
facility does not exceed the fair market value of the
facility,
``(B) the fees or charges imposed, directly or indirectly,
on the seller for any use of the facility after the sale of
such facility are not less than the amounts that would be
charged if the facility were financed with obligations the
interest on which is not exempt from tax, and
``(C) no person other than the qualified regional pollution
control authority is considered after the sale as the owner
of the facility for the purposes of Federal income taxes.
``(3) Qualified regional pollution control authority.--For
purposes of this subsection, the term `qualified regional
pollution control authority' means an authority which--
``(A) is a political subdivision created by State law to
control air or water pollution,
``(B) has within its jurisdictional boundaries all or part
of at least 2 counties (or equivalent political
subdivisions), and
``(C) operates air or water pollution control
facilities.''.
(c) Effective Date.--The amendments made by this section
shall apply to bonds issued after the date of the enactment
of this Act.
SEC. 3. EXEMPTION FROM VOLUME CAP FOR FACILITIES FURNISHING
WATER, SEWAGE FACILITIES, AND AIR OR WATER
POLLUTION CONTROL FACILITIES.
(a) In General.--Paragraph (3) of section 146(g) of the
Internal Revenue Code of 1986 (relating to exception for
certain bonds) is amended--
(1) by inserting ``(4), (5),'' after ``(2),'',
(2) by striking ``or (13)'' and inserting ``(13), or
(14)'',
(3) by inserting ``facilities for the furnishing of water,
sewage facilities,'' after ``wharves,'',
(4) by striking ``and'' before ``qualified'', and
(5) by inserting ``, and air or water pollution control
facilities'' after ``educational facilities''.
(b) Effective Date.--The amendments made by this section
shall apply to bonds issued after the date of the enactment
of this Act.
______
By Mr. SANTORUM (for himself and Mrs. Feinstein):
S. 1918. A bill to amend the Internal Revenue Code of 1986 to provide
that qualified homeowner downpayment assistance is a charitable
purpose; to the Committee on Finance.
Mr. SANTORUM. Mr. President, I am please to introduce today, along
with my colleague from California, Senator Feinstein, legislation that
will further one of the most important public policy goals we have as a
Nation--the goal of homeownership. Homeownership is a significant part
of the American dream. It has been called the backbone of our economy.
It is widely considered the primary means by which American families
create middle-class wealth and build financial security.
Homeownership is all those things and more. It is the cornerstone of
healthy communities across our Nation. It is good for families, good
for our schools, good for our neighborhoods. Equity in homes is the
leading source for collateral for small business start-up borrowing,
and home equity loans are the leading provider of funds for a college
education. Some experts even say home owners are more likely to vote.
Despite the many benefits, there are still too many Americans for
whom the
[[Page S15415]]
American dream of homeownership is unreachable. There are too many
American families who pay rent month after month, never accumulating
equity, never experiencing the joy of raising their children in a home
they own, and look forward to passing along to future generations. That
is especially true among Americans from minority populations. Though
nationwide nearly 70 percent of Americans own their own home,
homeownership rates among African-Americans and Hispanics is less than
50 percent.
There are any number of obstacles to homeownership, but there is one
problem that is widely considered the single biggest obstacle: the lack
of funds for a down payment. Again, this is disproportionately true
among minority families, which frequently have less accumulated wealth
that can be used for a down payment.
President Bush has proposed creating the American Dream Down Payment
Fund, which would provide down payment assistance to 40,000 families
every year. I support that effort, and I applaud President Bush for
proposing this bold new initiative. The President has set a goal of
increasing the number of minority homeowners by at least 5.5 million by
the end of this decade, which the Department of Housing and Urban
Development estimates would create $256 billion in economic activity. I
believe that is an important goal for us as a Nation.
I also believe that as we work to find ways for the Federal
Government to increase homeownership, we need to encourage the private
sector to do the same. There are a number of non-profit organizations
in our country doing just that by providing a gift of down payment
assistance to potential homeowners. These gifts of down payment
assistance go to families and individuals who have the income to afford
a mortgage, but who would otherwise be prevented from buying a home
because they lack funds for a down payment. Last year non-profit
organizations provided gifts of down payment assistance to over 85,000
home buyers--and the number will likely be much higher this year. One
organization alone has helped over 160,000 individuals and families
become homeowners, by providing a gift of funds for a down payment. And
all without collecting a single dime of government funding.
That is why I am so pleased to be introducing this legislation today.
I want to be sure the private sector can continue playing such a vital
role in increasing homeownership by providing down payment assistance.
Although many charities holding tax exemptions under section 501(c)(3)
of the Internal Revenue Code provide down payment assistance, IRS
regulations do not clearly address down payment assistance programs.
Our legislation will clarify that, under certain circumstances, the
provision of down payment assistance to American families for use in
purchasing low or moderate price homes constitutes charitable activity.
Rather than developing our own standard for eligible home purchases, we
have relied on the National Housing Act rule for FHA-insured loans. Our
provision applies to purchases of a principal residence if the amount
of the mortgage is less than the maximum mortgage amount eligible for
FHA insurance in the geographic area in which the home is located. That
will ensure that a charitable down payment assistance program is not
used to support the purchase of rental properties or expensive homes.
Our legislation also includes one other provision designed to protect
the Treasury. Home sellers often contribute to charitable down payment
assistance providers in connection with the sale of a home. Those
contributions are used to replenish the pool to make available gift
assistance for other home buyers. Although the contributions are being
made to a charity, they are not charitable in nature; they are expenses
of selling a home. The legislation clarifies that a party to a home
sale transaction may not claim a charitable contribution deduction for
a contribution to a down payment assistance provider made in connection
with the sale.
Although IRS regulations do not clearly address down payment
assistance programs, our legislation merely codifies current practice.
As a result, I do not anticipate that the legislation will result in a
significant change in tax revenues.
Non-profit providers of down payment assistance help tens of
thousands of Americans every year become homeowners. These
organizations are changing lives, changing families, changing our
communities--and they are doing it all without a single dime of
taxpayer funds. I am pleased my colleague from California, Senator
Feinstein, has joined me in introducing this legislation. I ask all of
my colleagues to join us in this important effort.
Mrs. FEINSTEIN. Mr. President, I am pleased to join with the
distinguished Senator from Pennsylvania, Senator Santorum, to introduce
legislation that will promote the American dream of homeownership.
Our legislation will specify that providing homeownership down
payment assistance to American families constitutes a charitable
activity under the regulations of the Internal Revenue Service.
As the cornerstone of middle-class wealth in our nation, we should be
doing everything possible to promote broad investment in owner-occupied
housing. Today, we have that chance.
It should not be a surprise that homeownership among low to moderate
income families is lower than for those with higher incomes. The single
biggest obstacle to achieving this dream is the lack of a downpayment.
Across America there are organizations that assist low to moderate
income families with that first important step toward homeownership. In
California, one of these groups, the Nehemiah Corporation, helps
literally thousands of families each year by providing down payments.
While the Federal Government provides tax incentives for increased
homeownership, we should make it easier for the private sector to
provide their own brand of incentives. Importantly, this legislation
will do several things to ensure that the private sector continues to
have the tools it needs to provide this important assistance.
One, our legislation will specify that homeownership down payment
assistance to American families constitutes a charitable activity.
Currently, Internal Revenue Service regulations do not clearly
address the special circumstances of those organizations that provide
downpayment assistance to families.
Two, our bill is structured to ensure that a charitable down payment
assistance program is not used to support the purchase of rental
properties or expensive homes.
Three, our legislation is designed so that the taxpayers do not pick-
up the tab. Since, home sellers often contribute to charitable down
payment assistance providers in connection with the sale of a home,
those contributions are not charitable in nature; they are an expense
related to selling a home.
This legislation clarifies that a party to a home sale transaction
may not claim a charitable contribution deduction for a contribution to
a down payment assistance organization made in connection with the
sale.
And, although Internal Revenue Service regulations do not
specifically address down payment assistance programs, our legislation
merely codifies current practice.
This legislation will ensure the continued growth of this essential
segment of the financial services market at no cost to the taxpayers.
And, as my friend from Pennsylvania has said, equity in homes is the
leading source for collateral for small business start-up borrowing.
At a time when the economy still fails to produce jobs, the expansion
of small business and the employment they provide is essential to the
health of our economy.
It is a win-win situation in the truest sense of the term and I urge
my colleagues to support it.
______
By Mr. SMITH (for himself and Mr. Breaux):
S. 1922. A bill to amend the Internal Revenue Code of 1986 to comply
with the World Trade Organization rulings on the FSC/ETI benefit in a
manner that preserves manufacturing jobs and production activities in
the United States, and for other purposes; to the Committee on Finance.
Mr. SMITH. Mr. President, I rise today to introduce The American
Manufacturing Jobs Bill of 2003--which will
[[Page S15416]]
provide a tax rate cut for all manufacturers who employ American
workers. I am pleased to be joined in this effort by Senator John
Breaux. On October 1, 2003, the Senate Finance Committee approved on a
bipartisan basis S. 1673, the centerpiece of which resolves the FSC/ETI
issue by replacing the export tax benefit with a reduction in the tax
burden on domestic manufacturing companies.
I applaud S. 1673, a balanced piece of legislation crafted by
Chairman Charles Grassley, R-IA, and ranking member Senator Max Baucus,
D-MT. I am, however, concerned that the domestic manufacturing benefit
in S. 1673 is not applied equally to all U.S. manufacturers. This bill
includes a provision--a ``haircut''--that provides less of a benefit to
companies that also manufacture abroad.
For example, a company that has 55 percent of its manufacturing in
the United States and 45 percent abroad will calculate its benefit
under the bill and then reduce that benefit by a fraction--the
numerator of which is the gross receipts from domestic manufacturing
over the same derived from worldwide manufacturing.
This company thus suffers twice. First, the domestic manufacturing
benefit in S. 1673 is less valuable than the benefit currently provided
under FSC/ETI. Second, this company's manufacturing benefit is further
reduced by the ``haircut'' merely because it also has overseas
manufacturing operations in order to be closer to their markets.
The ``haircut'' is a discriminatory measure that hurts both foreign-
owned and U.S.-owned companies alike. It is structured so that the more
a company manufactures abroad, the less of a manufacturing rate cut it
gets. The ``haircut'' makes the United States a less competitive
location for current and future investment because multinational
companies will believe they are being ``cheated'' and discriminated
against.
At a time when American manufacturing jobs are leaving our country in
record numbers, Congress should support all companies that employ
Americans. U.S. companies with global operations employ more than 23
million Americans--9 million of which are in manufacturing jobs--this
is tantamount to three out of every five manufacturing jobs in this
country. Foreign-owned companies with U.S. operations employ more than
2 million manufacturing workers in the United States. It is these many
of millions of manufacturing workers who will suffer if the ``haircut''
remains and companies are therefore discouraged to invest in the United
States.
Moreover, the ``haircut'' is inconsistent with historic tax and trade
policies to encourage U.S. companies to open up facilities outside the
United States. In fact, there is an entire department--the Department
of Commerce--set up to assist U.S. companies going global and then to
promote and facilitate those same companies' efforts once they have
established themselves in-country. I am also concerned that the
``haircut'' invites mirror legislation in other countries and may
invite another WTO challenge to this legislation.
I believe we have a duty to encourage the retention and creation of
manufacturing jobs in the United States. We must not treat U.S. jobs
created by multinational companies as ``less worthy'' than U.S. jobs
created by strictly domestic manufacturers. Congress should be in the
business of rewarding all well-paid, manufacturing jobs that are
created in the United States, not just those created by domestic
manufacturers. I believe that by eliminating the ``haircut'' and
providing a tax rate cut for all manufacturers who employ American
workers, we can help to revitalize the U.S. manufacturing sector. I ask
unanimous consent that the full text of this important legislation be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1922
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) Short Title.--This Act may be cited as the ``American
Manufacturing Jobs Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal 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 a section or other provision of the Internal
Revenue Code of 1986.
SEC. 2. REPEAL OF EXCLUSION FOR EXTRATERRITORIAL INCOME.
(a) In General.--Section 114 is hereby repealed.
(b) Conforming Amendments.--
(1)(A) Subpart E of part III of subchapter N of chapter 1
(relating to qualifying foreign trade income) is hereby
repealed.
(B) The table of subparts for such part III is amended by
striking the item relating to subpart E.
(2) The table of sections for part III of subchapter B of
chapter 1 is amended by striking the item relating to section
114.
(3) The second sentence of section 56(g)(4)(B)(i) is
amended by striking ``or under section 114''.
(4) Section 275(a) is amended--
(A) by inserting ``or'' at the end of paragraph (4)(A), by
striking ``or'' at the end of paragraph (4)(B) and inserting
a period, and by striking subparagraph (C), and
(B) by striking the last sentence.
(5) Paragraph (3) of section 864(e) is amended--
(A) by striking:
``(3) Tax-exempt assets not taken into account.--
``(A) In general.--For purposes of''; and inserting:
``(3) Tax-exempt assets not taken into account.--For
purposes of'', and
(B) by striking subparagraph (B).
(6) Section 903 is amended by striking ``114, 164(a),'' and
inserting ``164(a)''.
(7) Section 999(c)(1) is amended by striking
``941(a)(5),''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to transactions occurring after the date of the
enactment of this Act.
(2) Binding contracts.--The amendments made by this section
shall not apply to any transaction in the ordinary course of
a trade or business which occurs pursuant to a binding
contract--
(A) which is between the taxpayer and a person who is not a
related person (as defined in section 943(b)(3) of such Code,
as in effect on the day before the date of the enactment of
this Act), and
(B) which is in effect on September 17, 2003, and at all
times thereafter.
(d) Revocation of Section 943(e) Elections.--
(1) In general.--In the case of a corporation that elected
to be treated as a domestic corporation under section 943(e)
of the Internal Revenue Code of 1986 (as in effect on the day
before the date of the enactment of this Act)--
(A) the corporation may, during the 1-year period beginning
on the date of the enactment of this Act, revoke such
election, effective as of such date of enactment, and
(B) if the corporation does revoke such election--
(i) such corporation shall be treated as a domestic
corporation transferring (as of such date of enactment) all
of its property to a foreign corporation in connection with
an exchange described in section 354 of such Code, and
(ii) no gain or loss shall be recognized on such transfer.
(2) Exception.--Subparagraph (B)(ii) of paragraph (1) shall
not apply to gain on any asset held by the revoking
corporation if--
(A) the basis of such asset is determined in whole or in
part by reference to the basis of such asset in the hands of
the person from whom the revoking corporation acquired such
asset,
(B) the asset was acquired by transfer (not as a result of
the election under section 943(e) of such Code) occurring on
or after the 1st day on which its election under section
943(e) of such Code was effective, and
(C) a principal purpose of the acquisition was the
reduction or avoidance of tax (other than a reduction in tax
under section 114 of such Code, as in effect on the day
before the date of the enactment of this Act).
(e) General Transition.--
(1) In general.--In the case of a taxable year ending after
the date of the enactment of this Act and beginning before
January 1, 2007, for purposes of chapter 1 of such Code, a
current FSC/ETI beneficiary shall be allowed a deduction
equal to the transition amount determined under this
subsection with respect to such beneficiary for such year.
(2) Current fsc/eti beneficiary.--The term ``current FSC/
ETI beneficiary'' means any corporation which entered into
one or more transactions during its taxable year beginning in
calendar year 2002 with respect to which FSC/ETI benefits
were allowable.
(3) Transition amount.--For purposes of this subsection--
(A) In general.--The transition amount applicable to any
current FSC/ETI beneficiary for any taxable year is the
phaseout percentage of the base period amount.
(B) Phaseout percentage.--
(i) In general.--In the case of a taxpayer using the
calendar year as its taxable year, the phaseout percentage
shall be determined under the following table:
The phaseout
percentage is:
80 ...........................................................
[[Page S15417]]
80 ...........................................................
60............................................................
(ii) Special rule for 2003.--The phaseout percentage for
2003 shall be the amount that bears the same ratio to 100
percent as the number of days after the date of the enactment
of this Act bears to 365.
(iii) Special rule for fiscal year taxpayers.--In the case
of a taxpayer not using the calendar year as its taxable
year, the phaseout percentage is the weighted average of the
phaseout percentages determined under the preceding
provisions of this paragraph with respect to calendar years
any portion of which is included in the taxpayer's taxable
year. The weighted average shall be determined on the basis
of the respective portions of the taxable year in each
calendar year.
``(C) Short taxable year.--The Secretary shall prescribe
guidance for the computation of the transition amount in the
case of a short taxable year.
(4) Base period amount.--For purposes of this subsection,
the base period amount is the FSC/ETI benefit for the
taxpayer's taxable year beginning in calendar year 2002.
(5) FSC/ETI benefit.--For purposes of this subsection, the
term ``FSC/ETI benefit'' means--
(A) amounts excludable from gross income under section 114
of such Code, and
(B) the exempt foreign trade income of related foreign
sales corporations from property acquired from the taxpayer
(determined without regard to section 923(a)(5) of such Code
(relating to special rule for military property), as in
effect on the day before the date of the enactment of the FSC
Repeal and Extraterritorial Income Exclusion Act of 2000).
In determining the FSC/ETI benefit there shall be excluded
any amount attributable to a transaction with respect to
which the taxpayer is the lessor unless the leased property
was manufactured or produced in whole or in significant part
by the taxpayer.
(6) Special rule for agricultural and horticultural
cooperatives.--Determinations under this subsection with
respect to an organization described in section 943(g)(1) of
such Code, as in effect on the day before the date of the
enactment of this Act, shall be made at the cooperative level
and the purposes of this subsection shall be carried out in a
manner similar to section 199(h)(2) of such Code, as added by
this Act. Such determinations shall be in accordance with
such requirements and procedures as the Secretary may
prescribe.
(7) Certain rules to apply.--Rules similar to the rules of
section 41(f) of such Code shall apply for purposes of this
subsection.
(8) Coordination with binding contract rule.--The deduction
determined under paragraph (1) for any taxable year shall be
reduced by the phaseout percentage of any FSC/ETI benefit
realized for the taxable year by reason of subsection (c)(2)
or section 5(c)(1)(B) of the FSC Repeal and Extraterritorial
Income Exclusion Act of 2000, except that for purposes of
this paragraph the phaseout percentage for 2003 shall be
treated as being equal to 100 percent.
(9) Special rule for taxable year which includes date of
enactment.--In the case of a taxable year which includes the
date of the enactment of this Act, the deduction allowed
under this subsection to any current FSC/ETI beneficiary
shall in no event exceed--
(A) 100 percent of such beneficiary's base period amount
for calendar year 2003, reduced by
(B) the FSC/ETI benefit of such beneficiary with respect to
transactions occurring during the portion of the taxable year
ending on the date of the enactment of this Act.
SEC. 3. DEDUCTION RELATING TO INCOME ATTRIBUTABLE TO UNITED
STATES PRODUCTION ACTIVITIES.
(a) In General.--Part VI of subchapter B of chapter 1
(relating to itemized deductions for individuals and
corporations) is amended by adding at the end the following
new section:
``SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION
ACTIVITIES.
``(a) Allowance of Deduction.--
``(1) In general.--There shall be allowed as a deduction an
amount equal to 9 percent of the qualified production
activities income of the taxpayer for the taxable year.
``(2) Phasein.--In the case of taxable years beginning in
2003, 2004, 2005, 2006, 2007, or 2008, paragraph (1) shall be
applied by substituting for the percentage contained therein
the transition percentage determined under the following
table:
The transitions
percentage is:
1 or 2004.....................................................
2 .............................................................
3 .............................................................
6. or 2008.....................................................
``(b) Deduction Limited to Wages Paid.--
``(1) In general.--The amount of the deduction allowable
under subsection (a) for any taxable year shall not exceed 50
percent of the W-2 wages of the employer for the taxable
year.
``(2) W-2 wages.--For purposes of paragraph (1), the term
`W-2 wages' means the sum of the aggregate amounts the
taxpayer is required to include on statements under
paragraphs (3) and (8) of section 6051(a) with respect to
employment of employees of the taxpayer during the taxpayer's
taxable year.
``(3) Special rules.--
``(A) Pass-thru entities.--In the case of an S corporation,
partnership, estate or trust, or other pass-thru entity, the
limitation under this subsection shall apply at the entity
level.
``(B) Acquisitions and dispositions.--The Secretary shall
provide for the application of this subsection in cases where
the taxpayer acquires, or disposes of, the major portion of a
trade or business or the major portion of a separate unit of
a trade or business during the taxable year.
``(c) Qualified Production Activities Income.--For purposes
of this section, the term `qualified production activities
income' means an amount equal to the portion of the modified
taxable income of the taxpayer which is attributable to
domestic production activities.
``(d) Determination of Income Attributable to Domestic
Production Activities.--For purposes of this section--
``(1) In general.--The portion of the modified taxable
income which is attributable to domestic production
activities is so much of the modified taxable income for the
taxable year as does not exceed--
``(A) the taxpayer's domestic production gross receipts for
such taxable year, reduced by
``(B) the sum of--
``(i) the costs of goods sold that are allocable to such
receipts,
``(ii) other deductions, expenses, or losses directly
allocable to such receipts, and
``(iii) a proper share of other deductions, expenses, and
losses that are not directly allocable to such receipts or
another class of income.
``(2) Allocation method.--The Secretary shall prescribe
rules for the proper allocation of items of income,
deduction, expense, and loss for purposes of determining
income attributable to domestic production activities.
``(3) Special rules for determining costs.--
``(A) In general.--For purposes of determining costs under
clause (i) of paragraph (1)(B), any item or service brought
into the United States shall be treated as acquired by
purchase, and its cost shall be treated as not less than its
fair market value immediately after it entered the United
States. A similar rule shall apply in determining the
adjusted basis of leased or rented property where the lease
or rental gives rise to domestic production gross receipts.
``(B) Exports for further manufacture.--In the case of any
property described in subparagraph (A) that had been exported
by the taxpayer for further manufacture, the increase in cost
or adjusted basis under subparagraph (A) shall not exceed the
difference between the value of the property when exported
and the value of the property when brought back into the
United States after the further manufacture.
``(4) Modified taxable income.--The term `modified taxable
income' means taxable income computed without regard to the
deduction allowable under this section.
``(e) Domestic Production Gross Receipts.--For purposes of
this section--
``(1) In general.--The term `domestic production gross
receipts' means the gross receipts of the taxpayer which are
derived from--
``(A) any sale, exchange, or other disposition of, or
``(B) any lease, rental, or license of,
qualifying production property which was manufactured,
produced, grown, or extracted in whole or in significant part
by the taxpayer within the United States.
``(2) Special rules for certain property.--In the case of
any qualifying production property described in subsection
(f)(1)(C)--
``(A) such property shall be treated for purposes of
paragraph (1) as produced in significant part by the taxpayer
within the United States if more than 50 percent of the
aggregate development and production costs are incurred by
the taxpayer within the United States, and
``(B) if a taxpayer acquires such property before such
property begins to generate substantial gross receipts, any
development or production costs incurred before the
acquisition shall be treated as incurred by the taxpayer for
purposes of subparagraph (A) and paragraph (1).
``(f) Qualifying Production Property.--For purposes of this
section--
``(1) In general.--Except as otherwise provided in this
paragraph, the term `qualifying production property' means--
``(A) any tangible personal property,
``(B) any computer software, and
``(C) any property described in section 168(f) (3) or (4),
including any underlying copyright or trademark.
``(2) Exclusions from qualifying production property.--The
term `qualifying production property' shall not include--
``(A) consumable property that is sold, leased, or licensed
by the taxpayer as an integral part of the provision of
services,
``(B) oil or gas,
``(C) electricity,
``(D) water supplied by pipeline to the consumer,
``(E) utility services, or
``(F) any film, tape, recording, book, magazine, newspaper,
or similar property the market for which is primarily topical
or otherwise essentially transitory in nature.
``(g) Definitions and Special Rules.--
``(1) Application of section to pass-thru entities.--In the
case of an S corporation, partnership, estate or trust, or
other pass-thru entity--
[[Page S15418]]
``(A) subject to the provisions of paragraph (2) and
subsection (b)(3)(A), this section shall be applied at the
shareholder, partner, or similar level, and
``(B) the Secretary shall prescribe rules for the
application of this section, including rules relating to--
``(i) restrictions on the allocation of the deduction to
taxpayers at the partner or similar level, and
``(ii) additional reporting requirements.
``(2) Exclusion for patrons of agricultural and
horticultural cooperatives.--
``(A) In general.--If any amount described in paragraph (1)
or (3) of section 1385(a)--
``(i) is received by a person from an organization to which
part I of subchapter T applies which is engaged in the
marketing of agricultural or horticultural products, and
``(ii) is allocable to the portion of the qualified
production activities income of the organization which is
deductible under subsection (a) and designated as such by the
organization in a written notice mailed to its patrons during
the payment period described in section 1382(d),
then such person shall be allowed an exclusion from gross
income with respect to such amount. The taxable income of the
organization shall not be reduced under section 1382 by the
portion of any such amount with respect to which an exclusion
is allowable to a person by reason of this paragraph.
``(B) Special rules.--For purposes of applying subparagraph
(A), in determining the qualified production activities
income of the organization under this section--
``(i) there shall not be taken into account in computing
the organization's modified taxable income any deduction
allowable under subsection (b) or (c) of section 1382
(relating to patronage dividends, per-unit retain
allocations, and nonpatronage distributions), and
``(ii) the organization shall be treated as having
manufactured, produced, grown, or extracted in whole or
significant part any qualifying production property marketed
by the organization which its patrons have so manufactured,
produced, grown, or extracted.
``(3) Special rule for affiliated groups.--
``(A) In general.--All members of an expanded affiliated
group shall be treated as a single corporation for purposes
of this section.
``(B) Expanded affiliated group.--The term `expanded
affiliated group' means an affiliated group as defined in
section 1504(a), determined--
``(i) by substituting `50 percent' for `80 percent' each
place it appears, and
``(ii) without regard to paragraphs (2) and (4) of section
1504(b).
``(4) Coordination with minimum tax.--The deduction under
this section shall be allowed for purposes of the tax imposed
by section 55; except that for purposes of section 55,
alternative minimum taxable income shall be taken into
account in determining the deduction under this section.
``(5) Ordering rule.--The amount of any other deduction
allowable under this chapter shall be determined as if this
section had not been enacted.
``(6) Trade or business requirement.--This section shall be
applied by only taking into account items which are
attributable to the actual conduct of a trade or business.
``(7) Possessions, etc.--
``(A) In general.--For purposes of subsections (d) and (e),
the term `United States' includes the Commonwealth of Puerto
Rico, Guam, American Samoa, the Commonwealth of the Northern
Mariana Islands, and the Virgin Islands of the United States.
``(B) Special rules for applying wage limitation.--For
purposes of applying the limitation under subsection (b) for
any taxable year--
``(i) the determination of W-2 wages of a taxpayer shall be
made without regard to any exclusion under section 3401(a)(8)
for remuneration paid for services performed in a
jurisdiction described in subparagraph (A), and
``(ii) in determining the amount of any credit allowable
under section 30A or 936 for the taxable year, there shall
not be taken into account any wages which are taken into
account in applying such limitation.
``(8) Coordination with transition rules.--For purposes of
this section--
``(A) domestic production gross receipts shall not include
gross receipts from any transaction if the binding contract
transition relief of section 2(c)(2) of the American
Manufacturing Jobs Act of 2003 applies to such transaction,
and
``(B) any deduction allowed under section 2(e) of such Act
shall be disregarded in determining the portion of the
taxable income which is attributable to domestic production
gross receipts.''.
(b) Minimum Tax.--Section 56(g)(4)(C) (relating to
disallowance of items not deductible in computing earnings
and profits) is amended by adding at the end the following
new clause:
``(v) Deduction for domestic production.--Clause (i) shall
not apply to any amount allowable as a deduction under
section 199.''.
(c) Clerical Amendment.--The table of sections for part VI
of subchapter B of chapter 1 is amended by adding at the end
the following new item:
``Sec. 199. Income attributable to domestic production activities.''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment
of this Act.
(2) Application of section 15.--Section 15 of the Internal
Revenue Code of 1986 shall apply to the amendments made by
this section as if they were changes in a rate of tax.
______
By Mr. LEAHY:
S. 1923. A bill to reauthorize and amend the National Film
Preservation Act of 1996; to the Committee on the Judiciary.
Mr. LEAHY. Mr. President, I call attention today to a part of
American heritage that is literally disintegrating faster than can be
saved. Motion pictures are an important part of our American experience
and provide an extraordinary record of our history, our dreams, and our
aspirations. The National Film Preservation Board and the National Film
Preservation Foundation were created by Congress under the auspices of
the Library of Congress, to help save America's film heritage. Today, I
am introducing the ``National Film Preservation Act of 2003,'' which
will reauthorize and extend the ``National Film Preservation Act of
1996.''
We first acted in 1988 in order to recognize both the educational,
cultural, and historical importance of our film heritage, and its
inherently fragile nature. The ``National Film Preservation Act of
2003'' will allow the Library of Congress to continue its important
work in preserving America's fading treasures, as well as providing
grants that will help libraries, museums, and archives preserve films,
and make those works available for study and research. These continued
efforts are more critical today than ever before. Fewer than 20 percent
of the features of the 1920s exist in complete form and less than 10
percent of the features of the 1910s have survived into the new
millennium.
The films saved by the National Film Preservation Board are precisely
those types of films that would be unlikely to survive without public
support. At-risk documentaries, silent-era films, avant-garde works,
ethnic films, newsreels, and home movies are in many ways more
illuminating on the question of who we are as a society than the
Hollywood sound features kept and preserved by major studios. What is
more, in many cases only one copy of these ``orphaned'' works exists.
As the Librarian of Congress, Dr. James H. Billington, has noted, ``Our
film heritage is America's living past.'' I encourage my colleagues to
support the ``Film Preservation Act of 2003'' so that America's past
can survive in order to enlighten and entertain future generations.
I ask unanimous consent that the text of this bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1923
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
TITLE I--REAUTHORIZATION OF THE NATIONAL FILM PRESERVATION BOARD
SEC. 101. SHORT TITLE.
This title may be cited as the ``National Film Preservation
Act of 2003''.
SEC. 102. REAUTHORIZATION AND AMENDMENT.
(a) Duties of the Librarian of Congress.--Section 103 of
the National Film Preservation Act of 1996 (2 U.S.C. 179m) is
amended:
(1) in subsection (b)--
(A) by striking ``film copy'' each place that term appears
and inserting ``film or other approved copy'';
(B) by striking ``film copies'' each place that term
appears and inserting ``film or other approved copies''; and
(C) in the third sentence, by striking ``copyrighted'' and
inserting ``copyrighted, mass distributed, broadcast, or
published'' ; and
(2) by adding at the end the following:
``(c) Coordination of Program With Other Collection,
Preservation, and Accessibility Activities.--In carrying out
the comprehensive national film preservation program for
motion pictures established under the National Film
Preservation Act of 1992, the Librarian, in consultation with
the Board established pursuant to section 104, shall--
``(1) carry out activities to make films included in the
National Film registry more broadly accessible for research
and educational purposes, and to generate public awareness
and support of the Registry and the comprehensive national
film preservation program;
``(2) review the comprehensive national film preservation
plan, and amend it to the
[[Page S15419]]
extent necessary to ensure that it addresses technological
advances in the preservation and storage of, and access to
film collections in multiple formats; and
``(3) wherever possible, undertake expanded initiatives to
ensure the preservation of the moving image heritage of the
United States, including film, videotape, television, and
born digital moving image formats, by supporting the work of
the National Audio-Visual Conservation Center of the Library
of Congress, and other appropriate nonprofit archival and
preservation organizations.''.
(b) National Film Preservation Board.--Section 104 of the
National Film Preservation Act of 1996 (2 U.S.C. 179n) is
amended--
(1) in subsection (a)(1) by striking ``20'' and inserting
``22'';
(2) in subsection (a) (2) by striking ``three'' and
inserting ``5'';
(3) in subsection (d) by striking ``11'' and inserting
``12''; and
(4) by striking subsection (e) and inserting the following:
``(e) Reimbursement of Expenses.--Members of the Board
shall serve without pay, but may receive travel expenses,
including per diem in lieu of subsistence, in accordance with
sections 5702 and 5703 of title 5, United States Code.''.
(c) Responsibilities and Powers of Board.--Section 105(c)
of the National Film Preservation Act of 1996 (2 U.S.C. 179o)
is amended by adding at the end the following:
``(3) Review and approval of special foundation projects.--
The Board shall review special projects submitted for its
approval by the National Film Preservation Foundation under
section 151711 of title 36, United States Code.''.
(d) National Film Registry.--Section 106 of the National
Film Preservation Act of 1996 (2 U.S.C. 179q) is amended by
adding at the end the following:
``(e) National Audio-Visual Conservation Center.--The
Librarian shall utilize the National Audio-Visual
Conservation Center of the Library of Congress at Culpeper,
Virginia, to ensure that preserved films included in the
National Film Registry are stored in a proper manner, and
disseminated to researchers, scholars, and the public as may
be appropriate in accordance with--
``(1) title 17 of the United States Code; and
``(2) the terms of any agreements between the Librarian and
persons who hold copyrights to such audiovisual works.''.
(e) Use of Seal.--Section 107 (a) of the National Film
Preservation Act of 1996 (2 U.S.C. 179q) is amended--
(1) in paragraph (1), by inserting ``in any format'' after
``or any copy''; and
(2) in paragraph (2), by striking ``or film copy'' and
inserting ``in any format''.
(f) Effective Date.--Section 113 of the National Film
Preservation Act of 1996 (2 U.S.C. 179w) is amended by
striking ``7'' and inserting ``17''.
TITLE II--REAUTHORIZATION OF THE NATIONAL FILM PRESERVATION FOUNDATION
SEC. 201. SHORT TITLE.
This title may be cited as the ``National Film Preservation
Foundation Reauthorization Act of 2003''.
SEC. 202. REAUTHORIZATION AND AMENDMENT.
(a) Board of Directors.--Section 151703 of title 36, United
States Code, is amended--
(1) in subsection (b)(2)(A), by striking ``nine'' and
inserting ``12''; and
(2) in subsection (b)(4), by striking the second sentence
and inserting ``There shall be no limit to the number of
terms to which any individual may be appointed.''.
(b) Powers.--Section 151705 of title 36, United States
Code, is amended in subsection (b) by striking ``District of
Columbia'' and inserting ``the jurisdiction in which the
principal office of the corporation is located''.
(c) Principal Office.--Section 151706 of title 36, United
States Code, is amended by inserting ``, or another place as
determined by the board of directors'' after ``District of
Columbia''.
(d) Authorization of Appropriations.--Section 151711 of
title 36, United States Code, is amended by striking
subsections (a) and (b) and inserting the following:
``(a) Authorization of Appropriations.--There are
authorized to be appropriated to the Library of Congress
amounts necessary to carry out this chapter, not to exceed
$500,000 for each of the fiscal years 2004 and 2005, and not
to exceed $1,000,000 for each of the fiscal years 2006
through 2013. These amounts are to be made available to the
corporation to match any private contributions (whether in
currency, services, or property) made to the corporation by
private persons and State and local governments.
``(b) Limitation Related to Administrative Expenses.--
Amounts authorized under this section may not be used by the
corporation for management and general or fundraising
expenses as reported to the Internal Revenue Service as part
of an annual information return required under the Internal
Revenue Code of 1986.''.
(e) Cooperative film preservation.--
(1) In general.--Chapter 1517 of title 36, United States
Code, is amended--
(A) by redesignating sections 151711 and 151712 as sections
151712 and 151713, respectively; and
(B) by adding at the end the following:
``Sec. 151711. Cooperative film preservation
``(a) Cooperative film preservation.--
``(1) In general.--The corporation shall design and support
cooperative national film preservation and access
initiatives. Such initiatives shall be approved by the
corporation, the Librarian of Congress, and the National Film
Preservation Board of the Library of Congress under section
105(c)(3) of the National Film Preservation Act of 1996.
``(2) Scope.--Cooperative initiatives authorized under
paragraph (1) may include--
``(A) the repatriation and preservation of American films
that may be found in archives outside of the United States;
``(B) the exhibition and dissemination via broadcast or
other means of ``orphan'' films;
``(C) the production of educational materials in various
formats to encourage film preservation, preservation
initiatives undertaken by 3 or more archives jointly; and
``(D) other activities undertaken in light of significant
unfunded film preservation and access needs.
``(b) Authorization of Appropriations.--
``(1) In general.--There are authorized to be appropriated
to the Library of Congress amounts not to exceed $1,000,000
for each of the fiscal years 2006 through 2013, to carry out
the purposes of this section.
``(2) Matching.--The amounts made available under paragraph
(1) are to be made available to the corporation to match any
private contributions (whether in currency, services, or
property) made to the corporation by private persons and
State and local governments.
``(3) Limitation Related to Administrative Expenses.--
Amounts authorized under this section may not be used by the
corporation for management and general or fundraising
expenses as reported to the Internal Revenue Service as part
of an annual information return required under the Internal
Revenue Code of 1986.''.
(2) Technical and Conforming Amendment.--The table of
sections for chapter 1517 of title 36, United States Code, is
amended by striking the matter relating to section 151711 and
151712 and inserting the following:
``151711. Cooperative film preservation.
``151712. Authorization of appropriations.
``151713. Annual report.''.
______
By Mr. JEFFORDS:
S. 1924. A bill to provide for the coverage of milk production under
the H-2A nonimmigrant worker program; to the Committee on the
Judiciary.
Mr. JEFFORDS. Mr. President, today I rise to introduce the Dairy Farm
Workers Fairness Act.
Family dairy farms are critically important to our agricultural
economy and to the rural way of life in many parts of the country.
These farms support the rural economy by supporting the local tax base
and many local businesses. The working landscape created by our farms,
especially a patchwork of small farms, is also the best antidote for
the urban sprawl that is overtaking so much of the country. And, of
course, the availability of fresh, locally produced milk is an amenity
that we have come to take for granted. To support our rural economies,
the working landscape and our local food supply systems we need to help
small family dairy farms survive and thrive.
The most difficult challenge to the family dairy farm, after the
volatility in milk price, is finding and hiring workers. In my home
State of Vermont, dairy farms are not only an important part of our
economy; they are an institution that has come to define our landscape.
Vermont's beauty lies in the green fields, the red barns and the cows
grazing on the hillside. When a farm family sells their land, which in
many cases may have been worked by them and their ancestors for 5 or
more generations, the decision is often driven by the non-stop, 7 day a
week, 365 days a year work schedule. As fewer rural residents choose to
work in agriculture, these farmers have been forced to take on more
themselves. The whole family can end up working without vacations, sick
leave or having weekends off. Although dairy farming might not seem
seasonal, the burden becomes particularly heavy during the growing
season when planting, haying, harvesting and storage of feed must all
occur.
Dairy farmers are being forced to explore other options to find a
predictable source of qualified labor. While other agricultural
businesses in the country benefit from the temporary workers qualified
under the H2A Work Visa Program, dairy farms do not. The job of milking
cows on dairy farms has been judged under the current H2A program to
not meet the definition of temporary or seasonal and is thus excluded.
The largest labor need on dairy farms during the growing season,
remains the need for assistance with milking. The cows must be milked
two or three times a day by hired help so the farmer is able to take on
the more complex and specialized work of operating large machinery to
plant and harvest. While the work of milking is not seasonal or
temporary, the need for additional labor to accomplish the
[[Page S15420]]
work is seasonal and temporary. I believe the exclusion of dairy
farming under the H2A program is an unintended problem in definitions,
and our legislation is designed to fix that glitch. We must do this out
of fairness, so that dairy farms can benefit from the same access to
labor that other farms have, and more importantly to help our farms
survive.
Recently, I heard from a farmer who owns and operates, along with his
wife, a small dairy farm in central Vermont. The couple is nearing
retirement age and have no children of their own. They had attempted to
find a farm hand that could live on the farm and help with milking and
some of the heavier chores. After placing ads in the paper and working
with the state of Vermont's Department of Employment and Training, it
became clear that their best option was to hire a family friend who had
a strong desire to learn farming. Since the young man was from Honduras
they began the visa process only to have their request for
certification by the U.S. Department of Labor denied because their need
was considered neither temporary nor seasonal. This farm plays such an
important role in their rural Vermont community that I heard from
several other constituents who asked for my assistance on this family's
behalf. The couple continues to work their land but in doing so they
are straining their health and pushing themselves harder than they
should. They continue to operate their farm because they do not want to
sell it since it is land that has been farmed for generations.
The legislation I am introducing today would allow this family farm,
and so many others like it, to avail themselves of a labor source that
exists for virtually every other farm in this country. By creating a
period based on the summer growing season, dairy farms will be able to
bring on extra help during the busiest part of the year, providing much
needed relief for our farm families. I urge my colleagues to join me in
supporting dairy farms across the United States by cosponsoring this
important legislation. 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. 1924
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Dairy Farm Workers Fairness
Act''.
SEC. 2. COVERAGE OF MILK PRODUCTION UNDER H-2A NONIMMIGRANT
WORKER PROGRAM.
(a) In General.--For purposes of the administration of the
H-2A worker program in a year, work performed in the
production of milk for commercial use not earlier than April
15 or later than October 15 of that year shall qualify as
agriculture labor or services of a seasonal nature.
(b) Definitions.--In this section:
(1) H-2A nonimmigrant worker program.--The term ``H-2A
nonimmigrant worker program'' means the program for the
admission to the United States of H-2A nonimmigrant workers.
(2) H-2A nonimmigrant workers.--The term ``H-2A worker''
means a nonimmigrant alien described in section
101(a)(15)(H)(ii)(a) of the Immigration and Nationality Act
(8 U.S.C. 1101(a)(15)(H)(ii)(a)).
______
By Ms. STABENOW (for herself, Mr. Graham of Florida, Mrs.
Clinton, Mrs. Murray, Mr. Leahy, Mr. Daschle, Mr. Pryor, Mr.
Levin, Mr. Schumer, and Ms. Cantwell):
S. 1926. A bill to amend title XVIII of the Social Security Act to
restore the medicare program and for other purposes; to the Committee
on Finance.
Ms. STABENOW. Mr. President, I rise today to introduce legislation
that would allow us to help our providers and patients now.
If we immediately pass this bill, we can make our providers whole and
then go back to the drawing board to get a better Medicare prescription
drug benefit bill.
The bill includes all of the provider givebacks in the Conference
Report accompanying H.R. 1, the Medicare Prescription Drug and
Modernization Act of 2003.
It includes all adjustments, word for word, for the rural provisions,
physician updates, graduate medical education, GME, and home health
services.
It does not add new language.
It does not include any provider cuts or premium increases in H.R.1.
Congress should pass these provisions on their own to help hospitals,
physicians, and patients and not hold them hostage to a prescription
drug bill that privatizes Medicare and provides a mediocre benefit to
most seniors.
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. 1926
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT;
REFERENCES TO BIPA AND SECRETARY; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Support
Our Health Care Providers Act of 2003''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in division A of this Act an
amendment is expressed in terms of an amendment to or repeal
of a section or other provision, the reference shall be
considered to be made to that section or other provision of
the Social Security Act.
(c) BIPA; Secretary.--In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(d) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--RURAL PROVISIONS
Subtitle A--Provisions Relating to Part A Only
Sec. 101. Equalizing urban and rural standardized payment amounts under
the medicare inpatient hospital prospective payment
system.
Sec. 102. Enhanced disproportionate share hospital (DSH) treatment for
rural hospitals and urban hospitals with fewer than 100
beds.
Sec. 103. Adjustment to the medicare inpatient hospital prospective
payment system wage index to revise the labor-related
share of such index.
Sec. 104. More frequent update in weights used in hospital market
basket.
Sec. 105. Improvements to critical access hospital program.
Sec. 106. Medicare inpatient hospital payment adjustment for low-volume
hospitals.
Sec. 107. Treatment of missing cost reporting periods for sole
community hospitals.
Sec. 108. Recognition of attending nurse practitioners as attending
physicians to serve hospice patients.
Sec. 109. Rural hospice demonstration project.
Sec. 110. Exclusion of certain rural health clinic and federally
qualified health center services from the prospective
payment system for skilled nursing facilities.
Sec. 110A. Rural community hospital demonstration program.
Subtitle B--Provisions Relating to Part B Only
Sec. 111. 2-year extension of hold harmless provisions for small rural
hospitals and sole community hospitals under the
prospective payment system for hospital outpatient
department services.
Sec. 112. Establishment of floor on work geographic adjustment.
Sec. 113. Medicare incentive payment program improvements for physician
scarcity.
Sec. 114. Payment for rural and urban ambulance services.
Sec. 115. Providing appropriate coverage of rural air ambulance
services.
Sec. 116. Treatment of certain clinical diagnostic laboratory tests
furnished to hospital outpatients in certain rural areas.
Sec. 117. Extension of telemedicine demonstration project.
Sec. 118. Report on demonstration project permitting skilled nursing
facilities to be originating telehealth sites; authority
to implement.
Subtitle C--Provisions Relating to Parts A and B
Sec. 121. 1-year increase for home health services furnished in a rural
area.
Sec. 122. Redistribution of unused resident positions.
Subtitle D--Other Provisions
Sec. 131. Providing safe harbor for certain collaborative efforts that
benefit medically underserved populations.
Sec. 132. Office of rural health policy improvements.
[[Page S15421]]
Sec. 133. MedPac study on rural hospital payment adjustments.
Sec. 134. Frontier extended stay clinic demonstration project.
TITLE II--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
Sec. 201. Revision of acute care hospital payment updates.
Sec. 202. Revision of the indirect medical education (IME) adjustment
percentage.
Sec. 203. Recognition of new medical technologies under inpatient
hospital prospective payment system.
Sec. 204. Increase in Federal rate for hospitals in Puerto Rico.
Sec. 205. Wage index adjustment reclassification reform.
Sec. 206. Limitation on charges for inpatient hospital contract health
services provided to Indians by medicare participating
hospitals.
Sec. 207. Clarifications to certain exceptions to medicare limits on
physician referrals.
Sec. 208. 1-time appeals process for hospital wage index
classification.
Subtitle B--Other Provisions
Sec. 211. Payment for covered skilled nursing facility services.
Sec. 212. Coverage of hospice consultation services.
Sec. 213. Study on portable diagnostic ultrasound services for
beneficiaries in skilled nursing facilities.
TITLE III--PROVISIONS RELATING TO PART B
Subtitle A--Provisions Relating to Physicians' Services
Sec. 301. Revision of updates for physicians' services.
Sec. 302. Treatment of physicians' services furnished in Alaska.
Sec. 303. Inclusion of podiatrists, dentists, and optometrists under
private contracting authority.
Sec. 304. GAO study on access to physicians' services.
Sec. 305. Collaborative demonstration-based review of physician
practice expense geographic adjustment data.
Sec. 306. MedPac report on payment for physicians' services.
Subtitle B--Preventive Services
Sec. 311. Coverage of an initial preventive physical examination.
Sec. 312. Coverage of cardiovascular screening blood tests.
Sec. 313. Coverage of diabetes screening tests.
Sec. 314. Improved payment for certain mammography services.
Subtitle C--Other Provisions
Sec. 321. Hospital outpatient department (HOPD) payment reform.
Sec. 322. Limitation of application of functional equivalence standard.
Sec. 323. Payment for renal dialysis services.
Sec. 324. 2-year moratorium on therapy caps; provisions relating to
reports.
Sec. 325. Waiver of part B late enrollment penalty for certain military
retirees; special enrollment period.
Sec. 326. Payment for services furnished in ambulatory surgical
centers.
Sec. 327. Payment for certain shoes and inserts under the fee schedule
for orthotics and prosthetics.
Sec. 328. 5-year authorization of reimbursement for all medicare part B
services furnished by certain Indian hospitals and
clinics.
Subtitle D--Additional Demonstrations, Studies, and Other Provisions
Sec. 341. Demonstration project for coverage of certain prescription
drugs and biologicals.
Sec. 342. Extension of coverage of intravenous immune globulin (IVIG)
for the treatment of primary immune deficiency diseases
in the home.
Sec. 343. MedPac study of coverage of surgical first assisting services
of certified registered nurse first assistants.
Sec. 344. MedPac study of payment for cardio-thoracic surgeons.
Sec. 345. Studies relating to vision impairments.
Sec. 346. Medicare health care quality demonstration programs.
Sec. 347. MedPac study on direct access to physical therapy services.
Sec. 348. Demonstration project for consumer-directed chronic
outpatient services.
Sec. 349. Medicare care management performance demonstration.
Sec. 350. GAO study and report on the propagation of concierge care.
Sec. 351. Demonstration of coverage of chiropractic services under
medicare.
TITLE IV--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 401. Demonstration project to clarify the definition of homebound.
Sec. 402. Demonstration project for medical adult day-care services.
Sec. 403. Temporary suspension of oasis requirement for collection of
data on non-medicare and non-medicaid patients.
Sec. 404. MedPac study on medicare margins of home health agencies.
Sec. 405. Coverage of religious nonmedical health care institution
services furnished in the home.
Subtitle B--Graduate Medical Education
Sec. 411. Exception to initial residency period for geriatric residency
or fellowship programs.
Sec. 412. Treatment of volunteer supervision.
Subtitle C--Chronic Care Improvement
Sec. 421. Voluntary chronic care improvement under traditional fee-for-
service.
Sec. 422. Medicare advantage quality improvement programs.
Sec. 423. Chronically ill medicare beneficiary research, data,
demonstration strategy.
Subtitle D--Other Provisions
Sec. 431. Improvements in national and local coverage determination
process to respond to changes in technology.
Sec. 432. Extension of treatment of certain physician pathology
services under medicare.
Sec. 433. Payment for pancreatic islet cell investigational transplants
for medicare beneficiaries in clinical trials.
Sec. 434. Restoration of medicare trust funds.
Sec. 435. Modifications to Medicare Payment Advisory Commission
(MedPac).
Sec. 436. Technical amendments.
TITLE V--ADMINISTRATIVE IMPROVEMENTS, REGULATORY REDUCTION, AND
CONTRACTING REFORM
Sec. 500. Administrative improvements within the Centers for Medicare &
Medicaid Services (CMS).
Subtitle A--Regulatory Reform
Sec. 501. Construction; definition of supplier.
Sec. 502. Issuance of regulations.
Sec. 503. Compliance with changes in regulations and policies.
Sec. 504. Reports and studies relating to regulatory reform.
Subtitle B--Contracting Reform
Sec. 511. Increased flexibility in medicare administration.
Sec. 512. Requirements for information security for medicare
administrative contractors.
Subtitle C--Education and Outreach
Sec. 521. Provider education and technical assistance.
Sec. 522. Small provider technical assistance demonstration program.
Sec. 523. Medicare beneficiary ombudsman.
Sec. 524. Beneficiary outreach demonstration program.
Sec. 525. Inclusion of additional information in notices to
beneficiaries about skilled nursing facility benefits.
Sec. 526. Information on medicare-certified skilled nursing facilities
in hospital discharge plans.
Subtitle D--Appeals and Recovery
Sec. 531. Transfer of responsibility for medicare appeals.
Sec. 532. Process for expedited access to review.
Sec. 533. Revisions to medicare appeals process.
Sec. 534. Prepayment review.
Sec. 535. Recovery of overpayments.
Sec. 536. Provider enrollment process; right of appeal.
Sec. 537. Process for correction of minor errors and omissions without
pursuing appeals process.
Sec. 538. Prior determination process for certain items and services;
advance beneficiary notices.
Sec. 539. Appeals by providers when there is no other party available.
Sec. 540. Revisions to appeals timeframes and amounts.
Sec. 540A. Mediation process for local coverage determinations.
Subtitle E--Miscellaneous Provisions
Sec. 541. Policy development regarding evaluation and management (E &
M) documentation guidelines.
Sec. 542. Improvement in oversight of technology and coverage.
Sec. 543. Treatment of hospitals for certain services under medicare
secondary payor (MSP) provisions.
Sec. 544. EMTALA improvements.
Sec. 545. Emergency Medical Treatment and Labor Act (EMTALA) Technical
Advisory Group.
Sec. 546. Authorizing use of arrangements to provide core hospice
services in certain circumstances.
Sec. 547. Application of osha bloodborne pathogens standard to certain
hospitals.
Sec. 548. Bipa-related technical amendments and corrections.
Sec. 549. Conforming authority to waive a program exclusion.
Sec. 550. Treatment of certain dental claims.
Sec. 551. Furnishing hospitals with information to compute DSH formula.
[[Page S15422]]
Sec. 552. Revisions to reassignment provisions.
Sec. 553. Other provisions.
TITLE VI--MEDICAID AND MISCELLANEOUS PROVISIONS
Subtitle A--Medicaid Provisions
Sec. 601. Medicaid disproportionate share hospital (DSH) payments.
Sec. 602. Clarification of inclusion of inpatient drug prices charged
to certain public hospitals in the best price exemptions
for the medicaid drug rebate program.
Sec. 603. Extension of moratorium.
Subtitle B--Miscellaneous Provisions
Sec. 611. Federal reimbursement of emergency health services furnished
to undocumented aliens.
Sec. 612. Commission on Systemic Interoperability.
Sec. 613. Research on outcomes of health care items and services.
Sec. 614. Health care that works for all Americans: Citizens Health
Care Working Group.
Sec. 615. Funding start-up administrative costs for medicare reform.
Sec. 616. Health care infrastructure improvement program.
TITLE I--RURAL PROVISIONS
Subtitle A--Provisions Relating to Part A Only
SEC. 101. EQUALIZING URBAN AND RURAL STANDARDIZED PAYMENT
AMOUNTS UNDER THE MEDICARE INPATIENT HOSPITAL
PROSPECTIVE PAYMENT SYSTEM.
(a) In General.--Section 1886(d)(3)(A)(iv) (42 U.S.C.
1395ww(d)(3)(A)(iv)) is amended--
(1) by striking ``(iv) For discharges'' and inserting
``(iv)(I) Subject to subclause (II), for discharges''; and
(2) by adding at the end the following new subclause:
``(II) For discharges occurring in a fiscal year (beginning
with fiscal year 2004), the Secretary shall compute a
standardized amount for hospitals located in any area within
the United States and within each region equal to the
standardized amount computed for the previous fiscal year
under this subparagraph for hospitals located in a large
urban area (or, beginning with fiscal year 2005, for all
hospitals in the previous fiscal year) increased by the
applicable percentage increase under subsection (b)(3)(B)(i)
for the fiscal year involved.''.
(b) Conforming Amendments.--
(1) Computing drg-specific rates.--Section 1886(d)(3)(D)
(42 U.S.C. 1395ww(d)(3)(D)) is amended--
(A) in the heading, by striking ``in different areas'';
(B) in the matter preceding clause (i), by striking ``,
each of'';
(C) in clause (i)--
(i) in the matter preceding subclause (I), by inserting
``for fiscal years before fiscal year 2004,'' before ``for
hospitals''; and
(ii) in subclause (II), by striking ``and'' after the
semicolon at the end;
(D) in clause (ii)--
(i) in the matter preceding subclause (I), by inserting
``for fiscal years before fiscal year 2004,'' before ``for
hospitals''; and
(ii) in subclause (II), by striking the period at the end
and inserting ``; and''; and
(E) by adding at the end the following new clause:
``(iii) for a fiscal year beginning after fiscal year 2003,
for hospitals located in all areas, to the product of--
``(I) the applicable standardized amount (computed under
subparagraph (A)), reduced under subparagraph (B), and
adjusted or reduced under subparagraph (C) for the fiscal
year; and
``(II) the weighting factor (determined under paragraph
(4)(B)) for that diagnosis-related group.''.
(2) Technical conforming sunset.--Section 1886(d)(3) (42
U.S.C. 1395ww(d)(3)) is amended--
(A) in the matter preceding subparagraph (A), by inserting
``, for fiscal years before fiscal year 1997,'' before ``a
regional adjusted DRG prospective payment rate''; and
(B) in subparagraph (D), in the matter preceding clause
(i), by inserting ``, for fiscal years before fiscal year
1997,'' before ``a regional DRG prospective payment rate for
each region,''.
(3) Additional technical amendment.--Section
1886(d)(3)(A)(iii) (42 U.S.C. 1395ww(d)(3)(A)(iii)) is
amended by striking ``in an other urban area'' and inserting
``in an urban area''.
(c) Equalizing Urban and Rural Standardized Payment Amounts
Under the Medicare Inpatient Hospital Prospective Payment
System for Hospitals in Puerto Rico.--
(1) In general.--Section 1886(d)(9)(A) (42 U.S.C.
1395ww(d)(9)(A)), as amended by section 204, is amended--
(A) in clause (i), by striking ``and'' after the comma at
the end; and
(B) by striking clause (ii) and inserting the following new
clause:
``(ii) the applicable Federal percentage (specified in
subparagraph (E)) of--
``(I) for discharges beginning in a fiscal year beginning
on or after October 1, 1997, and before October 1, 2003, the
discharge-weighted average of--
``(aa) the national adjusted DRG prospective payment rate
(determined under paragraph (3)(D)) for hospitals located in
a large urban area,
``(bb) such rate for hospitals located in other urban
areas, and
``(cc) such rate for hospitals located in a rural area,
for such discharges, adjusted in the manner provided in
paragraph (3)(E) for different area wage levels; and
``(II) for discharges in a fiscal year beginning on or
after October 1, 2003, the national DRG prospective payment
rate determined under paragraph (3)(D)(iii) for hospitals
located in any area for such discharges, adjusted in the
manner provided in paragraph (3)(E) for different area wage
levels.
(2) Application of puerto rico standardized amount based on
large urban areas.--The authority of the Secretary referred
to in paragraph (1) shall apply with respect to the
amendments made by subsection (c) (2) of this section in the
same manner as that authority applies with respect to the
extension of provisions equalizing urban and rural
standardized inpatient hospital payments under subsection (a)
of such section 402, except that any reference in subsection
(b)(2)(A) of such section 402 is deemed to be a reference to
April 1, 2004.
SEC. 102 ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH)
TREATMENT FOR RURAL HOSPITALS AND URBAN
HOSPITALS WITH FEWER THAN 100 BEDS.
(a) Doubling the Cap.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended by adding at the end the
following new clause:
``(xiv)(I) In the case of discharges occurring on or after
April 1, 2004, subject to subclause (II), there shall be
substituted for the disproportionate share adjustment
percentage otherwise determined under clause (iv) (other than
subclause (I)) or under clause (viii), (x), (xi), (xii), or
(xiii), the disproportionate share adjustment percentage
determined under clause (vii) (relating to large, urban
hospitals).
``(II) Under subclause (I,) the disproportionate share
adjustment percentage shall not exceed 12 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C).''.
(b) Conforming Amendments.--Section 1886(d) (42 U.S.C.
1395ww(d)) is amended--
(1) in paragraph (5)(F)--
(A) in each of subclauses (II), (III), (IV), (V), and (VI) of
clause (iv), by inserting ``subject to clause (xiv) and''
before ``for discharges occurring'';
(B) in clause (vi), by striking ``The Formula'' and inserting
``Subject to clause (xiv), the formula''; and
As used in this section, the term `subsection (d) Puerto Rico
hospital' means a hospital that is located in Puerto Rico and
that would be a subsection (d) hospital (as defined in
paragraph (1)(B)) if it were located in one of the 50
States.''.
(2) Application of puerto rico standardized amount based on
large urban areas.--Section 1886(d)(9)(C) (42 U.S.C.
1395ww(d)(9)(C)) is amended--
(A) in clause (i)--
(i) by striking ``(i) The Secretary'' and inserting
``(i)(I) For discharges in a fiscal year after fiscal year
1988 and before fiscal year 2004, the Secretary''; and
(ii) by adding at the end the following new subclause:
``(II) For discharges occurring in a fiscal year (beginning
with fiscal year 2004), the Secretary shall compute an
average standardized amount for hospitals located in any area
of Puerto Rico that is equal to the average standardized
amount computed under subclause (I) for fiscal year 2003 for
hospitals in a large urban area (or, beginning with fiscal
year 2005, for all hospitals in the previous fiscal year)
increased by the applicable percentage increase under
subsection (b)(3)(B) for the fiscal year involved.'';
(B) in clause (ii), by inserting ``(or for fiscal year 2004
and thereafter, the average standardized amount)'' after
``each of the average standardized amounts''; and
(C) in clause (iii)(I), by striking ``for hospitals located
in an urban or rural area, respectively''.
(d) Implementation.--
(1) In general.--The amendments made by subsections (a),
(b), and (c)(1) of this section shall have no effect on the
authority of the Secretary, under subsection (b)(2) of
section 402 of Public Law 108-89, to delay implementation of
the extension of provisions equalizing urban and rural
standardized inpatient hospital payments under subsection (a)
of such section 402.
(2) Application of puerto rico standardized amount based on
large urban areas.--The authority of the Secretary referred
to in paragraph (1) shall apply with respect to the
amendments made by subsection (c)(2) of this section in the
same manner as that authority applies with respect to the
extension of provisions equalizing urban and rural
standardized inpatient hospital payments under subsection (a)
of such section 402, except that any reference in subsection
(b)(2)(A) of such section 402 is deemed to be a reference to
April 1, 2004.
SEC. 102. ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH)
TREATMENT FOR RURAL HOSPITALS AND URBAN
HOSPITALS WITH FEWER THAN 100 BEDS.
(a) Doubling the Cap.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended by adding at the end the
following new clause:
``(xiv)(I) In the case of discharges occurring on or after
April 1, 2004, subject to subclause (II), there shall be
substituted for the disproportionate share adjustment
percentage otherwise determined under clause (iv) (other than
subclause (I)) or under clause
[[Page S15423]]
(viii), (x), (xi), (xii), or (xiii), the disproportionate
share adjustment percentage determined under clause (vii)
(relating to large, urban hospitals).
``(II) Under subclause (I), the disproportionate share
adjustment percentage shall not exceed 12 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C).''.
(b) Conforming Amendments.--Section 1886(d) (42 U.S.C.
1395ww(d)) is amended--
(1) in paragraph (5)(F)--
(A) in each of subclauses (II), (III), (IV), (V), and (VI)
of clause (iv), by inserting ``subject to clause (xiv) and''
before ``for discharges occurring'';
(B) in clause (viii), by striking ``The formula'' and
inserting ``Subject to clause (xiv), the formula''; and
(C) in each of clauses (x), (xi), (xii), and (xiii), by
striking ``For purposes'' and inserting ``Subject to clause
(xiv), for purposes''; and
(2) in paragraph (2)(C)(iv)--
(A) by striking ``or'' before ``the enactment of section
303''; and
(B) by inserting before the period at the end the
following: ``, or the enactment of section 402(a)(1) of the
Medicare Provider Restoration Act of 2003''.
SEC. 103. ADJUSTMENT TO THE MEDICARE INPATIENT HOSPITAL
PROSPECTIVE PAYMENT SYSTEM WAGE INDEX TO REVISE
THE LABOR-RELATED SHARE OF SUCH INDEX.
(a) Adjustment.--
(1) In general.--Section 1886(d)(3)(E) (42 U.S.C.
1395ww(d)(3)(E)) is amended--
(A) by striking ``wage levels.--The Secretary'' and
inserting ``wage levels.--
``(i) In general.--Except as provided in clause (ii), the
Secretary''; and
(B) by adding at the end the following new clause:
``(ii) Alternative proportion to be adjusted beginning in
fiscal year 2005.--For discharges occurring on or after
October 1, 2004, the Secretary shall substitute `62 percent'
for the proportion described in the first sentence of clause
(i), unless the application of this clause would result in
lower payments to a hospital than would otherwise be made.''.
(2) Waiving budget neutrality.--Section 1886(d)(3)(E) (42
U.S.C. 1395ww(d)(3)(E)), as amended by subsection (a), is
amended by adding at the end of clause (i) the following new
sentence: ``The Secretary shall apply the previous sentence
for any period as if the amendments made by section 103(a)(1)
of the Medicare Provider Restoration Act of 2003 had not been
enacted.''.
(b) Application to Puerto Rico Hospitals.--Section
1886(d)(9)(C)(iv) (42 U.S.C. 1395ww(d)(9)(C)(iv)) is
amended--
(1) by inserting ``(I)'' after ``(iv)'';
(2) by striking ``paragraph (3)(E)'' and inserting
``paragraph (3)(E)(i)''; and
(3) by adding at the end the following new subclause:
``(II) For discharges occurring on or after October 1,
2004, the Secretary shall substitute `62 percent' for the
proportion described in the first sentence of clause (i),
unless the application of this subclause would result in
lower payments to a hospital than would otherwise be made.''.
SEC. 104. MORE FREQUENT UPDATE IN WEIGHTS USED IN HOSPITAL
MARKET BASKET.
(a) More Frequent Updates in Weights.--After revising the
weights used in the hospital market basket under section
1886(b)(3)(B)(iii) of the Social Security Act (42 U.S.C.
1395ww(b)(3)(B)(iii)) to reflect the most current data
available, the Secretary shall establish a frequency for
revising such weights, including the labor share, in such
market basket to reflect the most current data available more
frequently than once every 5 years.
(b) Incorporation of Explanation in Rulemaking.--The
Secretary shall include in the publication of the final rule
for payment for inpatient hospital services under section
1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) for
fiscal year 2006, an explanation of the reasons for, and
options considered, in determining frequency established
under subsection (a).
SEC. 105. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.
(a) Increase in Payment Amounts.--
(1) In general.--Sections 1814(l), 1834(g)(1), and
1883(a)(3) (42 U.S.C. 1395f(l), 1395m(g)(1), and
1395tt(a)(3)) are each amended by inserting ``equal to 101
percent of'' before ``the reasonable costs''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to payments for services furnished during cost
reporting periods beginning on or after January 1, 2004.
(b) Coverage of Costs for Certain Emergency Room On-Call
Providers.--
(1) In general.--Section 1834(g)(5) (42 U.S.C. 1395m(g)(5))
is amended--
(A) in the heading--
(i) by inserting ``certain'' before ``emergency''; and
(ii) by striking ``physicians'' and inserting
``providers'';
(B) by striking ``emergency room physicians who are on-call
(as defined by the Secretary)'' and inserting ``physicians,
physician assistants, nurse practitioners, and clinical nurse
specialists who are on-call (as defined by the Secretary) to
provide emergency services''; and
(C) by striking ``physicians' services'' and inserting
``services covered under this title''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply with respect to costs incurred for services
furnished on or after January 1, 2005.
(c) Authorization of Periodic Interim Payment (PIP).--
(1) In general.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2))
is amended--
(A) in the matter before subparagraph (A), by inserting ``,
in the cases described in subparagraphs (A) through (D)''
after ``1986'';
(B) by striking ``and'' at the end of subparagraph (C);
(C) by adding ``and'' at the end of subparagraph (D); and
(D) by inserting after subparagraph (D) the following new
subparagraph:
``(E) inpatient critical access hospital services;''.
(2) Development of alternative timing methods of periodic
interim payments.--With respect to periodic interim payments
to critical access hospitals for inpatient critical access
hospital services under section 1815(e)(2)(E) of the Social
Security Act, as added by paragraph (1), the Secretary shall
develop alternative methods for the timing of such payments.
(3) Authorization of pip.--The amendments made by paragraph
(1) shall apply to payments made on or after July 1, 2004.
(d) Condition for Application of Special Professional
Service Payment Adjustment.--
(1) In general.--Section 1834(g)(2) (42 U.S.C. 1395m(g)(2))
is amended by adding after and below subparagraph (B) the
following:
``The Secretary may not require, as a condition for applying
subparagraph (B) with respect to a critical access hospital,
that each physician or other practitioner providing
professional services in the hospital must assign billing
rights with respect to such services, except that such
subparagraph shall not apply to those physicians and
practitioners who have not assigned such billing rights.''.
(2) Effective date.--
(A) In general.--Except as provided in subparagraph (B),
the amendment made by paragraph (1) shall apply to cost
reporting periods beginning on or after July 1, 2004.
(B) Rule of application.--In the case of a critical access
hospital that made an election under section 1834(g)(2) of
the Social Security Act (42 U.S.C. 1395m(g)(2)) before
November 1, 2003, the amendment made by paragraph (1) shall
apply to cost reporting periods beginning on or after July 1,
2001.
(e) Revision of Bed Limitation for Hospitals.--
(1) In general.--Section 1820(c)(2)(B)(iii) (42 U.S.C.
1395i-4(c)(2)(B)(iii)) is amended by striking ``15 (or, in
the case of a facility under an agreement described in
subsection (f), 25)'' and inserting ``25''.
(2) Conforming amendment.--Section 1820(f) (42 U.S.C.
1395i-4(f)) is amended by striking ``and the number of beds
used at any time for acute care inpatient services does not
exceed 15 beds''.
(3) Effective date.--The amendments made by this subsection
shall apply to designations made before, on, or after January
1, 2004, but any election made pursuant to regulations
promulgated to carry out such amendments shall only apply
prospectively.
(f) Provisions Relating to FLEX Grants.--
(1) Additional 4-year period of funding.--Section 1820(j)
(42 U.S.C. 1395i-4(j)) is amended by inserting before the
period at the end the following: ``, and for making grants to
all States under paragraphs (1) and (2) of subsection (g),
$35,000,000 in each of fiscal years 2005 through 2008''.
(2) Additional requirements and administration.--Section
1820(g) (42 U.S.C. 1395i-4(g)) is amended by adding at the
end the following new paragraphs:
``(4) Additional requirements with respect to flex
grants.--With respect to grants awarded under paragraph (1)
or (2) from funds appropriated for fiscal year 2005 and
subsequent fiscal years--
``(A) Consultation with the state hospital association and
rural hospitals on the most appropriate ways to use grants.--
A State shall consult with the hospital association of such
State and rural hospitals located in such State on the most
appropriate ways to use the funds under such grant.
``(B) Limitation on use of grant funds for administrative
expenses.--A State may not expend more than the lesser of--
``(i) 15 percent of the amount of the grant for
administrative expenses; or
``(ii) the State's federally negotiated indirect rate for
administering the grant.
``(5) Use of funds for federal administrative expenses.--Of
the total amount appropriated for grants under paragraphs (1)
and (2) for a fiscal year (beginning with fiscal year 2005),
up to 5 percent of such amount shall be available to the
Health Resources and Services Administration for purposes of
administering such grants.''.
(g) Authority To Establish Psychiatric and Rehabilitation
Distinct Part Units.--
(1) In general.--Section 1820(c)(2) (42 U.S.C. 1395i-
4(c)(2)) is amended by adding at the end the following:
``(E) Authority to establish psychiatric and rehabilitation
distinct part units.--
``(i) In general.--Subject to the succeeding provisions of
this subparagraph, a critical access hospital may establish--
``(I) a psychiatric unit of the hospital that is a distinct
part of the hospital; and
``(II) a rehabilitation unit of the hospital that is a
distinct part of the hospital,
[[Page S15424]]
if the distinct part meets the requirements (including
conditions of participation) that would otherwise apply to
the distinct part if the distinct part were established by a
subsection (d) hospital in accordance with the matter
following clause (v) of section 1886(d)(1)(B), including any
regulations adopted by the Secretary under such section.
``(ii) Limitation on number of beds.--The total number of
beds that may be established under clause (i) for a distinct
part unit may not exceed 10.
``(iii) Exclusion of beds from bed count.--In determining
the number of beds of a critical access hospital for purposes
of applying the bed limitations referred to in subparagraph
(B)(iii) and subsection (f), the Secretary shall not take
into account any bed established under clause (i).
``(iv) Effect of failure to meet requirements.--If a
psychiatric or rehabilitation unit established under clause
(i) does not meet the requirements described in such clause
with respect to a cost reporting period, no payment may be
made under this title to the hospital for services furnished
in such unit during such period. Payment to the hospital for
services furnished in the unit may resume only after the
hospital has demonstrated to the Secretary that the unit
meets such requirements.''.
(2) Payment on a prospective payment basis.--Section
1814(l) (42 U.S.C. 1395f(l)) is amended--
(A) by striking ``(l) The amount'' and inserting ``(l)(1)
Except as provided in paragraph (2), the amount''; and
(B) by adding at the end the following new paragraph:
``(2) In the case of a distinct part psychiatric or
rehabilitation unit of a critical access hospital described
in section 1820(c)(2)(E), the amount of payment for inpatient
critical access hospital services of such unit shall be equal
to the amount of the payment that would otherwise be made if
such services were inpatient hospital services of a distinct
part psychiatric or rehabilitation unit, respectively,
described in the matter following clause (v) of section
1886(d)(1)(B).''.
(3) Effective date.--The amendments made by this subsection
shall apply to cost reporting periods beginning on or after
October 1, 2004.
(h) Waiver Authority.--
(1) In general.--Section 1820(c)(2)(B)(i)(II) (42 U.S.C.
1395i-4(c)(2)(B)(i)(II)) is amended by inserting ``before
January 1, 2006,'' after ``is certified''.
(2) Grandfathering waiver authority for certain
facilities.--Section 1820(h) (42 U.S.C. 1395i-4(h)) is
amended--
(A) in the heading preceding paragraph (1), by striking
``of Certain Facilities'' and inserting ``Provisions''; and
(B) by adding at the end the following new paragraph:
``(3) State authority to waive 35-mile rule.--In the case
of a facility that was designated as a critical access
hospital before January 1, 2006, and was certified by the
State as being a necessary provider of health care services
to residents in the area under subsection (c)(2)(B)(i)(II),
as in effect before such date, the authority under such
subsection with respect to any redesignation of such facility
shall continue to apply notwithstanding the amendment made by
section 105(h)(1) of the Medicare Provider Restoration Act of
2003.''.
SEC. 106. MEDICARE INPATIENT HOSPITAL PAYMENT ADJUSTMENT FOR
LOW-VOLUME HOSPITALS.
(a) In General.--Section 1886(d) (42 U.S.C. 1395ww(d)) is
amended by adding at the end the following new paragraph:
``(12) Payment adjustment for low-volume hospitals.--
``(A) In general.--In addition to any payments calculated
under this section for a subsection (d) hospital, for
discharges occurring during a fiscal year (beginning with
fiscal year 2005), the Secretary shall provide for an
additional payment amount to each low-volume hospital (as
defined in subparagraph (C)(i)) for discharges occurring
during that fiscal year that is equal to the applicable
percentage increase (determined under subparagraph (B) for
the hospital involved) in the amount paid to such hospital
under this section for such discharges (determined without
regard to this paragraph).
``(B) Applicable percentage increase.--The Secretary shall
determine an applicable percentage increase for purposes of
subparagraph (A) as follows:
``(i) The Secretary shall determine the empirical
relationship for subsection (d) hospitals between the
standardized cost-per-case for such hospitals and the total
number of discharges of such hospitals and the amount of the
additional incremental costs (if any) that are associated
with such number of discharges.
``(ii) The applicable percentage increase shall be
determined based upon such relationship in a manner that
reflects, based upon the number of such discharges for a
subsection (d) hospital, such additional incremental costs.
``(iii) In no case shall the applicable percentage increase
exceed 25 percent.
``(C) Definitions.--
``(i) Low-volume hospital.--For purposes of this paragraph,
the term `low-volume hospital' means, for a fiscal year, a
subsection (d) hospital (as defined in paragraph (1)(B)) that
the Secretary determines is located more than 25 road miles
from another subsection (d) hospital and has less than 800
discharges during the fiscal year.
``(ii) Discharge.--For purposes of subparagraph (B) and
clause (i), the term `discharge' means an inpatient acute
care discharge of an individual regardless of whether the
individual is entitled to benefits under part A.''.
(b) Judicial Review.--Section 1886(d)(7)(A) (42 U.S.C.
1395ww(d)(7)(A)) is amended by inserting after ``to
subsection (e)(1)'' the following: ``or the determination of
the applicable percentage increase under paragraph
(12)(A)(ii)''.
SEC. 107. TREATMENT OF MISSING COST REPORTING PERIODS FOR
SOLE COMMUNITY HOSPITALS.
(a) In General.--Section 1886(b)(3)(I) (42 U.S.C.
1395ww(b)(3)(I)) is amended by adding at the end the
following new clause:
``(iii) In no case shall a hospital be denied treatment as
a sole community hospital or payment (on the basis of a
target rate as such as a hospital) because data are
unavailable for any cost reporting period due to changes in
ownership, changes in fiscal intermediaries, or other
extraordinary circumstances, so long as data for at least one
applicable base cost reporting period is available.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to cost reporting periods beginning on or after
January 1, 2004.
SEC. 108. RECOGNITION OF ATTENDING NURSE PRACTITIONERS AS
ATTENDING PHYSICIANS TO SERVE HOSPICE PATIENTS.
(a) In General.--Section 1861(dd)(3)(B) (42 U.S.C.
1395x(dd)(3)(B)) is amended by inserting ``or nurse
practitioner (as defined in subsection (aa)(5))'' after ``the
physician (as defined in subsection (r)(1))''.
(b) Clarification of Hospice Role of Nurse Practitioners.--
Section 1814(a)(7) (A)(i)(I) (42 U.S.C. 1395f(a)(7)(A)
(i)(I)) is amended by inserting ``(which for purposes of this
subparagraph does not include a nurse practitioner)'' after
``attending physician (as defined in section
1861(dd)(3)(B))''.
SEC. 109. RURAL HOSPICE DEMONSTRATION PROJECT.
(a) In General.--The Secretary shall conduct a
demonstration project for the delivery of hospice care to
medicare beneficiaries in rural areas. Under the project
medicare beneficiaries who are unable to receive hospice care
in the facility for lack of an appropriate caregiver are
provided such care in a facility of 20 or fewer beds which
offers, within its walls, the full range of services provided
by hospice programs under section 1861(dd) of the Social
Security Act (42 U.S.C. 1395x(dd)).
(b) Scope of Project.--The Secretary shall conduct the
project under this section with respect to no more than 3
hospice programs over a period of not longer than 5 years
each.
(c) Compliance with Conditions.--Under the demonstration
project--
(1) the hospice program shall comply with otherwise
applicable requirements, except that it shall not be required
to offer services outside of the home or to meet the
requirements of section 1861(dd)(2)(A)(iii) of the Social
Security Act; and
(2) payments for hospice care shall be made at the rates
otherwise applicable to such care under title XVIII of such
Act.
The Secretary may require the program to comply with such
additional quality assurance standards for its provision of
services in its facility as the Secretary deems appropriate.
(d) Report.--Upon completion of the project, the Secretary
shall submit a report to Congress on the project and shall
include in the report recommendations regarding extension of
such project to hospice programs serving rural areas.
SEC. 110. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC AND
FEDERALLY QUALIFIED HEALTH CENTER SERVICES FROM
THE PROSPECTIVE PAYMENT SYSTEM FOR SKILLED
NURSING FACILITIES.
(a) In General.--Section 1888(e)(2)(A) (42 U.S.C.
1395yy(e)(2)(A)) is amended--
(1) in clause (i)(II), by striking ``clauses (ii) and
(iii)'' and inserting ``clauses (ii), (iii), and (iv)''; and
(2) by adding at the end the following new clause:
``(iv) Exclusion of certain rural health clinic and
federally qualified health center services.--Services
described in this clause are--
``(I) rural health clinic services (as defined in paragraph
(1) of section 1861(aa)); and
``(II) Federally qualified health center services (as
defined in paragraph (3) of such section);
that would be described in clause (ii) if such services were
furnished by an individual not affiliated with a rural health
clinic or a Federally qualified health center.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to services furnished on or after January 1,
2005.
SEC. 110A. RURAL COMMUNITY HOSPITAL DEMONSTRATION PROGRAM.
(a) Establishment of Rural Community Hospital (RCH)
Demonstration Program.--
(1) In general.--The Secretary shall establish a
demonstration program to test the feasibility and
advisability of the establishment of rural community
hospitals (as defined in subsection (f)(1)) to furnish
covered inpatient hospital services (as defined in subsection
(f)(2)) to medicare beneficiaries.
(2) Demonstration areas.--The program shall be conducted in
rural areas selected by
[[Page S15425]]
the Secretary in States with low population densities, as
determined by the Secretary.
(3) Application.--Each rural community hospital that is
located in a demonstration area selected under paragraph (2)
that desires to participate in the demonstration program
under this section shall submit an application to the
Secretary at such time, in such manner, and containing such
information as the Secretary may require.
(4) Selection of hospitals.--The Secretary shall select
from among rural community hospitals submitting applications
under paragraph (3) not more than 15 of such hospitals to
participate in the demonstration program under this section.
(5) Duration.--The Secretary shall conduct the
demonstration program under this section for a 5-year period.
(6) Implementation.--The Secretary shall implement the
demonstration program not later than January 1, 2005, but may
not implement the program before October 1, 2004.
(b) Payment.--
(1) In general.--The amount of payment under the
demonstration program for covered inpatient hospital services
furnished in a rural community hospital, other than such
services furnished in a psychiatric or rehabilitation unit of
the hospital which is a distinct part, is--
(A) for discharges occurring in the first cost reporting
period beginning on or after the implementation of the
demonstration program, the reasonable costs of providing such
services; and
(B) for discharges occurring in a subsequent cost reporting
period under the demonstration program, the lesser of--
(i) the reasonable costs of providing such services in the
cost reporting period involved; or
(ii) the target amount (as defined in paragraph (2),
applicable to the cost reporting period involved.
(2) Target amount.--For purposes of paragraph (1)(B)(ii),
the term ``target amount'' means, with respect to a rural
community hospital for a particular 12-month cost reporting
period--
(A) in the case of the second such reporting period for
which this subsection is in effect, the reasonable costs of
providing such covered inpatient hospital services as
determined under paragraph (1)(A), and
(B) in the case of a later reporting period, the target
amount for the preceding 12-month cost reporting period,
increased by the applicable percentage increase (under clause
(i) of section 1886(b)(3)(B) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B))) in the market basket percentage
increase (as defined in clause (iii) of such section) for
that particular cost reporting period.
(c) Funding.--
(1) In general.--The Secretary shall provide for the
transfer from the Federal Hospital Insurance Trust Fund under
section 1817 of the Social Security Act (42 U.S.C. 1395i) of
such funds as are necessary for the costs of carrying out the
demonstration program under this section.
(2) Budget neutrality.--In conducting the demonstration
program under this section, the Secretary shall ensure that
the aggregate payments made by the Secretary do not exceed
the amount which the Secretary would have paid if the
demonstration program under this section was not implemented.
(d) Waiver Authority.--The Secretary may waive such
requirements of title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.) as may be necessary for the purpose of
carrying out the demonstration program under this section.
(e) Report.--Not later than 6 months after the completion
of the demonstration program under this section, the
Secretary shall submit to Congress a report on such program,
together with recommendations for such legislation and
administrative action as the Secretary determines to be
appropriate.
(f) Definitions.--In this section:
(1) Rural community hospital defined.--
(A) In general.--The term ``rural community hospital''
means a hospital (as defined in section 1861(e) of the Social
Security Act (42 U.S.C. 1395x(e))) that--
(i) is located in a rural area (as defined in section
1886(d)(2)(D) of such Act (42 U.S.C. 1395ww(d)(2)(D))) or
treated as being so located pursuant to section 1886(d)(8)(E)
of such Act (42 U.S.C. 1395ww(d)(8)(E));
(ii) subject to paragraph (2), has fewer than 51 acute care
inpatient beds, as reported in its most recent cost report;
(iii) makes available 24-hour emergency care services; and
(iv) is not eligible for designation, or has not been
designated, as a critical access hospital under section 1820.
(B) Treatment of psychiatric and rehabilitation units.--For
purposes of paragraph (1)(B), beds in a psychiatric or
rehabilitation unit of the hospital which is a distinct part
of the hospital shall not be counted.
(2) Covered inpatient hospital services.--The term
``covered inpatient hospital services'' means inpatient
hospital services, and includes extended care services
furnished under an agreement under section 1883 of the Social
Security Act (42 U.S.C. 1395tt).
Subtitle B--Provisions Relating to Part B Only
SEC. 111. 2-YEAR EXTENSION OF HOLD HARMLESS PROVISIONS FOR
SMALL RURAL HOSPITALS AND SOLE COMMUNITY
HOSPITALS UNDER THE PROSPECTIVE PAYMENT SYSTEM
FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES.
(a) Hold Harmless Provisions.--
(1) In general.--Section 1833(t)(7)(D)(i) (42 U.S.C.
1395l(t)(7)(D)(i)) is amended--
(A) in the heading, by striking ``small'' and inserting
``certain'';
(B) by inserting ``or a sole community hospital (as defined
in section 1886(d)(5)(D)(iii)) located in a rural area''
after ``100 beds''; and
(C) by striking ``2004'' and inserting ``2006''.
(2) Effective date.--The amendment made by paragraph (1)(B)
shall apply with respect to cost reporting periods beginning
on and after January 1, 2004.
(b) Study; Authorization of Adjustment.--Section 1833(t)
(42 U.S.C. 1395l(t)) is amended--
(1) by redesignating paragraph (13) as paragraph (16); and
(2) by inserting after paragraph (12) the following new
paragraph:
``(13) Authorization of adjustment for rural hospitals.--
``(A) Study.--The Secretary shall conduct a study to
determine if, under the system under this subsection, costs
incurred by hospitals located in rural areas by ambulatory
payment classification groups (APCs) exceed those costs
incurred by hospitals located in urban areas.
``(B) Authorization of adjustment.--Insofar as the
Secretary determines under subparagraph (A) that costs
incurred by hospitals located in rural areas exceed those
costs incurred by hospitals located in urban areas, the
Secretary shall provide for an appropriate adjustment under
paragraph (2)(E) to reflect those higher costs by January 1,
2006.''.
SEC. 112. ESTABLISHMENT OF FLOOR ON WORK GEOGRAPHIC
ADJUSTMENT.
Section 1848(e)(1) (42 U.S.C. 1395w-4(e)(1)) is amended--
(1) in subparagraph (A), by striking ``subparagraphs (B)
and (C)'' and inserting ``subparagraphs (B), (C), and (E)'';
and
(2) by adding at the end the following new subparagraph:
``(E) Floor at 1.0 on work geographic index.--After
calculating the work geographic index in subparagraph
(A)(iii), for purposes of payment for services furnished on
or after January 1, 2004, and before January 1, 2007, the
Secretary shall increase the work geographic index to 1.00
for any locality for which such work geographic index is less
than 1.00.''.
SEC. 113. MEDICARE INCENTIVE PAYMENT PROGRAM IMPROVEMENTS FOR
PHYSICIAN SCARCITY.
(a) Additional Incentive Payment for Certain Physician
Scarcity Areas.--Section 1833 (42 U.S.C. 1395l) is amended by
adding at the end the following new subsection:
``(u) Incentive Payments for Physician Scarcity Areas.--
``(1) In general.--In the case of physicians' services
furnished on or after January 1, 2005, and before January 1,
2008--
``(A) by a primary care physician in a primary care
scarcity county (identified under paragraph (4)); or
``(B) by a physician who is not a primary care physician in
a specialist care scarcity county (as so identified),
in addition to the amount of payment that would otherwise be
made for such services under this part, there also shall be
paid an amount equal to 5 percent of the payment amount for
the service under this part.
``(2) Determination of ratios of physicians to medicare
beneficiaries in area.--Based upon available data, the
Secretary shall establish for each county or equivalent area
in the United States, the following:
``(A) Number of physicians practicing in the area.--The
number of physicians who furnish physicians' services in the
active practice of medicine or osteopathy in that county or
area, other than physicians whose practice is exclusively for
the Federal Government, physicians who are retired, or
physicians who only provide administrative services. Of such
number, the number of such physicians who are--
``(i) primary care physicians; or
``(ii) physicians who are not primary care physicians.
``(B) Number of medicare beneficiaries residing in the
area.--The number of individuals who are residing in the
county and are entitled to benefits under part A or enrolled
under this part, or both (in this subsection referred to as
`individuals').
``(C) Determination of ratios.--
``(i) Primary care ratio.--The ratio (in this paragraph
referred to as the `primary care ratio') of the number of
primary care physicians (determined under subparagraph
(A)(i)), to the number of individuals determined under
subparagraph (B).
``(ii) Specialist care ratio.--The ratio (in this paragraph
referred to as the `specialist care ratio') of the number of
other physicians (determined under subparagraph (A)(ii)), to
the number of individuals determined under subparagraph (B).
``(3) Ranking of counties.--The Secretary shall rank each
such county or area based separately on its primary care
ratio and its specialist care ratio.
``(4) Identification of counties.--
``(A) In general.--The Secretary shall identify--
``(i) those counties and areas (in this paragraph referred
to as `primary care scarcity counties') with the lowest
primary care ratios that represent, if each such county or
area were weighted by the number of individuals determined
under paragraph (2)(B), an
[[Page S15426]]
aggregate total of 20 percent of the total of the individuals
determined under such paragraph; and
``(ii) those counties and areas (in this subsection
referred to as `specialist care scarcity counties') with the
lowest specialist care ratios that represent, if each such
county or area were weighted by the number of individuals
determined under paragraph (2)(B), an aggregate total of 20
percent of the total of the individuals determined under such
paragraph.
``(B) Periodic revisions.--The Secretary shall periodically
revise the counties or areas identified in subparagraph (A)
(but not less often than once every three years) unless the
Secretary determines that there is no new data available on
the number of physicians practicing in the county or area or
the number of individuals residing in the county or area, as
identified in paragraph (2).
``(C) Identification of counties where service is
furnished.--For purposes of paying the additional amount
specified in paragraph (1), if the Secretary uses the 5-digit
postal ZIP Code where the service is furnished, the dominant
county of the postal ZIP Code (as determined by the United
States Postal Service, or otherwise) shall be used to
determine whether the postal ZIP Code is in a scarcity county
identified in subparagraph (A) or revised in subparagraph
(B).
``(D) Judicial review.--There shall be no administrative or
judicial review under section 1869, 1878, or otherwise,
respecting--
``(i) the identification of a county or area;
``(ii) the assignment of a specialty of any physician under
this paragraph;
``(iii) the assignment of a physician to a county under
paragraph (2); or
``(iv) the assignment of a postal ZIP Code to a county or
other area under this subsection.
``(5) Rural census tracts.--To the extent feasible, the
Secretary shall treat a rural census tract of a metropolitan
statistical area (as determined under the most recent
modification of the Goldsmith Modification, originally
published in the Federal Register on February 27, 1992 (57
Fed. Reg. 6725)), as an equivalent area for purposes of
qualifying as a primary care scarcity county or specialist
care scarcity county under this subsection.
``(6) Physician Defined.--For purposes of this paragraph,
the term `physician' means a physician described in section
1861(r)(1) and the term `primary care physician' means a
physician who is identified in the available data as a
general practitioner, family practice practitioner, general
internist, or obstetrician or gynecologist.
``(7) Publication of list of counties; posting on
website.--With respect to a year for which a county or area
is identified or revised under paragraph (4), the Secretary
shall identify such counties or areas as part of the proposed
and final rule to implement the physician fee schedule under
section 1848 for the applicable year. The Secretary shall
post the list of counties identified or revised under
paragraph (4) on the Internet website of the Centers for
Medicare & Medicaid Services.''.
(b) Improvement to Medicare Incentive Payment Program.--
(1) In general.--Section 1833(m) (42 U.S.C. 1395l(m)) is
amended--
(A) by inserting ``(1)'' after ``(m)'';
(B) in paragraph (1), as designated by subparagraph (A)--
(i) by inserting ``in a year'' after ``In the case of
physicians' services furnished''; and
(ii) by inserting ``as identified by the Secretary prior to
the beginning of such year'' after ``as a health professional
shortage area''; and
(C) by adding at the end the following new paragraphs:
``(2) For each health professional shortage area identified
in paragraph (1) that consists of an entire county, the
Secretary shall provide for the additional payment under
paragraph (1) without any requirement on the physician to
identify the health professional shortage area involved. The
Secretary may implement the previous sentence using the
method specified in subsection (u)(4)(C).
``(3) The Secretary shall post on the Internet website of
the Centers for Medicare & Medicaid Services a list of the
health professional shortage areas identified in paragraph
(1) that consist of a partial county to facilitate the
additional payment under paragraph (1) in such areas.
``(4) There shall be no administrative or judicial review
under section 1869, section 1878, or otherwise, respecting--
``(A) the identification of a county or area;
``(B) the assignment of a specialty of any physician under
this paragraph;
``(C) the assignment of a physician to a county under this
subsection; or
``(D) the assignment of a postal zip code to a county or
other area under this subsection.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to physicians' services furnished on or after
January 1, 2005.
(c) GAO Study of Geographic Differences in Payments for
Physicians' Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study of differences in payment amounts under
the physician fee schedule under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4) for physicians' services in
different geographic areas. Such study shall include--
(A) an assessment of the validity of the geographic
adjustment factors used for each component of the fee
schedule;
(B) an evaluation of the measures used for such adjustment,
including the frequency of revisions;
(C) an evaluation of the methods used to determine
professional liability insurance costs used in computing the
malpractice component, including a review of increases in
professional liability insurance premiums and variation in
such increases by State and physician specialty and methods
used to update the geographic cost of practice index and
relative weights for the malpractice component; and
(D) an evaluation of the effect of the adjustment to the
physician work geographic index under section 1848(e)(1)(E)
of the Social Security Act, as added by section 112, on
physician location and retention in areas affected by such
adjustment, taking into account--
(i) differences in recruitment costs and retention rates
for physicians, including specialists, between large urban
areas and other areas; and
(ii) the mobility of physicians, including specialists,
over the last decade.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under paragraph
(1). The report shall include recommendations regarding the
use of more current data in computing geographic cost of
practice indices as well as the use of data directly
representative of physicians' costs (rather than proxy
measures of such costs).
SEC. 114. PAYMENT FOR RURAL AND URBAN AMBULANCE SERVICES.
(a) Phase-In Providing Floor Using Blend of Fee Schedule
and Regional Fee Schedules.--Section 1834(l) (42 U.S.C.
1395m(l)) is amended--
(1) in paragraph (2)(E), by inserting ``consistent with
paragraph (11)'' after ``in an efficient and fair manner'';
and
(2) by redesignating paragraph (8), as added by section
221(a) of BIPA (114 Stat. 2763A-486), as paragraph (9); and
(3) by adding at the end the following new paragraph:
``(10) Phase-in providing floor using blend of fee schedule
and regional fee schedules.--In carrying out the phase-in
under paragraph (2)(E) for each level of ground service
furnished in a year, the portion of the payment amount that
is based on the fee schedule shall be the greater of the
amount determined under such fee schedule (without regard to
this paragraph) or the following blended rate of the fee
schedule under paragraph (1) and of a regional fee schedule
for the region involved:
``(A) For 2004 (for services furnished on or after July 1,
2004), the blended rate shall be based 20 percent on the fee
schedule under paragraph (1) and 80 percent on the regional
fee schedule.
``(B) For 2005, the blended rate shall be based 40 percent
on the fee schedule under paragraph (1) and 60 percent on the
regional fee schedule.
``(C) For 2006, the blended rate shall be based 60 percent
on the fee schedule under paragraph (1) and 40 percent on the
regional fee schedule.
``(D) For 2007, 2008, and 2009, the blended rate shall be
based 80 percent on the fee schedule under paragraph (1) and
20 percent on the regional fee schedule.
``(E) For 2010 and each succeeding year, the blended rate
shall be based 100 percent on the fee schedule under
paragraph (1).
For purposes of this paragraph, the Secretary shall establish
a regional fee schedule for each of the nine census divisions
(referred to in section 1886(d)(2)) using the methodology
(used in establishing the fee schedule under paragraph (1))
to calculate a regional conversion factor and a regional
mileage payment rate and using the same payment adjustments
and the same relative value units as used in the fee schedule
under such paragraph.''.
(b) Adjustment in Payment for Certain Long Trips.--Section
1834(l), as amended by subsection (a), is amended by adding
at the end the following new paragraph:
``(11) Adjustment in payment for certain long trips.--In
the case of ground ambulance services furnished on or after
July 1, 2004, and before January 1, 2009, regardless of where
the transportation originates, the fee schedule established
under this subsection shall provide that, with respect to the
payment rate for mileage for a trip above 50 miles the per
mile rate otherwise established shall be increased by \1/4\
of the payment per mile otherwise applicable to miles in
excess of 50 miles in such trip.''.
(c) Improvement in Payments To Retain Emergency Capacity
for Ambulance Services in Rural Areas.--
(1) In general.--Section 1834(l) (42 U.S.C. 1395m(l)), as
amended by subsections (a) and (b), is amended by adding at
the end the following new paragraph:
``(12) Assistance for rural providers furnishing services
in low population density areas.--
``(A) In general.--In the case of ground ambulance services
furnished on or after July 1, 2004, and before January 1,
2010, for which the transportation originates in a qualified
rural area (identified under subparagraph (B)(iii)), the
Secretary shall provide for a percent increase in the base
rate of the fee schedule for a trip established under this
subsection. In establishing such percent increase, the
Secretary shall estimate the
[[Page S15427]]
average cost per trip for such services (not taking into
account mileage) in the lowest quartile as compared to the
average cost per trip for such services (not taking into
account mileage) in the highest quartile of all rural county
populations.
``(B) Identification of qualified rural areas.--
``(i) Determination of population density in area.--Based
upon data from the United States decennial census for the
year 2000, the Secretary shall determine, for each rural
area, the population density for that area.
``(ii) Ranking of areas.--The Secretary shall rank each
such area based on such population density.
``(iii) Identification of qualified rural areas.--The
Secretary shall identify those areas (in subparagraph (A)
referred to as `qualified rural areas') with the lowest
population densities that represent, if each such area were
weighted by the population of such area (as used in computing
such population densities), an aggregate total of 25 percent
of the total of the population of all such areas.
``(iv) Rural area.--For purposes of this paragraph, the
term `rural area' has the meaning given such term in section
1886(d)(2)(D). If feasible, the Secretary shall treat a rural
census tract of a metropolitan statistical area (as
determined under the most recent modification of the
Goldsmith Modification, originally published in the Federal
Register on February 27, 1992 (57 Fed. Reg. 6725) as a rural
area for purposes of this paragraph.
``(v) Judicial review.--There shall be no administrative or
judicial review under section 1869, 1878, or otherwise,
respecting the identification of an area under this
subparagraph.''.
(2) Use of data.--In order to promptly implement section
1834(l)(12) of the Social Security Act, as added by paragraph
(1), the Secretary may use data furnished by the Comptroller
General of the United States.
(d) Temporary Increase for Ground Ambulance Services.--
Section 1834(l) (42 U.S.C. 1395m(l)), as amended by
subsections (a), (b), and (c), is amended by adding at the
end the following new paragraph:
``(13) Temporary increase for ground ambulance services.--
``(A) In general.--After computing the rates with respect
to ground ambulance services under the other applicable
provisions of this subsection, in the case of such services
furnished on or after July 1, 2004, and before January 1,
2007, for which the transportation originates in--
``(i) a rural area described in paragraph (9) or in a rural
census tract described in such paragraph, the fee schedule
established under this section shall provide that the rate
for the service otherwise established, after the application
of any increase under paragraphs (11) and (12), shall be
increased by 2 percent; and
``(ii) an area not described in clause (i), the fee
schedule established under this subsection shall provide that
the rate for the service otherwise established, after the
application of any increase under paragraph (11), shall be
increased by 1 percent.
``(B) Application of increased payments after 2006.--The
increased payments under subparagraph (A) shall not be taken
into account in calculating payments for services furnished
after the period specified in such subparagraph.''.
(e) Implementation.--The Secretary may implement the
amendments made by this section, and revise the conversion
factor applicable under section 1834(l) of the Social
Security Act (42 U.S.C. 1395m(l)) for purposes of
implementing such amendments, on an interim final basis, or
by program instruction.
(f) GAO Report on Costs and Access.--Not later than
December 31, 2005, the Comptroller General of the United
States shall submit to Congress an initial report on how
costs differ among the types of ambulance providers and on
access, supply, and quality of ambulance services in those
regions and States that have a reduction in payment under the
medicare ambulance fee schedule (under section 1834(l) of the
Social Security Act, as amended by this Act). Not later than
December 31, 2007, the Comptroller General shall submit to
Congress a final report on such access and supply.
(g) Technical Amendments.--(1) Section 221(c) of BIPA (114
Stat. 2763A-487) is amended by striking ``subsection (b)(2)''
and inserting ``subsection (b)(3)''.
(2) Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended
by moving subparagraph (U) 4 ems to the left.
SEC. 115. PROVIDING APPROPRIATE COVERAGE OF RURAL AIR
AMBULANCE SERVICES.
(a) Coverage.--Section 1834(l) (42 U.S.C. 1395m(l)), as
amended by subsections (a), (b), (c), and (d) of section 114,
is amended by adding at the end the following new paragraph:
``(14) Providing appropriate coverage of rural air
ambulance services.--
``(A) In general.--The regulations described in section
1861(s)(7) shall provide, to the extent that any ambulance
services (whether ground or air) may be covered under such
section, that a rural air ambulance service (as defined in
subparagraph (C)) is reimbursed under this subsection at the
air ambulance rate if the air ambulance service--
``(i) is reasonable and necessary based on the health
condition of the individual being transported at or
immediately prior to the time of the transport; and
``(ii) complies with equipment and crew requirements
established by the Secretary.
``(B) Satisfaction of requirement of medically necessary.--
The requirement of subparagraph (A)(i) is deemed to be met
for a rural air ambulance service if--
``(i) subject to subparagraph (D), such service is
requested by a physician or other qualified medical personnel
(as specified by the Secretary) who reasonably determines or
certifies that the individual's condition is such that the
time needed to transport the individual by land or the
instability of transportation by land poses a threat to the
individual's survival or seriously endangers the individual's
health; or
``(ii) such service is furnished pursuant to a protocol
that is established by a State or regional emergency medical
service (EMS) agency and recognized or approved by the
Secretary under which the use of an air ambulance is
recommended, if such agency does not have an ownership
interest in the entity furnishing such service.
``(C) Rural air ambulance service defined.--For purposes of
this paragraph, the term `rural air ambulance service' means
fixed wing and rotary wing air ambulance service in which the
point of pick up of the individual occurs in a rural area (as
defined in section 1886(d)(2)(D)) or in a rural census tract
of a metropolitan statistical area (as determined under the
most recent modification of the Goldsmith Modification,
originally published in the Federal Register on February 27,
1992 (57 Fed. Reg. 6725)).
``(D) Limitation.--
``(i) In general.--Subparagraph (B)(i) shall not apply if
there is a financial or employment relationship between the
person requesting the rural air ambulance service and the
entity furnishing the ambulance service, or an entity under
common ownership with the entity furnishing the air ambulance
service, or a financial relationship between an immediate
family member of such requester and such an entity.
``(ii) Exception.--Where a hospital and the entity
furnishing rural air ambulance services are under common
ownership, clause (i) shall not apply to remuneration
(through employment or other relationship) by the hospital of
the requester or immediate family member if the remuneration
is for provider-based physician services furnished in a
hospital (as described in section 1887) which are reimbursed
under part A and the amount of the remuneration is unrelated
directly or indirectly to the provision of rural air
ambulance services.''.
(b) Conforming Amendment.--Section 1861(s)(7) (42 U.S.C.
1395x(s)(7)) is amended by inserting ``, subject to section
1834(l)(14),'' after ``but''.
(c) Effective Date.--The amendments made by this subsection
shall apply to services furnished on or after January 1,
2005.
SEC. 116. TREATMENT OF CERTAIN CLINICAL DIAGNOSTIC LABORATORY
TESTS FURNISHED TO HOSPITAL OUTPATIENTS IN
CERTAIN RURAL AREAS.
(a) In General.--Notwithstanding subsections (a), (b), and
(h) of section 1833 of the Social Security Act (42 U.S.C.
1395l) and section 1834(d)(1) of such Act (42 U.S.C.
1395m(d)(1)), in the case of a clinical diagnostic laboratory
test covered under part B of title XVIII of such Act that is
furnished during a cost reporting period described in
subsection (b) by a hospital with fewer than 50 beds that is
located in a qualified rural area (identified under paragraph
(12)(B)(iii) of section 1834(l) of the Social Security Act
(42 U.S.C. 1395m(l)), as added by section 114(c)) as part of
outpatient services of the hospital, the amount of payment
for such test shall be 100 percent of the reasonable costs of
the hospital in furnishing such test.
(b) Application.--A cost reporting period described in this
subsection is a cost reporting period beginning during the 2-
year period beginning on July 1, 2004.
(c) Provision as Part of Outpatient Hospital Services.--For
purposes of subsection (a), in determining whether clinical
diagnostic laboratory services are furnished as part of
outpatient services of a hospital, the Secretary shall apply
the same rules that are used to determine whether clinical
diagnostic laboratory services are furnished as an outpatient
critical access hospital service under section 1834(g)(4) of
the Social Security Act (42 U.S.C. 1395m(g)(4)).
SEC. 117. EXTENSION OF TELEMEDICINE DEMONSTRATION PROJECT.
Section 4207 of the Balanced Budget Act of 1997 (Public Law
105-33) is amended--
(1) in subsection (a)(4), by striking ``4-year'' and
inserting ``8-year''; and
(2) in subsection (d)(3), by striking ``$30,000,000'' and
inserting ``$60,000,000''.
SEC. 118. REPORT ON DEMONSTRATION PROJECT PERMITTING SKILLED
NURSING FACILITIES TO BE ORIGINATING TELEHEALTH
SITES; AUTHORITY TO IMPLEMENT.
(a) Evaluation.--The Secretary, acting through the
Administrator of the Health Resources and Services
Administration in consultation with the Administrator of the
Centers for Medicare & Medicaid Services, shall evaluate
demonstration projects conducted by the Secretary under which
skilled nursing facilities (as defined in section 1819(a) of
the Social Security Act (42 U.S.C. 1395i-3(a)) are treated as
originating sites for telehealth services.
(b) Report.--Not later than January 1, 2005, the Secretary
shall submit to Congress a report on the evaluation conducted
under subsection (a). Such report shall include
recommendations on mechanisms to ensure that permitting a
skilled nursing facility to
[[Page S15428]]
serve as an originating site for the use of telehealth
services or any other service delivered via a
telecommunications system does not serve as a substitute for
in-person visits furnished by a physician, or for in-person
visits furnished by a physician assistant, nurse practitioner
or clinical nurse specialist, as is otherwise required by the
Secretary.
(c) Authority to Expand Originating Telehealth Sites to
Include Skilled Nursing Facilities.--Insofar as the Secretary
concludes in the report required under subsection (b) that is
advisable to permit a skilled nursing facility to be an
originating site for telehealth services under section
1834(m) of the Social Security Act (42 U.S.C. 1395m(m)), and
that the Secretary can establish the mechanisms to ensure
such permission does not serve as a substitute for in-person
visits furnished by a physician, or for in-person visits
furnished by a physician assistant, nurse practitioner or
clinical nurse specialist, the Secretary may deem a skilled
nursing facility to be an originating site under paragraph
(4)(C)(ii) of such section beginning on January 1, 2006.
Subtitle C--Provisions Relating to Parts A and B
SEC. 121. 1-YEAR INCREASE FOR HOME HEALTH SERVICES FURNISHED
IN A RURAL AREA.
(a) In General.--With respect to episodes and visits ending
on or after April 1, 2004, and before April 1, 2005, in the
case of home health services furnished in a rural area (as
defined in section 1886(d)(2)(D) of the Social Security Act
(42 U.S.C. 1395ww(d)(2)(D))), the Secretary shall increase
the payment amount otherwise made under section 1895 of such
Act (42 U.S.C. 1395fff ) for such services by 5 percent.
(b) Waiving Budget Neutrality.--The Secretary shall not
reduce the standard prospective payment amount (or amounts)
under section 1895 of the Social Security Act (42 U.S.C.
1395fff ) applicable to home health services furnished during
a period to offset the increase in payments resulting from
the application of subsection (a).
(c) No Effect on Subsequent Periods.--The payment increase
provided under subsection (a) for a period under such
subsection--
(1) shall not apply to episodes and visits ending after
such period; and
(2) shall not be taken into account in calculating the
payment amounts applicable for episodes and visits occurring
after such period.
SEC. 122. REDISTRIBUTION OF UNUSED RESIDENT POSITIONS.
(a) In General.--Section 1886(h) (42 U.S.C. 1395ww(h)(4))
is amended--
(1) in paragraph (4)(F)(i), by inserting ``subject to
paragraph (7),'' after ``October 1, 1997,'';
(2) in paragraph (4)(H)(i), by inserting ``and subject to
paragraph (7),'' after ``subparagraphs (F) and (G)''; and
(3) by adding at the end the following new paragraph:
``(7) Redistribution of unused resident positions.--
``(A) Reduction in limit based on unused positions.--
``(i) Programs subject to reduction.--
``(I) In general.--Except as provided in subclause (II), if
a hospital's reference resident level (specified in clause
(ii)) is less than the otherwise applicable resident limit
(as defined in subparagraph (C)(ii)), effective for portions
of cost reporting periods occurring on or after July 1, 2005,
the otherwise applicable resident limit shall be reduced by
75 percent of the difference between such otherwise
applicable resident limit and such reference resident level.
``(II) Exception for small rural hospitals.--This
subparagraph shall not apply to a hospital located in a rural
area (as defined in subsection (d)(2)(D)(ii)) with fewer than
250 acute care inpatient beds.
``(ii) Reference resident level.--
``(I) In general.--Except as otherwise provided in
subclauses (II) and (III), the reference resident level
specified in this clause for a hospital is the resident level
for the most recent cost reporting period of the hospital
ending on or before September 30, 2002, for which a cost
report has been settled (or, if not, submitted (subject to
audit)), as determined by the Secretary.
``(II) Use of most recent accounting period to recognize
expansion of existing programs.--If a hospital submits a
timely request to increase its resident level due to an
expansion of an existing residency training program that is
not reflected on the most recent settled cost report, after
audit and subject to the discretion of the Secretary, the
reference resident level for such hospital is the resident
level for the cost reporting period that includes July 1,
2003, as determined by the Secretary.
``(III) Expansions under newly approved programs.--Upon the
timely request of a hospital, the Secretary shall adjust the
reference resident level specified under subclause (I) or
(II) to include the number of medical residents that were
approved in an application for a medical residency training
program that was approved by an appropriate accrediting
organization (as determined by the Secretary) before January
1, 2002, but which was not in operation during the cost
reporting period used under subclause (I) or (II), as the
case may be, as determined by the Secretary.
``(iii) Affiliation.--The provisions of clause (i) shall be
applied to hospitals which are members of the same affiliated
group (as defined by the Secretary under paragraph
(4)(H)(ii)) as of July 1, 2003.
``(B) Redistribution.--
``(i) In general.--The Secretary is authorized to increase
the otherwise applicable resident limit for each qualifying
hospital that submits a timely application under this
subparagraph by such number as the Secretary may approve for
portions of cost reporting periods occurring on or after July
1, 2005. The aggregate number of increases in the otherwise
applicable resident limits under this subparagraph may not
exceed the Secretary's estimate of the aggregate reduction in
such limits attributable to subparagraph (A).
``(ii) Considerations in redistribution.--In determining
for which hospitals the increase in the otherwise applicable
resident limit is provided under clause (i), the Secretary
shall take into account the demonstrated likelihood of the
hospital filling the positions within the first 3 cost
reporting periods beginning on or after July 1, 2005, made
available under this subparagraph, as determined by the
Secretary.
``(iii) Priority for rural and small urban areas.--In
determining for which hospitals and residency training
programs an increase in the otherwise applicable resident
limit is provided under clause (i), the Secretary shall
distribute the increase to programs of hospitals located in
the following priority order:
``(I) First, to hospitals located in rural areas (as
defined in subsection (d)(2)(D)(ii)).
``(II) Second, to hospitals located in urban areas that are
not large urban areas (as defined for purposes of subsection
(d)).
``(III) Third, to other hospitals in a State if the
residency training program involved is in a specialty for
which there are not other residency training programs in the
State.
Increases of residency limits within the same priority
category under this clause shall be determined by the
Secretary.
``(iv) Limitation.--In no case shall more than 25 full-time
equivalent additional residency positions be made available
under this subparagraph with respect to any hospital.
``(v) Application of locality adjusted national average per
resident amount.--With respect to additional residency
positions in a hospital attributable to the increase provided
under this subparagraph, notwithstanding any other provision
of this subsection, the approved FTE resident amount is
deemed to be equal to the locality adjusted national average
per resident amount computed under paragraph (4)(E) for that
hospital.
``(vi) Construction.--Nothing in this subparagraph shall be
construed as permitting the redistribution of reductions in
residency positions attributable to voluntary reduction
programs under paragraph (6), under a demonstration project
approved as of October 31, 2003, under the authority of
section 402 of Public Law 90-248, or as affecting the ability
of a hospital to establish new medical residency training
programs under paragraph (4)(H).
``(C) Resident level and limit defined.--In this paragraph:
``(i) Resident level.--The term `resident level' means,
with respect to a hospital, the total number of full-time
equivalent residents, before the application of weighting
factors (as determined under paragraph (4)), in the fields of
allopathic and osteopathic medicine for the hospital.
``(ii) Otherwise applicable resident limit.--The term
`otherwise applicable resident limit' means, with respect to
a hospital, the limit otherwise applicable under
subparagraphs (F)(i) and (H) of paragraph (4) on the resident
level for the hospital determined without regard to this
paragraph.
``(D) Judicial review.--There shall be no administrative or
judicial review under section 1869, 1878, or otherwise, with
respect to determinations made under this paragraph.''.
(b) Conforming Provisions.--(1) Section 1886(d)(5)(B) (42
U.S.C. 1395ww(d)(5)(B)) is amended--
(A) in the second sentence of clause (ii), by striking
``For discharges'' and inserting ``Subject to clause (ix),
for discharges''; and
(B) in clause (v), by adding at the end the following:
``The provisions of subsection (h)(7) shall apply with
respect to the first sentence of this clause in the same
manner as it applies with respect to subsection
(h)(4)(F)(i).''; and
(C) by adding at the end the following new clause:
``(ix) For discharges occurring on or after July 1, 2005,
insofar as an additional payment amount under this
subparagraph is attributable to resident positions
redistributed to a hospital under subsection (h)(7)(B), in
computing the indirect teaching adjustment factor under
clause (ii) the adjustment shall be computed in a manner as
if `c' were equal to 0.66 with respect to such resident
positions.''.
(2) Chapter 35 of title 44, United States Code, shall not
apply with respect to applications under section 1886(h)(7)
of the Social Security Act, as added by subsection (a)(3).
(c) Report on Extension of Applications Under
Redistribution Program.--Not later than July 1, 2005, the
Secretary shall submit to Congress a report containing
recommendations regarding whether to extend the deadline for
applications for an increase in resident limits under section
1886(h)(4)(I)(ii)(II) of the Social Security Act (as added by
subsection (a)).
[[Page S15429]]
Subtitle D--Other Provisions
SEC. 131. PROVIDING SAFE HARBOR FOR CERTAIN COLLABORATIVE
EFFORTS THAT BENEFIT MEDICALLY UNDERSERVED
POPULATIONS.
(a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-
7(b)(3)), as amended by section 101(e)(2), is amended--
(1) in subparagraph (F), by striking ``and'' after the
semicolon at the end;
(2) in subparagraph (G), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(H) any remuneration between a health center entity
described under clause (i) or (ii) of section 1905(l)(2)(B)
and any individual or entity providing goods, items,
services, donations, loans, or a combination thereof, to such
health center entity pursuant to a contract, lease, grant,
loan, or other agreement, if such agreement contributes to
the ability of the health center entity to maintain or
increase the availability, or enhance the quality, of
services provided to a medically underserved population
served by the health center entity.''.
(b) Rulemaking for Exception for Health Center Entity
Arrangements.--
(1) Establishment.--
(A) In general.--The Secretary shall establish, on an
expedited basis, standards relating to the exception
described in section 1128B(b)(3)(H) of the Social Security
Act, as added by subsection (a), for health center entity
arrangements to the antikickback penalties.
(B) Factors to consider.--The Secretary shall consider the
following factors, among others, in establishing standards
relating to the exception for health center entity
arrangements under subparagraph (A):
(i) Whether the arrangement between the health center
entity and the other party results in savings of Federal
grant funds or increased revenues to the health center
entity.
(ii) Whether the arrangement between the health center
entity and the other party restricts or limits an
individual's freedom of choice.
(iii) Whether the arrangement between the health center
entity and the other party protects a health care
professional's independent medical judgment regarding
medically appropriate treatment.
The Secretary may also include other standards and criteria
that are consistent with the intent of Congress in enacting
the exception established under this section.
(2) Deadline.--Not later than 1 year after the date of the
enactment of this Act the Secretary shall publish final
regulations establishing the standards described in paragraph
(1).
SEC. 132. OFFICE OF RURAL HEALTH POLICY IMPROVEMENTS.
Section 711(b) (42 U.S.C. 912(b)) is amended--
(1) in paragraph (3), by striking ``and'' after the comma
at the end;
(2) in paragraph (4), by striking the period at the end and
inserting ``, and''; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) administer grants, cooperative agreements, and
contracts to provide technical assistance and other
activities as necessary to support activities related to
improving health care in rural areas.''.
SEC. 133. MEDPAC STUDY ON RURAL HOSPITAL PAYMENT ADJUSTMENTS.
(a) In General.--The Medicare Payment Advisory Commission
shall conduct a study of the impact of sections 401 through
406, 411, 416, and 505. The Commission shall analyze the
effect on total payments, growth in costs, capital spending,
and such other payment effects under those sections.
(b) Reports.--
(1) Interim report.--Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress an interim report on the matters studied
under subsection (a) with respect only to changes to the
critical access hospital provisions under section 105.
(2) Final report.--Not later than 3 years after the date of
the enactment of this Act, the Commission shall submit to
Congress a final report on all matters studied under
subsection (a).
SEC. 134. FRONTIER EXTENDED STAY CLINIC DEMONSTRATION
PROJECT.
(a) Authority To Conduct Demonstration Project.--The
Secretary shall waive such provisions of the medicare program
established under title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.) as are necessary to conduct a
demonstration project under which frontier extended stay
clinics described in subsection (b) in isolated rural areas
are treated as providers of items and services under the
medicare program.
(b) Clinics Described.--A frontier extended stay clinic is
described in this subsection if the clinic--
(1) is located in a community where the closest short-term
acute care hospital or critical access hospital is at least
75 miles away from the community or is inaccessible by public
road; and
(2) is designed to address the needs of--
(A) seriously or critically ill or injured patients who,
due to adverse weather conditions or other reasons, cannot be
transferred quickly to acute care referral centers; or
(B) patients who need monitoring and observation for a
limited period of time.
(c) Specification of Codes.--The Secretary shall determine
the appropriate life-safety codes for such clinics that treat
patients for needs referred to in subsection (b)(2).
(d) Funding.--
(1) In general.--Subject to paragraph (2), there are
authorized to be appropriated, in appropriate part from the
Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund, such sums as are
necessary to conduct the demonstration project under this
section.
(2) Budget Neutral Implementation.--In conducting the
demonstration project under this section, the Secretary shall
ensure that the aggregate payments made by the Secretary
under the medicare program do not exceed the amount which the
Secretary would have paid under the medicare program if the
demonstration project under this section was not implemented.
(e) 3-Year Period.--The Secretary shall conduct the
demonstration under this section for a 3-year period.
(f) Report.--Not later than the date that is 1 year after
the date on which the demonstration project concludes, the
Secretary shall submit to Congress a report on the
demonstration project, together with such recommendations for
legislation or administrative action as the Secretary
determines appropriate.
(g) Definitions.--In this section, the terms ``hospital''
and ``critical access hospital'' have the meanings given such
terms in subsections (e) and (mm), respectively, of section
1861 of the Social Security Act (42 U.S.C. 1395x).
TITLE II--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 201. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATES.
(a) In General.--Section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended--
(1) by striking ``and'' at the end of subclause (XVIII);
(2) by striking subclause (XIX); and
(3) by inserting after subclause (XVIII) the following new
subclauses:
``(XIX) for each of fiscal years 2004 through 2007, subject
to clause (vii), the market basket percentage increase for
hospitals in all areas; and
``(XX) for fiscal year 2008 and each subsequent fiscal
year, the market basket percentage increase for hospitals in
all areas.''.
(b) Submission of Hospital Quality Data.--Section
1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)) is amended by
adding at the end the following new clause:
``(vii)(I) For purposes of clause (i)(XIX) for each of
fiscal years 2005 through 2007, in a case of a subsection (d)
hospital that does not submit data to the Secretary in
accordance with subclause (II) with respect to such a fiscal
year, the applicable percentage increase under such clause
for such fiscal year shall be reduced by 0.4 percentage
points. Such reduction shall apply only with respect to the
fiscal year involved, and the Secretary shall not take into
account such reduction in computing the applicable percentage
increase under clause (i)(XIX) for a subsequent fiscal year.
``(II) Each subsection (d) hospital shall submit to the
Secretary quality data (for a set of 10 indicators
established by the Secretary as of November 1, 2003) that
relate to the quality of care furnished by the hospital in
inpatient settings in a form and manner, and at a time,
specified by the Secretary for purposes of this clause, but
with respect to fiscal year 2005, the Secretary shall provide
for a 30-day grace period for the submission of data by a
hospital.''.
(c) GAO Study and Report on Appropriateness of Payments
Under the Prospective Payment System for Inpatient Hospital
Services.--
(1) Study.--The Comptroller General of the United States,
using the most current data available, shall conduct a study
to determine--
(A) the appropriate level and distribution of payments in
relation to costs under the prospective payment system under
section 1886 of the Social Security Act (42 U.S.C. 1395ww)
for inpatient hospital services furnished by subsection (d)
hospitals (as defined in subsection (d)(1)(B) of such
section); and
(B) whether there is a need to adjust such payments under
such system to reflect legitimate differences in costs across
different geographic areas, kinds of hospitals, and types of
cases.
(2) Report.--Not later than 24 months after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report on the study
conducted under paragraph (1) together with such
recommendations for legislative and administrative action as
the Comptroller General determines appropriate.
SEC. 202. REVISION OF THE INDIRECT MEDICAL EDUCATION (IME)
ADJUSTMENT PERCENTAGE.
(a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C.
1395ww(d)(5)(B)(ii)) is amended--
(1) in subclause (VI), by striking ``and'' after the
semicolon at the end;
(2) in subclause (VII)--
(A) by inserting ``and before April 1, 2004,'' after ``on
or after October 1, 2002,''; and
(B) by striking the period at the end and inserting a
semicolon; and
(3) by adding at the end the following new subclauses:
``(VIII) on or after April 1, 2004, and before October 1,
2004, `c' is equal to 1.47;
``(IX) during fiscal year 2005, `c' is equal to 1.42;
``(X) during fiscal year 2006, `c' is equal to 1.37;
``(XI) during fiscal year 2007, `c' is equal to 1.32; and
[[Page S15430]]
``(XII) on or after October 1, 2007, `c' is equal to
1.35.''.
(b) Conforming Amendment Relating to Determination of
Standardized Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C.
1395ww(d)(2)(C)(i)) is amended--
(1) by striking ``1999 or'' and inserting ``1999,''; and
(2) by inserting ``, or the Medicare Provider Restoration
Act of 2003'' after ``2000''.
(c) Effective Date.--The amendments made by this section
shall apply to discharges occurring on or after April 1,
2004.
SEC. 203. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER
INPATIENT HOSPITAL PROSPECTIVE PAYMENT SYSTEM.
(a) Improving Timeliness of Data Collection.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is amended by
adding at the end the following new clause:
``(vii) Under the mechanism under this subparagraph, the
Secretary shall provide for the addition of new diagnosis and
procedure codes in April 1 of each year, but the addition of
such codes shall not require the Secretary to adjust the
payment (or diagnosis-related group classification) under
this subsection until the fiscal year that begins after such
date.''.
(b) Eligibility Standard for Technology Outliers.--
(1) Adjustment of threshold.--Section 1886(d)(5)(K)(ii)(I)
(42 U.S.C. 1395ww(d)(5)(K)(ii)(I)) is amended by inserting
``(applying a threshold specified by the Secretary that is
the lesser of 75 percent of the standardized amount
(increased to reflect the difference between cost and
charges) or 75 percent of one standard deviation for the
diagnosis-related group involved)'' after ``is inadequate''.
(2) Process for public input.--Section 1886(d)(5)(K) (42
U.S.C. 1395ww(d)(5)(K)), as amended by subsection (a), is
amended--
(A) in clause (i), by adding at the end the following:
``Such mechanism shall be modified to meet the requirements
of clause (viii).''; and
(B) by adding at the end the following new clause:
``(viii) The mechanism established pursuant to clause (i)
shall be adjusted to provide, before publication of a
proposed rule, for public input regarding whether a new
service or technology represents an advance in medical
technology that substantially improves the diagnosis or
treatment of individuals entitled to benefits under part A as
follows:
``(I) The Secretary shall make public and periodically
update a list of all the services and technologies for which
an application for additional payment under this subparagraph
is pending.
``(II) The Secretary shall accept comments,
recommendations, and data from the public regarding whether
the service or technology represents a substantial
improvement.
``(III) The Secretary shall provide for a meeting at which
organizations representing hospitals, physicians, such
individuals, manufacturers, and any other interested party
may present comments, recommendations, and data to the
clinical staff of the Centers for Medicare & Medicaid
Services before publication of a notice of proposed
rulemaking regarding whether service or technology represents
a substantial improvement.''.
(c) Preference for Use of DRG Adjustment.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)), as amended by
subsections (a) and (b), is amended by adding at the end the
following new clause:
``(ix) Before establishing any add-on payment under this
subparagraph with respect to a new technology, the Secretary
shall seek to identify one or more diagnosis-related groups
associated with such technology, based on similar clinical or
anatomical characteristics and the cost of the technology.
Within such groups the Secretary shall assign an eligible new
technology into a diagnosis-related group where the average
costs of care most closely approximate the costs of care of
using the new technology. No add-on payment under this
subparagraph shall be made with respect to such new
technology and this clause shall not affect the application
of paragraph (4)(C)(iii).''.
(d) Establishment of New Funding for Hospital Inpatient
Technology.--
(1) In general.--Section 1886(d)(5)(K)(ii)(III) (42 U.S.C.
1395ww(d)(5)(K)(ii)(III)) is amended by striking ``subject to
paragraph (4)(C)(iii),''.
(2) Not budget neutral.--There shall be no reduction or
other adjustment in payments under section 1886 of the Social
Security Act because an additional payment is provided under
subsection (d)(5)(K)(ii)(III) of such section.
(e) Effective Date.--
(1) In general.--The Secretary shall implement the
amendments made by this section so that they apply to
classification for fiscal years beginning with fiscal year
2005.
(2) Reconsiderations of applications for fiscal year 2004
that are denied.--In the case of an application for a
classification of a medical service or technology as a new
medical service or technology under section 1886(d)(5)(K) of
the Social Security Act (42 U.S.C. 1395ww(d)(5)(K)) that was
filed for fiscal year 2004 and that is denied--
(A) the Secretary shall automatically reconsider the
application as an application for fiscal year 2005 under the
amendments made by this section; and
(B) the maximum time period otherwise permitted for such
classification of the service or technology shall be extended
by 12 months.
SEC. 204. INCREASE IN FEDERAL RATE FOR HOSPITALS IN PUERTO
RICO.
Section 1886(d)(9) (42 U.S.C. 1395ww(d)(9)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``for discharges beginning
on or after October 1, 1997, 50 percent (and for discharges
between October 1, 1987, and September 30, 1997, 75
percent)'' and inserting ``the applicable Puerto Rico
percentage (specified in subparagraph (E))''; and
(B) in clause (ii), by striking ``for discharges beginning
in a fiscal year beginning on or after October 1, 1997, 50
percent (and for discharges between October 1, 1987, and
September 30, 1997, 25 percent)'' and inserting ``the
applicable Federal percentage (specified in subparagraph
(E))''; and
(2) by adding at the end the following new subparagraph:
``(E) For purposes of subparagraph (A), for discharges
occurring--
``(i) on or after October 1, 1987, and before October 1,
1997, the applicable Puerto Rico percentage is 75 percent and
the applicable Federal percentage is 25 percent;
``(ii) on or after October 1, 1997, and before April 1,
2004, the applicable Puerto Rico percentage is 50 percent and
the applicable Federal percentage is 50 percent;
``(iii) on or after April 1, 2004, and before October 1,
2004, the applicable Puerto Rico percentage is 37.5 percent
and the applicable Federal percentage is 62.5 percent; and
``(iv) on or after October 1, 2004, the applicable Puerto
Rico percentage is 25 percent and the applicable Federal
percentage is 75 percent.''.
SEC. 205. WAGE INDEX ADJUSTMENT RECLASSIFICATION REFORM.
(a) In General.--Section 1886(d) (42 U.S.C. 1395ww(d)), as
amended by section 106, is amended by adding at the end the
following new paragraph:
``(13)(A) In order to recognize commuting patterns among
geographic areas, the Secretary shall establish a process
through application or otherwise for an increase of the wage
index applied under paragraph (3)(E) for subsection (d)
hospitals located in a qualifying county described in
subparagraph (B) in the amount computed under subparagraph
(D) based on out-migration of hospital employees who reside
in that county to any higher wage index area.
``(B) The Secretary shall establish criteria for a
qualifying county under this subparagraph based on the out-
migration referred to in subparagraph (A) and differences in
the area wage indices. Under such criteria the Secretary
shall, utilizing such data as the Secretary determines to be
appropriate, establish--
``(i) a threshold percentage, established by the Secretary,
of the weighted average of the area wage index or indices for
the higher wage index areas involved;
``(ii) a threshold (of not less than 10 percent) for
minimum out-migration to a higher wage index area or areas;
and
``(iii) a requirement that the average hourly wage of the
hospitals in the qualifying county equals or exceeds the
average hourly wage of all the hospitals in the area in which
the qualifying county is located.
``(C) For purposes of this paragraph, the term `higher wage
index area' means, with respect to a county, an area with a
wage index that exceeds that of the county.
``(D) The increase in the wage index under subparagraph (A)
for a qualifying county shall be equal to the percentage of
the hospital employees residing in the qualifying county who
are employed in any higher wage index area multiplied by the
sum of the products, for each higher wage index area of--
``(i) the difference between--
``(I) the wage index for such higher wage index area, and
``(II) the wage index of the qualifying county; and
``(ii) the number of hospital employees residing in the
qualifying county who are employed in such higher wage index
area divided by the total number of hospital employees
residing in the qualifying county who are employed in any
higher wage index area.
``(E) The process under this paragraph may be based upon
the process used by the Medicare Geographic Classification
Review Board under paragraph (10). As the Secretary
determines to be appropriate to carry out such process, the
Secretary may require hospitals (including subsection (d)
hospitals and other hospitals) and critical access hospitals,
as required under section 1866(a)(1)(T), to submit data
regarding the location of residence, or the Secretary may use
data from other sources.
``(F) A wage index increase under this paragraph shall be
effective for a period of 3 fiscal years, except that the
Secretary shall establish procedures under which a subsection
(d) hospital may elect to waive the application of such wage
index increase.
``(G) A hospital in a county that has a wage index increase
under this paragraph for a period and that has not waived the
application of such an increase under subparagraph (F) is not
eligible for reclassification under paragraph (8) or (10)
during that period.
``(H) Any increase in a wage index under this paragraph for
a county shall not be taken into account for purposes of--
``(i) computing the wage index for portions of the wage
index area (not including the county) in which the county is
located; or
``(ii) applying any budget neutrality adjustment with
respect to such index under paragraph (8)(D).
[[Page S15431]]
``(I) The thresholds described in subparagraph (B), data on
hospital employees used under this paragraph, and any
determination of the Secretary under the process described in
subparagraph (E) shall be final and shall not be subject to
judicial review.''.
(b) Conforming Amendments.--Section 1866(a)(1) (42 U.S.C.
1395cc(a)(1)) is amended--
(1) in subparagraph (R), by striking ``and'' at the end;
(2) in subparagraph (S), by striking the period at the end
and inserting ``, and''; and
(3) by inserting after subparagraph (S) the following new
subparagraph:
``(T) in the case of hospitals and critical access
hospitals, to furnish to the Secretary such data as the
Secretary determines appropriate pursuant to subparagraph (E)
of section 1886(d)(12) to carry out such section.''.
(c) Effective Date.--The amendments made by this section
shall first apply to the wage index for discharges occurring
on or after October 1, 2004. In initially implementing such
amendments, the Secretary may modify the deadlines otherwise
applicable under clauses (ii) and (iii)(I) of section
1886(d)(10)(C) of the Social Security Act (42 U.S.C.
1395ww(d)(10)(C)), for submission of, and actions on,
applications relating to changes in hospital geographic
reclassification.
SEC. 206. LIMITATION ON CHARGES FOR INPATIENT HOSPITAL
CONTRACT HEALTH SERVICES PROVIDED TO INDIANS BY
MEDICARE PARTICIPATING HOSPITALS.
(a) In General.--Section 1866(a)(1) (42 U.S.C.
1395cc(a)(1)), as amended by section 205(b), is amended--
(1) in subparagraph (S), by striking ``and'' at the end;
(2) in subparagraph (T), by striking the period and
inserting ``, and''; and
(3) by inserting after subparagraph (T) the following new
subparagraph:
``(U) in the case of hospitals which furnish inpatient
hospital services for which payment may be made under this
title, to be a participating provider of medical care both--
``(i) under the contract health services program funded by
the Indian Health Service and operated by the Indian Health
Service, an Indian tribe, or tribal organization (as those
terms are defined in section 4 of the Indian Health Care
Improvement Act), with respect to items and services that are
covered under such program and furnished to an individual
eligible for such items and services under such program; and
``(ii) under any program funded by the Indian Health
Service and operated by an urban Indian organization with
respect to the purchase of items and services for an eligible
urban Indian (as those terms are defined in such section 4),
in accordance with regulations promulgated by the Secretary
regarding admission practices, payment methodology, and rates
of payment (including the acceptance of no more than such
payment rate as payment in full for such items and
services.''.
(b) Effective Date.--The amendments made by this section
shall apply as of a date specified by the Secretary of Health
and Human Services (but in no case later than 1 year after
the date of enactment of this Act) to medicare participation
agreements in effect (or entered into) on or after such date.
(c) Promulgation of Regulations.--The Secretary shall
promulgate regulations to carry out the amendments made by
subsection (a).
SEC. 207. CLARIFICATIONS TO CERTAIN EXCEPTIONS TO MEDICARE
LIMITS ON PHYSICIAN REFERRALS.
(a) Limits on Physician Referrals.--
(1) Ownership and investment interests in whole
hospitals.--
(A) In general.--Section 1877(d)(3) (42 U.S.C.
1395nn(d)(3)) is amended--
(i) by striking ``, and'' at the end of subparagraph (A)
and inserting a semicolon; and
(ii) by redesignating subparagraph (B) as subparagraph (C)
and inserting after subparagraph (A) the following new
subparagraph:
``(B) effective for the 18-month period beginning on the
date of the enactment of the Medicare Provider Restoration
Act of 2003, the hospital is not a specialty hospital (as
defined in subsection (h)(7)); and''.
(B) Definition.--Section 1877(h) (42 U.S.C. 1395nn(h)) is
amended by adding at the end the following:
``(7) Specialty hospital.--
``(A) In general.--For purposes of this section, except as
provided in subparagraph (B), the term `specialty hospital'
means a subsection (d) hospital (as defined in section
1886(d)(1)(B)) that is primarily or exclusively engaged in
the care and treatment of one of the following categories:
``(i) Patients with a cardiac condition.
``(ii) Patients with an orthopedic condition.
``(iii) Patients receiving a surgical procedure.
``(iv) Any other specialized category of services that the
Secretary designates as inconsistent with the purpose of
permitting physician ownership and investment interests in a
hospital under this section.
``(B) Exception.--For purposes of this section, the term
`specialty hospital' does not include any hospital--
``(i) determined by the Secretary--
``(I) to be in operation before November 18, 2003; or
``(II) under development as of such date;
``(ii) for which the number of physician investors at any
time on or after such date is no greater than the number of
such investors as of such date;
``(iii) for which the type of categories described in
subparagraph (A) at any time on or after such date is no
different than the type of such categories as of such date;
``(iv) for which any increase in the number of beds occurs
only in the facilities on the main campus of the hospital and
does not exceed 50 percent of the number of beds in the
hospital as of November 18, 2003, or 5 beds, whichever is
greater; and
``(v) that meets such other requirements as the Secretary
may specify.''.
(2) Ownership and investment interests in a rural
provider.--Section 1877(d)(2) (42 U.S.C. 1395nn(d)(2)) is
amended to read as follows:
``(2) Rural providers.--In the case of designated health
services furnished in a rural area (as defined in section
1886(d)(2)(D)) by an entity, if--
``(A) substantially all of the designated health services
furnished by the entity are furnished to individuals residing
in such a rural area; and
``(B) effective for the 18-month period beginning on the
date of the enactment of the Medicare Provider Restoration
Act of 2003, the entity is not a specialty hospital (as
defined in subsection (h)(7)).''.
(b) Application of Exception for Hospitals Under
Development.--For purposes of section 1877(h)(7)(B)(i)(II) of
the Social Security Act, as added by subsection (a)(1)(B), in
determining whether a hospital is under development as of
November 18, 2003, the Secretary shall consider--
(1) whether architectural plans have been completed,
funding has been received, zoning requirements have been met,
and necessary approvals from appropriate State agencies have
been received; and
(2) any other evidence the Secretary determines would
indicate whether a hospital is under development as of such
date.
(c) Studies.--
(1) MedPAC study.--The Medicare Payment Advisory
Commission, in consultation with the Comptroller General of
the United States, shall conduct a study to determine--
(A) any differences in the costs of health care services
furnished to patients by physician-owned specialty hospitals
and the costs of such services furnished by local full-
service community hospitals within specific diagnosis-related
groups;
(B) the extent to which specialty hospitals, relative to
local full-service community hospitals, treat patients in
certain diagnosis-related groups within a category, such as
cardiology, and an analysis of the selection;
(C) the financial impact of physician-owned specialty
hospitals on local full-service community hospitals;
(D) how the current diagnosis-related group system should
be updated to better reflect the cost of delivering care in a
hospital setting; and
(E) the proportions of payments received, by type of payer,
between the specialty hospitals and local full-service
community hospitals.
(2) HHS study.--The Secretary shall conduct a study of a
representative sample of specialty hospitals--
(A) to determine the percentage of patients admitted to
physician-owned specialty hospitals who are referred by
physicians with an ownership interest;
(B) to determine the referral patterns of physician owners,
including the percentage of patients they referred to
physician-owned specialty hospitals and the percentage of
patients they referred to local full-service community
hospitals for the same condition;
(C) to compare the quality of care furnished in physician-
owned specialty hospitals and in local full-service community
hospitals for similar conditions and patient satisfaction
with such care; and
(D) to assess the differences in uncompensated care, as
defined by the Secretary, between the specialty hospital and
local full-service community hospitals, and the relative
value of any tax exemption available to such hospitals.
(3) Reports.--Not later than 15 months after the date of
the enactment of this Act, the Commission and the Secretary,
respectively, shall each submit to Congress a report on the
studies conducted under paragraphs (1) and (2), respectively,
and shall include any recommendations for legislation or
administrative changes.
SEC. 208. 1-TIME APPEALS PROCESS FOR HOSPITAL WAGE INDEX
CLASSIFICATION.
(a) Establishment of Process.--
(1) In general.--The Secretary shall establish not later
than January 1, 2004, by instruction or otherwise a process
under which a hospital may appeal the wage index
classification otherwise applicable to the hospital and
select another area within the State (or, at the discretion
of the Secretary, within a contiguous State) to which to be
reclassified.
(2) Process requirements.--The process established under
paragraph (1) shall be consistent with the following:
(A) Such an appeal may be filed as soon as possible after
the date of the enactment of this Act but shall be filed by
not later than February 15, 2004.
(B) Such an appeal shall be heard by the Medicare
Geographic Reclassification Review Board.
(C) There shall be no further administrative or judicial
review of a decision of such Board.
[[Page S15432]]
(3) Reclassification upon successful appeal.--If the
Medicare Geographic Reclassification Review Board determines
that the hospital is a qualifying hospital (as defined in
subsection (c)), the hospital shall be reclassified to the
area selected under paragraph (1). Such reclassification
shall apply with respect to discharges occurring during the
3-year period beginning with April 1, 2004.
(4) Inapplicability of certain provisions.--Except as the
Secretary may provide, the provisions of paragraphs (8) and
(10) of section 1886(d) of the Social Security Act (42 U.S.C.
1395ww(d)) shall not apply to an appeal under this section.
(b) Application of Reclassification.--In the case of an
appeal decided in favor of a qualifying hospital under
subsection (a), the wage index reclassification shall not
affect the wage index computation for any area or for any
other hospital and shall not be effected in a budget neutral
manner. The provisions of this section shall not affect
payment for discharges occurring after the end of the 3-year-
period referred to in subsection (a).
(c) Qualifying Hospital Defined.--For purposes of this
section, the term ``qualifying hospital'' means a subsection
(d) hospital (as defined in section 1886(d)(1)(B) of the
Social Security Act, 42 U.S.C. 1395ww(d)(1)(B)) that--
(1) does not qualify for a change in wage index
classification under paragraph (8) or (10) of section 1886(d)
of the Social Security Act (42 U.S.C. 1395ww(d)) on the basis
of requirements relating to distance or commuting; and
(2) meets such other criteria, such as quality, as the
Secretary may specify by instruction or otherwise.
The Secretary may modify the wage comparison guidelines
promulgated under section 1886(d)(10)(D) of such Act (42
U.S.C. 1395ww(d)(10)(D)) in carrying out this section.
(d) Wage Index Classification.--For purposes of this
section, the term ``wage index classification'' means the
geographic area in which it is classified for purposes of
determining for a fiscal year the factor used to adjust the
DRG prospective payment rate under section 1886(d) of the
Social Security Act (42 U.S.C. 1395ww(d)) for area
differences in hospital wage levels that applies to such
hospital under paragraph (3)(E) of such section.
(e) Limitation on Expenditures.--The aggregate amount of
additional expenditures resulting from the application of
this section shall not exceed $900,000,000.
(f) Transitional Extension.--Any reclassification of a
county or other area made by Act of Congress for purposes of
making payments under section 1886(d) of the Social Security
Act (42 U.S.C. 1395ww(d)) that expired on September 30, 2003,
shall be deemed to be in effect during the period beginning
on January 1, 2004, and ending on September 30, 2004.
Subtitle B--Other Provisions
SEC. 211. PAYMENT FOR COVERED SKILLED NURSING FACILITY
SERVICES.
(a) Adjustment to RUGs for AIDS Residents.--Paragraph (12)
of section 1888(e) (42 U.S.C. 1395yy(e)) is amended to read
as follows:
``(12) Adjustment for residents with aids.--
``(A) In general.--Subject to subparagraph (B), in the case
of a resident of a skilled nursing facility who is afflicted
with acquired immune deficiency syndrome (AIDS), the per diem
amount of payment otherwise applicable (determined without
regard to any increase under section 101 of the Medicare,
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999,
or under section 314(a) of Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000), shall be
increased by 128 percent to reflect increased costs
associated with such residents.
``(B) Sunset.--Subparagraph (A) shall not apply on and
after such date as the Secretary certifies that there is an
appropriate adjustment in the case mix under paragraph
(4)(G)(i) to compensate for the increased costs associated
with residents described in such subparagraph.''.
(b) Effective Date.--The amendment made by paragraph (1)
shall apply to services furnished on or after October 1,
2004.
SEC. 212. COVERAGE OF HOSPICE CONSULTATION SERVICES.
(a) Coverage of Hospice Consultation Services.--Section
1812(a) (42 U.S.C. 1395d(a)) is amended--
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``; and''; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) for individuals who are terminally ill, have not made
an election under subsection (d)(1), and have not previously
received services under this paragraph, services that are
furnished by a physician (as defined in section 1861(r)(1))
who is either the medical director or an employee of a
hospice program and that--
``(A) consist of--
``(i) an evaluation of the individual's need for pain and
symptom management, including the individual's need for
hospice care; and
``(ii) counseling the individual with respect to hospice
care and other care options; and
``(B) may include advising the individual regarding
advanced care planning.''.
(b) Payment.--Section 1814(i) (42 U.S.C. 1395f(i)) is
amended by adding at the end the following new paragraph:
``(4) The amount paid to a hospice program with respect to
the services under section 1812(a)(5) for which payment may
be made under this part shall be equal to an amount
established for an office or other outpatient visit for
evaluation and management associated with presenting problems
of moderate severity and requiring medical decisionmaking of
low complexity under the fee schedule established under
section 1848(b), other than the portion of such amount
attributable to the practice expense component.''.
(c) Conforming Amendment.--Section 1861(dd)(2)(A)(i) (42
U.S.C. 1395x(dd)(2)(A)(i)) is amended by inserting before the
comma at the end the following: ``and services described in
section 1812(a)(5)''.
(d) Effective Date.--The amendments made by this section
shall apply to services provided by a hospice program on or
after January 1, 2005.
SEC. 213. STUDY ON PORTABLE DIAGNOSTIC ULTRASOUND SERVICES
FOR BENEFICIARIES IN SKILLED NURSING
FACILITIES.
(a) Study.--The Comptroller General of the United States
shall conduct a study of portable diagnostic ultrasound
services furnished to medicare beneficiaries in skilled
nursing facilities. Such study shall consider the following:
(1) Types of equipment; training.--The types of portable
diagnostic ultrasound services furnished to such
beneficiaries, the types of portable ultrasound equipment
used to furnish such services, and the technical skills, or
training, or both, required for technicians to furnish such
services.
(2) Clinical appropriateness.--The clinical appropriateness
of transporting portable diagnostic ultrasound diagnostic and
technicians to patients in skilled nursing facilities as
opposed to transporting such patients to a hospital or other
facility that furnishes diagnostic ultrasound services.
(3) Financial impact.--The financial impact if Medicare
were make a separate payment for portable ultrasound
diagnostic services, including the impact of separate
payments--
(A) for transportation and technician services for
residents during a resident in a part A stay, that would
otherwise be paid for under the prospective payment system
for covered skilled nursing facility services (under section
1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)); and
(B) for such services for residents in a skilled nursing
facility after a part A stay.
(4) Credentialing requirements.--Whether the Secretary
should establish credentialing or other requirements for
technicians that furnish diagnostic ultrasound services to
medicare beneficiaries.
(b) Report.--Not later than 2 years after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a), and shall include any recommendations for legislation or
administrative change as the Comptroller General determines
appropriate.
TITLE III--PROVISIONS RELATING TO PART B
Subtitle A--Provisions Relating to Physicians' Services
SEC. 301. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.
(a) Update for 2004 and 2005.--
(1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is
amended by adding at the end the following new paragraph:
``(5) Update for 2004 and 2005.--The update to the single
conversion factor established in paragraph (1)(C) for each of
2004 and 2005 shall be not less than 1.5 percent.''.
(2) Conforming amendment.--Paragraph (4)(B) of such section
is amended, in the matter before clause (i), by inserting
``and paragraph (5)'' after ``subparagraph (D)''.
(3) Not treated as change in law and regulation in
sustainable growth rate determination.--The amendments made
by this subsection shall not be treated as a change in law
for purposes of applying section 1848(f)(2)(D) of the Social
Security Act (42 U.S.C. 1395w-4(f)(2)(D)).
(b) Use of 10-Year Rolling Average in Computing Gross
Domestic Product.--
(1) In general.--Section 1848(f)(2)(C) (42 U.S.C. 1395w-
4(f)(2)(C)) is amended--
(A) by striking ``projected'' and inserting ``annual
average''; and
(B) by striking ``from the previous applicable period to
the applicable period involved'' and inserting ``during the
10-year period ending with the applicable period involved''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to computations of the sustainable growth rate
for years beginning with 2003.
SEC. 302. TREATMENT OF PHYSICIANS' SERVICES FURNISHED IN
ALASKA.
Section 1848(e)(1) (42 U.S.C. 1395w-4(e)(1)), as amended by
section 121, is amended--
(1) in subparagraph (A), by striking ``subparagraphs (B),
(C), (E), and (F)'' and inserting ``subparagraphs (B), (C),
(E), (F) and (G)''; and
(2) by adding at the end the following new subparagraph:
``(G) Floor for practice expense, malpractice, and work
geographic indices for services furnished in alaska.--For
purposes of payment for services furnished in Alaska on or
after January 1, 2004, and before
[[Page S15433]]
January 1, 2006, after calculating the practice expense,
malpractice, and work geographic indices in clauses (i),
(ii), and (iii) of subparagraph (A) and in subparagraph (B),
the Secretary shall increase any such index to 1.67 if such
index would otherwise be less than 1.67.''.
SEC. 303. INCLUSION OF PODIATRISTS, DENTISTS, AND
OPTOMETRISTS UNDER PRIVATE CONTRACTING
AUTHORITY.
Section 1802(b)(5)(B) (42 U.S.C. 1395a(b)(5)(B)) is amended
by striking ``section 1861(r)(1)'' and inserting ``paragraphs
(1), (2), (3), and (4) of section 1861(r)''.
SEC. 304. GAO STUDY ON ACCESS TO PHYSICIANS' SERVICES.
(a) Study.--The Comptroller General of the United States
shall conduct a study on access of medicare beneficiaries to
physicians' services under the medicare program. The study
shall include--
(1) an assessment of the use by beneficiaries of such
services through an analysis of claims submitted by
physicians for such services under part B of the medicare
program;
(2) an examination of changes in the use by beneficiaries
of physicians' services over time; and
(3) an examination of the extent to which physicians are
not accepting new medicare beneficiaries as patients.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a). The report shall include a determination whether--
(1) data from claims submitted by physicians under part B
of the medicare program indicate potential access problems
for medicare beneficiaries in certain geographic areas; and
(2) access by medicare beneficiaries to physicians'
services may have improved, remained constant, or
deteriorated over time.
SEC. 305. COLLABORATIVE DEMONSTRATION-BASED REVIEW OF
PHYSICIAN PRACTICE EXPENSE GEOGRAPHIC
ADJUSTMENT DATA.
(a) In General.--Not later than January 1, 2005, the
Secretary shall, in collaboration with State and other
appropriate organizations representing physicians, and other
appropriate persons, review and consider alternative data
sources than those currently used in establishing the
geographic index for the practice expense component under the
medicare physician fee schedule under section
1848(e)(1)(A)(i) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)(A)(i)).
(b) Sites.--The Secretary shall select two physician
payment localities in which to carry out subsection (a). One
locality shall include rural areas and at least one locality
shall be a statewide locality that includes both urban and
rural areas.
(c) Report and Recommendations.--
(1) Report.--Not later than January 1, 2006, the Secretary
shall submit to Congress a report on the review and
consideration conducted under subsection (a). Such report
shall include information on the alternative developed data
sources considered by the Secretary under subsection (a),
including the accuracy and validity of the data as measures
of the elements of the geographic index for practice expenses
under the medicare physician fee schedule as well as the
feasibility of using such alternative data nationwide in lieu
of current proxy data used in such index, and the estimated
impacts of using such alternative data.
(2) Recommendations.--The report submitted under paragraph
(1) shall contain recommendations on which data sources
reviewed and considered under subsection (a) are appropriate
for use in calculating the geographic index for practice
expenses under the medicare physician fee schedule.
SEC. 306. MEDPAC REPORT ON PAYMENT FOR PHYSICIANS' SERVICES.
(a) Practice Expense Component.--Not later than 1 year
after the date of the enactment of this Act, the Medicare
Payment Advisory Commission shall submit to Congress a report
on the effect of refinements to the practice expense
component of payments for physicians' services, after the
transition to a full resource-based payment system in 2002,
under section 1848 of the Social Security Act (42 U.S.C.
1395w-4). Such report shall examine the following matters by
physician specialty:
(1) The effect of such refinements on payment for
physicians' services.
(2) The interaction of the practice expense component with
other components of and adjustments to payment for
physicians' services under such section.
(3) The appropriateness of the amount of compensation by
reason of such refinements.
(4) The effect of such refinements on access to care by
medicare beneficiaries to physicians' services.
(5) The effect of such refinements on physician
participation under the medicare program.
(b) Volume of Physicians' Services.--Not later than 1 year
after the date of the enactment of this Act, the Medicare
Payment Advisory Commission shall submit to Congress a report
on the extent to which increases in the volume of physicians'
services under part B of the medicare program are a result of
care that improves the health and well-being of medicare
beneficiaries. The study shall include the following:
(1) An analysis of recent and historic growth in the
components that the Secretary includes under the sustainable
growth rate (under section 1848(f) of the Social Security Act
(42 U.S.C. 1395w-4(f))).
(2) An examination of the relative growth of volume in
physicians' services between medicare beneficiaries and other
populations.
(3) An analysis of the degree to which new technology,
including coverage determinations of the Centers for Medicare
& Medicaid Services, has affected the volume of physicians'
services.
(4) An examination of the impact on volume of demographic
changes.
(5) An examination of shifts in the site of service or
services that influence the number and intensity of services
furnished in physicians' offices and the extent to which
changes in reimbursement rates to other providers have
effected these changes.
(6) An evaluation of the extent to which the Centers for
Medicare & Medicaid Services takes into account the impact of
law and regulations on the sustainable growth rate.
Subtitle B--Preventive Services
SEC. 311. COVERAGE OF AN INITIAL PREVENTIVE PHYSICAL
EXAMINATION.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2))
is amended--
(1) in subparagraph (U), by striking ``and'' at the end;
(2) in subparagraph (V)(iii), by inserting ``and'' at the
end; and
(3) by adding at the end the following new subparagraph:
``(W) an initial preventive physical examination (as
defined in subsection (ww));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x) is
amended by adding at the end the following new subsection:
``Initial Preventive Physical Examination
``(ww)(1) The term `initial preventive physical
examination' means physicians' services consisting of a
physical examination (including measurement of height,
weight, and blood pressure, and an electrocardiogram) with
the goal of health promotion and disease detection and
includes education, counseling, and referral with respect to
screening and other preventive services described in
paragraph (2), but does not include clinical laboratory
tests.
``(2) The screening and other preventive services described
in this paragraph include the following:
``(A) Pneumococcal, influenza, and hepatitis B vaccine and
administration under subsection (s)(10).
``(B) Screening mammography as defined in subsection (jj).
``(C) Screening pap smear and screening pelvic exam as
defined in subsection (nn).
``(D) Prostate cancer screening tests as defined in
subsection (oo).
``(E) Colorectal cancer screening tests as defined in
subsection (pp).
``(F) Diabetes outpatient self-management training services
as defined in subsection (qq)(1).
``(G) Bone mass measurement as defined in subsection (rr).
``(H) Screening for glaucoma as defined in subsection (uu).
``(I) Medical nutrition therapy services as defined in
subsection (vv).
``(J) Cardiovascular screening blood tests as defined in
subsection (xx)(1).
``(K) Diabetes screening tests as defined in subsection
(yy).''.
(c) Payment as Physicians' Services.--Section 1848(j)(3)
(42 U.S.C. 1395w-4(j)(3)) is amended by inserting ``(2)(W),''
after ``(2)(S),''.
(d) Other Conforming Amendments.--(1) Section 1862(a) (42
U.S.C. 1395y(a)), as amended by section 303(i)(3)(B), is
amended--
(A) in paragraph (1)--
(i) by striking ``and'' at the end of subparagraph (I);
(ii) by striking the semicolon at the end of subparagraph
(J) and inserting ``, and''; and
(iii) by adding at the end the following new subparagraph:
``(K) in the case of an initial preventive physical
examination, which is performed not later than 6 months after
the date the individual's first coverage period begins under
part B;''; a
(B) in paragraph (7), by striking ``or (H)'' and inserting
``(H), or (K)''.
(2) Clauses (i) and (ii) of section 1861(s)(2)(K) (42
U.S.C. 1395x(s)(2)(K)) are each amended by inserting ``and
services described in subsection (ww)(1)'' after ``services
which would be physicians' services''.
(e) Effective Date.--The amendments made by this section
shall apply to services furnished on or after January 1,
2005, but only for individuals whose coverage period under
part B begins on or after such date.
SEC. 312. COVERAGE OF CARDIOVASCULAR SCREENING BLOOD TESTS.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)),
as amended by section 311(a), is amended--
(1) in subparagraph (V)(iii), by striking ``and'' at the
end;
(2) in subparagraph (W), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(X) cardiovascular screening blood tests (as defined in
subsection (xx)(1));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x) is
amended by adding at the end the following new subsection:
``Cardiovascular Screening Blood Test
``(xx)(1) The term `cardiovascular screening blood test'
means a blood test for the early detection of cardiovascular
disease (or abnormalities associated with an elevated
[[Page S15434]]
risk of cardiovascular disease) that tests for the following:
``(A) Cholesterol levels and other lipid or triglyceride
levels.
``(B) Such other indications associated with the presence
of, or an elevated risk for, cardiovascular disease as the
Secretary may approve for all individuals (or for some
individuals determined by the Secretary to be at risk for
cardiovascular disease), including indications measured by
noninvasive testing.
The Secretary may not approve an indication under
subparagraph (B) for any individual unless a blood test for
such is recommended by the United States Preventive Services
Task Force.
``(2) The Secretary shall establish standards, in
consultation with appropriate organizations, regarding the
frequency for each type of cardiovascular screening blood
tests, except that such frequency may not be more often than
once every 2 years.''.
(c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)),
as amended by section 311(d), is amended--
(1) by striking ``and'' at the end of subparagraph (K);
(2) by striking the semicolon at the end of subparagraph
(L) and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(M) in the case of cardiovascular screening blood tests
(as defined in section 1861(xx)(1)), which are performed more
frequently than is covered under section 1861(xx)(2);''.
(d) Effective Date.--The amendments made by this section
shall apply to tests furnished on or after January 1, 2005.
SEC. 313. COVERAGE OF DIABETES SCREENING TESTS.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)),
as amended by section 312(a), is amended--
(1) in subparagraph (W), by striking ``and'' at the end;
(2) in subparagraph (X), by adding ``and'' at the end; and
(3) by adding at the end the following new subparagraph:
``(Y) diabetes screening tests (as defined in subsection
(yy));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x), as
amended by section 312(b), is amended by adding at the end
the following new subsection:
``Diabetes Screening Tests
``(yy)(1) The term `diabetes screening tests' means testing
furnished to an individual at risk for diabetes (as defined
in paragraph (2)) for the purpose of early detection of
diabetes, including--
``(A) a fasting plasma glucose test; and
``(B) such other tests, and modifications to tests, as the
Secretary determines appropriate, in consultation with
appropriate organizations.
``(2) For purposes of paragraph (1), the term `individual
at risk for diabetes' means an individual who has any of the
following risk factors for diabetes:
``(A) Hypertension.
``(B) Dyslipidemia.
``(C) Obesity, defined as a body mass index greater than or
equal to 30 kg/m2.
``(D) Previous identification of an elevated impaired
fasting glucose.
``(E) Previous identification of impaired glucose
tolerance.
``(F) A risk factor consisting of at least 2 of the
following characteristics:
``(i) Overweight, defined as a body mass index greater than
25, but less than 30, kg/m2.
``(ii) A family history of diabetes.
``(iii) A history of gestational diabetes mellitus or
delivery of a baby weighing greater than 9 pounds.
``(iv) 65 years of age or older.
``(3) The Secretary shall establish standards, in
consultation with appropriate organizations, regarding the
frequency of diabetes screening tests, except that such
frequency may not be more often than twice within the 12-
month period following the date of the most recent diabetes
screening test of that individual.''.
(c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)),
as amended by section 312(c), is amended--
(1) by striking ``and'' at the end of subparagraph (L);
(2) by striking the semicolon at the end of subparagraph
(M) and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(N) in the case of a diabetes screening test (as defined
in section 1861(yy)(1)), which is performed more frequently
than is covered under section 1861(yy)(3);''.
(d) Effective Date.--The amendments made by this section
shall apply to tests furnished on or after January 1, 2005.
SEC. 314. IMPROVED PAYMENT FOR CERTAIN MAMMOGRAPHY SERVICES.
(a) Exclusion From OPD Fee Schedule.--Section
1833(t)(1)(B)(iv) (42 U.S.C. 1395l(t)(1)(B)(iv)) is amended
by inserting before the period at the end the following:
``and does not include screening mammography (as defined in
section 1861(jj)) and diagnostic mammography''.
(b) Conforming Amendment.--Section 1833(a)(2)(E)(i) (42
U.S.C. 1395l(a)(2)(E)(i)) is amended by inserting ``and, for
services furnished on or after January 1, 2005, diagnostic
mammography'' after ``screening mammography''.
(c) Effective Date.--The amendments made by this section
shall apply--
(1) in the case of screening mammography, to services
furnished on or after the date of the enactment of this Act;
and
(2) in the case of diagnostic mammography, to services
furnished on or after January 1, 2005.
Subtitle C--Other Provisions
SEC. 321. HOSPITAL OUTPATIENT DEPARTMENT (HOPD) PAYMENT
REFORM.
(a) Payment for Drugs.--
(1) Special rules for certain drugs and biologicals.--
Section 1833(t) (42 U.S.C. 1395l(t)), as amended by section
111(b), is amended by inserting after paragraph (13) the
following new paragraphs:
``(14) Drug apc payment rates.--
``(A) In general.--The amount of payment under this
subsection for a specified covered outpatient drug (defined
in subparagraph (B)) that is furnished as part of a covered
OPD service (or group of services)--
``(i) in 2004, in the case of--
``(I) a sole source drug shall in no case be less than 88
percent, or exceed 95 percent, of the reference average
wholesale price for the drug;
``(II) an innovator multiple source drug shall in no case
exceed 68 percent of the reference average wholesale price
for the drug; or
``(III) a noninnovator multiple source drug shall in no
case exceed 46 percent of the reference average wholesale
price for the drug;
``(ii) in 2005, in the case of--
``(I) a sole source drug shall in no case be less than 83
percent, or exceed 95 percent, of the reference average
wholesale price for the drug;
``(II) an innovator multiple source drug shall in no case
exceed 68 percent of the reference average wholesale price
for the drug; or
``(III) a noninnovator multiple source drug shall in no
case exceed 46 percent of the reference average wholesale
price for the drug; or
``(iii) in a subsequent year, shall be equal, subject to
subparagraph (E)--
``(I) to the average acquisition cost for the drug for that
year (which, at the option of the Secretary, may vary by
hospital group (as defined by the Secretary based on volume
of covered OPD services or other relevant characteristics)),
as determined by the Secretary taking into account the
hospital acquisition cost survey data under subparagraph (D);
or
``(II) if hospital acquisition cost data are not available,
the average price for the drug in the year established under
section 1842(o), section 1847A, or section 1847B, as the case
may be, as calculated and adjusted by the Secretary as
necessary for purposes of this paragraph.
``(B) Specified covered outpatient drug defined.--
``(i) In general.--In this paragraph, the term `specified
covered outpatient drug' means, subject to clause (ii), a
covered outpatient drug (as defined in section 1927(k)(2))
for which a separate ambulatory payment classification group
(APC) has been established and that is--
``(I) a radiopharmaceutical; or
``(II) a drug or biological for which payment was made
under paragraph (6) (relating to pass-through payments) on or
before December 31, 2002.
``(ii) Exception.--Such term does not include--
``(I) a drug or biological for which payment is first made
on or after January 1, 2003, under paragraph (6);
``(II) a drug or biological for which a temporary HCPCS
code has not been assigned; or
``(III) during 2004 and 2005, an orphan drug (as designated
by the Secretary).
``(C) Payment for designated orphan drugs during 2004 and
2005.--The amount of payment under this subsection for an
orphan drug designated by the Secretary under subparagraph
(B)(ii)(III) that is furnished as part of a covered OPD
service (or group of services) during 2004 and 2005 shall
equal such amount as the Secretary may specify.
``(D) Acquisition cost survey for hospital outpatient
drugs.--
``(i) Annual gao surveys in 2004 and 2005.--
``(I) In general.--The Comptroller General of the United
States shall conduct a survey in each of 2004 and 2005 to
determine the hospital acquisition cost for each specified
covered outpatient drug. Not later than April 1, 2005, the
Comptroller General shall furnish data from such surveys to
the Secretary for use in setting the payment rates under
subparagraph (A) for 2006.
``(II) Recommendations.--Upon the completion of such
surveys, the Comptroller General shall recommend to the
Secretary the frequency and methodology of subsequent surveys
to be conducted by the Secretary under clause (ii).
``(ii) Subsequent secretarial surveys.--The Secretary,
taking into account such recommendations, shall conduct
periodic subsequent surveys to determine the hospital
acquisition cost for each specified covered outpatient drug
for use in setting the payment rates under subparagraph (A).
``(iii) Survey requirements.--The surveys conducted under
clauses (i) and (ii) shall have a large sample of hospitals
that is sufficient to generate a statistically significant
estimate of the average hospital acquisition cost for each
specified covered outpatient drug. With respect to the
surveys conducted under clause (i), the Comptroller General
shall report to Congress on the justification for the size of
the sample used in order to assure the validity of such
estimates.
``(iv) Differentiation in cost.--In conducting surveys
under clause (i), the Comptroller General shall determine and
report to
[[Page S15435]]
Congress if there is (and the extent of any) variation in
hospital acquisition costs for drugs among hospitals based on
the volume of covered OPD services performed by such
hospitals or other relevant characteristics of such hospitals
(as defined by the Comptroller General).
``(v) Comment on proposed rates.--Not later than 30 days
after the date the Secretary promulgated proposed rules
setting forth the payment rates under subparagraph (A) for
2006, the Comptroller General shall evaluate such proposed
rates and submit to Congress a report regarding the
appropriateness of such rates based on the surveys the
Comptroller General has conducted under clause (i).
``(E) Adjustment in payment rates for overhead costs.--
``(i) Medpac report on drug apc design.--The Medicare
Payment Advisory Commission shall submit to the Secretary,
not later than July 1, 2005, a report on adjustment of
payment for ambulatory payment classifications for specified
covered outpatient drugs to take into account overhead and
related expenses, such as pharmacy services and handling
costs. Such report shall include--
``(I) a description and analysis of the data available with
regard to such expenses;
``(II) a recommendation as to whether such a payment
adjustment should be made; and
``(III) if such adjustment should be made, a recommendation
regarding the methodology for making such an adjustment.
``(ii) Adjustment authorized.--The Secretary may adjust the
weights for ambulatory payment classifications for specified
covered outpatient drugs to take into account the
recommendations contained in the report submitted under
clause (i).
``(F) Classes of drugs.--For purposes of this paragraph:
``(i) Sole source drugs.--The term `sole source drug'
means--
``(I) a biological product (as defined under section
1861(t)(1)); or
``(II) a single source drug (as defined in section
1927(k)(7)(A)(iv)).
``(ii) Innovator multiple source drugs.--The term
`innovator multiple source drug' has the meaning given such
term in section 1927(k)(7)(A)(ii).
``(iii) Noninnovator multiple source drugs.--The term
`noninnovator multiple source drug' has the meaning given
such term in section 1927(k)(7)(A)(iii).
``(G) Reference average wholesale price.--The term
`reference average wholesale price' means, with respect to a
specified covered outpatient drug, the average wholesale
price for the drug as determined under section 1842(o) as of
May 1, 2003.
``(H) Inapplicability of expenditures in determining
conversion, weighting, and other adjustment factors.--
Additional expenditures resulting from this paragraph shall
not be taken into account in establishing the conversion,
weighting, and other adjustment factors for 2004 and 2005
under paragraph (9), but shall be taken into account for
subsequent years.
``(15) Payment for new drugs and biologicals until hcpcs
code assigned.--With respect to payment under this part for
an outpatient drug or biological that is covered under this
part and is furnished as part of covered OPD services for
which a HCPCS code has not been assigned, the amount provided
for payment for such drug or biological under this part shall
be equal to 95 percent of the average wholesale price for the
drug or biological.''.
(2) Reduction in threshold for separate apcs for drugs.--
Section 1833(t)(16), as redesignated section 111(b), is
amended by adding at the end the following new subparagraph:
``(B) Threshold for establishment of separate apcs for
drugs.--The Secretary shall reduce the threshold for the
establishment of separate ambulatory payment classification
groups (APCs) with respect to drugs or biologicals to $50 per
administration for drugs and biologicals furnished in 2005
and 2006.''.
(3) Exclusion of separate drug apcs from outlier
payments.--Section 1833(t)(5) is amended by adding at the end
the following new subparagraph:
``(E) Exclusion of separate drug and biological apcs from
outlier payments.--No additional payment shall be made under
subparagraph (A) in the case of ambulatory payment
classification groups established separately for drugs or
biologicals.''.
(4) Payment for pass through drugs.--Section
1833(t)(6)(D)(i) (42 U.S.C. 1395l(t)(6)(D)(i)) is amended by
inserting after ``under section 1842(o)'' the following:
``(or if the drug or biological is covered under a
competitive acquisition contract under section 1847B, an
amount determined by the Secretary equal to the average price
for the drug or biological for all competitive acquisition
areas and year established under such section as calculated
and adjusted by the Secretary for purposes of this
paragraph)''.
(5) Conforming amendment to budget neutrality
requirement.--Section 1833(t)(9)(B) (42 U.S.C.
1395l(t)(9)(B)) is amended by adding at the end the
following: ``In determining adjustments under the preceding
sentence for 2004 and 2005, the Secretary shall not take into
account under this subparagraph or paragraph (2)(E) any
expenditures that would not have been made but for the
application of paragraph (14).''.
(6) Effective date.--The amendments made by this subsection
shall apply to items and services furnished on or after
January 1, 2004.
(b) Special Payment for Brachytherapy.--
(1) In general.--Section 1833(t)(16), as redesignated by
section 111(b) and as amended by subsection (a)(2), is
amended by adding at the end the following new subparagraph:
``(C) Payment for devices of brachytherapy at charges
adjusted to cost.--Notwithstanding the preceding provisions
of this subsection, for a device of brachytherapy consisting
of a seed or seeds (or radioactive source) furnished on or
after January 1, 2004, and before January 1, 2007, the
payment basis for the device under this subsection shall be
equal to the hospital's charges for each device furnished,
adjusted to cost. Charges for such devices shall not be
included in determining any outlier payment under this
subsection.''.
(2) Specification of groups for brachytherapy devices.--
Section 1833(t)(2) (42 U.S.C. 1395l(t)(2)) is amended--
(A) in subparagraph (F), by striking ``and'' at the end;
(B) in subparagraph (G), by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following new subparagraph:
``(H) with respect to devices of brachytherapy consisting
of a seed or seeds (or radioactive source), the Secretary
shall create additional groups of covered OPD services that
classify such devices separately from the other services (or
group of services) paid for under this subsection in a manner
reflecting the number, isotope, and radioactive intensity of
such devices furnished, including separate groups for
palladium-103 and iodine-125 devices.''.
(3) GAO report.--The Comptroller General of the United
States shall conduct a study to determine appropriate payment
amounts under section 1833(t)(16)(C) of the Social Security
Act, as added by paragraph (1), for devices of brachytherapy.
Not later than January 1, 2005, the Comptroller General shall
submit to Congress and the Secretary a report on the study
conducted under this paragraph, and shall include specific
recommendations for appropriate payments for such devices.
SEC. 322. LIMITATION OF APPLICATION OF FUNCTIONAL EQUIVALENCE
STANDARD.
Section 1833(t)(6) (42 U.S.C. 1395l(t)(6)) is amended by
adding at the end the following new subparagraph:
``(F) Limitation of application of functional equivalence
standard.--
``(i) In general.--The Secretary may not publish
regulations that apply a functional equivalence standard to a
drug or biological under this paragraph.
``(ii) Application.--Clause (i) shall apply to the
application of a functional equivalence standard to a drug or
biological on or after the date of enactment of the Medicare
Provider Restoration Act of 2003 unless--
``(I) such application was being made to such drug or
biological prior to such date of enactment; and
``(II) the Secretary applies such standard to such drug or
biological only for the purpose of determining eligibility of
such drug or biological for additional payments under this
paragraph and not for the purpose of any other payments under
this title.
``(iii) Rule of construction.--Nothing in this subparagraph
shall be construed to effect the Secretary's authority to
deem a particular drug to be identical to another drug if the
2 products are pharmaceutically equivalent and bioequivalent,
as determined by the Commissioner of Food and Drugs.''.
SEC. 323. PAYMENT FOR RENAL DIALYSIS SERVICES.
(a) Increase in Renal Dialysis Composite Rate for Services
Furnished.--The last sentence of section 1881(b)(7) (42
U.S.C. 1395rr(b)(7)) is amended--
(1) by striking ``and'' before ``for such services'' the
second place it appears;
(2) by inserting ``and before January 1, 2005,'' after
``January 1, 2001,''; and
(3) by inserting before the period at the end the
following: ``, and for such services furnished on or after
January 1, 2005, by 1.6 percent above such composite rate
payment amounts for such services furnished on December 31,
2004''.
(b) Restoring Composite Rate Exceptions for Pediatric
Facilities.--
(1) In general.--Section 422(a)(2) of BIPA is amended--
(A) in subparagraph (A), by striking ``and (C)'' and
inserting ``, (C), and (D)'';
(B) in subparagraph (B), by striking ``In the case'' and
inserting ``Subject to subparagraph (D), in the case''; and
(C) by adding at the end the following new subparagraph:
``(D) Inapplicability to pediatric facilities.--
Subparagraphs (A) and (B) shall not apply, as of October 1,
2002, to pediatric facilities that do not have an exception
rate described in subparagraph (C) in effect on such date.
For purposes of this subparagraph, the term `pediatric
facility' means a renal facility at least 50 percent of whose
patients are individuals under 18 years of age.''.
(2) Conforming amendment.--The fourth sentence of section
1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is amended by striking
``The Secretary'' and inserting ``Subject to section
422(a)(2) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000, the Secretary''.
(c) Inspector General Studies on ESRD Drugs.--
(1) In general.--The Inspector General of the Department of
Health and Human Services shall conduct two studies with
respect
[[Page S15436]]
to drugs and biologicals (including erythropoietin) furnished
to end-stage renal disease patients under the medicare
program which are separately billed by end stage renal
disease facilities.
(2) Studies on esrd drugs.--
(A) Existing drugs.--The first study under paragraph (1)
shall be conducted with respect to such drugs and biologicals
for which a billing code exists prior to January 1, 2004.
(B) New drugs.--The second study under paragraph (1) shall
be conducted with respect to such drugs and biologicals for
which a billing code does not exist prior to January 1, 2004.
(3) Matters studied.--Under each study conducted under
paragraph (1), the Inspector General shall--
(A) determine the difference between the amount of payment
made to end stage renal disease facilities under title XVIII
of the Social Security Act for such drugs and biologicals and
the acquisition costs of such facilities for such drugs and
biologicals and which are separately billed by end stage
renal disease facilities, and
(B) estimate the rates of growth of expenditures for such
drugs and biologicals billed by such facilities.
(4) Reports.--
(A) Existing esrd drugs.--Not later than April 1, 2004, the
Inspector General shall report to the Secretary on the study
described in paragraph (2)(A).
(B) New esrd drugs.--Not later than April 1, 2006, the
Inspector General shall report to the Secretary on the study
described in paragraph (2)(B).
(d) Basic Case-Mix Adjusted Composite Rate for Renal
Dialysis Facility Services.--(1) Section 1881(b) (42 U.S.C.
1395rr(b)) is amended by adding at the end the following new
paragraphs:
``(12)(A) In lieu of payment under paragraph (7) beginning
with services furnished on January 1, 2005, the Secretary
shall establish a basic case-mix adjusted prospective payment
system for dialysis services furnished by providers of
services and renal dialysis facilities in a year to
individuals in a facility and to such individuals at home.
The case-mix under such system shall be for a limited number
of patient characteristics.
``(B) The system described in subparagraph (A) shall
include--
``(i) the services comprising the composite rate
established under paragraph (7); and
``(ii) the difference between payment amounts under this
title for separately billed drugs and biologicals (including
erythropoietin) and acquisition costs of such drugs and
biologicals, as determined by the Inspector General reports
to the Secretary as required by section 323(c) of the
Medicare Provider Restoration Act of 2003--
``(I) beginning with 2005, for such drugs and biologicals
for which a billing code exists prior to January 1, 2004; and
``(II) beginning with 2007, for such drugs and biologicals
for which a billing code does not exist prior to January 1,
2004,
adjusted to 2005, or 2007, respectively, as determined to be
appropriate by the Secretary.
``(C)(i) In applying subparagraph (B)(ii) for 2005, such
payment amounts under this title shall be determined using
the methodology specified in paragraph (13)(A)(i).
``(ii) For 2006, the Secretary shall provide for an
adjustment to the payments under clause (i) to reflect the
difference between the payment amounts using the methodology
under paragraph (13)(A)(i) and the payment amount determined
using the methodology applied by the Secretary under
paragraph (13)(A)(iii) of such paragraph, as estimated by the
Secretary.
``(D) The Secretary shall adjust the payment rates under
such system by a geographic index as the Secretary determines
to be appropriate. If the Secretary applies a geographic
index under this paragraph that differs from the index
applied under paragraph (7) the Secretary shall phase-in the
application of the index under this paragraph over a
multiyear period.
``(E)(i) Such system shall be designed to result in the
same aggregate amount of expenditures for such services, as
estimated by the Secretary, as would have been made for 2005
if this paragraph did not apply.
``(ii) The adjustment made under subparagraph (B)(ii)(II)
shall be done in a manner to result in the same aggregate
amount of expenditures after such adjustment as would
otherwise have been made for such services for 2006 or 2007,
respectively, as estimated by the Secretary, if this
paragraph did not apply.
``(F) Beginning with 2006, the Secretary shall annually
increase the basic case-mix adjusted payment amounts
established under this paragraph, by an amount determined
by--
``(i) applying the estimated growth in expenditures for
drugs and biologicals (including erythropoietin) that are
separately billable to the component of the basic case-mix
adjusted system described in subparagraph (B)(ii); and
``(ii) converting the amount determined in clause (i) to an
increase applicable to the basic case-mix adjusted payment
amounts established under subparagraph (B).
Nothing in this paragraph shall be construed as providing for
an update to the composite rate component of the basic case-
mix adjusted system under subparagraph (B).
``(G) There shall be no administrative or judicial review
under section 1869, section 1878, or otherwise, of the case-
mix system, relative weights, payment amounts, the geographic
adjustment factor, or the update for the system established
under this paragraph, or the determination of the difference
between medicare payment amounts and acquisition costs for
separately billed drugs and biologicals (including
erythropoietin) under this paragraph and paragraph (13).
``(13)(A) The payment amounts under this title for
separately billed drugs and biologicals furnished in a year,
beginning with 2004, are as follows:
``(i) For such drugs and biologicals (other than
erythropoietin) furnished in 2004, the amount determined
under section 1842(o)(1)(A)(v) for the drug or biological.
``(ii) For such drugs and biologicals (including
erythropoietin) furnished in 2005, the acquisition cost of
the drug or biological, as determined by the Inspector
General reports to the Secretary as required by section
323(c) of the Medicare Provider Restoration Act of 2003.
Insofar as the Inspector General has not determined the
acquisition cost with respect to a drug or biological, the
Secretary shall determine the payment amount for such drug or
biological.
``(iii) For such drugs and biologicals (including
erythropoietin) furnished in 2006 and subsequent years, such
acquisition cost or the amount determined under section 1847A
for the drug or biological, as the Secretary may specify.
``(B)(i) Drugs and biologicals (including erythropoietin)
which were separately billed under this subsection on the day
before the date of the enactment of the Medicare Provider
Restoration Act of 2003 shall continue to be separately
billed on and after such date.
``(ii) Nothing in this paragraph, section 1842(o), section
1847A, or section 1847B shall be construed as requiring or
authorizing the bundling of payment for drugs and biologicals
into the basic case-mix adjusted payment system under this
paragraph.''.
(2) Paragraph (7) of such section is amended in the first
sentence by striking ``The Secretary'' and inserting
``Subject to paragraph (12), the Secretary''.
(3) Paragraph (11)(B) of such section is amended by
inserting ``subject to paragraphs (12) and (13)'' before
``payment for such item''.
(e) Demonstration of Bundled Case-Mix Adjusted Payment
System for ESRD Services.--
(1) In general.--The Secretary shall establish a
demonstration project of the use of a fully case-mix adjusted
payment system for end stage renal disease services under
section 1881 of the Social Security Act (42 U.S.C. 1395rr)
for patient characteristics identified in the report under
subsection (f) that bundles into such payment rates amounts
for--
(A) drugs and biologicals (including erythropoietin)
furnished to end-stage renal disease patients under the
medicare program which are separately billed by end stage
renal disease facilities (as of the date of the enactment of
this Act); and
(B) clinical laboratory tests related to such drugs and
biologicals.
(2) Facilities included in the demonstration.--In
conducting the demonstration under this subsection, the
Secretary shall ensure the participation of a sufficient
number of providers of dialysis services and renal dialysis
facilities, but in no case to exceed 500. In selecting such
providers and facilities, the Secretary shall ensure that the
following types of providers are included in the
demonstration:
(A) Urban providers and facilities.
(B) Rural providers and facilities.
(C) Not-for-profit providers and facilities.
(D) For-profit providers and facilities.
(E) Independent providers and facilities.
(F) Specialty providers and facilities, including pediatric
providers and facilities and small providers and facilities.
(3) Temporary add-on payment for dialysis services
furnished under the demonstration.--
(A) In general.--During the period of the demonstration
project, the Secretary shall increase payment rates that
would otherwise apply under section 1881(b) of such Act (42
U.S.C. 1395rr(b)) by 1.6 percent for dialysis services
furnished in facilities in the demonstration site.
(B) Rules of construction.--Nothing in this subsection
shall be construed as--
(i) as an annual update under section 1881(b) of the Social
Security Act (42 U.S.C. 1395rr(b));
(ii) as increasing the baseline for payments under such
section; or
(iii) requiring the budget neutral implementation of the
demonstration project under this subsection.
(4) 3-year period.--The Secretary shall conduct the
demonstration under this subsection for the 3-year period
beginning on January 1, 2006.
(5) Use of advisory board.--
(A) In general.--In carrying out the demonstration under
this subsection, the Secretary shall establish an advisory
board comprised of representatives described in subparagraph
(B) to provide advice and recommendations with respect to the
establishment and operation of such demonstration.
(B) Representatives.--Representatives referred to in
subparagraph (A) include representatives of the following:
(i) Patient organizations.
(ii) Individuals with expertise in end-stage renal dialysis
services, such as clinicians, economists, and researchers.
(iii) The Medicare Payment Advisory Commission, established
under section 1805 of the Social Security Act (42 U.S.C.
1395b-6).
[[Page S15437]]
(iv) The National Institutes of Health.
(v) Network organizations under section 1881(c) of the
Social Security Act (42 U.S.C. 1395rr(c)).
(vi) Medicare contractors to monitor quality of care.
(vii) Providers of services and renal dialysis facilities
furnishing end-stage renal disease services.
(C) Termination of advisory panel.--The advisory panel
shall terminate on December 31, 2008.
(6) Authorization of appropriations.--There are authorized
to be appropriated, in appropriate part from the Federal
Hospital Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund, $5,000,000 in fiscal year 2006
to conduct the demonstration under this subsection.
(f) Report on a Bundled Prospective Payment System for End
Stage Renal Disease Services.--
(1) Report.--
(A) In general.--Not later than October 1, 2005, the
Secretary shall submit to Congress a report detailing the
elements and features for the design and implementation of a
bundled prospective payment system for services furnished by
end stage renal disease facilities including, to the maximum
extent feasible, bundling of drugs, clinical laboratory
tests, and other items that are separately billed by such
facilities. The report shall include a description of the
methodology to be used for the establishment of payment
rates, including components of the new system described in
paragraph (2).
(B) Recommendations.--The Secretary shall include in such
report recommendations on elements, features, and methodology
for a bundled prospective payment system or other issues
related to such system as the Secretary determines to be
appropriate.
(2) Elements and features of a bundled prospective payment
system.--The report required under paragraph (1) shall
include the following elements and features of a bundled
prospective payment system:
(A) Bundle of items and services.--A description of the
bundle of items and services to be included under the
prospective payment system.
(B) Case mix.--A description of the case-mix adjustment to
account for the relative resource use of different types of
patients.
(C) Wage index.--A description of an adjustment to account
for geographic differences in wages.
(D) Rural areas.--The appropriateness of establishing a
specific payment adjustment to account for additional costs
incurred by rural facilities.
(E) Other adjustments.--Such other adjustments as may be
necessary to reflect the variation in costs incurred by
facilities in caring for patients with end stage renal
disease.
(F) Update framework.--A methodology for appropriate
updates under the prospective payment system.
(G) Additional recommendations.--Such other matters as the
Secretary determines to be appropriate.
SEC. 324. 2-YEAR MORATORIUM ON THERAPY CAPS; PROVISIONS
RELATING TO REPORTS.
(a) Additional Moratorium on Therapy Caps.--
(1) 2004 and 2005.--Section 1833(g)(4) (42 U.S.C.
1395l(g)(4)) is amended by striking ``and 2002'' and
inserting ``2002, 2004, and 2005''.
(2) Remainder of 2003.--For the period beginning on the
date of the enactment of this Act and ending of December 31,
2003, the Secretary shall not apply the provisions of
paragraphs (1), (2), and (3) of section 1833(g) to expenses
incurred with respect to services described in such
paragraphs during such period. Nothing in the preceding
sentence shall be construed as affecting the application of
such paragraphs by the Secretary before the date of the
enactment of this Act.
(b) Prompt Submission of Overdue Reports on Payment and
Utilization of Outpatient Therapy Services.--Not later than
March 31, 2004, the Secretary shall submit to Congress the
reports required under section 4541(d)(2) of the Balanced
Budget Act of 1997 (Public Law 105-33; 111 Stat. 457)
(relating to alternatives to a single annual dollar cap on
outpatient therapy) and under section 221(d) of the Medicare,
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999
(Appendix F, 113 Stat. 1501A-352), as enacted into law by
section 1000(a)(6) of Public Law 106-113 (relating to
utilization patterns for outpatient therapy).
(c) GAO Report Identifying Conditions and Diseases
Justifying Waiver of Therapy Cap.--
(1) Study.--The Comptroller General of the United States
shall identify conditions or diseases that may justify
waiving the application of the therapy caps under section
1833(g) of the Social Security Act (42 U.S.C. 1395l(g)) with
respect to such conditions or diseases.
(2) Report to congress.--Not later than October 1, 2004,
the Comptroller General shall submit to Congress a report on
the conditions and diseases identified under paragraph (1),
and shall include a recommendation of criteria, with respect
to such conditions and disease, under which a waiver of the
therapy caps would apply.
SEC. 325. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR
CERTAIN MILITARY RETIREES; SPECIAL ENROLLMENT
PERIOD.
(a) Waiver of Penalty.--
(1) In general.--Section 1839(b) (42 U.S.C. 1395r(b)) is
amended by adding at the end the following new sentence: ``No
increase in the premium shall be effected for a month in the
case of an individual who enrolls under this part during
2001, 2002, 2003, or 2004 and who demonstrates to the
Secretary before December 31, 2004, that the individual is a
covered beneficiary (as defined in section 1072(5) of title
10, United States Code). The Secretary of Health and Human
Services shall consult with the Secretary of Defense in
identifying individuals described in the previous
sentence.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to premiums for months beginning with January
2004. The Secretary shall establish a method for providing
rebates of premium penalties paid for months on or after
January 2004 for which a penalty does not apply under such
amendment but for which a penalty was previously collected.
(b) Medicare Part B Special Enrollment Period.--
(1) In general.--In the case of any individual who, as of
the date of the enactment of this Act, is eligible to enroll
but is not enrolled under part B of title XVIII of the Social
Security Act and is a covered beneficiary (as defined in
section 1072(5) of title 10, United States Code), the
Secretary of Health and Human Services shall provide for a
special enrollment period during which the individual may
enroll under such part. Such period shall begin as soon as
possible after the date of the enactment of this Act and
shall end on December 31, 2004.
(2) Coverage period.--In the case of an individual who
enrolls during the special enrollment period provided under
paragraph (1), the coverage period under part B of title
XVIII of the Social Security Act shall begin on the first day
of the month following the month in which the individual
enrolls.
SEC. 326. PAYMENT FOR SERVICES FURNISHED IN AMBULATORY
SURGICAL CENTERS.
(a) Reductions in Payment Updates.--Section 1833(i)(2)(C)
(42 U.S.C. 1395l(i)(2)(C)) is amended to read as follows:
``(C)(i) Notwithstanding the second sentence of each of
subparagraphs (A) and (B), except as otherwise specified in
clauses (ii), (iii), and (iv), if the Secretary has not
updated amounts established under such subparagraphs or under
subparagraph (D), with respect to facility services furnished
during a fiscal year (beginning with fiscal year 1986 or a
calendar year (beginning with 2006)), such amounts shall be
increased by the percentage increase in the Consumer Price
Index for all urban consumers (U.S. city average) as
estimated by the Secretary for the 12-month period ending
with the midpoint of the year involved.
``(ii) In each of the fiscal years 1998 through 2002, the
increase under this subparagraph shall be reduced (but not
below zero) by 2.0 percentage points.
``(iii) In fiscal year 2004, beginning with April 1, 2004,
the increase under this subparagraph shall be the Consumer
Price Index for all urban consumers (U.S. city average) as
estimated by the Secretary for the 12-month period ending
with March 31, 2003, minus 3.0 percentage points.
``(iv) In fiscal year 2005, the last quarter of calendar
year 2005, and each of calendar years 2006 through 2009, the
increase under this subparagraph shall be 0 percent.''.
(b) Repeal of Survey Requirement and Implementation of New
System.--Section 1833(i)(2) (42 U.S.C. 1395l(i)(2)) is
amended--
(1) in subparagraph (A)--
(A) in the matter preceding clause (i), by striking ``The''
and inserting ``For services furnished prior to the
implementation of the system described in subparagraph (D),
the''; and
(B) in clause (i), by striking ``taken not later than
January 1, 1995, and every 5 years thereafter,''; and
(2) by adding at the end the following new subparagraph:
``(D)(i) Taking into account the recommendations in the
report under section 326(d) of Medicare Provider Restoration
Act of 2003, the Secretary shall implement a revised payment
system for payment of surgical services furnished in
ambulatory surgical centers.
``(ii) In the year the system described in clause (i) is
implemented, such system shall be designed to result in the
same aggregate amount of expenditures for such services as
would be made if this subparagraph did not apply, as
estimated by the Secretary.
``(iii) The Secretary shall implement the system described
in clause (i) for periods in a manner so that it is first
effective beginning on or after January 1, 2006, and not
later than January 1, 2008.
``(iv) There shall be no administrative or judicial review
under section 1869, 1878, or otherwise, of the classification
system, the relative weights, payment amounts, and the
geographic adjustment factor, if any, under this
subparagraph.''.
(c) Conforming Amendment.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended by adding the following new
subparagraph:
``(G) with respect to facility services furnished in
connection with a surgical procedure specified pursuant to
subsection (i)(1)(A) and furnished to an individual in an
ambulatory surgical center described in such subsection, for
services furnished beginning with the implementation date of
a revised payment system for such services in such facilities
specified in subsection (i)(2)(D), the amounts paid shall be
80 percent of the lesser of the actual charge for the
services or the
[[Page S15438]]
amount determined by the Secretary under such revised payment
system,''.
(d) GAO Study of Ambulatory Surgical Center Payments.--
(1) Study.--
(A) In general.--The Comptroller General of the United
States shall conduct a study that compares the relative costs
of procedures furnished in ambulatory surgical centers to the
relative costs of procedures furnished in hospital outpatient
departments under section 1833(t) of the Social Security Act
(42 U.S.C. 1395l(t)). The study shall also examine how
accurately ambulatory payment categories reflect procedures
furnished in ambulatory surgical centers.
(B) Consideration of asc data.--In conducting the study
under paragraph (1), the Comptroller General shall consider
data submitted by ambulatory surgical centers regarding the
matters described in clauses (i) through (iii) of paragraph
(2)(B).
(2) Report and recommendations.--
(A) Report.--Not later than January 1, 2005, the
Comptroller General shall submit to Congress a report on the
study conducted under paragraph (1).
(B) Recommendations.--The report submitted under
subparagraph (A) shall include recommendations on the
following matters:
(i) The appropriateness of using the groups of covered
services and relative weights established under the
outpatient prospective payment system as the basis of payment
for ambulatory surgical centers.
(ii) If the relative weights under such hospital outpatient
prospective payment system are appropriate for such purpose--
(I) whether the payment rates for ambulatory surgical
centers should be based on a uniform percentage of the
payment rates or weights under such outpatient system; or
(II) whether the payment rates for ambulatory surgical
centers should vary, or the weights should be revised, based
on specific procedures or types of services (such as
ophthalmology and pain management services).
(iii) Whether a geographic adjustment should be used for
payment of services furnished in ambulatory surgical centers,
and if so, the labor and nonlabor shares of such payment.
SEC. 327. PAYMENT FOR CERTAIN SHOES AND INSERTS UNDER THE FEE
SCHEDULE FOR ORTHOTICS AND PROSTHETICS.
(a) In General.--Section 1833(o) (42 U.S.C. 1395l(o)) is
amended--
(1) in paragraph (1)(B), by striking ``no more than the
limits established under paragraph (2)'' and inserting ``no
more than the amount of payment applicable under paragraph
(2)''; and
(2) in paragraph (2), to read as follows:
``(2)(A) Except as provided by the Secretary under
subparagraphs (B) and (C), the amount of payment under this
paragraph for custom molded shoes, extra-depth shoes, and
inserts shall be the amount determined for such items by the
Secretary under section 1834(h).
``(B) The Secretary may establish payment amounts for shoes
and inserts that are lower than the amount established under
section 1834(h) if the Secretary finds that shoes and inserts
of an appropriate quality are readily available at or below
the amount established under such section.
``(C) In accordance with procedures established by the
Secretary, an individual entitled to benefits with respect to
shoes described in section 1861(s)(12) may substitute
modification of such shoes instead of obtaining one (or more,
as specified by the Secretary) pair of inserts (other than
the original pair of inserts with respect to such shoes). In
such case, the Secretary shall substitute, for the payment
amount established under section 1834(h), a payment amount
that the Secretary estimates will assure that there is no net
increase in expenditures under this subsection as a result of
this subparagraph.''.
(b) Conforming Amendments.--(1) Section 1834(h)(4)(C) (42
U.S.C. 1395m(h)(4)(C)) is amended by inserting ``(and
includes shoes described in section 1861(s)(12))'' after ``in
section 1861(s)(9)''.
(2) Section 1842(s)(2) (42 U.S.C. 1395u(s)(2)) is amended
by striking subparagraph (C).
(c) Effective Date.--The amendments made by this section
shall apply to items furnished on or after January 1, 2005.
SEC. 329. 5-YEAR AUTHORIZATION OF REIMBURSEMENT FOR ALL
MEDICARE PART B SERVICES FURNISHED BY CERTAIN
INDIAN HOSPITALS AND CLINICS.
Section 1880(e)(1)(A) (42 U.S.C. 1395qq(e)(1)(A)) is
amended by inserting ``(and for items and services furnished
during the 5-year period beginning on January 1, 2005, all
items and services for which payment may be made under part
B)'' after ``for services described in paragraph (2)''.
Subtitle D--Additional Demonstrations, Studies, and Other Provisions
SEC. 341. DEMONSTRATION PROJECT FOR COVERAGE OF CERTAIN
PRESCRIPTION DRUGS AND BIOLOGICALS.
(a) Demonstration Project.--The Secretary shall conduct a
demonstration project under part B of title XVIII of the
Social Security Act under which payment is made for drugs or
biologicals that are prescribed as replacements for drugs and
biologicals described in section 1861(s)(2)(A) or
1861(s)(2)(Q) of such Act (42 U.S.C. 1395x(s)(2)(A),
1395x(s)(2)(Q)), or both, for which payment is made under
such part. Such project shall provide for cost-sharing
applicable with respect to such drugs or biologicals.
(b) Demonstration Project Sites.--The project established
under this section shall be conducted in sites selected by
the Secretary.
(c) Duration.--The Secretary shall conduct the
demonstration project for the 2-year period beginning on the
date that is 90 days after the date of the enactment of this
Act, but in no case may the project extend beyond December
31, 2005.
(d) Limitation.--Under the demonstration project over the
duration of the project, the Secretary may not provide--
(1) coverage for more than 50,000 patients; and
(2) more than $500,000,000 in funding.
(e) Report.--Not later than July 1, 2006, the Secretary
shall submit to Congress a report on the project. The report
shall include an evaluation of patient access to care and
patient outcomes under the project, as well as an analysis of
the cost effectiveness of the project, including an
evaluation of the costs savings (if any) to the medicare
program attributable to reduced physicians' services and
hospital outpatient departments services for administration
of the biological.
SEC. 342. EXTENSION OF COVERAGE OF INTRAVENOUS IMMUNE
GLOBULIN (IVIG) FOR THE TREATMENT OF PRIMARY
IMMUNE DEFICIENCY DISEASES IN THE HOME.
(a) In General.--Section 1861 (42 U.S.C. 1395x), as amended
by sections 611(a) and 612(a) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of subparagraph (X);
(B) by adding ``and'' at the end of subparagraph (Y); and
(C) by adding at the end the following new subparagraph:
``(Z) intravenous immune globulin for the treatment of
primary immune deficiency diseases in the home (as defined in
subsection (zz));''; and
(2) by adding at the end the following new subsection:
``Intravenous Immune Globulin
``(zz) The term `intravenous immune globulin' means an
approved pooled plasma derivative for the treatment in the
patient's home of a patient with a diagnosed primary immune
deficiency disease, but not including items or services
related to the administration of the derivative, if a
physician determines administration of the derivative in the
patient's home is medically appropriate.''.
(b) Payment as a Drug or Biological.--Section 1833(a)(1)(S)
(42 U.S.C. 1395l(a)(1)(S)) is amended by inserting
``(including intravenous immune globulin (as defined in
section 1861(zz)))'' after ``with respect to drugs and
biologicals''.
(c) Effective Date.--The amendments made by this section
shall apply to items furnished administered on or after
January 1, 2004.
SEC. 343. MEDPAC STUDY OF COVERAGE OF SURGICAL FIRST
ASSISTING SERVICES OF CERTIFIED REGISTERED
NURSE FIRST ASSISTANTS.
(a) Study.--The Medicare Payment Advisory Commission (in
this section referred to as the ``Commission'') shall conduct
a study on the feasibility and advisability of providing for
payment under part B of title XVIII of the Social Security
Act for surgical first assisting services furnished by a
certified registered nurse first assistant to medicare
beneficiaries.
(b) Report.--Not later than January 1, 2005, the Commission
shall submit to Congress a report on the study conducted
under subsection (a) together with recommendations for such
legislation or administrative action as the Commission
determines to be appropriate.
(c) Definitions.--In this section:
(1) Surgical First Assisting Services.--The term ``surgical
first assisting services'' means services consisting of first
assisting a physician with surgery and related preoperative,
intraoperative, and postoperative care (as determined by the
Secretary) furnished by a certified registered nurse first
assistant (as defined in paragraph (2)) which the certified
registered nurse first assistant is legally authorized to
perform by the State in which the services are performed.
(2) Certified Registered Nurse First Assistant.--The term
``certified registered nurse first assistant'' means an
individual who--
(A) is a registered nurse and is licensed to practice
nursing in the State in which the surgical first assisting
services are performed;
(B) has completed a minimum of 2,000 hours of first
assisting a physician with surgery and related preoperative,
intraoperative, and postoperative care; and
(C) is certified as a registered nurse first assistant by
an organization recognized by the Secretary.
SEC. 344. MEDPAC STUDY OF PAYMENT FOR CARDIO-THORACIC
SURGEONS.
(a) Study.--The Medicare Payment Advisory Commission (in
this section referred to as the ``Commission'') shall conduct
a study on the practice expense relative values established
by the Secretary of Health and Human Services under the
medicare physician fee schedule under section 1848 of the
Social Security Act (42 U.S.C. 1395w-4) for physicians in the
specialties of thoracic and cardiac surgery to determine
whether such values adequately take into account the
attendant costs that such physicians incur in providing
clinical staff for patient care in hospitals.
(b) Report.--Not later than January 1, 2005, the Commission
shall submit to Congress a report on the study conducted
under
[[Page S15439]]
subsection (a) together with recommendations for such
legislation or administrative action as the Commission
determines to be appropriate.
SEC. 345. STUDIES RELATING TO VISION IMPAIRMENTS.
(a) Coverage of Outpatient Vision Services Furnished by
Vision Rehabilitation Professionals Under Part B.--
(1) Study.--The Secretary shall conduct a study to
determine the feasibility and advisability of providing for
payment for vision rehabilitation services furnished by
vision rehabilitation professionals.
(2) Report.--Not later than January 1, 2005, the Secretary
shall submit to Congress a report on the study conducted
under paragraph (1) together with recommendations for such
legislation or administrative action as the Secretary
determines to be appropriate.
(3) Vision Rehabilitation Professional Defined.--In this
subsection, the term ``vision rehabilitation professional''
means an orientation and mobility specialist, a
rehabilitation teacher, or a low vision therapist.
(b) Report on Appropriateness of a Demonstration Project To
Test Feasibility of Using PPO Networks To Reduce Costs of
Acquiring Eyeglasses for Medicare Beneficiaries After
Cataract Surgery.--Not later than 1 year after the date of
the enactment of this Act, the Secretary shall submit to
Congress a report on the feasibility of establishing a two-
year demonstration project under which the Secretary enters
into arrangements with vision care preferred provider
organization networks to furnish and pay for conventional
eyeglasses subsequent to each cataract surgery with insertion
of an intraocular lens on behalf of Medicare beneficiaries.
In such report, the Secretary shall include an estimate of
potential cost savings to the Medicare program through the
use of such networks, taking into consideration quality of
service and beneficiary access to services offered by vision
care preferred provider organization networks.
SEC. 346. MEDICARE HEALTH CARE QUALITY DEMONSTRATION
PROGRAMS.
Title XVIII (42 U.S.C. 1395 et seq.) is amended by
inserting after section 1866B the following new section:
``SEC. 1866C. HEALTH CARE QUALITY DEMONSTRATION PROGRAM.
``Sec. (a) Definitions.--In this section:
``(1) Beneficiary.--The term `beneficiary' means an
individual who is entitled to benefits under part A and
enrolled under part B, including any individual who is
enrolled in a Medicare Advantage plan under part C.
``(2) Health care group.--
``(A) In general.--The term `health care group' means--
``(i) a group of physicians that is organized at least in
part for the purpose of providing physician's services under
this title;
``(ii) an integrated health care delivery system that
delivers care through coordinated hospitals, clinics, home
health agencies, ambulatory surgery centers, skilled nursing
facilities, rehabilitation facilities and clinics, and
employed, independent, or contracted physicians; or
``(iii) an organization representing regional coalitions of
groups or systems described in clause (i) or (ii).
``(B) Inclusion.--As the Secretary determines appropriate,
a health care group may include a hospital or any other
individual or entity furnishing items or services for which
payment may be made under this title that is affiliated with
the health care group under an arrangement structured so that
such hospital, individual, or entity participates in a
demonstration project under this section.
``(3) Physician.--Except as otherwise provided for by the
Secretary, the term `physician' means any individual who
furnishes services that may be paid for as physicians'
services under this title.
``(b) Demonstration Projects.--The Secretary shall
establish a 5-year demonstration program under which the
Secretary shall approve demonstration projects that examine
health delivery factors that encourage the delivery of
improved quality in patient care, including--
``(1) the provision of incentives to improve the safety of
care provided to beneficiaries;
``(2) the appropriate use of best practice guidelines by
providers and services by beneficiaries;
``(3) reduced scientific uncertainty in the delivery of
care through the examination of variations in the utilization
and allocation of services, and outcomes measurement and
research;
``(4) encourage shared decision making between providers
and patients;
``(5) the provision of incentives for improving the quality
and safety of care and achieving the efficient allocation of
resources;
``(6) the appropriate use of culturally and ethnically
sensitive health care delivery; and
``(7) the financial effects on the health care marketplace
of altering the incentives for care delivery and changing the
allocation of resources.
``(c) Administration by Contract.--
``(1) In general.--Except as otherwise provided in this
section, the Secretary may administer the demonstration
program established under this section in a manner that is
similar to the manner in which the demonstration program
established under section 1866A is administered in accordance
with section 1866B.
``(2) Alternative payment systems.--A health care group
that receives assistance under this section may, with respect
to the demonstration project to be carried out with such
assistance, include proposals for the use of alternative
payment systems for items and services provided to
beneficiaries by the group that are designed to--
``(A) encourage the delivery of high quality care while
accomplishing the objectives described in subsection (b); and
``(B) streamline documentation and reporting requirements
otherwise required under this title.
``(3) Benefits.--A health care group that receives
assistance under this section may, with respect to the
demonstration project to be carried out with such assistance,
include modifications to the package of benefits available
under the original medicare fee-for-service program under
parts A and B or the package of benefits available through a
Medicare Advantage plan under part C. The criteria employed
under the demonstration program under this section to
evaluate outcomes and determine best practice guidelines and
incentives shall not be used as a basis for the denial of
medicare benefits under the demonstration program to patients
against their wishes (or if the patient is incompetent,
against the wishes of the patient's surrogate) on the basis
of the patient's age or expected length of life or of the
patient's present or predicted disability, degree of medical
dependency, or quality of life.
``(d) Eligibility Criteria.--To be eligible to receive
assistance under this section, an entity shall--
``(1) be a health care group;
``(2) meet quality standards established by the Secretary,
including--
``(A) the implementation of continuous quality improvement
mechanisms that are aimed at integrating community-based
support services, primary care, and referral care;
``(B) the implementation of activities to increase the
delivery of effective care to beneficiaries;
``(C) encouraging patient participation in preference-based
decisions;
``(D) the implementation of activities to encourage the
coordination and integration of medical service delivery; and
``(E) the implementation of activities to measure and
document the financial impact on the health care marketplace
of altering the incentives of health care delivery and
changing the allocation of resources; and
``(3) meet such other requirements as the Secretary may
establish.
``(e) Waiver Authority.--The Secretary may waive such
requirements of titles XI and XVIII as may be necessary to
carry out the purposes of the demonstration program
established under this section.
``(f) Budget Neutrality.--With respect to the 5-year period
of the demonstration program under subsection (b), the
aggregate expenditures under this title for such period shall
not exceed the aggregate expenditures that would have been
expended under this title if the program established under
this section had not been implemented.
``(g) Notice Requirements.--In the case of an individual
that receives health care items or services under a
demonstration program carried out under this section, the
Secretary shall ensure that such individual is notified of
any waivers of coverage or payment rules that are applicable
to such individual under this title as a result of the
participation of the individual in such program.
``(h) Participation and Support by Federal Agencies.--In
carrying out the demonstration program under this section,
the Secretary may direct--
``(1) the Director of the National Institutes of Health to
expand the efforts of the Institutes to evaluate current
medical technologies and improve the foundation for evidence-
based practice;
``(2) the Administrator of the Agency for Healthcare
Research and Quality to, where possible and appropriate, use
the program under this section as a laboratory for the study
of quality improvement strategies and to evaluate, monitor,
and disseminate information relevant to such program; and
``(3) the Administrator of the Centers for Medicare &
Medicaid Services and the Administrator of the Center for
Medicare Choices to support linkages of relevant medicare
data to registry information from participating health care
groups for the beneficiary populations served by the
participating groups, for analysis supporting the purposes of
the demonstration program, consistent with the applicable
provisions of the Health Insurance Portability and
Accountability Act of 1996.''.
SEC. 347. MEDPAC STUDY ON DIRECT ACCESS TO PHYSICAL THERAPY
SERVICES.
(a) Study.--The Medicare Payment Advisory Commission (in
this section referred to as the ``Commission'') shall conduct
a study on the feasibility and advisability of allowing
medicare fee-for-service beneficiaries direct access to
outpatient physical therapy services and physical therapy
services furnished as comprehensive rehabilitation facility
services.
(b) Report.--Not later than January 1, 2005, the Commission
shall submit to Congress a report on the study conducted
under subsection (a) together with recommendations for such
legislation or administrative action as the Commission
determines to be appropriate.
(c) Direct Access Defined.--The term ``direct access''
means, with respect to outpatient physical therapy services
and physical therapy services furnished as comprehensive
outpatient rehabilitation facility
[[Page S15440]]
services, coverage of and payment for such services in
accordance with the provisions of title XVIII of the Social
Security Act, except that sections 1835(a)(2), 1861(p), and
1861(cc) of such Act (42 U.S.C. 1395n(a)(2), 1395x(p), and
1395x(cc), respectively) shall be applied--
(1) without regard to any requirement that--
(A) an individual be under the care of (or referred by) a
physician; or
(B) services be provided under the supervision of a
physician; and
(2) by allowing a physician or a qualified physical
therapist to satisfy any requirement for--
(A) certification and recertification; and
(B) establishment and periodic review of a plan of care.
SEC. 348. DEMONSTRATION PROJECT FOR CONSUMER-DIRECTED CHRONIC
OUTPATIENT SERVICES.
(a) Establishment.--
(1) In general.--Subject to the succeeding provisions of
this section, the Secretary shall establish demonstration
projects (in this section referred to as ``demonstration
projects'') under which the Secretary shall evaluate methods
that improve the quality of care provided to individuals with
chronic conditions and that reduce expenditures that would
otherwise be made under the medicare program on behalf of
such individuals for such chronic conditions, such methods to
include permitting those beneficiaries to direct their own
health care needs and services.
(2) Individuals with chronic conditions defined.--In this
section, the term ``individuals with chronic conditions''
means an individual entitled to benefits under part A of
title XVIII of the Social Security Act, and enrolled under
part B of such title, but who is not enrolled under part C of
such title who is diagnosed as having one or more chronic
conditions (as defined by the Secretary), such as diabetes.
(b) Design of Projects.--
(1) Evaluation before implementation of project.--
(A) In general.--In establishing the demonstration projects
under this section, the Secretary shall evaluate best
practices employed by group health plans and practices under
State plans for medical assistance under the medicaid program
under title XIX of the Social Security Act, as well as best
practices in the private sector or other areas, of methods
that permit patients to self-direct the provision of personal
care services. The Secretary shall evaluate such practices
for a 1-year period and, based on such evaluation, shall
design the demonstration project.
(B) Requirement for estimate of budget neutral costs.--As
part of the evaluation under subparagraph (A), the Secretary
shall evaluate the costs of furnishing care under the
projects. The Secretary may not implement the demonstration
projects under this section unless the Secretary determines
that the costs of providing care to individuals with chronic
conditions under the project will not exceed the costs, in
the aggregate, of furnishing care to such individuals under
title XVIII of the Social Security Act, that would otherwise
be paid without regard to the demonstration projects for the
period of the project.
(2) Scope of services.--The Secretary shall determine the
appropriate scope of personal care services that would apply
under the demonstration projects.
(c) Voluntary Participation.--Participation of providers of
services and suppliers, and of individuals with chronic
conditions, in the demonstration projects shall be voluntary.
(d) Demonstration Projects Sites.--Not later than 2 years
after the date of the enactment of this Act, the Secretary
shall conduct a demonstration project in at least one area
that the Secretary determines has a population of individuals
entitled to benefits under part A of title XVIII of the
Social Security Act, and enrolled under part B of such title,
with a rate of incidence of diabetes that significantly
exceeds the national average rate of all areas.
(e) Evaluation and Report.--
(1) Evaluations.--The Secretary shall conduct evaluations
of the clinical and cost effectiveness of the demonstration
projects.
(2) Reports.--Not later than 2 years after the commencement
of the demonstration projects, and biannually thereafter, the
Secretary shall submit to Congress a report on the
evaluation, and shall include in the report the following:
(A) An analysis of the patient outcomes and costs of
furnishing care to the individuals with chronic conditions
participating in the projects as compared to such outcomes
and costs to other individuals for the same health
conditions.
(B) Evaluation of patient satisfaction under the
demonstration projects.
(C) Such recommendations regarding the extension,
expansion, or termination of the projects as the Secretary
determines appropriate.
(f) Waiver Authority.--The Secretary shall waive compliance
with the requirements of title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) to such extent and for such
period as the Secretary determines is necessary to conduct
demonstration projects.
(g) Authorization of Appropriations.--(1) Payments for the
costs of carrying out the demonstration project under this
section shall be made from the Federal Supplementary Medical
Insurance Trust Fund under section 1841 of such Act (42
U.S.C. 1395t).
(2) There are authorized to be appropriated from such Trust
Fund such sums as may be necessary for the Secretary to enter
into contracts with appropriate organizations for the deign,
implementation, and evaluation of the demonstration project.
(3) In no case may expenditures under this section exceed
the aggregate expenditures that would otherwise have been
made for the provision of personal care services.
SEC. 349. MEDICARE CARE MANAGEMENT PERFORMANCE DEMONSTRATION.
(a) Establishment.--
(1) In general.--The Secretary shall establish a pay-for-
performance demonstration program with physicians to meet the
needs of eligible beneficiaries through the adoption and use
of health information technology and evidence-based outcomes
measures for--
(A) promoting continuity of care;
(B) helping stabilize medical conditions;
(C) preventing or minimizing acute exacerbations of chronic
conditions; and
(D) reducing adverse health outcomes, such as adverse drug
interactions related to polypharmacy.
(2) Sites.--The Secretary shall designate no more than 4
sites at which to conduct the demonstration program under
this section, of which--
(A) 2 shall be in an urban area;
(B) 1 shall be in a rural area; and
(C) 1 shall be in a State with a medical school with a
Department of Geriatrics that manages rural outreach sites
and is capable of managing patients with multiple chronic
conditions, one of which is dementia.
(3) Duration.--The Secretary shall conduct the
demonstration program under this section for a 3-year period.
(4) Consultation.--In carrying out the demonstration
program under this section, the Secretary shall consult with
private sector and non-profit groups that are undertaking
similar efforts to improve quality and reduce avoidable
hospitalizations for chronically ill patients.
(b) Participation.--
(1) In general.--A physician who provides care for a
minimum number of eligible beneficiaries (as specified by the
Secretary) may participate in the demonstration program under
this section if such physician agrees, to phase-in over the
course of the 3-year demonstration period and with the
assistance provided under subsection (d)(2)--
(A) the use of health information technology to manage the
clinical care of eligible beneficiaries consistent with
paragraph (3); and
(B) the electronic reporting of clinical quality and
outcomes measures in accordance with requirements established
by the Secretary under the demonstration program.
(2) Special rule.--In the case of the sites referred to in
subparagraphs (B) and (C) of subsection (a)(2), a physician
who provides care for a minimum number of beneficiaries with
two or more chronic conditions, including dementia (as
specified by the Secretary), may participate in the program
under this section if such physician agrees to the
requirements in subparagraphs (A) and (B) of paragraph (1).
(3) Practice standards.--Each physician participating in
the demonstration program under this section must demonstrate
the ability--
(A) to assess each eligible beneficiary for conditions
other than chronic conditions, such as impaired cognitive
ability and co-morbidities, for the purposes of developing
care management requirements;
(B) to serve as the primary contact of eligible
beneficiaries in accessing items and services for which
payment may be made under the medicare program;
(C) to establish and maintain health care information
system for such beneficiaries;
(D) to promote continuity of care across providers and
settings;
(E) to use evidence-based guidelines and meet such clinical
quality and outcome measures as the Secretary shall require;
(F) to promote self-care through the provision of patient
education and support for patients or, where appropriate,
family caregivers;
(G) when appropriate, to refer such beneficiaries to
community service organizations; and
(H) to meet such other complex care management requirements
as the Secretary may specify.
The guidelines and measures required under subparagraph (E)
shall be designed to take into account beneficiaries with
multiple chronic conditions.
(c) Payment Methodology.--Under the demonstration program
under this section the Secretary shall pay a per beneficiary
amount to each participating physician who meets or exceeds
specific performance standards established by the Secretary
with respect to the clinical quality and outcome measures
reported under subsection (b)(1)(B). Such amount may vary
based on different levels of performance or improvement.
(d) Administration.--
(1) Use of quality improvement organizations.--The
Secretary shall contract with quality improvement
organizations or such other entities as the Secretary deems
appropriate to enroll physicians and evaluate their
performance under the demonstration program under this
section.
(2) Technical assistance.--The Secretary shall require in
such contracts that the contractor be responsible for
technical assistance and education as needed to physicians
[[Page S15441]]
enrolled in the demonstration program under this section for
the purpose of aiding their adoption of health information
technology, meeting practice standards, and implementing
required clinical and outcomes measures.
(e) Funding.--
(1) In general.--The Secretary shall provide for the
transfer from the Federal Supplementary Medical Insurance
Trust Fund established under section 1841 of the Social
Security Act (42 U.S.C. 1395t) of such funds as are necessary
for the costs of carrying out the demonstration program under
this section.
(2) Budget neutrality.--In conducting the demonstration
program under this section, the Secretary shall ensure that
the aggregate payments made by the Secretary do not exceed
the amount which the Secretary estimates would have been paid
if the demonstration program under this section was not
implemented.
(f) Waiver Authority.--The Secretary may waive such
requirements of titles XI and XVIII of the Social Security
Act (42 U.S.C. 1301 et seq.; 1395 et seq.) as may be
necessary for the purpose of carrying out the demonstration
program under this section.
(g) Report.--Not later than 12 months after the date of
completion of the demonstration program under this section,
the Secretary shall submit to Congress a report on such
program, together with recommendations for such legislation
and administrative action as the Secretary determines to be
appropriate.
(h) Definitions.--In this section:
(1) Eligible beneficiary.--The term ``eligible
beneficiary'' means any individual who--
(A) is entitled to benefits under part A and enrolled for
benefits under part B of title XVIII of the Social Security
Act and is not enrolled in a plan under part C of such title;
and
(B) has one or more chronic medical conditions specified by
the Secretary (one of which may be cognitive impairment).
(2) Health information technology.--The term ``health
information technology'' means email communication, clinical
alerts and reminders, and other information technology that
meets such functionality, interoperability, and other
standards as prescribed by the Secretary.
SEC. 350. GAO STUDY AND REPORT ON THE PROPAGATION OF
CONCIERGE CARE.
(a) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct a study on concierge care (as defined in
paragraph (2)) to determine the extent to which such care--
(A) is used by medicare beneficiaries (as defined in
section 1802(b)(5)(A) of the Social Security Act (42 U.S.C.
1395a(b)(5)(A))); and
(B) has impacted upon the access of medicare beneficiaries
(as so defined) to items and services for which reimbursement
is provided under the medicare program under title XVIII of
the Social Security Act (42 U.S.C. 1395 et seq.).
(2) Concierge care.--In this section, the term ``concierge
care'' means an arrangement under which, as a prerequisite
for the provision of a health care item or service to an
individual, a physician, practitioner (as described in
section 1842(b)(18)(C) of the Social Security Act (42 U.S.C.
1395u(b)(18)(C))), or other individual--
(A) charges a membership fee or another incidental fee to
an individual desiring to receive the health care item or
service from such physician, practitioner, or other
individual; or
(B) requires the individual desiring to receive the health
care item or service from such physician, practitioner, or
other individual to purchase an item or service.
(b) Report.--Not later than the date that is 12 months
after the date of enactment of this Act, the Comptroller
General of the United States shall submit to Congress a
report on the study conducted under subsection (a)(1)
together with such recommendations for legislative or
administrative action as the Comptroller General determines
to be appropriate.
SEC. 351. DEMONSTRATION OF COVERAGE OF CHIROPRACTIC SERVICES
UNDER MEDICARE.
(a) Definitions.--In this section:
(1) Chiropractic services.--The term ``chiropractic
services'' has the meaning given that term by the Secretary
for purposes of the demonstration projects, but shall
include, at a minimum--
(A) care for neuromusculoskeletal conditions typical among
eligible beneficiaries; and
(B) diagnostic and other services that a chiropractor is
legally authorized to perform by the State or jurisdiction in
which such treatment is provided.
(2) Demonstration project.--The term ``demonstration
project'' means a demonstration project established by the
Secretary under subsection (b)(1).
(3) Eligible beneficiary.--The term ``eligible
beneficiary'' means an individual who is enrolled under part
B of the medicare program.
(4) Medicare program.--The term ``medicare program'' means
the health benefits program under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.).
(b) Demonstration of Coverage of Chiropractic Services
Under Medicare.--
(1) Establishment.--The Secretary shall establish
demonstration projects in accordance with the provisions of
this section for the purpose of evaluating the feasibility
and advisability of covering chiropractic services under the
medicare program (in addition to the coverage provided for
services consisting of treatment by means of manual
manipulation of the spine to correct a subluxation described
in section 1861(r)(5) of the Social Security Act (42 U.S.C.
1395x(r)(5))).
(2) No physician approval required.--In establishing the
demonstration projects, the Secretary shall ensure that an
eligible beneficiary who participates in a demonstration
project, including an eligible beneficiary who is enrolled
for coverage under a Medicare+Choice plan (or, on and after
January 1, 2006, under a Medicare Advantage plan), is not
required to receive approval from a physician or other health
care provider in order to receive a chiropractic service
under a demonstration project.
(3) Consultation.--In establishing the demonstration
projects, the Secretary shall consult with chiropractors,
organizations representing chiropractors, eligible
beneficiaries, and organizations representing eligible
beneficiaries.
(4) Participation.--Any eligible beneficiary may
participate in the demonstration projects on a voluntary
basis.
(c) Conduct of Demonstration Projects.--
(1) Demonstration sites.--
(A) Selection of demonstration sites.--The Secretary shall
conduct demonstration projects at 4 demonstration sites.
(B) Geographic diversity.--Of the sites described in
subparagraph (A)--
(i) 2 shall be in rural areas; and
(ii) 2 shall be in urban areas.
(C) Sites located in hpsas.--At least 1 site described in
clause (i) of subparagraph (B) and at least 1 site described
in clause (ii) of such subparagraph shall be located in an
area that is designated under section 332(a)(1)(A) of the
Public Health Service Act (42 U.S.C. 254e(a)(1)(A)) as a
health professional shortage area.
(2) Implementation; duration.--
(A) Implementation.--The Secretary shall not implement the
demonstration projects before October 1, 2004.
(B) Duration.--The Secretary shall complete the
demonstration projects by the date that is 2 years after the
date on which the first demonstration project is implemented.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall conduct an evaluation
of the demonstration projects--
(A) to determine whether eligible beneficiaries who use
chiropractic services use a lesser overall amount of items
and services for which payment is made under the medicare
program than eligible beneficiaries who do not use such
services;
(B) to determine the cost of providing payment for
chiropractic services under the medicare program;
(C) to determine the satisfaction of eligible beneficiaries
participating in the demonstration projects and the quality
of care received by such beneficiaries; and
(D) to evaluate such other matters as the Secretary
determines is appropriate.
(2) Report.--Not later than the date that is 1 year after
the date on which the demonstration projects conclude, the
Secretary shall submit to Congress a report on the evaluation
conducted under paragraph (1) together with such
recommendations for legislation or administrative action as
the Secretary determines is appropriate.
(e) Waiver of Medicare Requirements.--The Secretary shall
waive compliance with such requirements of the medicare
program to the extent and for the period the Secretary finds
necessary to conduct the demonstration projects.
(f) Funding.--
(1) Demonstration projects.--
(A) In general.--Subject to subparagraph (B) and paragraph
(2), the Secretary shall provide for the transfer from the
Federal Supplementary Insurance Trust Fund under section 1841
of the Social Security Act (42 U.S.C. 1395t) of such funds as
are necessary for the costs of carrying out the demonstration
projects under this section.
(B) Limitation.--In conducting the demonstration projects
under this section, the Secretary shall ensure that the
aggregate payments made by the Secretary under the medicare
program do not exceed the amount which the Secretary would
have paid under the medicare program if the demonstration
projects under this section were not implemented.
(2) Evaluation and report.--There are authorized to be
appropriated such sums as are necessary for the purpose of
developing and submitting the report to Congress under
subsection (d).
TITLE IV--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 401. DEMONSTRATION PROJECT TO CLARIFY THE DEFINITION OF
HOMEBOUND.
(a) Demonstration Project.--Not later than 180 days after
the date of the enactment of this Act, the Secretary shall
conduct a 2-year demonstration project under part B of title
XVIII of the Social Security Act under which medicare
beneficiaries with chronic conditions described in subsection
(b) are deemed to be homebound for purposes of receiving home
health services under the medicare program.
[[Page S15442]]
(b) Medicare Beneficiary Described.--For purposes of
subsection (a), a medicare beneficiary is eligible to be
deemed to be homebound, without regard to the purpose,
frequency, or duration of absences from the home, if--
(1) the beneficiary has been certified by one physician as
an individual who has a permanent and severe, disabling
condition that is not expected to improve;
(2) the beneficiary is dependent upon assistance from
another individual with at least 3 out of the 5 activities of
daily living for the rest of the beneficiary's life;
(3) the beneficiary requires skilled nursing services for
the rest of the beneficiary's life and the skilled nursing is
more than medication management;
(4) an attendant is required to visit the beneficiary on a
daily basis to monitor and treat the beneficiary's medical
condition or to assist the beneficiary with activities of
daily living;
(5) the beneficiary requires technological assistance or
the assistance of another person to leave the home; and
(6) the beneficiary does not regularly work in a paid
position full-time or part-time outside the home.
(c) Demonstration Project Sites.--The demonstration project
established under this section shall be conducted in 3 States
selected by the Secretary to represent the Northeast,
Midwest, and Western regions of the United States.
(d) Limitation on Number of Participants.--The aggregate
number of such beneficiaries that may participate in the
project may not exceed 15,000.
(e) Data.--The Secretary shall collect such data on the
demonstration project with respect to the provision of home
health services to medicare beneficiaries that relates to
quality of care, patient outcomes, and additional costs, if
any, to the medicare program.
(f) Report to Congress.--Not later than 1 year after the
date of the completion of the demonstration project under
this section, the Secretary shall submit to Congress a report
on the project using the data collected under subsection (e).
The report shall include the following:
(1) An examination of whether the provision of home health
services to medicare beneficiaries under the project has had
any of the following effects:
(A) Has adversely affected the provision of home health
services under the medicare program.
(B) Has directly caused an increase of expenditures under
the medicare program for the provision of such services that
is directly attributable to such clarification.
(2) The specific data evidencing the amount of any increase
in expenditures that is directly attributable to the
demonstration project (expressed both in absolute dollar
terms and as a percentage) above expenditures that would
otherwise have been incurred for home health services under
the medicare program.
(3) Specific recommendations to exempt permanently and
severely disabled homebound beneficiaries from restrictions
on the length, frequency, and purpose of their absences from
the home to qualify for home health services without
incurring additional costs to the medicare program.
(g) Waiver Authority.--The Secretary shall waive compliance
with the requirements of title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) to such extent and for such
period as the Secretary determines is necessary to conduct
demonstration projects.
(h) Construction.--Nothing in this section shall be
construed as waiving any applicable civil monetary penalty,
criminal penalty, or other remedy available to the Secretary
under title XI or title XVIII of the Social Security Act for
acts prohibited under such titles, including penalties for
false certifications for purposes of receipt of items or
services under the medicare program.
(i) Authorization of Appropriations.--Payments for the
costs of carrying out the demonstration project under this
section shall be made from the Federal Supplementary Medical
Insurance Trust Fund under section 1841 of such Act (42
U.S.C. 1395t).
(j) Definitions.--In this section:
(1) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual who is enrolled under part
B of title XVIII of the Social Security Act.
(2) Home health services.--The term ``home health
services'' has the meaning given such term in section 1861(m)
of the Social Security Act (42 U.S.C. 1395x(m)).
(3) Activities of daily living defined.--The term
``activities of daily living'' means eating, toileting,
transferring, bathing, and dressing.
SEC. 402. DEMONSTRATION PROJECT FOR MEDICAL ADULT DAY-CARE
SERVICES.
(a) Establishment.--Subject to the succeeding provisions of
this section, the Secretary shall establish a demonstration
project (in this section referred to as the ``demonstration
project'') under which the Secretary shall, as part of a plan
of an episode of care for home health services established
for a medicare beneficiary, permit a home health agency,
directly or under arrangements with a medical adult day-care
facility, to provide medical adult day-care services as a
substitute for a portion of home health services that would
otherwise be provided in the beneficiary's home.
(b) Payment.--
(1) In general.--Subject to paragraph (2), the amount of
payment for an episode of care for home health services, a
portion of which consists of substitute medical adult day-
care services, under the demonstration project shall be made
at a rate equal to 95 percent of the amount that would
otherwise apply for such home health services under section
1895 of the Social Security Act (42 U.S.C. 1395fff). In no
case may a home health agency, or a medical adult day-care
facility under arrangements with a home health agency,
separately charge a beneficiary for medical adult day-care
services furnished under the plan of care.
(2) Adjustment in case of overutilization of substitute
adult day-care services to ensure budget neutrality.--The
Secretary shall monitor the expenditures under the
demonstration project and under title XVIII of the Social
Security Act for home health services. If the Secretary
estimates that the total expenditures under the demonstration
project and under such title XVIII for home health services
for a period determined by the Secretary exceed expenditures
that would have been made under such title XVIII for home
health services for such period if the demonstration project
had not been conducted, the Secretary shall adjust the rate
of payment to medical adult day-care facilities under
paragraph (1) in order to eliminate such excess.
(c) Demonstration Project Sites.--The demonstration project
established under this section shall be conducted in not more
than 5 sites in States selected by the Secretary that license
or certify providers of services that furnish medical adult
day-care services.
(d) Duration.--The Secretary shall conduct the
demonstration project for a period of 3 years.
(e) Voluntary Participation.--Participation of medicare
beneficiaries in the demonstration project shall be
voluntary. The total number of such beneficiaries that may
participate in the project at any given time may not exceed
15,000.
(f) Preference in Selecting Agencies.--In selecting home
health agencies to participate under the demonstration
project, the Secretary shall give preference to those
agencies that are currently licensed or certified through
common ownership and control to furnish medical adult day-
care services.
(g) Waiver Authority.--The Secretary may waive such
requirements of title XVIII of the Social Security Act as may
be necessary for the purposes of carrying out the
demonstration project, other than waiving the requirement
that an individual be homebound in order to be eligible for
benefits for home health services.
(h) Evaluation and Report.--The Secretary shall conduct an
evaluation of the clinical and cost-effectiveness of the
demonstration project. Not later than 6 months after the
completion of the project, the Secretary shall submit to
Congress a report on the evaluation, and shall include in the
report the following:
(1) An analysis of the patient outcomes and costs of
furnishing care to the medicare beneficiaries participating
in the project as compared to such outcomes and costs to
beneficiaries receiving only home health services for the
same health conditions.
(2) Such recommendations regarding the extension,
expansion, or termination of the project as the Secretary
determines appropriate.
(i) Definitions.--In this section:
(1) Home health agency.--The term ``home health agency''
has the meaning given such term in section 1861(o) of the
Social Security Act (42 U.S.C. 1395x(o)).
(2) Medical adult day-care facility.--The term ``medical
adult day-care facility'' means a facility that--
(A) has been licensed or certified by a State to furnish
medical adult day-care services in the State for a continuous
2-year period;
(B) is engaged in providing skilled nursing services and
other therapeutic services directly or under arrangement with
a home health agency;
(C) is licensed and certified by the State in which it
operates or meets such standards established by the Secretary
to assure quality of care and such other requirements as the
Secretary finds necessary in the interest of the health and
safety of individuals who are furnished services in the
facility; and
(D) provides medical adult day-care services.
(3) Medical adult day-care services.--The term ``medical
adult day-care services'' means--
(A) home health service items and services described in
paragraphs (1) through (7) of section 1861(m) furnished in a
medical adult day-care facility;
(B) a program of supervised activities furnished in a group
setting in the facility that--
(i) meet such criteria as the Secretary determines
appropriate; and
(ii) is designed to promote physical and mental health of
the individuals; and
(C) such other services as the Secretary may specify.
(4) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual entitled to benefits under
part A of this title, enrolled under part B of this title, or
both.
SEC. 403. TEMPORARY SUSPENSION OF OASIS REQUIREMENT FOR
COLLECTION OF DATA ON NON-MEDICARE AND NON-
MEDICAID PATIENTS.
(a) In General.--During the period described in subsection
(b), the Secretary may
[[Page S15443]]
not require, under section 4602(e) of the Balanced Budget Act
of 1997 (Public Law 105-33; 111 Stat. 467) or otherwise under
OASIS, a home health agency to gather or submit information
that relates to an individual who is not eligible for
benefits under either title XVIII or title XIX of the Social
Security Act (such information in this section referred to as
``non-medicare/medicaid OASIS information'').
(b) Period of Suspension.--The period described in this
subsection--
(1) begins on the date of the enactment of this Act; and
(2) ends on the last day of the second month beginning
after the date as of which the Secretary has published final
regulations regarding the collection and use by the Centers
for Medicare & Medicaid Services of non-medicare/medicaid
OASIS information following the submission of the report
required under subsection (c).
(c) Report.--
(1) Study.--The Secretary shall conduct a study on how non-
medicare/medicaid OASIS information is and can be used by
large home health agencies. Such study shall examine--
(A) whether there are unique benefits from the analysis of
such information that cannot be derived from other
information available to, or collected by, such agencies; and
(B) the value of collecting such information by small home
health agencies compared to the administrative burden related
to such collection.
In conducting the study the Secretary shall obtain
recommendations from quality assessment experts in the use of
such information and the necessity of small, as well as
large, home health agencies collecting such information.
(2) Report.--The Secretary shall submit to Congress a
report on the study conducted under paragraph (1) by not
later than 18 months after the date of the enactment of this
Act.
(d) Construction.--Nothing in this section shall be
construed as preventing home health agencies from collecting
non-medicare/medicaid OASIS information for their own use.
SEC. 404. MEDPAC STUDY ON MEDICARE MARGINS OF HOME HEALTH
AGENCIES.
(a) Study.--The Medicare Payment Advisory Commission shall
conduct a study of payment margins of home health agencies
under the home health prospective payment system under
section 1895 of the Social Security Act (42 U.S.C. 1395fff).
Such study shall examine whether systematic differences in
payment margins are related to differences in case mix (as
measured by home health resource groups (HHRGs)) among such
agencies. The study shall use the partial or full-year cost
reports filed by home health agencies.
(b) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study under subsection (a).
SEC. 405. COVERAGE OF RELIGIOUS NONMEDICAL HEALTH CARE
INSTITUTION SERVICES FURNISHED IN THE HOME.
(a) In General.--Section 1821(a) (42 U.S.C. 1395i-5(a)) is
amended--
(1) in the matter preceding paragraph (1), by inserting
``and for home health services furnished an individual by a
religious nonmedical health care institution'' after
``religious nonmedical health care institution''; and
(2) in paragraph (2)--
(A) by striking ``or extended care services'' and inserting
``, extended care services, or home health services''; and
(B) by inserting ``, or receiving services from a home
health agency,'' after ``skilled nursing facility''.
(b) Definition.--Section 1861 (42 U.S.C. 1395x), as amended
by section 342, is amended by adding at the end the following
new section:
``Extended Care in Religious Nonmedical Health Care Institutions
``(aaa)(1) The term `home health agency' also includes a
religious nonmedical health care institution (as defined in
subsection (ss)(1)), but only with respect to items and
services ordinarily furnished by such an institution to
individuals in their homes, and that are comparable to items
and services furnished to individuals by a home health agency
that is not religious nonmedical health care institution.
``(2)(A) Subject to subparagraphs (B), payment may be made
with respect to services provided by such an institution only
to such extent and under such conditions, limitations, and
requirements (in addition to or in lieu of the conditions,
limitations, and requirements otherwise applicable) as may be
provided in regulations consistent with section 1821.
``(B) Notwithstanding any other provision of this title,
payment may not be made under subparagraph (A)--
``(i) in a year insofar as such payments exceed $700,000;
and
``(ii) after December 31, 2006.''.
Subtitle B--Graduate Medical Education
SEC. 411. EXCEPTION TO INITIAL RESIDENCY PERIOD FOR GERIATRIC
RESIDENCY OR FELLOWSHIP PROGRAMS.
(a) Clarification of Congressional Intent.--Congress
intended section 1886(h)(5)(F)(ii) of the Social Security Act
(42 U.S.C. 1395ww(h)(5)(F)(ii)), as added by section 9202 of
the Consolidated Omnibus Budget Reconciliation Act of 1985
(Public Law 99-272), to provide an exception to the initial
residency period for geriatric residency or fellowship
programs such that, where a particular approved geriatric
training program requires a resident to complete 2 years of
training to initially become board eligible in the geriatric
specialty, the 2 years spent in the geriatric training
program are treated as part of the resident's initial
residency period, but are not counted against any limitation
on the initial residency period.
(b) Interim Final Regulatory Authority and Effective
Date.--The Secretary shall promulgate interim final
regulations consistent with the congressional intent
expressed in this section after notice and pending
opportunity for public comment to be effective for cost
reporting periods beginning on or after October 1, 2003.
SEC. 412. TREATMENT OF VOLUNTEER SUPERVISION.
(a) Moratorium on Changes in Treatment.--During the 1-year
period beginning on January 1, 2004, for purposes of applying
subsections (d)(5)(B) and (h) of section 1886 of the Social
Security Act (42 U.S.C. 1395ww), the Secretary shall allow
all hospitals to count residents in osteopathic and
allopathic family practice programs in existence as of
January 1, 2002, who are training at non-hospital sites,
without regard to the financial arrangement between the
hospital and the teaching physician practicing in the non-
hospital site to which the resident has been assigned.
(b) Study and Report.--
(1) Study.--The Inspector General of the Department of
Health and Human Services shall conduct a study of the
appropriateness of alternative payment methodologies under
such sections for the costs of training residents in non-
hospital settings.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Inspector General shall submit to
Congress a report on the study conducted under paragraph (1),
together with such recommendations as the Inspector General
determines appropriate.
Subtitle C--Chronic Care Improvement
SEC. 421. VOLUNTARY CHRONIC CARE IMPROVEMENT UNDER
TRADITIONAL FEE-FOR-SERVICE.
(a) In General.--Title XVIII is amended by inserting after
section 1806 the following new section:
``chronic care improvement
``Sec. 1807. (a) Implementation of Chronic Care Improvement
Programs.--
``(1) In general.--The Secretary shall provide for the
phased-in development, testing, evaluation, and
implementation of chronic care improvement programs in
accordance with this section. Each such program shall be
designed to improve clinical quality and beneficiary
satisfaction and achieve spending targets with respect to
expenditures under this title for targeted beneficiaries with
one or more threshold conditions.
``(2) Definitions.--For purposes of this section:
``(A) Chronic care improvement program.--The term `chronic
care improvement program' means a program described in
paragraph (1) that is offered under an agreement under
subsection (b) or (c).
``(B) Chronic care improvement organization.--The term
`chronic care improvement organization' means an entity that
has entered into an agreement under subsection (b) or (c) to
provide, directly or through contracts with subcontractors, a
chronic care improvement program under this section. Such an
entity may be a disease management organization, health
insurer, integrated delivery system, physician group
practice, a consortium of such entities, or any other legal
entity that the Secretary determines appropriate to carry out
a chronic care improvement program under this section.
``(C) Care management plan.--The term `care management
plan' means a plan established under subsection (d) for a
participant in a chronic care improvement program.
``(D) Threshold condition.--The term `threshold condition'
means a chronic condition, such as congestive heart failure,
diabetes, chronic obstructive pulmonary disease (COPD), or
other diseases or conditions, as selected by the Secretary as
appropriate for the establishment of a chronic care
improvement program.
``(E) Targeted beneficiary.--The term `targeted
beneficiary' means, with respect to a chronic care
improvement program, an individual who--
``(i) is entitled to benefits under part A and enrolled
under part B, but not enrolled in a plan under part C;
``(ii) has one or more threshold conditions covered under
such program; and
``(iii) has been identified under subsection (d)(1) as a
potential participant in such program.
``(3) Construction.--Nothing in this section shall be
construed as--
``(A) expanding the amount, duration, or scope of benefits
under this title;
``(B) providing an entitlement to participate in a chronic
care improvement program under this section;
``(C) providing for any hearing or appeal rights under
section 1869, 1878, or otherwise, with respect to a chronic
care improvement program under this section; or
``(D) providing benefits under a chronic care improvement
program for which a claim may be submitted to the Secretary
by any provider of services or supplier (as defined in
section 1861(d)).
``(b) Developmental Phase (Phase I).--
[[Page S15444]]
``(1) In general.--In carrying out this section, the
Secretary shall enter into agreements consistent with
subsection (f) with chronic care improvement organizations
for the development, testing, and evaluation of chronic care
improvement programs using randomized controlled trials. The
first such agreement shall be entered into not later than 12
months after the date of the enactment of this section.
``(2) Agreement period.--The period of an agreement under
this subsection shall be for 3 years.
``(3) Minimum participation.--
``(A) In general.--The Secretary shall enter into
agreements under this subsection in a manner so that chronic
care improvement programs offered under this section are
offered in geographic areas that, in the aggregate, consist
of areas in which at least 10 percent of the aggregate number
of medicare beneficiaries reside.
``(B) Medicare beneficiary defined.--In this paragraph, the
term `medicare beneficiary' means an individual who is
entitled to benefits under part A, enrolled under part B, or
both, and who resides in the United States.
``(4) Site selection.--In selecting geographic areas in
which agreements are entered into under this subsection, the
Secretary shall ensure that each chronic care improvement
program is conducted in a geographic area in which at least
10,000 targeted beneficiaries reside among other individuals
entitled to benefits under part A, enrolled under part B, or
both to serve as a control population.
``(5) Independent evaluations of phase i programs.--The
Secretary shall contract for an independent evaluation of the
programs conducted under this subsection. Such evaluation
shall be done by a contractor with knowledge of chronic care
management programs and demonstrated experience in the
evaluation of such programs. Each evaluation shall include an
assessment of the following factors of the programs:
``(A) Quality improvement measures, such as adherence to
evidence-based guidelines and rehospitalization rates.
``(B) Beneficiary and provider satisfaction.
``(C) Health outcomes.
``(D) Financial outcomes, including any cost savings to the
program under this title.
``(c) Expanded Implementation Phase (Phase II).--
``(1) In general.--With respect to chronic care improvement
programs conducted under subsection (b), if the Secretary
finds that the results of the independent evaluation
conducted under subsection (b)(6) indicate that the
conditions specified in paragraph (2) have been met by a
program (or components of such program), the Secretary shall
enter into agreements consistent with subsection (f) to
expand the implementation of the program (or components) to
additional geographic areas not covered under the program as
conducted under subsection (b), which may include the
implementation of the program on a national basis. Such
expansion shall begin not earlier than 2 years after the
program is implemented under subsection (b) and not later
than 6 months after the date of completion of such program.
``(2) Conditions for expansion of programs.--The conditions
specified in this paragraph are, with respect to a chronic
care improvement program conducted under subsection (b) for a
threshold condition, that the program is expected to--
``(A) improve the clinical quality of care;
``(B) improve beneficiary satisfaction; and
``(C) achieve targets for savings to the program under this
title specified by the Secretary in the agreement within a
range determined to be appropriate by the Secretary, subject
to the application of budget neutrality with respect to the
program and not taking into account any payments by the
organization under the agreement under the program for risk
under subsection (f)(3)(B).
``(3) Independent evaluations of phase ii programs.--The
Secretary shall carry out evaluations of programs expanded
under this subsection as the Secretary determines
appropriate. Such evaluations shall be carried out in the
similar manner as is provided under subsection (b)(5).
``(d) Identification and Enrollment of Prospective Program
Participants.--
``(1) Identification of prospective program participants.--
The Secretary shall establish a method for identifying
targeted beneficiaries who may benefit from participation in
a chronic care improvement program.
``(2) Initial contact by secretary.--The Secretary shall
communicate with each targeted beneficiary concerning
participation in a chronic care improvement program. Such
communication may be made by the Secretary and shall include
information on the following:
``(A) A description of the advantages to the beneficiary in
participating in a program.
``(B) Notification that the organization offering a program
may contact the beneficiary directly concerning such
participation.
``(C) Notification that participation in a program is
voluntary.
``(D) A description of the method for the beneficiary to
participate or for declining to participate and the method
for obtaining additional information concerning such
participation.
``(3) Voluntary participation.--A targeted beneficiary may
participate in a chronic care improvement program on a
voluntary basis and may terminate participation at any time.
``(e) Chronic Care Improvement Programs.--
``(1) In general.--Each chronic care improvement program
shall--
``(A) have a process to screen each targeted beneficiary
for conditions other than threshold conditions, such as
impaired cognitive ability and co-morbidities, for the
purposes of developing an individualized, goal-oriented care
management plan under paragraph (2);
``(B) provide each targeted beneficiary participating in
the program with such plan; and
``(C) carry out such plan and other chronic care
improvement activities in accordance with paragraph (3).
``(2) Elements of care management plans.--A care management
plan for a targeted beneficiary shall be developed with the
beneficiary and shall, to the extent appropriate, include the
following:
``(A) A designated point of contact responsible for
communications with the beneficiary and for facilitating
communications with other health care providers under the
plan.
``(B) Self-care education for the beneficiary (through
approaches such as disease management or medical nutrition
therapy) and education for primary caregivers and family
members.
``(C) Education for physicians and other providers and
collaboration to enhance communication of relevant clinical
information.
``(D) The use of monitoring technologies that enable
patient guidance through the exchange of pertinent clinical
information, such as vital signs, symptomatic information,
and health self-assessment.
``(E) The provision of information about hospice care, pain
and palliative care, and end-of-life care.
``(3) Conduct of programs.--In carrying out paragraph
(1)(C) with respect to a participant, the chronic care
improvement organization shall--
``(A) guide the participant in managing the participant's
health (including all co-morbidities, relevant health care
services, and pharmaceutical needs) and in performing
activities as specified under the elements of the care
management plan of the participant;
``(B) use decision-support tools such as evidence-based
practice guidelines or other criteria as determined by the
Secretary; and
``(C) develop a clinical information database to track and
monitor each participant across settings and to evaluate
outcomes.
``(4) Additional responsibilities.--
``(A) Outcomes report.--Each chronic care improvement
organization offering a chronic care improvement program
shall monitor and report to the Secretary, in a manner
specified by the Secretary, on health care quality, cost, and
outcomes.
``(B) Additional requirements.--Each such organization and
program shall comply with such additional requirements as the
Secretary may specify.
``(5) Accreditation.--The Secretary may provide that
chronic care improvement programs and chronic care
improvement organizations that are accredited by qualified
organizations (as defined by the Secretary) may be deemed to
meet such requirements under this section as the Secretary
may specify.
``(f) Terms of Agreements.--
``(1) Terms and conditions.--
``(A) In general.--An agreement under this section with a
chronic care improvement organization shall contain such
terms and conditions as the Secretary may specify consistent
with this section.
``(B) Clinical, quality improvement, and financial
requirements.--The Secretary may not enter into an agreement
with such an organization under this section for the
operation of a chronic care improvement program unless--
``(i) the program and organization meet the requirements of
subsection (e) and such clinical, quality improvement,
financial, and other requirements as the Secretary deems to
be appropriate for the targeted beneficiaries to be served;
and
``(ii) the organization demonstrates to the satisfaction of
the Secretary that the organization is able to assume
financial risk for performance under the agreement (as
applied under paragraph (3)(B)) with respect to payments made
to the organization under such agreement through available
reserves, reinsurance, withholds, or such other means as the
Secretary determines appropriate.
``(2) Manner of payment.--Subject to paragraph (3)(B), the
payment under an agreement under--
``(A) subsection (b) shall be computed on a per-member per-
month basis; or
``(B) subsection (c) may be on a per-member per-month basis
or such other basis as the Secretary and organization may
agree.
``(3) Application of performance standards.--
``(A) Specification of performance standards.--Each
agreement under this section with a chronic care improvement
organization shall specify performance standards for each of
the factors specified in subsection (c)(2), including
clinical quality and spending targets under this title,
against which the performance of the chronic care improvement
organization under the agreement is measured.
``(B) Adjustment of payment based on performance.--
``(i) In general.--Each such agreement shall provide for
adjustments in payment
[[Page S15445]]
rates to an organization under the agreement insofar as the
Secretary determines that the organization failed to meet the
performance standards specified in the agreement under
subparagraph (A).
``(ii) Financial risk for performance.--In the case of an
agreement under subsection (b) or (c), the agreement shall
provide for a full recovery for any amount by which the fees
paid to the organization under the agreement exceed the
estimated savings to the programs under this title
attributable to implementation of such agreement.
``(4) Budget neutral payment condition.--Under this
section, the Secretary shall ensure that the aggregate sum of
medicare program benefit expenditures for beneficiaries
participating in chronic care improvement programs and funds
paid to chronic care improvement organizations under this
section, shall not exceed the medicare program benefit
expenditures that the Secretary estimates would have been
made for such targeted beneficiaries in the absence of such
programs.
``(g) Funding.--(1) Subject to paragraph (2), there are
appropriated to the Secretary, in appropriate part from the
Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund, such sums as may
be necessary to provide for agreements with chronic care
improvement programs under this section.
``(2) In no case shall the funding under this section
exceed $100,000,000 in aggregate increased expenditures under
this title (after taking into account any savings
attributable to the operation of this section) over the 3-
fiscal-year period beginning on October 1, 2003.''.
(b) Reports.--The Secretary shall submit to Congress
reports on the operation of section 1807 of the Social
Security Act, as added by subsection (a), as follows:
(1) Not later than 2 years after the date of the
implementation of such section, the Secretary shall submit to
Congress an interim report on the scope of implementation of
the programs under subsection (b) of such section, the design
of the programs, and preliminary cost and quality findings
with respect to those programs based on the following
measures of the programs:
(A) Quality improvement measures, such as adherence to
evidence-based guidelines and rehospitalization rates.
(B) Beneficiary and provider satisfaction.
(C) Health outcomes.
(D) Financial outcomes.
(2) Not later than 3 years and 6 months after the date of
the implementation of such section the Secretary shall submit
to Congress an update to the report required under paragraph
(1) on the results of such programs.
(3) The Secretary shall submit to Congress 2 additional
biennial reports on the chronic care improvement programs
conducted under such section. The first such report shall be
submitted not later than 2 years after the report is
submitted under paragraph (2). Each such report shall include
information on--
(A) the scope of implementation (in terms of both regions
and chronic conditions) of the chronic care improvement
programs;
(B) the design of the programs; and
(C) the improvements in health outcomes and financial
efficiencies that result from such implementation.
SEC. 422. MEDICARE ADVANTAGE QUALITY IMPROVEMENT PROGRAMS.
(a) In General.--Section 1852(e) (42 U.S.C. 1395w-22(e)) is
amended--
(1) in the heading, by striking ``Assurance'' and inserting
``Improvement'';
(2) by amending paragraphs (1) through (3) to read as
follows:
``(1) In general.--Each MA organization shall have an
ongoing quality improvement program for the purpose of
improving the quality of care provided to enrollees in each
MA plan offered by such organization (other than an MA
private fee-for-service plan or an MSA plan).
``(2) Chronic care improvement programs.--As part of the
quality improvement program under paragraph (1), each MA
organization shall have a chronic care improvement program.
Each chronic care improvement program shall have a method for
monitoring and identifying enrollees with multiple or
sufficiently severe chronic conditions that meet criteria
established by the organization for participation under the
program.
``(3) Data.--
``(A) Collection, analysis, and reporting.--
``(i) In general.--Except as provided in clauses (ii) and
(iii) with respect to plans described in such clauses and
subject to subparagraph (B), as part of the quality
improvement program under paragraph (1), each MA organization
shall provide for the collection, analysis, and reporting of
data that permits the measurement of health outcomes and
other indices of quality.
``(ii) Application to ma regional plans.--The Secretary
shall establish as appropriate by regulation requirements for
the collection, analysis, and reporting of data that permits
the measurement of health outcomes and other indices of
quality for MA organizations with respect to MA regional
plans. Such requirements may not exceed the requirements
under this subparagraph with respect to MA local plans that
are preferred provider organization plans.
``(iii) Application to preferred provider organizations.--
Clause (i) shall apply to MA organizations with respect to MA
local plans that are preferred provider organization plans
only insofar as services are furnished by providers or
services, physicians, and other health care practitioners and
suppliers that have contracts with such organization to
furnish services under such plans.
``(iv) Definition of preferred provider organization
plan.--In this subparagraph, the term `preferred provider
organization plan' means an MA plan that--
``(I) has a network of providers that have agreed to a
contractually specified reimbursement for covered benefits
with the organization offering the plan;
``(II) provides for reimbursement for all covered benefits
regardless of whether such benefits are provided within such
network of providers; and
``(III) is offered by an organization that is not licensed
or organized under State law as a health maintenance
organization.
``(B) Limitations.--
``(i) Types of data.--The Secretary shall not collect under
subparagraph (A) data on quality, outcomes, and beneficiary
satisfaction to facilitate consumer choice and program
administration other than the types of data that were
collected by the Secretary as of November 1, 2003.
``(ii) Changes in types of data.--Subject to subclause
(iii), the Secretary may only change the types of data that
are required to be submitted under subparagraph (A) after
submitting to Congress a report on the reasons for such
changes that was prepared in consultation with MA
organizations and private accrediting bodies.
``(iii) Construction.--Nothing in the subsection shall be
construed as restricting the ability of the Secretary to
carry out the duties under section 1851(d)(4)(D).'';
(3) in paragraph (4)(B), by amending clause (i) to read as
follows:
``(i) Paragraphs (1) through (3) of this subsection
(relating to quality improvement programs).''; and
(4) by striking paragraph (5).
(b) Conforming Amendment.--Section 1852(c)(1)(I) (42 U.S.C.
1395w-22(c)(1)(I)) is amended to read as follows:
``(I) Quality improvement program.--A description of the
organization's quality improvement program under subsection
(e).''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to contract years beginning on and
after January 1, 2006.
SEC. 423. CHRONICALLY ILL MEDICARE BENEFICIARY RESEARCH,
DATA, DEMONSTRATION STRATEGY.
(a) Development of Plan.--Not later than 6 months after the
date of the enactment of this Act, the Secretary shall
develop a plan to improve quality of care and reduce the cost
of care for chronically ill medicare beneficiaries.
(b) Plan Requirements.--The plan will utilize existing data
and identify data gaps, develop research initiatives, and
propose intervention demonstration programs to provide better
health care for chronically ill medicare beneficiaries. The
plan shall--
(1) integrate existing data sets including, the Medicare
Current Beneficiary Survey (MCBS), Minimum Data Set (MDS),
Outcome and Assessment Information Set (OASIS), data from
Quality Improvement Organizations (QIO), and claims data;
(2) identify any new data needs and a methodology to
address new data needs;
(3) plan for the collection of such data in a data
warehouse; and
(4) develop a research agenda using such data.
(c) Consultation.--In developing the plan under this
section, the Secretary shall consult with experts in the
fields of care for the chronically ill (including
clinicians).
(d) Implementation.--Not later than 2 years after the date
of the enactment of this Act, the Secretary shall implement
the plan developed under this section. The Secretary may
contract with appropriate entities to implement such plan.
(e) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary such sums as may be
necessary in fiscal years 2004 and 2005 to carry out this
section.
Subtitle D--Other Provisions
SEC. 431. IMPROVEMENTS IN NATIONAL AND LOCAL COVERAGE
DETERMINATION PROCESS TO RESPOND TO CHANGES IN
TECHNOLOGY.
(a) National and Local Coverage Determination Process.--
(1) In general.--Section 1862 (42 U.S.C. 1395y), as amended
by sections 948 and 950, is amended--
(A) in the third sentence of subsection (a), by inserting
``consistent with subsection (l)'' after ``the Secretary
shall ensure''; and
(B) by adding at the end the following new subsection:
``(l) National and Local Coverage Determination Process.--
``(1) Factors and evidence used in making national coverage
determinations.--The Secretary shall make available to the
public the factors considered in making national coverage
determinations of whether an item or service is reasonable
and necessary. The Secretary shall develop guidance documents
to carry out this paragraph in a manner similar to the
development of guidance documents under section 701(h) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 371(h)).
``(2) Timeframe for decisions on requests for national
coverage determinations.--In
[[Page S15446]]
the case of a request for a national coverage determination
that--
``(A) does not require a technology assessment from an
outside entity or deliberation from the Medicare Coverage
Advisory Committee, the decision on the request shall be made
not later than 6 months after the date of the request; or
``(B) requires such an assessment or deliberation and in
which a clinical trial is not requested, the decision on the
request shall be made not later than 9 months after the date
of the request.
``(3) Process for public comment in national coverage
determinations.--
``(A) Period for proposed decision.--Not later than the end
of the 6-month period (or 9-month period for requests
described in paragraph (2)(B)) that begins on the date a
request for a national coverage determination is made, the
Secretary shall make a draft of proposed decision on the
request available to the public through the Internet website
of the Centers for Medicare & Medicaid Services or other
appropriate means.
``(B) 30-day period for public comment.--Beginning on the
date the Secretary makes a draft of the proposed decision
available under subparagraph (A), the Secretary shall provide
a 30-day period for public comment on such draft.
``(C) 60-day period for final decision.--Not later than 60
days after the conclusion of the 30-day period referred to
under subparagraph (B), the Secretary shall--
``(i) make a final decision on the request;
``(ii) include in such final decision summaries of the
public comments received and responses to such comments;
``(iii) make available to the public the clinical evidence
and other data used in making such a decision when the
decision differs from the recommendations of the Medicare
Coverage Advisory Committee; and
``(iv) in the case of a final decision under clause (i) to
grant the request for the national coverage determination,
the Secretary shall assign a temporary or permanent code
(whether existing or unclassified) and implement the coding
change.
``(4) Consultation with outside experts in certain national
coverage determinations.--With respect to a request for a
national coverage determination for which there is not a
review by the Medicare Coverage Advisory Committee, the
Secretary shall consult with appropriate outside clinical
experts.
``(5) Local coverage determination process.--
``(A) Plan to promote consistency of coverage
determinations.--The Secretary shall develop a plan to
evaluate new local coverage determinations to determine which
determinations should be adopted nationally and to what
extent greater consistency can be achieved among local
coverage determinations.
``(B) Consultation.--The Secretary shall require the fiscal
intermediaries or carriers providing services within the same
area to consult on all new local coverage determinations
within the area.
``(C) Dissemination of information.--The Secretary should
serve as a center to disseminate information on local
coverage determinations among fiscal intermediaries and
carriers to reduce duplication of effort.
``(6) National and local coverage determination defined.--
For purposes of this subsection--
``(A) National coverage determination.--The term `national
coverage determination' means a determination by the
Secretary with respect to whether or not a particular item or
service is covered nationally under this title.
``(B) Local coverage determination.--The term `local
coverage determination' has the meaning given that in section
1869(f)(2)(B).''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to national coverage determinations as of January
1, 2004, and section 1862(l)(5) of the Social Security Act,
as added by such paragraph, shall apply to local coverage
determinations made on or after July 1, 2004.
(b) Medicare Coverage of Routine Costs Associated With
Certain Clinical Trials of Category A Devices.--
(1) In general.--Section 1862 (42 U.S.C. 1395y), as amended
by subsection (a), is amended by adding at the end the
following new subsection:
``(m) Coverage of Routine Costs Associated With Certain
Clinical Trials of Category A Devices.--
``(1) In general.--In the case of an individual entitled to
benefits under part A, or enrolled under part B, or both who
participates in a category A clinical trial, the Secretary
shall not exclude under subsection (a)(1) payment for
coverage of routine costs of care (as defined by the
Secretary) furnished to such individual in the trial.
``(2) Category a clinical trial.--For purposes of paragraph
(1), a `category A clinical trial' means a trial of a medical
device if--
``(A) the trial is of an experimental/investigational
(category A) medical device (as defined in regulations under
section 405.201(b) of title 42, Code of Federal Regulations
(as in effect as of September 1, 2003));
``(B) the trial meets criteria established by the Secretary
to ensure that the trial conforms to appropriate scientific
and ethical standards; and
``(C) in the case of a trial initiated before January 1,
2010, the device involved in the trial has been determined by
the Secretary to be intended for use in the diagnosis,
monitoring, or treatment of an immediately life-threatening
disease or condition.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to routine costs incurred on and after January 1,
2005, and, as of such date, section 411.15(o) of title 42,
Code of Federal Regulations, is superseded to the extent
inconsistent with section 1862(m) of the Social Security Act,
as added by such paragraph.
(3) Rule of construction.--Nothing in the amendment made by
paragraph (1) shall be construed as applying to, or
affecting, coverage or payment for a nonexperimental/
investigational (category B) device.
(c) Issuance of Temporary National Codes.--Not later than
July 1, 2004, the Secretary shall implement revised
procedures for the issuance of temporary national HCPCS codes
under part B of title XVIII of the Social Security Act.
SEC. 432. EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN
PATHOLOGY SERVICES UNDER MEDICARE.
Section 542(c) of BIPA (114 Stat. 2763A-551) is amended by
inserting ``, and for services furnished during 2005 and
2006'' before the period at the end.
SEC. 433. PAYMENT FOR PANCREATIC ISLET CELL INVESTIGATIONAL
TRANSPLANTS FOR MEDICARE BENEFICIARIES IN
CLINICAL TRIALS.
(a) Clinical Trial.--
(1) In general.--The Secretary, acting through the National
Institute of Diabetes and Digestive and Kidney Disorders,
shall conduct a clinical investigation of pancreatic islet
cell transplantation which includes medicare beneficiaries.
(2) Authorization of appropriations.--There are authorized
to be appropriated to the Secretary such sums as may be
necessary to conduct the clinical investigation under
paragraph (1).
(b) Medicare Payment.--Not earlier than October 1, 2004,
the Secretary shall pay for the routine costs as well as
transplantation and appropriate related items and services
(as described in subsection (c)) in the case of medicare
beneficiaries who are participating in a clinical trial
described in subsection (a) as if such transplantation were
covered under title XVIII of such Act and as would be paid
under part A or part B of such title for such beneficiary.
(c) Scope of Payment.--For purposes of subsection (b):
(1) The term ``routine costs'' means reasonable and
necessary routine patient care costs (as defined in the
Centers for Medicare & Medicaid Services Coverage Issues
Manual, section 30-1), including immunosuppressive drugs and
other followup care.
(2) The term ``transplantation and appropriate related
items and services'' means items and services related to the
acquisition and delivery of the pancreatic islet cell
transplantation, notwithstanding any national noncoverage
determination contained in the Centers for Medicare &
Medicaid Services Coverage Issues Manual.
(3) The term ``medicare beneficiary'' means an individual
who is entitled to benefits under part A of title XVIII of
the Social Security Act, or enrolled under part B of such
title, or both.
(d) Construction.--The provisions of this section shall not
be construed--
(1) to permit payment for partial pancreatic tissue or
islet cell transplantation under title XVIII of the Social
Security Act other than payment as described in subsection
(b); or
(2) as authorizing or requiring coverage or payment
conveying--
(A) benefits under part A of such title to a beneficiary
not entitled to such part A; or
(B) benefits under part B of such title to a beneficiary
not enrolled in such part B.
SEC. 434. RESTORATION OF MEDICARE TRUST FUNDS.
(a) Definitions.--In this section:
(1) Clerical error.--The term ``clerical error'' means a
failure that occurs on or after April 15, 2001, to have
transferred the correct amount from the general fund of the
Treasury to a Trust Fund.
(2) Trust fund.--The term ``Trust Fund'' means the Federal
Hospital Insurance Trust Fund established under section 1817
of the Social Security Act (42 U.S.C. 1395i) and the Federal
Supplementary Medical Insurance Trust Fund established under
section 1841 of such Act (42 U.S.C. 1395t).
(b) Correction of Trust Fund Holdings.--
(1) In general.--The Secretary of the Treasury shall take
the actions described in paragraph (2) with respect to the
Trust Fund with the goal being that, after such actions are
taken, the holdings of the Trust Fund will replicate, to the
extent practicable in the judgment of the Secretary of the
Treasury, in consultation with the Secretary, the holdings
that would have been held by the Trust Fund if the clerical
error involved had not occurred.
(2) Obligations issued and redeemed.--The Secretary of the
Treasury shall--
(A) issue to the Trust Fund obligations under chapter 31 of
title 31, United States Code, that bear issue dates, interest
rates, and maturity dates that are the same as those for the
obligations that--
(i) would have been issued to the Trust Fund if the
clerical error involved had not occurred; or
(ii) were issued to the Trust Fund and were redeemed by
reason of the clerical error involved; and
(B) redeem from the Trust Fund obligations that would have
been redeemed from
[[Page S15447]]
the Trust Fund if the clerical error involved had not
occurred.
(c) Appropriation.--There is appropriated to the Trust
Fund, out of any money in the Treasury not otherwise
appropriated, an amount determined by the Secretary of the
Treasury, in consultation with the Secretary, to be equal to
the interest income lost by the Trust Fund through the date
on which the appropriation is being made as a result of the
clerical error involved.
(d) Congressional Notice.--In the case of a clerical error
that occurs after April 15, 2001, the Secretary of the
Treasury, before taking action to correct the error under
this section, shall notify the appropriate committees of
Congress concerning such error and the actions to be taken
under this section in response to such error.
(e) Deadline.--With respect to the clerical error that
occurred on April 15, 2001, not later than 120 days after the
date of the enactment of this Act--
(1) the Secretary of the Treasury shall take the actions
under subsection (b)(1); and
(2) the appropriation under subsection (c) shall be made.
SEC. 435. MODIFICATIONS TO MEDICARE PAYMENT ADVISORY
COMMISSION (MEDPAC).
(a) Examination of Budget Consequences.--Section 1805(b)
(42 U.S.C. 1395b-6(b)) is amended by adding at the end the
following new paragraph:
``(8) Examination of budget consequences.--Before making
any recommendations, the Commission shall examine the budget
consequences of such recommendations, directly or through
consultation with appropriate expert entities.''.
(b) Consideration of Efficient Provision of Services.--
Section 1805(b)(2)(B)(i) (42 U.S.C. 1395b-6(b)(2)(B)(i)) is
amended by inserting ``the efficient provision of'' after
``expenditures for''.
(c) Application of Disclosure Requirements.--
(1) In general.--Section 1805(c)(2)(D) (42 U.S.C. 1395b-
6(c)(2)(D)) is amended by adding at the end the following:
``Members of the Commission shall be treated as employees of
Congress for purposes of applying title I of the Ethics in
Government Act of 1978 (Public Law 95-521).''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on January 1, 2004.
(d) Additional Reports.--
(1) Data needs and sources.--The Medicare Payment Advisory
Commission shall conduct a study, and submit a report to
Congress by not later than June 1, 2004, on the need for
current data, and sources of current data available, to
determine the solvency and financial circumstances of
hospitals and other medicare providers of services.
(2) Use of tax-related returns.--Using return information
provided under Form 990 of the Internal Revenue Service, the
Commission shall submit to Congress, by not later than June
1, 2004, a report on the following:
(A) Investments, endowments, and fundraising of hospitals
participating under the medicare program and related
foundations.
(B) Access to capital financing for private and for not-
for-profit hospitals.
(e) Representation of Experts in Prescription Drugs.--
(1) In general.--Section 1805(c)(2)(B) (42 U.S.C. 1395b-
6(c)(2)(B)) is amended by inserting ``experts in the area of
pharmaco-economics or prescription drug benefit programs,''
after ``other health professionals,''.
(2) Appointment.--The Comptroller General of the United
States shall ensure that the membership of the Commission
complies with the amendment made by paragraph (1) with
respect to appointments made on or after the date of the
enactment of this Act.
SEC. 436. TECHNICAL AMENDMENTS.
(a) Part A.--(1) Section 1814(a) (42 U.S.C. 1395f(a)) is
amended--
(A) by striking the seventh sentence, as added by section
322(a)(1) of BIPA (114 Stat. 2763A-501); and
(B) in paragraph (7)(A)--
(i) in clause (i), by inserting before the comma at the end
the following: ``based on the physician's or medical
director's clinical judgment regarding the normal course of
the individual's illness''; and
(ii) in clause (ii), by inserting before the semicolon at
the end the following: ``based on such clinical judgment''.
(2) Section 1814(b) (42 U.S.C. 1395f(b)), in the matter
preceding paragraph (1), is amended by inserting a comma
after ``1813''.
(3) Section 1815(e)(1)(B) (42 U.S.C. 1395g(e)(1)(B)), in
the matter preceding clause (i), is amended by striking ``of
hospital'' and inserting ``of a hospital''.
(4) Section 1816(c)(2)(B)(ii) (42 U.S.C.
1395h(c)(2)(B)(ii)) is amended--
(A) by striking ``and'' at the end of subclause (III); and
(B) by striking the period at the end of subclause (IV) and
inserting ``, and''.
(5) Section 1817(k)(3)(A) (42 U.S.C. 1395i(k)(3)(A)) is
amended--
(A) in clause (i)(I), by striking the comma at the end and
inserting a semicolon; and
(B) in clause (ii), by striking ``the Medicare and medicaid
programs'' and inserting ``the programs under this title and
title XIX''.
(6) Section 1817(k)(6)(B) (42 U.S.C. 1395i(k)(6)(B)) is
amended by striking ``Medicare program under title XVIII''
and inserting ``program under this title''.
(7) Section 1818 (42 U.S.C. 1395i-2) is amended--
(A) in subsection (d)(6)(A) is amended by inserting ``of
such Code'' after ``3111(b)''; and
(B) in subsection (g)(2)(B) is amended by striking
``subsection (b).'' and inserting ``subsection (b)''.
(8) Section 1819 (42 U.S.C. 1395i-3) is amended--
(A) in subsection (b)(4)(C)(i), by striking ``at least at
least'' and inserting ``at least'';
(B) in subsection (d)(1)(A), by striking ``physical
mental'' and inserting ``physical, mental''; and
(C) in subsection (f)(2)(B)(iii), by moving the last
sentence 2 ems to the left.
(9) Section 1886(b)(3)(I)(i)(I) (42 U.S.C.
1395ww(b)(3)(I)(i)(I)) is amended by striking ``the the'' and
inserting ``the''.
(10) The heading of subsection (mm) of section 1861 (42
U.S.C. 1395x) is amended to read as follows:
``Critical Access Hospital; Critical Access Hospital Services''.
(11) Paragraphs (1) and (2) of section 1861(tt) (42 U.S.C.
1395x(tt)) are each amended by striking ``rural primary
care'' and inserting ``critical access''.
(12) Section 1865(b)(3)(B) (42 U.S.C. 1395bb(b)(3)(B)) is
amended by striking ``section 1819 and 1861(j)'' and
inserting ``sections 1819 and 1861(j)''.
(13) Section 1866(b)(2) (42 U.S.C. 1395cc(b)(2)) is amended
by moving subparagraph (D) 2 ems to the left.
(14) Section 1867 (42 U.S.C. 1395dd) is amended--
(A) in the matter following clause (ii) of subsection
(d)(1)(B), by striking ``is is'' and inserting ``is'';
(B) in subsection (e)(1)(B), by striking ``a pregnant
women'' and inserting ``a pregnant woman''; and
(C) in subsection (e)(2), by striking ``means hospital''
and inserting ``means a hospital''.
(15) Section 1886(g)(3)(B) (42 U.S.C. 1395ww(g)(3)(B)) is
amended by striking ``(as defined in subsection
(d)(5)(D)(iii)'' and inserting ``(as defined in subsection
(d)(5)(D)(iii))''.
(b) Part B.--(1) Section 1833(h)(5)(D) (42 U.S.C.
1395l(h)(5)(D)) is amended by striking ``clinic,,'' and
inserting ``clinic,''.
(2) Section 1833(t)(3)(C)(ii) (42 U.S.C.
1395l(t)(3)(C)(ii)) is amended by striking ``clause (iii)''
and inserting ``clause (iv)''.
(3) Section 1861(v)(1)(S)(ii)(III) (42 U.S.C.
1395x(v)(1)(S)(ii)(III)) is amended by striking ``(as defined
in section 1886(d)(5)(D)(iii)'' and inserting ``(as defined
in section 1886(d)(5)(D)(iii))''.
(4) Section 1834(b)(4)(D)(iv) (42 U.S.C.
1395m(b)(4)(D)(iv)) is amended by striking ``clauses (vi)''
and inserting ``clause (vi)''.
(5) Section 1834(m)(4)(C)(ii)(III) (42 U.S.C.
1395m(m)(4)(C)(ii)(III)) is amended by striking
``1861(aa)(s)'' and inserting ``1861(aa)(2)''.
(6) Section 1838(a)(1) (42 U.S.C. 1395q(a)(1)) is amended
by inserting a comma after ``1966''.
(7) The second sentence of section 1839(a)(4) (42 U.S.C.
1395r(a)(4)) is amended by striking ``which will'' and
inserting ``will''.
(8) Section 1842(c)(2)(B)(ii) (42 U.S.C.
1395u(c)(2)(B)(ii)) is amended--
(A) by striking ``and'' at the end of subclause (III); and
(B) by striking the period at the end of subclause (IV) and
inserting ``, and''.
(9) Section 1842(i)(2) (42 U.S.C. 1395u(i)(2)) is amended
by striking ``services, a physician'' and inserting
``services, to a physician''.
(10) Section 1848(i)(3)(A) (42 U.S.C. 1395w-4(i)(3)(A)) is
amended by striking ``a comparable services'' and inserting
``comparable services''.
(11) Section 1861(s)(2)(K)(i) (42 U.S.C. 1395x(s)(2)(K)(i))
is amended by striking ``; and but'' and inserting ``, but''.
(12) Section 1861(aa)(1)(B) (42 U.S.C. 1395x(aa)(1)(B)) is
amended by striking ``,,'' and inserting a comma.
(13) Section 128(b)(2) of BIPA (114 Stat. 2763A-480) is
amended by striking ``Not later that'' and inserting ``Not
later than'' each place it appears.
(c) Parts A and B.--(1) Section 1812(a)(3) (42 U.S.C.
1395d(a)(3)) is amended--
(A) by striking ``for individuals not'' and inserting ``in
the case of individuals not''; and
(B) by striking ``for individuals so'' and inserting ``in
the case of individuals so''.
(2)(A) Section 1814(a) (42 U.S.C. 1395f(a)) is amended in
the sixth sentence by striking ``leave home,'' and inserting
``leave home and''.
(B) Section 1835(a) (42 U.S.C. 1395n(a)) is amended in the
seventh sentence by striking ``leave home,'' and inserting
``leave home and''.
(3) Section 1891(d)(1) (42 U.S.C. 1395bbb(d)(1)) is amended
by striking ``subsection (c)(2)(C)(I)'' and inserting
``subsection (c)(2)(C)(i)(I)''.
(4) Section 1861(v) (42 U.S.C. 1395x(v)) is amended by
moving paragraph (8) (including clauses (i) through (v) of
such paragraph) 2 ems to the left.
(5) Section 1866B(b)(7)(D) (42 U.S.C. 1395cc-2(b)(7)(D)) is
amended by striking ``(c)(2)(A)(ii)'' and inserting
``(c)(2)(B)''.
(6) Section 1886(h)(3)(D)(ii)(III) (42 U.S.C.
1395ww(h)(3)(D)(ii)(III)) is amended by striking ``and''
after the comma at the end.
(7) Section 1893(a) (42 U.S.C. 1395ddd(a)) is amended by
striking ``Medicare program'' and inserting ``medicare
program''.
(8) Section 1896(b)(4) (42 U.S.C. 1395ggg(b)(4)) is amended
by striking ``701(f)'' and inserting ``712(f)''.
(d) Part C.--(1) Section 1853 (42 U.S.C. 1395w-23), as
amended by section 307 of BIPA (114 Stat. 2763A-558), is
amended--
(A) in subsection (a)(3)(C)(ii), by striking ``clause
(iii)'' and inserting ``clause (iv)'';
[[Page S15448]]
(B) in subsection (a)(3)(C), by redesignating the clause
(iii) added by such section 307 as clause (iv); and
(C) in subsection (c)(5), by striking ``(a)(3)(C)(iii)''
and inserting ``(a)(3)(C)(iv)''.
(2) Section 1876 (42 U.S.C. 1395mm) is amended--
(A) in subsection (c)(2)(B), by striking ``signifcant'' and
inserting ``significant''; and
(B) in subsection (j)(2), by striking ``this setion'' and
inserting ``this section''.
(e) Medigap.--Section 1882 (42 U.S.C. 1395ss) is amended--
(1) in subsection (d)(3)(A)(i)(II), by striking ``plan a
medicare supplemental policy'' and inserting ``plan, a
medicare supplemental policy'';
(2) in subsection (d)(3)(B)(iii)(II), by striking ``to the
best of the issuer or seller's knowledge'' and inserting ``to
the best of the issuer's or seller's knowledge'';
(3) in subsection (g)(2)(A), by striking ``medicare
supplement policies'' and inserting ``medicare supplemental
policies'';
(4) in subsection (p)(2)(B), by striking ``, and'' and
inserting ``; and''; and
(5) in subsection (s)(3)(A)(iii), by striking ``pre-
existing'' and inserting ``preexisting''.
TITLE V--ADMINISTRATIVE IMPROVEMENTS, REGULATORY REDUCTION, AND
CONTRACTING REFORM
SEC. 500. ADMINISTRATIVE IMPROVEMENTS WITHIN THE CENTERS FOR
MEDICARE & MEDICAID SERVICES (CMS).
(a) Coordinated Administration of Medicare Prescription
Drug and Medicare Advantage Programs.--Title XVIII (42 U.S.C.
1395 et seq.), as amended by section 421, is amended by
inserting after 1807 the following new section:
``provisions relating to administration
``Sec. 1808. (a) Coordinated Administration of Medicare
Prescription Drug and Medicare Advantage Programs.--
``(1) In general.--There is within the Centers for Medicare
& Medicaid Services a center to carry out the duties
described in paragraph (3).
``(2) Director.--Such center shall be headed by a director
who shall report directly to the Administrator of the Centers
for Medicare & Medicaid Services.
``(3) Duties.--The duties described in this paragraph are
the following:
``(A) The administration of parts C and D.
``(B) The provision of notice and information under section
1804.
``(C) Such other duties as the Secretary may specify.
``(4) Deadline.--The Secretary shall ensure that the center
is carrying out the duties described in paragraph (3) by not
later than January 1, 2008.''.
(b) Management Staff for the Centers for Medicare &
Medicaid Services.--Such section is further amended by adding
at the end the following new subsection:
``(b) Employment of Management Staff.--
``(1) In general.--The Secretary may employ, within the
Centers for Medicare & Medicaid Services, such individuals as
management staff as the Secretary determines to be
appropriate. With respect to the administration of parts C
and D, such individuals shall include individuals with
private sector expertise in negotiations with health benefits
plans.
``(2) Eligibility.--To be eligible for employment under
paragraph (1) an individual shall be required to have
demonstrated, by their education and experience (either in
the public or private sector), superior expertise in at least
one of the following areas:
``(A) The review, negotiation, and administration of health
care contracts.
``(B) The design of health care benefit plans.
``(C) Actuarial sciences.
``(D) Compliance with health plan contracts.
``(E) Consumer education and decision making.
``(F) Any other area specified by the Secretary that
requires specialized management or other expertise.
``(3) Rates of payment.--
``(A) Performance-related pay.--Subject to subparagraph
(B), the Secretary shall establish the rate of pay for an
individual employed under paragraph (1). Such rate shall take
into account expertise, experience, and performance.
``(B) Limitation.--In no case may the rate of compensation
determined under subparagraph (A) exceed the highest rate of
basic pay for the Senior Executive Service under section
5382(b) of title 5, United States Code.''.
(c) Requirement for Dedicated Actuary for Private Health
Plans.--Section 1117(b) (42 U.S.C. 1317(b)) is amended by
adding at the end the following new paragraph:
``(3) In the office of the Chief Actuary there shall be an
actuary whose duties relate exclusively to the programs under
parts C and D of title XVIII and related provisions of such
title.''.
(d) Increase in Grade to Executive Level III for the
Administrator of the Centers for Medicare & Medicaid
Services.--
(1) In general.--Section 5314 of title 5, United States
Code, is amended by adding at the end the following:
``Administrator of the Centers for Medicare & Medicaid
Services.''.
(2) Conforming amendment.--Section 5315 of such title is
amended by striking ``Administrator of the Health Care
Financing Administration.''.
(3) Effective date.--The amendments made by this subsection
take effect on January 1, 2004.
(e) Conforming Amendments Relating to Health Care Financing
Administration.--
(1) Amendments to the social security act.--The Social
Security Act is amended--
(A) in section 1117 (42 U.S.C. 1317)--
(i) in the heading to read as follows:
``appointment of the administrator and chief actuary of the centers for
medicare & medicaid services'';
(ii) in subsection (a), by striking ``Health Care Financing
Administration'' and inserting ``Centers for Medicare &
Medicaid Services''; and
(iii) in subsection (b)(1)--
(I) by striking ``Health Care Financing Administration''
and inserting ``Centers for Medicare & Medicaid Services'';
and
(II) by striking ``Administration'' and inserting
``Centers'';
(B) in section 1140(a) (42 U.S.C. 1320b-10(a))--
(i) in paragraph (1), by striking ``Health Care Financing
Administration'' both places it appears in the
matter following subparagraph (B) and inserting ``Centers for
Medicare & Medicaid Services'';
(ii) in paragraph (1)(A)--
(I) by striking ``Health Care Financing Administration''
and inserting ``Centers for Medicare & Medicaid Services'';
and
(II) by striking ``HCFA'' and inserting ``CMS''; and
(iii) in paragraph (1)(B), by striking ``Health Care
Financing Administration'' both places it appears and
inserting ``Centers for Medicare & Medicaid Services'';
(C) in section 1142(b)(3) (42 U.S.C. 1320b-12(b)(3)), by
striking ``Health Care Financing Administration'' and
inserting ``Centers for Medicare & Medicaid Services'';
(D) in section 1817(b) (42 U.S.C. 1395i(b))--
(i) by striking ``Health Care Financing Administration'',
both in the fifth sentence of the matter preceding paragraph
(1) and in the second sentence of the
matter following paragraph (4), and inserting ``Centers for
Medicare & Medicaid Services''; and
(ii) by striking ``Chief Actuarial Officer'' in the second
sentence of the
matter following paragraph (4) and inserting ``Chief
Actuary'';
(E) in section 1841(b) (42 U.S.C. 1395t(b))--
(i) by striking ``Health Care Financing Administration'',
both in the fifth sentence of the matter preceding paragraph
(1) and in the second sentence of the
matter following paragraph (4), and inserting ``Centers for
Medicare & Medicaid Services''; and
(ii) by striking ``Chief Actuarial Officer'' in the second
sentence of the
matter following paragraph (4) and inserting ``Chief
Actuary'';
(F) in section 1852(a)(5) (42 U.S.C. 1395w-22(a)(5)), by
striking ``Health Care Financing Administration'' in the
matter following subparagraph (B) and inserting ``Centers for
Medicare & Medicaid Services'';
(G) in section 1853 (42 U.S.C. 1395w-23)--
(i) in subsection (b)(4), by striking ``Health Care
Financing Administration'' in the first sentence and
inserting ``Centers for Medicare & Medicaid Services''; and
(ii) in subsection (c)(7), by striking ``Health Care
Financing Administration'' in the last sentence and inserting
``Centers for Medicare & Medicaid Services'';
(H) in section 1854(a)(5)(A) (42 U.S.C. 1395w-24(a)(5)(A)),
by striking ``Health Care Financing Administration''and
inserting ``Centers for Medicare & Medicaid Services'';
(I) in section 1857(d)(4)(A)(ii) (42 U.S.C. 1395w-
27(d)(4)(A)(ii)), by striking ``Health Care Financing
Administration'' and inserting ``Secretary'';
(J) in section 1862(b)(5)(A)(ii) (42 U.S.C.
1395y(b)(5)(A)(ii)), by striking ``Health Care Financing
Administration'' and inserting ``Centers for Medicare &
Medicaid Services'';
(K) in section 1927(e)(4) (42 U.S.C. 1396r-8(e)(4)), by
striking ``HCFA'' and inserting ``The Secretary'';
(L) in section 1927(f)(2) (42 U.S.C. 1396r-8(f)(2)), by
striking ``HCFA'' and inserting ``The Secretary''; and
(M) in section 2104(g)(3) (42 U.S.C. 1397dd(g)(3)) by
inserting ``or CMS Form 64 or CMS Form 21, as the case may
be,'' after ``HCFA Form 64 or HCFA Form 21''
(2) Amendments to the public health service act.--The
Public Health Service Act is amended--
(A) in section 501(d)(18) (42 U.S.C. 290aa(d)(18)), by
striking ``Health Care Financing Administration'' and
inserting ``Centers for Medicare & Medicaid Services'';
(B) in section 507(b)(6) (42 U.S.C. 290bb(b)(6)), by
striking ``Health Care Financing Administration'' and
inserting ``Centers for Medicare & Medicaid Services'';
(C) in section 916 (42 U.S.C. 299b-5)--
(i) in subsection (b)(2), by striking ``Health Care
Financing Administration'' and inserting ``Centers for
Medicare & Medicaid Services''; and
(ii) in subsection (c)(2), by striking ``Health Care
Financing Administration'' and inserting ``Centers for
Medicare & Medicaid Services'';
(D) in section 921(c)(3)(A) (42 U.S.C. 299c(c)(3)(A)), by
striking ``Health Care Financing Administration'' and
inserting ``Centers for Medicare & Medicaid Services'';
(E) in section 1318(a)(2) (42 U.S.C. 300e-17(a)(2)), by
striking ``Health Care Financing
[[Page S15449]]
Administration'' and inserting ``Centers for Medicare &
Medicaid Services'';
(F) in section 2102(a)(7) (42 U.S.C. 300aa-2(a)(7)), by
striking ``Health Care Financing Administration'' and
inserting ``Centers for Medicare & Medicaid Services''; and
(G) in section 2675(a) (42 U.S.C. 300ff-75(a)), by striking
``Health Care Financing Administration'' in the first
sentence and inserting ``Centers for Medicare & Medicaid
Services''.
(3) Amendments to the internal revenue code of 1986.--
Section 6103(l)(12) of the Internal Revenue Code of 1986 is
amended--
(A) in subparagraph (B), by striking ``Health Care
Financing Administration'' in the matter preceding clause (i)
and inserting ``Centers for Medicare & Medicaid Services'';
and
(B) in subparagraph (C)--
(i) by striking ``health care financing administration'' in
the heading and inserting ``centers for medicare & medicaid
services''; and
(ii) by striking ``Health Care Financing Administration''
in the matter preceding clause (i) and inserting ``Centers
for Medicare & Medicaid Services''.
(4) Amendments to title 10, united states code.--Title 10,
United States Code, is amended--
(A) in section 1086(d)(4), by striking ``administrator of
the Health Care Financing Administration'' in the last
sentence and inserting ``Administrator of the Centers for
Medicare & Medicaid Services''; and
(B) in section 1095(k)(2), by striking ``Health Care
Financing Administration'' in the second sentence and
inserting ``Centers for Medicare & Medicaid Services''.
(5) Amendments to the alzheimer's disease and related
dementias services research act of 1992.--The Alzheimer's
Disease and Related Dementias Research Act of 1992 (42 U.S.C.
11271 et seq.) is amended--
(A) in the heading of subpart 3 of part D to read as
follows:
``Subpart 3--Responsibilities of the Centers for Medicare & Medicaid
Services'';
(B) in section 937 (42 U.S.C. 11271)--
(i) in subsection (a), by striking ``National Health Care
Financing Administration'' and inserting ``Centers for
Medicare & Medicaid Services'';
(ii) in subsection (b)(1), by striking ``Health Care
Financing Administration'' and inserting ``Centers for
Medicare & Medicaid Services'';
(iii) in subsection (b)(2), by striking ``Health Care
Financing Administration'' and inserting ``Centers for
Medicare & Medicaid Services''; and
(iv) in subsection (c), by striking ``Health Care Financing
Administration'' and inserting ``Centers for Medicare &
Medicaid Services''; and
(C) in section 938 (42 U.S.C. 11272), by striking ``Health
Care Financing Administration'' and inserting ``Centers for
Medicare & Medicaid Services''.
(6) Miscellaneous amendments.--
(A) Rehabilitation act of 1973.--Section 202(b)(8) of the
Rehabilitation Act of 1973 (29 U.S.C. 762(b)(8)) is amended
by striking ``Health Care Financing Administration'' and
inserting ``Centers for Medicare & Medicaid Services''.
(B) Indian health care improvement act.--Section 405(d)(1)
of the Indian Health Care Improvement Act (25 U.S.C.
1645(d)(1)) is amended by striking ``Health Care Financing
Administration'' in the matter preceding subparagraph (A) and
inserting ``Centers for Medicare & Medicaid Services''.
(C) Individuals with disabilities education act.--Section
644(b)(5) of the Individuals with Disabilities Education Act
(20 U.S.C. 1444(b)(5)) is amended by striking ``Health Care
Financing Administration'' and inserting ``Centers for
Medicare & Medicaid Services''.
(D) The home health care and alzheimer's disease amendments
of 1990.--Section 302(a)(9) of the Home Health Care and
Alzheimer's Disease Amendments of 1990 (42 U.S.C. 242q-
1(a)(9)) is amended by striking ``Health Care Financing
Administration'' and inserting ``Centers for Medicare &
Medicaid Services''.
(E) The children's health act of 2000.--Section 2503(a) of
the Children's Health Act of 2000 (42 U.S.C. 247b-3a(a)) is
amended by striking ``Health Care Financing Administration''
and inserting ``Centers for Medicare & Medicaid Services''.
(F) The national institutes of health revitalization act of
1993.--Section 1909 of the National Institutes of Health
Revitalization Act of 1993 (42 U.S.C. 299a note) is amended
by striking ``Health Care Financing Administration'' and
inserting ``Centers for Medicare & Medicaid Services''.
(G) The omnibus budget reconciliation act of 1990.--Section
4359(d) of the Omnibus Budget Reconciliation Act of 1990 (42
U.S.C. 1395b-3(d)) is amended by striking ``Health Care
Financing Administration'' and inserting ``Centers for
Medicare & Medicaid Services''.
(H) The medicare, medicaid, and schip benefits improvement
and protection act of 2000.--Section 104(d)(4) of the
Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (42 U.S.C. 1395m note) is amended by
striking ``Health Care Financing Administration'' and
inserting ``Health Care''.
(7) Additional amendment.--Section 403 of the Act entitled,
``An Act to authorize certain appropriations for the
territories of the United States, to amend certain Acts
relating thereto, and for other purposes'', enacted October
15, 1977 (48 U.S.C. 1574-1; 48 U.S.C. 1421q-1), is amended by
striking ``Health Care Financing Administration'' and
inserting ``Centers for Medicare & Medicaid Services''.
Subtitle A--Regulatory Reform
SEC. 501. CONSTRUCTION; DEFINITION OF SUPPLIER.
(a) Construction.--Nothing in this title shall be
construed--
(1) to compromise or affect existing legal remedies for
addressing fraud or abuse, whether it be criminal
prosecution, civil enforcement, or administrative remedies,
including under sections 3729 through 3733 of title 31,
United States Code (commonly known as the ``False Claims
Act''); or
(2) to prevent or impede the Department of Health and Human
Services in any way from its ongoing efforts to eliminate
waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative
contracting set forth in this division does not constitute
consolidation of the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund or
reflect any position on that issue.
(b) Definition of Supplier.--Section 1861 (42 U.S.C. 1395x)
is amended by inserting after subsection (c) the following
new subsection:
``Supplier
``(d) The term `supplier' means, unless the context
otherwise requires, a physician or other practitioner, a
facility, or other entity (other than a provider of services)
that furnishes items or services under this title.''.
SEC. 502. ISSUANCE OF REGULATIONS.
(a) Regular Timeline for Publication of Final Rules.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is
amended by adding at the end the following new paragraph:
``(3)(A) The Secretary, in consultation with the Director
of the Office of Management and Budget, shall establish and
publish a regular timeline for the publication of final
regulations based on the previous publication of a proposed
regulation or an interim final regulation.
``(B) Such timeline may vary among different regulations
based on differences in the complexity of the regulation, the
number and scope of comments received, and other relevant
factors, but shall not be longer than 3 years except under
exceptional circumstances. If the Secretary intends to vary
such timeline with respect to the publication of a final
regulation, the Secretary shall cause to have published in
the Federal Register notice of the different timeline by not
later than the timeline previously established with respect
to such regulation. Such notice shall include a brief
explanation of the justification for such variation.
``(C) In the case of interim final regulations, upon the
expiration of the regular timeline established under this
paragraph for the publication of a final regulation after
opportunity for public comment, the interim final regulation
shall not continue in effect unless the Secretary publishes
(at the end of the regular timeline and, if applicable, at
the end of each succeeding 1-year period) a notice of
continuation of the regulation that includes an explanation
of why the regular timeline (and any subsequent 1-year
extension) was not complied with. If such a notice is
published, the regular timeline (or such timeline as
previously extended under this paragraph) for publication of
the final regulation shall be treated as having been extended
for 1 additional year.
``(D) The Secretary shall annually submit to Congress a
report that describes the instances in which the Secretary
failed to publish a final regulation within the applicable
regular timeline under this paragraph and that provides an
explanation for such failures.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
The Secretary shall provide for an appropriate transition to
take into account the backlog of previously published interim
final regulations.
(b) Limitations on New Matter in Final Regulations.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as
amended by subsection (a), is amended by adding at the end
the following new paragraph:
``(4) If the Secretary publishes a final regulation that
includes a provision that is not a logical outgrowth of a
previously published notice of proposed rulemaking or interim
final rule, such provision shall be treated as a proposed
regulation and shall not take effect until there is the
further opportunity for public comment and a publication of
the provision again as a final regulation.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to final regulations published on or after the
date of the enactment of this Act.
SEC. 503. COMPLIANCE WITH CHANGES IN REGULATIONS AND
POLICIES.
(a) No Retroactive Application of Substantive Changes.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh), as
amended by section 502(a), is amended by adding at the end
the following new subsection:
``(e)(1)(A) A substantive change in regulations, manual
instructions, interpretative rules, statements of policy, or
guidelines of general applicability under this title shall
[[Page S15450]]
not be applied (by extrapolation or otherwise) retroactively
to items and services furnished before the effective date of
the change, unless the Secretary determines that--
``(i) such retroactive application is necessary to comply
with statutory requirements; or
``(ii) failure to apply the change retroactively would be
contrary to the public interest.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to substantive changes issued on or after the
date of the enactment of this Act.
(b) Timeline for Compliance With Substantive Changes After
Notice.--
(1) In general.--Section 1871(e)(1), as added by subsection
(a), is amended by adding at the end the following:
``(B)(i) Except as provided in clause (ii), a substantive
change referred to in subparagraph (A) shall not become
effective before the end of the 30-day period that begins on
the date that the Secretary has issued or published, as the
case may be, the substantive change.
``(ii) The Secretary may provide for such a substantive
change to take effect on a date that precedes the end of the
30-day period under clause (i) if the Secretary finds that
waiver of such 30-day period is necessary to comply with
statutory requirements or that the application of such 30-day
period is contrary to the public interest. If the Secretary
provides for an earlier effective date pursuant to this
clause, the Secretary shall include in the issuance or
publication of the substantive change a finding described in
the first sentence, and a brief statement of the reasons for
such finding.
``(C) No action shall be taken against a provider of
services or supplier with respect to noncompliance with such
a substantive change for items and services furnished before
the effective date of such a change.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to compliance actions undertaken on or after the
date of the enactment of this Act.
(c) Reliance on Guidance.--
(1) In general.--Section 1871(e), as added by subsection
(a), is further amended by adding at the end the following
new paragraph:
``(2)(A) If--
``(i) a provider of services or supplier follows the
written guidance (which may be transmitted electronically)
provided by the Secretary or by a medicare contractor (as
defined in section 1889(g)) acting within the scope of the
contractor's contract authority, with respect to the
furnishing of items or services and submission of a claim for
benefits for such items or services with respect to such
provider or supplier;
``(ii) the Secretary determines that the provider of
services or supplier has accurately presented the
circumstances relating to such items, services, and claim to
the contractor in writing; and
``(iii) the guidance was in error;
the provider of services or supplier shall not be subject to
any penalty or interest under this title or the provisions of
title XI insofar as they relate to this title (including
interest under a repayment plan under section 1893 or
otherwise) relating to the provision of such items or service
or such claim if the provider of services or supplier
reasonably relied on such guidance.
``(B) Subparagraph (A) shall not be construed as preventing
the recoupment or repayment (without any additional penalty)
relating to an overpayment insofar as the overpayment was
solely the result of a clerical or technical operational
error.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act
and shall only apply to a penalty or interest imposed with
respect to guidance provided on or after July 24, 2003.
SEC. 504. REPORTS AND STUDIES RELATING TO REGULATORY REFORM.
(a) GAO Study on Advisory Opinion Authority.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to determine the feasibility and
appropriateness of establishing in the Secretary authority to
provide legally binding advisory opinions on appropriate
interpretation and application of regulations to carry out
the medicare program under title XVIII of the Social Security
Act. Such study shall examine the appropriate timeframe for
issuing such advisory opinions, as well as the need for
additional staff and funding to provide such opinions.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than 1 year after the date of the enactment of
this Act.
(b) Report on Legal and Regulatory Inconsistencies.--
Section 1871 (42 U.S.C. 1395hh), as amended by section
503(a)(1), is amended by adding at the end the following new
subsection:
``(f)(1) Not later than 2 years after the date of the
enactment of this subsection, and every 3 years thereafter,
the Secretary shall submit to Congress a report with respect
to the administration of this title and areas of
inconsistency or conflict among the various provisions under
law and regulation.
``(2) In preparing a report under paragraph (1), the
Secretary shall collect--
``(A) information from individuals entitled to benefits
under part A or enrolled under part B, or both, providers of
services, and suppliers and from the Medicare Beneficiary
Ombudsman with respect to such areas of inconsistency and
conflict; and
``(B) information from medicare contractors that tracks the
nature of written and telephone inquiries.
``(3) A report under paragraph (1) shall include a
description of efforts by the Secretary to reduce such
inconsistency or conflicts, and recommendations for
legislation or administrative action that the Secretary
determines appropriate to further reduce such inconsistency
or conflicts.''.
Subtitle B--Contracting Reform
SEC. 511. INCREASED FLEXIBILITY IN MEDICARE ADMINISTRATION.
(a) Consolidation and Flexibility in Medicare
Administration.--
(1) In general.--Title XVIII is amended by inserting after
section 1874 the following new section:
``contracts with medicare administrative contractors
``Sec. 1874A. (a) Authority.--
``(1) Authority to enter into contracts.--The Secretary may
enter into contracts with any eligible entity to serve as a
medicare administrative contractor with respect to the
performance of any or all of the functions described in
paragraph (4) or parts of those functions (or, to the extent
provided in a contract, to secure performance thereof by
other entities).
``(2) Eligibility of entities.--An entity is eligible to
enter into a contract with respect to the performance of a
particular function described in paragraph (4) only if--
``(A) the entity has demonstrated capability to carry out
such function;
``(B) the entity complies with such conflict of interest
standards as are generally applicable to Federal acquisition
and procurement;
``(C) the entity has sufficient assets to financially
support the performance of such function; and
``(D) the entity meets such other requirements as the
Secretary may impose.
``(3) Medicare administrative contractor defined.--For
purposes of this title and title XI--
``(A) In general.--The term `medicare administrative
contractor' means an agency, organization, or other person
with a contract under this section.
``(B) Appropriate medicare administrative contractor.--With
respect to the performance of a particular function in
relation to an individual entitled to benefits under part A
or enrolled under part B, or both, a specific provider of
services or supplier (or class of such providers of services
or suppliers), the `appropriate' medicare administrative
contractor is the medicare administrative contractor that has
a contract under this section with respect to the performance
of that function in relation to that individual, provider of
services or supplier or class of provider of services or
supplier.
``(4) Functions described.--The functions referred to in
paragraphs (1) and (2) are payment functions (including the
function of developing local coverage determinations, as
defined in section 1869(f)(2)(B)), provider services
functions, and functions relating to services furnished to
individuals entitled to benefits under part A or enrolled
under part B, or both, as follows:
``(A) Determination of payment amounts.--Determining
(subject to the provisions of section 1878 and to such review
by the Secretary as may be provided for by the contracts) the
amount of the payments required pursuant to this title to be
made to providers of services, suppliers and individuals.
``(B) Making payments.--Making payments described in
subparagraph (A) (including receipt, disbursement, and
accounting for funds in making such payments).
``(C) Beneficiary education and assistance.--Providing
education and outreach to individuals entitled to benefits
under part A or enrolled under part B, or both, and providing
assistance to those individuals with specific issues,
concerns, or problems.
``(D) Provider consultative services.--Providing
consultative services to institutions, agencies, and other
persons to enable them to establish and maintain fiscal
records necessary for purposes of this title and otherwise to
qualify as providers of services or suppliers.
``(E) Communication with providers.--Communicating to
providers of services and suppliers any information or
instructions furnished to the medicare administrative
contractor by the Secretary, and facilitating communication
between such providers and suppliers and the Secretary.
``(F) Provider education and technical assistance.--
Performing the functions relating to provider education,
training, and technical assistance.
``(G) Additional functions.--Performing such other
functions, including (subject to paragraph (5)) functions
under the Medicare Integrity Program under section 1893, as
are necessary to carry out the purposes of this title.
``(5) Relationship to mip contracts.--
``(A) Nonduplication of duties.--In entering into contracts
under this section, the Secretary shall assure that functions
of medicare administrative contractors in carrying out
activities under parts A and B do not duplicate activities
carried out under a contract entered into under the Medicare
Integrity Program under section 1893. The previous sentence
shall not apply with respect to the activity described in
section 1893(b)(5)
[[Page S15451]]
(relating to prior authorization of certain items of durable
medical equipment under section 1834(a)(15)).
``(B) Construction.--An entity shall not be treated as a
medicare administrative contractor merely by reason of having
entered into a contract with the Secretary under section
1893.
``(6) Application of federal acquisition regulation.--
Except to the extent inconsistent with a specific requirement
of this section, the Federal Acquisition Regulation applies
to contracts under this section.
``(b) Contracting Requirements.--
``(1) Use of competitive procedures.--
``(A) In general.--Except as provided in laws with general
applicability to Federal acquisition and procurement or in
subparagraph (B), the Secretary shall use competitive
procedures when entering into contracts with medicare
administrative contractors under this section, taking into
account performance quality as well as price and other
factors.
``(B) Renewal of contracts.--The Secretary may renew a
contract with a medicare administrative contractor under this
section from term to term without regard to section 5 of
title 41, United States Code, or any other provision of law
requiring competition, if the medicare administrative
contractor has met or exceeded the performance requirements
applicable with respect to the contract and contractor,
except that the Secretary shall provide for the application
of competitive procedures under such a contract not less
frequently than once every 5 years.
``(C) Transfer of functions.--The Secretary may transfer
functions among medicare administrative contractors
consistent with the provisions of this paragraph. The
Secretary shall ensure that performance quality is considered
in such transfers. The Secretary shall provide public notice
(whether in the Federal Register or otherwise) of any such
transfer (including a description of the functions so
transferred, a description of the providers of services and
suppliers affected by such transfer, and contact information
for the contractors involved).
``(D) Incentives for quality.--The Secretary shall provide
incentives for medicare administrative contractors to provide
quality service and to promote efficiency.
``(2) Compliance with requirements.--No contract under this
section shall be entered into with any medicare
administrative contractor unless the Secretary finds that
such medicare administrative contractor will perform its
obligations under the contract efficiently and effectively
and will meet such requirements as to financial
responsibility, legal authority, quality of services
provided, and other matters as the Secretary finds pertinent.
``(3) Performance requirements.--
``(A) Development of specific performance requirements.--
``(i) In general.--The Secretary shall develop contract
performance requirements to carry out the specific
requirements applicable under this title to a function
described in subsection (a)(4) and shall develop standards
for measuring the extent to which a contractor has met such
requirements.
``(ii) Consultation.--In developing such performance
requirements and standards for measurement, the Secretary
shall consult with providers of services, organizations
representative of beneficiaries under this title, and
organizations and agencies performing functions necessary to
carry out the purposes of this section with respect to such
performance requirements.
``(iii) Publication of standards.--The Secretary shall make
such performance requirements and measurement standards
available to the public.
``(B) Considerations.--The Secretary shall include, as one
of the standards developed under subparagraph (A), provider
and beneficiary satisfaction levels.
``(C) Inclusion in contracts.--All contractor performance
requirements shall be set forth in the contract between the
Secretary and the appropriate medicare administrative
contractor. Such performance requirements--
``(i) shall reflect the performance requirements published
under subparagraph (A), but may include additional
performance requirements;
``(ii) shall be used for evaluating contractor performance
under the contract; and
``(iii) shall be consistent with the written statement of
work provided under the contract.
``(4) Information requirements.--The Secretary shall not
enter into a contract with a medicare administrative
contractor under this section unless the contractor agrees--
``(A) to furnish to the Secretary such timely information
and reports as the Secretary may find necessary in performing
his functions under this title; and
``(B) to maintain such records and afford such access
thereto as the Secretary finds necessary to assure the
correctness and verification of the information and reports
under subparagraph (A) and otherwise to carry out the
purposes of this title.
``(5) Surety bond.--A contract with a medicare
administrative contractor under this section may require the
medicare administrative contractor, and any of its officers
or employees certifying payments or disbursing funds pursuant
to the contract, or otherwise participating in carrying out
the contract, to give surety bond to the United States in
such amount as the Secretary may deem appropriate.
``(c) Terms and Conditions.--
``(1) In general.--A contract with any medicare
administrative contractor under this section may contain such
terms and conditions as the Secretary finds necessary or
appropriate and may provide for advances of funds to the
medicare administrative contractor for the making of payments
by it under subsection (a)(4)(B).
``(2) Prohibition on mandates for certain data
collection.--The Secretary may not require, as a condition of
entering into, or renewing, a contract under this section,
that the medicare administrative contractor match data
obtained other than in its activities under this title with
data used in the administration of this title for purposes of
identifying situations in which the provisions of section
1862(b) may apply.
``(d) Limitation on Liability of Medicare Administrative
Contractors and Certain Officers.--
``(1) Certifying officer.--No individual designated
pursuant to a contract under this section as a certifying
officer shall, in the absence of the reckless disregard of
the individual's obligations or the intent by that individual
to defraud the United States, be liable with respect to any
payments certified by the individual under this section.
``(2) Disbursing officer.--No disbursing officer shall, in
the absence of the reckless disregard of the officer's
obligations or the intent by that officer to defraud the
United States, be liable with respect to any payment by such
officer under this section if it was based upon an
authorization (which meets the applicable requirements for
such internal controls established by the Comptroller General
of the United States) of a certifying officer designated as
provided in paragraph (1) of this subsection.
``(3) Liability of medicare administrative contractor.--
``(A) In general.--No medicare administrative contractor
shall be liable to the United States for a payment by a
certifying or disbursing officer unless, in connection with
such payment, the medicare administrative contractor acted
with reckless disregard of its obligations under its medicare
administrative contract or with intent to defraud the United
States.
``(B) Relationship to false claims act.--Nothing in this
subsection shall be construed to limit liability for conduct
that would constitute a violation of sections 3729 through
3731 of title 31, United States Code.
``(4) Indemnification by secretary.--
``(A) In general.--Subject to subparagraphs (B) and (D), in
the case of a medicare administrative contractor (or a person
who is a director, officer, or employee of such a contractor
or who is engaged by the contractor to participate directly
in the claims administration process) who is made a party to
any judicial or administrative proceeding arising from or
relating directly to the claims administration process under
this title, the Secretary may, to the extent the Secretary
determines to be appropriate and as specified in the contract
with the contractor, indemnify the contractor and such
persons.
``(B) Conditions.--The Secretary may not provide
indemnification under subparagraph (A) insofar as the
liability for such costs arises directly from conduct that is
determined by the judicial proceeding or by the Secretary to
be criminal in nature, fraudulent, or grossly negligent. If
indemnification is provided by the Secretary with respect to
a contractor before a determination that such costs arose
directly from such conduct, the contractor shall reimburse
the Secretary for costs of indemnification.
``(C) Scope of indemnification.--Indemnification by the
Secretary under subparagraph (A) may include payment of
judgments, settlements (subject to subparagraph (D)), awards,
and costs (including reasonable legal expenses).
``(D) Written approval for settlements or compromises.--A
contractor or other person described in subparagraph (A) may
not propose to negotiate a settlement or compromise of a
proceeding described in such subparagraph without the prior
written approval of the Secretary to negotiate such
settlement or compromise. Any indemnification under
subparagraph (A) with respect to amounts paid under a
settlement or compromise of a proceeding described in such
subparagraph are conditioned upon prior written approval by
the Secretary of the final settlement or compromise.
``(E) Construction.--Nothing in this paragraph shall be
construed--
``(i) to change any common law immunity that may be
available to a medicare administrative contractor or person
described in subparagraph (A); or
``(ii) to permit the payment of costs not otherwise
allowable, reasonable, or allocable under the Federal
Acquisition Regulation.''.
(2) Consideration of incorporation of current law
standards.--In developing contract performance requirements
under section 1874A(b) of the Social Security Act, as
inserted by paragraph (1), the Secretary shall consider
inclusion of the performance standards described in sections
1816(f)(2) of such Act (relating to timely processing of
reconsiderations and applications for exemptions) and section
1842(b)(2)(B) of such Act (relating to timely review of
determinations and fair hearing requests), as such sections
were in effect before the date of the enactment of this Act.
[[Page S15452]]
(b) Conforming Amendments to Section 1816 (Relating to
Fiscal Intermediaries).--Section 1816 (42 U.S.C. 1395h) is
amended as follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part a''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.''.
(3) Subsection (b) is repealed.
(4) Subsection (c) is amended--
(A) by striking paragraph (1); and
(B) in each of paragraphs (2)(A) and (3)(A), by striking
``agreement under this section'' and inserting ``contract
under section 1874A that provides for making payments under
this part''.
(5) Subsections (d) through (i) are repealed.
(6) Subsections (j) and (k) are each amended--
(A) by striking ``An agreement with an agency or
organization under this section'' and inserting ``A contract
with a medicare administrative contractor under section 1874A
with respect to the administration of this part''; and
(B) by striking ``such agency or organization'' and
inserting ``such medicare administrative contractor'' each
place it appears.
(7) Subsection (l) is repealed.
(c) Conforming Amendments to Section 1842 (Relating to
Carriers).--Section 1842 (42 U.S.C. 1395u) is amended as
follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part b''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.''.
(3) Subsection (b) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)--
(i) by striking subparagraphs (A) and (B);
(ii) in subparagraph (C), by striking ``carriers'' and
inserting ``medicare administrative contractors''; and
(iii) by striking subparagraphs (D) and (E);
(C) in paragraph (3)--
(i) in the matter before subparagraph (A), by striking
``Each such contract shall provide that the carrier'' and
inserting ``The Secretary'';
(ii) by striking ``will'' the first place it appears in
each of subparagraphs (A), (B), (F), (G), (H), and (L) and
inserting ``shall'';
(iii) in subparagraph (B), in the matter before clause (i),
by striking ``to the policyholders and subscribers of the
carrier'' and inserting ``to the policyholders and
subscribers of the medicare administrative contractor'';
(iv) by striking subparagraphs (C), (D), and (E);
(v) in subparagraph (H)--
(I) by striking ``if it makes determinations or payments
with respect to physicians' services,'' in the matter
preceding clause (i); and
(II) by striking ``carrier'' and inserting ``medicare
administrative contractor'' in clause (i);
(vi) by striking subparagraph (I);
(vii) in subparagraph (L), by striking the semicolon and
inserting a period;
(viii) in the first sentence, after subparagraph (L), by
striking ``and shall contain'' and all that follows through
the period; and
(ix) in the seventh sentence, by inserting ``medicare
administrative contractor,'' after ``carrier,'';
(D) by striking paragraph (5);
(E) in paragraph (6)(D)(iv), by striking ``carrier'' and
inserting ``medicare administrative contractor''; and
(F) in paragraph (7), by striking ``the carrier'' and
inserting ``the Secretary'' each place it appears.
(4) Subsection (c) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)(A), by striking ``contract under this
section which provides for the disbursement of funds, as
described in subsection (a)(1)(B),'' and inserting ``contract
under section 1874A that provides for making payments under
this part'';
(C) in paragraph (3)(A), by striking ``subsection
(a)(1)(B)'' and inserting ``section 1874A(a)(3)(B)'';
(D) in paragraph (4), in the matter preceding subparagraph
(A), by striking ``carrier'' and inserting ``medicare
administrative contractor''; and
(E) by striking paragraphs (5) and (6).
(5) Subsections (d), (e), and (f) are repealed.
(6) Subsection (g) is amended by striking ``carrier or
carriers'' and inserting ``medicare administrative contractor
or contractors''.
(7) Subsection (h) is amended--
(A) in paragraph (2)--
(i) by striking ``Each carrier having an agreement with the
Secretary under subsection (a)'' and inserting ``The
Secretary''; and
(ii) by striking ``Each such carrier'' and inserting ``The
Secretary'';
(B) in paragraph (3)(A)--
(i) by striking ``a carrier having an agreement with the
Secretary under subsection (a)'' and inserting ``medicare
administrative contractor having a contract under section
1874A that provides for making payments under this part'';
and
(ii) by striking ``such carrier'' and inserting ``such
contractor'';
(C) in paragraph (3)(B)--
(i) by striking ``a carrier'' and inserting ``a medicare
administrative contractor'' each place it appears; and
(ii) by striking ``the carrier'' and inserting ``the
contractor'' each place it appears; and
(D) in paragraphs (5)(A) and (5)(B)(iii), by striking
``carriers'' and inserting ``medicare administrative
contractors'' each place it appears.
(8) Subsection (l) is amended--
(A) in paragraph (1)(A)(iii), by striking ``carrier'' and
inserting ``medicare administrative contractor''; and
(B) in paragraph (2), by striking ``carrier'' and inserting
``medicare administrative contractor''.
(9) Subsection (p)(3)(A) is amended by striking ``carrier''
and inserting ``medicare administrative contractor''.
(10) Subsection (q)(1)(A) is amended by striking
``carrier''.
(d) Effective Date; Transition Rule.--
(1) Effective date.--
(A) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on October 1, 2005, and the Secretary is authorized to
take such steps before such date as may be necessary to
implement such amendments on a timely basis.
(B) Construction for current contracts.--Such amendments
shall not apply to contracts in effect before the date
specified under subparagraph (A) that continue to retain the
terms and conditions in effect on such date (except as
otherwise provided under this Act, other than under this
section) until such date as the contract is let out for
competitive bidding under such amendments.
(C) Deadline for competitive bidding.--The Secretary shall
provide for the letting by competitive bidding of all
contracts for functions of medicare administrative
contractors for annual contract periods that begin on or
after October 1, 2011.
(2) General transition rules.--
(A) Authority to continue to enter into new agreements and
contracts and waiver of provider nomination provisions during
transition.--Prior to October 1, 2005, the Secretary may,
consistent with subparagraph (B), continue to enter into
agreements under section 1816 and contracts under section
1842 of the Social Security Act (42 U.S.C. 1395h, 1395u). The
Secretary may enter into new agreements under section 1816
prior to October 1, 2005, without regard to any of the
provider nomination provisions of such section.
(B) Appropriate transition.--The Secretary shall take such
steps as are necessary to provide for an appropriate
transition from agreements under section 1816 and contracts
under section 1842 of the Social Security Act (42 U.S.C.
1395h, 1395u) to contracts under section 1874A, as added by
subsection (a)(1).
(3) Authorizing continuation of mip functions under current
contracts and agreements and under transition contracts.--
Notwithstanding the amendments made by this section, the
provisions contained in the exception in section 1893(d)(2)
of the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall
continue to apply during the period that begins on the date
of the enactment of this Act and ends on October 1, 2011, and
any reference in such provisions to an agreement or contract
shall be deemed to include a contract under section 1874A of
such Act, as inserted by subsection (a)(1), that continues
the activities referred to in such provisions.
(e) References.--On and after the effective date provided
under subsection (d)(1), any reference to a fiscal
intermediary or carrier under title XI or XVIII of the Social
Security Act (or any regulation, manual instruction,
interpretative rule, statement of policy, or guideline issued
to carry out such titles) shall be deemed a reference to a
medicare administrative contractor (as provided under section
1874A of the Social Security Act).
(f) Secretarial Submission of Legislative Proposal.--Not
later than 6 months after the date of the enactment of this
Act, the Secretary shall submit to the appropriate committees
of Congress a legislative proposal providing for such
technical and conforming amendments in the law as are
required by the provisions of this section.
(g) Reports on Implementation.--
(1) Plan for implementation.--By not later than October 1,
2004, the Secretary shall submit a report to Congress and the
Comptroller General of the United States that describes the
plan for implementation of the amendments made by this
section. The Comptroller General shall conduct an evaluation
of such plan and shall submit to Congress, not later than 6
months after the date the report is received, a report on
such evaluation and shall include in such report such
recommendations as the Comptroller General deems appropriate.
(2) Status of implementation.--The Secretary shall submit a
report to Congress not later than October 1, 2008, that
describes the status of implementation of such amendments and
that includes a description of the following:
(A) The number of contracts that have been competitively
bid as of such date.
(B) The distribution of functions among contracts and
contractors.
[[Page S15453]]
(C) A timeline for complete transition to full competition.
(D) A detailed description of how the Secretary has
modified oversight and management of medicare contractors to
adapt to full competition.
SEC. 512. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDICARE
ADMINISTRATIVE CONTRACTORS.
(a) In General.--Section 1874A, as added by section
511(a)(1), is amended by adding at the end the following new
subsection:
``(e) Requirements for Information Security.--
``(1) Development of information security program.--A
medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall implement a contractor-wide information
security program to provide information security for the
operation and assets of the contractor with respect to such
functions under this title. An information security program
under this paragraph shall meet the requirements for
information security programs imposed on Federal agencies
under paragraphs (1) through (8) of section 3544(b) of title
44, United States Code (other than the requirements under
paragraphs (2)(D)(i), (5)(A), and (5)(B) of such section).
``(2) Independent audits.--
``(A) Performance of annual evaluations.--Each year a
medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall undergo an evaluation of the information
security of the contractor with respect to such functions
under this title. The evaluation shall--
``(i) be performed by an entity that meets such
requirements for independence as the Inspector General of the
Department of Health and Human Services may establish; and
``(ii) test the effectiveness of information security
control techniques of an appropriate subset of the
contractor's information systems (as defined in section
3502(8) of title 44, United States Code) relating to such
functions under this title and an assessment of compliance
with the requirements of this subsection and related
information security policies, procedures, standards and
guidelines, including policies and procedures as may be
prescribed by the Director of the Office of Management and
Budget and applicable information security standards
promulgated under section 11331 of title 40, United States
Code.
``(B) Deadline for initial evaluation.--
``(i) New contractors.--In the case of a medicare
administrative contractor covered by this subsection that has
not previously performed the functions referred to in
subparagraphs (A) and (B) of subsection (a)(4) (relating to
determining and making payments) as a fiscal intermediary or
carrier under section 1816 or 1842, the first independent
evaluation conducted pursuant to subparagraph (A) shall be
completed prior to commencing such functions.
``(ii) Other contractors.--In the case of a medicare
administrative contractor covered by this subsection that is
not described in clause (i), the first independent evaluation
conducted pursuant to subparagraph (A) shall be completed
within 1 year after the date the contractor commences
functions referred to in clause (i) under this section.
``(C) Reports on evaluations.--
``(i) To the department of health and human services.--The
results of independent evaluations under subparagraph (A)
shall be submitted promptly to the Inspector General of the
Department of Health and Human Services and to the Secretary.
``(ii) To congress.--The Inspector General of the
Department of Health and Human Services shall submit to
Congress annual reports on the results of such evaluations,
including assessments of the scope and sufficiency of such
evaluations.
``(iii) Agency reporting.--The Secretary shall address the
results of such evaluations in reports required under section
3544(c) of title 44, United States Code.''.
(b) Application of Requirements to Fiscal Intermediaries
and Carriers.--
(1) In general.--The provisions of section 1874A(e)(2) of
the Social Security Act (other than subparagraph (B)), as
added by subsection (a), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(2) Deadline for initial evaluation.--In the case of such a
fiscal intermediary or carrier with an agreement or contract
under such respective section in effect as of the date of the
enactment of this Act, the first evaluation under section
1874A(e)(2)(A) of the Social Security Act (as added by
subsection (a)), pursuant to paragraph (1), shall be
completed (and a report on the evaluation submitted to the
Secretary) by not later than 1 year after such date.
Subtitle C--Education and Outreach
SEC. 521. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.
(a) Coordination of Education Funding.--
(1) In general.--Title XVIII is amended by inserting after
section 1888 the following new section:
``provider education and technical assistance
``Sec. 1889. (a) Coordination of Education Funding.--The
Secretary shall coordinate the educational activities
provided through medicare contractors (as defined in
subsection (g), including under section 1893) in order to
maximize the effectiveness of Federal education efforts for
providers of services and suppliers.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(3) Report.--Not later than October 1, 2004, the Secretary
shall submit to Congress a report that includes a description
and evaluation of the steps taken to coordinate the funding
of provider education under section 1889(a) of the Social
Security Act, as added by paragraph (1).
(b) Incentives To Improve Contractor Performance.--
(1) In general.--Section 1874A, as added by section
511(a)(1) and as amended by section 512(a), is amended by
adding at the end the following new subsection:
``(f) Incentives To Improve Contractor Performance in
Provider Education and Outreach.--The Secretary shall use
specific claims payment error rates or similar methodology of
medicare administrative contractors in the processing or
reviewing of medicare claims in order to give such
contractors an incentive to implement effective education and
outreach programs for providers of services and suppliers.''.
(2) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(f) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(3) GAO report on adequacy of methodology.--Not later than
October 1, 2004, the Comptroller General of the United States
shall submit to Congress and to the Secretary a report on the
adequacy of the methodology under section 1874A(f) of the
Social Security Act, as added by paragraph (1), and shall
include in the report such recommendations as the Comptroller
General determines appropriate with respect to the
methodology.
(4) Report on use of methodology in assessing contractor
performance.--Not later than October 1, 2004, the Secretary
shall submit to Congress a report that describes how the
Secretary intends to use such methodology in assessing
medicare contractor performance in implementing effective
education and outreach programs, including whether to use
such methodology as a basis for performance bonuses. The
report shall include an analysis of the sources of identified
errors and potential changes in systems of contractors and
rules of the Secretary that could reduce claims error rates.
(c) Provision of Access to and Prompt Responses From
Medicare Administrative Contractors.--
(1) In general.--Section 1874A, as added by section
511(a)(1) and as amended by section 512(a) and subsection
(b), is further amended by adding at the end the following
new subsection:
``(g) Communications With Beneficiaries, Providers of
Services and Suppliers.--
``(1) Communication strategy.--The Secretary shall develop
a strategy for communications with individuals entitled to
benefits under part A or enrolled under part B, or both, and
with providers of services and suppliers under this title.
``(2) Response to written inquiries.--Each medicare
administrative contractor shall, for those providers of
services and suppliers which submit claims to the contractor
for claims processing and for those individuals entitled to
benefits under part A or enrolled under part B, or both, with
respect to whom claims are submitted for claims processing,
provide general written responses (which may be through
electronic transmission) in a clear, concise, and accurate
manner to inquiries of providers of services, suppliers, and
individuals entitled to benefits under part A or enrolled
under part B, or both, concerning the programs under this
title within 45 business days of the date of receipt of such
inquiries.
``(3) Response to toll-free lines.--The Secretary shall
ensure that each medicare administrative contractor shall
provide, for those providers of services and suppliers which
submit claims to the contractor for claims processing and for
those individuals entitled to benefits under part A or
enrolled under part B, or both, with respect to whom claims
are submitted for claims processing, a toll-free telephone
number at which such individuals, providers of services, and
suppliers may obtain information regarding billing, coding,
claims, coverage, and other appropriate information under
this title.
``(4) Monitoring of contractor responses.--
``(A) In general.--Each medicare administrative contractor
shall, consistent with standards developed by the Secretary
under subparagraph (B)--
``(i) maintain a system for identifying who provides the
information referred to in paragraphs (2) and (3); and
``(ii) monitor the accuracy, consistency, and timeliness of
the information so provided.
``(B) Development of standards.--
[[Page S15454]]
``(i) In general.--The Secretary shall establish and make
public standards to monitor the accuracy, consistency, and
timeliness of the information provided in response to written
and telephone inquiries under this subsection. Such standards
shall be consistent with the performance requirements
established under subsection (b)(3).
``(ii) Evaluation.--In conducting evaluations of individual
medicare administrative contractors, the Secretary shall take
into account the results of the monitoring conducted under
subparagraph (A) taking into account as performance
requirements the standards established under clause (i). The
Secretary shall, in consultation with organizations
representing providers of services, suppliers, and
individuals entitled to benefits under part A or enrolled
under part B, or both, establish standards relating to the
accuracy, consistency, and timeliness of the information so
provided.
``(C) Direct monitoring.--Nothing in this paragraph shall
be construed as preventing the Secretary from directly
monitoring the accuracy, consistency, and timeliness of the
information so provided.
``(5) Authorization of appropriations.--There are
authorized to be appropriated such sums as are necessary to
carry out this subsection.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect October 1, 2004.
(3) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(g) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(d) Improved Provider Education and Training.--
(1) In general.--Section 1889, as added by subsection (a),
is amended by adding at the end the following new
subsections:
``(b) Enhanced Education and Training.--
``(1) Additional resources.--There are authorized to be
appropriated to the Secretary (in appropriate part from the
Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) such sums as may
be necessary for fiscal years beginning with fiscal year
2005.
``(2) Use.--The funds made available under paragraph (1)
shall be used to increase the conduct by medicare contractors
of education and training of providers of services and
suppliers regarding billing, coding, and other appropriate
items and may also be used to improve the accuracy,
consistency, and timeliness of contractor responses.
``(c) Tailoring Education and Training Activities for Small
Providers or Suppliers.--
``(1) In general.--Insofar as a medicare contractor
conducts education and training activities, it shall tailor
such activities to meet the special needs of small providers
of services or suppliers (as defined in paragraph (2)). Such
education and training activities for small providers of
services and suppliers may include the provision of technical
assistance (such as review of billing systems and internal
controls to determine program compliance and to suggest more
efficient and effective means of achieving such compliance).
``(2) Small provider of services or supplier.--In this
subsection, the term `small provider of services or supplier'
means--
``(A) a provider of services with fewer than 25 full-time-
equivalent employees; or
``(B) a supplier with fewer than 10 full-time-equivalent
employees.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2004.
(e) Requirement To Maintain Internet Websites.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsection (d), is further amended by
adding at the end the following new subsection:
``(d) Internet Websites; FAQs.--The Secretary, and each
medicare contractor insofar as it provides services
(including claims processing) for providers of services or
suppliers, shall maintain an Internet website which--
``(1) provides answers in an easily accessible format to
frequently asked questions, and
``(2) includes other published materials of the contractor,
that relate to providers of services and suppliers under the
programs under this title (and title XI insofar as it relates
to such programs).''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2004.
(f) Additional Provider Education Provisions.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsections (d) and (e), is further amended
by adding at the end the following new subsections:
``(e) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of
attendance at (or failure to attend) educational activities
or other information gathered during an educational program
conducted under this section or otherwise by the Secretary to
select or track providers of services or suppliers for the
purpose of conducting any type of audit or prepayment review.
``(f) Construction.--Nothing in this section or section
1893(g) shall be construed as providing for disclosure by a
medicare contractor--
``(1) of the screens used for identifying claims that will
be subject to medical review; or
``(2) of information that would compromise pending law
enforcement activities or reveal findings of law enforcement-
related audits.
``(g) Definitions.--For purposes of this section, the term
`medicare contractor' includes the following:
``(1) A medicare administrative contractor with a contract
under section 1874A, including a fiscal intermediary with a
contract under section 1816 and a carrier with a contract
under section 1842.
``(2) An eligible entity with a contract under section
1893.
Such term does not include, with respect to activities of a
specific provider of services or supplier an entity that has
no authority under this title or title IX with respect to
such activities and such provider of services or supplier.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
SEC. 522. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION
PROGRAM.
(a) Establishment.--
(1) In general.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which technical assistance
described in paragraph (2) is made available, upon request
and on a voluntary basis, to small providers of services or
suppliers in order to improve compliance with the applicable
requirements of the programs under medicare program under
title XVIII of the Social Security Act (including provisions
of title XI of such Act insofar as they relate to such title
and are not administered by the Office of the Inspector
General of the Department of Health and Human Services).
(2) Forms of technical assistance.--The technical
assistance described in this paragraph is--
(A) evaluation and recommendations regarding billing and
related systems; and
(B) information and assistance regarding policies and
procedures under the medicare program, including coding and
reimbursement.
(3) Small providers of services or suppliers.--In this
section, the term ``small providers of services or
suppliers'' means--
(A) a provider of services with fewer than 25 full-time-
equivalent employees; or
(B) a supplier with fewer than 10 full-time-equivalent
employees.
(b) Qualification of Contractors.--In conducting the
demonstration program, the Secretary shall enter into
contracts with qualified organizations (such as peer review
organizations or entities described in section 1889(g)(2) of
the Social Security Act, as inserted by section 521(f)(1))
with appropriate expertise with billing systems of the full
range of providers of services and suppliers to provide the
technical assistance. In awarding such contracts, the
Secretary shall consider any prior investigations of the
entity's work by the Inspector General of Department of
Health and Human Services or the Comptroller General of the
United States.
(c) Description of Technical Assistance.--The technical
assistance provided under the demonstration program shall
include a direct and in-person examination of billing systems
and internal controls of small providers of services or
suppliers to determine program compliance and to suggest more
efficient or effective means of achieving such compliance.
(d) GAO Evaluation.--Not later than 2 years after the date
the demonstration program is first implemented, the
Comptroller General, in consultation with the Inspector
General of the Department of Health and Human Services, shall
conduct an evaluation of the demonstration program. The
evaluation shall include a determination of whether claims
error rates are reduced for small providers of services or
suppliers who participated in the program and the extent of
improper payments made as a result of the demonstration
program. The Comptroller General shall submit a report to the
Secretary and the Congress on such evaluation and shall
include in such report recommendations regarding the
continuation or extension of the demonstration program.
(e) Financial Participation by Providers.--The provision of
technical assistance to a small provider of services or
supplier under the demonstration program is conditioned upon
the small provider of services or supplier paying an amount
estimated (and disclosed in advance of a provider's or
supplier's participation in the program) to be equal to 25
percent of the cost of the technical assistance.
(f) Authorization of Appropriations.--There are authorized
to be appropriated, from amounts not otherwise appropriated
in the Treasury, such sums as may be necessary to carry out
this section.
SEC. 523. MEDICARE BENEFICIARY OMBUDSMAN.
(a) In General.--Section 1808, as added and amended by
section 500, is amended by adding at the end the following
new subsection:
``(c) Medicare Beneficiary Ombudsman.--
``(1) In general.--The Secretary shall appoint within the
Department of Health and
[[Page S15455]]
Human Services a Medicare Beneficiary Ombudsman who shall
have expertise and experience in the fields of health care
and education of (and assistance to) individuals entitled to
benefits under this title.
``(2) Duties.--The Medicare Beneficiary Ombudsman shall--
``(A) receive complaints, grievances, and requests for
information submitted by individuals entitled to benefits
under part A or enrolled under part B, or both, with respect
to any aspect of the medicare program;
``(B) provide assistance with respect to complaints,
grievances, and requests referred to in subparagraph (A),
including--
``(i) assistance in collecting relevant information for
such individuals, to seek an appeal of a decision or
determination made by a fiscal intermediary, carrier, MA
organization, or the Secretary;
``(ii) assistance to such individuals with any problems
arising from disenrollment from an MA plan under part C; and
``(iii) assistance to such individuals in presenting
information under section 1839(i)(4)(C) (relating to income-
related premium adjustment; and
``(C) submit annual reports to Congress and the Secretary
that describe the activities of the Office and that include
such recommendations for improvement in the administration of
this title as the Ombudsman determines appropriate.
The Ombudsman shall not serve as an advocate for any
increases in payments or new coverage of services, but may
identify issues and problems in payment or coverage policies.
``(3) Working with health insurance counseling programs.--
To the extent possible, the Ombudsman shall work with health
insurance counseling programs (receiving funding under
section 4360 of Omnibus Budget Reconciliation Act of 1990) to
facilitate the provision of information to individuals
entitled to benefits under part A or enrolled under part B,
or both regarding MA plans and changes to those plans.
Nothing in this paragraph shall preclude further
collaboration between the Ombudsman and such programs.''.
(b) Deadline for Appointment.--By not later than 1 year
after the date of the enactment of this Act, the Secretary
shall appoint the Medicare Beneficiary Ombudsman under
section 1808(c) of the Social Security Act, as added by
subsection (a).
(c) Funding.--There are authorized to be appropriated to
the Secretary (in appropriate part from the Federal Hospital
Insurance Trust Fund, established under section 1817 of the
Social Security Act (42 U.S.C. 1395i), and the Federal
Supplementary Medical Insurance Trust Fund, established under
section 1841 of such Act (42 U.S.C. 1395t)) to carry out
section 1808(c) of such Act (relating to the Medicare
Beneficiary Ombudsman), as added by subsection (a), such sums
as are necessary for fiscal year 2004 and each succeeding
fiscal year.
(d) Use of Central, Toll-Free Number (1-800-MEDICARE).--
(1) Phone triage system; listing in medicare handbook
instead of other toll-free numbers.--Section 1804(b) (42
U.S.C. 1395b-2(b)) is amended by adding at the end the
following: ``The Secretary shall provide, through the toll-
free telephone number 1-800-MEDICARE, for a means by which
individuals seeking information about, or assistance with,
such programs who phone such toll-free number are transferred
(without charge) to appropriate entities for the provision of
such information or assistance. Such toll-free number shall
be the toll-free number listed for general information and
assistance in the annual notice under subsection (a) instead
of the listing of numbers of individual contractors.''.
(2) Monitoring accuracy.--
(A) Study.--The Comptroller General of the United States
shall conduct a study to monitor the accuracy and consistency
of information provided to individuals entitled to benefits
under part A or enrolled under part B, or both, through the
toll-free telephone number 1-800-MEDICARE, including an
assessment of whether the information provided is sufficient
to answer questions of such individuals. In conducting the
study, the Comptroller General shall examine the education
and training of the individuals providing information through
such number.
(B) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under
subparagraph (A).
SEC. 524. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.
(a) In General.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which medicare specialists
employed by the Department of Health and Human Services
provide advice and assistance to individuals entitled to
benefits under part A of title XVIII of the Social Security
Act, or enrolled under part B of such title, or both,
regarding the medicare program at the location of existing
local offices of the Social Security Administration.
(b) Locations.--
(1) In general.--The demonstration program shall be
conducted in at least 6 offices or areas. Subject to
paragraph (2), in selecting such offices and areas, the
Secretary shall provide preference for offices with a high
volume of visits by individuals referred to in subsection
(a).
(2) Assistance for rural beneficiaries.--The Secretary
shall provide for the selection of at least 2 rural areas to
participate in the demonstration program. In conducting the
demonstration program in such rural areas, the Secretary
shall provide for medicare specialists to travel among local
offices in a rural area on a scheduled basis.
(c) Duration.--The demonstration program shall be conducted
over a 3-year period.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall provide for an
evaluation of the demonstration program. Such evaluation
shall include an analysis of--
(A) utilization of, and satisfaction of those individuals
referred to in subsection (a) with, the assistance provided
under the program; and
(B) the cost-effectiveness of providing beneficiary
assistance through out-stationing medicare specialists at
local offices of the Social Security Administration.
(2) Report.--The Secretary shall submit to Congress a
report on such evaluation and shall include in such report
recommendations regarding the feasibility of permanently out-
stationing medicare specialists at local offices of the
Social Security Administration.
SEC. 525. INCLUSION OF ADDITIONAL INFORMATION IN NOTICES TO
BENEFICIARIES ABOUT SKILLED NURSING FACILITY
BENEFITS.
(a) In General.--The Secretary shall provide that in
medicare beneficiary notices provided (under section 1806(a)
of the Social Security Act, 42 U.S.C. 1395b-7(a)) with
respect to the provision of post-hospital extended care
services under part A of title XVIII of the Social Security
Act, there shall be included information on the number of
days of coverage of such services remaining under such part
for the medicare beneficiary and spell of illness involved.
(b) Effective Date.--Subsection (a) shall apply to notices
provided during calendar quarters beginning more than 6
months after the date of the enactment of this Act.
SEC. 526. INFORMATION ON MEDICARE-CERTIFIED SKILLED NURSING
FACILITIES IN HOSPITAL DISCHARGE PLANS.
(a) Availability of Data.--The Secretary shall publicly
provide information that enables hospital discharge planners,
medicare beneficiaries, and the public to identify skilled
nursing facilities that are participating in the medicare
program.
(b) Inclusion of Information in Certain Hospital Discharge
Plans.--
(1) In general.--Section 1861(ee)(2)(D) (42 U.S.C.
1395x(ee)(2)(D)) is amended--
(A) by striking ``hospice services'' and inserting
``hospice care and post-hospital extended care services'';
and
(B) by inserting before the period at the end the
following: ``and, in the case of individuals who are likely
to need post-hospital extended care services, the
availability of such services through facilities that
participate in the program under this title and that serve
the area in which the patient resides''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to discharge plans made on or after such date as
the Secretary shall specify, but not later than 6 months
after the date the Secretary provides for availability of
information under subsection (a).
Subtitle D--Appeals and Recovery
SEC. 531. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.
(a) Transition Plan.--
(1) In general.--Not later than April 1, 2004, the
Commissioner of Social Security and the Secretary shall
develop and transmit to Congress and the Comptroller General
of the United States a plan under which the functions of
administrative law judges responsible for hearing cases under
title XVIII of the Social Security Act (and related
provisions in title XI of such Act) are transferred from the
responsibility of the Commissioner and the Social Security
Administration to the Secretary and the Department of Health
and Human Services.
(2) Contents.--The plan shall include information on the
following:
(A) Workload.--The number of such administrative law judges
and support staff required now and in the future to hear and
decide such cases in a timely manner, taking into account the
current and anticipated claims volume, appeals, number of
beneficiaries, and statutory changes.
(B) Cost projections and financing.--Funding levels
required for fiscal year 2005 and subsequent fiscal years to
carry out the functions transferred under the plan.
(C) Transition timetable.--A timetable for the transition.
(D) Regulations.--The establishment of specific regulations
to govern the appeals process.
(E) Case tracking.--The development of a unified case
tracking system that will facilitate the maintenance and
transfer of case specific data across both the fee-for-
service and managed care components of the medicare program.
(F) Feasibility of precedential authority.--The feasibility
of developing a process to give decisions of the Departmental
Appeals Board in the Department of Health and Human Services
addressing broad legal issues binding, precedential
authority.
(G) Access to administrative law judges.--The feasibility
of--
(i) filing appeals with administrative law judges
electronically; and
(ii) conducting hearings using tele- or video-conference
technologies.
[[Page S15456]]
(H) Independence of administrative law judges.--The steps
that should be taken to ensure the independence of
administrative law judges consistent with the requirements of
subsection (b)(2).
(I) Geographic distribution.--The steps that should be
taken to provide for an appropriate geographic distribution
of administrative law judges throughout the United States to
carry out subsection (b)(3).
(J) Hiring.--The steps that should be taken to hire
administrative law judges (and support staff) to carry out
subsection (b)(4).
(K) Performance standards.--The appropriateness of
establishing performance standards for administrative law
judges with respect to timelines for decisions in cases under
title XVIII of the Social Security Act taking into account
requirements under subsection (b)(2) for the independence of
such judges and consistent with the applicable provisions of
title 5, United States Code relating to impartiality.
(L) Shared resources.--The steps that should be taken to
carry out subsection (b)(6) (relating to the arrangements
with the Commissioner of Social Security to share office
space, support staff, and other resources, with appropriate
reimbursement).
(M) Training.--The training that should be provided to
administrative law judges with respect to laws and
regulations under title XVIII of the Social Security Act.
(3) Additional information.--The plan may also include
recommendations for further congressional action, including
modifications to the requirements and deadlines established
under section 1869 of the Social Security Act (42 U.S.C.
1395ff) (as amended by this Act).
(4) GAO evaluation.--The Comptroller General of the United
States shall evaluate the plan and, not later than the date
that is 6 months after the date on which the plan is received
by the Comptroller General, shall submit to Congress a report
on such evaluation.
(b) Transfer of Adjudication Authority.--
(1) In general.--Not earlier than July 1, 2005, and not
later than October 1, 2005, the Commissioner of Social
Security and the Secretary shall implement the transition
plan under subsection (a) and transfer the administrative law
judge functions described in such subsection from the Social
Security Administration to the Secretary.
(2) Assuring independence of judges.--The Secretary shall
assure the independence of administrative law judges
performing the administrative law judge functions transferred
under paragraph (1) from the Centers for Medicare & Medicaid
Services and its contractors. In order to assure such
independence, the Secretary shall place such judges in an
administrative office that is organizationally and
functionally separate from such Centers. Such judges shall
report to, and be under the general supervision of, the
Secretary, but shall not report to, or be subject to
supervision by, another officer of the Department of Health
and Human Services.
(3) Geographic distribution.--The Secretary shall provide
for an appropriate geographic distribution of administrative
law judges performing the administrative law judge functions
transferred under paragraph (1) throughout the United States
to ensure timely access to such judges.
(4) Hiring authority.--Subject to the amounts provided in
advance in appropriations Acts, the Secretary shall have
authority to hire administrative law judges to hear such
cases, taking into consideration those judges with expertise
in handling medicare appeals and in a manner consistent with
paragraph (3), and to hire support staff for such judges.
(5) Financing.--Amounts payable under law to the
Commissioner for administrative law judges performing the
administrative law judge functions transferred under
paragraph (1) from the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund
shall become payable to the Secretary for the functions so
transferred.
(6) Shared resources.--The Secretary shall enter into such
arrangements with the Commissioner as may be appropriate with
respect to transferred functions of administrative law judges
to share office space, support staff, and other resources,
with appropriate reimbursement from the Trust Funds described
in paragraph (5).
(c) Increased Financial Support.--In addition to any
amounts otherwise appropriated, to ensure timely action on
appeals before administrative law judges and the Departmental
Appeals Board consistent with section 1869 of the Social
Security Act (42 U.S.C. 1395ff) (as amended by this Act),
there are authorized to be appropriated (in appropriate part
from the Federal Hospital Insurance Trust Fund, established
under section 1817 of the Social Security Act (42 U.S.C.
1395i), and the Federal Supplementary Medical Insurance Trust
Fund, established under section 1841 of such Act (42 U.S.C.
1395t)) to the Secretary such sums as are necessary for
fiscal year 2005 and each subsequent fiscal year to--
(1) increase the number of administrative law judges (and
their staffs) under subsection (b)(4);
(2) improve education and training opportunities for
administrative law judges (and their staffs); and
(3) increase the staff of the Departmental Appeals Board.
(d) Conforming Amendment.--Section 1869(f)(2)(A)(i) (42
U.S.C. 1395ff(f)(2)(A)(i)) is amended by striking ``of the
Social Security Administration''.
SEC. 532. PROCESS FOR EXPEDITED ACCESS TO REVIEW.
(a) Expedited Access to Judicial Review.--
(1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)) is
amended--
(A) in paragraph (1)(A), by inserting ``, subject to
paragraph (2),'' before ``to judicial review of the
Secretary's final decision''; and
(B) by adding at the end the following new paragraph:
``(2) Expedited access to judicial review.--
``(A) In general.--The Secretary shall establish a process
under which a provider of services or supplier that furnishes
an item or service or an individual entitled to benefits
under part A or enrolled under part B, or both, who has filed
an appeal under paragraph (1) (other than an appeal filed
under paragraph (1)(F)(i)) may obtain access to judicial
review when a review entity (described in subparagraph (D)),
on its own motion or at the request of the appellant,
determines that the Departmental Appeals Board does not have
the authority to decide the question of law or regulation
relevant to the matters in controversy and that there is no
material issue of fact in dispute. The appellant may make
such request only once with respect to a question of law or
regulation for a specific matter in dispute in a case of an
appeal.
``(B) Prompt determinations.--If, after or coincident with
appropriately filing a request for an administrative hearing,
the appellant requests a determination by the appropriate
review entity that the Departmental Appeals Board does not
have the authority to decide the question of law or
regulations relevant to the matters in controversy and that
there is no material issue of fact in dispute, and if such
request is accompanied by the documents and materials as the
appropriate review entity shall require for purposes of
making such determination, such review entity shall make a
determination on the request in writing within 60 days after
the date such review entity receives the request and such
accompanying documents and materials. Such a determination by
such review entity shall be considered a final decision and
not subject to review by the Secretary.
``(C) Access to judicial review.--
``(i) In general.--If the appropriate review entity--
``(I) determines that there are no material issues of fact
in dispute and that the only issues to be adjudicated are
ones of law or regulation that the Departmental Appeals Board
does not have authority to decide; or
``(II) fails to make such determination within the period
provided under subparagraph (B),
then the appellant may bring a civil action as described in
this subparagraph.
``(ii) Deadline for filing.--Such action shall be filed, in
the case described in--
``(I) clause (i)(I), within 60 days of the date of the
determination described in such clause; or
``(II) clause (i)(II), within 60 days of the end of the
period provided under subparagraph (B) for the determination.
``(iii) Venue.--Such action shall be brought in the
district court of the United States for the judicial district
in which the appellant is located (or, in the case of an
action brought jointly by more than one applicant, the
judicial district in which the greatest number of applicants
are located) or in the District Court for the District of
Columbia.
``(iv) Interest on any amounts in controversy.--Where a
provider of services or supplier is granted judicial review
pursuant to this paragraph, the amount in controversy (if
any) shall be subject to annual interest beginning on the
first day of the first month beginning after the 60-day
period as determined pursuant to clause (ii) and equal to the
rate of interest on obligations issued for purchase by the
Federal Supplementary Medical Insurance Trust Fund for the
month in which the civil action authorized under this
paragraph is commenced, to be awarded by the reviewing court
in favor of the prevailing party. No interest awarded
pursuant to the preceding sentence shall be deemed income or
cost for the purposes of determining reimbursement due
providers of services or suppliers under this title.
``(D) Review entity defined.--For purposes of this
subsection, the term `review entity' means an entity of up to
three reviewers who are administrative law judges or members
of the Departmental Appeals Board selected for purposes of
making determinations under this paragraph.''.
(2) Conforming amendment.--Section 1869(b)(1)(F)(ii) (42
U.S.C. 1395ff(b)(1)(F)(ii)) is amended to read as follows:
``(ii) Reference to expedited access to judicial review.--
For the provision relating to expedited access to judicial
review, see paragraph (2).''.
(b) Application to Provider Agreement Determinations.--
Section 1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
(1) by inserting ``(A)'' after ``(h)(1)''; and
(2) by adding at the end the following new subparagraph:
``(B) An institution or agency described in subparagraph
(A) that has filed for a hearing under subparagraph (A) shall
have expedited access to judicial review under this
subparagraph in the same manner as providers of services,
suppliers, and individuals entitled
[[Page S15457]]
to benefits under part A or enrolled under part B, or both,
may obtain expedited access to judicial review under the
process established under section 1869(b)(2). Nothing in this
subparagraph shall be construed to affect the application of
any remedy imposed under section 1819 during the pendency of
an appeal under this subparagraph.''.
(c) Expedited Review of Certain Provider Agreement
Determinations.--
(1) Termination and certain other immediate remedies.--
Section 1866(h)(1) (42 U.S.C. 1395cc(h)(1)), as amended by
subsection (b), is amended by adding at the end the following
new subparagraph:
``(C)(i) The Secretary shall develop and implement a
process to expedite proceedings under this subsection in
which--
``(I) the remedy of termination of participation has been
imposed;
``(II) a remedy described in clause (i) or (iii) of section
1819(h)(2)(B) has been imposed, but only if such remedy has
been imposed on an immediate basis; or
``(III) a determination has been made as to a finding of
substandard quality of care that results in the loss of
approval of a skilled nursing facility's nurse aide training
program.
``(ii) Under such process under clause (i), priority shall
be provided in cases of termination described in clause
(i)(I).
``(iii) Nothing in this subparagraph shall be construed to
affect the application of any remedy imposed under section
1819 during the pendency of an appeal under this
subparagraph.''.
(2) Waiver of disapproval of nurse-aide training
programs.--Sections 1819(f)(2) and section 1919(f)(2) (42
U.S.C. 1395i-3(f)(2) and 1396r(f)(2)) are each amended--
(A) in subparagraph (B)(iii), by striking ``subparagraph
(C)'' and inserting ``subparagraphs (C) and (D)''; and
(B) by adding at the end the following new subparagraph:
``(D) Waiver of disapproval of nurse-aide training
programs.--Upon application of a nursing facility, the
Secretary may waive the application of subparagraph
(B)(iii)(I)(c) if the imposition of the civil monetary
penalty was not related to the quality of care provided to
residents of the facility. Nothing in this subparagraph shall
be construed as eliminating any requirement upon a facility
to pay a civil monetary penalty described in the preceding
sentence.''.
(3) Increased financial support.--In addition to any
amounts otherwise appropriated, to reduce by 50 percent the
average time for administrative determinations on appeals
under section 1866(h) of the Social Security Act (42 U.S.C.
1395cc(h)), there are authorized to be appropriated (in
appropriate part from the Federal Hospital Insurance Trust
Fund, established under section 1817 of the Social Security
Act (42 U.S.C. 1395i), and the Federal Supplementary Medical
Insurance Trust Fund, established under section 1841 of such
Act (42 U.S.C. 1395t)) to the Secretary such additional sums
for fiscal year 2004 and each subsequent fiscal year as may
be necessary. The purposes for which such amounts are
available include increasing the number of administrative law
judges (and their staffs) and the appellate level staff at
the Departmental Appeals Board of the Department of Health
and Human Services and educating such judges and staffs on
long-term care issues.
(d) Effective Date.--The amendments made by this section
shall apply to appeals filed on or after October 1, 2004.
SEC. 533. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) Requiring Full and Early Presentation of Evidence.--
(1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as
amended by section 532(a), is further amended by adding at
the end the following new paragraph:
``(3) Requiring full and early presentation of evidence by
providers.--A provider of services or supplier may not
introduce evidence in any appeal under this section that was
not presented at the reconsideration conducted by the
qualified independent contractor under subsection (c), unless
there is good cause which precluded the introduction of such
evidence at or before that reconsideration.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2004.
(b) Use of Patients' Medical Records.--Section
1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)) is amended by
inserting ``(including the medical records of the individual
involved)'' after ``clinical experience''.
(c) Notice Requirements for Medicare Appeals.--
(1) Initial determinations and redeterminations.--Section
1869(a) (42 U.S.C. 1395ff(a)) is amended by adding at the end
the following new paragraphs:
``(4) Requirements of notice of determinations.--With
respect to an initial determination insofar as it results in
a denial of a claim for benefits--
``(A) the written notice on the determination shall
include--
``(i) the reasons for the determination, including whether
a local medical review policy or a local coverage
determination was used;
``(ii) the procedures for obtaining additional information
concerning the determination, including the information
described in subparagraph (B); and
``(iii) notification of the right to seek a redetermination
or otherwise appeal the determination and instructions on how
to initiate such a redetermination under this section;
``(B) such written notice shall be provided in printed form
and written in a manner calculated to be understood by the
individual entitled to benefits under part A or enrolled
under part B, or both; and
``(C) the individual provided such written notice may
obtain, upon request, information on the specific provision
of the policy, manual, or regulation used in making the
redetermination.
``(5) Requirements of notice of redeterminations.--With
respect to a redetermination insofar as it results in a
denial of a claim for benefits--
``(A) the written notice on the redetermination shall
include--
``(i) the specific reasons for the redetermination;
``(ii) as appropriate, a summary of the clinical or
scientific evidence used in making the redetermination;
``(iii) a description of the procedures for obtaining
additional information concerning the redetermination; and
``(iv) notification of the right to appeal the
redetermination and instructions on how to initiate such an
appeal under this section;
``(B) such written notice shall be provided in printed form
and written in a manner calculated to be understood by the
individual entitled to benefits under part A or enrolled
under part B, or both; and
``(C) the individual provided such written notice may
obtain, upon request, information on the specific provision
of the policy, manual, or regulation used in making the
redetermination.''.
(2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C.
1395ff(c)(3)(E)) is amended--
(A) by inserting ``be written in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both, and shall include (to
the extent appropriate)'' after ``in writing,''; and
(B) by inserting ``and a notification of the right to
appeal such determination and instructions on how to initiate
such appeal under this section'' after ``such decision,''.
(3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)) is
amended--
(A) in the heading, by inserting ``; Notice'' after
``Secretary''; and
(B) by adding at the end the following new paragraph:
``(4) Notice.--Notice of the decision of an administrative
law judge shall be in writing in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both, and shall include--
``(A) the specific reasons for the determination
(including, to the extent appropriate, a summary of the
clinical or scientific evidence used in making the
determination);
``(B) the procedures for obtaining additional information
concerning the decision; and
``(C) notification of the right to appeal the decision and
instructions on how to initiate such an appeal under this
section.''.
(4) Submission of record for appeal.--Section
1869(c)(3)(J)(i) (42 U.S.C. 1395ff(c)(3)(J)(i)) is amended by
striking ``prepare'' and inserting ``submit'' and by striking
``with respect to'' and all that follows through ``and
relevant policies''.
(d) Qualified Independent Contractors.--
(1) Eligibility requirements of qualified independent
contractors.--Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)) is
amended--
(A) in subparagraph (A), by striking ``sufficient training
and expertise in medical science and legal matters'' and
inserting ``sufficient medical, legal, and other expertise
(including knowledge of the program under this title) and
sufficient staffing''; and
(B) by adding at the end the following new subparagraph:
``(K) Independence requirements.--
``(i) In general.--Subject to clause (ii), a qualified
independent contractor shall not conduct any activities in a
case unless the entity--
``(I) is not a related party (as defined in subsection
(g)(5));
``(II) does not have a material familial, financial, or
professional relationship with such a party in relation to
such case; and
``(III) does not otherwise have a conflict of interest with
such a party.
``(ii) Exception for reasonable compensation.--Nothing in
clause (i) shall be construed to prohibit receipt by a
qualified independent contractor of compensation from the
Secretary for the conduct of activities under this section if
the compensation is provided consistent with clause (iii).
``(iii) Limitations on entity compensation.--Compensation
provided by the Secretary to a qualified independent
contractor in connection with reviews under this section
shall not be contingent on any decision rendered by the
contractor or by any reviewing professional.''.
(2) Eligibility requirements for reviewers.--Section 1869
(42 U.S.C. 1395ff) is amended--
(A) by amending subsection (c)(3)(D) to read as follows:
``(D) Qualifications for reviewers.--The requirements of
subsection (g) shall be met (relating to qualifications of
reviewing professionals).''; and
(B) by adding at the end the following new subsection:
``(g) Qualifications of Reviewers.--
``(1) In general.--In reviewing determinations under this
section, a qualified independent contractor shall assure
that--
[[Page S15458]]
``(A) each individual conducting a review shall meet the
qualifications of paragraph (2);
``(B) compensation provided by the contractor to each such
reviewer is consistent with paragraph (3); and
``(C) in the case of a review by a panel described in
subsection (c)(3)(B) composed of physicians or other health
care professionals (each in this subsection referred to as a
`reviewing professional'), a reviewing professional meets the
qualifications described in paragraph (4) and, where a claim
is regarding the furnishing of treatment by a physician
(allopathic or osteopathic) or the provision of items or
services by a physician (allopathic or osteopathic), a
reviewing professional shall be a physician (allopathic or
osteopathic).
``(2) Independence.--
``(A) In general.--Subject to subparagraph (B), each
individual conducting a review in a case shall--
``(i) not be a related party (as defined in paragraph (5));
``(ii) not have a material familial, financial, or
professional relationship with such a party in the case under
review; and
``(iii) not otherwise have a conflict of interest with such
a party.
``(B) Exception.--Nothing in subparagraph (A) shall be
construed to--
``(i) prohibit an individual, solely on the basis of a
participation agreement with a fiscal intermediary, carrier,
or other contractor, from serving as a reviewing professional
if--
``(I) the individual is not involved in the provision of
items or services in the case under review;
``(II) the fact of such an agreement is disclosed to the
Secretary and the individual entitled to benefits under part
A or enrolled under part B, or both, or such individual's
authorized representative, and neither party objects; and
``(III) the individual is not an employee of the
intermediary, carrier, or contractor and does not provide
services exclusively or primarily to or on behalf of such
intermediary, carrier, or contractor;
``(ii) prohibit an individual who has staff privileges at
the institution where the treatment involved takes place from
serving as a reviewer merely on the basis of having such
staff privileges if the existence of such privileges is
disclosed to the Secretary and such individual (or authorized
representative), and neither party objects; or
``(iii) prohibit receipt of compensation by a reviewing
professional from a contractor if the compensation is
provided consistent with paragraph (3).
For purposes of this paragraph, the term `participation
agreement' means an agreement relating to the provision of
health care services by the individual and does not include
the provision of services as a reviewer under this
subsection.
``(3) Limitations on reviewer compensation.--Compensation
provided by a qualified independent contractor to a reviewer
in connection with a review under this section shall not be
contingent on the decision rendered by the reviewer.
``(4) Licensure and expertise.--Each reviewing professional
shall be--
``(A) a physician (allopathic or osteopathic) who is
appropriately credentialed or licensed in one or more States
to deliver health care services and has medical expertise in
the field of practice that is appropriate for the items or
services at issue; or
``(B) a health care professional who is legally authorized
in one or more States (in accordance with State law or the
State regulatory mechanism provided by State law) to furnish
the health care items or services at issue and has medical
expertise in the field of practice that is appropriate for
such items or services.
``(5) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a case under
this title involving a specific individual entitled to
benefits under part A or enrolled under part B, or both, any
of the following:
``(A) The Secretary, the medicare administrative contractor
involved, or any fiduciary, officer, director, or employee of
the Department of Health and Human Services, or of such
contractor.
``(B) The individual (or authorized representative).
``(C) The health care professional that provides the items
or services involved in the case.
``(D) The institution at which the items or services (or
treatment) involved in the case are provided.
``(E) The manufacturer of any drug or other item that is
included in the items or services involved in the case.
``(F) Any other party determined under any regulations to
have a substantial interest in the case involved.''.
(3) Reducing minimum number of qualified independent
contractors.--Section 1869(c)(4) (42 U.S.C. 1395ff(c)(4)) is
amended by striking ``not fewer than 12 qualified independent
contractors under this subsection'' and inserting ``with a
sufficient number of qualified independent contractors (but
not fewer than 4 such contractors) to conduct
reconsiderations consistent with the timeframes applicable
under this subsection''.
(4) Effective date.--The amendments made by paragraphs (1)
and (2) shall be effective as if included in the enactment of
the respective provisions of subtitle C of title V of BIPA
(114 Stat. 2763A-534).
(5) Transition.--In applying section 1869(g) of the Social
Security Act (as added by paragraph (2)), any reference to a
medicare administrative contractor shall be deemed to include
a reference to a fiscal intermediary under section 1816 of
the Social Security Act (42 U.S.C. 1395h) and a carrier under
section 1842 of such Act (42 U.S.C. 1395u).
SEC. 534. PREPAYMENT REVIEW.
(a) In General.--Section 1874A, as added by section
511(a)(1) and as amended by sections 912(b), 921(b)(1), and
921(c)(1), is further amended by adding at the end the
following new subsection:
``(h) Conduct of Prepayment Review.--
``(1) Conduct of random prepayment review.--
``(A) In general.--A medicare administrative contractor may
conduct random prepayment review only to develop a
contractor-wide or program-wide claims payment error rates or
under such additional circumstances as may be provided under
regulations, developed in consultation with providers of
services and suppliers.
``(B) Use of standard protocols when conducting prepayment
reviews.--When a medicare administrative contractor conducts
a random prepayment review, the contractor may conduct such
review only in accordance with a standard protocol for random
prepayment audits developed by the Secretary.
``(C) Construction.--Nothing in this paragraph shall be
construed as preventing the denial of payments for claims
actually reviewed under a random prepayment review.
``(D) Random prepayment review.--For purposes of this
subsection, the term `random prepayment review' means a
demand for the production of records or documentation absent
cause with respect to a claim.
``(2) Limitations on non-random prepayment review.--
``(A) Limitations on initiation of non-random prepayment
review.--A medicare administrative contractor may not
initiate non-random prepayment review of a provider of
services or supplier based on the initial identification by
that provider of services or supplier of an improper billing
practice unless there is a likelihood of sustained or high
level of payment error under section 1893(f)(3)(A).
``(B) Termination of non-random prepayment review.--The
Secretary shall issue regulations relating to the
termination, including termination dates, of non-random
prepayment review. Such regulations may vary such a
termination date based upon the differences in the
circumstances triggering prepayment review.''.
(b) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendment made by subsection (a) shall take effect 1 year
after the date of the enactment of this Act.
(2) Deadline for promulgation of certain regulations.--The
Secretary shall first issue regulations under section
1874A(h) of the Social Security Act, as added by subsection
(a), by not later than 1 year after the date of the enactment
of this Act.
(3) Application of standard protocols for random prepayment
review.--Section 1874A(h)(1)(B) of the Social Security Act,
as added by subsection (a), shall apply to random prepayment
reviews conducted on or after such date (not later than 1
year after the date of the enactment of this Act) as the
Secretary shall specify.
(c) Application to Fiscal Intermediaries and Carriers.--The
provisions of section 1874A(h) of the Social Security Act, as
added by subsection (a), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
SEC. 535. RECOVERY OF OVERPAYMENTS.
(a) In General.--Section 1893 (42 U.S.C. 1395ddd) is
amended by adding at the end the following new subsection:
``(f) Recovery of Overpayments.--
``(1) Use of repayment plans.--
``(A) In general.--If the repayment, within 30 days by a
provider of services or supplier, of an overpayment under
this title would constitute a hardship (as described in
subparagraph (B)), subject to subparagraph (C), upon request
of the provider of services or supplier the Secretary shall
enter into a plan with the provider of services or supplier
for the repayment (through offset or otherwise) of such
overpayment over a period of at least 6 months but not longer
than 3 years (or not longer than 5 years in the case of
extreme hardship, as determined by the Secretary). Interest
shall accrue on the balance through the period of repayment.
Such plan shall meet terms and conditions determined to be
appropriate by the Secretary.
``(B) Hardship.--
``(i) In general.--For purposes of subparagraph (A), the
repayment of an overpayment (or overpayments) within 30 days
is deemed to constitute a hardship if--
``(I) in the case of a provider of services that files cost
reports, the aggregate amount of the overpayments exceeds 10
percent of the amount paid under this title to the provider
of services for the cost reporting period covered by the most
recently submitted cost report; or
``(II) in the case of another provider of services or
supplier, the aggregate amount of the overpayments exceeds 10
percent of the amount paid under this title to the provider
of services or supplier for the previous calendar year.
[[Page S15459]]
``(ii) Rule of application.--The Secretary shall establish
rules for the application of this subparagraph in the case of
a provider of services or supplier that was not paid under
this title during the previous year or was paid under this
title only during a portion of that year.
``(iii) Treatment of previous overpayments.--If a provider
of services or supplier has entered into a repayment plan
under subparagraph (A) with respect to a specific overpayment
amount, such payment amount under the repayment plan shall
not be taken into account under clause (i) with respect to
subsequent overpayment amounts.
``(C) Exceptions.--Subparagraph (A) shall not apply if--
``(i) the Secretary has reason to suspect that the provider
of services or supplier may file for bankruptcy or otherwise
cease to do business or discontinue participation in the
program under this title; or
``(ii) there is an indication of fraud or abuse committed
against the program.
``(D) Immediate collection if violation of repayment
plan.--If a provider of services or supplier fails to make a
payment in accordance with a repayment plan under this
paragraph, the Secretary may immediately seek to offset or
otherwise recover the total balance outstanding (including
applicable interest) under the repayment plan.
``(E) Relation to no fault provision.--Nothing in this
paragraph shall be construed as affecting the application of
section 1870(c) (relating to no adjustment in the cases of
certain overpayments).
``(2) Limitation on recoupment.--
``(A) In general.--In the case of a provider of services or
supplier that is determined to have received an overpayment
under this title and that seeks a reconsideration by a
qualified independent contractor on such determination under
section 1869(b)(1), the Secretary may not take any action (or
authorize any other person, including any medicare
contractor, as defined in subparagraph (C)) to recoup the
overpayment until the date the decision on the
reconsideration has been rendered. If the provisions of
section 1869(b)(1) (providing for such a reconsideration by a
qualified independent contractor) are not in effect, in
applying the previous sentence any reference to such a
reconsideration shall be treated as a reference to a
redetermination by the fiscal intermediary or carrier
involved.
``(B) Collection with interest.--Insofar as the
determination on such appeal is against the provider of
services or supplier, interest on the overpayment shall
accrue on and after the date of the original notice of
overpayment. Insofar as such determination against the
provider of services or supplier is later reversed, the
Secretary shall provide for repayment of the amount recouped
plus interest at the same rate as would apply under the
previous sentence for the period in which the amount was
recouped.
``(C) Medicare contractor defined.--For purposes of this
subsection, the term `medicare contractor' has the meaning
given such term in section 1889(g).
``(3) Limitation on use of extrapolation.--A medicare
contractor may not use extrapolation to determine overpayment
amounts to be recovered by recoupment, offset, or otherwise
unless the Secretary determines that--
``(A) there is a sustained or high level of payment error;
or
``(B) documented educational intervention has failed to
correct the payment error.
There shall be no administrative or judicial review under
section 1869, section 1878, or otherwise, of determinations
by the Secretary of sustained or high levels of payment
errors under this paragraph.
``(4) Provision of supporting documentation.--In the case
of a provider of services or supplier with respect to which
amounts were previously overpaid, a medicare contractor may
request the periodic production of records or supporting
documentation for a limited sample of submitted claims to
ensure that the previous practice is not continuing.
``(5) Consent settlement reforms.--
``(A) In general.--The Secretary may use a consent
settlement (as defined in subparagraph (D)) to settle a
projected overpayment.
``(B) Opportunity to submit additional information before
consent settlement offer.--Before offering a provider of
services or supplier a consent settlement, the Secretary
shall--
``(i) communicate to the provider of services or supplier--
``(I) that, based on a review of the medical records
requested by the Secretary, a preliminary evaluation of those
records indicates that there would be an overpayment;
``(II) the nature of the problems identified in such
evaluation; and
``(III) the steps that the provider of services or supplier
should take to address the problems; and
``(ii) provide for a 45-day period during which the
provider of services or supplier may furnish additional
information concerning the medical records for the claims
that had been reviewed.
``(C) Consent settlement offer.--The Secretary shall review
any additional information furnished by the provider of
services or supplier under subparagraph (B)(ii). Taking into
consideration such information, the Secretary shall determine
if there still appears to be an overpayment. If so, the
Secretary--
``(i) shall provide notice of such determination to the
provider of services or supplier, including an explanation of
the reason for such determination; and
``(ii) in order to resolve the overpayment, may offer the
provider of services or supplier--
``(I) the opportunity for a statistically valid random
sample; or
``(II) a consent settlement.
The opportunity provided under clause (ii)(I) does not waive
any appeal rights with respect to the alleged overpayment
involved.
``(D) Consent settlement defined.--For purposes of this
paragraph, the term `consent settlement' means an agreement
between the Secretary and a provider of services or supplier
whereby both parties agree to settle a projected overpayment
based on less than a statistically valid sample of claims and
the provider of services or supplier agrees not to appeal the
claims involved.
``(6) Notice of over-utilization of codes.--The Secretary
shall establish, in consultation with organizations
representing the classes of providers of services and
suppliers, a process under which the Secretary provides for
notice to classes of providers of services and suppliers
served by the contractor in cases in which the contractor has
identified that particular billing codes may be overutilized
by that class of providers of services or suppliers under the
programs under this title (or provisions of title XI insofar
as they relate to such programs).
``(7) Payment audits.--
``(A) Written notice for post-payment audits.--Subject to
subparagraph (C), if a medicare contractor decides to conduct
a post-payment audit of a provider of services or supplier
under this title, the contractor shall provide the provider
of services or supplier with written notice (which may be in
electronic form) of the intent to conduct such an audit.
``(B) Explanation of findings for all audits.--Subject to
subparagraph (C), if a medicare contractor audits a provider
of services or supplier under this title, the contractor
shall--
``(i) give the provider of services or supplier a full
review and explanation of the findings of the audit in a
manner that is understandable to the provider of services or
supplier and permits the development of an appropriate
corrective action plan;
``(ii) inform the provider of services or supplier of the
appeal rights under this title as well as consent settlement
options (which are at the discretion of the Secretary);
``(iii) give the provider of services or supplier an
opportunity to provide additional information to the
contractor; and
``(iv) take into account information provided, on a timely
basis, by the provider of services or supplier under clause
(iii).
``(C) Exception.--Subparagraphs (A) and (B) shall not apply
if the provision of notice or findings would compromise
pending law enforcement activities, whether civil or
criminal, or reveal findings of law enforcement-related
audits.
``(8) Standard methodology for probe sampling.--The
Secretary shall establish a standard methodology for medicare
contractors to use in selecting a sample of claims for review
in the case of an abnormal billing pattern.''.
(b) Effective Dates and Deadlines.--
(1) Use of repayment plans.--Section 1893(f)(1) of the
Social Security Act, as added by subsection (a), shall apply
to requests for repayment plans made after the date of the
enactment of this Act.
(2) Limitation on recoupment.--Section 1893(f)(2) of the
Social Security Act, as added by subsection (a), shall apply
to actions taken after the date of the enactment of this Act.
(3) Use of extrapolation.--Section 1893(f)(3) of the Social
Security Act, as added by subsection (a), shall apply to
statistically valid random samples initiated after the date
that is 1 year after the date of the enactment of this Act.
(4) Provision of supporting documentation.--Section
1893(f)(4) of the Social Security Act, as added by subsection
(a), shall take effect on the date of the enactment of this
Act.
(5) Consent settlement.--Section 1893(f)(5) of the Social
Security Act, as added by subsection (a), shall apply to
consent settlements entered into after the date of the
enactment of this Act.
(6) Notice of overutilization.--Not later than 1 year after
the date of the enactment of this Act, the Secretary shall
first establish the process for notice of overutilization of
billing codes under section 1893A(f)(6) of the Social
Security Act, as added by subsection (a).
(7) Payment audits.--Section 1893A(f)(7) of the Social
Security Act, as added by subsection (a), shall apply to
audits initiated after the date of the enactment of this Act.
(8) Standard for abnormal billing patterns.--Not later than
1 year after the date of the enactment of this Act, the
Secretary shall first establish a standard methodology for
selection of sample claims for abnormal billing patterns
under section 1893(f)(8) of the Social Security Act, as added
by subsection (a).
SEC. 536. PROVIDER ENROLLMENT PROCESS; RIGHT OF APPEAL.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is
amended--
(1) by adding at the end of the heading the following: ``;
enrollment processes''; and
(2) by adding at the end the following new subsection:
[[Page S15460]]
``(j) Enrollment Process for Providers of Services and
Suppliers.--
``(1) Enrollment process.--
``(A) In general.--The Secretary shall establish by
regulation a process for the enrollment of providers of
services and suppliers under this title.
``(B) Deadlines.--The Secretary shall establish by
regulation procedures under which there are deadlines for
actions on applications for enrollment (and, if applicable,
renewal of enrollment). The Secretary shall monitor the
performance of medicare administrative contractors in meeting
the deadlines established under this subparagraph.
``(C) Consultation before changing provider enrollment
forms.--The Secretary shall consult with providers of
services and suppliers before making changes in the provider
enrollment forms required of such providers and suppliers to
be eligible to submit claims for which payment may be made
under this title.
``(2) Hearing rights in cases of denial or non-renewal.--A
provider of services or supplier whose application to enroll
(or, if applicable, to renew enrollment) under this title is
denied may have a hearing and judicial review of such denial
under the procedures that apply under subsection (h)(1)(A) to
a provider of services that is dissatisfied with a
determination by the Secretary.''.
(b) Effective Dates.--
(1) Enrollment process.--The Secretary shall provide for
the establishment of the enrollment process under section
1866(j)(1) of the Social Security Act, as added by subsection
(a)(2), within 6 months after the date of the enactment of
this Act.
(2) Consultation.--Section 1866(j)(1)(C) of the Social
Security Act, as added by subsection (a)(2), shall apply with
respect to changes in provider enrollment forms made on or
after January 1, 2004.
(3) Hearing rights.--Section 1866(j)(2) of the Social
Security Act, as added by subsection (a)(2), shall apply to
denials occurring on or after such date (not later than 1
year after the date of the enactment of this Act) as the
Secretary specifies.
SEC. 537. PROCESS FOR CORRECTION OF MINOR ERRORS AND
OMISSIONS WITHOUT PURSUING APPEALS PROCESS.
(a) Claims.--The Secretary shall develop, in consultation
with appropriate medicare contractors (as defined in section
1889(g) of the Social Security Act, as inserted by section
301(a)(1)) and representatives of providers of services and
suppliers, a process whereby, in the case of minor errors or
omissions (as defined by the Secretary) that are detected in
the submission of claims under the programs under title XVIII
of such Act, a provider of services or supplier is given an
opportunity to correct such an error or omission without the
need to initiate an appeal. Such process shall include the
ability to resubmit corrected claims.
(b) Deadline.--Not later than 1 year after the date of the
enactment of this Act, the Secretary shall first develop the
process under subsection (a).
SEC. 538. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND
SERVICES; ADVANCE BENEFICIARY NOTICES.
(a) In General.--Section 1869 (42 U.S.C. 1395ff(b)), as
amended by section 533(d)(2)(B), is further amended by adding
at the end the following new subsection:
``(h) Prior Determination Process for Certain Items and
Services.--
``(1) Establishment of process.--
``(A) In general.--With respect to a medicare
administrative contractor that has a contract under section
1874A that provides for making payments under this title with
respect to physicians' services (as defined in section
1848(j)(3)), the Secretary shall establish a prior
determination process that meets the requirements of this
subsection and that shall be applied by such contractor in
the case of eligible requesters.
``(B) Eligible requester.--For purposes of this subsection,
each of the following shall be an eligible requester:
``(i) A participating physician, but only with respect to
physicians' services to be furnished to an individual who is
entitled to benefits under this title and who has consented
to the physician making the request under this subsection for
those physicians' services.
``(ii) An individual entitled to benefits under this title,
but only with respect to a physicians' service for which the
individual receives, from a physician, an advance beneficiary
notice under section 1879(a).
``(2) Secretarial flexibility.--The Secretary shall
establish by regulation reasonable limits on the physicians'
services for which a prior determination of coverage may be
requested under this subsection. In establishing such limits,
the Secretary may consider the dollar amount involved with
respect to the physicians' service, administrative costs and
burdens, and other relevant factors.
``(3) Request for prior determination.--
``(A) In general.--Subject to paragraph (2), under the
process established under this subsection an eligible
requester may submit to the contractor a request for a
determination, before the furnishing of a physicians'
service, as to whether the physicians' service is covered
under this title consistent with the applicable requirements
of section 1862(a)(1)(A) (relating to medical necessity).
``(B) Accompanying documentation.--The Secretary may
require that the request be accompanied by a description of
the physicians' service, supporting documentation relating to
the medical necessity for the physicians' service, and any
other appropriate documentation. In the case of a request
submitted by an eligible requester who is described in
paragraph (1)(B)(ii), the Secretary may require that the
request also be accompanied by a copy of the advance
beneficiary notice involved.
``(4) Response to request.--
``(A) In general.--Under such process, the contractor shall
provide the eligible requester with written notice of a
determination as to whether--
``(i) the physicians' service is so covered;
``(ii) the physicians' service is not so covered; or
``(iii) the contractor lacks sufficient information to make
a coverage determination with respect to the physicians'
service.
``(B) Contents of notice for certain determinations.--
``(i) Noncoverage.--If the contractor makes the
determination described in subparagraph (A)(ii), the
contractor shall include in the notice a brief explanation of
the basis for the determination, including on what national
or local coverage or noncoverage determination (if any) the
determination is based, and a description of any applicable
rights under subsection (a).
``(ii) Insufficient information.--If the contractor makes
the determination described in subparagraph (A)(iii), the
contractor shall include in the notice a description of the
additional information required to make the coverage
determination.
``(C) Deadline to respond.--Such notice shall be provided
within the same time period as the time period applicable to
the contractor providing notice of initial determinations on
a claim for benefits under subsection (a)(2)(A).
``(D) Informing beneficiary in case of physician request.--
In the case of a request by a participating physician under
paragraph (1)(B)(i), the process shall provide that the
individual to whom the physicians' service is proposed to be
furnished shall be informed of any determination described in
subparagraph (A)(ii) (relating to a determination of non-
coverage) and the right (referred to in paragraph (6)(B)) to
obtain the physicians' service and have a claim submitted for
the physicians' service.
``(5) Binding nature of positive determination.--If the
contractor makes the determination described in paragraph
(4)(A)(i), such determination shall be binding on the
contractor in the absence of fraud or evidence of
misrepresentation of facts presented to the contractor.
``(6) Limitation on further review.--
``(A) In general.--Contractor determinations described in
paragraph (4)(A)(ii) or (4)(A)(iii) (relating to pre-service
claims) are not subject to further administrative appeal or
judicial review under this section or otherwise.
``(B) Decision not to seek prior determination or negative
determination does not impact right to obtain services, seek
reimbursement, or appeal rights.--Nothing in this subsection
shall be construed as affecting the right of an individual
who--
``(i) decides not to seek a prior determination under this
subsection with respect to physicians' services; or
``(ii) seeks such a determination and has received a
determination described in paragraph (4)(A)(ii),
from receiving (and submitting a claim for) such physicians'
services and from obtaining administrative or judicial review
respecting such claim under the other applicable provisions
of this section. Failure to seek a prior determination under
this subsection with respect to physicians' service shall not
be taken into account in such administrative or judicial
review.
``(C) No prior determination after receipt of services.--
Once an individual is provided physicians' services, there
shall be no prior determination under this subsection with
respect to such physicians' services.''.
(b) Effective Date; Sunset; Transition.--
(1) Effective date.--The Secretary shall establish the
prior determination process under the amendment made by
subsection (a) in such a manner as to provide for the
acceptance of requests for determinations under such process
filed not later than 18 months after the date of the
enactment of this Act.
(2) Sunset.--Such prior determination process shall not
apply to requests filed after the end of the 5-year period
beginning on the first date on which requests for
determinations under such process are accepted.
(3) Transition.--During the period in which the amendment
made by subsection (a) has become effective but contracts are
not provided under section 1874A of the Social Security Act
with medicare administrative contractors, any reference in
section 1869(g) of such Act (as added by such amendment) to
such a contractor is deemed a reference to a fiscal
intermediary or carrier with an agreement under section 1816,
or contract under section 1842, respectively, of such Act.
(4) Limitation on application to sgr.--For purposes of
applying section 1848(f)(2)(D) of the Social Security Act (42
U.S.C. 1395w-4(f)(2)(D)), the amendment made by subsection
(a) shall not be considered to be a change in law or
regulation.
(c) Provisions Relating to Advance Beneficiary Notices;
Report on Prior Determination Process.--
[[Page S15461]]
(1) Data collection.--The Secretary shall establish a
process for the collection of information on the instances in
which an advance beneficiary notice (as defined in paragraph
(5)) has been provided and on instances in which a
beneficiary indicates on such a notice that the beneficiary
does not intend to seek to have the item or service that is
the subject of the notice furnished.
(2) Outreach and education.--The Secretary shall establish
a program of outreach and education for beneficiaries and
providers of services and other persons on the appropriate
use of advance beneficiary notices and coverage policies
under the medicare program.
(3) GAO report on use of advance beneficiary notices.--Not
later than 18 months after the date on which section 1869(h)
of the Social Security Act (as added by subsection (a)) takes
effect, the Comptroller General of the United States shall
submit to Congress a report on the use of advance beneficiary
notices under title XVIII of such Act. Such report shall
include information concerning the providers of services and
other persons that have provided such notices and the
response of beneficiaries to such notices.
(4) GAO report on use of prior determination process.--Not
later than 36 months after the date on which section 1869(h)
of the Social Security Act (as added by subsection (a)) takes
effect, the Comptroller General of the United States shall
submit to Congress a report on the use of the prior
determination process under such section. Such report shall
include--
(A) information concerning--
(i) the number and types of procedures for which a prior
determination has been sought;
(ii) determinations made under the process;
(iii) the percentage of beneficiaries prevailing;
(iv) in those cases in which the beneficiaries do not
prevail, the reasons why such beneficiaries did not prevail;
and
(v) changes in receipt of services resulting from the
application of such process;
(B) an evaluation of whether the process was useful for
physicians (and other suppliers) and beneficiaries, whether
it was timely, and whether the amount of information required
was burdensome to physicians and beneficiaries; and
(C) recommendations for improvements or continuation of
such process.
(5) Advance beneficiary notice defined.--In this
subsection, the term ``advance beneficiary notice'' means a
written notice provided under section 1879(a) of the Social
Security Act (42 U.S.C. 1395pp(a)) to an individual entitled
to benefits under part A or enrolled under part B of title
XVIII of such Act before items or services are furnished
under such part in cases where a provider of services or
other person that would furnish the item or service believes
that payment will not be made for some or all of such items
or services under such title.
SEC. 539. APPEALS BY PROVIDERS WHEN THERE IS NO OTHER PARTY
AVAILABLE.
(a) In General.--Section 1870 (42 U.S.C. 1395gg) is amended
by adding at the end the following new subsection:
``(h) Notwithstanding subsection (f) or any other provision
of law, the Secretary shall permit a provider of services or
supplier to appeal any determination of the Secretary under
this title relating to services rendered under this title to
an individual who subsequently dies if there is no other
party available to appeal such determination.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act
and shall apply to items and services furnished on or after
such date.
SEC. 540. REVISIONS TO APPEALS TIMEFRAMES AND AMOUNTS.
(a) Timeframes.--Section 1869 (42 U.S.C. 1395ff) is
amended--
(1) in subsection (a)(3)(C)(ii), by striking ``30-day
period'' each place it appears and inserting ``60-day
period''; and
(2) in subsection (c)(3)(C)(i), by striking ``30-day
period'' and inserting ``60-day period''.
(b) Amounts.--
(1) In general.--Section 1869(b)(1)(E) (42 U.S.C.
1395ff(b)(1)(E)) is amended by adding at the end the
following new clause:
``(iii) Adjustment of dollar amounts.--For requests for
hearings or judicial review made in a year after 2004, the
dollar amounts specified in clause (i) shall be equal to such
dollar amounts increased by the percentage increase in the
medical care component of the consumer price index for all
urban consumers (U.S. city average) for July 2003 to the July
preceding the year involved. Any amount determined under the
previous sentence that is not a multiple of $10 shall be
rounded to the nearest multiple of $10.''.
(2) Conforming amendments.--(A) Section 1852(g)(5) (42
U.S.C. 1395w-22(g)(5)) is amended by adding at the end the
following: ``The provisions of section 1869(b)(1)(E)(iii)
shall apply with respect to dollar amounts specified in the
first 2 sentences of this paragraph in the same manner as
they apply to the dollar amounts specified in section
1869(b)(1)(E)(i).''.
(B) Section 1876(b)(5)(B) (42 U.S.C. 1395mm(b)(5)(B)) is
amended by adding at the end the following: ``The provisions
of section 1869(b)(1)(E)(iii) shall apply with respect to
dollar amounts specified in the first 2 sentences of this
subparagraph in the same manner as they apply to the dollar
amounts specified in section 1869(b)(1)(E)(i).''.
SEC. 540A. MEDIATION PROCESS FOR LOCAL COVERAGE
DETERMINATIONS.
(a) In General.--Section 1869 (42 U.S.C. 1395ff), as
amended by section 538(a), is amended by adding at the end
the following new subsection:
``(i) Mediation Process for Local Coverage
Determinations.--
``(1) Establishment of process.--The Secretary shall
establish a mediation process under this subsection through
the use of a physician trained in mediation and employed by
the Centers for Medicare & Medicaid Services.
``(2) Responsibility of mediator.--Under the process
established in paragraph (1), such a mediator shall mediate
in disputes between groups representing providers of
services, suppliers (as defined in section 1861(d)), and the
medical director for a medicare administrative contractor
whenever the regional administrator (as defined by the
Secretary) involved determines that there was a systematic
pattern and a large volume of complaints from such groups
regarding decisions of such director or there is a complaint
from the co-chair of the advisory committee for that
contractor to such regional administrator regarding such
dispute.''.
(b) Inclusion in mac contracts.--Section 1874A(b)(3)(A)(i),
as added by section 511(a)(1), is amended by adding at the
end the following: ``Such requirements shall include specific
performance duties expected of a medical director of a
medicare administrative contractor, including requirements
relating to professional relations and the availability of
such director to conduct medical determination activities
within the jurisdiction of such a contractor.''.
Subtitle E--Miscellaneous Provisions
SEC. 541. POLICY DEVELOPMENT REGARDING EVALUATION AND
MANAGEMENT (E & M) DOCUMENTATION GUIDELINES.
(a) In General.--The Secretary may not implement any new or
modified documentation guidelines (which for purposes of this
section includes clinical examples) for evaluation and
management physician services under the title XVIII of the
Social Security Act on or after the date of the enactment of
this Act unless the Secretary--
(1) has developed the guidelines in collaboration with
practicing physicians (including both generalists and
specialists) and provided for an assessment of the proposed
guidelines by the physician community;
(2) has established a plan that contains specific goals,
including a schedule, for improving the use of such
guidelines;
(3) has conducted appropriate and representative pilot
projects under subsection (b) to test such guidelines;
(4) finds, based on reports submitted under subsection
(b)(5) with respect to pilot projects conducted for such or
related guidelines, that the objectives described in
subsection (c) will be met in the implementation of such
guidelines; and
(5) has established, and is implementing, a program to
educate physicians on the use of such guidelines and that
includes appropriate outreach.
The Secretary shall make changes to the manner in which
existing evaluation and management documentation guidelines
are implemented to reduce paperwork burdens on physicians.
(b) Pilot Projects to Test Modified or New Evaluation and
Management Documentation Guidelines.--
(1) In general.--With respect to proposed new or modified
documentation guidelines referred to in subsection (a), the
Secretary shall conduct under this subsection appropriate and
representative pilot projects to test the proposed
guidelines.
(2) Length and consultation.--Each pilot project under this
subsection shall--
(A) be voluntary;
(B) be of sufficient length as determined by the Secretary
(but in no case to exceed 1 year) to allow for preparatory
physician and medicare contractor education, analysis, and
use and assessment of potential evaluation and management
guidelines; and
(C) be conducted, in development and throughout the
planning and operational stages of the project, in
consultation with practicing physicians (including both
generalists and specialists).
(3) Range of pilot projects.--Of the pilot projects
conducted under this subsection with respect to proposed new
or modified documentation guidelines--
(A) at least one shall focus on a peer review method by
physicians (not employed by a medicare contractor) which
evaluates medical record information for claims submitted by
physicians identified as statistical outliers relative to
codes used for billing purposes for such services;
(B) at least one shall focus on an alternative method to
detailed guidelines based on physician documentation of face
to face encounter time with a patient;
(C) at least one shall be conducted for services furnished
in a rural area and at least one for services furnished
outside such an area; and
(D) at least one shall be conducted in a setting where
physicians bill under physicians' services in teaching
settings and at least one shall be conducted in a setting
other than a teaching setting.
(4) Study of impact.--Each pilot project shall examine the
effect of the proposed guidelines on--
[[Page S15462]]
(A) different types of physician practices, including those
with fewer than 10 full-time-equivalent employees (including
physicians); and
(B) the costs of physician compliance, including education,
implementation, auditing, and monitoring.
(5) Report on pilot projects.--Not later than 6 months
after the date of completion of pilot projects carried out
under this subsection with respect to a proposed guideline
described in paragraph (1), the Secretary shall submit to
Congress a report on the pilot projects. Each such report
shall include a finding by the Secretary of whether the
objectives described in subsection (c) will be met in the
implementation of such proposed guideline.
(c) Objectives for Evaluation and Management Guidelines.--
The objectives for modified evaluation and management
documentation guidelines developed by the Secretary shall be
to--
(1) identify clinically relevant documentation needed to
code accurately and assess coding levels accurately;
(2) decrease the level of non-clinically pertinent and
burdensome documentation time and content in the physician's
medical record;
(3) increase accuracy by reviewers; and
(4) educate both physicians and reviewers.
(d) Study of Simpler, Alternative Systems of Documentation
for Physician Claims.--
(1) Study.--The Secretary shall carry out a study of the
matters described in paragraph (2).
(2) Matters described.--The matters referred to in
paragraph (1) are--
(A) the development of a simpler, alternative system of
requirements for documentation accompanying claims for
evaluation and management physician services for which
payment is made under title XVIII of the Social Security Act;
and
(B) consideration of systems other than current coding and
documentation requirements for payment for such physician
services.
(3) Consultation with practicing physicians.--In designing
and carrying out the study under paragraph (1), the Secretary
shall consult with practicing physicians, including
physicians who are part of group practices and including both
generalists and specialists.
(4) Application of hipaa uniform coding requirements.--In
developing an alternative system under paragraph (2), the
Secretary shall consider requirements of administrative
simplification under part C of title XI of the Social
Security Act.
(5) Report to congress.--(A) Not later than October 1,
2005, the Secretary shall submit to Congress a report on the
results of the study conducted under paragraph (1).
(B) The Medicare Payment Advisory Commission shall conduct
an analysis of the results of the study included in the
report under subparagraph (A) and shall submit a report on
such analysis to Congress.
(e) Study on Appropriate Coding of Certain Extended Office
Visits.--The Secretary shall conduct a study of the
appropriateness of coding in cases of extended office visits
in which there is no diagnosis made. Not later than October
1, 2005, the Secretary shall submit a report to Congress on
such study and shall include recommendations on how to code
appropriately for such visits in a manner that takes into
account the amount of time the physician spent with the
patient.
(f) Definitions.--In this section--
(1) the term ``rural area'' has the meaning given that term
in section 1886(d)(2)(D) of the Social Security Act (42
U.S.C. 1395ww(d)(2)(D)); and
(2) the term ``teaching settings'' are those settings
described in section 415.150 of title 42, Code of Federal
Regulations.
SEC. 542. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY AND
COVERAGE.
(a) Council for Technology and Innovation.--Section 1868
(42 U.S.C. 1395ee), as amended by section 521(a), is amended
by adding at the end the following new subsection:
``(c) Council for Technology and Innovation.--
``(1) Establishment.--The Secretary shall establish a
Council for Technology and Innovation within the Centers for
Medicare & Medicaid Services (in this section referred to as
`CMS').
``(2) Composition.--The Council shall be composed of senior
CMS staff and clinicians and shall be chaired by the
Executive Coordinator for Technology and Innovation
(appointed or designated under paragraph (4)).
``(3) Duties.--The Council shall coordinate the activities
of coverage, coding, and payment processes under this title
with respect to new technologies and procedures, including
new drug therapies, and shall coordinate the exchange of
information on new technologies between CMS and other
entities that make similar decisions.
``(4) Executive coordinator for technology and
innovation.--The Secretary shall appoint (or designate) a
noncareer appointee (as defined in section 3132(a)(7) of
title 5, United States Code) who shall serve as the Executive
Coordinator for Technology and Innovation. Such executive
coordinator shall report to the Administrator of CMS, shall
chair the Council, shall oversee the execution of its duties,
and shall serve as a single point of contact for outside
groups and entities regarding the coverage, coding, and
payment processes under this title.''.
(b) Methods for Determining Payment Basis for New Lab
Tests.--Section 1833(h) (42 U.S.C. 1395l(h)) is amended by
adding at the end the following:
``(8)(A) The Secretary shall establish by regulation
procedures for determining the basis for, and amount of,
payment under this subsection for any clinical diagnostic
laboratory test with respect to which a new or substantially
revised HCPCS code is assigned on or after January 1, 2005
(in this paragraph referred to as `new tests').
``(B) Determinations under subparagraph (A) shall be made
only after the Secretary--
``(i) makes available to the public (through an Internet
website and other appropriate mechanisms) a list that
includes any such test for which establishment of a payment
amount under this subsection is being considered for a year;
``(ii) on the same day such list is made available, causes
to have published in the Federal Register notice of a meeting
to receive comments and recommendations (and data on which
recommendations are based) from the public on the appropriate
basis under this subsection for establishing payment amounts
for the tests on such list;
``(iii) not less than 30 days after publication of such
notice convenes a meeting, that includes representatives of
officials of the Centers for Medicare & Medicaid Services
involved in determining payment amounts, to receive such
comments and recommendations (and data on which the
recommendations are based);
``(iv) taking into account the comments and recommendations
(and accompanying data) received at such meeting, develops
and makes available to the public (through an Internet
website and other appropriate mechanisms) a list of proposed
determinations with respect to the appropriate basis for
establishing a payment amount under this subsection for each
such code, together with an explanation of the reasons for
each such determination, the data on which the determinations
are based, and a request for public written comments on the
proposed determination; and
``(v) taking into account the comments received during the
public comment period, develops and makes available to the
public (through an Internet website and other appropriate
mechanisms) a list of final determinations of the payment
amounts for such tests under this subsection, together with
the rationale for each such determination, the data on which
the determinations are based, and responses to comments and
suggestions received from the public.
``(C) Under the procedures established pursuant to
subparagraph (A), the Secretary shall--
``(i) set forth the criteria for making determinations
under subparagraph (A); and
``(ii) make available to the public the data (other than
proprietary data) considered in making such determinations.
``(D) The Secretary may convene such further public
meetings to receive public comments on payment amounts for
new tests under this subsection as the Secretary deems
appropriate.
``(E) For purposes of this paragraph:
``(i) The term `HCPCS' refers to the Health Care Procedure
Coding System.
``(ii) A code shall be considered to be `substantially
revised' if there is a substantive change to the definition
of the test or procedure to which the code applies (such as a
new analyte or a new methodology for measuring an existing
analyte-specific test).''.
(c) GAO Study on Improvements in External Data Collection
for Use in the Medicare Inpatient Payment System.--
(1) Study.--The Comptroller General of the United States
shall conduct a study that analyzes which external data can
be collected in a shorter timeframe by the Centers for
Medicare & Medicaid Services for use in computing payments
for inpatient hospital services. The study may include an
evaluation of the feasibility and appropriateness of using
quarterly samples or special surveys or any other methods.
The study shall include an analysis of whether other
executive agencies, such as the Bureau of Labor Statistics in
the Department of Commerce, are best suited to collect this
information.
(2) Report.--By not later than October 1, 2004, the
Comptroller General shall submit a report to Congress on the
study under paragraph (1).
SEC. 543. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER
MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.
(a) In General.--The Secretary shall not require a hospital
(including a critical access hospital) to ask questions (or
obtain information) relating to the application of section
1862(b) of the Social Security Act (relating to medicare
secondary payor provisions) in the case of reference
laboratory services described in subsection (b), if the
Secretary does not impose such requirement in the case of
such services furnished by an independent laboratory.
(b) Reference Laboratory Services Described.--Reference
laboratory services described in this subsection are clinical
laboratory diagnostic tests (or the interpretation of such
tests, or both) furnished without a face-to-face encounter
between the individual entitled to benefits under part A or
enrolled under part B, or both, and the hospital involved and
in which the hospital submits a claim only for such test or
interpretation.
[[Page S15463]]
SEC. 544. EMTALA IMPROVEMENTS.
(a) Payment for EMTALA-Mandated Screening and Stabilization
Services.--
(1) In general.--Section 1862 (42 U.S.C. 1395y) is amended
by inserting after subsection (c) the following new
subsection:
``(d) For purposes of subsection (a)(1)(A), in the case of
any item or service that is required to be provided pursuant
to section 1867 to an individual who is entitled to benefits
under this title, determinations as to whether the item or
service is reasonable and necessary shall be made on the
basis of the information available to the treating physician
or practitioner (including the patient's presenting symptoms
or complaint) at the time the item or service was ordered or
furnished by the physician or practitioner (and not on the
patient's principal diagnosis). When making such
determinations with respect to such an item or service, the
Secretary shall not consider the frequency with which the
item or service was provided to the patient before or after
the time of the admission or visit.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to items and services furnished on or after
January 1, 2004.
(b) Notification of Providers When EMTALA Investigation
Closed.--Section 1867(d) (42 U.S.C. 42 U.S.C. 1395dd(d)) is
amended by adding at the end the following new paragraph:
``(4) Notice upon closing an investigation.--The Secretary
shall establish a procedure to notify hospitals and
physicians when an investigation under this section is
closed.''.
(c) Prior Review by Peer Review Organizations in EMTALA
Cases Involving Termination of Participation.--
(1) In general.--Section 1867(d)(3) (42 U.S.C.
1395dd(d)(3)) is amended--
(A) in the first sentence, by inserting ``or in terminating
a hospital's participation under this title'' after ``in
imposing sanctions under paragraph (1)''; and
(B) by adding at the end the following new sentences:
``Except in the case in which a delay would jeopardize the
health or safety of individuals, the Secretary shall also
request such a review before making a compliance
determination as part of the process of terminating a
hospital's participation under this title for violations
related to the appropriateness of a medical screening
examination, stabilizing treatment, or an appropriate
transfer as required by this section, and shall provide a
period of 5 days for such review. The Secretary shall provide
a copy of the organization's report to the hospital or
physician consistent with confidentiality requirements
imposed on the organization under such part B.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to terminations of participation initiated on or
after the date of the enactment of this Act.
SEC. 545. EMERGENCY MEDICAL TREATMENT AND LABOR ACT (EMTALA)
TECHNICAL ADVISORY GROUP.
(a) Establishment.--The Secretary shall establish a
Technical Advisory Group (in this section referred to as the
``Advisory Group'') to review issues related to the Emergency
Medical Treatment and Labor Act (EMTALA) and its
implementation. In this section, the term ``EMTALA'' refers
to the provisions of section 1867 of the Social Security Act
(42 U.S.C. 1395dd).
(b) Membership.--The Advisory Group shall be composed of 19
members, including the Administrator of the Centers for
Medicare & Medicaid Services and the Inspector General of the
Department of Health and Human Services and of which--
(1) 4 shall be representatives of hospitals, including at
least one public hospital, that have experience with the
application of EMTALA and at least 2 of which have not been
cited for EMTALA violations;
(2) 7 shall be practicing physicians drawn from the fields
of emergency medicine, cardiology or cardiothoracic surgery,
orthopedic surgery, neurosurgery, pediatrics or a pediatric
subspecialty, obstetrics-gynecology, and psychiatry, with not
more than one physician from any particular field;
(3) 2 shall represent patients;
(4) 2 shall be staff involved in EMTALA investigations from
different regional offices of the Centers for Medicare &
Medicaid Services; and
(5) 1 shall be from a State survey office involved in
EMTALA investigations and 1 shall be from a peer review
organization, both of whom shall be from areas other than the
regions represented under paragraph (4).
In selecting members described in paragraphs (1) through (3),
the Secretary shall consider qualified individuals nominated
by organizations representing providers and patients.
(c) General Responsibilities.--The Advisory Group--
(1) shall review EMTALA regulations;
(2) may provide advice and recommendations to the Secretary
with respect to those regulations and their application to
hospitals and physicians;
(3) shall solicit comments and recommendations from
hospitals, physicians, and the public regarding the
implementation of such regulations; and
(4) may disseminate information on the application of such
regulations to hospitals, physicians, and the public.
(d) Administrative Matters.--
(1) Chairperson.--The members of the Advisory Group shall
elect a member to serve as chairperson of the Advisory Group
for the life of the Advisory Group.
(2) Meetings.--The Advisory Group shall first meet at the
direction of the Secretary. The Advisory Group shall then
meet twice per year and at such other times as the Advisory
Group may provide.
(e) Termination.--The Advisory Group shall terminate 30
months after the date of its first meeting.
(f) Waiver of Administrative Limitation.--The Secretary
shall establish the Advisory Group notwithstanding any
limitation that may apply to the number of advisory
committees that may be established (within the Department of
Health and Human Services or otherwise).
SEC. 546. AUTHORIZING USE OF ARRANGEMENTS TO PROVIDE CORE
HOSPICE SERVICES IN CERTAIN CIRCUMSTANCES.
(a) In General.--Section 1861(dd)(5) (42 U.S.C.
1395x(dd)(5)) is amended by adding at the end the following:
``(D) In extraordinary, exigent, or other non-routine
circumstances, such as unanticipated periods of high patient
loads, staffing shortages due to illness or other events, or
temporary travel of a patient outside a hospice program's
service area, a hospice program may enter into arrangements
with another hospice program for the provision by that other
program of services described in paragraph (2)(A)(ii)(I). The
provisions of paragraph (2)(A)(ii)(II) shall apply with
respect to the services provided under such arrangements.
``(E) A hospice program may provide services described in
paragraph (1)(A) other than directly by the program if the
services are highly specialized services of a registered
professional nurse and are provided non-routinely and so
infrequently so that the provision of such services directly
would be impracticable and prohibitively expensive.''.
(b) Conforming Payment Provision.--Section 1814(i) (42
U.S.C. 1395f(i)), as amended by section 212(b), is amended by
adding at the end the following new paragraph:
``(5) In the case of hospice care provided by a hospice
program under arrangements under section 1861(dd)(5)(D) made
by another hospice program, the hospice program that made the
arrangements shall bill and be paid for the hospice care.''.
(c) Effective Date.--The amendments made by this section
shall apply to hospice care provided on or after the date of
the enactment of this Act.
SEC. 547. APPLICATION OF OSHA BLOODBORNE PATHOGENS STANDARD
TO CERTAIN HOSPITALS.
(a) In General.--Section 1866 (42 U.S.C. 1395cc), as
amended by section 206, is amended--
(1) in subsection (a)(1)--
(A) in subparagraph (T), by striking ``and'' at the end;
(B) in subparagraph (U), by striking the period at the end
and inserting ``, and''; and
(C) by inserting after subparagraph (U) the following new
subparagraph:
``(V) in the case of hospitals that are not otherwise
subject to the Occupational Safety and Health Act of 1970 (or
a State occupational safety and health plan that is approved
under 18(b) of such Act), to comply with the Bloodborne
Pathogens standard under section 1910.1030 of title 29 of the
Code of Federal Regulations (or as subsequently
redesignated).''; and
(2) by adding at the end of subsection (b) the following
new paragraph:
``(4)(A) A hospital that fails to comply with the
requirement of subsection (a)(1)(V) (relating to the
Bloodborne Pathogens standard) is subject to a civil money
penalty in an amount described in subparagraph (B), but is
not subject to termination of an agreement under this
section.
``(B) The amount referred to in subparagraph (A) is an
amount that is similar to the amount of civil penalties that
may be imposed under section 17 of the Occupational Safety
and Health Act of 1970 for a violation of the Bloodborne
Pathogens standard referred to in subsection (a)(1)(U) by a
hospital that is subject to the provisions of such Act.
``(C) A civil money penalty under this paragraph shall be
imposed and collected in the same manner as civil money
penalties under subsection (a) of section 1128A are imposed
and collected under that section.''.
(b) Effective Date.--The amendments made by this subsection
(a) shall apply to hospitals as of July 1, 2004.
SEC. 548. BIPA-RELATED TECHNICAL AMENDMENTS AND CORRECTIONS.
(a) Technical Amendments Relating to Advisory Committee
Under BIPA Section 522.--(1) Subsection (i) of section 1114
(42 U.S.C. 1314)--
(A) is transferred to section 1862 and added at the end of
such section; and
(B) is redesignated as subsection (j).
(2) Section 1862 (42 U.S.C. 1395y) is amended--
(A) in the last sentence of subsection (a), by striking
``established under section 1114(f)''; and
(B) in subsection (j), as so transferred and redesignated--
(i) by striking ``under subsection (f)''; and
(ii) by striking ``section 1862(a)(1)'' and inserting
``subsection (a)(1)''.
(b) Terminology Corrections.--(1) Section 1869(c)(3)(I)(ii)
(42 U.S.C. 1395ff(c)(3)(I)(ii)) is amended--
(A) in subclause (III), by striking ``policy'' and
inserting ``determination''; and
(B) in subclause (IV), by striking ``medical review
policies'' and inserting ``coverage determinations''.
(2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is
amended by striking ``policy''
[[Page S15464]]
and ``policy'' and inserting ``determination'' each place it
appears and ``determination'', respectively.
(c) Reference Corrections.--Section 1869(f)(4) (42 U.S.C.
1395ff(f)(4)) is amended--
(1) in subparagraph (A)(iv), by striking ``subclause (I),
(II), or (III)'' and inserting ``clause (i), (ii), or
(iii)'';
(2) in subparagraph (B), by striking ``clause (i)(IV)'' and
``clause (i)(III)'' and inserting ``subparagraph (A)(iv)''
and ``subparagraph (A)(iii)'', respectively; and
(3) in subparagraph (C), by striking ``clause (i)'',
``subclause (IV)'' and ``subparagraph (A)'' and inserting
``subparagraph (A)'', ``clause (iv)'' and ``paragraph
(1)(A)'', respectively each place it appears.
(d) Other Corrections.--Effective as if included in the
enactment of section 221(c) of BIPA, section 1154(e) (42
U.S.C. 1320c-3(e)) is amended by striking paragraph (5).
(e) Effective Date.--Except as otherwise provided, the
amendments made by this section shall be effective as if
included in the enactment of BIPA.
SEC. 549. CONFORMING AUTHORITY TO WAIVE A PROGRAM EXCLUSION.
The first sentence of section 1128(c)(3)(B) (42 U.S.C.
1320a-7(c)(3)(B)) is amended to read as follows: ``Subject to
subparagraph (G), in the case of an exclusion under
subsection (a), the minimum period of exclusion shall be not
less than five years, except that, upon the request of the
administrator of a Federal health care program (as defined in
section 1128B(f)) who determines that the exclusion would
impose a hardship on individuals entitled to benefits under
part A of title XVIII or enrolled under part B of such title,
or both, the Secretary may, after consulting with the
Inspector General of the Department of Health and Human
Services, waive the exclusion under subsection (a)(1),
(a)(3), or (a)(4) with respect to that program in the case of
an individual or entity that is the sole community physician
or sole source of essential specialized services in a
community.''.
SEC. 550. TREATMENT OF CERTAIN DENTAL CLAIMS.
(a) In General.--Section 1862 (42 U.S.C. 1395y) is amended
by adding at the end, after the subsection transferred and
redesignated by section 548(a), the following new subsection:
``(k)(1) Subject to paragraph (2), a group health plan (as
defined in subsection (a)(1)(A)(v)) providing supplemental or
secondary coverage to individuals also entitled to services
under this title shall not require a medicare claims
determination under this title for dental benefits
specifically excluded under subsection (a)(12) as a condition
of making a claims determination for such benefits under the
group health plan.
``(2) A group health plan may require a claims
determination under this title in cases involving or
appearing to involve inpatient dental hospital services or
dental services expressly covered under this title pursuant
to actions taken by the Secretary.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date that is 60 days after the date
of the enactment of this Act.
SEC. 551. FURNISHING HOSPITALS WITH INFORMATION TO COMPUTE
DSH FORMULA.
Beginning not later than 1 year after the date of the
enactment of this Act, the Secretary shall arrange to furnish
to subsection (d) hospitals (as defined in section
1886(d)(1)(B) of the Social Security Act, 42 U.S.C.
1395ww(d)(1)(B)) the data necessary for such hospitals to
compute the number of patient days used in computing the
disproportionate patient percentage under such section for
that hospital for the current cost reporting year. Such data
shall also be furnished to other hospitals which would
qualify for additional payments under part A of title XVIII
of the Social Security Act on the basis of such data.
SEC. 552. REVISIONS TO REASSIGNMENT PROVISIONS.
(a) In General.--Section 1842(b)(6)(A) (42 U.S.C.
1395u(b)(6)(A)) is amended by striking ``or (ii) (where the
service was provided in a hospital, critical access hospital,
clinic, or other facility) to the facility in which the
service was provided if there is a contractual arrangement
between such physician or other person and such facility
under which such facility submits the bill for such
service,'' and inserting ``or (ii) where the service was
provided under a contractual arrangement between such
physician or other person and an entity, to the entity if,
under the contractual arrangement, the entity submits the
bill for the service and the contractual arrangement meets
such program integrity and other safeguards as the Secretary
may determine to be appropriate,''.
(b) Conforming Amendment.--The second sentence of section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended by striking
``except to an employer or facility as described in clause
(A)'' and inserting ``except to an employer or entity as
described in subparagraph (A)''.
(c) Effective Date.--The amendments made by this section
shall apply to payments made on or after the date of the
enactment of this Act.
SEC. 553. OTHER PROVISIONS.
(a) GAO Reports on the Physician Compensation.--
(1) Sustainable growth rate and updates.--Not later than 6
months after the date of the enactment of this Act, the
Comptroller General of the United States shall submit to
Congress a report on the appropriateness of the updates in
the conversion factor under subsection (d)(3) of section 1848
of the Social Security Act (42 U.S.C. 1395w-4), including the
appropriateness of the sustainable growth rate formula under
subsection (f) of such section for 2002 and succeeding years.
Such report shall examine the stability and predictability of
such updates and rate and alternatives for the use of such
rate in the updates.
(2) Physician compensation generally.--Not later than 12
months after the date of the enactment of this Act, the
Comptroller General shall submit to Congress a report on all
aspects of physician compensation for services furnished
under title XVIII of the Social Security Act, and how those
aspects interact and the effect on appropriate compensation
for physician services. Such report shall review alternatives
for the physician fee schedule under section 1848 of such
title (42 U.S.C. 1395w-4).
(b) Annual Publication of List of National Coverage
Determinations.--The Secretary shall provide, in an
appropriate annual publication available to the public, a
list of national coverage determinations made under title
XVIII of the Social Security Act in the previous year and
information on how to get more information with respect to
such determinations.
(c) GAO Report on Flexibility in Applying Home Health
Conditions of Participation to Patients Who Are Not Medicare
Beneficiaries.--Not later than 6 months after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report on the implications
if there were flexibility in the application of the medicare
conditions of participation for home health agencies with
respect to groups or types of patients who are not medicare
beneficiaries. The report shall include an analysis of the
potential impact of such flexible application on clinical
operations and the recipients of such services and an
analysis of methods for monitoring the quality of care
provided to such recipients.
(d) OIG Report on Notices Relating to Use of Hospital
Lifetime Reserve Days.--Not later than 1 year after the date
of the enactment of this Act, the Inspector General of the
Department of Health and Human Services shall submit a report
to Congress on--
(1) the extent to which hospitals provide notice to
medicare beneficiaries in accordance with applicable
requirements before they use the 60 lifetime reserve days
described in section 1812(a)(1) of the Social Security Act
(42 U.S.C. 1395d(a)(1)); and
(2) the appropriateness and feasibility of hospitals
providing a notice to such beneficiaries before they
completely exhaust such lifetime reserve days.
TITLE VI--MEDICAID AND MISCELLANEOUS PROVISIONS
Subtitle A--Medicaid Provisions
SEC. 601. MEDICAID DISPROPORTIONATE SHARE HOSPITAL (DSH)
PAYMENTS.
(a) Temporary Increase.--Section 1923(f)(3) (42 U.S.C.
1396r-4(f)(3)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B) and (C)''; and
(2) by adding at the end the following new subparagraphs:
``(C) Special, temporary increase in allotments on a one-
time, non-cumulative basis.--The DSH allotment for any State
(other than a State with a DSH allotment determined under
paragraph (5))--
``(i) for fiscal year 2004 is equal to 116 percent of the
DSH allotment for the State for fiscal year 2003 under this
paragraph, notwithstanding subparagraph (B); and
``(ii) for each succeeding fiscal year is equal to the DSH
allotment for the State for fiscal year 2004 or, in the case
of fiscal years beginning with the fiscal year specified in
subparagraph (D) for that State, the DSH allotment for the
State for the previous fiscal year increased by the
percentage change in the consumer price index for all urban
consumers (all items; U.S. city average), for the previous
fiscal year.
``(D) Fiscal year specified.--For purposes of subparagraph
(C)(ii), the fiscal year specified in this subparagraph for a
State is the first fiscal year for which the Secretary
estimates that the DSH allotment for that State will equal
(or no longer exceed) the DSH allotment for that State under
the law as in effect before the date of the enactment of this
subparagraph.''.
(b) Increase in Floor for Treatment as a Low DSH State.--
Section 1923(f)(5) (42 U.S.C. 1396r-4(f)(5)) is amended to
read as follows:
``(5) Special rule for low dsh states.--In the case of a
State in which the total expenditures under the State plan
(including Federal and State shares) for disproportionate
share hospital adjustments under this section for fiscal year
2000, as reported to the Administrator of the Centers for
Medicare & Medicaid Services as of August 31, 2003, is
greater than 0 but less than 3 percent of the State's total
amount of expenditures under the State plan for medical
assistance during the fiscal year, the DSH allotment for the
State with respect to--
``(A) fiscal year 2004 shall be the DSH allotment for the
State for fiscal year 2003 increased by 16 percent;
``(B) each succeeding fiscal year before fiscal year 2009
shall be the DSH allotment for the State for the previous
fiscal year increased by 16 percent; and
``(C) fiscal year 2009 and any subsequent fiscal year,
shall be the DSH allotment for
[[Page S15465]]
the State for the previous year subject to an increase for
inflation as provided in paragraph (3)(A).''.
(c) Allotment Adjustment.--Section 1923(f) (42 U.S.C.
1396r-4(f)) is amended--
(1) in paragraph (3)(A), by striking ``The DSH'' and
inserting ``Except as provided in paragraph (6), the DSH'';
(2) by redesignating paragraph (6) as paragraph (7); and
(3) by inserting after paragraph (5) the following:
``(6) Allotment adjustment.--Only with respect to fiscal
year 2004 or 2005, if a statewide waiver under section 1115
is revoked or terminated before the end of either such fiscal
year and there is no DSH allotment for the State, the
Secretary shall--
``(A) permit the State whose waiver was revoked or
terminated to submit an amendment to its State plan that
would describe the methodology to be used by the State (after
the effective date of such revocation or termination) to
identify and make payments to disproportionate share
hospitals, including children's hospitals and institutions
for mental diseases or other mental health facilities (other
than State-owned institutions or facilities), on the basis of
the proportion of patients served by such hospitals that are
low-income patients with special needs; and
``(B) provide for purposes of this subsection for
computation of an appropriate DSH allotment for the State for
fiscal year 2004 or 2005 (or both) that would not exceed the
amount allowed under paragraph (3)(B)(ii) and that does not
result in greater expenditures under this title than would
have been made if such waiver had not been revoked or
terminated.
In determining the amount of an appropriate DSH allotment
under subparagraph (B) for a State, the Secretary shall take
into account the level of DSH expenditures for the State for
the fiscal year preceding the fiscal year in which the waiver
commenced.''.
(d) Increased Reporting and Other Requirements To Ensure
the Appropriate Use of Medicaid DSH Payment Adjustments.--
Section 1923 (42 U.S.C. 1396r-4) is amended by adding at the
end the following new subsection:
``(j) Annual Reports and Other Requirements Regarding
Payment Adjustments.--With respect to fiscal year 2004 and
each fiscal year thereafter, the Secretary shall require a
State, as a condition of receiving a payment under section
1903(a)(1) with respect to a payment adjustment made under
this section, to do the following:
``(1) Report.--The State shall submit an annual report that
includes the following:
``(A) An identification of each disproportionate share
hospital that received a payment adjustment under this
section for the preceding fiscal year and the amount of the
payment adjustment made to such hospital for the preceding
fiscal year.
``(B) Such other information as the Secretary determines
necessary to ensure the appropriateness of the payment
adjustments made under this section for the preceding fiscal
year.
``(2) Independent certified audit.--The State shall
annually submit to the Secretary an independent certified
audit that verifies each of the following:
``(A) The extent to which hospitals in the State have
reduced their uncompensated care costs to reflect the total
amount of claimed expenditures made under this section.
``(B) Payments under this section to hospitals that comply
with the requirements of subsection (g).
``(C) Only the uncompensated care costs of providing
inpatient hospital and outpatient hospital services to
individuals described in paragraph (1)(A) of such subsection
are included in the calculation of the hospital-specific
limits under such subsection.
``(D) The State included all payments under this title,
including supplemental payments, in the calculation of such
hospital-specific limits.
``(E) The State has separately documented and retained a
record of all of its costs under this title, claimed
expenditures under this title, uninsured costs in determining
payment adjustments under this section, and any payments made
on behalf of the uninsured from payment adjustments under
this section.''.
(e) Clarification Regarding Non-Regulation of Transfers.--
(1) In general.--Nothing in section 1903(w) of the Social
Security Act (42 U.S.C. 1396b(w)) shall be construed by the
Secretary as prohibiting a State's use of funds as the non-
Federal share of expenditures under title XIX of such Act
where such funds are transferred from or certified by a
publicly-owned regional medical center located in another
State and described in paragraph (2), so long as the
Secretary determines that such use of funds is proper and in
the interest of the program under title XIX.
(2) Center described.--A center described in this paragraph
is a publicly-owned regional medical center that--
(A) provides level 1 trauma and burn care services;
(B) provides level 3 neonatal care services;
(C) is obligated to serve all patients, regardless of State
of origin;
(D) is located within a Standard Metropolitan Statistical
Area (SMSA) that includes at least 3 States, including the
States described in paragraph (1);
(E) serves as a tertiary care provider for patients
residing within a 125 mile radius; and
(F) meets the criteria for a disproportionate share
hospital under section 1923 of such Act in at least one State
other than the one in which the center is located.
(3) Effective period.--This subsection shall apply through
December 31, 2005.
SEC. 602. CLARIFICATION OF INCLUSION OF INPATIENT DRUG PRICES
CHARGED TO CERTAIN PUBLIC HOSPITALS IN THE BEST
PRICE EXEMPTIONS FOR THE MEDICAID DRUG REBATE
PROGRAM.
(a) In General.--Section 1927(c)(1)(C)(i)(I) (42 U.S.C.
1396r-8(c)(1)(C)(i)(I)) is amended by inserting before the
semicolon the following: ``(including inpatient prices
charged to hospitals described in section 340B(a)(4)(L) of
the Public Health Service Act)''.
(b) Anti-Diversion Protection.--Section 1927(c)(1)(C) (42
U.S.C. 1396r-8(c)(1)(C)) is amended by adding at the end the
following:
``(iii) Application of auditing and recordkeeping
requirements.--With respect to a covered entity described in
section 340B(a)(4)(L) of the Public Health Service Act, any
drug purchased for inpatient use shall be subject to the
auditing and recordkeeping requirements described in section
340B(a)(5)(C) of the Public Health Service Act.''.
SEC. 603. EXTENSION OF MORATORIUM.
(a) In General.--Section 6408(a)(3) of the Omnibus Budget
Reconciliation Act of 1989, as amended by section 13642 of
the Omnibus Budget Reconciliation Act of 1993 and section
4758 of the Balanced Budget Act of 1997, is amended--
(1) by striking ``until December 31, 2002'', and
(2) by striking ``Kent Community Hospital Complex in
Michigan or.''
(b) Effective Dates.--
(1) Permanent extension.--The amendment made by subsection
(a)(1) shall take effect as if included in the amendment made
by section 4758 of the Balanced Budget Act of 1997.
(2) Modification.--The amendment made by subsection (a)(2)
shall take effect on the date of enactment of this Act.
Subtitle B--Miscellaneous Provisions
SEC. 611. FEDERAL REIMBURSEMENT OF EMERGENCY HEALTH SERVICES
FURNISHED TO UNDOCUMENTED ALIENS.
(a) Total Amount Available for Allotment.--
(1) In general.--Out of any funds in the Treasury not
otherwise appropriated, there are appropriated to the
Secretary $250,000,000 for each of fiscal years 2005 through
2008 for the purpose of making allotments under this section
for payments to eligible providers in States described in
paragraph (1) or (2) of subsection (b).
(2) Availability.--Funds appropriated under paragraph (1)
shall remain available until expended.
(b) State Allotments.--
(1) Based on percentage of undocumented aliens.--
(A) In general.--Out of the amount appropriated under
subsection (a) for a fiscal year, the Secretary shall use
$167,000,000 of such amount to make allotments for such
fiscal year in accordance with subparagraph (B).
(B) Formula.--The amount of the allotment for payments to
eligible providers in each State for a fiscal year shall be
equal to the product of--
(i) the total amount available for allotments under this
paragraph for the fiscal year; and
(ii) the percentage of undocumented aliens residing in the
State as compared to the total number of such aliens residing
in all States, as determined by the Statistics Division of
the Immigration and Naturalization Service, as of January
2003, based on the 2000 decennial census.
(2) Based on number of undocumented alien apprehension
states.--
(A) In general.--Out of the amount appropriated under
subsection (a) for a fiscal year, the Secretary shall use
$83,000,000 of such amount to make allotments, in addition to
amounts allotted under paragraph (1), for such fiscal year
for each of the 6 States with the highest number of
undocumented alien apprehensions for such fiscal year.
(B) Determination of allotments.--The amount of the
allotment for each State described in subparagraph (A) for a
fiscal year shall be equal to the product of--
(i) the total amount available for allotments under this
paragraph for the fiscal year; and
(ii) the percentage of undocumented alien apprehensions in
the State in that fiscal year as compared to the total of
such apprehensions for all such States for the preceding
fiscal year.
(C) Data.--For purposes of this paragraph, the highest
number of undocumented alien apprehensions for a fiscal year
shall be based on the apprehension rates for the 4-
consecutive-quarter period ending before the beginning of the
fiscal year for which information is available for
undocumented aliens in such States, as reported by the
Department of Homeland Security.
(c) Use of Funds.--
(1) Authority to make payments.--From the allotments made
for a State under subsection (b) for a fiscal year, the
Secretary shall pay the amount (subject to the total amount
available from such allotments) determined under paragraph
(2) directly to eligible providers located in the State for
the provision of eligible services to aliens described in
paragraph (5) to the extent that
[[Page S15466]]
the eligible provider was not otherwise reimbursed (through
insurance or otherwise) for such services during that fiscal
year.
(2) Determination of payment amounts.--
(A) In general.--Subject to subparagraph (B), the payment
amount determined under this paragraph shall be an amount
determined by the Secretary that is equal to the lesser of--
(i) the amount that the provider demonstrates was incurred
for the provision of such services; or
(ii) amounts determined under a methodology established by
the Secretary for purposes of this subsection.
(B) Pro-rata reduction.--If the amount of funds allotted to
a State under subsection (b) for a fiscal year is
insufficient to ensure that each eligible provider in that
State receives the amount of payment calculated under
subparagraph (A), the Secretary shall reduce that amount of
payment with respect to each eligible provider to ensure that
the entire amount allotted to the State for that fiscal year
is paid to such eligible providers.
(3) Methodology.--In establishing a methodology under
paragraph (2)(A)(ii), the Secretary--
(A) may establish different methodologies for types of
eligible providers;
(B) may base payments for hospital services on estimated
hospital charges, adjusted to estimated cost, through the
application of hospital-specific cost-to-charge ratios;
(C) shall provide for the election by a hospital to receive
either payments to the hospital for--
(i) hospital and physician services; or
(ii) hospital services and for a portion of the on-call
payments made by the hospital to physicians; and
(D) shall make quarterly payments under this section to
eligible providers.
If a hospital makes the election under subparagraph (C)(i),
the hospital shall pass on payments for services of a
physician to the physician and may not charge any
administrative or other fee with respect to such payments.
(4) Limitation on use of funds.--Payments made to eligible
providers in a State from allotments made under subsection
(b) for a fiscal year may only be used for costs incurred in
providing eligible services to aliens described in paragraph
(5).
(5) Aliens described.--For purposes of paragraphs (1) and
(2), aliens described in this paragraph are any of the
following:
(A) Undocumented aliens.
(B) Aliens who have been paroled into the United States at
a United States port of entry for the purpose of receiving
eligible services.
(B) Mexican citizens permitted to enter the United States
for not more than 72 hours under the authority of a biometric
machine readable border crossing identification card (also
referred to as a ``laser visa'') issued in accordance with
the requirements of regulations prescribed under section
101(a)(6) of the Immigration and Nationality Act (8 U.S.C.
1101(a)(6)).
(d) Applications; Advance Payments.--
(1) Deadline for establishment of application process.--
(A) In general.--Not later than September 1, 2004, the
Secretary shall establish a process under which eligible
providers located in a State may request payments under
subsection (c).
(B) Inclusion of measures to combat fraud and abuse.--The
Secretary shall include in the process established under
subparagraph (A) measures to ensure that inappropriate,
excessive, or fraudulent payments are not made from the
allotments determined under subsection (b), including
certification by the eligible provider of the veracity of the
payment request.
(2) Advance payment; retrospective adjustment.--The process
established under paragraph (1) may provide for making
payments under this section for each quarter of a fiscal year
on the basis of advance estimates of expenditures submitted
by applicants for such payments and such other investigation
as the Secretary may find necessary, and for making
reductions or increases in the payments as necessary to
adjust for any overpayment or underpayment for prior quarters
of such fiscal year.
(e) Definitions.--In this section:
(1) Eligible provider.--The term ``eligible provider''
means a hospital, physician, or provider of ambulance
services (including an Indian Health Service facility whether
operated by the Indian Health Service or by an Indian tribe
or tribal organization).
(2) Eligible services.--The term ``eligible services''
means health care services required by the application of
section 1867 of the Social Security Act (42 U.S.C. 1395dd),
and related hospital inpatient and outpatient services and
ambulance services (as defined by the Secretary).
(3) Hospital.--The term ``hospital'' has the meaning given
such term in section 1861(e) of the Social Security Act (42
U.S.C. 1395x(e)), except that such term shall include a
critical access hospital (as defined in section 1861(mm)(1)
of such Act (42 U.S.C. 1395x(mm)(1)).
(4) Physician.--The term ``physician'' has the meaning
given that term in section 1861(r) of the Social Security Act
(42 U.S.C. 1395x(r)).
(5) Indian tribe; tribal organization.--The terms ``Indian
tribe'' and ``tribal organization'' have the meanings given
such terms in section 4 of the Indian Health Care Improvement
Act (25 U.S.C. 1603).
(6) State.--The term ``State'' means the 50 States and the
District of Columbia.
SEC. 612. COMMISSION ON SYSTEMIC INTEROPERABILITY.
(a) Establishment.--The Secretary shall establish a
commission to be known as the ``Commission on Systemic
Interoperability'' (in this section referred to as the
``Commission'').
(b) Duties.--
(1) In general.--The Commission shall develop a
comprehensive strategy for the adoption and implementation of
health care information technology standards, that includes a
timeline and prioritization for such adoption and
implementation.
(2) Considerations.--In developing the comprehensive health
care information technology strategy under paragraph (1), the
Commission shall consider--
(A) the costs and benefits of the standards, both financial
impact and quality improvement;
(B) the current demand on industry resources to implement
this Act and other electronic standards, including HIPAA
standards; and
(C) the most cost-effective and efficient means for
industry to implement the standards.
(3) Noninterference.--In carrying out this section, the
Commission shall not interfere with any standards development
of adoption processes underway in the private or public
sector and shall not replicate activities related to such
standards or the national health information infrastructure
underway within the Department of Health and Human Services.
(4) Report.--Not later than October 31, 2005, the
Commission shall submit to the Secretary and to Congress a
report describing the strategy developed under paragraph (1),
including an analysis of the matters considered under
paragraph (2).
(c) Membership.--
(1) Number and appointment.--The Commission shall be
composed of 11 members appointed as follows:
(A) The President shall appoint 3 members, one of whom the
President shall designate as Chairperson.
(B) The Majority Leader of the Senate shall appoint 2
members.
(C) The Minority Leader of the Senate shall appoint 2
members.
(D) The Speaker of the House of Representatives shall
appoint 2 members.
(E) The Minority Leader of the House of Representatives
shall appoint 2 members.
(2) Qualifications.--The membership of the Commission shall
include individuals with national recognition for their
expertise in health finance and economics, health plans and
integrated delivery systems, reimbursement of health
facilities, practicing physicians, practicing pharmacists,
and other providers of health services, health care
technology and information systems, and other related fields,
who provide a mix of different professionals, broad
geographic representation, and a balance between urban and
rural representatives.
(d) Terms.--Each member shall be appointed for the life of
the Commission.
(e) Compensation.--
(1) Rates of pay.--Members shall each be paid at a rate not
to exceed the daily equivalent of the rate of basic pay for
level IV of the Executive Schedule for each day (including
travel time) during which they are engaged in the actual
performance of duties vested in the Commission.
(2) Prohibition of compensation of federal employees.--
Members of the Commission who are full-time officers or
employees of the United States or Members of Congress may not
receive additional pay, allowances, or benefits by reason of
their service on the Commission.
(3) Travel expenses.--Each member shall receive travel
expenses, including per diem in lieu of subsistence, in
accordance with applicable provisions under subchapter I of
chapter 57 of title 5, United States Code.
(f) Quorum.--A majority of the members of the Commission
shall constitute a quorum but a lesser number may hold
hearings.
(g) Director and Staff of Commission; Experts and
Consultants.--
(1) Director.--The Commission shall have a Director who
shall be appointed by the Chairperson. The Director shall be
paid at a rate not to exceed the rate of basic pay for level
IV of the Executive Schedule.
(2) Staff.--With the approval of the Commission, the
Director may appoint and fix the pay of such additional
personnel as the Director considers appropriate.
(3) Applicability of certain civil service laws.--The
Director and staff of the Commission may be appointed without
regard to the provisions of title 5, United States Code,
governing appointments in the competitive service, and may be
paid without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of that title relating to
classification and General Schedule pay rates, except that an
individual so appointed may not receive pay in excess of
level IV of the Executive Schedule.
(4) Experts and consultants.--With the approval of the
Commission, the Director may procure temporary and
intermittent services under section 3109(b) of title 5,
United States Code.
(5) Staff of federal agencies.--Upon request of the
Chairperson, the head of any Federal department or agency may
detail, on a reimbursable basis, any of the personnel of
[[Page S15467]]
that department or agency to the Commission to assist it in
carrying out its duties under this Act.
(h) Powers of Commission.--
(1) Hearings and sessions.--The Commission may, for the
purpose of carrying out this Act, hold hearings, sit and act
at times and places, take testimony, and receive evidence as
the Commission considers appropriate.
(2) Powers of members and agents.--Any member or agent of
the Commission may, if authorized by the Commission, take any
action which the Commission is authorized to take by this
section.
(3) Obtaining official data.--The Commission may secure
directly from any department or agency of the United States
information necessary to enable it to carry out this Act.
Upon request of the Chairperson of the Commission, the head
of that department or agency shall furnish that information
to the Commission.
(4) Gifts, bequests, and devises.--The Commission may
accept, use, and dispose of gifts, bequests, or devises of
services or property, both real and personal, for the purpose
of aiding or facilitating the work of the Commission. Gifts,
bequests, or devises of money and proceeds from sales of
other property received as gifts, bequests, or devises shall
be deposited in the Treasury and shall be available for
disbursement upon order of the Commission. For purposes of
Federal income, estate, and gift taxes, property accepted
under this subsection shall be considered as a gift, bequest,
or devise to the United States.
(5) Mails.--The Commission may use the United States mails
in the same manner and under the same conditions as other
departments and agencies of the United States.
(6) Administrative support services.--Upon the request of
the Commission, the Administrator of General Services shall
provide to the Commission, on a reimbursable basis, the
administrative support services necessary for the Commission
to carry out its responsibilities under this Act.
(7) Contract authority.--The Commission may enter into
contracts or make other arrangements, as may be necessary for
the conduct of the work of the Commission (without regard to
section 3709 of the Revised Statutes (41 U.S.C. 5)).
(i) Termination.--The Commission shall terminate on 30 days
after submitting its report pursuant to subsection (b)(3).
(j) Authorization of Appropriations.--There is authorized
to be appropriated such sums as may be necessary to carry out
this section.
SEC. 613. RESEARCH ON OUTCOMES OF HEALTH CARE ITEMS AND
SERVICES.
(a) Research, Demonstrations, and Evaluations.--
(1) Improvement of effectiveness and efficiency.--
(A) In general.--To improve the quality, effectiveness, and
efficiency of health care delivered pursuant to the programs
established under titles XVIII, XIX, and XXI of the Social
Security Act, the Secretary acting through the Director of
the Agency for Healthcare Research and Quality (in this
section referred to as the ``Director''), shall conduct and
support research to meet the priorities and requests for
scientific evidence and information identified by such
programs with respect to--
(i) the outcomes, comparative clinical effectiveness, and
appropriateness of health care items and services (including
prescription drugs); and
(ii) strategies for improving the efficiency and
effectiveness of such programs, including the ways in which
such items and services are organized, managed, and delivered
under such programs.
(B) Specification.--To respond to priorities and
information requests in subparagraph (A), the Secretary may
conduct or support, by grant, contract, or interagency
agreement, research, demonstrations, evaluations, technology
assessments, or other activities, including the provision of
technical assistance, scientific expertise, or methodological
assistance.
(2) Priorities.--
(A) In general.--The Secretary shall establish a process to
develop priorities that will guide the research,
demonstrations, and evaluation activities undertaken pursuant
to this section.
(B) Initial list.--Not later than 6 months after the date
of the enactment of this Act, the Secretary shall establish
an initial list of priorities for research related to health
care items and services (including prescription drugs).
(C) Process.--In carrying out subparagraph (A), the
Secretary--
(i) shall ensure that there is broad and ongoing
consultation with relevant stakeholders in identifying the
highest priorities for research, demonstrations, and
evaluations to support and improve the programs established
under titles XVIII, XIX, and XXI of the Social Security Act;
(ii) may include health care items and services which
impose a high cost on such programs, as well as those which
may be underutilized or overutilized and which may
significantly improve the prevention, treatment, or cure of
diseases and conditions (including chronic conditions) which
impose high direct or indirect costs on patients or society;
and
(iii) shall ensure that the research and activities
undertaken pursuant to this section are responsive to the
specified priorities and are conducted in a timely manner.
(3) Evaluation and synthesis of scientific evidence.--
(A) In general.--The Secretary shall--
(i) evaluate and synthesize available scientific evidence
related to health care items and services (including
prescription drugs) identified as priorities in accordance
with paragraph (2) with respect to the comparative clinical
effectiveness, outcomes, appropriateness, and provision of
such items and services (including prescription drugs);
(ii) identify issues for which existing scientific evidence
is insufficient with respect to such health care items and
services (including prescription drugs);
(iii) disseminate to prescription drug plans and MA-PD
plans under part D of title XVIII of the Social Security Act,
other health plans, and the public the findings made under
clauses (i) and (ii); and
(iv) work in voluntary collaboration with public and
private sector entities to facilitate the development of new
scientific knowledge regarding health care items and services
(including prescription drugs).
(B) Initial research.--The Secretary shall complete the
evaluation and synthesis of the initial research required by
the priority list developed under paragraph (2)(B) not later
than 18 months after the development of such list.
(C) Dissemination.--
(i) In general.--To enhance patient safety and the quality
of health care, the Secretary shall make available and
disseminate in appropriate formats to prescription drugs
plans under part D, and MA-PD plans under part C, of title
XVIII of the Social Security Act, other health plans, and the
public the evaluations and syntheses prepared pursuant to
subparagraph (A) and the findings of research conducted
pursuant to paragraph (1). In carrying out this clause the
Secretary, in order to facilitate the availability of such
evaluations and syntheses or findings at every decision point
in the health care system, shall--
(I) present such evaluations and syntheses or findings in a
form that is easily understood by the individuals receiving
health care items and services (including prescription drugs)
under such plans and periodically assess that the
requirements of this subclause have been met; and
(II) provide such evaluations and syntheses or findings and
other relevant information through easily accessible and
searchable electronic mechanisms, and in hard copy formats as
appropriate.
(ii) Rule of construction.--Nothing in this section shall
be construed as--
(I) affecting the authority of the Secretary or the
Commissioner of Food and Drugs under the Federal Food, Drug,
and Cosmetic Act or the Public Health Service Act; or
(II) conferring any authority referred to in subclause (I)
to the Director.
(D) Accountability.--In carrying out this paragraph, the
Secretary shall implement activities in a manner that--
(i) makes publicly available all scientific evidence relied
upon and the methodologies employed, provided such evidence
and method are not protected from public disclosure by
section 1905 of title 18, United States Code, or other
applicable law so that the results of the research, analyses,
or syntheses can be evaluated or replicated; and
(ii) ensures that any information needs and unresolved
issues identified in subparagraph (A)(ii) are taken into
account in priority-setting for future research conducted by
the Secretary.
(4) Confidentiality.--
(A) In general.--In making use of administrative, clinical,
and program data and information developed or collected with
respect to the programs established under titles XVIII, XIX,
and XXI of the Social Security Act, for purposes of carrying
out the requirements of this section or the activities
authorized under title IX of the Public Health Service Act
(42 U.S.C. 299 et seq.), such data and information shall be
protected in accordance with the confidentiality requirements
of title IX of the Public Health Service Act.
(B) Rule of construction.--Nothing in this section shall be
construed to require or permit the disclosure of data
provided to the Secretary that is otherwise protected from
disclosure under the Federal Food, Drug, and Cosmetic Act,
section 1905 of title 18, United States Code, or other
applicable law.
(5) Evaluations.--The Secretary shall conduct and support
evaluations of the activities carried out under this section
to determine the extent to which such activities have had an
effect on outcomes and utilization of health care items and
services.
(6) Improving information available to health care
providers, patients, and policymakers.--Not later than 18
months after the date of enactment of this Act, the Secretary
shall identify options that could be undertaken in voluntary
collaboration with private and public entities (as
appropriate) for the--
(A) provision of more timely information through the
programs established under titles XVIII, XIX, and XXI of the
Social Security Act, regarding the outcomes and quality of
patient care, including clinical and patient-reported
outcomes, especially with respect to interventions and
conditions for which clinical trials would not be feasible or
raise ethical concerns that are difficult to address;
(B) acceleration of the adoption of innovation and quality
improvement under such programs; and
(C) development of management tools for the programs
established under titles XIX
[[Page S15468]]
and XXI of the Social Security Act, and with respect to the
programs established under such titles, assess the
feasibility of using administrative or claims data, to--
(i) improve oversight by State officials;
(ii) support Federal and State initiatives to improve the
quality, safety, and efficiency of services provided under
such programs; and
(iii) provide a basis for estimating the fiscal and
coverage impact of Federal or State program and policy
changes.
(b) Recommendations.--
(1) Disclaimer.--In carrying out this section, the Director
shall--
(A) not mandate national standards of clinical practice or
quality health care standards; and
(B) include in any recommendations resulting from projects
funded and published by the Director, a corresponding
reference to the prohibition described in subparagraph (A).
(2) Requirement for implementation.--Research, evaluation,
and communication activities performed pursuant to this
section shall reflect the principle that clinicians and
patients should have the best available evidence upon which
to make choices in health care items and services, in
providers, and in health care delivery systems, recognizing
that patient subpopulations and patient and physician
preferences may vary.
(3) Rule of construction.--Nothing in this section shall be
construed to provide the Director with authority to mandate a
national standard or require a specific approach to quality
measurement and reporting.
(c) Research With Respect to Dissemination.--The Secretary,
acting through the Director, may conduct or support research
with respect to improving methods of disseminating
information in accordance with subsection (a)(3)(C).
(d) Limitation on CMS.--The Administrator of the Centers
for Medicare & Medicaid Services may not use data obtained in
accordance with this section to withhold coverage of a
prescription drug.
(e) Authorization of Appropriations.--There is authorized
to be appropriated to carry out this section, $50,000,000 for
fiscal year 2004, and such sums as may be necessary for each
fiscal year thereafter.
SEC. 614. HEALTH CARE THAT WORKS FOR ALL AMERICANS: CITIZENS
HEALTH CARE WORKING GROUP.
(a) Findings.--Congress finds the following:
(1) In order to improve the health care system, the
American public must engage in an informed national public
debate to make choices about the services they want covered,
what health care coverage they want, and how they are willing
to pay for coverage.
(2) More than a trillion dollars annually is spent on the
health care system, yet--
(A) 41,000,000 Americans are uninsured;
(B) insured individuals do not always have access to
essential, effective services to improve and maintain their
health; and
(C) employers, who cover over 170,000,000 Americans, find
providing coverage increasingly difficult because of rising
costs and double digit premium increases.
(3) Despite increases in medical care spending that are
greater than the rate of inflation, population growth, and
Gross Domestic Product growth, there has not been a
commensurate improvement in our health status as a nation.
(4) Health care costs for even just 1 member of a family
can be catastrophic, resulting in medical bills potentially
harming the economic stability of the entire family.
(5) Common life occurrences can jeopardize the ability of a
family to retain private coverage or jeopardize access to
public coverage.
(6) Innovations in health care access, coverage, and
quality of care, including the use of technology, have often
come from States, local communities, and private sector
organizations, but more creative policies could tap this
potential.
(7) Despite our Nation's wealth, the health care system
does not provide coverage to all Americans who want it.
(b) Purposes.--The purposes of this section are--
(1) to provide for a nationwide public debate about
improving the health care system to provide every American
with the ability to obtain quality, affordable health care
coverage; and
(2) to provide for a vote by Congress on the
recommendations that result from the debate.
(c) Establishment.--The Secretary, acting through the
Agency for Healthcare Research and Quality, shall establish
an entity to be known as the Citizens' Health Care Working
Group (referred to in this section as the ``Working Group'').
(d) Membership.--
(1) Number and appointment.--The Working Group shall be
composed of 15 members. One member shall be the Secretary.
The Comptroller General of the United States shall appoint 14
members.
(2) Qualifications.--
(A) In general.--The membership of the Working Group shall
include--
(i) consumers of health services that represent those
individuals who have not had insurance within 2 years of
appointment, that have had chronic illnesses, including
mental illness, are disabled, and those who receive insurance
coverage through medicare and medicaid; and
(ii) individuals with expertise in financing and paying for
benefits and access to care, business and labor perspectives,
and providers of health care.
The membership shall reflect a broad geographic
representation and a balance between urban and rural
representatives.
(B) Prohibited appointments.--Members of the Working Group
shall not include Members of Congress or other elected
government officials (Federal, State, or local). Individuals
appointed to the Working Group shall not be paid employees or
representatives of associations or advocacy organizations
involved in the health care system.
(e) Period of Appointment.--Members of the Working Group
shall be appointed for a life of the Working Group. Any
vacancies shall not affect the power and duties of the
Working Group but shall be filled in the same manner as the
original appointment.
(f) Designation of the Chairperson.--Not later than 15 days
after the date on which all members of the Working Group have
been appointed under subsection (d)(1), the Comptroller
General shall designate the chairperson of the Working Group.
(g) Subcommittees.--The Working Group may establish
subcommittees if doing so increases the efficiency of the
Working Group in completing its tasks.
(h) Duties.--
(1) Hearings.--Not later than 90 days after the date of the
designation of the chairperson under subsection (f), the
Working Group shall hold hearings to examine--
(A) the capacity of the public and private health care
systems to expand coverage options;
(B) the cost of health care and the effectiveness of care
provided at all stages of disease;
(C) innovative State strategies used to expand health care
coverage and lower health care costs;
(D) local community solutions to accessing health care
coverage;
(E) efforts to enroll individuals currently eligible for
public or private health care coverage;
(F) the role of evidence-based medical practices that can
be documented as restoring, maintaining, or improving a
patient's health, and the use of technology in supporting
providers in improving quality of care and lowering costs;
and
(G) strategies to assist purchasers of health care,
including consumers, to become more aware of the impact of
costs, and to lower the costs of health care.
(2) Additional hearings.--The Working Group may hold
additional hearings on subjects other than those listed in
paragraph (1) so long as such hearings are determined to be
necessary by the Working Group in carrying out the purposes
of this section. Such additional hearings do not have to be
completed within the time period specified in paragraph (1)
but shall not delay the other activities of the Working Group
under this section.
(3) The health report to the american people.--Not later
than 90 days after the hearings described in paragraphs (1)
and (2) are completed, the Working Group shall prepare and
make available to health care consumers through the Internet
and other appropriate public channels, a report to be
entitled, ``The Health Report to the American People''. Such
report shall be understandable to the general public and
include--
(A) a summary of--
(i) health care and related services that may be used by
individuals throughout their life span;
(ii) the cost of health care services and their medical
effectiveness in providing better quality of care for
different age groups;
(iii) the source of coverage and payment, including
reimbursement, for health care services;
(iv) the reasons people are uninsured or underinsured and
the cost to taxpayers, purchasers of health services, and
communities when Americans are uninsured or underinsured;
(v) the impact on health care outcomes and costs when
individuals are treated in all stages of disease;
(vi) health care cost containment strategies; and
(vii) information on health care needs that need to be
addressed;
(B) examples of community strategies to provide health care
coverage or access;
(C) information on geographic-specific issues relating to
health care;
(D) information concerning the cost of care in different
settings, including institutional-based care and home and
community-based care;
(E) a summary of ways to finance health care coverage; and
(F) the role of technology in providing future health care
including ways to support the information needs of patients
and providers.
(4) Community meetings.--
(A) In general.--Not later than 1 year after the date on
which all the members of the Working Group have been
appointed under subsection (d)(1) and appropriations are
first made available to carry out this section, the Working
Group shall initiate health care community meetings
throughout the United States (in this paragraph referred to
as ``community meetings''). Such community meetings may be
geographically or regionally based and shall be completed
within 180 days after the initiation of the first meeting.
(B) Number of meetings.--The Working Group shall hold a
sufficient number of community meetings in order to receive
information that reflects--
[[Page S15469]]
(i) the geographic differences throughout the United
States;
(ii) diverse populations; and
(iii) a balance among urban and rural populations.
(C) Meeting requirements.--
(i) Facilitator.--A State health officer may be the
facilitator at the community meetings.
(ii) Attendance.--At least 1 member of the Working Group
shall attend and serve as chair of each community meeting.
Other members may participate through interactive technology.
(iii) Topics.--The community meetings shall, at a minimum,
address the following questions:
(I) What health care benefits and services should be
provided?
(II) How does the American public want health care
delivered?
(III) How should health care coverage be financed?
(IV) What trade-offs are the American public willing to
make in either benefits or financing to ensure access to
affordable, high quality health care coverage and services?
(iv) Interactive technology.--The Working Group may
encourage public participation in community meetings through
interactive technology and other means as determined
appropriate by the Working Group.
(D) Interim requirements.--Not later than 180 days after
the date of completion of the community meetings, the Working
Group shall prepare and make available to the public through
the Internet and other appropriate public channels, an
interim set of recommendations on health care coverage and
ways to improve and strengthen the health care system based
on the information and preferences expressed at the community
meetings. There shall be a 90-day public comment period on
such recommendations.
(i) Recommendations.--Not later than 120 days after the
expiration of the public comment period described in
subsection (h)(4)(D), the Working Group shall submit to
Congress and the President a final set of recommendations.
(j) Administration.--
(1) Executive director.--There shall be an Executive
Director of the Working Group who shall be appointed by the
chairperson of the Working Group in consultation with the
members of the Working Group.
(2) Compensation.--While serving on the business of the
Working Group (including travel time), a member of the
Working Group shall be entitled to compensation at the per
diem equivalent of the rate provided for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code, and while so serving away from home and the
member's regular place of business, a member may be allowed
travel expenses, as authorized by the chairperson of the
Working Group. For purposes of pay and employment benefits,
rights, and privileges, all personnel of the Working Group
shall be treated as if they were employees of the Senate.
(3) Information from federal agencies.--The Working Group
may secure directly from any Federal department or agency
such information as the Working Group considers necessary to
carry out this section. Upon request of the Working Group,
the head of such department or agency shall furnish such
information.
(4) Postal services.--The Working Group may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the Federal Government.
(k) Detail.--Not more than 10 Federal Government employees
employed by the Department of Labor and 10 Federal Government
employees employed by the Department of Health and Human
Services may be detailed to the Working Group under this
section without further reimbursement. Any detail of an
employee shall be without interruption or loss of civil
service status or privilege.
(l) Temporary and Intermittent Services.--The chairperson
of the Working Group may procure temporary and intermittent
services under section 3109(b) of title 5, United States
Code, at rates for individuals which do not exceed the daily
equivalent of the annual rate of basic pay prescribed for
level V of the Executive Schedule under section 5316 of such
title.
(m) Annual Report.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter during the
existence of the Working Group, the Working Group shall
report to Congress and make public a detailed description of
the expenditures of the Working Group used to carry out its
duties under this section.
(n) Sunset of Working Group.--The Working Group shall
terminate on the date that is 2 years after the date on which
all the members of the Working Group have been appointed
under subsection (d)(1) and appropriations are first made
available to carry out this section.
(o) Administration Review and Comments.--Not later than 45
days after receiving the final recommendations of the Working
Group under subsection (i), the President shall submit a
report to Congress which shall contain--
(1) additional views and comments on such recommendations;
and
(2) recommendations for such legislation and administrative
actions as the President considers appropriate.
(p) Required Congressional Action.--Not later than 45 days
after receiving the report submitted by the President under
subsection (o), each committee of jurisdiction of Congress,
the Committee on Finance of the Senate, the Committee on
Health, Education, Labor, and Pensions of the Senate, the
Committee on Ways and Means of the House of Representatives,
the Committee on Energy and Commerce of the House of
Representatives, Committee on Education and the Workforce of
the House of Representatives, shall hold at least 1 hearing
on such report and on the final recommendations of the
Working Group submitted under subsection (i).
(q) Authorization of Appropriations.--
(1) In general.--There are authorized to be appropriated to
carry out this section, other than subsection (h)(3),
$3,000,000 for each of fiscal years 2005 and 2006.
(2) Health report to the american people.--There are
authorized to be appropriated for the preparation and
dissemination of the Health Report to the American People
described in subsection (h)(3), such sums as may be necessary
for the fiscal year in which the report is required to be
submitted.
SEC. 615. FUNDING START-UP ADMINISTRATIVE COSTS FOR MEDICARE
REFORM.
(a) In General.--There are appropriated to carry out this
Act (including the amendments made by this Act), to be
transferred from the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund--
(1) not to exceed $1,000,000,000 for the Centers for
Medicare & Medicaid Services; and
(2) not to exceed $500,000,000 for the Social Security
Administration.
(b) Availability.--Amounts provided under subsection (a)
shall remain available until September 30, 2005.
(c) Application.--From amounts provided under subsection
(a)(2), the Social Security Administration may reimburse the
Internal Revenue Service for expenses in carrying out this
Act (and the amendments made by this Act).
(d) Transfer.--The President may transfer amounts provided
under subsection (a) between the Centers for Medicare &
Medicaid Services and the Social Security Administration.
Notice of such transfers shall be transmitted within 15 days
to the authorizing committees of the House of Representatives
and of the Senate.
SEC. 616. HEALTH CARE INFRASTRUCTURE IMPROVEMENT PROGRAM.
Title XVIII is amended by adding at the end the following
new section:
``health care infrastructure improvement program
``Sec. 1897. (a) Establishment.--The Secretary shall
establish a loan program that provides loans to qualifying
hospitals for payment of the capital costs of projects
described in subsection (d).
``(b) Application.--No loan may be provided under this
section to a qualifying hospital except pursuant to an
application that is submitted and approved in a time, manner,
and form specified by the Secretary. A loan under this
section shall be on such terms and conditions and meet such
requirements as the Secretary determines appropriate.
``(c) Selection Criteria.--
``(1) In general.--The Secretary shall establish criteria
for selecting among qualifying hospitals that apply for a
loan under this section. Such criteria shall consider the
extent to which the project for which loan is sought is
nationally or regionally significant, in terms of expanding
or improving the health care infrastructure of the United
States or the region or in terms of the medical benefit that
the project will have.
``(2) Qualifying hospital defined.--For purposes of this
section, the term `qualifying hospital' means a hospital
that--
``(A) is engaged in research in the causes, prevention, and
treatment of cancer; and
``(B) is designated as a cancer center for the National
Cancer Institute or is designated by the State as the
official cancer institute of the State.
``(d) Projects.--A project described in this subsection is
a project of a qualifying hospital that is designed to
improve the health care infrastructure of the hospital,
including construction, renovation, or other capital
improvements.
``(e) State and Local Permits.--The provision of a loan
under this section with respect to a project shall not--
``(1) relieve any recipient of the loan of any obligation
to obtain any required State or local permit or approval with
respect to the project;
``(2) limit the right of any unit of State or local
government to approve or regulate any rate of return on
private equity invested in the project; or
``(3) otherwise supersede any State or local law (including
any regulation) applicable to the construction or operation
of the project.
``(f) Forgiveness of Indebtedness.--The Secretary may
forgive a loan provided to a qualifying hospital under this
section under terms and conditions that are analogous to the
loan forgiveness provision for student loans under part D of
title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a
et seq.), except that the Secretary shall condition such
forgiveness on the establishment by the hospital of--
``(A) an outreach program for cancer prevention, early
diagnosis, and treatment that provides services to a
substantial majority of the residents of a State or region,
including residents of rural areas;
``(B) an outreach program for cancer prevention, early
diagnosis, and treatment that
[[Page S15470]]
provides services to multiple Indian tribes; and
``(C)(i) unique research resources (such as population
databases); or
``(ii) an affiliation with an entity that has unique
research resources.
``(g) Funding.--
``(1) In general.--There are appropriated, out of amounts
in the Treasury not otherwise appropriated, to carry out this
section, $200,000,000, to remain available during the period
beginning on July 1, 2004, and ending on September 30, 2008.
``(2) Administrative costs.--From funds made available
under paragraph (1), the Secretary may use, for the
administration of this section, not more than $2,000,000 for
each of fiscal years 2004 through 2008.
``(3) Availability.--Amounts appropriated under this
section shall be available for obligation on July 1, 2004.
``(h) Report to Congress.--Not later than 4 years after the
date of the enactment of this section, the Secretary shall
submit to Congress a report on the projects for which loans
are provided under this section and a recommendation as to
whether the Congress should authorize the Secretary to
continue loans under this section beyond fiscal year 2008.''.
______
By Mrs. CLINTON:
S. 1927. A bill to establish an award program to encourage the
development of effective bomb-scanning technology; to the Committee on
Commerce, Science, and Transportation.
Mrs. CLINTON. Mr. President, ever since the events of September 11,
2001 awakened this Nation to the very real dangers of the world we live
in, we have been struggling to defend ourselves against terrorism. Our
aviation system remains a primary target for terrorists, and we must be
every vigilant in the fight to keep that system safe. The economic
viability, not to mention safety and security, of our country is at
stake in that fight.
Nowhere is this more obvious than in New York. Not only did we bear
the brunt of the worst terrorist attack in our Nation's history, but we
also depend on our airports to fuel our state economy. John F. Kennedy
Airport in Queens is the Nation's premier international gateway and
contributes approximately $30 billion to the regional economy while
employing 35,000 people. LaGuardia Airport, also in Queens, handles
over 20 million passengers a year despite having only two 7000-foot
runways on 680 acres. Our airports in Albany, Syracuse, Rochester, and
Buffalo have seen strong growth in recent years with the arrival of
low-cost carriers.
Unfortunately, our economic and physical security remains at risk
because we still have not developed a way to effectively scan each
piece of passenger luggage for explosives. We have recognized that in
the current world environment, we must scan each bag, but technology
has not kept up with our needs. The current technology used in most
airports in this country is known to have a false-positive rate of
approximately 20 percent. This means that machines incorrectly identify
20 percent of all bags going through them as containing explosives,
thus slowing down the process considerably as well as costing time and
money. Even more dangerous is the false-negative rate of these
machines. This number, the percentage of bags going undetected through
these machines with bombs inside of them during test runs, should be
close to zero. The actual false-negative rate is not publicized for
obvious reasons, but it is known to be well above zero.
I am proposing a bill today that seeks to create a major incentive
for firms to invent a bomb-scanning technology that actually works. It
will award $20 million to any firm that can successfully produce a
machine that has a false-positive rate less than 10 percent, a false
negative rate less than 2 percent, and is feasible for deployment en
masse at our Nation's airports. Although we are currently spending
money on researching this technology, that funding is clearly not
getting us there fast enough. This new award will help to spur the
private sector to develop new technology that will make a major
difference in the safety of our aviation system.
______
By Mr. SARBANES (for himself, Mr. Schumer, Ms. Stabenow, Mr.
Corzine, Mr. Durbin, Mr. Kerry, Ms. Mikulski, Mrs. Clinton, Mr.
Levin, Mr. Leahy, Mr. Akaka, Mr. Kennedy, Mr. Lautenberg, Mr.
Dayton, and Mr. Dodd):
S. 1928. A bill to amend the Truth in Lending Act to protect
consumers against predatory practices in connection with high cost
mortgage transactions, to strengthen the civil remedies available to
consumers under existing law, and for other purposes; to the Committee
on Banking, Housing, and Urban Affairs.
Mr. SARBANES. Mr. President, in July of 2001, and continuing through
January of the following year, the Committee on Banking, Housing, and
Urban Affairs held a series of hearings to shine a bright light on the
deceptive and destructive practices of predatory mortgage lenders. At
those hearings, the Committee heard from housing experts, community
groups, legal advocates, industry representatives and victims of
predatory lending in an effort to determine how best to address this
terrible problem. Today, I am introducing legislation, the ``Predatory
Lending Consumer Protection Act of 2003,'' along with a number of my
colleagues, that would begin to address the problems that came to light
in those hearings.
Homeownership is the American Dream. Indeed, the Committee has
already passed legislation this year that would authorize a new $200
million downpayment assistance program to ensure that more people can
achieve this goal.
We have taken this step because homeownership is the best opportunity
for most Americans to put down roots and start creating equity for
themselves and their families. Homeownership has been the path to
building wealth for generations of Americans, wealth that can be tapped
to send children to college, pay for a secure retirement, or simply
work as a reserve against unexpected emergencies. It has been the key
to ensuring stable communities, good schools, and safe streets. Common
sense tells us, and the evidence confirms, that homeowners are more
engaged citizens and more active in their communities.
Little wonder, then, that so many Americans, young and old, aspire to
achieve this dream.
Unhappily, predatory lenders cynically play on these hopes and dreams
to cheat people out of their wealth. These lenders target lower income,
elderly, and, often, uneducated homeowners for their abusive practices.
Study after study has shown that predatory lenders also target
minorities, driving a wedge between these families and the hope of a
productive life in the economic and financial mainstream of America.
We owe it to these hardworking families to provide protections
against these unscrupulous players.
Let me share with you one of the stories we heard at our hearings.
Mary Ann Podelco, a widowed waitress from West Virginia, used $19,000
from her husband's life insurance to pay off the balance on her
mortgage, thus owning her home free and clear. Before her husband's
death, she had never had a checking account or a credit card. She then
took out a $11,921 loan for repairs. At the time, her monthly income
from Social Security was $458, and her loan payments were more than
half this amount. Ms. Podelco, who has a sixth grade education,
testified that after her first refinancing, ``I began getting calls
from people trying to refinance my mortgage all hours of the day and
night.'' Within 2 years, having been advised to refinance seven times--
each time seeing high points and fees being financed into her new
loan--she owed $64,000, and lost her home to foreclosure.
Ms. Podelco's story is all too typical. Unfortunately, most of the
sharp practices used by unscrupulous lenders and brokers, while
unethical and clearly abusive, are not illegal. This bill is designed
to address that problem by tightening the interest rate and fee
triggers that define high cost loans; the bill improves protections for
borrowers receiving such loans by prohibiting the financing of
exorbitant fees, ``packing'' in of unnecessary and costly products,
such as single premium credit insurance, and limiting prepayment
penalties. Finally, it protects these consumers' rights to seek redress
by prohibiting mandatory arbitration, as the Federal Trade Commission
(FTC) proposed unanimously in 2000.We often hear about the importance
of improved enforcement as a way to combat this
[[Page S15471]]
problem. As the FTC pointed out, mandatory arbitration prevents
homeowners from exercising any of their rights to enforce existing law.
We cannot extol the virtues of homeownership, as we so often do,
without seeking at the same time to preserve this benefit for so many
elderly, minority, and unsophisticated Americans who are the targets of
unscrupulous lenders and brokers. This legislation will help achieve
this important goal. This bill has been endorsed by the Leadership
Conference on Civil Rights, the U.S. Conference of Mayors, the National
Council of La Raza, the National Consumer Law Center, ACORN, National
Consumer Reinvestment Coalition, Consumer Federation of America, the
NAACP, the Self-Help Credit Union, the National Association of Local
Housing Finance Agencies, the National Community Development
Association, the National Association of Consumer Advocates, and the
National League of Cities, among others.
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. 1928
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Predatory Lending Consumer
Protection Act of 2003''.
SEC. 2. TRUTH IN LENDING ACT DEFINITIONS.
(a) High Cost Mortgages.--
(1) In general.--The portion of section 103(aa) of the
Truth in Lending Act (15 U.S.C. 1602(aa)) that precedes
paragraph (2) is amended to read as follows:
``(aa) Mortgage Referred to in This Subsection.--
``(1) Definition.--
``(A) In general.--A mortgage referred to in this
subsection means a consumer credit transaction--
``(i) that is secured by the principal dwelling of the
consumer, other than a reverse mortgage transaction; and
``(ii) the terms of which provide that--
``(I) the transaction is secured by a first mortgage on the
principal dwelling of the consumer, and the annual percentage
rate on the credit, at the consummation of the transaction,
will exceed by more than 6 percentage points the yield on
Treasury securities having comparable periods of maturity on
the 15th day of the month immediately preceding the month in
which the application for the extension of credit is received
by the creditor;
``(II) the transaction is secured by a junior or
subordinate mortgage on the principal dwelling of the
consumer, and the annual percentage rate on the credit, at
the consummation of the transaction, will exceed by more than
8 percentage points the yield on Treasury securities having
comparable periods of maturity on the 15th day of the month
immediately preceding the month in which the application for
the extension of credit is received by the creditor; or
``(III) the total points and fees payable on the
transaction will exceed the greater of 5 percent of the total
loan amount, or $1,000, excluding not more than 2 bona fide
discount points.
``(B) Introductory rates not taken into account.--For
purposes of subparagraph (A)(ii), the annual percentage rate
of interest shall be determined--
``(i) in the case of a fixed-rate loan in which the annual
percentage rate will not vary during the term of the loan, as
the rate in effect on the date of consummation of the
transaction;
``(ii) in the case of a loan in which the rate of interest
varies according to an index, or is less than the rate of
interest which will apply after the end of an initial or
introductory period, by adding the index rate in effect on
the date of consummation of the transaction to the maximum
margin permitted at any time during the loan agreement; and
``(iii) in the case of any other loan in which the rate may
vary at any time during the term of the loan for any reason,
by including in the finance charge component of the annual
percentage rate--
``(I) the interest charged on the loan at the maximum rate
that may be charged during the term of the loan; and
``(II) any other applicable charges that would otherwise be
included in accordance with section 106.''.
(2) Technical and conforming amendment.--Section 103(aa)(2)
of the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is
amended--
(A) by striking subparagraph (B); and
(B) by redesignating subparagraph (C) as subparagraph (B).
(b) Points and Fees.--Section 103(aa)(4) of the Truth in
Lending Act (15 U.S.C. 1602(aa)(4)) is amended--
(1) by striking subparagraph (B) and inserting the
following:
``(B) all compensation paid directly or indirectly by a
consumer or a creditor to a mortgage broker;'';
(2) by redesignating subparagraph (D) as subparagraph (G);
and
(3) by striking subparagraph (C) and inserting the
following:
``(C) each of the charges listed in section 106(e) (except
an escrow for future payment of taxes and insurance);
``(D) the cost of all premiums financed by the lender,
directly or indirectly, for any credit life, credit
disability, credit unemployment or credit property
insurance, or any other life or health insurance, or any
payments financed by the lender, directly or indirectly,
for any debt cancellation or suspension agreement or
contract, except that, for purposes of this subparagraph,
insurance premiums or debt cancellation or suspension fees
calculated and paid on a monthly basis shall not be
considered financed by the lender;
``(E) the maximum prepayment penalties that may be charged
or collected under the terms of the loan documents;
``(F) all prepayment fees or penalties that are charged to
the borrower if the loan refinances a previous loan made by
the same creditor or an affiliate of that creditor; and''.
(c) High Cost Mortgage Lender.--Section 103(f) of the Truth
in Lending Act (15 U.S.C. 1602(f)) is amended by striking the
last sentence and inserting ``Any person who originates 2 or
more mortgages referred to in subsection (aa) in any 12-month
period, any person who originates 1 or more such mortgages
through a mortgage broker or acted as a mortgage broker
between originators and consumers on more than 5 mortgages
referred to in subsection (aa) within the preceding 12-month
period, and any creditor-affiliated party shall be considered
to be a creditor for purposes of this title.''.
(d) Bona Fide Discount Points and Benchmark Rate Defined.--
Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is
amended by adding at the end the following:
``(cc) Other Interest Rate Related Terms.--
``(1) Benchmark rate.--The term `benchmark rate' means an
interest rate that the borrower may reduce by paying bona
fide discount points, not to exceed the weekly average yield
of United States Treasury securities having a maturity of 5
years, on the 15th day of the month immediately preceding the
month in which the loan is made, plus 5 percentage points.
``(2) Bona fide discount points.--The term `bona fide
discount points' means loan discount points which are--
``(A) knowingly paid by the borrower;
``(B) paid for the express purpose of lowering the
benchmark rate;
``(C) in fact reducing the interest rate or time-price
differential applicable to the loan from an interest rate
which does not exceed the benchmark rate; and
``(D) recouped within the first 4 years of the scheduled
loan payments.
``(3) Recoupment.--For purposes of paragraph (2)(D), loan
discount points shall be considered to be recouped within the
first 4 years of the scheduled loan payments if the reduction
in the interest rate that is achieved by the payment of the
loan discount points reduces the interest charged on the
scheduled payments, such that the dollar amount of savings in
payments made by the borrower over the first 4 years is equal
to or exceeds the dollar amount of loan discount points paid
by the borrower.''.
SEC. 3. AMENDMENTS TO EXISTING REQUIREMENTS FOR HIGH COST
CONSUMER MORTGAGES.
(a) Additional Disclosures.--Section 129(a)(1) of the Truth
in Lending Act (15 U.S.C. 1639(a)(1)) is amended by adding at
the end the following:
``(C) `The interest rate on this loan is much higher than
most people pay. This means the chance that you will lose
your home is much higher if you do not make all payments
under the loan.'.
``(D) `You may be able to get a loan with a much lower
interest rate. Before you sign any papers, you have the right
to go see a housing or consumer credit counseling agency, as
well as to consult other lenders to find ways to get a
cheaper loan.'.
``(E) `If you are taking out this loan to repay other
loans, look to see how many months it will take to pay for
this loan and what the total amount is that you will have to
pay before this loan is repaid. Even though the total amount
you will have to pay each month for this loan may be less
than the total amount you are paying each month for those
other loans, you may have to pay on this loan for many more
months than those other loans which will cost you more money
in the end.' ''.
(b) Prepayment Penalty Provisions.--Section 129(c) of the
Truth in Lending Act (15 U.S.C. 1639(c)) is amended to read
as follows:
``(c) Prepayment Penalty Provisions.--
``(1) No prepayment penalties after end of 24-month
period.--A mortgage referred to in section 103(aa) may not
contain terms under which a consumer must pay any prepayment
penalty for any payment made after the end of the 24-month
period beginning on the date the mortgage is consummated.
``(2) No prepayment penalties if more than 3 percent of
points and fees were financed.--Subject to subsection (l)(1),
a mortgage referred to in section 103(aa) may not contain
terms under which a consumer must pay any prepayment penalty
for any payment made at or before the end of the 24-month
period referred to in paragraph (1) if
[[Page S15472]]
the creditor financed points or fees in connection with the
consumer credit transaction in an amount equal to or greater
than 3 percent of the total amount of credit extended in the
transaction.
``(3) Limited prepayment penalty for early repayment under
certain circumstances.--Subject to paragraph (2), the terms
of a mortgage referred to in section 103(aa) may contain
terms under which a consumer must pay a prepayment penalty
for any payment made at or before the end of the 24-month
period referred to in paragraph (1) to the extent that the
sum of the total amount of points or fees financed by the
creditor, if any, in connection with the consumer credit
transaction and the total amount payable as a prepayment
penalty does not exceed the amount which is equal to 3
percent of the total amount of credit extended in the
transaction.
``(4) Construction.--For purposes of this subsection, any
method of computing a refund of unearned scheduled interest
is a prepayment penalty if it is less favorable to the
consumer than the actuarial method (as that term is defined
in section 933(d) of the Housing and Community Development
Act of 1992).
``(5) Prepayment penalty defined.--The term `prepayment
penalty' means any monetary penalty imposed on a consumer for
paying all or part of the principal with respect to a
consumer credit transaction before the date on which the
principal is due.''.
(c) All Balloon Payments Prohibited.--Section 129(e) of the
Truth in Lending Act (15 U.S.C. 1639(e)) is amended by
striking ``having a term of less than 5 years''.
(d) Assessment of Ability To Repay.--Section 129(h) of the
Truth in Lending Act (15 U.S.C. 1639(h)) is amended--
(1) by striking ``Consumer.--A creditor'' and inserting
``Consumer.--
``(1) Prohibition on patterns and practices.--A creditor'';
and
(2) by adding at the end the following:
``(2) Case-by-case assessments of consumer ability to pay
required.--
``(A) In general.--In addition to the prohibition in
paragraph (1) on engaging in certain patterns and practices,
a creditor may not extend any credit in connection with any
mortgage referred to in section 103(aa) unless the creditor
has determined, at the time such credit is extended, that 1
or more of the resident obligors, when considered
individually and collectively, will be able to make the
scheduled payments under the terms of the transaction based
on a consideration of the current and expected income,
current obligations, employment status, and other financial
resources of any such obligor, without taking into account
any equity of any such obligor in the dwelling which is the
security for the credit.
``(B) Regulations.--The Board shall prescribe, by
regulation, the appropriate format for determining the
ability of a consumer to make payments and the criteria to be
considered in making that determination.
``(C) Resident obligor.--For purposes of this paragraph,
the term `resident obligor' means an obligor for whom the
dwelling securing the extension of credit is, or upon the
consummation of the transaction will be, the principal
residence.
``(3) Verification.--The requirements of paragraphs (1) and
(2) shall not be deemed to have been met unless any
information relied upon by the creditor for purposes of any
such paragraph has been verified by the creditor
independently of information provided by any resident
obligor.''.
(e) Requirements Relating to Home Improvement Contracts.--
Section 129(i) of the Truth in Lending Act (15 U.S.C.
1639(i)) is amended--
(1) by striking ``Improvement Contracts.--A creditor'' and
inserting ``Improvement Contracts.--
``(1) In general.--A creditor''; and
(2) by adding at the end the following:
``(2) Affirmative claims and defenses.--Notwithstanding any
other provision of law, any assignee or holder, in any
capacity, of a mortgage referred to in section 103(aa) which
was made, arranged, or assigned by a person financing home
improvements to the dwelling of a consumer shall be subject
to all affirmative claims and defenses which the consumer may
have against the seller, home improvement contractor, broker,
or creditor with respect to such mortgage or home
improvements.''.
(f) Clarification of Rescission Rights.--Section 129(j) of
the Truth in Lending Act (15 U.S.C. 1639(j)) is amended to
read as follows:
``(j) Consequence of Failure To Comply.--
``(1) In general.--The consummation of a consumer credit
transaction resulting in a mortgage referred to in section
103(aa) shall be treated as a failure to deliver the material
disclosures required under this title for the purpose of
section 125, if--
``(A) the mortgage contains a provision prohibited by this
section or does not contain a provision required by this
section; or
``(B) a creditor or other person fails to comply with the
provisions of this section, whether by an act or omission,
with regard to such mortgage at any time.
``(2) Rule of application.--In any application of section
125 to a mortgage described in section 103(aa) under
circumstances described in paragraph (1), paragraphs (2) and
(4) of section 125(e) shall not apply or be taken into
account.''.
SEC. 4. ADDITIONAL REQUIREMENTS FOR HIGH COST CONSUMER
MORTGAGES.
(a) Single Premium Credit Insurance.--Section 129 of the
Truth in Lending Act (15 U.S.C. 1639) is amended--
(1) by redesignating subsections (k) and (l) as subsections
(s) and (t), respectively; and
(2) by inserting after subsection (j), the following:
``(k) Single Premium Credit Insurance.--
``(1) In general.--The terms of a mortgage referred to in
section 103(aa) may not require, and no creditor or other
person may require or allow in connection with any such
mortgage, whether paid directly by the consumer or financed
by the consumer through such mortgage--
``(A) the advance collection of a premium, on a single
premium basis, for any credit life, credit disability, credit
unemployment, or credit property insurance, and any analogous
product; or
``(B) the advance collection of a fee for any debt
cancellation or suspension agreement or contract.
``(2) Rule of construction.--Paragraph (1) shall not be
construed as affecting the right of a creditor to collect
premium payments on insurance or debt cancellation or
suspension fees referred to in paragraph (1) that are
calculated and paid on a regular monthly basis, if the
insurance transaction is conducted separately from the
mortgage transaction, the insurance may be canceled by the
consumer at any time, and the insurance policy is
automatically canceled upon repayment or other termination of
the mortgage referred to in paragraph (1).''.
(b) Restriction on Financing Points and Fees.--Section 129
of the Truth in Lending Act (15 U.S.C. 1639) is amended by
inserting after subsection (k) (as added by subsection (a) of
this section) the following:
``(l) Restriction on Financing Points and Fees.--
``(1) Limit on amount of points and fees that may be
financed.--Subject to paragraphs (2) and (3) of subsection
(c), no creditor may, in connection with the formation or
consummation of a mortgage referred to in section 103(aa),
finance, directly or indirectly, any portion of the points,
fees, or other charges payable to the creditor or any third
party in an amount in excess of the greater of 3 percent of
the total loan amount or $600.
``(2) Prohibition on financing certain points, fees, or
charges.--No creditor may, in connection with the formation
or consummation of a mortgage referred to in section 103(aa),
finance, directly or indirectly, any of the following fees or
other charges payable to the creditor or any third party:
``(A) Any prepayment fee or penalty required to be paid by
the consumer in connection with a loan or other extension of
credit which is being refinanced by such mortgage if the
creditor, with respect to such mortgage, or any affiliate of
the creditor, is the creditor with respect to the loan or
other extension of credit being refinanced.
``(B) Any points, fees, or other charges required to be
paid by the consumer in connection with such mortgage if--
``(i) the mortgage is being entered into in order to
refinance an existing mortgage of the consumer that is
referred to in section 103(aa); and
``(ii) if the creditor, with respect to such new mortgage,
or any affiliate of the creditor, is the creditor with
respect to the existing mortgage which is being
refinanced.''.
(c) Creditor Call Provision.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after
subsection (l) (as added by subsection (b) of this section)
the following:
``(m) Creditor Call Provision.--
``(1) In general.--A mortgage referred to in section
103(aa) may not include terms under which the indebtedness
may be accelerated by the creditor, in the sole discretion of
the creditor.
``(2) Exception.--Paragraph (1) shall not apply when
repayment of the loan has been accelerated as a result of a
bona fide default.''.
(d) Prohibition on Actions Encouraging Default.--Section
129 of the Truth in Lending Act (15 U.S.C. 1639) is amended
by inserting after subsection (m) (as added by subsection (c)
of this section) the following:
``(n) Prohibition on Actions Encouraging Default.--No
creditor may make any statement, take any action, or fail to
take any action before or in connection with the formation or
consummation of any mortgage referred to in section 103(aa)
to refinance all or any portion of an existing loan or other
extension of credit, if the statement, action, or failure to
act has the effect of encouraging or recommending the
consumer to default on the existing loan or other extension
of credit at any time before, or in connection with, the
closing or any scheduled closing on such mortgage.''.
(e) Modification or Deferral Fees.--Section 129 of the
Truth in Lending Act (15 U.S.C. 1639) is amended by inserting
after subsection (n) (as added by subsection (d) of this
section) the following:
``(o) Modification or Deferral Fees.--
``(1) In general.--Except as provided in paragraph (2), a
creditor may not charge any consumer with respect to a
mortgage referred to in section 103(aa) any fee or other
charge--
``(A) to modify, renew, extend, or amend such mortgage, or
any provision of the terms of the mortgage; or
``(B) to defer any payment otherwise due under the terms of
the mortgage.
``(2) Exception for modifications for the benefit of the
consumer.--Paragraph (1) shall not apply with respect to any
fee imposed in connection with any action described in
subparagraph (A) or (B) if--
[[Page S15473]]
``(A) the action provides a material benefit to the
consumer; and
``(B) the amount of the fee or charge does not exceed--
``(i) an amount equal to 0.5 percent of the total loan
amount; or
``(ii) in any case in which the total loan amount of the
mortgage does not exceed $60,000, an amount in excess of
$300.''.
(f) Consumer Counseling Requirements.--Section 129 of the
Truth in Lending Act (15 U.S.C. 1639) is amended by inserting
after subsection (o) (as added by subsection (e) of this
section) the following:
``(p) Consumer Counseling Requirement.--
``(1) In general.--A creditor may not extend any credit in
the form of a mortgage referred to in section 103(aa) to any
consumer, unless the creditor has provided to the consumer,
at such time before the consummation of the mortgage and in
such manner as the Board shall provide by regulation--
``(A) all warnings and disclosures regarding the risks of
the mortgage to the consumer;
``(B) a separate written statement recommending that the
consumer take advantage of available home ownership or credit
counseling services before agreeing to the terms of any
mortgage referred to in section 103(aa); and
``(C) a written statement containing the names, addresses,
and telephone numbers of counseling agencies or programs
reasonably available to the consumer that have been certified
or approved by the Secretary of Housing and Urban
Development, a State housing finance authority (as defined in
section 1301 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989), or the agency referred to in
subsection (a) or (c) of section 108 with jurisdiction over
the creditor as qualified to provide counseling on--
``(i) the advisability of a high cost loan transaction; and
``(ii) the appropriateness of a high cost loan for the
consumer.
``(2) Complete and updated lists required.--Any failure to
provide as complete or updated a list under paragraph (1)(C)
as is reasonably possible shall constitute a violation of
this section.''.
(g) Arbitration.--Section 129 of the Truth in Lending Act
(15 U.S.C. 1639) is amended by inserting after subsection (p)
(as added by subsection (f) of this section) the following:
``(q) Arbitration.--
``(1) In general.--A mortgage referred to in section
103(aa) may not include terms which require arbitration or
any other nonjudicial procedure as the method for resolving
any controversy or settling any claims arising out of the
transaction.
``(2) Post-controversy agreements.--Subject to paragraph
(3), paragraph (1) shall not be construed as limiting the
right of the consumer and the creditor to agree to
arbitration or any other nonjudicial procedure as the method
for resolving any controversy at any time after a dispute or
claim under the transaction arises.
``(3) No waiver of statutory cause of action.--No provision
of any mortgage referred to in section 103(aa) or any
agreement between the consumer and the creditor shall be
applied or interpreted so as to bar a consumer from bringing
an action in an appropriate district court of the United
States, or any other court of competent jurisdiction,
pursuant to section 130 or any other provision of law, for
damages or other relief in connection with any alleged
violation of this section, any other provision of this title,
or any other Federal law.''.
(h) Prohibition on Evasions.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after
subsection (q) (as added by subsection (g) of this section)
the following:
``(r) Prohibitions on Evasions, Structuring of
Transactions, and Reciprocal Arrangements.--
``(1) In general.--A creditor may not take any action--
``(A) for the purpose or with the intent to circumvent or
evade any requirement of this title, including entering into
a reciprocal arrangement with any other creditor or affiliate
of another creditor or dividing a transaction into separate
parts, for the purpose of evading or circumventing any such
requirement; or
``(B) with regard to any other loan or extension of credit
for the purpose or with the intent to evade the requirements
of this title, including structuring or restructuring a
consumer credit transaction as another form of loan, such as
a business loan.
``(2) Other actions.--In addition to the actions prohibited
under paragraph (1), a creditor may not take any action which
the Board determines, by regulation, constitutes a bad faith
effort to evade or circumvent any requirement of this section
with regard to a consumer credit transaction.
``(3) Regulations.--The Board shall prescribe such
regulations as the Board determines to be appropriate to
prevent circumvention or evasion of the requirements of this
section or to facilitate compliance with the requirements of
this section.''.
SEC. 5. AMENDMENTS RELATING TO RIGHT OF RESCISSION.
(a) Timing of Waiver by Consumer.--Section 125(a) of the
Truth in Lending Act (15 U.S.C. 1635(a)) is amended--
(1) by striking ``(a) Except as otherwise provided'' and
inserting ``(a) Right Established.--
``(1) In general.--Except as otherwise provided''; and
(2) by adding at the end the following:
``(2) Timing of election of waiver by consumer.--No
election by a consumer to waive the right established under
paragraph (1) to rescind a transaction shall be effective
if--
``(A) the waiver was required by the creditor as a
condition for the transaction;
``(B) the creditor advised or encouraged the consumer to
waive such right of the consumer; or
``(C) the creditor had any discussion with the consumer
about a waiver of such right during the period beginning when
the consumer provides written acknowledgement of the receipt
of the disclosures and the delivery of forms and information
required to be provided to the consumer under paragraph (1)
and ending at such time as the Board determines, by
regulation, to be appropriate.''.
(b) Noncompliance With Requirements as Recoupment in
Foreclosure Proceeding.--Section 130(e) of the Truth in
Lending Act (15 U.S.C. 1640(e)) is amended by inserting after
the second sentence the following: ``This subsection also
does not bar a person from asserting a rescission under
section 125, in an action to collect the debt as a defense to
a judicial or nonjudicial foreclosure after the expiration of
the time periods for affirmative actions set forth in this
section and section 125.''.
SEC. 6. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.
(a) Increase in Amount of Civil Money Penalties for Certain
Violations.--Section 130(a) of the Truth in Lending Act (15
U.S.C. 1640(a)) is amended--
(1) in paragraph (2)(A)(iii), by striking ``$2,000'' and
inserting ``$10,000''; and
(2) in paragraph (2)(B), by striking ``lesser of $500,000
or 1 percentum of the net worth of the creditor'' and
inserting ``the greater of--
``(i) the amount determined by multiplying the maximum
amount of liability under subparagraph (A) for such failure
to comply in an individual action by the number of members in
the certified class; or
``(ii) the amount equal to 2 percent of the net worth of
the creditor.''.
(b) Statute of Limitations Extended for Section 129
Violations.--Section 130(e) of the Truth in Lending Act (15
U.S.C. 1640(e)) (as amended by section 5(b) of this Act) is
amended--
(1) in the first sentence, by striking ``Any action'' and
inserting ``Except as provided in the subsequent sentence,
any action''; and
(2) by inserting after the first sentence the following:
``Any action under this section with respect to any violation
of section 129 may be brought in any United States district
court, or in any other court of competent jurisdiction,
before the end of the 3-year period beginning on the date of
the occurrence of the violation.''.
SEC. 7. AMENDMENT TO FAIR CREDIT REPORTING ACT.
Section 623 of the Fair Credit Reporting Act (15 U.S.C.
1681s-2) is amended by adding at the end the following:
``(e) Duty of Creditors With Respect to High Cost
Mortgages.--
``(1) In general.--Each creditor who enters into a consumer
credit transaction which is a mortgage referred to in section
103(aa), and each successor to such creditor with respect to
such transaction, shall report the complete payment history,
favorable and unfavorable, of the obligor with respect to
such transaction to a consumer reporting agency that compiles
and maintains files on consumers on a nationwide basis at
least quarterly, or more frequently as required by regulation
or in guidelines established by participants in the secondary
mortgage market, while such transaction is in effect.
``(2) Definitions.--For purposes of paragraph (1), the term
`credit' and `creditor' have the same meanings as in section
103 of the Truth in Lending Act (15 U.S.C. 1602).''.
SEC. 8. REGULATIONS.
The Board of Governors of the Federal Reserve System shall
publish regulations implementing this Act and the amendments
made by this Act in final form before the end of the 6-month
period beginning on the date of enactment of this Act.
______
By Mr. BROWNBACK (for himself, Mr. Ensign, Mr. Enzi, Mr. Hagel,
Mr. Inhofe, Mr. Nickles, Mr. Santorum, and Mr. Sessions):
S. 1930. A bill to provide that the approved application under the
Federal Food, Drug and Cosmetic Act for the drug commonly known as RU-
486 is deemed to have been withdrawn, to provide for the review by the
Comptroller General of the United States of the process by which the
Food and Drug Administration approved such drug, and for other
purposes; to the Committee on Health, Education, Labor, and Pensions.
Mr. BROWNBACK. Mr. President, I rise today to introduce a very
important piece of legislation, the RU-486 Suspension and Review Act of
2003. The abortion drug RU-486 increases in infamy as its lethal nature
continues to reveal itself. As my colleagues may remember, in
September, RU-486 claimed two more lives, one of whom was an 18-year-
old woman. Holly Patterson, a resident of the San Francisco suburb of
Livermore, died from an infection caused by fragments of her baby left
in
[[Page S15474]]
her uterus after she was administered RU-486 at a Planned Parenthood
facility. This tragedy underscores the dangerous nature of this drug.
The available data from the U.S. trials of RU-486 raises serious
questions in my mind as to whether or not this drug truly is ``safe''
for the women who use it. Women who participated in the U.S. trials of
this drug were carefully screened, and only those who were in the most
physically ideal condition were accepted. Even so, among these
physically ideal participants, troubling results emerged. Two-percent
of the women participating hemorrhaged; one-percent had to be
hospitalized; several others required surgery to stop the bleeding--
some of whom needed blood transfusions; and one woman in Iowa, after
losing between one-half to two-thirds of her total blood volume, would
have died if she had not undergone emergency surgery. If these side-
effects occurred in the most physically ideal candidates, what about
those who are not in the physically ideal category? Is this drug
``safe'' for women? I believe medical results suggest it is not.
The bill I am introducing today will require the suspension of the
Food and Drug Administration's approval of RU-486. Following this
suspension, the General Accounting Office is directed to review the
process the FDA used to approve RU-486 and to determine whether the FDA
followed its own guidelines. If it is determined that the FDA violated
its guidelines, RU-486 will be suspended indefinitely. Monty and Helen
Patterson, the parents of Holly Patterson, have expressed their firm
support for this legislation and have requested that it be known as
``Holly's Law'' in honor of their daughter whose life was prematurely
ended. I ask that their open letter on this subject be printed in the
Record.
The Food and Drug Administration should not have authorized this
dangerous drug. RU-486 is perilous both to the baby and to the woman
who uses it. I urgently call on my colleagues in this Chamber to
support ``Holly's Law'' to prevent more unnecessary deaths.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Livermore, CA,
November 20, 2003.
Dear Sir or Madam: The Alameda County Coroner's report has
validated what we already believed to be true. Holly has died
from an RU-486 chemical induced abortion. There are no quick
fixes for a pregnancy or magical pills that will make it go
away. Our family, friends and community are all deeply
saddened and forever marred by Holly's tragic and preventable
death.
Holly lived as an adult by law for only 19 days, yet she
became pregnant when she was just 17 years old. We now know
that she learned about her pregnancy in the second week of
August and was so distraught over her unplanned pregnancy
that she sought help for depression from her family doctor on
September 10, 2003--the very day that she began the drug
induced abortion process.
Holly was a strong, healthy, intelligent and ambitious
teenager who fell victim of a process that wholly failed her,
beginning with the 24-year-old man who had unprotected sex
with her, impregnated her, and then proceeded to facilitate
the secrecy that surrounded her pregnancy and abortion. Under
this conspiracy of silence, Holly suffered and depended on
the safety of the FDA approved pill administered by Planned
Parenthood and emergency room treatment by Valley Care
Medical Center where she received pain killers for severe
cramping and was sent home. On Saturday and Sunday, Holly
cried and complained of severe cramping and constipation, and
even allowed us to comfort her but could not tell us what she
was really going through. On September 17, 2003, she
succumbed to septic shock and died while many members of our
family waited anxiously, yet expectantly in the Critical Care
Unit for her to recover until we were forced behind the
curtain when it was clear that she was dying.
And in those last moments of her life feeling utter
disbelief and desperation we formed a circle just beyond the
curtain and prayed aloud, cried and screamed, ``We love you,
Holly'' hoping beyond hope that those words would ring out
and save her life. And the other members of our family who
drove and flew from all over the country to be by her side
did not make it in time to say, ``I love you'' just one last
time. Holly was not alone, unloved, unprotected or
unsupported; she had a large family who willingly supported
her throughout her short life and tragic death.
In the weeks since we buried Holly's body we are now able
to recall and share the memories of our daughter's brilliant
blue eyes, engaging smile, laughter, unwavering determination
and sheer gentle beauty that invoked our natural instinct to
protect and love her, but we will never be able to forget
those last moments of her life when she was too weak to talk
and could barely squeeze our hands in acknowledgement of our
words of encouragement. ``We love you, Holly'', ``Just hang
in there, the whole family is coming,'' ``You fight this
Holly, you can do it.''
Because Holly has died this way, we have educated ourselves
about the grave dangers of this drug, become conscious of the
current lack of parental notification/consent laws in
California and now recognize the critical need for accurate,
impartial sources of information and resources for parents,
teenagers and young women who want to learn about the real
dangers and risks of unplanned pregnancy and abortion and the
dire need for a national movement to encourage prevention and
open dialogue in the home about unplanned pregnancy and
abortion.
We will actively support ``Holly's Law'' in Congress by
Reps. DeMint, Bartlett and Senator Brownback to suspend and
review the abortion drug RU-486, the Tell-A-Parent (TAP)
bill, which requires parental notification laws in California
and a campaign to encourage prevention and open dialogue
about unplanned pregnancy and abortion in the home.
As parents, we cannot allow our beautiful Holly's horrible
death to be in vain. RU-486 has caused serious injury and has
been implicated in the deaths of other young women. Now it
has killed our daughter. We have learned that the initial
trials were rushed and the drug was lumped in and approved
with drugs designed for life threatening illnesses such as
cancer and AIDS. Pregnancy is a natural process that a
woman's body is designed to support and has never been
classified as a life threatening illness. We need help to
develop a website and provide a place for teenagers and women
to report their stories and testimonials of their experience
on the serious and adverse affects using RU-486.
The FDA has failed to carry out its mission of ensuring RU-
486 is a safe and effective abortion drug regimen. According
to the FDA, it is ``responsible for protecting the public
health by assuring the safety, efficacy, and security of
human and veterinary drugs, biological products, medical
devices, our nation's food supply, cosmetics, and products
that emit radiation.'' Holly has already paid the ultimate
price. The RU-486 abortion drug should not be either a Pro
Life or Pro Choice issue. The most primary concern here must
be the health and welfare of our children and young women.
Hopefully, all parents can learn from Holly's horrible death
and our loss.
According to Danco Laboratories, the abortion drug's
distributor, the RU-486 regimen fails to work 7-8 percent of
the time. Over a year ago the FDA received 400 reports of
adverse reactions to the drug including several deaths.
Holly is yet another victim who was subject to an
unacceptable risk to a drug that has a significant failure
rate. And we demand that FDA Commissioner Mark McClellan and
Health and Human services Secretary, Tommy Thompson take RU-
486 off the market immediately pending an extensive
investigation by the Comptroller General of the United States
before more parents suffer and women die.
We respectfully request the name of the bill that is to be
presented to the House of Representatives, an Act as the
``[RU-486 Approval and Review Act of 2003]'' to be known as
``Holly's Law.'' With actively support a bill that halts the
use of the drug that took Holly's young life.
We demand an investigation by the FDA and the California
State Health Department as to why abortion clinics like
Planned Parenthood are not following FDA approved regulations
to administer the drug. We question the purity of the drugs
they administer, especially when they are made in foreign
countries, such as China.
In addition to the dangers of this drug and its
administration, we believe that health care providers such as
Valley Medical Center don't appear to be fully prepared to
evaluate and treat patients with RU-486 complications in
emergency situations. Holly was in the hospital twice and
died within 20 minutes before her follow up appointment with
Planned Parenthood.
FDA Commissioner Mark McClellan and Health and Human
Services Secretary, Tommy Thompson should now have enough
evidence to pull this drug from the market. How many more
teenagers and young women will have to pay the price with
their health or with their life, before the FDA decides to
act?
Currently in California, teenage girls under the age of 18
can't get their ears pierced or go on a school trip, but they
can have a medical or surgical abortion without parental
knowledge or consent. This prevents parents from being able
to talk to their children about a pregnancy that would allow
them to keep a baby or to be able to follow the abortion
process.
The first line of defense for a child is a parent. Kids
wouldn't be walking into clinics under a veil of secrey if
parents were notified first hand where they could talk to
their children about abortion risks. We have now learned that
Holly first sought a pregnancy test in the months leading up
to her pregnancy while she was still 17 years old. We know
now that a parental notification law would have brought
Holly's activity to our attention and her needless death
could have been prevented if we had been aware and
intervened.
We actively support the Tell-A-Parent (TAP) ballot
initative sponsored by Life on
[[Page S15475]]
The Ballot www.LifeontheBallot.org. With enough petitions,
this initiative will be on the 2004 ballot and requires
parental notification 48 hours prior to an abortion in
California. As parents, we are concerned about the health and
welfare of all daughters; we are ``Pro Holly'' and look to
our California Senators Barbara Boxer and Dianne Feinstein to
support this initiative for the safety and protection of all
young women in California.
Finally, we have suffered greatly with the realization that
it's not enough to avoid the issue or talk to our children
about why we don't want them to be involved in an unplanned
pregnancy or abortion, but as parents, we must also talk
about the tragic realities of unwanted pregnancy and abortion
and reassure both, our daughters and sons that while we don't
want this to happen, we will support them. We must focus on
prevention and they must be told that they are not alone in
this or any other unfortunate circumstances, regardless of
the outcome.
We feel strongly that this country needs a national
campaign to promote open and frank discussions in the home
about unplanned pregnancy and the options that are available
to our daughters who find themselves in this unfortunate
predicament. We are eager to support such a campaign designed
to bring about awareness, encourage parental involvement, and
provide accurate information to minors, women, and parents
about abstinence, birth control, unplanned pregnancy,
abortion, parenting, and adoption options.
While parents would prefer that their daughters abstain
from sex and many do, we must deal with the reality that many
don't. In addition to unplanned pregnancy, girls can contract
HIV and other STIs. As parents we need to prevent unplanned
pregnancy instead of relying upon abortion clinics and
agencies to educate our children and provide them with
inaccurate information. No parent wants to see his or her
teenage or college age daughter in the unfortunate situation
that Holly was faced with.
We have lost our daughter, Holly, but we can still help to
prevent this terrible tragedy from happening in other
families. Holly's drive and determination to accomplish her
goals gives us strength to pursue these critical issues in
her name. Holly's memory and light will live on in our
hearts, family, friends and our work. We will actively
support the bill to suspend and review ``Holly's Law'' in
Congress by Reps. DeMint and Bartlett and Senator Brownback
to suspend and review the abortion drug RU-486, the Tell-A-
Parent (TAP) bill, which requires parental notification laws
in California and a campaign to encourage prevention and open
dialogue about unplanned pregnancy and abortion in the home.
Please contact us with any questions or requests for support
of these very important issues.
Sincerely,
Monty and Helen Patterson.
____________________