    [House Report 108-74]
    [From the U.S. Government Publishing Office]

    108th Congress                                             Rept. 108-74
                            HOUSE OF REPRESENTATIVES
     1st Session                                                     Part 1

    ======================================================================

    .          MEDICARE REGULATORY AND CONTRACTING REFORM ACT OF 2003

                                    _______

                     April 11, 2003.--Ordered to be printed

                                    _______

        Mr. Thomas, from the Committee on Ways and Means, submitted the
                                   following

                                  R E P O R T

                                 together with

                                DISSENTING VIEWS

                            [To accompany H.R. 810]

          [Including cost estimate of the Congressional Budget Office]

      The Committee on Ways and Means, to whom was referred the
    bill (H.R. 810) to amend title XVIII of the Social Security Act
    to provide regulatory relief and contracting flexibility under
    the Medicare Program, having considered the same, report
    favorably thereon with an amendment and recommend that the bill
    as amended do pass.

                                    CONTENTS

                                                                       Page
      I. Summary and Background..........................................38
              A. Purpose and Summary.................................    38
              B. Background and Need for Legislation.................    38
              C. Legislative History.................................    39
     II. Explanation of the Bill.........................................40
              A. Regulatory Reform...................................    41
              B. Contracting Reform..................................    43
              C. Education and Outreach Improvements.................    50
              D. Appeals and Recovery................................    56
              E. Miscellaneous Provisions............................    69
    III. Votes of the Committee..........................................81
     IV. Budget Effects of the Bill......................................83
              A. Committee Estimate of Budgetary Effects.............    83
              B. Statement Regarding New Budgetary Authority and Tax
                  Expenditures.......................................    83
              C. Cost Estimate Prepared by the Congressional Budget
                  Office.............................................    83
      V. Other Matters To Be Discussed Under the Rules of the House......89
     VI. Changes in Existing Law Made by the Bill, as Reported...........90
    VII. Dissenting Views...............................................144

      The amendment is as follows:
      Strike all after the enacting clause and insert the
    following:

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

      (a) Short Title.--This Act may be cited as the ``Medicare Regulatory
    and Contracting Reform Act of 2003''.
      (b) Amendments to Social Security Act.--Except as otherwise
    specifically provided, whenever in this Act an amendment is expressed
    in terms of an amendment to or repeal of a section or other provision,
    the reference shall be considered to be made to that section or other
    provision of the Social Security Act.
      (c) Table of Contents.--The table of contents of this Act is as
    follows:

    Sec. 1. Short title; amendments to Social Security Act; table of
    contents.
    Sec. 2. Findings and construction.
    Sec. 3. Definitions.

                           TITLE I--REGULATORY REFORM

    Sec. 101. Issuance of regulations.
    Sec. 102. Compliance with changes in regulations and policies.
    Sec. 103. Reports and studies relating to regulatory reform.

                          TITLE II--CONTRACTING REFORM

    Sec. 201. Increased flexibility in medicare administration.
    Sec. 202. Requirements for information security for medicare
    administrative contractors.

                       TITLE III--EDUCATION AND OUTREACH

    Sec. 301. Provider education and technical assistance.
    Sec. 302. Small provider technical assistance demonstration program.
    Sec. 303. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman.
    Sec. 304. Beneficiary outreach demonstration program.
    Sec. 305. Inclusion of additional information in notices to
    beneficiaries about skilled nursing facility benefits.
    Sec. 306. Information on medicare-certified skilled nursing facilities
    in hospital discharge plans.

                         TITLE IV--APPEALS AND RECOVERY

    Sec. 401. Transfer of responsibility for medicare appeals.
    Sec. 402. Process for expedited access to review.
    Sec. 403. Revisions to medicare appeals process.
    Sec. 404. Prepayment review.
    Sec. 405. Recovery of overpayments.
    Sec. 406. Provider enrollment process; right of appeal.
    Sec. 407. Process for correction of minor errors and omissions without
    pursuing appeals process.
    Sec. 408. Prior determination process for certain items and services;
    advance beneficiary notices.

                       TITLE V--MISCELLANEOUS PROVISIONS

    Sec. 501. Policy development regarding evaluation and management (E &
    M) documentation guidelines.
    Sec. 502. Improvement in oversight of technology and coverage.
    Sec. 503. Treatment of hospitals for certain services under medicare
    secondary payor (MSP) provisions.
    Sec. 504. EMTALA improvements.
    Sec. 505. Emergency Medical Treatment and Active Labor Act (EMTALA)
    Technical Advisory Group.
    Sec. 506. Authorizing use of arrangements to provide core hospice
    services in certain circumstances.
    Sec. 507. Application of OSHA bloodborne pathogens standard to certain
    hospitals.
    Sec. 508. BIPA-related technical amendments and corrections.
    Sec. 509. Conforming authority to waive a program exclusion.
    Sec. 510. Treatment of certain dental claims.
    Sec. 511. Furnishing hospitals with information to compute DSH formula.
    Sec. 512. Revisions to reassignment provisions.
    Sec. 513. Specialized Medicare+Choice plans for special needs
    beneficiaries.
    Sec. 514. Temporary suspension of OASIS requirement for collection of
    data on non-medicare and non-medicaid patients.
    Sec. 515. Miscellaneous reports, studies, and publication requirements.

    SEC. 2. FINDINGS AND CONSTRUCTION.

      (a) Findings.--Congress finds the following:
              (1) The overwhelming majority of providers of services and
            suppliers in the United States are law-abiding persons who
            provide important health care services to patients each day.
              (2) The Secretary of Health and Human Services should work to
            streamline paperwork requirements under the medicare program
            and communicate clearer instructions to providers of services
            and suppliers so that they may spend more time caring for
            patients.
      (b) Construction.--Nothing in this Act 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
            (known as the False Claims Act); or
              (2) to prevent or impede the Department of Health and Human
            Services in any way from its ongoing efforts to eliminate
            waste, fraud, and abuse in the medicare program.
    Furthermore, the consolidation of medicare administrative contracting
    set forth in this Act does not constitute consolidation of the Federal
    Hospital Insurance Trust Fund and the Federal Supplementary Medical
    Insurance Trust Fund or reflect any position on that issue.

    SEC. 3. DEFINITIONS.

      (a) Use of Term Supplier in Medicare.--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.''.
      (b) Other Terms Used in Act.--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.

                           TITLE I--REGULATORY REFORM

    SEC. 101. ISSUANCE OF REGULATIONS.

      (a) Limitations on New Matter in Final Regulations.--Section 1871(a)
    (42 U.S.C. 1395hh(a)) is amended by adding at the end the following new
    paragraph:
      ``(3) 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.''.
      (b) Effective Date.--The amendment made by subsection (a) shall apply
    to final regulations published on or after the date of the enactment of
    this Act.

    SEC. 102. 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 101(a), is amended by adding at the end the
            following new subsection:
      ``(d)(1)(A) A substantive change in regulations, manual instructions,
    interpretative rules, statements of policy, or guidelines of general
    applicability under this title shall not be applied (by extrapolation
    or otherwise) retroactively to items and services furnished before the
    effective date of the change, unless the Secretary determines that--
              ``(i) such retroactive application is necessary to comply
            with statutory requirements; or
              ``(ii) failure to apply the change retroactively would be
            contrary to the public interest.''.
              (2) Effective date.--The amendment made by paragraph (1)
            shall apply to substantive changes issued on or after the date
            of the enactment of this Act.
      (b) Timeline for Compliance With Substantive Changes After Notice.--
              (1) In general.--Section 1871(d)(1), as added by subsection
            (a), is amended by adding at the end the following:
      ``(B)(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(d), 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
    sanction (including any penalty or requirement for repayment of any
    amount) 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 but
            shall not apply to any sanction for which notice was provided
            on or before the date of the enactment of this Act.

    SEC. 103. 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 one 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 2(a), is amended by adding at the
    end the following new subsection:
      ``(e)(1) Not later than 2 years after the date of the enactment of
    this subsection, and every 2 years thereafter, the Secretary shall
    submit to Congress a report with respect to the administration of this
    title and areas of inconsistency or conflict among the various
    provisions under law and regulation.
      ``(2) In preparing a report under paragraph (1), the Secretary shall
    collect--
              ``(A) information from 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 and the Medicare Provider 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.''.

                          TITLE II--CONTRACTING REFORM

    SEC. 201. 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, 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 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 the
                    Medicare Integrity Program under section 1893. The
                    previous sentence shall not apply with respect to the
                    activity described in section 1893(b)(5) (relating to
                    prior authorization of certain items of durable medical
                    equipment under section 1834(a)(15)).
                      ``(B) Construction.--An entity shall not be treated
                    as a medicare administrative contractor merely by
                    reason of having entered into a contract with the
                    Secretary under section 1893.
              ``(6) Application of federal acquisition regulation.--Except
            to the extent inconsistent with a specific requirement of this
            title, the Federal Acquisition Regulation applies to contracts
            under this title.
      ``(b) Contracting Requirements.--
              ``(1) Use of competitive procedures.--
                      ``(A) In general.--Except as provided in laws with
                    general applicability to Federal acquisition and
                    procurement 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 five 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.--In developing contract performance
                    requirements, the Secretary shall develop performance
                    requirements applicable to functions described in
                    subsection (a)(4).
                      ``(B) Consultation.-- In developing such
                    requirements, the Secretary may consult with providers
                    of services and suppliers, organizations representing
                    individuals entitled to benefits under part A or
                    enrolled under part B, or both, and organizations and
                    agencies performing functions necessary to carry out
                    the purposes of this section with respect to such
                    performance requirements.
                      ``(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 developed 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 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 (commonly known as the `False Claims Act').
              ``(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.--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 Regulations.''.
              (2) Consideration of incorporation of current law
            standards.--In developing contract performance requirements
            under section 1874A(b) of the Social Security Act, as inserted
            by paragraph (1), the Secretary shall consider inclusion of the
            performance standards described in sections 1816(f)(2) of such
            Act (relating to timely processing of reconsiderations and
            applications for exemptions) and section 1842(b)(2)(B) of such
            Act (relating to timely review of determinations and fair
            hearing requests), as such sections were in effect before the
            date of the enactment of this Act.
      (b) Conforming Amendments to Section 1816 (Relating to Fiscal
    Intermediaries).--Section 1816 (42 U.S.C. 1395h) is amended as follows:
              (1) The heading is amended to read as follows:
            ``provisions relating to the administration of part a''.
              (2) Subsection (a) is amended to read as follows:
      ``(a) The administration of this part shall be conducted through
    contracts with medicare administrative contractors under section
    1874A.''.
              (3) Subsection (b) is repealed.
              (4) Subsection (c) is amended--
                      (A) by striking paragraph (1); and
                      (B) in each of paragraphs (2)(A) and (3)(A), by
                    striking ``agreement under this section'' and inserting
                    ``contract under section 1874A that provides for making
                    payments under this part''.
              (5) Subsections (d) through (i) are repealed.
              (6) Subsections (j) and (k) are each amended--
                      (A) by striking ``An agreement with an agency or
                    organization under this section'' and inserting ``A
                    contract with a medicare administrative contractor
                    under section 1874A with respect to the administration
                    of this part''; and
                      (B) by striking ``such agency or organization'' and
                    inserting ``such medicare administrative contractor''
                    each place it appears.
              (7) Subsection (l) is repealed.
      (c) Conforming Amendments to Section 1842 (Relating to Carriers).--
    Section 1842 (42 U.S.C. 1395u) is amended as follows:
              (1) The heading is amended to read as follows:
            ``provisions relating to the administration of part b''.
              (2) Subsection (a) is amended to read as follows:
      ``(a) The administration of this part shall be conducted through
    contracts with medicare administrative contractors under section
    1874A.''.
              (3) Subsection (b) is amended--
                      (A) by striking paragraph (1);
                      (B) in paragraph (2)--
                              (i) by striking subparagraphs (A) and (B);
                              (ii) in subparagraph (C), by striking
                            ``carriers'' and inserting ``medicare
                            administrative contractors''; and
                              (iii) by striking subparagraphs (D) and (E);
                      (C) in paragraph (3)--
                              (i) in the matter before subparagraph (A), by
                            striking ``Each such contract shall provide
                            that the carrier'' and inserting ``The
                            Secretary'';
                              (ii) by striking ``will'' the first place it
                            appears in each of subparagraphs (A), (B), (F),
                            (G), (H), and (L) and inserting ``shall'';
                              (iii) in subparagraph (B), in the matter
                            before clause (i), by striking ``to the
                            policyholders and subscribers of the carrier''
                            and inserting ``to the policyholders and
                            subscribers of the medicare administrative
                            contractor'';
                              (iv) by striking subparagraphs (C), (D), and
                            (E);
                              (v) in subparagraph (H)--
                                      (I) by striking ``if it makes
                                    determinations or payments with respect
                                    to physicians' services,'' in the
                                    matter preceding clause (i); and
                                      (II) by striking ``carrier'' and
                                    inserting ``medicare administrative
                                    contractor'' in clause (i);
                              (vi) by striking subparagraph (I);
                              (vii) in subparagraph (L), by striking the
                            semicolon and inserting a period;
                              (viii) in the first sentence, after
                            subparagraph (L), by striking ``and shall
                            contain'' and all that follows through the
                            period; and
                              (ix) in the seventh sentence, by inserting
                            ``medicare administrative contractor,'' after
                            ``carrier,''; and
                      (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, 2010.
                      (D) Waiver of provider nomination provisions during
                    transition.--During the period beginning on the date of
                    the enactment of this Act and before the date specified
                    under subparagraph (A), the Secretary may enter into
                    new agreements under section 1816 of the Social
                    Security Act (42 U.S.C. 1395h) without regard to any of
                    the provider nomination provisions of such section.
              (2) General transition rules.--The Secretary shall take such
            steps, consistent with paragraph (1)(B) and (1)(C), as are
            necessary to provide for an appropriate transition from
            contracts under section 1816 and section 1842 of the Social
            Security Act (42 U.S.C. 1395h, 1395u) to contracts under
            section 1874A, as added by subsection (a)(1).
              (3) Authorizing continuation of mip functions under current
            contracts and agreements and under rollover contracts.--The
            provisions contained in the exception in section 1893(d)(2) of
            the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall
            continue to apply notwithstanding the amendments made by this
            section, and any reference in such provisions to an agreement
            or contract shall be deemed to include a contract under section
            1874A of such Act, as inserted by subsection (a)(1), that
            continues the activities referred to in such provisions.
      (e) References.--On and after the effective date provided under
    subsection (d)(1), any reference to a fiscal intermediary or carrier
    under title XI or XVIII of the Social Security Act (or any regulation,
    manual instruction, interpretative rule, statement of policy, or
    guideline issued to carry out such titles) shall be deemed a reference
    to an appropriate medicare administrative contractor (as provided under
    section 1874A of the Social Security Act).
      (f) Reports on Implementation.--
              (1) Plan for implementation.--By not later than October 1,
            2004, the Secretary shall submit a report to Congress and the
            Comptroller General of the United States that describes the
            plan for implementation of the amendments made by this section.
            The Comptroller General shall conduct an evaluation of such
            plan and shall submit to Congress, not later than 6 months
            after the date the report is received, a report on such
            evaluation and shall include in such report such
            recommendations as the Comptroller General deems appropriate.
              (2) Status of implementation.--The Secretary shall submit a
            report to Congress not later than October 1, 2008, that
            describes the status of implementation of such amendments and
            that includes a description of the following:
                      (A) The number of contracts that have been
                    competitively bid as of such date.
                      (B) The distribution of functions among contracts and
                    contractors.
                      (C) A timeline for complete transition to full
                    competition.
                      (D) A detailed description of how the Secretary has
                    modified oversight and management of medicare
                    contractors to adapt to full competition.

    SEC. 202. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDICARE
                        ADMINISTRATIVE CONTRACTORS.

      (a) In General.--Section 1874A, as added by section 201(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
            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 policies, procedures, and practices of
                            a representative 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 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 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
                            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.

                       TITLE III--EDUCATION AND OUTREACH

    SEC. 301. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.

      (a) Coordination of Education Funding.--
              (1) In general.--The Social Security Act is amended by
            inserting after section 1888 the following new section:
                 ``provider education and technical assistance
      ``Sec. 1889. (a) Coordination of Education Funding.--The Secretary
    shall coordinate the educational activities provided through medicare
    contractors (as defined in subsection (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 201(a)(1)
            and as amended by section 202(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 201(a)(1)
            and as amended by section 202(a) and subsection (b), is further
            amended by adding at the end the following new subsection:
      ``(g) Communications With Beneficiaries, Providers of Services and
    Suppliers.--
              ``(1) Communication strategy.--The Secretary shall develop a
            strategy for communications with individuals entitled to
            benefits under part A or enrolled under part B, or both, and
            with providers of services and suppliers under this title.
              ``(2) Response to written inquiries.--Each medicare
            administrative contractor shall, for those providers of
            services and suppliers which submit claims to the contractor
            for claims processing and for those individuals entitled to
            benefits under part A or enrolled under part B, or both, with
            respect to whom claims are submitted for claims processing,
            provide general written responses (which may be through
            electronic transmission) in a clear, concise, and accurate
            manner to inquiries of providers of services, suppliers and
            individuals entitled to benefits under part A or enrolled under
            part B, or both, concerning the programs under this title
            within 45 business days of the date of receipt of such
            inquiries.
              ``(3) Response to toll-free lines.--The Secretary shall
            ensure that each medicare administrative contractor shall
            provide, for those providers of services and suppliers which
            submit claims to the contractor for claims processing and for
            those individuals entitled to benefits under part A or enrolled
            under part B, or both, with respect to whom claims are
            submitted for claims processing, a toll-free telephone number
            at which such individuals, providers of services and suppliers
            may obtain information regarding billing, coding, claims,
            coverage, and other appropriate information under this title.
              ``(4) Monitoring of contractor responses.--
                      ``(A) In general.--Each medicare administrative
                    contractor shall, consistent with standards developed
                    by the Secretary under subparagraph (B)--
                              ``(i) maintain a system for identifying who
                            provides the information referred to in
                            paragraphs (2) and (3); and
                              ``(ii) monitor the accuracy, consistency, and
                            timeliness of the information so provided.
                      ``(B) Development of standards.--
                              ``(i) In general.--The Secretary shall
                            establish and make public standards to monitor
                            the accuracy, consistency, and timeliness of
                            the information provided in response to written
                            and telephone inquiries under this subsection.
                            Such standards shall be consistent with the
                            performance requirements established under
                            subsection (b)(3).
                              ``(ii) Evaluation.--In conducting evaluations
                            of individual medicare administrative
                            contractors, the Secretary shall take into
                            account the results of the monitoring conducted
                            under subparagraph (A) taking into account as
                            performance requirements the standards
                            established under clause (i). The Secretary
                            shall, in consultation with organizations
                            representing providers of services, suppliers,
                            and individuals entitled to benefits under part
                            A or enrolled under part B, or both, establish
                            standards relating to the accuracy,
                            consistency, and timeliness of the information
                            so provided.
                      ``(C) Direct monitoring.--Nothing in this paragraph
                    shall be construed as preventing the Secretary from
                    directly monitoring the accuracy, consistency, and
                    timeliness of the information so provided.''.
              (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) $25,000,000 for
            each of fiscal years 2005 and 2006 and such sums as may be
            necessary for succeeding fiscal years.
              ``(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)).
              ``(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 Sites.--
              (1) In general.--Section 1889, as added by subsection (a) and
            as amended by subsection (d), is further amended by adding at
            the end the following new subsection:
      ``(d) Internet Sites; 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 site 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 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. 302. 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 5(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) Avoidance of Recovery Actions for Problems Identified as
    Corrected.--The Secretary shall provide that, absent evidence of fraud
    and notwithstanding any other provision of law, any errors found in a
    compliance review for a small provider of services or supplier that
    participates in the demonstration program shall not be subject to
    recovery action if the technical assistance personnel under the program
    determine that--
              (1) the problem that is the subject of the compliance review
            has been corrected to their satisfaction within 30 days of the
            date of the visit by such personnel to the small provider of
            services or supplier; and
              (2) such problem remains corrected for such period as is
            appropriate.
    The previous sentence applies only to claims filed as part of the
    demonstration program and lasts only for the duration of such program
    and only as long as the small provider of services or supplier is a
    participant in such program.
      (e) GAO Evaluation.--Not later than 2 years after the date of the
    date the demonstration program is first implemented, the Comptroller
    General, in consultation with the Inspector General of the Department
    of Health and Human Services, shall conduct an evaluation of the
    demonstration program. The evaluation shall include a determination of
    whether claims error rates are reduced for small providers of services
    or suppliers who participated in the program 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.
      (f) Financial Participation by Providers.--The provision of technical
    assistance to a small provider of services or supplier under the
    demonstration program is conditioned upon the small provider of
    services or supplier paying 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.
      (g) Authorization of Appropriations.--There are authorized to be
    appropriated to the Secretary (in appropriate part from the Federal
    Hospital Insurance Trust Fund and the Federal Supplementary Medical
    Insurance Trust Fund) to carry out the demonstration program--
              (1) for fiscal year 2005, $1,000,000, and
              (2) for fiscal year 2006, $6,000,000.

    SEC. 303. MEDICARE PROVIDER OMBUDSMAN; MEDICARE BENEFICIARY OMBUDSMAN.

      (a) Medicare Provider Ombudsman.--Section 1868 (42 U.S.C. 1395ee) is
    amended--
              (1) by adding at the end of the heading the following: ``;
            medicare provider ombudsman'';
              (2) by inserting ``Practicing Physicians Advisory Council.--
            (1)'' after ``(a)'';
              (3) in paragraph (1), as so redesignated under paragraph (2),
            by striking ``in this section'' and inserting ``in this
            subsection'';
              (4) by redesignating subsections (b) and (c) as paragraphs
            (2) and (3), respectively; and
              (5) by adding at the end the following new subsection:
      ``(b) Medicare Provider Ombudsman.--The Secretary shall appoint
    within the Department of Health and Human Services a Medicare Provider
    Ombudsman. The Ombudsman shall--
              ``(1) provide assistance, on a confidential basis, to
            providers of services and suppliers with respect to complaints,
            grievances, and requests for information concerning the
            programs under this title (including provisions of title XI
            insofar as they relate to this title and are not administered
            by the Office of the Inspector General of the Department of
            Health and Human Services) and in the resolution of unclear or
            conflicting guidance given by the Secretary and medicare
            contractors to such providers of services and suppliers
            regarding such programs and provisions and requirements under
            this title and such provisions; and
              ``(2) submit recommendations to the Secretary for improvement
            in the administration of this title and such provisions,
            including--
                      ``(A) recommendations to respond to recurring
                    patterns of confusion in this title and such provisions
                    (including recommendations regarding suspending
                    imposition of sanctions where there is widespread
                    confusion in program administration), and
                      ``(B) recommendations to provide for an appropriate
                    and consistent response (including not providing for
                    audits) in cases of self-identified overpayments by
                    providers of services and suppliers.
    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.''.
      (b) Medicare Beneficiary Ombudsman.--Title XVIII is amended by
    inserting after section 1806 the following new section:
                        ``medicare beneficiary ombudsman
      ``Sec. 1807. (a) In General.--The Secretary shall appoint within the
    Department of Health and Human Services a Medicare Beneficiary
    Ombudsman who shall have expertise and experience in the fields of
    health care and education of (and assistance to) individuals entitled
    to benefits under this title.
      ``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
              ``(1) 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;
              ``(2) provide assistance with respect to complaints,
            grievances, and requests referred to in paragraph (1),
            including--
                      ``(A) assistance in collecting relevant information
                    for such individuals, to seek an appeal of a decision
                    or determination made by a fiscal intermediary,
                    carrier, Medicare+Choice organization, or the
                    Secretary; and
                      ``(B) assistance to such individuals with any
                    problems arising from disenrollment from a
                    Medicare+Choice plan under part C; and
              ``(3) submit annual reports to Congress and the Secretary
            that describe the activities of the Office and that include
            such recommendations for improvement in the administration of
            this title as the Ombudsman determines appropriate.
    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.
      ``(c) 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 Medicare+Choice plans and
    changes to those plans. Nothing in this subsection shall preclude
    further collaboration between the Ombudsman and such programs.''.
      (c) Deadline for Appointment.--The Secretary shall appoint the
    Medicare Provider Ombudsman and the Medicare Beneficiary Ombudsman,
    under the amendments made by subsections (a) and (b), respectively, by
    not later than 1 year after the date of the enactment of this Act.
      (d) Funding.--There are authorized to be appropriated to the
    Secretary (in appropriate part from the Federal Hospital Insurance
    Trust Fund and the Federal Supplementary Medical Insurance Trust Fund)
    to carry out the provisions of subsection (b) of section 1868 of the
    Social Security Act (relating to the Medicare Provider Ombudsman), as
    added by subsection (a)(5) and section 1807 of such Act (relating to
    the Medicare Beneficiary Ombudsman), as added by subsection (b), such
    sums as are necessary for fiscal year 2004 and each succeeding fiscal
    year.
      (e) 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 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 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. 304. 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. 305. 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. 306. 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).

                         TITLE IV--APPEALS AND RECOVERY

    SEC. 401. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.

      (a) Transition Plan.--
              (1) In general.--Not later than October 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) 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 (or, to the extent the Secretary
            delegates such authority, the officer next in rank below the
            Secretary), but shall not report to, or be subject to
            supervision by, any other officer of the Department.
              (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 Act, the Secretary shall have
            authority to hire administrative law judges to hear such cases,
            giving priority to those judges with prior experience 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 (as amended by section 521
    of BIPA, 114 Stat. 2763A-534), there are authorized to be appropriated
    (in appropriate part from the Federal Hospital Insurance Trust Fund and
    the Federal Supplementary Medical Insurance Trust Fund) to the
    Secretary such sums 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)), as added by section 522(a) of BIPA (114 Stat.
    2763A-543), is amended by striking ``of the Social Security
    Administration''.

    SEC. 402. PROCESS FOR EXPEDITED ACCESS TO REVIEW.

      (a) Expedited Access to Judicial Review.--Section 1869(b) (42 U.S.C.
    1395ff(b)) as amended by BIPA, is amended--
              (1) in paragraph (1)(A), by inserting ``, subject to
            paragraph (2),'' before ``to judicial review of the Secretary's
            final decision'';
              (2) in paragraph (1)(F)--
                      (A) by striking clause (ii);
                      (B) by striking ``proceeding'' and all that follows
                    through ``determination'' and inserting
                    ``determinations and reconsiderations''; and
                      (C) by redesignating subclauses (I) and (II) as
                    clauses (i) and (ii) and by moving the indentation of
                    such subclauses (and the matter that follows) 2 ems to
                    the left; and
              (3) 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) may obtain access to judicial review when
                    a review panel (described in subparagraph (D)), on its
                    own motion or at the request of the appellant,
                    determines that no entity in the administrative appeals
                    process has the authority to decide the question of law
                    or regulation relevant to the matters in controversy
                    and that there is no material issue of fact in dispute.
                    The appellant may make such request only once with
                    respect to a question of law or regulation in a case of
                    an appeal.
                      ``(B) Prompt determinations.--If, after or coincident
                    with appropriately filing a request for an
                    administrative hearing, the appellant requests a
                    determination by the appropriate review panel that no
                    review panel has the authority to decide the question
                    of law or regulations relevant to the matters in
                    controversy and that there is no material issue of fact
                    in dispute and if such request is accompanied by the
                    documents and materials as the appropriate review panel
                    shall require for purposes of making such
                    determination, such review panel shall make a
                    determination on the request in writing within 60 days
                    after the date such review panel receives the request
                    and such accompanying documents and materials. Such a
                    determination by such review panel shall be considered
                    a final decision and not subject to review by the
                    Secretary.
                      ``(C) Access to judicial review.--
                              ``(i) In general.--If the appropriate review
                            panel--
                                      ``(I) determines that there are no
                                    material issues of fact in dispute and
                                    that the only issue is one of law or
                                    regulation that no review panel has the
                                    authority to decide; or
                                      ``(II) fails to make such
                                    determination within the period
                                    provided under subparagraph (B);
                            then the appellant may bring a civil action as
                            described in this subparagraph.
                              ``(ii) Deadline for filing.--Such action
                            shall be filed, in the case described in--
                                      ``(I) clause (i)(I), within 60 days
                                    of date of the determination described
                                    in such subparagraph; or
                                      ``(II) clause (i)(II), within 60 days
                                    of the end of the period provided under
                                    subparagraph (B) for the determination.
                              ``(iii) Venue.--Such action shall be brought
                            in the district court of the United States for
                            the judicial district in which the appellant is
                            located (or, in the case of an action brought
                            jointly by more than one applicant, the
                            judicial district in which the greatest number
                            of applicants are located) or in the district
                            court for the District of Columbia.
                              ``(iv) Interest on amounts in controversy.--
                            Where a provider of services or supplier seeks
                            judicial review pursuant to this paragraph, the
                            amount in controversy shall be subject to
                            annual interest beginning on the first day of
                            the first month beginning after the 60-day
                            period as determined pursuant to clause (ii)
                            and equal to the rate of interest on
                            obligations issued for purchase by the Federal
                            Hospital Insurance Trust Fund and 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 Act.
                      ``(D) Review panels.--For purposes of this
                    subsection, a `review panel' is a panel consisting of 3
                    members (who shall be administrative law judges,
                    members of the Departmental Appeals Board, or qualified
                    individuals associated with a qualified independent
                    contractor (as defined in subsection (c)(2)) or with
                    another independent entity) designated by the Secretary
                    for purposes of making determinations under this
                    paragraph.''.
      (b) Application to Provider Agreement Determinations.--Section
    1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
              (1) by inserting ``(A)'' after ``(h)(1)''; and
              (2) by adding at the end the following new subparagraph:
      ``(B) An institution or agency described in subparagraph (A) that has
    filed for a hearing under subparagraph (A) shall have expedited access
    to judicial review under this subparagraph in the same manner as
    providers of services, suppliers, and individuals entitled to benefits
    under part A or enrolled under part B, or both, may obtain expedited
    access to judicial review under the process established under section
    1869(b)(2). Nothing in this subparagraph shall be construed to affect
    the application of any remedy imposed under section 1819 during the
    pendency of an appeal under this subparagraph.''.
      (c) Effective Date.--The amendments made by this section shall apply
    to appeals filed on or after October 1, 2004.
      (d) Expedited Review of Certain Provider Agreement Determinations.--
              (1) Termination and certain other immediate remedies.--The
            Secretary shall develop and implement a process to expedite
            proceedings under sections 1866(h) of the Social Security Act
            (42 U.S.C. 1395cc(h)) in which the remedy of termination of
            participation, or a remedy described in clause (i) or (iii) of
            section 1819(h)(2)(B) of such Act (42 U.S.C. 1395i-3(h)(2)(B))
            which is applied on an immediate basis, has been imposed. Under
            such process priority shall be provided in cases of
            termination.
              (2) Increased financial support.--In addition to any amounts
            otherwise appropriated, to reduce by 50 percent the average
            time for administrative determinations on appeals under section
            1866(h) of the Social Security Act (42 U.S.C. 1395cc(h)), there
            are authorized to be appropriated (in appropriate part from the
            Federal Hospital Insurance Trust Fund and the Federal
            Supplementary Medical Insurance Trust Fund) to the Secretary
            such additional sums for fiscal year 2005 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.
      (e) Process for Reinstatement of Approval of Certain SNF Training
    Programs.--
              (1) In general.--In the case of a termination of approval of
            a nurse aide training program described in paragraph (2) of a
            skilled nursing facility, the Secretary shall develop and
            implement a process for the reinstatement of approval of such
            program before the end of the mandatory 2 year disapproval
            period if the facility and program is certified by the
            Secretary, in coordination with the applicable State survey and
            certification agency and after public notice, as being in
            compliance with applicable requirements and as having remedied
            any deficiencies in the facility or program that resulted in
            noncompliance.
              (2) Termination of approval described.--A termination of
            approval of a training program described in this paragraph is a
            mandatory 2-year disapproval provided for under section
            1819(f)(2)(B)(iii) of the Social Security Act (42 U.S.C. 1395i-
            3(f)(2)(B)(iii)) if the only basis for the mandatory
            disapproval was the assessment of a civil money penalty of not
            less than $5,000.

    SEC. 403. 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 BIPA and as amended by section 402(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)), as amended by BIPA, 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)), as amended by BIPA, 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; and
                      ``(B) the person provided such notice may obtain,
                    upon request, the specific provision of the policy,
                    manual, or regulation used in making the determination.
              ``(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 person provided such 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)), as amended by BIPA, 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)), as
            amended by BIPA, 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)) 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)), as
            amended by BIPA, 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), as amended by BIPA, is amended--
                      (A) by amending subsection (c)(3)(D) to read as
                    follows:
                      ``(D) Qualifications for reviewers.--The requirements
                    of subsection (g) shall be met (relating to
                    qualifications of reviewing professionals).''; and
                      (B) by adding at the end the following new
                    subsection:
      ``(g) Qualifications of Reviewers.--
              ``(1) In general.--In reviewing determinations under this
            section, a qualified independent contractor shall assure that--
                      ``(A) each individual conducting a review shall meet
                    the qualifications of paragraph (2);
                      ``(B) compensation provided by the contractor to each
                    such reviewer is consistent with paragraph (3); and
                      ``(C) in the case of a review by a panel described in
                    subsection (c)(3)(B) composed of physicians or other
                    health care professionals (each in this subsection
                    referred to as a `reviewing professional'), a reviewing
                    professional meets the qualifications described in
                    paragraph (4) and, where a claim is regarding the
                    furnishing of treatment by a physician (allopathic or
                    osteopathic) or the provision of items or services by a
                    physician (allopathic or osteopathic), a reviewing
                    professional shall be a physician (allopathic or
                    osteopathic).
              ``(2) Independence.--
                      ``(A) In general.--Subject to subparagraph (B), each
                    individual conducting a review in a case shall--
                              ``(i) not be a related party (as defined in
                            paragraph (5));
                              ``(ii) not have a material familial,
                            financial, or professional relationship with
                            such a party in the case under review; and
                              ``(iii) not otherwise have a conflict of
                            interest with such a party.
                      ``(B) Exception.--Nothing in subparagraph (A) shall
                    be construed to--
                              ``(i) prohibit an individual, solely on the
                            basis of a participation agreement with a
                            fiscal intermediary, carrier, or other
                            contractor, from serving as a reviewing
                            professional if--
                                      ``(I) the individual is not involved
                                    in the provision of items or services
                                    in the case under review;
                                      ``(II) the fact of such an agreement
                                    is disclosed to the Secretary and the
                                    individual entitled to benefits under
                                    part A or enrolled under part B, or
                                    both, (or 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 ``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. 404. PREPAYMENT REVIEW.

      (a) In General.--Section 1874A, as added by section 201(a)(1) and as
    amended by sections 202(b), 301(b)(1), and 301(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 (as defined in subsection (i)(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. 405. 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 defined in subparagraph (B)), subject to
                    subparagraph (C), upon request of the provider of
                    services or supplier the Secretary shall enter into a
                    plan with the provider of services or supplier for the
                    repayment (through offset or otherwise) of such
                    overpayment over a period of at least 6 months but not
                    longer than 3 years (or not longer than 5 years in the
                    case of extreme hardship, as determined by the
                    Secretary). Interest shall accrue on the balance
                    through the period of repayment. Such plan shall meet
                    terms and conditions determined to be appropriate by
                    the Secretary.
                      ``(B) Hardship.--
                              ``(i) In general.--For purposes of
                            subparagraph (A), the repayment of an
                            overpayment (or overpayments) within 30 days is
                            deemed to constitute a hardship if--
                                      ``(I) in the case of a provider of
                                    services that files cost reports, the
                                    aggregate amount of the overpayments
                                    exceeds 10 percent of the amount paid
                                    under this title to the provider of
                                    services for the cost reporting period
                                    covered by the most recently submitted
                                    cost report; or
                                      ``(II) in the case of another
                                    provider of services or supplier, the
                                    aggregate amount of the overpayments
                                    exceeds 10 percent of the amount paid
                                    under this title to the provider of
                                    services or supplier for the previous
                                    calendar year.
                              ``(ii) Rule of application.--The Secretary
                            shall establish rules for the application of
                            this subparagraph in the case of a provider of
                            services or supplier that was not paid under
                            this title during the previous year or was paid
                            under this title only during a portion of that
                            year.
                              ``(iii) Treatment of previous overpayments.--
                            If a provider of services or supplier has
                            entered into a repayment plan under
                            subparagraph (A) with respect to a specific
                            overpayment amount, such payment amount under
                            the repayment plan shall not be taken into
                            account under clause (i) with respect to
                            subsequent overpayment amounts.
                      ``(C) Exceptions.--Subparagraph (A) shall not apply
                    if--
                              ``(i) the Secretary has reason to suspect
                            that the provider of services or supplier may
                            file for bankruptcy or otherwise cease to do
                            business or discontinue participation in the
                            program under this title; or
                              ``(ii) there is an indication of fraud or
                            abuse committed against the program.
                      ``(D) Immediate collection if violation of repayment
                    plan.--If a provider of services or supplier fails to
                    make a payment in accordance with a repayment plan
                    under this paragraph, the Secretary may immediately
                    seek to offset or otherwise recover the total balance
                    outstanding (including applicable interest) under the
                    repayment plan.
                      ``(E) Relation to no fault provision.--Nothing in
                    this paragraph shall be construed as affecting the
                    application of section 1870(c) (relating to no
                    adjustment in the cases of certain overpayments).
              ``(2) Limitation on recoupment.--
                      ``(A) In general.--In the case of a provider of
                    services or supplier that is determined to have
                    received an overpayment under this title and that seeks
                    a reconsideration by a qualified independent contractor
                    on such determination under section 1869(b)(1), the
                    Secretary may not take any action (or authorize any
                    other person, including any medicare contractor, as
                    defined in subparagraph (C)) to recoup the overpayment
                    until the date the decision on the reconsideration has
                    been rendered. If the provisions of section 1869(b)(1)
                    (providing for such a reconsideration by a qualified
                    independent contractor) are not in effect, in applying
                    the previous sentence any reference to such a
                    reconsideration shall be treated as a reference to a
                    redetermination by the fiscal intermediary or carrier
                    involved.
                      ``(B) Collection with interest.--Insofar as the
                    determination on such appeal is against the provider of
                    services or supplier, interest on the overpayment shall
                    accrue on and after the date of the original notice of
                    overpayment. Insofar as such determination against the
                    provider of services or supplier is later reversed, the
                    Secretary shall provide for repayment of the amount
                    recouped plus interest at the same rate as would apply
                    under the previous sentence for the period in which the
                    amount was recouped.
                      ``(C) Medicare contractor defined.--For purposes of
                    this subsection, the term `medicare contractor' has the
                    meaning given such term in section 1889(g).
              ``(3) Limitation on use of extrapolation.--A medicare
            contractor may not use extrapolation to determine overpayment
            amounts to be recovered by recoupment, offset, or otherwise
            unless--
                      ``(A) there is a sustained or high level of payment
                    error (as defined by the Secretary by regulation); or
                      ``(B) documented educational intervention has failed
                    to correct the payment error (as determined by the
                    Secretary).
              ``(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. 406. PROVIDER ENROLLMENT PROCESS; RIGHT OF APPEAL.

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

    SEC. 407. 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) Permitting Use of Corrected and Supplementary Data.--
              (1) In general.--Section 1886(d)(10)(D)(vi) (42 U.S.C.
            1395ww(d)(10)(D)(vi)) is amended by adding after subclause (II)
            at the end the following:
    ``Notwithstanding subclause (I), a hospital may submit, and the
    Secretary may accept upon verification, data that corrects or
    supplements the data described in such subclause without regard to
    whether the corrected or supplementary data relate to a cost report
    that has been settled.''.
              (2) Effective date.--The amendment made by paragraph (1)
            shall apply to fiscal years beginning with fiscal year 2004.
              (3) Submittal and resubmittal of applications permitted for
            fiscal year 2004.--
                      (A) In general.--Notwithstanding any other provision
                    of law, a hospital may submit (or resubmit) an
                    application for a change described in section
                    1886(d)(10)(C)(i)(II) of the Social Security Act for
                    fiscal year 2004 if the hospital demonstrates on a
                    timely basis to the satisfaction of the Secretary that
                    the use of corrected or supplementary data under the
                    amendment made by paragraph (1) would materially affect
                    the approval of such an application.
                      (B) Application of budget neutrality.--If one or more
                    hospital's applications are approved as a result of
                    paragraph (1) and subparagraph (A) for fiscal year
                    2004, the Secretary shall make a proportional
                    adjustment in the standardized amounts determined under
                    section 1886(d)(3) of the Social Security Act (42
                    U.S.C. 1395ww(d)(3)) for fiscal year 2004 to assure
                    that approval of such applications does not result in
                    aggregate payments under section 1886(d) of such Act
                    that are greater or less than those that would
                    otherwise be made if paragraph (1) and subparagraph (A)
                    did not apply.

    SEC. 408. 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
    sections 521 and 522 of BIPA and section 403(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 eligible items and services
                    described in subparagraph (C), 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 physician, but only with respect to
                            eligible items and services for which the
                            physician may be paid directly.
                              ``(ii) An individual entitled to benefits
                            under this title, but only with respect to an
                            item or service for which the individual
                            receives, from the physician who may be paid
                            directly for the item or service, an advance
                            beneficiary notice under section 1879(a) that
                            payment may not be made (or may no longer be
                            made) for the item or service under this title.
                      ``(C) Eligible items and services.--For purposes of
                    this subsection and subject to paragraph (2), eligible
                    items and services are items and services which are
                    physicians' services (as defined in paragraph (4)(A) of
                    section 1848(f) for purposes of calculating the
                    sustainable growth rate under such section).
              ``(2) Secretarial flexibility.--The Secretary shall establish
            by regulation reasonable limits on the categories of eligible
            items and 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 item or 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
                    an eligible item or service involved as to whether the
                    item or 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 item or service, supporting
                    documentation relating to the medical necessity for the
                    item or 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 item or service is so covered;
                              ``(ii) the item or service is not so covered;
                            or
                              ``(iii) the contractor lacks sufficient
                            information to make a coverage determination.
                    If the contractor makes the determination described in
                    clause (iii), the contractor shall include in the
                    notice a description of the additional information
                    required to make the coverage determination.
                      ``(B) 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).
                      ``(C) Informing beneficiary in case of physician
                    request.--In the case of a request in which an eligible
                    requester is not the individual described in paragraph
                    (1)(B)(ii), the process shall provide that the
                    individual to whom the item or service is proposed to
                    be furnished shall be informed of any determination
                    described in clause (ii) (relating to a determination
                    of non-coverage) and the right (referred to in
                    paragraph (6)(B)) to obtain the item or service and
                    have a claim submitted for the item or service.
              ``(5) Effect of determinations.--
                      ``(A) 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.
                      ``(B) Notice and right to redetermination in case of
                    a denial.--
                              ``(i) In general.--If the contractor makes
                            the determination described in paragraph
                            (4)(A)(ii)--
                                      ``(I) the eligible requester has the
                                    right to a redetermination by the
                                    contractor on the determination that
                                    the item or service is not so covered;
                                    and
                                      ``(II) the contractor shall include
                                    in notice under paragraph (4)(A) 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 the right
                                    to such a redetermination.
                              ``(ii) Deadline for redeterminations.--The
                            contractor shall complete and provide notice of
                            such redetermination within the same time
                            period as the time period applicable to the
                            contractor providing notice of redeterminations
                            relating to a claim for benefits under
                            subsection (a)(3)(C)(ii).
              ``(6) Limitation on further review.--
                      ``(A) In general.--Contractor determinations
                    described in paragraph (4)(A)(ii) or (4)(A)(iii) (and
                    redeterminations made under paragraph (5)(B)), 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 items or 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 items
                    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
                    items and services 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 items and
                    services, there shall be no prior determination under
                    this subsection with respect to such items or
                    services.''.
      (b) Effective Date; 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) 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.
              (3) Limitation on application to sgr.--For purposes of
            applying section 1848(f)(2)(D) of the Social Security Act (42
            U.S.C. 1395w-4(f)(2)(D)), the amendment made by subsection (a)
            shall not be considered to be a change in law or regulation.
      (c) Provisions Relating to Advance Beneficiary Notices; Report on
    Prior Determination Process.--
              (1) Data collection.--The Secretary shall establish a process
            for the collection of information on the instances in which an
            advance beneficiary notice (as defined in paragraph (4)) 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 report on use of advance beneficiary
            notices.--Not later than 18 months after the date on which
            section 1869(g) 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 18 months after the date on which section 1869(g) 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 the types of procedures
                    for which a prior determination has been sought,
                    determinations made under the process, and changes in
                    receipt of services resulting from the application of
                    such process; and
                      (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.
              (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 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.

                       TITLE V--MISCELLANEOUS PROVISIONS

    SEC. 501. POLICY DEVELOPMENT REGARDING EVALUATION AND MANAGEMENT (E &
                        M) DOCUMENTATION GUIDELINES.

      (a) In General.--The Secretary may not implement any new
    documentation guidelines for, or clinical examples of, 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 modifications to the
            evaluation and management documentation guidelines;
              (4) finds 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 Evaluation and Management Documentation
    Guidelines.--
              (1) In general.--The Secretary shall conduct under this
            subsection appropriate and representative pilot projects to
            test new evaluation and management documentation guidelines
            referred to in subsection (a).
              (2) Length and consultation.--Each pilot project under this
            subsection shall--
                      (A) be voluntary;
                      (B) be of sufficient length as determined by the
                    Secretary 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--
                      (A) at least one shall focus on a peer review method
                    by physicians (not employed by a medicare contractor)
                    which evaluates medical record information for claims
                    submitted by physicians identified as statistical
                    outliers relative to definitions published in the
                    Current Procedures Terminology (CPT) code book of the
                    American Medical Association;
                      (B) at least one shall 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) Banning of targeting of pilot project participants.--Data
            collected under this subsection shall not be used as the basis
            for overpayment demands or post-payment audits. Such limitation
            applies only to claims filed as part of the pilot project and
            lasts only for the duration of the pilot project and only as
            long as the provider is a participant in the pilot project.
              (5) Study of impact.--Each pilot project shall examine the
            effect of the new evaluation and management documentation
            guidelines on--
                      (A) different types of physician practices, including
                    those with fewer than 10 full-time-equivalent employees
                    (including physicians); and
                      (B) the costs of physician compliance, including
                    education, implementation, auditing, and monitoring.
              (6) Periodic reports.--The Secretary shall submit to Congress
            periodic reports on the pilot projects under this subsection.
      (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. 502. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY AND COVERAGE.

      (a) Council for Technology and Innovation.--Section 1868 (42 U.S.C.
    1395ee), as amended by section 301(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 site
            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 site 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 site 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 time frame 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 of 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).
      (d) Process for Adoption of ICD Codes as Data Standard.--Section
    1172(f) (42 U.S.C. 1320d-1(f)) is amended by inserting after the first
    sentence the following: ``Notwithstanding the preceding sentence, if
    the National Committee on Vital and Health Statistics has not made a
    recommendation to the Secretary before the date of the enactment of
    this sentence, with respect to the adoption of the International
    Classification of Diseases, 10th Revision, Procedure Coding System
    (`ICD-10-PCS') and the International Classification of Diseases, 10th
    Revision, Clinical Modification (`ICD-10-CM') as a standard under this
    part for the reporting of services, the Secretary may adopt ICD-10-PCS
    and ICD-10-CM as such a standard on or after such date without
    receiving such a recommendation.''.

    SEC. 503. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER MEDICARE
                        SECONDARY PAYOR (MSP) PROVISIONS.

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

    SEC. 504. 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. 505. EMERGENCY MEDICAL TREATMENT AND ACTIVE 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. 506. 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)) is amended by adding at the end the following new paragraph:
      ``(4) 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. 507. APPLICATION OF OSHA BLOODBORNE PATHOGENS STANDARD TO CERTAIN
                        HOSPITALS.

      (a) In General.--Section 1866 (42 U.S.C. 1395cc) is amended--
              (1) in subsection (a)(1)--
                      (A) in subparagraph (R), by striking ``and'' at the
                    end;
                      (B) in subparagraph (S), by striking the period at
                    the end and inserting ``, and''; and
                      (C) by inserting after subparagraph (S) the following
                    new subparagraph:
              ``(T) 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
            section 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)(T) (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)(T) 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. 508. 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)), as amended by section 521 of BIPA, is
    amended--
              (A) in subclause (III), by striking ``policy'' and inserting
            ``determination''; and
              (B) in subclause (IV), by striking ``medical review
            policies'' and inserting ``coverage determinations''.
      (2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is amended by
    striking ``policy'' and ``policy'' and inserting ``determination'' each
    place it appears and ``determination'', respectively.
      (c) Reference Corrections.--Section 1869(f)(4) (42 U.S.C.
    1395ff(f)(4)), as added by section 522 of BIPA, 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 521(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. 509. 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 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. 510. TREATMENT OF CERTAIN DENTAL CLAIMS.

      (a) In General.--Section 1862 (42 U.S.C. 1395y), as amended by
    section 508(a)(1), is amended by adding at the end 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. 511. 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 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 described in subclause (II) of section
    1886(d)(5)(F)(vi) of the Social Security Act (42 U.S.C.
    1395ww(d)(5)(F)(vi)) used in computing the disproportionate patient
    percentage under such section for that hospital. 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. 512. REVISIONS TO REASSIGNMENT PROVISIONS.

      (a) In General.--Section 1842(b)(6)(A)(ii) (42 U.S.C.
    1395u(b)(6)(A)(ii)) is amended to read as follows: ``(ii) where the
    service was provided under a contractual arrangement between such
    physician or other person and a qualified entity (as defined by the
    Secretary) or other person, to the entity or other person if under such
    arrangement such entity or individual submits the bill for such service
    and such arrangement (I) includes joint and several liability for
    overpayment by such physician or other person and such entity or other
    person, and (II) meets such other 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, entity, or other person as described in subparagraph (A)''.
      (c) Effective Date.--The amendments made by this section shall apply
    to payments made on or after one year after the date of the enactment
    of this Act.

    SEC. 513. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS
                        BENEFICIARIES.

      (a) Treatment as Coordinated Care Plan.--Section 1851(a)(2)(A) (42
    U.S.C. 1395w-21(a)(2)(A)) is amended by adding at the end the following
    new sentence: ``Specialized Medicare+Choice plans for special needs
    beneficiaries (as defined in section 1859(b)(4)) may be any type of
    coordinated care plan.''.
      (b) Specialized Medicare+Choice Plan for Special Needs Beneficiaries
    Defined.--Section 1859(b) (42 U.S.C. 1395w-29(b)) is amended by adding
    at the end the following new paragraph:
              ``(4) Specialized medicare+choice plans for special needs
            beneficiaries.--
                      ``(A) In general.--The term `specialized
                    Medicare+Choice plan for special needs beneficiaries'
                    means a Medicare+Choice plan that exclusively serves
                    special needs beneficiaries (as defined in subparagraph
                    (B)).
                      ``(B) Special needs beneficiary.--The term `special
                    needs beneficiary' means a Medicare+Choice eligible
                    individual who--
                              ``(i) is institutionalized (as defined by the
                            Secretary);
                              ``(ii) is entitled to medical assistance
                            under a State plan under title XIX; or
                              ``(iii) meets such requirements as the
                            Secretary may determine would benefit from
                            enrollment in such a specialized
                            Medicare+Choice plan described in subparagraph
                            (A) for individuals with severe or disabling
                            chronic conditions.''.
      (c) Restriction on Enrollment Permitted.--Section 1859 (42 U.S.C.
    1395w-29) is amended by adding at the end the following new subsection:
      ``(f) Restriction on Enrollment for Specialized Medicare+Choice Plans
    for Special Needs Beneficiaries.--In the case of a specialized
    Medicare+Choice plan (as defined in subsection (b)(4)), notwithstanding
    any other provision of this part and in accordance with regulations of
    the Secretary and for periods before January 1, 2008, the plan may
    restrict the enrollment of individuals under the plan to individuals
    who are within one or more classes of special needs beneficiaries.''.
      (d) Report to Congress.--Not later than December 31, 2006, the
    Secretary shall submit to Congress a report that assesses the impact of
    specialized Medicare+Choice plans for special needs beneficiaries on
    the cost and quality of services provided to enrollees. Such report
    shall include an assessment of the costs and savings to the medicare
    program as a result of amendments made by subsections (a), (b), and
    (c).
      (e) Effective Dates.--
              (1) In general.--The amendments made by subsections (a), (b),
            and (c) shall take effect upon the date of the enactment of
            this Act.
              (2) Deadline for issuance of requirements for special needs
            beneficiaries; transition.--No later than 6 months after the
            date of the enactment of this Act, the Secretary shall issue
            final regulations to establish requirements for special needs
            beneficiaries under section 1859(b)(4)(B)(iii) of the Social
            Security Act, as added by subsection (b).

    SEC. 514. TEMPORARY SUSPENSION OF OASIS REQUIREMENT FOR COLLECTION OF
                        DATA ON NON-MEDICARE AND NON-MEDICAID PATIENTS.

      (a) In General.--During the period described in subsection (b), the
    Secretary may not require, under section 4602(e) of the Balanced Budget
    Act of 1997 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 2nd 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. 515. MISCELLANEOUS REPORTS, STUDIES, AND PUBLICATION REQUIREMENTS.

      (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.

                           I. SUMMARY AND BACKGROUND

                             A. Purpose and Summary

        There are currently over 130,000 pages of regulations for
    the Medicare program. These regulations are often confusing,
    overly burdensome and can take away from providers' time with
    patients. They are also needed to assure payment for services
    rendered and to monitor compliance with the conditions of
    participation and other quality of care requirements.
        The purpose of H.R. 810 is to streamline paperwork
    requirements under the Medicare program and communicate clearer
    instructions to providers of services and suppliers so that
    they may spend more time caring for patients. At the same time,
    the bill does not prevent or impede the ability of the existing
    legal authorities to combat waste, fraud and abuse. It is also
    intended to reform the Medicare contracting process to make it
    more open by requiring competition.

                     B. Background and Need for Legislation

        Regulatory Reform.--This bill would provide protections for
    beneficiaries and providers by requiring new matter introduced
    in a final rule that is not a logical outgrowth of previously
    published material to be treated as a proposed regulation until
    there is public comment. It also prohibits retroactive
    application of regulations and policies. Finally, providers
    that rely on written, but erroneous guidance from the Secretary
    or its contractors shall not be subject to sanctions if they
    reasonably relied on such guidance.
        Contracting Reform.--This bill would reform Medicare's
    contracting system for administrative functions by
    consolidating contracting functions for Part A and Part B,
    requiring competition among contractors, and providing for more
    flexibility for contractors.
        Education and Outreach.--This bill would improve
    beneficiary and provider education and outreach by: requiring
    coordination of educational activities: providing incentives to
    improve contractor performance, requiring written responses
    within 45 days; providing a toll-free telephone number for
    questions about the program and outreach programs for
    beneficiaries and small providers. It also establishes
    ombudsmen for beneficiaries and providers and a demonstration
    program to place Medicare staff in selected Social Security
    offices.
        Appeals.--This bill would transfer responsibility for
    Medicare appeals from Social Security to the Department of
    Health and Human Services. The Administrative Law Judges would
    maintain their independence from the Centers for Medicare and
    Medicaid Services. It also establishes requirements for
    independence of the Qualified Independent Contractors by
    ensuring no conflicts of interest. Finally, beneficiaries would
    be provided with more information on the disposition of their
    cases.
        Overpayment.--This bill establishes standards for
    prepayment review, audits and consent settlements; allows for
    hardship in the case of repayment of overpayments; and limits
    recoupments by the program until the first independent level of
    appeal--qualified independent contractors--is determined. It
    also allows for beneficiaries and physicians to ask for prior
    authorization for physician office services.
        Miscellaneous and Technical Provisions.--This bill contains
    a number of provisions that would facilitate the introduction
    of new technology into the system. It also limits some
    information requests to providers or otherwise requires the
    Secretary to provide the information. It provides flexibility
    to hospice organizations in extraordinary circumstances.

                             C. Legislative History

                              SUBCOMMITTEE ACTION

        During the 107th Congress, the Subcommittee held two
    hearings on regulatory and contracting reform: March 15, 2001
    and September 25th, 2001. After Subcommittee Chairman Johnson
    and Representative Stark introduced the ``Medicare Regulatory
    Contracting Reform Act of 2001'' (HR 2768) on August 2, the
    Committee favorably reported that bill October 4, 2001 on a
    voice vote. After conferring with the Energy and Commerce
    Committee, a revised version (HR 3391) was introduced and
    passed the House 408-0 on December 4, 2001. Most of the
    provisions in this bill were incorporated into the Medicare
    Modernization and Prescription Drug Act (HR 4954), which passed
    the House in June, 2002.
        Action commenced on regulatory and contracting reform in
    the 108th Congress with the introduction of the Medicare
    Regulatory and Contracting Reform Act (HR 810) of 2003 by
    Chairman Johnson and Representative Stark on February 12. This
    bill is nearly identical to HR 3391 that passed the House in
    the 107th Congress. The Subcommittee on Health held a hearing
    on HR 810 on February 13th 2003, and heard testimony from CMS
    Administrator Tom Scully, Dr. Douglas Wood, Chairman of the
    Secretary's Advisory Committee on Regulatory Reform, and
    provider and beneficiary representatives.
        On March 19, 2003, the Subcommittee on Health favorably
    reported on a voice vote to the full Committee H.R. 810 the
    ``Medicare Regulatory and Contracting Reform Act of 2003.'' The
    major changes made in the Chairman's amendment in the nature of
    a substitute were to conform the liability for contractors to
    language negotiated by the Department of Justice, Office of
    Inspector General, CMS and contractors, and to delete obsolete
    provisions, which CMS is already undertaking administratively.

                             FULL COMMITTEE ACTION

        On April 2, 2003, the Committee reported 19-13 on H.R. 810
    the ``Medicare Regulatory and Contracting Reform Act of 2003.''
    The major changes made in the Chairman's amendment in the
    nature of a substitute were: adding a process to facilitate the
    adoption of updated diagnoses and procedure codes called ICD-
    10; allowing certain staffing companies to enroll in Medicare;
    and for specialized Medicare+Choice plans to exclusively serve
    special needs beneficiaries.
        Two additional amendments were approved by the Committee.
    The first was to suspend the collection of unused home health
    data on privately-insured patients until CMS analyses how this
    data can be used and moves through the regulatory and public
    comment process. The second amendment would provide for an
    exception process where the Secretary can, under certain
    limited conditions, reinstate the nurse aide training programs
    of a skilled nursing facility. The Secretary (in conjunction
    with the State survey agencies and allowing for public notice
    from patients and their families and patient advocacy groups)
    must certify that the homes are fully in compliance with any
    Federal or State regulations on quality of care.

                          II. EXPLANATION OF THE BILL

    Section 1. Short Title; Amendments to Social Security Act; Table of
            Contents

        Current Law. No provision.
        Explanation of Provision. Except as otherwise specified,
    the provisions would amend or repeal a section or other
    provisions of the Social Security Act.
        Effective Date. Upon enactment.

    Section 2. Findings and Construction

        Current Law. No provision.
        Explanation of Provision. Congress finds that the
    overwhelming numbers of providers are law-abiding and directs
    the Secretary to streamline Medicare's paperwork requirements
    so that time spent on patient care can increase.
        None of the provisions shall be construed to (1) compromise
    or affect the existing legal authorities, procedures or
    remedies for addressing Medicare fraud or abuse whether it be
    criminal investigation and prosecution, civil enforcement, or
    administrative remedies, including those established by the
    False Claims Act or (2) prevent any existing legal authorities
    from eliminating waste, fraud, and abuse in Medicare. Also,
    consolidation of Medicare's administrative contracting
    functions (as provided for in this bill) would not consolidate
    the Federal Hospital Insurance Trust Fund, which pays for Part
    A services and the Federal Supplementary Medical Insurance
    Trust fund, which pays for Part B services. The bill notes that
    this administrative consolidation of contracting functions does
    not reflect any position on that issue.
        Effective Date. Upon enactment.
        Reason for Change. The Committee is committed to extending
    needed regulatory relief to providers and suppliers while at
    the same time protecting taxpayers from waste, fraud and abuse.

    Section 3. Definitions

        Current Law. No provision.
        Explanation of Provision. The term, ``supplier,'' means a
    physician, practitioner, facility or other nonprovider entity
    that furnishes Medicare items or services unless otherwise
    indicated. BIPA means the Medicare Medicaid and SCHIP Benefits
    Improvement and Protection Act of 2000 and Secretary means the
    Secretary of Health and Human Services (HHS).
        Effective Date. Upon enactment.

                         A. Title I--Regulatory Reform

    Section 101. Issuance of Regulations

    (a) Limitation on New Matter in Final Regulations

        Current Law. No provision.
        Explanation of Provision. A provision in a final regulation
    that is not a logical outgrowth of a previously published
    notice or proposed rulemaking or interim final rule would be
    treated as a proposed regulation and would not take effect
    without a separate public comment period followed by its
    publication as a final regulation.
        Effective Date. Final regulations published on or after
    enactment.
        Reason for Change. The provision ensures that interested
    parties will be given an opportunity to comment on issues
    addressed in regulations before they take effect. The Committee
    recognizes that proposed regulations for annual payment updates
    for providers and suppliers include proposed overall payment
    updates, and that specific payment amounts for specific codes
    or specific payment areas are not typically included until
    final rules. The Committee does not intend to change the
    requirements or application of the Administrative Procedures
    Act. It is the Committee's intent that if the Secretary
    publishes a final rulemaking document which includes a
    provision that is not a logical outgrowth of a previously
    published notice of proposed rulemaking, such provision will
    not take effect until there is further opportunity for public
    comment and a publication of the provision again as a final
    regulation.

    Section 102. Compliance With Changes in Regulations and Policies

    (a) No Retroactive Application of Substantive Changes

        Current Law. No provision.
        Explanation of Provision. A substantive change in a
    regulatory or a subregulatory issuance would not be applied
    retroactively to items or services, unless the Secretary
    determines that retroactive application (1) would be necessary
    to comply with statutory requirements; or (2) would be
    beneficial to the public interest.
        Effective Date. For substantive changes issued on or after
    enactment.
        Reason for Change. This provision will ensure that
    Medicare's rules are not generally applied retroactively.

    (b) Timeline for Compliance With Substantive Changes After Notice

        Current Law. No provision.
        Explanation of Provision. A substantive change would not
    become effective before 30 days after the date the change is
    issued or published. The Secretary would be able to waive the
    30-day period to comply with statutory requirements or if such
    waiver is in the public interest. If an earlier date is
    established, the Secretary would be required to include a brief
    explanation of such finding in the issuance or publication of
    the substantive change. No compliance action would be permitted
    against a provider or supplier for goods and services furnished
    before the effective date of the substantive change.
        Effective Date. For compliance actions undertaken on or
    after enactment.
        Reason for Change. This provision will ensure providers and
    suppliers have sufficient time to make any changes to systems
    needed to comply with changes in regulations.

    (c) Reliance on Guidance

        Current Law. No provision.
        Explanation of Provision. A provider or supplier who
    reasonably relied on erroneous guidance would not be subject to
    any sanction or penalties, including repayment, provided the
    following conditions were met: (1) The provider or supplier
    follows written guidance (which may be transmitted
    electronically) provided by the Secretary or a Medicare
    contractor when furnishing an item or service and submitting a
    claim; (2) the Secretary finds that the circumstances relating
    to the furnished items and services have been accurately
    presented in writing to the contractor; and (3) the guidance is
    inaccurate. This provision would not prevent recoupment or
    repayment (without additional penalty) if the overpayment were
    solely the result of a clerical or technical operational error.
        Effective Date. Upon enactment, but would not apply to
    sanctions where notice was provided on or before enactment.
        Reason for Change. This provision will ensure that
    providers and suppliers who, in good faith based on the
    information received from contractors will not be vulnerable to
    recovery if it turns out that the contractor was in error.
    Providers should be able to rely on the directions or guidance
    provided by their Medicare contractors.

    Section 103. Reports and Studies Relating to Regulatory Reform

        Current Law. No provision.
        Explanation of Provision. The legislation has two studies
    in this area. First, the Comptroller General of the United
    States (GAO) would be required to conduct a study to determine
    the appropriateness and feasibility of providing the authority
    to the Secretary to issue legally binding advisory opinions on
    the interpretation and application of Medicare regulations. The
    study would examine the appropriate time frame for issuing the
    decisions as well as the need for additional staff and funding.
    GAO would submit the study not later than one year after
    enactment.
        Second, the Secretary would be required to report to
    Congress on the administration of the Medicare program and
    inconsistencies among existing Medicare statutory or regulatory
    provisions. The report would include (1) information from
    beneficiaries, providers, suppliers, Medicare Beneficiary and
    Provider Ombudsmen (established in Section 303 of this
    legislation), and Medicare contractors; (2) descriptions of
    efforts to reduce inconsistencies; and (3) recommendations from
    the Secretary for appropriate legislation or administrative
    actions. The report would be due no later than two years after
    enactment and every two years thereafter.
        Effective Date. Upon enactment.
        Reason for Change. The Committee is interested in receiving
    additional information regarding both advisory opinions and
    inconsistencies in Medicare regulations.

                        B. Title II--Contracting Reform

    Section 201. Increased Flexibility in Medicare Administration

    (a) Consolidation and Flexibility in Medicare Administration

        Current Law. Section 1816 of the Social Security Act
    authorizes the Secretary to establish agreements with fiscal
    intermediaries nominated by different provider associations to
    make Medicare payments for health care services furnished by
    institutional providers. Section 1842 of the Act authorizes the
    Secretary to enter into contracts with health insurers (or
    carriers) to make Medicare payments to physicians,
    practitioners and other health care suppliers. Section
    1834(a)(12) of the Act authorizes separate regional carriers
    for the payment of durable medical equipment (DME) claims.
    Section 1893 authorizes the Secretary to contract for certain
    program safeguard activities under the Medicare Integrity
    Program (MIP).
        Certain terms and conditions of the contracting agreements
    for fiscal intermediaries and carriers are specified in the
    Medicare statute. Medicare regulations coupled with long-
    standing agency practices have further limited the way that
    contracts for claims administration services can be
    established. Specifically, the contracts are awarded without
    full and open competition; generally must cover the range of
    claims processing and related activities; cannot be terminated
    without cause and without the opportunity for a public hearing;
    and incorporate cost-based, not performance-based,
    reimbursement methods with no incentive bonuses.
        Certain functions and responsibilities of the fiscal
    intermediaries and carriers are specified in the statute as
    well. The Secretary may not require that carriers or
    intermediaries match data obtained in its other activities with
    Medicare data in order to identify beneficiaries who have other
    insurance coverage as part of the Medicare Secondary Payer
    (MSP) program. With the exception of prior authorization of DME
    claims, an entity may not perform activities (or receive
    related payments) under a claims processing contract to the
    extent that the activities are carried out pursuant to a MIP
    contract. Performance standards with respect to the timeliness
    of reviews, fair hearings, reconsiderations and exemption
    decisions are established as well.
        A Medicare contract with an intermediary or carrier may
    require any of its employees certifying or making payments
    provide a surety bond to the United States in an amount
    established by the Secretary. Neither the contractor nor the
    contractor's employee who certifies the amount of Medicare
    payments is liable for erroneous payments in the absence of
    gross negligence or intent to defraud the United States.
    Neither the contractor nor the contractor's employee who
    disburses payments is liable for erroneous payments in the
    absence of gross negligence or intent to defraud the United
    States, if such payments are based upon a voucher signed by the
    certifying employee.
        Explanation of Provision. The legislation would add Section
    1874A to the Social Security Act to permit the Secretary to
    enter into contracts with any entity to serve as a Medicare
    administrative contractor. These contractors would perform or
    secure the performance (through subcontracting) of some or all
    of the following tasks: determine payment amounts; make
    payments; educate and assist beneficiaries; provide
    consultative services; communicate with providers and
    suppliers; educate and offer technical assistance to providers;
    and perform additional functions as necessary. An entity
    eligible to enter into a contract with respect to the
    performance of a particular function as an entity would (1)
    have demonstrated capability to carry out such function; (2)
    comply with conflict of interest standards that are generally
    applicable under Federal acquisition and procurement; (3) have
    sufficient assets to financially support the performance of
    such functions and (4) meet other requirements imposed by the
    Secretary. The claims processing jurisdiction of Medicare
    administrative contractor would be determined by the scope of
    the contract awarded to the entity. Specifically, the Medicare
    administrative contractor that would perform a particular
    function is the entity that has the contract to perform that
    function for any given beneficiary, any given provider or
    supplier, or class of same.
        The Federal Acquisition Rules (FAR) would apply to Medicare
    administrative contracts except to the extent they are
    inconsistent with a specific Medicare requirement. The
    Secretary would be required to use competitive procedures when
    entering into a Medicare administrative contract and would take
    into account performance quality, price, and other factors. The
    Secretary would be able to renew a contract for up to five
    years without regard to statutory requirements concerning
    competitive contracting if the entity has met or exceeded
    specified performance standards. The Secretary would be able to
    transfer functions among contractors consistent with these
    provisions. The Secretary would be required to (1) ensure that
    performance quality is considered in such transfers and (2)
    provide notice of such transfer (in the Federal Register or
    otherwise) including a description of the transferred
    functions, the affected providers and suppliers, and includes
    contractor contact information.
        The Secretary would be required to (1) provide incentives
    for the Medicare administrative contractors to provide
    efficient, high-quality services; and (2) develop performance
    standards with respect to each of the payment, provider
    service, and beneficiary service functions required of the
    contractors. In developing the performance standards, the
    Secretary would be able to consult with providers and
    suppliers, organizations representing Medicare beneficiaries,
    and Medicare contractors. In developing the performance
    requirements for Medicare administrative contractors, the
    Secretary may include satisfaction of beneficiaries as a
    standard for measuring performance. The Secretary would be
    required to contract only with those entities that will (1)
    perform efficiently and effectively; (2) meet standards for
    financial responsibility, legal authority and service quality
    among other pertinent matters; (3) agree to furnish timely and
    necessary data; and (4) maintain and provide access to
    necessary records and data.
        The performance requirements would be (1) set forth in the
    contract between the Secretary and the appropriate Medicare
    contractor; (2) used to evaluate contractor performance; and
    (3) consistent with the contract's written statement of work.
    The statement of work and contract are public documents. A
    Medicare administrative contract would contain provisions
    deemed necessary by the Secretary and may provide for advances
    of Medicare funds for the purposes of making payments to
    providers and suppliers. In developing contract performance
    requirements for Medicare administrative contractors, the
    Secretary would be required to consider the inclusion of the
    existing standards in effect for timeliness of reviews,
    reconsiderations and exemption decisions.
        The existing MSP provision would apply: the Secretary would
    not be able to require contractors to match their data with
    Medicare data for the purposes of the identifying beneficiaries
    with other insurance coverage. The Secretary would assure that
    the activities of the Medicare administrative contractors do
    not duplicate the Medicare Integrity Program (MIP) functions
    except with respect to the prior authorization of durable
    medical equipment. An entity with a MIP contract would not be
    treated as a Medicare administrative contractor simply because
    it has a MIP contract.
        A Medicare administrative contractor and any of its
    employees certifying or disbursing payments may be required to
    provide a surety bond to the United States in an amount
    established by the Secretary. It is the intent of Congress that
    the definition of a surety bond in this instance includes
    fidelity bonds and the Secretary has the authority to request
    fidelity bonds.
        A Medicare administrative contractor, certifying officer,
    or disbursing officer shall not be liable for erroneous
    payments in the absence of reckless disregard or intent to
    defraud the United States. While Medicare administrative
    contractors are not liable for inadvertent billing errors, as
    in the past, they are liable for all penalties and damages
    resulting from reckless disregard of their obligations under
    their Medicare administrative contracts or intent to defraud
    the United States. The ``reckless disregard'' standard is the
    same as that under the False Claims Act which has been used
    effectively by whistleblowers and the Department of Justice to
    uncover and penalize fraud against the Medicare program by some
    fiscal intermediaries and carriers. This ``reckless disregard''
    standard, which does not require proof of specific intent to
    defraud, is designed to balance the practical need to shelter
    Medicare Administrative Contractors from frivolous civil
    litigation by disgruntled providers or beneficiaries with the
    Medicare program's interest in protecting itself from
    contractor fraud. This section makes it clear that the False
    Claims Act continues, as in the past, to remain available as a
    remedy for fraud against Medicare by contractors, and that, as
    in the past, the damages and penalties which the Medicare
    program is entitled to recover from fraudulent contractors
    include not just administrative payments but also the affected
    payments from the Medicare trust funds.
        The Secretary would be able to indemnify a Medicare
    administrative contractor, subcontractor, or employee who is
    made a party to any judicial or administrative proceeding
    arising from the claims administration process to an
    appropriate extent as determined by the Secretary and specified
    in the contract. Indemnification in this case may include
    payment of judgments, certain settlements, awards and costs
    (including reasonable legal expenses). Settlement proposals
    would not be negotiated or compromised without prior written
    approval by the Secretary. The Secretary would not be able to
    provide any indemnification if the liability arises directly
    from conduct that is determined in the proceeding or by the
    Secretary to be criminal in nature or fraudulent. If
    indemnification is provided before such determination is made
    that such costs arose directly from such conduct, the
    contractor would reimburse the Secretary for these costs. The
    provisions would not change common law immunity available to
    the Medicare contractor or other party, or permit the payment
    of costs not otherwise allowable, reasonable or allocable under
    the Federal Acquisition Regulation.
        Effective Date. See subsection (d).
        Reason for Change. Medicare's current contracting
    represents an antiquated, inefficient, and closed system based
    on cozy relationships between the government, contractors and
    providers.
        Medicare contracting is antiquated because contractors may
    not provide service for the entire Medicare program, or
    particular functions within the program; rather Fiscal
    Intermediaries administer claims for facilities and carriers
    administer claims for all other providers. It has failed to
    keep pace with integrated claims administration practices in
    the private sector.
        Medicare contracting is inefficient because Medicare does
    not award contracts for Fiscal Intermediaries through
    competitive procedures, but rather on provider nomination.
        Medicare contracting is a closed system. All but one of the
    contractors today have been with Medicare since the program's
    inception 38 years ago, and only insurers can provide
    contracting services under current law.
        This provision permits greater flexibility in contracting
    for administrative services between the Secretary and the
    Medicare contractors (entities that process claims under Part A
    and Part B of the Medicare program), including the flexibility
    to separately contract for all or parts of the contractor
    functions. The Secretary also may contract with a wider range
    of entities, so that the most efficient and effective
    contractor can be selected.
        These amendments require the Secretary to contract
    competitively at least once every five years for the
    administration of benefits under Parts A and B. In conjunction
    with the elimination of cost contracts, it is intended to
    create incentives for improved service to beneficiaries and to
    providers of services and suppliers.

    (b) Conforming Amendments to Section 1816 (Relating to Fiscal
            Intermediaries)

        Current Law. Section 1816 of the Social Security Act
    establishes the provider nomination process, the contracting
    specifications, and performance standards for fiscal
    intermediaries that currently contract with Medicare to process
    claims and perform other related administrative activities for
    institutional providers.
        Explanation of Provision. The provisions establish that the
    activities of fiscal intermediaries in administering Medicare
    would be conducted through contracts with Medicare
    administrative contractors as set forth in subsection (a). The
    provider nomination process and contracting specifications
    would be repealed. Certain performance standards with respect
    to the processing of clean claims would be retained. Certain
    annual reporting requirements concerning the contractor's
    overpayment recovery efforts would be retained.
        Effective Date. See subsection (d).
        Reason for Change. These amendments provide a basis for a
    unified contracting system for the administration of Parts A
    and B, identical to the recent Congressionally mandated
    structure of the Medicare Integrity Program contractors.
    Consolidation of contracting duties as set forth in this
    legislation does not constitute consolidation of the Hospital
    Insurance and Medical Supplementary Insurance Trust Funds, or
    reflect any position on that issue. In addition, the
    elimination of provider nomination, which hospitals have rarely
    been allowed to exercise in recent years, is essential for
    bringing full and open competition into the contracting
    functions of the Medicare program.

    (c) Conforming Amendments to Section 1842 (Relating to Carriers)

        Current Law. Section 1842 of the Social Security Act
    establishes that carriers will be used to administer certain
    Medicare benefits as well as the contracting requirements and
    certain performance standards for those activities.
        Explanation of Provision. The provisions would establish
    that the activities of carriers administering Medicare would be
    conducted through contracts with Medicare administrative
    contractors as set forth in subsection (a). Certain
    instructions including those pertaining to nursing facilities
    payments, claims assignment, physician participation,
    overpayment recoveries and billing by suppliers would be
    retained. Certain performance standards with respect to the
    processing of clean claims would be retained. Contracting
    specifications and other conforming changes would be
    established. The Secretary, not the contractor, would be
    responsible for taking necessary actions to assure that
    reasonable payments are made, for those made on both a cost and
    charge basis. The Secretary, not the contractor, would be
    responsible for maintaining a toll-free telephone number for
    beneficiaries to obtain information on participating suppliers.
    Since the Carrier fair hearing requirement were eliminated in
    BIPA, the requirements for the hearing are eliminated to
    conform with existing law. Certain annual reporting
    requirements concerning the contractor's overpayment recovery
    efforts would be retained.
        The Committee directs the Secretary's attention to the
    provision of the Balanced Budget Act of 1997 requiring CMS to
    designate no more than five regional carriers to process
    laboratory claims. This provision was passed in order to
    streamline the processing of laboratory claims and was to be
    implemented by July 1, 1999, but CMS has taken no action to
    date. In consultation with the clinical laboratory industry,
    CMS may consider other potential solutions, including the
    designation of a single contractor to process all claims of
    laboratory entities operating in more than one state. CMS is
    directed to report back to the Committee on Ways and Means and
    the Committee on Energy and Commerce within three months
    detailing the action it has taken to implement this directive.
        Effective Date. See subsection (d).
        Reason for Change. The provision establishes a basis for a
    unified contracting system, identical to the structure
    implemented for the Medicare Integrity Program (MIP)
    contractors. It is important to note, however, that
    consolidation of contracting duties as set forth in this
    legislation does not constitute consolidation of the Hospital
    Insurance and Medical Supplementary Insurance Trust Funds, or
    reflect any position on that issue. In addition, the Secretary
    would have the flexibility to choose the best contractor(s) to
    provide telephone information on suppliers which is intended to
    reduce administrative costs and improve quality. Since the
    carrier fair hearing requirement was eliminated in previous
    legislation, the requirements for the hearing are eliminated in
    order to conform with existing law.

    (d) Effective Date; Transition Rule

        Current Law. No provision.
        Explanation of Provision. Except as otherwise provided in
    this subsection, the provisions in this section would be
    effective October 1, 2005. The Secretary would be authorized to
    take necessary actions prior to that date in order to implement
    these amendments on a timely basis to transition from the
    contracts established under sections 1816 and 1842 of the
    Social Security Act to those established under the new section
    1874A created by this legislation. The transition would be
    consistent with the requirement that the administrative
    contracts be competitively bid by October 1, 2010. The
    requirement that MIP contracts be awarded on a competitive
    basis would continue to apply and would not be affected by the
    provisions in this section. The MIP contracting exception that
    allows agreements according to current law would be deemed to
    be a contract established under the new authority of 1874A and
    would continue existing activities. The Secretary has the
    authority to recognize the appropriate termination costs of the
    current contractors during the transition from cost contracts
    to competitively bid contracts.

    (e) References

        Current Law. No provision.
        Explanation of Provision. After this section becomes
    effective, any reference to fiscal intermediary or carrier
    would be considered a reference to the appropriate Medicare
    administrative contractor.

    (f) Reports on Implementation

        Current Law. No provision.
        Explanation of Provision. The Secretary would submit an
    implementation plan to Congress and GAO no later than October
    1, 2004. GAO would evaluate the plan and include appropriate
    recommendations no later than six months after the plan is
    received. No later than October 1, 2008, the Secretary would be
    required to submit a status report to Congress including (1)
    the number of contracts that have been competitively bid; (2)
    the distribution of functions among contracts and contractors;
    (3) a timeline for complete transition to full competition; and
    (4) a detailed description of changes to contractor oversight
    and management.
        Effective Dates. Upon enactment.

    Section 202. Requirements for Information Security

        Current Law. No provision.
        Explanation of Provision. Medicare administrative
    contractors that determine and make payments would be required
    to implement a contractor-wide information security program
    that meets the requirements imposed on Federal agencies to
    ensure the security, integrity, confidentiality, authenticity,
    and availability of operational data and systems supporting
    operations. An annual audit of the information security at each
    Medicare administrative contractor: (1) would be performed by
    an independent entity that meets the independence requirements
    specified by the Office of the Inspector General (OIG) in HHS;
    and (2) would test the effectiveness of the information
    security techniques for an appropriate subset of the
    contractor's systems. An audit of new contractors (those that
    have not been fiscal intermediaries or carriers) would be
    required prior to the start of their performing Medicare
    payment functions. An audit of existing contractors (those that
    are now fiscal intermediaries and carriers) would be required
    to be completed within one year from enactment. The results of
    the audits would be reported promptly to the OIG which will
    submit a report annually to Congress. These provisions would be
    equally applicable to fiscal intermediaries and carriers as to
    Medicare administrative contractors.
        Effective Date. Upon enactment.
        Reason for Change. The increased reliance by the Federal
    government on the Internet and related telecommunications
    technologies has resulted in enhanced inter-connectivity and
    interdependencies associated with Federal computer systems and
    between federal and private computer systems. Over the past
    several years, this inter-connectivity or ``networking'' has
    resulted in increased security vulnerabilities that have put at
    greater risk computer systems and data that are critical to
    ensuring national and economic security and public health and
    welfare, including sensitive, non-public information that is
    collected and maintained by CMS and its business partners.
        Investigations have revealed significant security
    weaknesses, which the agency has been working to address. Some
    of the computer security concerns identified include weak
    password management, inadequate access controls, excessive user
    privileges, improper network configurations, and inadequate
    testing of critical systems. In addition, the OIG conducted
    assessments of financial controls--including electronic data
    processing controls--at CMS and its major Medicare contractors,
    and, in every year since 1997, the OIG has identified computer
    security controls to be a material weakness at both CMS and the
    Medicare contractors reviewed.
        Section 202 is intended to assist CMS in identifying and
    working with contractors to address potential security
    deficiencies in order to ensure that sensitive, non-public
    information related to the processing of Medicare claims is
    adequately secure from unauthorized access, misuse, or
    destruction.

               C. Title III--Education and Outreach Improvements

    Section 301. Provider Education and Technical Assistance

    (a) Coordination of Education Funding

        Current Law. Medicare's provider education activities are
    funded through the program management appropriation and through
    the Education and Training component of the Medicare Integrity
    Program (MIP). Both claims processing contractors (fiscal
    intermediaries and carriers) and MIP contractors may undertake
    provider education activities.
        Explanation of Provision. The provision would add Section
    1889 to the Social Security Act which would require the
    Secretary to (1) coordinate the educational activities provided
    through the Medicare administrative and MIP contractors and (2)
    to submit an evaluation to Congress, no later than October 1,
    2002, on actions taken to coordinate the funding of provider
    education.
        Effective Date. Upon enactment.
        Reason for Change. This provision is intended to ensure
    that federal spending on provider education is coordinated and
    used as efficiently as possible to maximize the value obtained
    from the investment. It is not intended to change the
    proportion of Medicare Integrity Program funds spent on
    provider education.

    (b) Incentives to Improve Contractor Performance

        Current Law. No specific statutory provision. Since FY1996,
    as part of the audit required by the Chief Financial Officers
    Act, an estimate of improper payments in Medicare fee-for-
    service has been established annually. As a recent initiative,
    CMS is implementing a comprehensive error rate testing program
    to produce national, contractor specific, benefit category
    specific and provider specific paid claim error rates.
        Explanation of Provision. The Secretary would be required
    to use the specific claims payment error rates or similar
    methodology at each Medicare administrative contractor to
    provide incentives for such contractors to effectively educate
    providers on proper claims procedures. This methodology would
    apply to existing fiscal intermediaries and carriers in the
    same manner as it applies to Medicare administrative
    contractors. No later than October 1, 2004, GAO would submit to
    Congress and to the Secretary a report on the adequacy of the
    methodology, including recommendations as appropriate. No later
    than October 1, 2004, the Secretary would be required to report
    to Congress on (1) the use of the claims error rate methodology
    in assessing the effectiveness of contractors' provider
    education and outreach programs and (2) whether methodology
    should be used as a basis to pay contractors' performance
    bonuses.
        Effective Date. As specified.
        Reason for Change. This provision would ensure that the
    Department monitors contractor performance for claims payment
    error rates, and it would identify best practices for provider
    education--all with the goal of reducing payment errors and
    helping providers and suppliers better comply with program
    requirements. It is the Committee's intent that, in
    consultation with representatives of providers and suppliers,
    the Secretary shall identify and encourage best practices
    developed by contractors for educating providers and suppliers.

    (c) Provision of Access to and Prompt Responses From Medicare
            Administrative Contractors

        Current Law. No specific statutory provision. Statutory
    provisions generally instruct carriers to assist providers and
    others who furnish services in developing procedures relating
    to utilization practices and to serve as a channel of
    communication relating information on program administration.
    Fiscal intermediaries are generally instructed to (1) provide
    consultative services to institutions and other agencies to
    enable them to establish and maintain fiscal records necessary
    for program participation and payment and (2) serve as a center
    for any information as well as a channel for communication with
    providers.
        Explanation of Provision. The Secretary would be required
    to develop a communication strategy with beneficiaries,
    providers and suppliers. Each Medicare administrative
    contractor would be required to (1) provide general written
    responses (which may be through electronic transmission) in a
    clear, concise and accurate manner to written inquiries from
    beneficiaries, providers and suppliers within 45 business days;
    (2) provide a toll-free telephone number where these interested
    parties may obtain billing, coding, claims, coverage and other
    appropriate Medicare information; (3) maintain a system for
    identifying which employee provided both the written and oral
    information; and (4) monitor the accuracy, consistency, and
    timeliness of the information provided. The Secretary would be
    required to establish and make public the standards used to
    monitor the accuracy, consistency, and timeliness of
    information provided in response to written and telephone
    inquiries. The standards would be developed in consultation
    with provider, supplier, and beneficiary organizations and
    would be consistent with the contractors' performance
    requirements. The Secretary would be able to directly monitor
    the quality of the information so provided. These provisions
    would also apply to existing fiscal intermediaries and
    carriers. The Medicare administrative contractor is required to
    record the subject matter and content of any advice, in part,
    to facilitate tracking the accuracy of the advice.
        Effective Date. By October 1, 2004.
        Reason for Change. This provision is intended to improve
    contractor accountability to make contractors more responsive
    to providers and suppliers, and to increase the accuracy,
    timeliness and reliability of the information provided in
    response to the questions received.

    (d) Improved Provider Education and Training

        Current Law. In FY2000, $54.8 million was spent on provider
    education and training activities: about $43 million came from
    the program management appropriation and about $12 million came
    from the Provider Education and Training component of MIP. In
    FY2001, about $57.3 million was budgeted for these activities.
        Explanation of Provision. The provisions would authorize
    $25 million in Medicare appropriations in FY2005 and FY2006 and
    such funds as necessary in subsequent years to increase
    provider education and training and to improve the accuracy and
    quality of contractor responses. The Committee intends for this
    amount to be provided in addition to current funding levels.
    Starting on October 1, 2004, the contractors' training
    activities would accommodate the special needs of small
    providers and suppliers. The provisions define a small provider
    as an institution with fewer than 25 full-time equivalents
    (FTEs) and a non-facility based provider or supplier with fewer
    than 10 FTEs.
        Effective Date. Upon enactment and as specified.
        Reason for Change. This provision acknowledges that
    contractors are being instructed to significantly improve their
    provider education and training efforts, and accordingly
    authorizes new funds to be available for those purposes.

    (e) Requirement To Maintain Internet Sites

        Current Law. No provision.
        Explanation of Provision. The Secretary and each contractor
    would be required to maintain an Internet site that provides
    answers to frequently asked questions in an easily accessible
    format as well as other materials published by the contractor.
        Effective Date. By October 1, 2004.
        Reason for Change. This provision will facilitate greater
    ease of provider and supplier access to information provided by
    Medicare's contractors.

    (f) Additional Provider Education Provisions

        Current Law. No provision.
        Explanation of Provision. A Medicare contractor would not
    be able to use attendance records at educational programs or
    information gathered during these programs to select or track
    candidates for audit or prepayment review. Nothing in the
    proposed legislation would require Medicare administrative
    contractors to disclose information that would compromise
    pending law enforcement activities or reveal findings of law
    enforcement-related audits.
        Effective Date. Upon enactment.
        Reason for Change. This provision addresses a concern
    raised by providers and suppliers that their participation in
    educational forums has been used to trigger audits.
    Participation in educational forums should be encouraged not
    discouraged.
        Nothing in this section or section 1893(g) shall be
    construed as preventing the disclosure by a Medicare contractor
    of information on attendance at education activities for law
    enforcement purposes. Nothing in this section or section
    1893(g) shall be construed as providing for the disclosure by a
    Medicare contractor of the claims processing screens or
    computer edits used for identifying claims that will be subject
    to review.

    Section 302. Small Provider Technical Assistance Demonstration Program

        Current Law. No provision.
        Explanation of Provision. The Secretary would be required
    to establish a demonstration program and contract with
    qualified entities to offer technical assistance, when
    requested and on a voluntary basis, to small providers or
    suppliers. Small providers and suppliers would be those
    institutional providers with less than 25 full-time equivalents
    (FTEs) or suppliers with less than 10 FTEs. Technical
    assistance would include direct, in-person examination of
    billing systems and internal controls by qualified entities
    such as peer review organizations or other entities. In
    awarding these contracts, the Secretary would be required to
    consider any prior investigations of the entity's work by the
    Office of the Inspector General (OIG) in HHS or the GAO.
    Participating providers and suppliers would be required to pay
    an amount estimated and disclosed in advance that would equal
    25 percent of the cost of the technical assistance they
    received. Absent indications of fraud, errors found in the
    review would not be subject to recovery if the problem is
    corrected within 30 days of the on-site visit and remains
    corrected for an appropriate period. However, this protection
    would only apply to claims filed as part of the demonstration
    project, would last only for the duration of the project and
    only as long as the provider or supplier was participating in
    the project. GAO, in consultation with the OIG, would be
    required to evaluate and provide recommendations on the
    continuation of the demonstration project no later than two
    years after its implementation. The evaluation would include a
    determination of whether claims error rates were reduced for
    providers and suppliers who participated in the program. The
    provision would authorize $1 million in FY2005 and $6 million
    in FY2006 of appropriations from the Medicare Trust Funds to
    carry out demonstration project.
        Effective Date. Upon enactment.
        Reason for Change. Many large providers and suppliers have
    contracts with private consulting firms to help them navigate
    their interactions with the Medicare program. This type of
    assistance can be prohibitively expensive for small providers
    and suppliers--but they are also required to comply with
    complex program rules and regulations. This provision creates a
    new demonstration program to facilitate small provider and
    supplier access to expert technical assistance. The
    demonstration will also test whether encouraging technical
    assistance on the front end to help providers and suppliers
    play by the rules can save the program money in the long term
    by promoting greater program compliance.

    Section 303. Medicare Provider Ombudsman; Medicare Beneficiary
            Ombudsman

    (a) Medicare Provider Ombudsman

        Current Law. No provision.
        Explanation of Provision. The Secretary would be required
    to appoint a Medicare Provider Ombudsman within HHS to (1) to
    resolve unclear guidance and provide confidential assistance to
    providers and suppliers regarding complaints or questions about
    the Medicare program including peer review and administrative
    requirements; and (2) recommend changes to improve program
    administration. The Ombudsman would not advocate any increases
    in payments or expanded coverage, but would identify issues and
    problems in current payment and coverage policies.
        Effective Date. One year after enactment.
        Reason for Change. Providers are currently confronted with
    a morass of bureaucracy and regulation, with no clear
    individual to assist them. The new ombudsman will help
    providers navigate Medicare's complicated rules and
    regulations.
        The Medicare Provider Ombudsman shall make recommendations
    to the Secretary concerning how to respond to recurring
    patterns of confusion in the Medicare program. Such a
    recommendation may include calling for the suspension of the
    imposition of provider sanctions (except those sanctions
    relating to the quality of care) where there is widespread
    confusion in program administration. Nothing in this section
    shall be construed as allowing for the suspension of provider
    sanctions relating to the quality of care, regardless of
    whether widespread confusion in the Medicare program exists.

    (b) Medicare Beneficiary Ombudsman

        Current Law. No provision.
        Explanation of Provision. The Secretary would be required
    to appoint a Medicare Beneficiary Ombudsman within HHS from
    individuals with health care expertise, advocacy, and education
    of Medicare beneficiaries. The ombudsman would (1) receive
    complaints, grievances, and requests for information from
    Medicare beneficiaries; (2) provide assistance with respect to
    those complaints, grievances and requests, including assistance
    to beneficiaries who appeal claims determinations or those
    affected by the decisions of Medicare+Choice organizations to
    leave Medicare; and (3) submit an annual report to Congress and
    the Secretary describing activities and recommending changes to
    improve program administration. The Ombudsman would not
    advocate any increases in payments or expanded coverage, but
    would identify issues and problems in current payment and
    coverage policies.
        To the extent possible, the Beneficiary Ombudsman would
    work with the Health Insurance and Assistance Counseling
    Programs authorized under Section 4360 of OBRA 1990, to
    facilitate the provision of information to Medicare
    beneficiaries regarding Medicare+Choice plans and any changes
    related to those plans. In addition, nothing in this section
    would preclude further collaboration, as appropriate, between
    the Beneficiary Ombudsman and these programs.
        Effective Date. One year after enactment.
        Reason for Change. Beneficiaries confront a morass of
    bureaucracy and regulation, with no clear individual to assist
    them. This new ombudsman will help beneficiaries navigate
    Medicare's complicated rules and regulations.

    (c) Funding

        Current Law. No provision
        Explanation of Provision. The provision would authorize
    appropriations of necessary sums in FY2004 and subsequently
    from the appropriate Medicare Trust Funds for the Ombudsman
    programs.
        Effective Date. Upon enactment.
        Reason for Change. The Committee acknowledges that
    implementing these new functions will have a cost and
    accordingly authorize necessary appropriations.

    (d) Use of Central Toll Free Number (1-800-MEDICARE)

        Current Law. The Secretary is required to prepare and
    distribute an annual notice explaining Medicare benefits and
    limitations to coverage to Medicare beneficiaries. The
    Secretary is also required to provide information via a toll-
    free telephone number.
        Explanation of Provision. The Secretary would be required
    to establish a toll-free number (1-800-MEDICARE) which will
    transfer individuals with questions or seeking help to the
    appropriate entities. The transfer would occur with no charge.
    This toll-free number would be the general information and
    assistance number listed on the annual notice provided to
    beneficiaries. GAO would be required to (1) monitor the
    adequacy, accuracy, and consistency of the information provided
    to Medicare beneficiaries through the toll-free 1-800-MEDICARE
    number and (2) examine the education and training of those
    providing the information through the toll-free number. GAO
    would be required to submit a report to Congress no later than
    one year from enactment. This toll-free number is intended to
    supplement, not replace, information and assistance available
    through non-federal sources. For example, contact information
    for the State Health Insurance Assistance Programs (SHIPs)
    should still be listed in the beneficiary handbook.
        Effective Date. Upon enactment.
        Reason for Change. The beneficiary handbook currently
    provides many pages of phone numbers, which can be very
    confusing for beneficiaries, rather than a single number that
    then can triage and transfer beneficiaries to the appropriate
    person or entity. This provision will promote better access to
    information for beneficiaries.

    Section 304. Beneficiary Outreach Demonstration Program

        Current Law. No provision.
        Explanation of Provision. The Secretary would be required
    to establish a 3-year demonstration project where Medicare
    specialists who are HHS employees are placed in at least six
    SSA offices to advise and assist Medicare beneficiaries. The
    SSA offices would be those with a high-volume of visits by
    Medicare beneficiaries; at least two of which would be in rural
    areas. In the rural SSA offices, the Secretary would provide
    for the Medicare specialists to travel among local offices on a
    scheduled basis. The Secretary would be required to (1)
    evaluate the project with respect to beneficiary utilization,
    beneficiary satisfaction, and cost-effectiveness and (2)
    recommend whether the demonstration should be expanded and made
    permanent.
        Effective Date. Upon enactment.
        Reason for Change. This provision makes Medicare experts
    available in six Social Security Administration offices to
    assist beneficiaries and answer their questions. The
    demonstration will test whether such outsourced Medicare
    specialists improve beneficiary understanding of the program
    and beneficiary satisfaction.

    Section 305. Notification About Skilled Nursing Facility Benefits

        Current Law. No provision.
        Explanation of Provision. The Secretary would be required
    to provide beneficiaries with information about the remaining
    number of days of skilled nursing facility coverage.
        Effective Date. For notices provided during calendar
    quarters beginning more than six months after enactment.
        Reason for Change. Beneficiaries are not always aware that
    their Medicare coverage is running out, and may need time to
    arrange alternate financing for continued skilled nursing
    facility care. This provision will provide beneficiaries with
    advance notice of the expiration of their skilled nursing
    benefit so that they have time to make arrangements without
    disruptions in care.

    Section 306. Information on Medicare-Certified Skilled Nursing
            Facilities in Hospital Discharge Plans

        Current Law. No provision.
        Explanation of Provision. The Secretary would make publicly
    available information that enables hospital discharge planners,
    Medicare beneficiaries, and the public to identify skilled
    nursing facilities that are participating in Medicare.
        Hospital discharge plans would be required to identify, for
    individuals who are likely to need post-hospital extended care
    services, the availability of Medicare-certified skilled
    nursing facilities that serve the area in which the patient
    resides.
        Effective Date. Not later than 6 months after the Secretary
    provides for the availability of information needed for
    discharge plans.
        Reason for Change. The Committee has received reports of
    beneficiaries being discharged to non-Medicare skilled nursing
    facilities or beds. This provision is intended to assure that
    beneficiaries are given information during discharge planning
    about Medicare participating facilities. Thus, this provision
    would ensure that beneficiaries who need post acute care are
    notified about the availability of Medicare participating
    skilled nursing facilities in the area.

                       D. Title IV--Appeals and Recovery

    Section 401. Transfer of Responsibility for Medicare Appeals

        Current Law. Medicare beneficiaries and, in certain
    circumstances, providers and suppliers of health care services
    may appeal claims that are denied or payments that are reduced.
    Section 1869 of the Social Security Act, which covers the
    Medicare claims appeals process, was amended by BIPA in its
    entirety, but the BIPA provisions are not yet effective.
    Generally, parties who have been denied coverage of an item or
    service have the right to appeal that decision through a series
    of administrative appeals and then into federal district court
    if the amounts of disputed claims in question meet certain
    thresholds at each step of the appeals process. A hearing by an
    administrative law judge (ALJ) in the Social Security
    Administration (SSA) with review by the Department Appeals
    Board (DAB) is a component of the administrative appeals
    process.
        Explanation of Provision. By October 1, 2004, the
    Commissioner of SSA and the Secretary would develop a plan to
    transfer the functions of the administrative law judges (ALJs)
    who are responsible for hearing Medicare and Medicare related
    cases from SSA to HHS. The plan would be transmitted to
    Congress and GAO no later than October 1, 2004. The GAO would
    evaluate the plan and submit a report to Congress within six
    months. The Secretary and the Commissioner of SSA would
    implement the transition plan and transfer the ALJ functions no
    earlier than July 1, 2005 and no later than October 1, 2005.
    The Secretary would (1) assure the ALJ's independence from the
    Centers of Medicare and Medicaid Services (CMS) by placing the
    ALJs in an administrative office that is organizationally and
    functionally separate from CMS; and (2) locate the ALJs with an
    appropriate geographic distribution to ensure access. Subject
    to appropriations, the Secretary would be permitted to hire
    ALJs and support staff with priority given to ALJs with
    experience in handling Medicare appeals. Amounts previously
    paid to SSA for the ALJs performing the ALJ functions would be
    payable to the Secretary for the transferred functions. The
    Secretary would be permitted to enter into arrangements with
    SSA to share office space, support staff, and other resources
    with appropriate reimbursement from the Medicare trust funds.
    Increased appropriations would be permitted to increase the
    number of ALJs and support staff; improve education and
    training for ALJs and their staff; and increase DAB staff.
        Effective Date. Upon enactment.
        Reason for Change. The Office of Inspector General has
    identified moving the functions of the Medicare Administrative
    Law Judges to the Department of Health and Human Services as an
    important priority in improving the appeals system. This
    provision makes that transition and increases the emphasis on
    providing training Administrative Law Judges and their staffs
    to increase their expertise in Medicare's rules and
    regulations. The SSA Commissioner and the Secretary are
    instructed to work together on the transition plans in order to
    assure that the transition does not adversely affect the SSA
    ALJ appeals system. The Committee objects to recent proposals
    to locate the ALJs in CMS.
        The transition plan shall include information on the
    following:
               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;
               Cost Projections--Funding levels required
            for fiscal year 2004 and subsequent fiscal years under
            this subsection to hear such cases in a timely manner;
               Transition Timetable--A timetable for the
            transition;
               Regulations--The establishment of specific
            regulations to govern the appeals process;
               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;
               Feasibility of Precedential Authority--The
            feasibility of developing a process to give binding,
            precedential authority to decisions of the Departmental
            Appeals Board in the Department of Health and Human
            Services that address broad legal issues; and
               Access to Administrative Law Judges--The
            feasibility of filing appeals with administrative law
            judges electronically, and the feasibility of
            conducting hearings using tele- or video-conference
            technologies.

    Section 402. Process for Expedited Access to Judicial Review

    (a) In General

        Current Law. Section 521 of BIPA (which is not yet
    implemented) amends Section 1869 to establish deadlines for
    filing appeals and for making decisions in the Medicare appeals
    process. Generally, an initial determination is to be completed
    no later than 45 days from the date a claim for benefits is
    received; an individual dissatisfied with an initial
    determination is entitled to a redetermination by a carrier or
    fiscal intermediary if requested within 120 days of the
    determination date. The redetermination is to be completed no
    later than 30 days from the request date. The Secretary may
    reopen or revise any initial determination or reconsidered
    determination under guidelines established by regulation.
        An individual dissatisfied with the redetermination is
    entitled to reconsideration by a qualified independent
    contractor (QIC) if the request is initiated within 180 days of
    the notice of the adverse redetermination. With certain
    exceptions, a QIC reconsideration decision is to be completed
    within 30 days from the date a timely request has been filed.
    After a QIC's reconsideration, if the remaining contested
    amount is greater than $100, an individual is entitled to a
    hearing by an administrative law judge and then a review by the
    DAB. Both the ALJ hearing and the DAB review are to be
    completed within 90 days of a timely filed request for such an
    action.
        If the dispute is not satisfactorily resolved and the
    contested amounts are greater than $1,000, the individual is
    entitled to judicial review of the decision. Under certain
    circumstances, a beneficiary is entitled to an expedited
    determination with accelerated deadlines. BIPA also provides
    for an expedited hearing under Section 1869, where the moving
    party alleges that no material issues of fact are in dispute;
    the Secretary makes an expedited determination as to whether
    any such facts are in dispute and, if not, renders a decision
    expeditiously.
        Explanation of Provision. The Secretary would establish an
    appeals process for a provider, supplier, or beneficiary that
    permits access to judicial review when a review panel
    determines that no entity in the administrative appeals process
    has authority to decide the question of law or regulation in
    controversy and where material facts are not in dispute. The
    appellant would be able to make such request only once with
    respect to a question of law or regulation for a specific
    dispute. If the appellant requests this determination and
    submits appropriate supporting documentation, the review panel
    would make this determination in writing no later than 60 days
    after receiving the request. A review panel would consist of a
    panel of three members who are ALJs, members of the DAB, or
    qualified individuals associated with a QIC or other
    independent entity designated by the Secretary to make these
    determinations. The determination by the review panel would be
    considered a final decision and not subject to review by the
    Secretary. Given such a determination or a failure to make the
    determination within the 60-day deadline, the appellant would
    be able to request judicial review before a civil court. The
    filing deadline for this civil action would be within 60 days
    of the determination or within 60 days of the end of the
    deadline to make such determination. The venue for judicial
    review would be the U.S. District Court where the appellant is
    located, or where the greatest number of appellants are
    located, or in the district court for the District of Columbia.
    The amount in controversy would be subject to annual interest
    beginning on the first day of the first month beginning after
    the 60-day deadline for filing. Interest would be equal to the
    rate of interest on obligations issued for purchase by the
    Medicare trust funds effective for the month that the civil
    action is authorized to commence. The interest payments would
    not be deemed to be Medicare reimbursement.
        Effective Date. See section (c).

    (b) Application to Provider Agreement Determinations

        Current Law. Section 1866(h) of the Social Security Act
    provides for a hearing and for judicial review of that hearing
    for any institution or agency dissatisfied with a determination
    that it is not a provider (or that it can no longer be a
    provider).
        Explanation of Provision. An agency or institution's appeal
    concerning program participation under Section 1866 would have
    access to expedited judicial review under Section 1869
    provisions. This provision would not be construed to affect
    remedies applied to assure quality of care in skilled nursing
    facilities (under Section 1819) while such appeals are pending.

    (c) Effective Date

        Explanation of Provision. Amendments in the section would
    apply to appeals filed on or after October 1, 2004.
        Reason for Change. The provisions in 402 (a-c) on expedited
    access to judicial review ensure that if a review board
    certifies that there are no material facts in dispute and that
    the appeals process does not have authority to resolve the
    question at issue, the provider, supplier, or beneficiary may
    take their case to court in an expedited manner. This will
    facilitate more prompt resolution of challenges to the
    underlying validity of CMS regulations and determinations. To
    the extent that any part of an appeal poses a factual dispute
    that is being adjudicated before an administrative tribunal,
    this provision would not authorize the severance of the legal
    issues from the underlying factual dispute.

    (d) Expedited Review of Certain Provider Agreement Determinations

        Current Law. No provision.
        Explanation of Provision. The Secretary would develop and
    implement a process under 1866(h) to expedite provider
    agreement determinations including those instances where
    participation is terminated or other sanctions (including
    denials of new admissions or appointment of temporary
    management) against skilled nursing facilities have been
    imposed. Priority would be given to termination of provider
    agreements. Increased appropriations from the Medicare trust
    funds in FY2005 and subsequently would be authorized in order
    to (1) reduce the average time for administrative
    determinations on provider participation appeals by 50 percent;
    (2) increase the number of ALJs and their staff; and (3)
    educate the ALJs and their staff on long term care issues.
        Effective Date. Upon enactment.
        Reason for Change. Given the disruption to beneficiaries if
    a facility is closed, this provides for an expedited appeal
    concerning a termination from Medicare.

    (e) Process for Reinstatement of Approval of Certain Skilled Nursing
            Programs

        Current Law. Civil Monetary Penalties (CMPs) can be applied
    when a nursing home is out of compliance with the standards of
    care. The facility is out of compliance when it has one or more
    deficiencies that subject a resident to at least the potential
    for more than minimal harm. The CMPs can also be applied
    retroactively to the date of initial non-compliance. The CMPs
    can also be applied when a facility is currently in compliance
    but was not in compliance at one point in the past. The GAO
    stated in March of 1999 that Congress established the CMPs to
    create a strong incentive for facilities to maintain compliance
    with federal standards.
        Nurse aides render most of the daily care furnished to a
    nursing home resident and about 60 percent of all nursing care.
    Nurse aides must have 75 hours of training with 16 hours in
    clinical training. Nursing homes that wish to sponsor a
    training program must obtain state approval. All states
    periodically review and recertify the approved nurse aide
    training programs. According to the Office of the Inspector
    General, inadequate levels of staffing are one of the major
    problems with nursing homes. In particular, more nurse aide
    staffing can address problems, such as poor hygiene.
        The law requires suspension of the nurse aide training
    program if the facility has been assessed a civil monetary
    penalty of not less than $5,000. The suspension of the training
    program is also secondary to the CMPs, to the extent that
    during an appeal of the CMPs, the nurse aide training program
    can continue over the 2 to 3 years required to complete the
    appeal.
        Explanation of Provision. The Secretary is required to
    develop a process for the reinstatement of the nurse aide
    program before the end of the mandatory 2-year suspension for
    those facilities that have corrected any deficiencies. The
    Secretary must certify, in coordination with the state and
    after public notice and comment by beneficiaries and their
    advocacy groups, that the facility is in compliance and has
    remedied any deficiencies. An exception already exists for
    facilities in rural areas without any nearby nursing
    facilities, which allows them to have their aides trained in
    the facility by outside nurses.
        Effective Date. Upon enactment.
        Reason for Change. This penalty is applied automatically in
    conjunction with CMPs with no Secretarial discretion. This
    provision provides much needed Secretarial discretion so that
    the Secretary can impose CMPs but permit nurse training to
    resume if deficiencies have been corrected and the facility is
    back in compliance. Under the current law, the suspension can
    be wholly unrelated to any quality problems or any problems
    with the training program. The link between any actual problem
    and the suspension of the training program is weak because this
    penalty is suspended during the 2 to 3 year process of the
    appeal of a CMP. There appears to be no direct evidence from
    OIG or GAO studies that this penalty is critical to enforcement
    rather it is the CMPs that are the key. Indeed, this penalty is
    so severe that it may deter the use of CMPs. While immediate
    correction of any deficiencies is required by CMS after a
    survey, the review process will encourage continued compliance,
    which has been a significant problem with nursing homes.

    Section 403. Revisions to Medicare Appeals Process

    (a) Requiring Full and Early Presentation of Evidence

        Current Law. No provision.
        Explanation of Provision. A provider or supplier would not
    be able to introduce evidence that was not presented at
    reconsideration conducted by the QIC unless a good cause
    precluded its introduction at or before that reconsideration.
        Effective Date. On or before October 1, 2004.
        Reason for Change. The Office of Inspector General
    identified this change as a priority to promote more
    expeditious resolution of appeals of denied claims. This
    provision requires prompt introduction of evidence relevant to
    a provider appeal. When deciding whether there is good cause to
    introduce new evidence, the adjudicator should ensure, after
    consideration of the totality of the circumstances, that
    disallowing the introduction of such new evidence would
    unfairly prejudice the case. The totality of the circumstances
    may include, but is not limited to, the following: evidence is
    not yet available; the appellant was not represented at a lower
    level of appeal; the appellant was not aware of her rights; or
    the appellant did not understand the proceeding.

    (b) Use of Patients' Medical Records

        Current Law. BIPA established QIC reconsiderations as part
    of the Medicare's administrative review process. To reconsider
    whether a service is reasonable and necessary, a QIC will
    employ panel of physicians or other appropriate health care
    professionals to review the facts and the circumstances of the
    initial determination. The QIC reconsideration is to be based
    on applicable information, including clinical experience, and
    medical, technical, and scientific evidence.
        Explanation of Provision. Medical records of the individual
    involved in the appeal would be included as part of the
    applicable information used by QICs in their reconsideration
    process.
        Effective Date. Upon enactment.
        Reason for Change. In the determination of whether an item
    or service is reasonable and necessary for an individual, a
    beneficiary's medical records should be considered with other
    relevant information.

    (c) Notice Requirements for Medicare Appeals

        Current Law. Section 521 of BIPA (which is not yet
    implemented) amends Section 1869 appeals process in its
    entirety, but did not establish specific notice requirements
    for each part of the Medicare appeals process.
        Explanation of Provision. The provisions would establish
    that a written notice of an initial determination associated
    with a claims denial be provided. The notice would include: (1)
    the reason for the denial and, upon request, the specific
    policy, manual or regulation used to make the decision; (2) the
    procedures for obtaining additional information concerning the
    determination; and (3) notification of appeal rights and
    associated instructions.
        The provisions would amend the existing requirement that a
    reconsideration decision be written and establish that the
    decision would have to be provided in printed form and written
    in a manner that could be understood by the beneficiary; the
    notice would include: as appropriate, a summary of the clinical
    or scientific evidence used to make the decision; upon request,
    the policy manual or regulation used to make the decision; and
    a detailed explanation of the decision to the extent
    appropriate. The requirement that the reconsideration decision
    include a notice of appeal rights and relevant instructions
    would also be established.
        Comparable requirements would be extended to ALJ decisions.
    These decisions would have to be written in an understandable
    manner and include the specific reasons for the decision, an
    appropriate summary of the evidence, the procedures for
    obtaining additional information about the decision, and a
    notification of appeal rights and instructions.
        The current requirements that a QIC prepare documentation
    and an explanation of the issues for an appeal to an ALJ would
    be modified: a QIC would be required to submit the information
    required in an appeal of a Medicare contractor's decision to
    the ALJ.
        Effective Date. Upon enactment.
        Reason for Change. Currently, Medicare only provides
    beneficiaries with a brief statement about the initial
    determination of her claim on the Medicare Summary Notice. This
    provision provides additional information to beneficiaries (or
    providers who appeal on their behalf) about Medicare's denial
    of their claim for benefits; the reasons for the denial, and
    the rights to further appeal so that beneficiaries can have a
    clear and concise understanding of decisions affecting their
    medical care.

    (d) Qualified Independent Contractors

        Current Law. BIPA established Qualified Independent
    Contractor (QIC) reconsiderations as part of Medicare's
    administrative review process. A QIC is an entity or
    organization that is independent of any organization under
    contract with the Secretary that makes initial determinations
    and that meets the established requirements for sufficient
    training and expertise in medical science and legal matters to
    make such reconsiderations. QIC reviews include consideration
    of the facts and circumstances by a panel of physicians or
    appropriate health professionals. No physician or health care
    professional employed by a QIC may review determinations
    regarding services provided to a patient, if directly
    responsible for furnishing the services to that patient. Review
    of home health care services is also prohibited by physicians
    and other professionals who have a significant direct or
    indirect financial interest in the agency or institution
    providing the care. This prohibition extends to physicians and
    professionals who have family members with such significant
    financial interests.
        Explanation of Provision. To qualify as a QIC, an entity
    would be required to have sufficient medical, legal and other
    expertise, including knowledge of the Medicare program as well
    as sufficient professional qualifications, independence and
    staffing to make reconsideration decisions. A QIC would be
    required to assure that reviewers meet qualification and
    compensation requirements. If a reconsideration request
    indicates that a physician furnished the item or service, a
    reviewing professional should be a physician. Entities and
    their professional reviewers would have to meet independence
    requirements and may not: (1) be a related party; (2) have a
    material familial, financial, or professional relationships
    with a related party; or (3) have a conflict of interest with
    respect to a related party. QIC's compensation would not be
    contingent on any decision by the QIC or by any reviewing
    professional. A reviewer's compensation would not be contingent
    on any decision rendered by the reviewer. In this context, a
    related party to a Medicare case involving an individual
    beneficiary is (1) the Secretary, the Medicare administrative
    contractor involved, any fiduciary, officer, director or
    employee of HHS or such Medicare contractor; (2) the individual
    or authorized representative; (3) the health professional,
    institution or entity that provides or manufactures the item or
    service involved in the case; and (4) any other party with
    substantial interest in the case, as defined by regulation.
        Individuals affiliated with a fiscal intermediary, carrier
    or other contractor would be able to act as a QIC reviewer if
    (1) a individual is not involved with the provision of the item
    or service of the case; (2) individual is not an employee of
    the Medicare contractor and does not provide services
    exclusively or primarily to or on behalf of the contractor; and
    (3) the fact of the relationship is disclosed to the Secretary
    and the Medicare beneficiary or authorized representative who
    do not object. Individuals with staff privileges at the
    institution where treatment occurs would be able to serve as a
    reviewer if the affiliation is disclosed and there is no
    objection. Each reviewing professional shall be a allopathic or
    osteopathic physician or health care professional who is
    legally authorized to furnish items and services that are the
    subject of review in one or more states; and has medical
    expertise in the appropriate field for the case.
        The provision would reduce the minimum number of QICs from
    twelve to a sufficient number, not fewer than four, to conduct
    reconsiderations consistent with established time frames for
    appeals.
        Effective Date. As if included in BIPA.
        Reason for Change. The BIPA 2000 law laid out broad
    provisions for revision of the Medicare appeals process. These
    provisions strengthen the appeals process by enhancing the
    criteria related to the independence and expertise of the
    reviewers and review entities.

    Section 404. Prepayment Review

        Current Law. No provision.
        Explanation of Provision. Medicare administrative
    contractors would be able to conduct random prepayment reviews
    in order to develop contractor-wide or program-wide claims
    payment error rates or under additional circumstances as
    established by regulations that are developed in consultation
    with providers and suppliers. Medicare administrative
    contractors would be permitted to conduct random prepayment
    reviews in accordance with a standard protocol developed by the
    Secretary. The Secretary would not be able to initiate non-
    random prepayment review based on the initial identification by
    a provider or supplier of an improper billing practice unless
    there is a likelihood of sustained or high level of payment
    error. The Secretary would be required to 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 reviews. No provision would
    prevent the denial of payment for claims actually reviewed
    under random prepayment review. These provisions would be
    applied to fiscal intermediaries and carriers.
        Effective Date. No later than one year from enactment. The
    Secretary would be required to issue regulations before that
    deadline; the random prepayment review protocols would apply to
    reviews after a date specified by the Secretary (but no later
    than one year from enactment.)
        Reason for Change. These provisions build greater
    consistency and predictability into Medicare's rules for
    prepayment review, while protecting program integrity.

    Section 405. Recovery of Overpayments

        Current Law. No provision with respect to repayment plans.
    Section 1833(j) of the Social Security Act provides that
    interest accrues on underpayments or overpayments starting
    within 30 days of the date of the final determination of the
    accurate payment amount.
        Explanation of Provision. Subject to certain
    qualifications, in circumstances where refund of an overpayment
    within 30 days would constitute a hardship, providers and
    suppliers on request would be allowed to repay the overpayment
    amount (by offset or otherwise) over a period of at least six
    months up to three years when their obligation exceeds a ten
    percent threshold of their annual payments from Medicare. The
    Secretary would be able to establish a repayment period of up
    to five years in cases of extreme hardship. Interest would
    accrue on the balance through the repayment period. The
    Secretary would be required to establish a process under which
    newly-participating providers and suppliers could qualify for a
    repayment plan under this hardship provision. Previous
    overpayment amounts already included in an ongoing repayment
    plans would not be included in the calculation of the hardship
    threshold. The Secretary would be allowed to seek immediate
    collection if payments are not made as scheduled. Exceptions to
    this provision would be permitted in cases where the Secretary
    has reason to suspect that bankruptcy may be declared or that
    the provider or supplier may otherwise cease to do business or
    discontinue participating in the Medicare program. This
    subparagraph shall not apply if the Secretary has reason to
    suspect that false claims, fraud or abuse have been committed
    against the program. This provision would not affect the
    application of existing no-fault provisions which preclude
    recovery under certain circumstances where incorrect payment
    has been made to an individual who is without fault or where
    the recovery would decrease payments to another person who is
    without fault.
        Upon enactment, the Secretary would not be able to initiate
    any recovery action if the provider or supplier has sought a
    reconsideration of the Medicare overpayment by a qualified
    independent contractor (QIC) until the date of the
    reconsideration decision. If QIC's are not yet in place, the
    recovery would not be initiated until the date of a
    redetermination decision by a fiscal intermediary or a carrier.
    If monies have been offset or repaid, the Secretary would
    return those amounts plus applicable interest if the original
    overpayment determination is reversed. If such an overpayment
    determination is upheld, interest would accrue beginning on the
    date of the original overpayment notice; the interest amount
    would be the rate otherwise applicable for Medicare
    overpayments.
        Not later than one year after enactment, a Medicare
    contractor would not be able to use extrapolation to make
    overpayment determinations initiated after the date of
    enactment, unless, as determined by the Secretary, a sustained
    or high level of payment error exists or a documented
    educational intervention did not correct the payment error.
        Where providers and suppliers have previously been
    overpaid, Medicare contractors would be able to require
    periodic production of records or supporting documentation for
    a limited sample of submitted claims to ensure that a previous
    practice has been discontinued.
        The Secretary would be able to use a consent settlement to
    resolve a projected overpayment. Before entering into any
    consent settlements after the date of enactment, the Secretary
    would be required to communicate to a provider or supplier that
    based on a preliminary evaluation of a medical records review,
    an overpayment may exist; the nature of the identified
    problems; and the necessary steps to address the problem. The
    Secretary would provide 45-days where additional information
    may be submitted concerning the claims for which the medical
    records have been reviewed. After considering the additional
    information, the Secretary would provide notice and explanation
    of any remaining overpayment determination and would offer the
    opportunity for a statistically valid random sample (which
    would not waive appeal rights) or a consent settlement (based
    on a smaller sample with a waiver of appeal rights) to resolve
    the overpayment amounts.
        Not later than one year after enactment, the Secretary
    would be required to establish, in consultation with health
    care associations, a process where classes of providers and
    suppliers are notified that their Medicare contractor has
    identified specific billing codes that may be over-utilized.
        For audits initiated after enactment, Medicare contractors
    would be required to provide a written notice (which may be in
    electronic form) of the intent to conduct a post-payment audit
    to those selected as audit candidates. Medicare contractors
    would be required to provide those who have been audited a full
    review and understandable explanation of the findings that: (1)
    permits the development of an appropriate corrective action
    plan; (2) provides information on appeal rights as well as
    consent settlements (which are at the discretion of the
    Secretary); and (3) provides for an opportunity to supply
    additional information to the contractor. Medicare contractors
    would be required to take into account the information provided
    on a timely basis. The provisions requiring notice of audit and
    findings would not apply if pending law enforcement activities
    would be compromised or findings of law enforcement-related
    audits would be revealed.
        Not later than one year after enactment, the Secretary
    would be required to establish a standard methodology for
    Medicare contractors to use in selecting a claims sample for a
    review of abnormal billing patterns.
        These provisions would apply to Medicare administrative
    contractors including fiscal intermediaries and carriers as
    well as those eligible entities with MIP contracts. These
    provisions do not apply to actions taken by the Department of
    Justice.
        Effective Date. Upon enactment.
        Reason for Change. These provisions build greater
    consistency and predictability into Medicare's rules for
    recovery of overpayments, while protecting program integrity.

    Section 406. Provider Enrollment Process; Right of Appeal

        Current Law. Providers and, to some extent suppliers, have
    access to certain appeal mechanisms if their application to
    participate in Medicare is denied or terminated. Section
    1866(h) of the Social Security Act provides for a hearing and
    for judicial review of that hearing for any institution or
    agency dissatisfied with a determination that it is not a
    provider (or that it can no longer be a provider). There is no
    statutory provision extending such judicial appeal rights to
    suppliers. Sections 1128(a) and (b) of the Act provide for the
    exclusion of certain individuals or entities because of the
    conviction of crimes related to their participation in
    Medicare; Section 1128(f) provides for hearing and judicial
    review for exclusions. In 1999, the Health Care Financing
    Administration (HCFA--now the Centers for Medicare and Medicaid
    Services or CMS) published a proposed regulation that would
    revise existing Medicare Part B administrative appeals
    procedures and extend them to all suppliers not currently
    covered.
        Explanation of Provision. The Secretary would be required
    to (1) establish by regulation an enrollment process for
    providers and suppliers which would include deadlines for
    actions on enrollment applications within six months of
    enactment; (2) monitor the performance of Medicare
    administrative contractors in meeting the deadlines: (3)
    consult with providers and suppliers in making changes to the
    enrollment forms made on or after January 1, 2004. In
    establishing an enrollment process for providers and suppliers,
    the Secretary would build upon existing Medicare practice.
        Providers and suppliers whose application to enroll or
    reenroll has been denied and who are dissatisfied with the
    determination would be entitled to a hearing and judicial
    review of the determination under the procedures that currently
    apply to providers. This provision would apply to denials after
    a date specified by the Secretary which could not be later than
    one year from enactment.
        Effective Date. Upon enactment.
        Reason for Change. This provision gives providers and
    suppliers an opportunity to appeal denials of their
    applications to participate in the Medicare program.

    Section 407. Process for Correction of Minor Errors and Omissions
            Without Pursuing Appeals Process

        Current Law. No provision.
        Explanation of Provision. The Secretary would be required
    to develop, in consultation with appropriate Medicare
    contractors and health care associations, a process where minor
    claims errors and omissions can be corrected and resubmitted
    without appealing the claims denial. In addition, a hospital
    may submit corrected or supplemented data for applications
    under 1886(d)(10)(C)(i)(II).
        Effective Date. Upon enactment.
        Reason for Change. Many of the providers and suppliers who
    testified before the Subcommittee or contacted members directly
    emphasized the need to create a process in which they could
    correct claims or other forms that were denied because they
    were incomplete or contained minor errors without having to
    pursue a formal appeal. This provision instructs the Secretary
    to create such a process, which will alleviate pressure on the
    appeals system. The Committee would be concerned, however, if
    this process were to become an incentive for providers to
    knowingly or negligently submit incomplete information.
        The Committee intends that the process for correction of
    minor errors and omissions on claims cover both the submission
    of prepayment and post-payment review claims. For example, if
    in the case of a home health claim, the physician has signed
    the plan of care and/or physician's order but has not dated it,
    the claim shall be returned to the home health agency and may
    be resubmitted by the home health agency with any incomplete or
    missing information without having to appeal the claim. At the
    same time, past errors and omission in the data as part of
    applications under 1886(d)(10)(C)(i)(II) should not prevent a
    reexamination of the data in the normal application process
    given the significant financial consequences for any individual
    hospital.

    Section 408. Prior Determination Process for Certain Items and
            Services; Advance Beneficiary Notices

        Current Law. Medicare law prohibits payment for items and
    services that are not medically reasonable and necessary for
    the diagnosis or treatment of an illness or an injury. Under
    certain circumstances, however, Medicare will pay for non-
    covered services that have been provided if both the
    beneficiary and the provider of the services did not know and
    could not have reasonably been expected to know that Medicare
    payment would not be made for these services.
        However, in most circumstances either the beneficiary or
    the provider will be liable in the event that Medicare does not
    cover an item or service. There are detailed rules on
    beneficiary and provider liability in the statute. A provider
    may be held liable for providing uncovered services, if, for
    example, specific requirements are published by the Medicare
    contractor or the provider has received a denial or reduction
    of payment on the same or similar service. In cases where the
    provider believes that the service may not be covered as
    reasonable and necessary, the provider may limit his liability
    by providing an acceptable advance notice of Medicare's
    possible denial of payment to the patient. The notice must be
    given in writing, in advance of providing the service; include
    the patient's name, date and description of service as well as
    reasons why the service would not be covered; and must be
    signed and dated by the patient to indicate that the
    beneficiary will assume financial liability for the service if
    Medicare payment is denied or reduced. Currently, when there is
    a question about coverage, there is no way for a beneficiary or
    provider to find out in advance whether or not Medicare will
    cover that item or service for that particular beneficiary.
        Explanation of Provision. The Secretary would be required
    to establish a process through regulation where physicians and
    beneficiaries can establish whether Medicare covers certain
    items and services before such services are provided. An
    eligible requestor would be either a physician or a Medicare
    beneficiary who receives an advance beneficiary notice (ABN)
    from a physician. Eligible items and services for review are
    those physicians' services under 1848(f)(4)(A) for which a
    physician may be paid directly. The provisions would establish:
    (1) such prior determinations would be binding on the Medicare
    contractor, absent fraud or misrepresentation of facts; (2) the
    right to redetermination in the case of a denial; (3) the
    applicability of existing deadlines with respect to those
    redeterminations; (4) contractors' prior determinations (and
    redeterminations) are not subject to further administrative or
    judicial review; and (5) an individual retains all rights to
    usual administrative or judicial review after receiving the
    service or receiving a determination that a service would not
    be covered. This section also requires that whenever a
    physician requests a pre-service determination (or
    redetermination), beneficiaries must still receive notices that
    include information explaining the beneficiary's right to
    receive the service and request access to the appeals process
    under section 1869. The calculation of the sustainable growth
    rate for physician updates is modified so that the increase in
    utilization from this provision is included. These provisions
    would not affect a Medicare beneficiary's rights in any future
    appeal or judicial action. The Secretary must establish the
    process to allow for the processing of such requests beginning
    18 months after enactment. The Secretary would be required to
    collect data on the advance determinations and to establish a
    beneficiary and provider outreach and education program. GAO is
    required to report on the use of the advance beneficiary notice
    and prior determination process within 18 months of its
    implementation.
        Effective Date. Upon enactment.
        Reason for Change. The Committee believes that when there
    is a question of whether Medicare will cover certain care for a
    beneficiary, the beneficiary should have the right to find out
    what will be covered before getting the service and risking
    financial liability. Doctors also should be able to make such a
    request on behalf of a particular patient. This provision is
    particularly important for seniors and disabled individuals who
    tend to be risk adverse and live on fixed incomes.

                      E. Title V--Miscellaneous Provisions

    Section 501. Policy Development Regarding Evaluation and Management
            (E&M) Documentation Guidelines

        Current Law. No provision.
        Explanation of Provision. The Secretary would not be
    permitted to implement any new documentation guidelines on or
    after enactment for evaluation and management (E&M) physician
    services unless the guidelines (1) are developed in
    collaboration with practicing physicians (both generalists and
    specialists) after assessment by the physician community; (2)
    based on a plan with deadlines for improving use of E&M codes;
    (3) are developed after completion of the pilot projects to
    test modifications to the codes; (4) are found to meet the
    desired objectives; and (5) are preceded the establishment of
    an appropriate outreach and education of the physician
    community. The Secretary would make changes to existing E&M
    guidelines to reduce paperwork burdens on physicians. The
    Secretary would be required to modify E&M guidelines to: (1)
    identify clinically relevant documentation; (2) decrease non-
    clinically pertinent documentation; (3) increase the reviewers'
    accuracy; and (4) educate the physicians and the reviewers.
        The provisions would establish different pilot projects in
    specified settings that would be: (1) conducted on a voluntary
    basis in consultation with practicing physicians (both
    generalists and specialists); (2) be of sufficient length to
    educate physicians and contractors on E&M guidelines and (3)
    allow for an assessment of E&M guidelines and their use. A
    range of different projects would be established and include at
    least one project that (1) uses a physician peer review method;
    (2) uses an alternative method based on face-to-face encounter
    time with the patient; (3) is in a rural area; (4) is outside a
    rural area; and (5) involves physicians billing in a teaching
    setting and nonteaching setting. The projects would examine the
    effect of modified E&M guidelines on different types of
    physician practices in terms of the cost of compliance. Data
    collected under these projects would not be the basis for
    overpayment demands or post-payment audits. This protection
    would apply to claims filed as part of the project, would last
    the duration of the project, and would last for as long as the
    provider participated in the project. The Secretary, in
    consultation with practicing physicians including those in
    groups practices as well as generalists and specialists, would
    be required to evaluate the development of alternative E&M
    documentation systems with respect to administrative
    simplification requirements and report results of the study to
    Congress by October 1, 2005. The Medicare Payment Advisory
    Commission would conduct an analysis of the results of this
    study and submit a report to Congress.
        The Secretary would be required to conduct a study of the
    appropriate coding of extended office visits where no diagnosis
    is made and submit a report with recommendations to Congress no
    later than October 1, 2005.
        Effective Date. Upon enactment.
        Reason for Change. This provision is designed to promote
    greater consultation with practicing physicians with regard to
    the complicated evaluation and management and coding
    requirements governing Medicare payment for physician services.

    Section 502. Improvement in Oversight of Technology and Coverage

    (a) Council for Technology and Innovation

        Current Law. No provision.
        Explanation of Provision. The Secretary is required to
    establish a Council for Technology and Innovation within the
    Centers for Medicare and Medicaid Services (CMS). The council
    would be composed of senior CMS staff with an Executive
    Coordinator, who is designated or appointed by the Secretary
    and reports to the CMS administrator. The Chairperson would
    serve as a single point of contact for outside groups and
    entities regarding Medicare coverage, coding, and payment
    processes. The Council would coordinate Medicare's coverage,
    coding, and payment processes as well as information exchange
    with other entities with respect to new technologies and
    procedures, including drug therapies.
        Effective Date. Upon enactment.
        Reason for Change. CMS personnel responsible for coverage,
    coding and payment of medical innovation are often not well
    coordinated. This provision creates a focal point for
    technology and innovation within the Centers for Medicare and
    Medicaid Services by creating a Council to coordinate across
    the different Centers and Offices with responsibilities in this
    area. The Executive Coordinator also provides a single point of
    contact for outside groups, similar to recent initiatives
    launched by the Secretary for specific issues and types of
    providers.

    (b) Methods for Determining Payment Basis for New Lab Tests

        Current Law. Outpatient clinical diagnostic laboratory
    tests are paid on the basis of area wide fee schedules. The law
    establishes cap on the payment amounts that is currently set at
    74 percent of the median for all fee schedules for that test.
    The cap is set at 100 percent of the median for tests performed
    after January 1, 2001 that the Secretary determines are new
    tests for which no limitation amount has previously been
    established.
        Explanation of Provision. The Secretary would be required
    to establish procedures (by regulation) for determining the
    basis and amount of payments for new clinical diagnostic
    laboratory tests. New laboratory tests would be defined as
    those assigned a new Health Care Procedure Coding System
    (HCPCS) code on or after January 1, 2005. The Secretary, as
    part of this procedure, would be required to: (1) provide a
    list (on an Internet site or other appropriate venue) of tests
    for which payments are being established in that year; (2)
    publish a notice of a meeting in the Federal Register on the
    day the list becomes available; (3) hold the public meeting no
    earlier than 30 days after the notice to receive public
    comments and recommendations; (4) take into account the
    comments, recommendations and accompanying data in both
    proposed and final payment determinations. The Secretary would
    set forth the criteria for making these determinations; make
    public the available data considered in making such
    determinations; and could convene other public meetings as
    necessary.
        Effective Date. Upon enactment.
        Reason for Change. The Secretary of Health and Human
    Services is required to establish by regulation an open process
    for any clinical diagnostic laboratory test. Under the
    regulations, the Secretary shall develop criteria for use in
    determining whether a laboratory test should be established
    through gap-filling or cross-walking to an existing code. When
    existing services are not sufficient and gap filling must be
    used, the criteria shall explain the basis of the data, the
    collection of the data, and the methodology for computing the
    rate. It is the view of the Committee that, in these cases, it
    is not appropriate for carriers or the agency to substitute the
    payment amount of an alternative test for the gap-fill amount.
        The intent of Congress is to open the process to allow CMS
    to have access to information from beneficiaries, physicians,
    health care experts and laboratories. Using the information it
    receives through this new process, CMS shall develop and make
    available to the public the information used to arrive at a
    final determination. The information will include the rationale
    for each such determination, the data on which the
    determination is based, and responses to public comments.

    (c) Report on Improvements in External Data Collection for Use in the
            Medicare Inpatient System

        Current Law. No provision.
        Explanation of Provision. No later than October 1, 2004,
    the Comptroller would submit to Congress a study that analyzes
    the collection of external data for in computing data for
    inpatient hospital services. This should include a survey of
    data sources such as the Department of Labor, or U.S. or
    foreign sales information.
        Effective Date. Upon enactment.
        Reason for Change. The Committee is soliciting expert
    review from GAO on implications of flexible application of the
    Medicare conditions of participation for home health agencies.

    (d) Process for Adoption of ICD Codes as Data Standard

        Current Law. No provision.
        Explanation of Provision. The provision permits the
    Secretary to adopt the updated version of the ICD-10 procedure
    and classification codes if the National Committee on Vital and
    Health Statistics (NCVHS) has not made a recommendation to the
    Secretary with respect to the adoption of these codes.
        Effective Date. Upon enactment.
        Reason for Change. ICD-10 is more clinically accurate and
    specific than ICD-9 and has been adopted by every developed
    country in the world. The International Classification of
    Disease (ICD-9) coding system was adopted in 1979 and remains
    in effect for procedure and diagnosis coding in the hospital
    inpatient setting and for reporting diagnosis codes in the
    hospital outpatient departments and physician offices. The
    NCVHS began investigating adoption of an updated coding
    system--ICD-10--in 1990. As part of HIPAA in 1996, Congress
    required NCVHS to make a recommendation on adoption prior to
    Secretarial approval. To date, NCVHS still has not issued a
    recommendation.
        The current ICD-9 code system has run out of codes. As a
    result there are several distinct procedures performed in
    different parts of the body that have widely different resource
    utilization that are grouped together under the same procedure
    code. For example, code 99.29, Injection or infusion of other
    therapeutic or prophylactic substance, has been used to report
    a wide variety of procedures such as: an injection of
    epinephrine to cauterize a rectal ulcer, infusion of a narcotic
    into a pump for pain relief, insertion of an implant in the eye
    for slow release of an antiviral drug, and injection into the
    uterine artery to treat a fibroid. Such vagueness in coding
    hampers the program in detecting fraud and from knowing what
    services are being delivered to Medicare beneficiaries. Last
    year, CMS did find 100 unused codes under the eye and ear
    section of ICD-9, which is an imperfect albeit necessary
    solution given the lack of clinical coherence and potential
    confusion for coders. The timing of moving to ICD-10 is
    critical given that less than 75 codes remain and installation
    of the new procedure and diagnosis codes by hospitals will take
    at least 2 years. In the meantime, new initiatives for public
    health as well as bioterrorism are severely compromised by the
    lack of codes. For example, no code was available for the
    anthrax attack in 2001. Finally, the continued use of
    inappropriate and ill-defined codes in ICD-9 makes the program
    vulnerable to fraud and abuse. The specificity of ICD-10 will
    make it easier for coders to avoid mistakes and for the program
    to check for fraud.

    Section 503. Treatment of Hospitals for Certain Services Under the
            Medicare Secondary Payor (MSP) Provisions

        Current Law. In certain instances when a beneficiary has
    other insurance coverage, Medicare becomes the secondary
    insurance. Medicare Secondary Payor is the Medicare program's
    coordination of benefits with other insurers. Section
    1862(b)(6) of the Social Security Act requires an entity
    furnishing a Part B service to obtain information from the
    beneficiary on whether other insurance coverage is available.
        Explanation of Provision. The Secretary would not require a
    hospital or a critical access hospital to ask questions or
    obtain information relating to the Medicare secondary payor
    provisions in the case of reference laboratory services if the
    same requirements are not imposed upon those provided by an
    independent laboratory. Reference laboratory services would be
    those clinical laboratory diagnostic tests and interpretations
    of same that are furnished without a face-to-face encounter
    between the beneficiary and the hospital where the hospital
    submits a claim for the services.
        Effective Date. Upon enactment.
        Reason for Change. Hospitals would not have to directly
    contact each beneficiary on their retirement date, black lung
    status and other insurance information for reference laboratory
    services. While current law provisions for a claim containing
    valid insurance information are maintained, this provision is
    intended to reduce the amount of paperwork and regulatory
    burden related to the provision of these reference laboratory
    services by hospital-based entities.

    Section 504. EMTALA Improvements

        Current Law. Medicare requires participating hospitals that
    operate an emergency room to provide necessary screening and
    stabilization services to a patient in order to determine
    whether an emergency medical situation exist prior to asking
    about insurance status of the patient.
        Hospitals that are found to be in violation of EMTALA
    requirements may face civil monetary penalties and termination
    of their provider agreement. After a state investigation of an
    EMTALA complaint, the CMS Regional Office may ask their local
    peer review organization (PRO) to perform a 5-day review to
    obtain additional medical expertise. This review is
    discretionary. However, prior to imposing a civil monetary
    penalty, the Secretary is required to request that a PRO assess
    whether the involved beneficiary had an emergency condition
    that had not been stabilized and provide a report on its
    findings. Except in the case where a delay would jeopardize the
    health or safety of individuals, the Secretary provides 60-day
    period for the requested PRO review.
        Explanation of Provision. Emergency room services provided
    to screen and stabilize a Medicare beneficiary furnished after
    January 1, 2004, would be evaluated as reasonable and necessary
    on the basis of the information available to the treating
    physician or practitioner at the time the services were
    ordered; this would include the patient's presenting symptoms
    or complaint and not the patient's principal diagnosis. The
    Secretary would not be able to consider the frequency with
    which the item or service was provided to the patient before
    the time of admission or visit. The Secretary shall also not
    count the provision of the item or service during such an
    admission or visit when considering the frequency with which
    the item or service is furnished on subsequent occasions.
        The Secretary would be required to establish a procedure to
    notify hospitals and physicians when an EMTALA investigation is
    closed.
        Except in the case where a delay would jeopardize the
    health and safety of individuals, the Secretary would be
    required to request a PRO review before making a compliance
    determination that would terminate a hospital's Medicare
    participation because of EMTALA violation. The current period
    of review for the discretionary review--5 business days--would
    apply for such review. The Secretary shall provide a copy of
    the report on its findings to the hospital or physician,
    consistent with existing confidentiality requirements. This
    provision would apply to terminations initiated on or after
    enactment.
        Effective Date. Upon enactment.
        Reason for Change. Providers have reported that some
    Medicare contractors are looking at final diagnoses (not
    presenting symptoms) in applying local medical review policies
    (LMRPs) that match particular tests to particular diagnoses--if
    a test does not match a listed diagnosis, payment is denied.
    Other claims are reportedly being denied based on LMRPs that
    set frequency limits for certain tests--if the test's use in
    the emergency room exceeds a frequency limit, payment is
    denied. In its January 2001 report entitled ``The Emergency
    Medical Treatment and Labor Act: The Enforcement Process,'' the
    OIG recommended that CMS ensure that peer review occurs before
    a provider is terminated from the Medicare program for an
    EMTALA violation. This section implements that recommendation,
    making the current discretionary PRO review process mandatory
    in cases that involve a question of medical judgement.

    Section 505. Emergency Medical Treatment and Active Labor (EMTALA)
            Technical Advisory Group

        Current Law. No provision.
        Explanation of Provision. The Secretary would be required
    to establish a 19-member technical advisory group under
    specified requirements to review issues related to the
    Emergency Medical Treatment and Labor Act (EMTALA). The
    advisory group would include: the CMS Administrator; the OIG;
    four hospital representatives who have EMTALA experience,
    (including one person from a public hospital and two of whom
    have not experienced EMTALA violations) seven practicing
    physicians with EMTALA experience; two patient representatives;
    two regional CMS staff involved in EMTALA investigations; one
    representative from a State survey organization and one
    representative from a PRO. The Secretary would select qualified
    individuals who are nominated by organizations representing
    providers and patients.
        The advisory group would be required to: (1) elect a member
    to as chairperson; (2) schedule its first meeting at the
    direction of the Secretary and meet at least twice a year
    subsequently; and (3) terminate 30 months after the date of its
    first meeting. The advisory group would review EMTALA
    regulations; provide advice and recommendations to the
    Secretary; solicit public comments from interested parties; and
    disseminate information on the application of the EMTALA
    regulations.
        Effective Date. Upon enactment.
        Reason for Change. In its January 2001 report entitled
    ``The Emergency Medical Treatment and Labor Act: The
    Enforcement Process,'' the OIG recommended that CMS establish
    an EMTALA technical advisory group that includes all EMTALA
    stakeholders to help the agency resolve any emerging issues
    related to implementation of the law. Some of these current
    issues include specialists who refuse to service on call panels
    and inconsistencies between State and Federal law governing
    emergency medical services. In its June 2001 report entitled
    ``Emergency Care: EMTALA Implementations and Enforcement
    Issues,'' the GAO also concluded that the establishment of a
    technical advisory group could help CMS work with hospitals and
    physicians to achieve the goals of EMTALA and avoid creating
    unnecessary burdens for providers. This section implements the
    OIG recommendation, establishing a 19-member technical advisory
    group within HHS.

    Section 506. Authorizing Use of Arrangements To Provide Core Hospice
            Services in Certain Circumstances

        Current Law. Hospice programs are not permitted to use
    services provided under arrangement to deliver core hospice
    services. Under arrangement services are permitted for
    providers delivering Part A and Part B hospital services as
    well for skilled nursing services. However, the originating
    hospital or skilled nursing facility is required to bill for
    the service and be responsible for the quality of care
    delivered by the subcontractor.
        Explanation of Provision. Hospice programs may enter into
    arrangements with another certified hospice program to provide
    services. The provision for under arrangement services is
    limited to extraordinary or non-routine circumstances, such as
    unanticipated periods of staffing shortages. The originating
    hospice program continues to bear the legal responsibility for
    billing and maintaining quality of care.
        In addition, hospice programs may make arrangements for
    highly specialized services of a registered professional nurse
    for non-routine and infrequent services that would be
    impracticable and prohibitively expensive to provide directly.
        Effective Date. For hospice care provided after enactment.
        Reason for Change. Hospice programs would be allowed to use
    personnel from other hospice programs to provide services to
    hospice patients. The program is given the flexibility so that
    a hospice program could continue to serve a patient if he or
    she was temporarily out of the area due to travel. Otherwise,
    the provision of the care to the patient might be delayed by
    the paperwork and requirements in starting up a new service at
    another agency. The program is also given the flexibility to
    arrange for highly specialized services of a registered
    professional nurse for non-routine and infrequent services that
    the hospice cannot reasonably provide directly. It is the
    intent of Congress that the originating hospice maintains
    control over the billing and quality of care.

    Section 507. Application of OSHA Bloodborne Pathogens Standards to
            Certain Hospitals

        Current Law. Section 1866 establishes certain conditions of
    participation that providers must meet in order to participate
    in Medicare.
        Explanation of Provision. Public hospitals that are not
    otherwise subject to the Occupational Safety and Health Act of
    1970 would be required to comply with the Bloodborne Pathogens
    standard under section 1910.1030 of title 29 of the Code of
    Federal Regulations. A hospital that fails to comply with the
    requirement would be subject to a civil monetary penalty, but
    would not be terminated from participating in Medicare.
        Effective Date. Applies to hospitals as of July 1, 2004.
        Reason for Change. Last year, Congress enacted legislation
    that requires hospitals to utilize safe needles. However, that
    legislation only applies to non-government hospitals. Twenty-
    four states have similar requirements on public hospitals. This
    provision would protect the health and safety of health care
    workers in those facilities by requiring public hospitals in
    the other 26 states and the District of Columbia to comply with
    this important standard.

    Section 508. BIPA-Related Technical Amendments and Corrections

        Current Law. BIPA established an advisory process for
    national coverage determinations where panels of experts formed
    by advisory committees could forward their recommendations
    directly to the Secretary without prior approval of the
    advisory committee or the Executive Committee.
        Explanation of Provision. This provision makes technical
    corrections related to the Medicare Coverage Advisory Committee
    by transferring the provisions from Title 11 to Title 18 and by
    removing incorrect cross references to the establishment
    authority.
        Effective Date. As if included in BIPA.

    Section 509. Conforming Authority To Waive Program Exclusion

        Current Law. The Secretary is required to exclude
    individuals and entities from participation in Federal Health
    Programs who are (1) convicted of a criminal offense related to
    health care delivery under Medicare or under State health
    programs; (2) convicted of a criminal offense related to
    patient abuse or neglect under Federal or State law; (3)
    convicted of a felony relating to fraud, theft, or financial
    misconduct relating to a health care program financed or
    operated by the Federal, State or local government; or (4)
    convicted of a felony related to a controlled substance. At the
    request of a state, the Secretary is permitted to waive a
    program exclusion with respect to Medicare or Medicaid, but
    only for exclusions described in (1) above.
        Explanation of Provision. The Administrator of a Federal
    health program would be permitted to request a waiver of a
    program exclusion if the exclusion of a sole community
    physician or source of specialized services in a community
    would impose a hardship. This conforming change would extend
    the same waiver authority currently in Medicare and Medicaid to
    federal health programs. In addition, waivers could be
    requested for Medicare, Medicaid, and federal health programs
    with respect to all exclusions except those related to patient
    abuse or neglect.
        Effective Date. Upon enactment.
        Reason for Change. This technical correction was requested
    by the Office of Inspector General.

    Section 510. Treatment of Certain Dental Claims

        Current Law. Under current law, providers of services and
    suppliers submitting claims to Medicare must be enrolled in the
    Medicare program. However, certain services are specifically
    excluded from coverage under Medicare. Under current law, no
    payment may be made under part A or part B of the Medicare
    program for any services in connection with the care,
    treatment, filling, removal, or replacement of teeth or
    structures directly supporting teeth, except in the case of
    inpatient hospital services associated with the provision of
    these dental services if the individual's underlying medical
    condition and clinical status or the severity of the dental
    service require hospitalization.
        Explanation of Provision. This provision would prohibit
    group health plans from requiring a Medicare claims
    determination for dental benefits that are specifically
    excluded from Medicare coverage as a condition of making a
    determination for coverage under the group health plan. In so
    doing, this provision would ensure that dentists would not have
    to submit claims to the Medicare program (and thus enroll in
    the Medicare program) when the services they are providing are
    clearly those that are categorically excluded from coverage. In
    those cases that involve or appear to involve inpatient
    hospital services or dental services expressly covered by
    Medicare, a group health plan may require the claim to be first
    submitted to the Medicare program.
        Effective Date. Sixty days after enactment.
        Reason for Change. The Committee is concerned about private
    insurers requiring dentists to submit claims to Medicare for
    non-covered services before making a determination for coverage
    under the group health plan. Because of this requirement,
    dentists have been forced to enroll in the Medicare program to
    submit claims for services that are categorically excluded from
    Medicare coverage. Dentists view Medicare's enrollment
    application process as overly burdensome, particularly in light
    of the fact that most dental services are not covered by
    Medicare. This provision would alleviate the enrollment burden
    placed on dentists providing services clearly excluded from
    Medicare coverage, consistent with the overarching goal of this
    legislation to reduce regulatory burdens.

    Section 511. Furnishing Hospitals With Information To Compute DSH
            Formula

        Current Law. No provision.
        Explanation of Provision. The Secretary should furnish to
    hospitals the data necessary to compute the Medicaid days
    percentage on the Medicare cost report for the purposes of
    computing Medicare disproportionate share payments. It is the
    sense of this Committee that the Secretary has the flexibility
    to explore different models of dissemination of the data. For
    instance, in Arizona, the hospitals submit the data to the
    states for verification and the states forward it to the fiscal
    intermediaries.
        Effective Date. 1 year after enactment.
        Reason for Change. Hospitals have reported that it is
    difficult and expensive to verify their Medicaid days for use
    for Medicare inpatient payments. The Medicare program has
    experienced problems with improper payments being made due to
    the poor quality of the data.

    Section 512. Revisions to Reassignment Provisions

        Current Law. Medicare does not permit staffing companies
    that use independent contractors to enroll in Medicare and
    receive direct Medicare reimbursement for health care services
    rendered by independent contractor physicians. Physician
    staffing companies set up complicated payment arrangements to
    work around this limitation.
        Explanation of Provision. This provision would allow
    entities, such as staffing companies, to enroll in Medicare and
    to submit bills for services provided by a physician or other
    person, when the entity has an arrangement with the physician
    or other person that includes joint and several liability for
    overpayment, and meets other program integrity safeguards as
    the Secretary determines appropriate.
        Effective Date. Applies to payments made on or after one
    year after enactment.
        Reason for Change. In a March 2003 report, GAO recommended
    that Congress enact legislation permitting the reassignment of
    benefits to staffing companies that retain contractor
    physicians, and requiring these companies to seek enrollment in
    Medicare. GAO argued that this change would enhance program
    integrity by allowing claims monitoring.

    Section 513. Specialized Medicare+Choice Plans for Special Needs
            Beneficiaries

        Current Law. Under current law, Medicare+Choice (M+C)
    programs are required to enroll all beneficiaries, regardless
    of their health status, and cannot exclusively enroll or
    specialize in care for frail elderly beneficiaries. Such
    requirements are intended to prevent health plans from
    enrolling only the healthy and avoiding the sick. Specialized
    plans are designed to provide coverage to the frailest
    beneficiaries, and are not designed to provide coverage to the
    entire Medicare population. One model for providing a
    specialized Medicare+Choice plan, Evercare, operates as a
    demonstration program, which is set to expire in December 2003.
        Explanation of Provision. This provision would allow
    specialized plans for special needs beneficiaries (such as the
    Evercare demonstration) to become any type of M+C coordinated
    care plan and to limit enrollment to special needs
    beneficiaries. Special needs beneficiaries would be defined as
    those M+C eligible individuals who are institutionalized,
    entitled to Medicaid, or meet requirements determined by the
    Secretary. Enrollment in specialized M+C plans could be limited
    to special needs beneficiaries until January 1, 2008. The
    Secretary would be required to report to Congress by December
    31, 2006 providing an assessment of the impact of these plans.
    The Secretary would be required to issue final regulations
    establishing requirements for special needs beneficiaries
    within 6 months after enactment of this legislation.
        Effective Date. Upon enactment.
        Reason for Change. This provision is needed to allow
    specialized plans for special needs beneficiaries to continue
    to operate under the Medicare program after a demonstration
    ends, by allowing these plans to limit enrollment to
    beneficiaries with special needs. This model of care is based
    on resource-intensive hands-on care coordination that is best
    suited for frail elderly beneficiaries. Allowing specialized
    plans to become any type of M+C coordinated care plan would
    enhance plan and beneficiary flexibility.

    Section 514. Temporary Suspension of OASIS for Non-Medicare and Non-
            Medicaid Patients During Study and Regulatory Period

        Current Law. The Conditions of Participation require
    collection of OASIS data for all patients but the data for non-
    Medicare and Non-Medicaid patients are not transmitted for use
    in any Federal data analysis. Medicare and Medicaid data are
    currently used by CMS as part of the quality measurement
    program.
        Explanation of Provision. CMS would be required to analyze
    how these data could be used in quality measurement or for
    other assessments. After the report, CMS must go through
    rulemaking to propose and finalize how these data for
    individuals who are not insured through a public program are to
    be used. The collection of the data by home health agencies on
    other than a voluntary basis (except where it conflicts with
    state law) is suspended until 60 days after publication of the
    final rule.
        Effective Date. Upon enactment.
        Reason for Change. Requiring home health agencies to
    collect data on private pay patients imposes a significant
    paperwork burden upon agencies. This requirement has nothing to
    do with quality or documentation of Medicare or Medicare
    patients. More troubling, these data are not collected or used
    for any national assessment process. Moreover, the privately
    insured population differs substantially from the Medicare/
    Medicaid population and may use different kinds of services.
    The Committee believes that CMS need to analyze how these data
    can best be used. Moreover, the OASIS data contain very
    specific information on the patient, their finances and their
    living situation. To ensure the privacy of these individuals,
    Congress believes that CMS should proceed through rule-making
    to demonstrate to the public that confidentiality can be
    maintained and allow for public comments.

    Section 515. Miscellaneous Reports, Studies and Publication
            Requirements

    (a) GAO Reports on Physician Compensation

        Current Law. No provision.
        Explanation of Provision. No later than 6 months from
    enactment, GAO would be required to report to Congress on the
    appropriateness of the updates in the conversion factor
    including the appropriateness of the sustainable growth rate
    (SGR) formula for 2002 and subsequent years. The report would
    examine the stability and predictability of the updates and
    rate as well as the alternatives for use of the SGR in the
    updates. No later than 12 months from enactment, GAO would be
    required to report to Congress on all aspects of physician
    compensation for Medicare services. The report would review
    alternative physician payment structures, and provide
    recommendations to make the current system more stable and less
    complex.
        Effective Date. Upon enactment.
        Reason for Change. The Committee is soliciting expert
    feedback from GAO on ways to improve Medicare's complicated
    system of physician payment.

    (b) Annual Publication of List on National Coverage Determinations

        Current Law. No provision.
        Explanation of Provision. The Secretary would be required
    to provide, in an annual report that will be publicly
    available, a list of Medicare's national coverage
    determinations made in the previous year and include
    information on how to learn more about such determinations.
        Effective Date. Upon enactment.

    (c) Report on Applying Home Health Conditions of Participation

        Current Law. No provision.
        Explanation of Provision. No later than 6 months from
    enactment, GAO would be required to report to Congress on the
    implications if there were flexibility in the application of
    Medicare conditions of participation for home health agencies
    with respect to groups or types of patients who are not
    Medicare beneficiaries. The report would include an analysis of
    the potential impact of flexible application on clinical
    operations and recipients of home health services, and analysis
    of methods for monitoring quality of care provided to patients.
        Effective Date. Upon enactment.
        Reason for Change. The Committee is soliciting expert
    review from GAO on implications of flexible application of the
    Medicare conditions of participation for home health agencies.

    (d) Report on Notices Relating to Use of Hospital Lifetime Reserve Days

        Current Law. No provision.
        Explanation of Provision. No later than 1 year from
    enactment, the Inspector General would be required to submit a
    report to Congress on the extent to which hospitals provide
    notice to beneficiaries before they use their 60 lifetime
    reserve days, and the appropriateness of providing a notice to
    beneficiaries before they completely exhaust their lifetime
    reserve days.
        Effective date. Upon enactment.
        Reason for Change. The Committee is soliciting oversight on
    hospital compliance with requirements to notify beneficiaries
    about use of their 60 lifetime reserve days, and expert opinion
    on the appropriateness of a new notification requirement to
    inform beneficiaries before they exhaust their lifetime reserve
    days.

    (e) Clarifications and Instructions to the Secretary

        First, the Committee is pleased that the Secretary has
    published a notice of proposed rulemaking to provide Medicare
    payment for clinical psychology internship training programs
    that would not qualify under Medicare's existing provider-
    operated criteria. The Committee notes that Congress has
    consistently urged the Secretary to initiate payment for the
    training of clinical psychologists since 1997. Supportive
    language has been included in conference reports accompanying
    Medicare legislation in 1999 (Report 106-479), and in 2000
    (Senate Report 106-293).
        The Committee is concerned, however, that a delay in the
    rule may mean that hospitals and institutions will reduce or
    eliminate psychology training programs and urges implementation
    of the rule as soon as possible. The Committee notes that
    clinical psychologists provide valuable and unique services to
    Medicare beneficiaries during their training. Regarding their
    training, clinical psychologists are distinguishable from other
    health care professionals in that they are the only doctoral
    level mental health professionals fully participating in
    Medicare whose clinical training is not currently reimbursed.
    In addition, their clinical internship training is entirely
    controlled, administered, supervised, evaluated, and certified
    by the hospital or institution, separately accredited, and
    distinct from any university training they receive. Clinical
    psychologists are hospital-based in the final stages of their
    training functioning in a parallel status to medical interns
    and residents, not medical nursing or health professional
    students. Where a clinical psychologist has clearly finished
    their educational curriculum and is training solely in the
    hospital setting, it is the intention of Congress that the
    hospital be reimbursed if that training is hospital-based.
        Second, Congresses original intent on BIPA section
    422(a)(2) on the dialysis composite rate has not been correctly
    interpreted by CMS. The intent was not to bar end stage renal
    disease (ESRD) composite rate exception relief for facilities
    that are not presently being paid under an exception to the
    composite rate. It is the Committee's expectation that CMS will
    evaluate ESRD composite rate exception requests submitted in
    2002 and subsequent years by new renal dialysis facilities and
    existing facilities that do not have an exception.

                          III. VOTES OF THE COMMITTEE

        In compliance with clause 3(b) of rule XIII of the Rules of
    the House of Representatives, the following statements are made
    concerning the votes of the Committee on Ways and Means in its
    consideration of the bill, H.R. 810.

                           MOTION TO REPORT THE BILL

        The bill, H.R. 810, as amended, was ordered favorably
    reported by a roll call vote of 19 yeas to 13 nays (with a
    quorum being present). The vote was as follows:

    ----------------------------------------------------------------------------------------------------------------
            Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
    ----------------------------------------------------------------------------------------------------------------
    Mr. Thomas.....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
    Mr. Crane......................        X   ........  .........  Mr. Stark........  ........        X   .........
    Mr. Shaw.......................        X   ........  .........  Mr. Matsui.......  ........  ........  .........
    Mrs. Johnson...................        X   ........  .........  Mr. Levin........  ........        X   .........
    Mr. Houghton...................  ........  ........  .........  Mr. Cardin.......  ........  ........  .........
    Mr. Herger.....................        X   ........  .........  Mr. McDermott....  ........        X   .........
    Mr. McCrery....................        X   ........  .........  Mr. Kleczka......  ........        X   .........
    Mr. Camp.......................        X   ........  .........  Mr. Lewis (GA)...  ........  ........  .........
    Mr. Ramstad....................        X   ........  .........  Mr. Neal.........  ........        X   .........
    Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......  ........  ........  .........
    Mr. Johnson....................        X   ........  .........  Mr. Jefferson....  ........        X   .........
    Ms. Dunn.......................        X   ........  .........  Mr. Tanner.......  ........        X   .........
    Mr. Collins....................        X   ........  .........  Mr. Becerra......  ........        X   .........
    Mr. Portman....................        X   ........  .........  Mr. Doggett......  ........        X   .........
    Mr. English....................        X   ........  .........  Mr. Pomeroy......  ........        X   .........
    Mr. Hayworth...................        X   ........  .........  Mr. Sandlin......  ........        X   .........
    Mr. Weller.....................  ........  ........  .........  Ms. Tubbs Jones..  ........        X   .........
    Mr. Hulshof....................        X   ........
    Mr. McInnis....................  ........
    Mr. Lewis (KY).................        X   ........
    Mr. Foley......................        X   ........
    Mr. Brady......................        X   ........
    Mr. Ryan.......................        X   ........
    Mr. Cantor.....................  ........
    ----------------------------------------------------------------------------------------------------------------

                              VOTES ON AMENDMENTS

        An amendment in the nature of a substitute by Chairman
    Thomas, was agreed to by a rollcall vote of 19 yeas to 13 nays.
    The vote was as follows:

    ----------------------------------------------------------------------------------------------------------------
            Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
    ----------------------------------------------------------------------------------------------------------------
    Mr. Thomas.....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
    Mr. Crane......................        X   ........  .........  Mr. Stark........  ........        X   .........
    Mr. Shaw.......................        X   ........  .........  Mr. Matsui.......  ........
    Mrs. Johnson...................        X   ........  .........  Mr. Levin........  ........        X   .........
    Mr. Houghton...................  ........  ........  .........  Mr. Cardin.......  ........
    Mr. Herger.....................        X   ........  .........  Mr. McDermott....  ........        X   .........
    Mr. McCrery....................        X   ........  .........  Mr. Kleczka......  ........        X   .........
    Mr. Camp.......................        X   ........  .........  Mr. Lewis (GA)...  ........
    Mr. Ramstad....................        X   ........  .........  Mr. Neal.........  ........        X   .........
    Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......  ........
    Mr. Johnson....................        X   ........  .........  Mr. Jefferson....  ........        X   .........
    Ms. Dunn.......................        X   ........  .........  Mr. Tanner.......  ........        X   .........
    Mr. Collins....................        X   ........  .........  Mr. Becerra......  ........        X   .........
    Mr. Portman....................        X   ........  .........  Mr. Doggett......  ........        X   .........
    Mr. English....................        X   ........  .........  Mr. Pomeroy......  ........        X   .........
    Mr. Hayworth...................        X   ........  .........  Mr. Sandlin......  ........        X   .........
    Mr. Weller.....................  ........  ........  .........  Ms. Tubbs Jones..  ........        X   .........
    Mr. Hulshof....................        X   ........
    Mr. McInnis....................  ........
    Mr. Lewis (KY).................        X   ........
    Mr. Foley......................        X   ........
    Mr. Brady......................        X   ........
    Mr. Ryan.......................        X   ........
    Mr. Cantor.....................  ........
    ----------------------------------------------------------------------------------------------------------------

        A rollcall vote was conducted on the following amendments
    to the Chairman's amendment in the nature of a substitute.
        An amendment by Mrs. Johnson to require the Center for
    Medicare and Medicaid Services (CMS) to evaluate within 18
    months the value of collection data on non-Medicare and non-
    Medicaid patients, suspend the collection of OASIS data on non-
    Medicare and non-Medicaid patients until CMS has finalized
    regulations on the collection and use of such data, and would
    not prevent home health agencies from continuing to collect
    OASIA data on non-Medicare and non-Medicaid patients if they so
    desire, was agreed to by a roll call vote of 21 yeas to 13
    nays. The vote was as follows:

    ----------------------------------------------------------------------------------------------------------------
            Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
    ----------------------------------------------------------------------------------------------------------------
    Mr. Thomas.....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
    Mr. Crane......................        X   ........  .........  Mr. Stark........  ........        X   .........
    Mr. Shaw.......................        X   ........  .........  Mr. Matsui.......  ........  ........  .........
    Mrs. Johnson...................        X   ........  .........  Mr. Levin........  ........        X   .........
    Mr. Houghton...................  ........  ........  .........  Mr. Cardin.......  ........        X   .........
    Mr. Herger.....................  ........        X   .........  Mr. McDermott....  ........        X   .........
    Mr. McCrery....................  ........        X   .........  Mr. Kleczka......  ........        X   .........
    Mr. Camp.......................  ........        X   .........  Mr. Lewis (GA)...  ........  ........  .........
    Mr. Ramstad....................  ........        X   .........  Mr. Neal.........  ........        X   .........
    Mr. Nussle.....................  ........        X   .........  Mr. McNulty......  ........        X   .........
    Mr. Johnson....................  ........        X   .........  Mr. Jefferson....  ........  ........  .........
    Ms. Dunn.......................  ........        X   .........  Mr. Tanner.......  ........        X   .........
    Mr. Collins....................  ........        X   .........  Mr. Becerra......  ........        X   .........
    Mr. Portman....................  ........        X   .........  Mr. Doggett......  ........        X   .........
    Mr. English....................  ........        X   .........  Mr. Pomeroy......  ........        X   .........
    Mr. Hayworth...................  ........        X   .........  Mr. Sandlin......  ........  ........  .........
    Mr. Weller.....................  ........        X   .........  Ms. Tubbs Jones..  ........        X   .........
    Mr. Hulshof....................  ........  ........  .........  .................  ........  ........  .........
    Mr. McInnis....................  ........  ........  .........  .................  ........  ........  .........
    Mr. Lewis (KY).................  ........        X   .........  .................  ........  ........  .........
    Mr. Foley......................  ........        X   .........  .................  ........  ........  .........
    Mr. Brady......................  ........        X   .........  .................  ........  ........  .........
    Mr. Ryan.......................  ........        X   .........  .................  ........  ........  .........
    Mr. Cantor.....................  ........        X   .........  .................  ........  ........  .........
    ----------------------------------------------------------------------------------------------------------------

        An amendment by Mr. Camp, which would require the Secretary
    to develop a process for the reinstatement of the nurse aid
    program before the mandatory 2-year disapproval program, and
    require that the facility and program must be certified by the
    Secretary as being in compliance and having remedied any
    deficiencies, was agreed by a roll call vote of 19 yeas to 13
    nays. The vote was as follows:

    ----------------------------------------------------------------------------------------------------------------
            Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
    ----------------------------------------------------------------------------------------------------------------
    Mr. Thomas.....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
    Mr. Crane......................        X   ........  .........  Mr. Stark........  ........        X   .........
    Mr. Shaw.......................        X   ........  .........  Mr. Matsui.......  ........  ........  .........
    Mrs. Johnson...................        X   ........  .........  Mr. Levin........  ........        X   .........
    Mr. Houghton...................  ........  ........  .........  Mr. Cardin.......  ........  ........  .........
    Mr. Herger.....................        X   ........  .........  Mr. McDermott....  ........        X   .........
    Mr. McCrery....................        X   ........  .........  Mr. Kleczka......  ........        X   .........
    Mr. Camp.......................        X   ........  .........  Mr. Lewis (GA)...  ........  ........  .........
    Mr. Ramstad....................        X   ........  .........  Mr. Neal.........  ........        X   .........
    Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......  ........  ........  .........
    Mr. Johnson....................        X   ........  .........  Mr. Jefferson....  ........        X   .........
    Ms. Dunn.......................        X   ........  .........  Mr. Tanner.......  ........        X   .........
    Mr. Collins....................        X   ........  .........  Mr. Becerra......  ........        X   .........
    Mr. Portman....................        X   ........  .........  Mr. Doggett......  ........        X   .........
    Mr. English....................        X   ........  .........  Mr. Pomeroy......  ........        X   .........
    Mr. Hayworth...................        X   ........  .........  Mr. Sandlin......  ........        X   .........
    Mr. Weller.....................  ........  ........  .........  Ms. Tubbs Jones..  ........        X   .........
    Mr. Hulshof....................        X   ........  .........
    Mr. McInnis....................  ........  ........  .........
    Mr. Lewis (KY).................        X   ........  .........
    Mr. Foley......................        X   ........  .........
    Mr. Brady......................        X   ........  .........
    Mr. Ryan.......................        X   ........  .........
    Mr. Cantor.....................  ........  ........  .........
    ----------------------------------------------------------------------------------------------------------------

                         IV. BUDGET EFFECTS OF THE BILL

                   A. Committee Estimate of Budgetary Effects

        In compliance with clause 3(d)(2) of rule XIII of the Rules
    of the House of Representatives, the following statement is
    made:
        The Committee agrees with the zero budgetary estimate
    prepared by the Congressional Budget Office (CBO), which is
    included below. However, it does believe that some of the
    administrative costs to the agency are overstated because CMS
    has indicated that it is already performing some of the
    provisions.

        B. Statement Regarding New Budget Authority and Tax Expenditures

        In compliance with clause 3(c)(2) of rule XIII of the Rules
    of the House of Representatives, the Committee states that the
    Committee bill would result in no increase in federal direct
    spending.

          C. Cost Estimate Prepared by the Congressional Budget Office

        In compliance with clause 3(c)(3) of rule XIII of the Rules
    of the House of Representatives requiring a cost estimate
    prepared by the Congressional Budget Office (CBO), the
    following report prepared by the CBO is provided.
                                         U.S. Congress,
                                   Congressional Budget Office,
                                         Washington, DC, April 8, 2003.
    Hon. William ``Bill'' M. Thomas,
    Chairman, Committee on Ways and Means,
    House of Representatives, Washington, DC.
        Dear Mr. Chairman: The Congressional Budget Office has
    prepared the enclosed cost estimate for H.R. 810, the Medicare
    Regulatory and Contracting Reform Act of 2003.
        If you wish further details on this estimate, we will be
    pleased to provide them. The CBO staff contact is Alexis
    Ahlstrom.
                Sincerely,
                                              Barry B. Anderson
                                   (For Douglas Holtz-Eakin, Director).
        Enclosure.

    H.R. 810-Medicare Regulatory and Contracting Reform Act of 2003

        Summary: The Medicare Regulatory and Contracting Reform Act
    of 2003 would require the Centers for Medicare and Medicaid
    Services (CMS) to modify how Medicare regulations and policies
    are developed and enforced, and would modify the procedures
    used to resolve disputes involving payment for services covered
    by Medicare. The bill would transfer certain administrative law
    judges from the Social Security Administration (SSA) to the
    Department of Health and Human Services (HHS). It would change
    the procedures by which Medicare makes contracts with entities
    to process and pay claims, and it would place new requirements
    on those contractors. It would require the Secretary of HHS to
    conduct several demonstrations, to initiate new outreach and
    education programs, and to complete several studies and
    reports. CBO estimates that implementing H.R. 810 would cost
    $61 million in 2004 and $1.6 billion over the 2004-2008 period,
    assuming appropriation of the necessary funds.
        The procedural changes required by H.R. 810 would affect
    spending for services covered by Medicare, which is direct
    spending. However, many of the bill's requirements codify
    existing practices, while the other requirements would cause
    minor increases or decreases in spending for covered services.
    These changes could have significant impacts on direct spending
    in any given year, however, CBO estimates that the net change
    in direct spending would be insignificant over the 2004-2013
    period.
        H.R. 810 contains no intergovernmental or private-sector
    mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    The requirement for public hospitals participating in the
    Medicare program to comply with the bloodborne pathogens
    standard promulgated by the Occupational Safety and Health
    Administration (OSHA) would have cost implications for state
    and local governments. However, that requirement would be a
    condition of participating in a voluntary federal program and
    thus would not be an intergovernmental mandate as defined in
    UMRA.
        Estimated cost to the Federal Government: The following
    table shows the estimated authorization levels and outlays for
    Medicare administrative expenses under current law and under
    H.R. 810. Assuming appropriation of the estimated amounts, CBO
    estimates that implementing H.R. 810 would cost $61 million in
    2004 and $1.6 billion over the 2004-2008 period. The costs of
    this legislation fall within budget function 570 (Medicare).

    ----------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in millions of dollars--
                                                                     -----------------------------------------------
                                                                       2003    2004    2005    2006    2007    2008
    ----------------------------------------------------------------------------------------------------------------
                                          SPENDING SUBJECT TO APPROPRIATION \1\

    Spending for Medicare administrative costs under current law:
        Estimated authorization level \2\...........................   3,798   3,931   4,078   4,236   4,418   4,626
        Estimated outlays...........................................   3,797   3,925   4,064   4,209   4,377   4,579
    Proposed changes:
        Estimated authorization level...............................       0      68     486     396     312     328
        Estimated outlays...........................................       0      61     444     405     321     327
    Spending for Medicare administrative costs under H.R. 810:
        Estimated authorization level...............................   3,798   3,999   4,564   4,632   4,730   4,954
        Estimated outlays...........................................   3,797   3,986   4,508   4,614   4,698   4,906
    ----------------------------------------------------------------------------------------------------------------
    \1\ Enacting H.R. 810 also would affect direct spending, but CBO estimates there would be no significant net
      impact over the 2004-2013 period.
    \2\ The 2003 level is the amount appropriated for that year. The 2004-2008 levels are baseline projections,
      which assume annual adjustments for anticipated inflation.

    Basis of estimate

        For this estimate, CBO assumes that the legislation will be
    enacted July 1, 2003 and that the necessary amounts will be
    appropriated each year, beginning in fiscal year 2004.
                Spending subject to appropriation
        Implementing H.R. 810 would require increased
    appropriations for the administration of Medicare. In
    particular, the bill would increase the costs to CMS for
    contracting, for adjudicating appeals, for education and
    outreach to providers and beneficiaries, and for other
    activities.
        Contracting Reform. Under current law, CMS contracts with
    fiscal intermediaries and carriers to process and pay claims,
    to educate providers regarding Medicare billing policy, and for
    other purposes. This bill would change the activities required
    of contractors and the methods by which CMS enters into
    contracts and oversees the activities or contractors. CBO
    estimates that these provisions would increase the cost of
    administering contracts and the total amount CMS spends on
    contracts by $37 million in 2004 and $1.3 billion over the
    2004-2008 period.
        Contracting Changes. H.R. 810 would direct CMS to provide
    incentives to contractors who meet or exceed certain
    performance standards. Based on information furnished by CMS,
    we estimate that the incentive payments would total 3 percent
    of operating payments to contractors, or about $250 million
    over the 2004-2008 period.
        H.R. 810 would require CMS to competitively bid contracts
    with fiscal intermediaries and carriers at least every five
    years. CBO expects that an additional 3-to-5 full-time-
    equivalent employees (FTEs) at the GS-12 level would be needed
    throughout the period to write new competitively bid contracts.
    The estimate assumes that about one-quarter of the contracts
    would be awarded to a nonincumbent bidder, and that it would
    cost about $2 million to transition between contractors. CBO
    estimates that implementing this provision would cost about $66
    million over the 2004-2008 period. CBO expects that the
    competitive bidding of contracts would yield savings to CMS
    over the long run, but that savings over the 2004-2008 period
    would probably not be significant.
        New Contractor Activities. The bill would require
    contractors to respond to written requests for guidance within
    45 days of receipt, and would make the response binding on the
    Medicare program. We expect that contractors would receive 50
    percent more written requests under H.R. 810 than they would
    under current law, with each request costing $16 to process in
    2004. This, plus the requirement that contractors respond to
    those requests within 45 days, would require contractors to
    hire additional employees. CBO estimates that implementing
    these provisions would cost $11 million in 2004 and $81 million
    over the 2004-2008 period.
        The bill also would require contractors to monitor the
    accuracy of information given to providers and the timeliness
    of contractors' processing of providers' enrollment
    applications. CBO estimates that complying with these
    provisions would cost about $16 million over the 2004-2008
    period.
        Beginning in January 2005, the bill would require
    contractors, upon request of a beneficiary or provider, to make
    a determination about whether Medicare will cover a particular
    service or item before that service is furnished. The
    contractor would be required to conduct a medical review and to
    make the coverage decision within 45 days. CBO estimates that
    contractors would make about 100,000 determinations a year at
    an average cost of about $125 per determination (at 2005
    prices). We estimate the cost of administering this program
    would total $44 million over the 2005-2008 period.
        The bill would require contractors to create a system by
    which providers may resubmit claims originally submitted with
    errors or omissions without having to pursue payment via the
    appeals process. CBO estimates the cost of developing and
    operating systems to process these resubmitted claims would
    total $5 million in 2004 and $56 million over the 2004-2008
    period.
        The bill also would require contractors to give providers
    or beneficiaries, upon request, a summary of the clinical and
    scientific evidence used in making a determination and in
    making a redetermination, in the case of an appeal. CBO
    estimates the cost of making available scientific and clinical
    evidence on determinations and redeterminations would total
    $706 million over the 2004-2008 period.
        Appeals Reform. H.R. 810 would change the processes by
    which Medicare adjudicates appeals by providers of payment
    denials and conducts compliance actions against providers. The
    bill would delay the date by which CMS is required to implement
    certain provisions of the Beneficiary Improvement and
    Protection Act and modify other provisions. CBO estimates that
    implementing these provisions would cost $9 million in 2004 and
    $94 million over the 2004-2008 period.
        Administrative Law Judge Transfer. The bill would transfer
    certain law judges (ALJs) from the Social Security
    Administration to the Department of Health and Human Services
    and would permit the Secretary to hire more ALJs. CBO estimates
    that the costs of planning and implementing the transfer,
    adding ALJs, and providing the ALJs with additional training on
    Medicare issues would be $1 million in 2004 and would total $45
    million over the 2004-2008 period.
        Standardization of Compliance and Appeals Actions. The bill
    would also standardize existing policies regarding the use of
    random and non-random prepayment review, the use of
    extrapolation in the case of overpayments, and the offering of
    repayment plans in the case of overpayment. In addition, H.R.
    810 would create procedures by which appellants may petition
    for expedited access to judicial review in federal district
    court in certain circumstances. The bill also would require
    that judgments by administrative law judges contain the
    scientific evidence used in their decision, similar to the
    bill's requirements of contractors. CBO estimates that
    implementing those provisions would cost $46 million over the
    2004-2008 period. These provisions would require CMS to make
    changes to current appeals and compliance systems but would not
    change the conditions under which Medicare would make payments
    to providers. Therefore, CBO estimates that these provisions
    would have no effect on direct spending.
        Provider and Beneficiary Program. H.R. 810 would direct CMS
    to expand its programs to educate beneficiaries and providers.
    CBO estimates that implementing these provisions would cost $10
    million in 2004 and $171 million during the 2004-2008 period.
        The bill would authorize the appropriation of $25 million
    in 2005 and in 2006, and such sums as necessary in subsequent
    years, for the education of providers on Medicare billing and
    coding practices. H.R. 810 would direct the Secretary to
    conduct a demonstration with small providers and suppliers in
    which they can get specific help with Medicare policies,
    including coding and reimbursement. CBO estimates that
    implementing these provisions would cost $108 million over the
    2004-2008 period.
        H.R. 810 would require CMS to designate two ombudsmen to
    act as liaisons between providers and Medicare, and between
    beneficiaries and Medicare. CBO assumes that, in order to
    respond to providers' and beneficiaries' needs and complaints,
    the ombudsmen would require the aid of several staff members.
    CBO estimates the cost of implementing these provisions would
    be $59 million over the 2004-2008 period.
        The bill would direct CMS to implement a three-year
    outreach demonstration in at least six locations throughout the
    United States. The program would involve the deployment of
    Medicare specialists to local Social Security Administration
    offices to provide beneficiaries assistance and advice
    regarding the Medicare program. CBO estimates that the costs of
    the demonstration, which would include the rental of office
    space, salaries for Medicare specialists, and travel, moving,
    and administrative expenses, would total $4 million over the
    2004-2008 period.
        Miscellaneous provisions. H.R. 810 contains several
    provisions, that CBO estimates would require additional
    resources to implement. These provisions would:
         Require the Secretary, the Comptroller General,
    and the Office of the Inspector General to conduct several
    studies, produce reports, and conduct evaluations.
         Require the Secretary to establish two groups, a
    technical group to review issues relating to the Emergency
    Medical Treatment and Active Labor Act and a council for
    technology and innovation to coordinate activities with respect
    to new medical technologies.
         Restrict CMS from implementing new documentation
    guidelines for evaluation and management services until several
    conditions had been met.
         Allow hospitals to submit corrected and
    supplementary data in order to change the geographic adjustment
    factor used in the calculation of payments to that hospital for
    Medicare services. CMS would have to reprocess that data and
    would have to recalculate the geographic adjustment factors for
    other hospitals.
         Require CMS to provide data to hospitals for the
    calculation of additional payments for the care of low-income
    patients.
        CBO estimates that conducting these activities would cost
    $35 million over the 2004-2008 period.
                Direct spending
        H.R. 810 would change the conditions under which Medicare
    would pay for services, would create a process to establish
    whether an item or service is covered prior to a beneficiary
    receiving the service, and would reallocate payments between
    hospitals. CBO estimates that enacting these provisions would
    have no significant effect on direct spending.
        In general, if a provider is not certain whether Medicare
    will pay for a service or item in a particular case, there is
    no process under current law that enables the provider or
    beneficiary to find out in advance whether Medicare will pay
    for that service or item. In such cases, the provider may
    request that the beneficiary sign an advanced beneficiary
    notice (ABN) by which the beneficiary accepts responsibility
    for paying for the service if Medicare denies payment. (The
    provider is prohibited from charging the beneficiary if the
    beneficiary does not sign an ABN and Medicare subsequently
    denies payment.
        The bill would authorize the Secretary to specify services
    for which the provider or beneficiary may request a coverage
    determination before a service is furnished. Upon receipt of
    such a request, the bill would require the contractor to
    conduct a medical review and issue a decision within 45 days.
    The bill would make a positive determination by a contractor
    binding, but it would limit the number of appeals a provider
    could make in the event of a negative determination by a
    contractor.
        H.R. 810 directs the Secretary to exclude this provision as
    a change in law or regulation in the calculation of the
    sustainable growth rate (SGR) used in the calculation of
    physician payments under Medicare. (In general, changes in law
    and regulation are incorporated into the calculation of the
    SGR). The SGR is a self-correcting mechanism: any additional
    services paid for under this provision would be offset by lower
    physician payments in subsequent years. CBO therefore estimates
    that enacting this provision could affect direct spending in
    each year, but would not have a significant impact over the
    2004-2013 period.
        H.R. 810 also would allow hospitals to submit corrected
    wage data to qualify for higher Medicare payment rates. The
    increase in payments to qualifying hospitals would be offset by
    reductions in payment rates for all other hospitals. Therefore,
    CBO estimates that enacting this provision would have no effect
    on direct spending or receipts.
        Estimated impact on state, local, and tribal governments:
    H.R. 810 contains no intergovernmental mandates as defined in
    UMRA. The requirement for public hospitals participating in the
    Medicare program to comply with OSHA's bloodborne pathogens
    standard would have cost implications for state and local
    governments. The current OSHA standard applies to all private-
    sector employers with one or more employees, as well as to
    federal civilian employees. This bill would extend the
    requirement to all hospitals participating in the Medicare
    program, including state and local public hospitals. About half
    of the states currently have bloodborne pathogen standards that
    apply to these hospitals that are at least as stringent as the
    federal standard, and many hospitals in other states have
    voluntarily established comparable standards. Consequently, CBO
    does not expect the costs of the requirement to be significant.
    Any such costs would result from participating in Medicare, a
    voluntary federal program, and thus would not be costs of an
    intergovernmental mandate as defined in UMRA.
        Estimated impact on the private sector: H.R. 810 contains
    no private-sector mandates as defined in UMRA.
        Previous estimate: On April 8, 2003, CBO transmitted a cost
    estimate for H.R. 810 as ordered reported by the House
    Committee on Energy and Commerce on March 26, 2003. This
    version of H.R. 810 does not include a provision that would
    require CMS to make all interim final regulations final,
    whereas the version reported by the Energy and Commerce
    Committee does. CBO estimated implementing that provision would
    cost $19 million over the 2004-2018 period. However, this
    version of H.R. 810 includes two provisions that the Energy and
    Commerce version does not: one that allows hospitals to
    resubmit data relevant to their geographic adjustment payments,
    and one that requires CMS to provide hospitals with data used
    to calculate additional payments for the provision of services
    to low-income patients. CBO estimates these provisions would
    cost $6 million over the 2004-2008 period to implement. The
    costs of these provisions are included above in the
    ``Miscellaneous Provisions'' cost subtotal of $35 million over
    the five-year period.
        Estimate prepared by: Federal costs: Alexis Ahlstrom;
    impact on state, local, and tribal governments: Leo Lex; impact
    on the private sector: Robert Nguyen.
        Estimate approved by: Peter H. Fontaine, Deputy Assistant
    Director for Budget Analysis.

     V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

              A. Committee Oversight Findings and Recommendations

        In compliance with clause 3(c)(1) of rule XIII of the Rules
    of the House of Representatives, the Committee reports that the
    need for this legislation was confirmed by the oversight
    hearings of the Subcommittee on Health. The hearings were as
    follows:
        The Subcommittee on Health held a series of hearings on
    Medicare Reform during the 107th and the 108th Congress to
    examine the implications of regulatory burden on seniors and
    providers. A list of these hearings may be found in this report
    in Section I. Introduction, Part C. Legislative History (Page
    3).

             B. Summary of General Performance Goals and Objectives

        In compliance with clause 3(c)(4) of rule XIII of the Rules
    of the House of Representatives, the Committee states that the
    primary purpose of H.R. 4954 is to create a prescription drug
    benefit into the Medicare program while modernizing other
    aspects of the program.

                     C. Constitutional Authority Statement

        In compliance with clause 3(d)(1) of rule XIII of the Rules
    of the House of Representatives, relating to constitutional
    Authority, the Committee states that the Committee's action in
    reporting the bill is derived from Article I of the
    Constitution, Section 8 (``The Congress shall have power to lay
    and collect taxes, duties, imposts, and excises, to pay the
    debts and to provide for * * * the General Welfare of the
    United States * * *'').

           VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

      In compliance with clause 3(e) of rule XIII of the Rules of
    the House of Representatives, changes in existing law made by
    the bill, as reported, are shown as follows (existing law
    proposed to be omitted is enclosed in black brackets, new
    matter is printed in italic, existing law in which no change is
    proposed is shown in roman):

    SOCIAL SECURITY ACT

               *       *       *       *       *       *       *

         TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE
    SIMPLIFICATION

               *       *       *       *       *       *       *

    Part A--General Provisions

               *       *       *       *       *       *       *

           APPOINTMENT OF ADVISORY COUNCIL AND OTHER ADVISORY GROUPS

      Sec. 1114. (a) * * *

               *       *       *       *       *       *       *

      [(i)(1) Any advisory committee appointed under subsection (f
    ) to advise the Secretary on matters relating to the
    interpretation, application, or implementation of section
    1862(a)(1) shall assure the full participation of a nonvoting
    member in the deliberations of the advisory committee, and
    shall provide such nonvoting member access to all information
    and data made available to voting members of the advisory
    committee, other than information that--
              [(A) is exempt from disclosure pursuant to subsection
            (a) of section 552 of title 5, United States Code, by
            reason of subsection (b)(4) of such section (relating
            to trade secrets); or
              [(B) the Secretary determines would present a
            conflict of interest relating to such nonvoting member.
      [(2) If an advisory committee described in paragraph (1)
    organizes into panels of experts according to types of items or
    services considered by the advisory committee, any such panel
    of experts may report any recommendation with respect to such
    items or services directly to the Secretary without the prior
    approval of the advisory committee or an executive committee
    thereof.]

               *       *       *       *       *       *       *

      EXCLUSION OF CERTAIN INDIVIDUALS AND ENTITIES FROM PARTICIPATION IN
                    MEDICARE AND STATE HEALTH CARE PROGRAMS

      Sec. 1128. (a) * * *

               *       *       *       *       *       *       *

      (c) Notice, Effective Date, and Period of Exclusion.--(1) * *
    *

               *       *       *       *       *       *       *

      (3)(A) * * *
      (B) [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 a
    State, the Secretary may waive the exclusion under subsection
    (a)(1) in the case of an individual or entity that is the sole
    community physician or sole source of essential specialized
    services in a community.] 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 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. The Secretary's decision whether to
    waive the exclusion shall not be reviewable.

               *       *       *       *       *       *       *

       Part B--Peer Review of the Utilization and Quality of Health Care
    Services

               *       *       *       *       *       *       *

                     FUNCTIONS OF PEER REVIEW ORGANIZATIONS

      Sec. 1154. (a) * * *

               *       *       *       *       *       *       *

      (e)(1) * * *

               *       *       *       *       *       *       *

      [(5) In any review conducted under paragraph (2) or (3), the
    organization shall solicit the views of the patient involved
    (or the patient's representative).]

               *       *       *       *       *       *       *

    Part C--Administrative Simplification

               *       *       *       *       *       *       *

                 GENERAL REQUIREMENTS FOR ADOPTION OF STANDARDS

      Sec. 1172. (a) * * *

               *       *       *       *       *       *       *

      (f) Assistance to the Secretary.--In complying with the
    requirements of this part, the Secretary shall rely on the
    recommendations of the National Committee on Vital and Health
    Statistics established under section 306(k) of the Public
    Health Service Act (42 U.S.C. 242k(k)), and shall consult with
    appropriate Federal and State agencies and private
    organizations. Notwithstanding the preceding sentence, if the
    National Committee on Vital and Health Statistics has not made
    a recommendation to the Secretary before the date of the
    enactment of this sentence, with respect to the adoption of the
    International Classification of Diseases, 10th Revision,
    Procedure Coding System (``ICD-10-PCS'') and the International
    Classification of Diseases, 10th Revision, Clinical
    Modification (``ICD-10-CM'') as a standard under this part for
    the reporting of services, the Secretary may adopt ICD-10-PCS
    and ICD-10-CM as such a standard on or after such date without
    receiving such a recommendation. The Secretary shall publish in
    the Federal Register any recommendation of the National
    Committee on Vital and Health Statistics regarding the adoption
    of a standard under this part.

               *       *       *       *       *       *       *

    TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

               *       *       *       *       *       *       *

         NOTICE OF MEDICARE BENEFITS; MEDICARE AND MEDIGAP INFORMATION

      Sec. 1804. (a) * * *
      (b) The Secretary shall provide information via a toll-free
    telephone number on the programs under this title. The
    Secretary shall provide, through the toll-free number 1-800-
    MEDICARE, for a means by which individuals seeking information
    about, or assistance with, such programs who phone such toll-
    free number are transferred (without charge) to appropriate
    entities for the provision of such information or assistance.
    Such toll-free number shall be the toll-free number listed for
    general information and assistance in the annual notice under
    subsection (a) instead of the listing of numbers of individual
    contractors.

               *       *       *       *       *       *       *

                         MEDICARE BENEFICIARY OMBUDSMAN

      Sec. 1807. (a) In General.--The Secretary shall appoint
    within the Department of Health and Human Services a Medicare
    Beneficiary Ombudsman who shall have expertise and experience
    in the fields of health care and education of (and assistance
    to) individuals entitled to benefits under this title.
      (b) Duties.--The Medicare Beneficiary Ombudsman shall--
              (1) 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;
              (2) provide assistance with respect to complaints,
            grievances, and requests referred to in paragraph (1),
            including--
                      (A) assistance in collecting relevant
                    information for such individuals, to seek an
                    appeal of a decision or determination made by a
                    fiscal intermediary, carrier, Medicare+Choice
                    organization, or the Secretary; and
                      (B) assistance to such individuals with any
                    problems arising from disenrollment from a
                    Medicare+Choice plan under part C; and
              (3) submit annual reports to Congress and the
            Secretary that describe the activities of the Office
            and that include such recommendations for improvement
            in the administration of this title as the Ombudsman
            determines appropriate.
    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.
      (c) 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 Medicare+Choice plans and changes to those plans.
    Nothing in this subsection shall preclude further collaboration
    between the Ombudsman and such programs.

               *       *       *       *       *       *       *

    Part A--Hospital Insurance Benefits for the Aged and Disabled

               *       *       *       *       *       *       *

             CONDITIONS OF AND LIMITATIONS ON PAYMENT FOR SERVICES

                   Requirement of Requests and Certifications

      Sec. 1814. (a) * * *

               *       *       *       *       *       *       *

                            Payment for Hospice Care

      (i)(1) * * *

               *       *       *       *       *       *       *

      (4) 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.

               *       *       *       *       *       *       *

    [USE OF PUBLIC AGENCIES OR PRIVATE ORGANIZATIONS TO FACILITATE PAYMENT
                           TO PROVIDERS OF SERVICES]

              PROVISIONS RELATING TO THE ADMINISTRATION OF PART A

      Sec. 1816. [(a) If any group or association of providers of
    services wishes to have payments under this part to such
    providers made through a national, State, or other public or
    private agency or organization and nominates such agency or
    organization for this purpose, the Secretary is authorized to
    enter into an agreement with such agency or organization
    providing for the determination by such agency or organization
    (subject to the provisions of section 1878 and to such review
    by the Secretary as may be provided for by the agreement) of
    the amount of the payments required pursuant to this part to be
    made to such providers (and to providers assigned to such
    agency or organization under subsection (e)), and for the
    making of such payments by such agency or organization to such
    providers (and to providers assigned to such agency or
    organization under subsection (e)). Such agreement may also
    include provision for the agency or organization to do all or
    any part of the following: (1) to provide consultative services
    to institutions or agencies to enable them to establish and
    maintain fiscal records necessary for purposes of this part and
    otherwise to qualify as hospitals, extended care facilities, or
    home health agencies, and (2) with respect to the providers of
    services which are to receive payments through it (A) to serve
    as a center for, and communicate to providers, any information
    or instructions furnished to it by the Secretary, and serve as
    a channel of communication from providers to the Secretary; (B)
    to make such audits of the records of providers as may be
    necessary to insure that proper payments are made under this
    part; and (C) to perform such other functions as are necessary
    to carry out this subsection. As used in this title and part B
    of title XI, the term ``fiscal intermediary'' means an agency
    or organization with a contract under this section.
      [(b) The Secretary shall not enter into or renew an agreement
    with any agency or organization under this section unless--
              [(1) he finds--
                      [(A) after applying the standards, criteria,
                    and procedures developed under subsection (f),
                    that to do so is consistent with the effective
                    and efficient administration of this part, and
                      [(B) that such agency or organization is
                    willing and able to assist the providers to
                    which payments are made through it under this
                    part in the application of safeguards against
                    unnecessary utilization of services furnished
                    by them to individuals entitled to hospital
                    insurance benefits under section 226, and the
                    agreement provides for such assistance; and
              [(2) such agency or organization agrees--
                      [(A) to furnish to the Secretary such of the
                    information acquired by it in carrying out its
                    agreement under this section, and
                      [(B) to provide the Secretary with access to
                    all such data, information, and claims
                    processing operations,
            as the Secretary may find necessary in performing his
            functions under this part.]
      (a) The administration of this part shall be conducted
    through contracts with medicare administrative contractors
    under section 1874A.
      (c)[(1) An agreement with any agency or organization under
    this section may contain such terms and conditions as the
    Secretary finds necessary or appropriate, may provide for
    advances of funds to the agency or organization for the making
    of payments by it under subsection (a), and shall provide for
    payment of so much of the cost of administration of the agency
    or organization as is determined by the Secretary to be
    necessary and proper for carrying out the functions covered by
    the agreement. The Secretary shall provide that in determining
    the necessary and proper cost of administration, the Secretary
    shall, with respect to each agreement, take into account the
    amount that is reasonable and adequate to meet the costs which
    must be incurred by an efficiently and economically operated
    agency or organization in carrying out the terms of its
    agreement. The Secretary shall cause to have published in the
    Federal Register, by not later than September 1 before each
    fiscal year, data, standards, and methodology to be used to
    establish budgets for fiscal intermediaries under this section
    for that fiscal year, and shall cause to be published in the
    Federal Register for public comment, at least 90 days before
    such data, standards, and methodology are published, the data,
    standards, and methodology proposed to be used. The Secretary
    may not require, as a condition of entering into or renewing an
    agreement under this section or under section 1871, that a
    fiscal intermediary match data obtained other than in its
    activities under this part with data used in the administration
    of this part for purposes of identifying situations in which
    the provisions of section 1862(b) may apply.]
      (2)(A) Each [agreement under this section] contract under
    section 1874A that provides for making payments under this part
    shall provide that payment shall be issued, mailed, or
    otherwise transmitted with respect to not less than 95 percent
    of all claims submitted under this title--
              (i)  * * *

               *       *       *       *       *       *       *

      (3)(A) Each [agreement under this section] contract under
    section 1874A that provides for making payments under this part
    shall provide that no payment shall be issued, mailed, or
    otherwise transmitted with respect to any claim submitted under
    this title within the applicable number of calendar days after
    the date on which the claim is received.

               *       *       *       *       *       *       *

      [(d) If the nomination of an agency or organization as
    provided in this section is made by a group or association of
    providers of services, it shall not be binding on members of
    the group or association which notify the Secretary of their
    election to that effect. Any provider may, upon such notice as
    may be specified in the agreement under this section with an
    agency or organization, withdraw its nomination to receive
    payments through such agency or organization. Any provider
    which has withdrawn its nomination, and any provider which has
    not made a nomination, may elect to receive payments from any
    agency or organization which has entered into an agreement with
    the Secretary under this section if the Secretary and such
    agency or organization agree to it.
      [(e)(1) Notwithstanding subsections (a) and (d), the
    Secretary, after taking into consideration any preferences of
    providers of services, may assign or reassign any provider of
    services to any agency or organization which has entered into
    an agreement with him under this section, if he determines,
    after applying the standards, criteria, and procedures
    developed under subsection (f), that such assignment or
    reassignment would result in the more effective and efficient
    administration of this part.
      [(2) Notwithstanding subsections (a) and (d), the Secretary
    may (subject to the provisions of paragraph (4)) designate a
    national or regional agency or organization which has entered
    into an agreement with him under this section to perform
    functions under the agreement with respect to a class of
    providers of services in the Nation or region (as the case may
    be), if he determines, after applying the standards, criteria,
    and procedures developed under subsection (f), that such
    designation would result in more effective and efficient
    administration of this part.
      [(3)(A) Before the Secretary makes an assignment or
    reassignment under paragraph (1) of a provider of services to
    other than the agency or organization nominated by the
    provider, he shall furnish (i) the provider and such agency or
    organization with a full explanation of the reasons for his
    determination as to the efficiency and effectiveness of the
    agency or organization to perform the functions required under
    this part with respect to the provider, and (ii) such agency or
    organization with opportunity for a hearing, and such
    determination shall be subject to judicial review in accordance
    with chapter 7 of title 5, United States Code.
      [(B) Before the Secretary makes a designation under paragraph
    (2) with respect to a class of providers of services, he shall
    furnish (i) such providers and the agencies and organizations
    adversely affected by such designation with a full explanation
    of the reasons for his determination as to the efficiency and
    effectiveness of such agencies and organizations to perform the
    functions required under this part with respect to such
    providers, and (ii) the agencies and organizations adversely
    affected by such designation with opportunity for a hearing,
    and such determination shall be subject to judicial review in
    accordance with chapter 7 of title 5, United States Code.
      [(4) Notwithstanding subsections (a) and (d) and paragraphs
    (1), (2), and (3) of this subsection, the Secretary shall
    designate regional agencies or organizations which have entered
    into an agreement with him under this section to perform
    functions under such agreement with respect to home health
    agencies (as defined in section 1861(o)) in the region, except
    that in assigning such agencies to such designated regional
    agencies or organizations the Secretary shall assign a home
    health agency which is a subdivision of a hospital (and such
    agency and hospital are affiliated or under common control)
    only if, after applying such criteria relating to
    administrative efficiency and effectiveness as he shall
    promulgate, he determines that such assignment would result in
    the more effective and efficient administration of this title.
    By not later than July 1, 1987, the Secretary shall limit the
    number of such regional agencies or organizations to not more
    than ten.
      [(5) Notwithstanding any other provision of this title, the
    Secretary shall designate the agency or organization which has
    entered into an agreement under this section to perform
    functions under such an agreement with respect to each hospice
    program, except that with respect to a hospice program which is
    a subdivision of a provider of services (and such hospice
    program and provider of services are under common control) due
    regard shall be given to the agency or organization which
    performs the functions under this section for the provider of
    services.
      [(f)(1) In order to determine whether the Secretary should
    enter into, renew, or terminate an agreement under this section
    with an agency or organization, whether the Secretary should
    assign or reassign a provider of services to an agency or
    organization, and whether the Secretary should designate an
    agency or organization to perform services with respect to a
    class of providers of services, the Secretary shall develop
    standards, criteria, and procedures to evaluate such agency's
    or organization's (A) overall performance of claims processing
    (including the agency's or organization's success in recovering
    payments made under this title for services for which payment
    has been or could be made under a primary plan (as defined in
    section 1862(b)(2)(A))) and other related functions required to
    be performed by such an agency or organization under an
    agreement entered into under this section, and (B) performance
    of such functions with respect to specific providers of
    services, and the Secretary shall establish standards and
    criteria with respect to the efficient and effective
    administration of this part. No agency or organization shall be
    found under such standards and criteria not to be efficient or
    effective or to be less efficient or effective solely on the
    ground that the agency or organization serves only providers
    located in a single State.
      [(2) The standards and criteria established under paragraph
    (1) shall include--
              [(A) with respect to claims for services furnished
            under this part by any provider of services other than
            a hospital--
                      [(i) whether such agency or organization is
                    able to process 75 percent of reconsiderations
                    within 60 days (except in the case of fiscal
                    year 1989, 66 percent of reconsiderations) and
                    90 percent of reconsiderations within 90 days,
                    and
                      [(ii) the extent to which such agency's or
                    organization's determinations are reversed on
                    appeal; and
              [(B) with respect to applications for an exemption
            from or exception or adjustment to the target amount
            applicable under section 1886(b) to a hospital that is
            not a subsection (d) hospital (as defined in section
            1886(d)(1)(B))--
                      [(i) if such agency or organization receives
                    a completed application, whether such agency or
                    organization is able to process such
                    application not later than 75 days after the
                    application is filed, and
                      [(ii) if such agency or organization receives
                    an incomplete application, whether such agency
                    or organization is able to return the
                    application with instructions on how to
                    complete the application not later than 60 days
                    after the application is filed.
      [(g) An agreement with the Secretary under this section may
    be terminated--
              [(1) by the agency or organization which entered into
            such agreement at such time and upon such notice to the
            Secretary, to the public, and to the providers as may
            be provided in regulations, or
              [(2) by the Secretary at such time and upon such
            notice to the agency or organization, to the providers
            which have nominated it for purposes of this section,
            and to the public, as may be provided in regulations,
            but only if he finds, after applying the standards,
            criteria, and procedures developed under subsection (f)
            and after reasonable notice and opportunity for hearing
            to the agency or organization, that (A) the agency or
            organization has failed substantially to carry out the
            agreement, or (B) the continuation of some or all of
            the functions provided for in the agreement with the
            agency or organization is disadvantageous or is
            inconsistent with the efficient administration of this
            part.
      [(h) An agreement with an agency or organization under this
    section may require any of its officers or employees certifying
    payments or disbursing funds pursuant to the agreement, or
    otherwise participating in carrying out the agreement, to give
    surety bond to the United States in such amount as the
    Secretary may deem appropriate.
      [(i)(1) No individual designated pursuant to an agreement
    under this section as a certifying officer shall, in the
    absence of gross negligence or intent to defraud the United
    States, be liable with respect to any payments certified by him
    under this section.
      [(2) No disbursing officer shall, in the absence of gross
    negligence or intent to defraud the United States, be liable
    with respect to any payment by him under this section if it was
    based upon a voucher signed by a certifying officer designated
    as provided in paragraph (1) of this subsection.
      [(3) No such agency or organization shall be liable to the
    United States for any payments referred to in paragraph (1) or
    (2).]
      (j) [An agreement with an agency or organization under this
    section] A contract with a medicare administrative contractor
    under section 1874A with respect to the administration of this
    part shall require that, with respect to a claim for home
    health services, extended care services, or post-hospital
    extended care services submitted by a provider to [such agency
    or organization] such medicare administrative contractor that
    is denied, [such agency or organization] such medicare
    administrative contractor--
              (1) * * *

               *       *       *       *       *       *       *

      (k) [An agreement with an agency or organization under this
    section] A contract with a medicare administrative contractor
    under section 1874A with respect to the administration of this
    part shall require that [such agency or organization] such
    medicare administrative contractor submit an annual report to
    the Secretary describing the steps taken to recover payments
    made for items or services for which payment has been or could
    be made under a primary plan (as defined in section
    1862(b)(2)(A)).
      [(l) No agency or organization may carry out (or receive
    payment for carrying out) any activity pursuant to an agreement
    under this section to the extent that the activity is carried
    out pursuant to a contract under the Medicare Integrity Program
    under section 1893.]

               *       *       *       *       *       *       *

       Part B--Supplementary Medical Insurance Benefits for the Aged and
    Disabled

               *       *       *       *       *       *       *

                              PAYMENT OF BENEFITS

      Sec. 1833. (a) * * *

               *       *       *       *       *       *       *

      (h)(1) * * *

               *       *       *       *       *       *       *

      (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 site 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 site 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 site 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).

               *       *       *       *       *       *       *

                [USE OF CARRIERS FOR ADMINISTRATION OF BENEFITS]

              PROVISIONS RELATING TO THE ADMINISTRATION OF PART B

      Sec. 1842. [(a) In order to provide for the administration of
    the benefits under this part with maximum efficiency and
    convenience for individuals entitled to benefits under this
    part and for providers of services and other persons furnishing
    services to such individuals, and with a view to furthering
    coordination of the administration of the benefits under part A
    and under this part, the Secretary is authorized to enter into
    contracts with carriers, including carriers with which
    agreements under section 1816 are in effect, which will perform
    some or all of the following functions (or, to the extent
    provided in such contracts, will secure performance thereof by
    other organizations); and, with respect to any of the following
    functions which involve payments for physicians' services on a
    reasonable charge basis, the Secretary shall to the extent
    possible enter into such contracts:
              [(1)(A) make determinations of the rates and amounts
            of payments required pursuant to this part to be made
            to providers of services and other persons on a
            reasonable cost or reasonable charge basis (as may be
            applicable);
              [(B) receive, disburse, and account for funds in
            making such payments; and
              [(C) make such audits of the records of providers of
            services as may be necessary to assure that proper
            payments are made under this part;
              [(2)(A) determine compliance with the requirements of
            section 1861(k) as to utilization review; and
              [(B) assist providers of services and other persons
            who furnish services for which payment may be made
            under this part in the development of procedures
            relating to utilization practices, make studies of the
            effectiveness of such procedures and methods for their
            improvement, assist in the application of safeguards
            against unnecessary utilization of services furnished
            by providers of services and other persons to
            individuals entitled to benefits under this part, and
            provide procedures for and assist in arranging, where
            necessary, the establishment of groups outside
            hospitals (meeting the requirements of section
            1861(k)(2)) to make reviews of utilization;
              [(3) serve as a channel of communication of
            information relating to the administration of this
            part; and
              [(4) otherwise assist, in such manner as the contract
            may provide, in discharging administrative duties
            necessary to carry out the purposes of this part.]
      (a) The administration of this part shall be conducted
    through contracts with medicare administrative contractors
    under section 1874A.
      (b)[(1) Contracts with carriers under subsection (a) may be
    entered into without regard to section 3709 of the Revised
    Statutes or any other provision of law requiring competitive
    bidding.]
      (2)[(A) No such contract shall be entered into with any
    carrier unless the Secretary finds that such carrier will
    perform its obligations under the contract efficiently and
    effectively and will meet such requirements as to financial
    responsibility, legal authority, and other matters as he finds
    pertinent. The Secretary shall publish in the Federal Register
    standards and criteria for the efficient and effective
    performance of contract obligations under this section, and
    opportunity shall be provided for public comment prior to
    implementation. In establishing such standards and criteria,
    the Secretary shall provide a system to measure a carrier's
    performance of responsibilities described in paragraph (3)(H),
    subsection (h), and section 1845(e)(2). The Secretary may not
    require, as a condition of entering into or renewing a contract
    under this section or under section 1871, that a carrier match
    data obtained other than in its activities under this part with
    data used in the administration of this part for purposes of
    identifying situations in which section 1862(b) may apply.
      [(B) The Secretary shall establish standards for evaluating
    carriers' performance of reviews of initial carrier
    determinations and of fair hearings under paragraph (3)(C),
    under which a carrier is expected--
              [(i) to complete such reviews, within 45 days after
            the date of a request by an individual enrolled under
            this part for such a review, in 95 percent of such
            requests, and
              [(ii) to make a final determination, within 120 days
            after the date of receipt of a request by an individual
            enrolled under this part for a fair hearing under
            paragraph (3)(C), in 90 percent of such cases.]
      (C) In the case of residents of nursing facilities who
    receive services described in clause (i) or (ii) of section
    1861(s)(2)(K) performed by a member of a team, the Secretary
    shall instruct [carriers] medicare administrative contractors
    to develop mechanisms which permit routine payment under this
    part for up to 1.5 visits per month per resident. In the
    previous sentence, the term ``team'' refers to a physician and
    includes a physician assistant acting under the supervision of
    the physician or a nurse practitioner working in collaboration
    with that physician, or both.
      [(D) In addition to any other standards and criteria
    established by the Secretary for evaluating carrier performance
    under this paragraph relating to avoiding erroneous payments,
    the carrier shall be subject to standards and criteria relating
    to the carrier's success in recovering payments made under this
    part for items or services for which payment has been or could
    be made under a primary plan (as defined in section
    1862(b)(2)(A)).
      [(E) With respect to the payment of claims for home health
    services under this part that, but for the amendments made by
    section 4611 of the Balanced Budget Act of 1997, would be
    payable under part A instead of under this part, the Secretary
    shall continue administration of such claims through fiscal
    intermediaries under section 1816.]
      (3) [Each such contract shall provide that the carrier] The
    Secretary--
              (A) [will] shall take such action as may be necessary
            to assure that, where payment under this part for a
            service is on a cost basis, the cost is reasonable cost
            (as determined under section 1861(v));
              (B) [will] shall take such action as may be necessary
            to assure that, where payment under this part for a
            service is on a charge basis, such charge will be
            reasonable and not higher than the charge applicable,
            for a comparable service and under comparable
            circumstances, [to the policyholders and subscribers of
            the carrier] to the policyholders and subscribers of
            the medicare administrative contractor, and such
            payment will (except as otherwise provided in section
            1870(f)) be made--
                      (i)  * * *

               *       *       *       *       *       *       *

              [(C) will establish and maintain procedures pursuant
            to which an individual enrolled under this part will be
            granted an opportunity for a fair hearing by the
            carrier, in any case where the amount in controversy is
            at least $100, but less than $500, when requests for
            payment under this part with respect to services
            furnished him are denied or are not acted upon with
            reasonable promptness or when the amount of such
            payment is in controversy;
              [(D) will furnish to the Secretary such timely
            information and reports as he may find necessary in
            performing his functions under this part;
              [(E) will 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 (D) and
            otherwise to carry out the purposes of this part;]
              (F) [will] shall take such action as may be necessary
            to assure that where payment under this part for a
            service rendered is on a charge basis, such payment
            shall be determined on the basis of the charge that is
            determined in accordance with this section on the basis
            of customary and prevailing charge levels in effect at
            the time the service was rendered or, in the case of
            services rendered more than 12 months before the year
            in which the bill is submitted or request for payment
            is made, on the basis of such levels in effect for the
            12-month period preceding such year;
              (G) [will] shall, for a service that is furnished
            with respect to an individual enrolled under this part,
            that is not paid on an assignment-related basis, and
            that is subject to a limiting charge under section
            1848(g)--
                      (i)  * * *

               *       *       *       *       *       *       *

              (H) [if it makes determinations or payments with
            respect to physicians' services, will] shall
            implement--
                      (i) programs to recruit and retain physicians
                    as participating physicians in the area served
                    by the [carrier] medicare administrative
                    contractor, including educational and outreach
                    activities and the use of professional
                    relations personnel to handle billing and other
                    problems relating to payment of claims of
                    participating physicians; and

               *       *       *       *       *       *       *

              [(I) will submit annual reports to the Secretary
            describing the steps taken to recover payments made
            under this part for items or services for which payment
            has been or could be made under a primary plan (as
            defined in section 1862(b)(2)(A)); and]
              (L) [will] shall monitor and profile physicians'
            billing patterns within each area or locality and
            provide comparative data to physicians whose
            utilization patterns vary significantly from other
            physicians in the same payment area or locality[;].
    [and shall contain such other terms and conditions not
    inconsistent with this section as the Secretary may find
    necessary or appropriate.] In determining the reasonable charge
    for services for purposes of this paragraph, there shall be
    taken into consideration the customary charges for similar
    services generally made by the physician or other person
    furnishing such services, as well as the prevailing charges in
    the locality for similar services. No charge may be determined
    to be reasonable in the case of bills submitted or requests for
    payment made under this part after December 31, 1970, if it
    exceeds the higher of (i) the prevailing charge recognized by
    the carrier and found acceptable by the Secretary for similar
    services in the same locality in administering this part on
    December 31, 1970, or (ii) the prevailing charge level that, on
    the basis of statistical data and methodology acceptable to the
    Secretary, would cover 75 percent of the customary charges made
    for similar services in the same locality during the 12-month
    period ending on the June 30 last preceding the start of the
    calendar year in which the service is rendered. In the case of
    physicians' services the prevailing charge level determined for
    purposes of clause (ii) of the preceding sentence for any
    twelve-month period (beginning after June 30, 1973) specified
    in clause (ii) of such sentence may not exceed (in the
    aggregate) the level determined under such clause for the
    fiscal year ending June 30, 1973, or (with respect to
    physicians' services furnished in a year after 1987) the level
    determined under this sentence (or under any other provision of
    law affecting the prevailing charge level) for the previous
    year except to the extent that the Secretary finds, on the
    basis of appropriate economic index data, that such higher
    level is justified by year-to-year economic changes. With
    respect to power-operated wheelchairs for which payment may be
    made in accordance with section 1861(s)(6), charges determined
    to be reasonable may not exceed the lowest charge at which
    power-operated wheelchairs are available in the locality. In
    the case of medical services, supplies, and equipment
    (including equipment servicing) that, in the judgment of the
    Secretary, do not generally vary significantly in quality from
    one supplier to another, the charges incurred after December
    31, 1972, determined to be reasonable may not exceed the lowest
    charge levels at which such services, supplies, and equipment
    are widely and consistently available in a locality except to
    the extent and under the circumstances specified by the
    Secretary. The requirement in subparagraph (B) that a bill be
    submitted or request for payment be made by the close of the
    following calendar year shall not apply if (I) failure to
    submit the bill or request the payment by the close of such
    year is due to the error or misrepresentation of an officer,
    employee, fiscal intermediary, carrier, medicare administrative
    contractor, or agent of the Department of Health and Human
    Services performing functions under this title and acting
    within the scope of his or its authority, and (II) the bill is
    submitted or the payment is requested promptly after such error
    or misrepresentation is eliminated or corrected.
    Notwithstanding the provisions of the third and fourth
    sentences preceding this sentence, the prevailing charge level
    in the case of a physician service in a particular locality
    determined pursuant to such third and fourth sentences for any
    calendar year after 1974 shall, if lower than the prevailing
    charge level for the fiscal year ending June 30, 1975, in the
    case of a similar physician service in the same locality by
    reason of the application of economic index data, be raised to
    such prevailing charge level for the fiscal year ending June
    30, 1975, and shall remain at such prevailing charge level
    until the prevailing charge for a year (as adjusted by economic
    index data) equals or exceeds such prevailing charge level. The
    amount of any charges for outpatient services which shall be
    considered reasonable shall be subject to the limitations
    established by regulations issued by the Secretary pursuant to
    section 1861(v)(1)(K), and in determining the reasonable charge
    for such services, the Secretary may limit such reasonable
    charge to a percentage of the amount of the prevailing charge
    for similar services furnished in a physician's office, taking
    into account the extent to which overhead costs associated with
    such outpatient services have been included in the reasonable
    cost or charge of the facility.

               *       *       *       *       *       *       *

      [(5) Each contract under this section shall be for a term of
    at least one year, and may be made automatically renewable from
    term to term in the absence of notice by either party of
    intention to terminate at the end of the current term; except
    that the Secretary may terminate any such contract at any time
    (after such reasonable notice and opportunity for hearing to
    the carrier involved as he may provide in regulations) if he
    finds that the carrier has failed substantially to carry out
    the contract or is carrying out the contract in a manner
    inconsistent with the efficient and effective administration of
    the insurance program established by this part.]
      (6) No payment under this part for a service provided to any
    individual shall (except as provided in section 1870) be made
    to anyone other than such individual or (pursuant to an
    assignment described in subparagraph (B)(ii) of paragraph (3))
    the physician or other person who provided the service, except
    that (A) payment may be made (i) to the employer of such
    physician or other person if such physician or other person is
    required as a condition of his employment to turn over his fee
    for such service to his employer, 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, (B) payment may be
    made to an entity (i) which provides coverage of the services
    under a health benefits plan, but only to the extent that
    payment is not made under this part, (ii) which has paid the
    person who provided the service an amount (including the amount
    payable under this part) which that person has accepted as
    payment in full for the service, and] (ii) where the service
    was provided under a contractual arrangement between such
    physician or other person and a qualified entity (as defined by
    the Secretary) or other person, to the entity or other person
    if under such arrangement such entity or individual submits the
    bill for such service and such arrangement (I) includes joint
    and several liability for overpayment by such physician or
    other person and such entity or other person, and (II) meets
    such other program integrity and other safeguards as the
    Secretary may determine to be appropriate, (iii) to which the
    individual has agreed in writing that payment may be made under
    this part, (C) in the case of services described in clause (i)
    of section 1861(s)(2)(K), payment shall be made to either (i)
    the employer of the physician assistant involved, or (ii) with
    respect to a physician assistant who was the owner of a rural
    health clinic (as described in section 1861(aa)(2)) for a
    continuous period beginning prior to the date of the enactment
    of the Balanced Budget Act of 1997 and ending on the date that
    the Secretary determines such rural health clinic no longer
    meets the requirements of section 1861(aa)(2), payment may be
    made directly to the physician assistant, (D) payment may be
    made to a physician for physicians' services (and services
    furnished incident to such services) furnished by a second
    physician to patients of the first physician if (i) the first
    physician is unavailable to provide the services; (ii) the
    services are furnished pursuant to an arrangement between the
    two physicians that (I) is informal and reciprocal, or (II)
    involves per diem or other fee-for-time compensation for such
    services; (iii) the services are not provided by the second
    physician over a continuous period of more than 60 days; and
    (iv) the claim form submitted to the carrier for such services
    includes the second physician's unique identifier (provided
    under the system established under subsection (r)) and
    indicates that the claim meets the requirements of this
    subparagraph for payment to the first physician, (E) in the
    case of an item or service (other than services described in
    section 1888(e)(2)(A)(ii)) furnished by, or under arrangements
    made by, a skilled nursing facility to an individual who (at
    the time the item or service is furnished) is a resident of a
    skilled nursing facility, payment shall be made to the
    facility, (F) in the case of home health services (including
    medical supplies described in section 1861(m)(5), but excluding
    durable medical equipment to the extent provided for in such
    section) furnished to an individual who (at the time the item
    or service is furnished) is under a plan of care of a home
    health agency, payment shall be made to the agency (without
    regard to whether or not the item or service was furnished by
    the agency, by others under arrangement with them made by the
    agency, or when any other contracting or consulting
    arrangement, or otherwise), and (G) in the case of services in
    a hospital or clinic to which section 1880(e) applies, payment
    shall be made to such hospital or clinic. No payment which
    under the preceding sentence may be made directly to the
    physician or other person providing the service involved
    (pursuant to an assignment described in subparagraph (B)(ii) of
    paragraph (3)) shall be made to anyone else under a
    reassignment or power of attorney ([except to an employer or
    facility as described in clause (A)] except to an employer,
    entity, or other person as described in subparagraph (A) of
    such sentence); but nothing in this subsection shall be
    construed (i) to prevent the making of such a payment in
    accordance with an assignment from the individual to whom the
    service was provided or a reassignment from the physician or
    other person providing such service if such assignment or
    reassignment is made to a governmental agency or entity or is
    established by or pursuant to the order of a court of competent
    jurisdiction, or (ii) to preclude an agent of the physician or
    other person providing the service from receiving any such
    payment if (but only if) such agent does so pursuant to an
    agency agreement under which the compensation to be paid to the
    agent for his services for or in connection with the billing or
    collection of payments due such physician or other person under
    this title is unrelated (directly or indirectly) to the amount
    of such payments or the billings therefor, and is not dependent
    upon the actual collection of any such payment. For purposes of
    subparagraph (C) of the first sentence of this paragraph, an
    employment relationship may include any independent contractor
    arrangement, and employer status shall be determined in
    accordance with the law of the State in which the services
    described in such clause are performed.
      (7)(A) In the case of physicians' services furnished to a
    patient in a hospital with a teaching program approved as
    specified in section 1861(b)(6) but which does not meet the
    conditions described in section 1861(b)(7), [the carrier] the
    Secretary shall not provide (except on the basis described in
    subparagraph (C)) for payment for such services under this
    part--
              (i)  * * *

               *       *       *       *       *       *       *

      (B) The customary charge for such services in a hospital
    shall be determined in accordance with regulations issued by
    the Secretary and taking into account the following factors:
              (i) In the case of a physician who is not a teaching
            physician (as defined by the Secretary), [the carrier]
            the Secretary shall take into account the amounts the
            physician charges for similar services in the
            physician's practice outside the teaching setting.
              (ii) In the case of a teaching physician, if the
            hospital, its physicians, or other appropriate billing
            entity has established one or more schedules of charges
            which are collected for medical and surgical services,
            [the carrier] the Secretary shall base payment under
            this title on the greatest of--
                      (I)  * * *

               *       *       *       *       *       *       *

      (C) In the case of physicians' services furnished to a
    patient in a hospital with a teaching program approved as
    specified in section 1861(b)(6) but which does not meet the
    conditions described in section 1861(b)(7), if the conditions
    described in subclauses (I) and (II) of subparagraph (A)(i) are
    met and if the physician elects payment to be determined under
    this subparagraph, [the carrier] the Secretary shall provide
    for payment for such services under this part on the basis of
    regulations of the Secretary governing reimbursement for the
    services of hospital-based physicians (and not on any other
    basis).

               *       *       *       *       *       *       *

      (c)[(1) Any contract entered into with a carrier under this
    section shall provide for advances of funds to the carrier for
    the making of payments by it under this part, and shall provide
    for payment of the cost of administration of the carrier, as
    determined by the Secretary to be necessary and proper for
    carrying out the functions covered by the contract. The
    Secretary shall provide that in determining a carrier's
    necessary and proper cost of administration, the Secretary
    shall, with respect to each contract, take into account the
    amount that is reasonable and adequate to meet the costs which
    must be incurred by an efficiently and economically operated
    carrier in carrying out the terms of its contract. The
    Secretary shall cause to have published in the Federal
    Register, by not later than September 1 before each fiscal
    year, data, standards, and methodology to be used to establish
    budgets for carriers under this section for that fiscal year,
    and shall cause to be published in the Federal Register for
    public comment, at least 90 days before such data, standards,
    and methodology are published, the data, standards, and
    methodology proposed to be used.]
      (2)(A) Each [contract under this section which provides for
    the disbursement of funds, as described in subsection
    (a)(1)(B),] contract under section 1874A that provides for
    making payments under this part shall provide that payment
    shall be issued, mailed, or otherwise transmitted with respect
    to not less than 95 percent of all claims submitted under this
    part--
              (i)  * * *

               *       *       *       *       *       *       *

      (3)(A) Each contract under this section which provides for
    the disbursement of funds, as described in [subsection
    (a)(1)(B)] section 1874A(a)(3)(B), shall provide that no
    payment shall be issued, mailed, or otherwise transmitted with
    respect to any claim submitted under this title within the
    applicable number of calendar days after the date on which the
    claim is received.
      (4) Neither a [carrier] medicare administrative contractor
    nor the Secretary may impose a fee under this title--
              (A)  * * *

               *       *       *       *       *       *       *

      [(5) Each contract under this section which provides for the
    disbursement of funds, as described in subsection (a)(1)(B),
    shall require the carrier to meet criteria developed by the
    Secretary to measure the timeliness of carrier responses to
    requests for payment of items described in section
    1834(a)(15)(C).
      [(6) No carrier may carry out (or receive payment for
    carrying out) any activity pursuant to a contract under this
    subsection to the extent that the activity is carried out
    pursuant to a contract under the Medicare Integrity Program
    under section 1893. The previous sentence shall not apply with
    respect to the activity described in section 1893(b)(5)
    (relating to prior authorization of certain items of durable
    medical equipment under section 1834(a)(15)).
      [(d) Any contract with a carrier under this section may
    require such carrier or 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.
      [(e)(1) No individual designated pursuant to a contract under
    this section as a certifying officer shall, in the absence of
    gross negligence or intent to defraud the United States, be
    liable with respect to any payments certified by him under this
    section.
      [(2) No disbursing officer shall, in the absence of gross
    negligence or intent to defraud the United States, be liable
    with respect to any payment by him under this section if it was
    based upon a voucher signed by a certifying officer designated
    as provided in paragraph (1) of this subsection.
      [(3) No such carrier shall be liable to the United States for
    any payments referred to in paragraph (1) or (2).
      [(f) For purposes of this part, the term ``carrier'' means--
              [(1) with respect to providers of services and other
            persons, a voluntary association, corporation,
            partnership, or other nongovernmental organization
            which is lawfully engaged in providing, paying for, or
            reimbursing the cost of, health services under group
            insurance policies or contracts, medical or hospital
            service agreements, membership or subscription
            contracts, or similar group arrangements, in
            consideration of premiums or other periodic charges
            payable to the carrier, including a health benefits
            plan duly sponsored or underwritten by an employee
            organization; and
              [(2) with respect to providers of services only, any
            agency or organization (not described in paragraph (1))
            with which an agreement is in effect under section
            1816.]
      (g) The Railroad Retirement Board shall, in accordance with
    such regulations as the Secretary may prescribe, contract with
    a [carrier or carriers] medicare administrative contractor or
    contractors to perform the functions set out in this section
    with respect to individuals entitled to benefits as qualified
    railroad retirement beneficiaries pursuant to section 226(a) of
    this Act and section 7(d) of the Railroad Retirement Act of
    1974.
      (h)(1) * * *
      (2) [Each carrier having an agreement with the Secretary
    under subsection (a)] The Secretary shall maintain a toll-free
    telephone number or numbers at which individuals enrolled under
    this part may obtain the names, addresses, specialty, and
    telephone numbers of participating physicians and suppliers and
    may request a copy of an appropriate directory published under
    paragraph (4). [Each such carrier] The Secretary shall, without
    charge, mail a copy of such directory upon such a request.
      (3)(A) In any case in which [a carrier having an agreement
    with the Secretary under subsection (a)] medicare
    administrative contractor having a contract under section 1874A
    that provides for making payments under this part is able to
    develop a system for the electronic transmission to [such
    carrier] such contractor of bills for services, such carrier
    shall establish direct lines for the electronic receipt of
    claims from participating physicians and suppliers.
      (B) The Secretary shall establish a procedure whereby an
    individual enrolled under this part may assign, in an
    appropriate manner on the form claiming a benefit under this
    part for an item or service furnished by a participating
    physician or supplier, the individual's rights of payment under
    a medicare supplemental policy (described in section
    1882(g)(1)) in which the individual is enrolled. In the case
    such an assignment is properly executed and a payment
    determination is made by [a carrier] a medicare administrative
    contractor with a contract under this section, [the carrier]
    the contractor shall transmit to the private entity issuing the
    medicare supplemental policy notice of such fact and shall
    include an explanation of benefits and any additional
    information that the Secretary may determine to be appropriate
    in order to enable the entity to decide whether (and the amount
    of) any payment is due under the policy. The Secretary may
    enter into agreements for the transmittal of such information
    to entities electronically. The Secretary shall impose user
    fees for the transmittal of information under this subparagraph
    by [a carrier] a medicare administrative contractor, whether
    electronically or otherwise, and such user fees shall be
    collected and retained by [the carrier] the contractor.

               *       *       *       *       *       *       *

      (5)(A) The Secretary shall promptly notify individuals
    enrolled under this part through an annual mailing of the
    participation program under this subsection and the publication
    and availability of the directories and shall make the
    appropriate area directory or directories available in each
    district and branch office of the Social Security
    Administration, in the offices of [carriers] medicare
    administrative contractors, and to senior citizen
    organizations.
      (B) The annual notice provided under subparagraph (A) shall
    include--
              (i) * * *
              (iii) an explanation of the assistance offered by
            [carriers] medicare administrative contractors in
            obtaining the names of participating physicians and
            suppliers, and

               *       *       *       *       *       *       *

      (l)(1)(A) Subject to subparagraph (C), if--
              (i) * * *

               *       *       *       *       *       *       *

              (iii)(I) a [carrier] medicare administrative
            contractor determines under this part or a peer review
            organization determines under part B of title XI that
            payment may not be made by reason of section 1862(a)(1)
            because a service otherwise covered under this title is
            not reasonable and necessary under the standards
            described in that section or (II) payment under this
            title for such services is denied under section
            1154(a)(2) by reason of a determination under section
            1154(a)(1)(B), and

               *       *       *       *       *       *       *

      (2) Each [carrier] medicare administrative contractor with a
    contract in effect under this section with respect to
    physicians and each peer review organization with a contract
    under part B of title XI shall send any notice of denial of
    payment for physicians' services based on section 1862(a)(1)
    and for which payment is not requested on an assignment-related
    basis to the physician and the individual involved.

               *       *       *       *       *       *       *

      (p)(1) * * *

               *       *       *       *       *       *       *

      (3) In the case of a request for payment for an item or
    service furnished by a physician not submitted on an
    assignment-related basis and which does not include the code
    (or codes) required under paragraph (1)--
              (A) if the physician knowingly and willfully fails to
            provide the code (or codes) promptly upon request of
            the Secretary or a [carrier] medicare administrative
            contractor, the physician may be subject to a civil
            money penalty in an amount not to exceed $2,000, and

               *       *       *       *       *       *       *

      (q)(1)(A) The Secretary, in consultation with groups
    representing physicians who furnish anesthesia services, shall
    establish by regulation a relative value guide for use in all
    [carrier] localities in making payment for physician anesthesia
    services furnished under this part. Such guide shall be
    designed so as to result in expenditures under this title for
    such services in an amount that would not exceed the amount of
    such expenditures which would otherwise occur.

               *       *       *       *       *       *       *

                        Part C--Medicare+Choice Program

                     ELIGIBILITY, ELECTION, AND ENROLLMENT

      Sec. 1851. (a) Choice of Medicare Benefits Through
    Medicare+Choice Plans.--
              (1) * * *
              (2) Types of medicare+choice plans that may be
            available.--A Medicare+Choice plan may be any of the
            following types of plans of health insurance:
                      (A) Coordinated care plans.--Coordinated care
                    plans which provide health care services,
                    including but not limited to health maintenance
                    organization plans (with or without point of
                    service options), plans offered by provider-
                    sponsored organizations (as defined in section
                    1855(d)), and preferred provider organization
                    plans. Specialized Medicare+Choice plans for
                    special needs beneficiaries (as defined in
                    section 1859(b)(4)) may be any type of
                    coordinated care plan.

               *       *       *       *       *       *       *

                      BENEFITS AND BENEFICIARY PROTECTIONS

      Sec. 1852. (a) Basic Benefits.--
              (1) * * *
              (2) Satisfaction of requirement.--
                      (A) * * *

               *       *       *       *       *       *       *

                      (C) Election of uniform coverage [policy]
                    determination.--In the case of a
                    Medicare+Choice organization that offers a
                    Medicare+Choice plan in an area in which more
                    than one local coverage [policy] determination
                    is applied with respect to different parts of
                    the area, the organization may elect to have
                    the local coverage [policy] determination for
                    the part of the area that is most beneficial to
                    Medicare+Choice enrollees (as identified by the
                    Secretary) apply with respect to all
                    Medicare+Choice enrollees enrolled in the plan.

               *       *       *       *       *       *       *

                     DEFINITIONS; MISCELLANEOUS PROVISIONS

      Sec. 1859. (a) * * *
      (b) Definitions Relating to Medicare+Choice Plans.--
              (1) * * *

               *       *       *       *       *       *       *

              (4) Specialized medicare+choice plans for special
            needs beneficiaries.--
                      (A) In general.--The term ``specialized
                    Medicare+Choice plan for special needs
                    beneficiaries'' means a Medicare+Choice plan
                    that exclusively serves special needs
                    beneficiaries (as defined in subparagraph (B)).
                      (B) Special needs beneficiary.--The term
                    ``special needs beneficiary'' means a
                    Medicare+Choice eligible individual who--
                              (i) is institutionalized (as defined
                            by the Secretary);
                              (ii) is entitled to medical
                            assistance under a State plan under
                            title XIX; or
                              (iii) meets such requirements as the
                            Secretary may determine would benefit
                            from enrollment in such a specialized
                            Medicare+Choice plan described in
                            subparagraph (A) for individuals with
                            severe or disabling chronic conditions.

               *       *       *       *       *       *       *

      (f) Restriction on Enrollment for Specialized Medicare+Choice
    Plans for Special Needs Beneficiaries.--In the case of a
    specialized Medicare+Choice plan (as defined in subsection
    (b)(4)), notwithstanding any other provision of this part and
    in accordance with regulations of the Secretary and for periods
    before January 1, 2008, the plan may restrict the enrollment of
    individuals under the plan to individuals who are within one or
    more classes of special needs beneficiaries.

               *       *       *       *       *       *       *

                        Part D--Miscellaneous Provisions

                  DEFINITIONS OF SERVICES, INSTITUTIONS, ETC.

      Sec. 1861. For purposes of this title--

                                Spell of Illness

      (a) * * *

               *       *       *       *       *       *       *

                                    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.

               *       *       *       *       *       *       *

                         Hospice Care; Hospice Program

      (dd)(1) * * *

               *       *       *       *       *       *       *

      (5)(A) * * *

               *       *       *       *       *       *       *

      (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.

               *       *       *       *       *       *       *

                           Discharge Planning Process

      (ee)(1) * * *
      (2) The Secretary shall develop guidelines and standards for
    the discharge planning process in order to ensure a timely and
    smooth transition to the most appropriate type of and setting
    for post-hospital or rehabilitative care. The guidelines and
    standards shall include the following:
              (A) * * *

               *       *       *       *       *       *       *

              (D) A discharge planning evaluation must include an
            evaluation of a patient's likely need for appropriate
            post-hospital services, including [hospice services]
            hospice care and post-hospital extended care services,
            and the availability of those services, including the
            availability of home health services through
            individuals and entities that participate in the
            program under this title and that serve the area in
            which the patient resides and that request to be listed
            by the hospital as available 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.

               *       *       *       *       *       *       *

            EXCLUSIONS FROM COVERAGE AND MEDICARE AS SECONDARY PAYER

      Sec. 1862. (a) Notwithstanding any other provision of this
    title, no payment may be made under part A or part B for any
    expenses incurred for items or services--
              (1) * * *

               *       *       *       *       *       *       *

    Paragraph (7) shall not apply to Federally qualified health
    center services described in section 1861(aa)(3)(B). In making
    a national coverage determination (as defined in paragraph
    (1)(B) of section 1869(f )) the Secretary shall ensure that the
    public is afforded notice and opportunity to comment prior to
    implementation by the Secretary of the determination; meetings
    of advisory committees [established under section 1114(f )]
    with respect to the determination are made on the record; in
    making the determination, the Secretary has considered
    applicable information (including clinical experience and
    medical, technical, and scientific evidence) with respect to
    the subject matter of the determination; and in the
    determination, provide a clear statement of the basis for the
    determination (including responses to comments received from
    the public), the assumptions underlying that basis, and make
    available to the public the data (other than proprietary data)
    considered in making the determination.

               *       *       *       *       *       *       *

      (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.

               *       *       *       *       *       *       *

      [(i)] (j)(1) Any advisory committee appointed [under
    subsection (f )] to advise the Secretary on matters relating to
    the interpretation, application, or implementation of [section
    1862(a)(1)] subsection (a)(1) shall assure the full
    participation of a nonvoting member in the deliberations of the
    advisory committee, and shall provide such nonvoting member
    access to all information and data made available to voting
    members of the advisory committee, other than information
    that--
              (A) is exempt from disclosure pursuant to subsection
            (a) of section 552 of title 5, United States Code, by
            reason of subsection (b)(4) of such section (relating
            to trade secrets); or
              (B) the Secretary determines would present a conflict
            of interest relating to such nonvoting member.
      (2) If an advisory committee described in paragraph (1)
    organizes into panels of experts according to types of items or
    services considered by the advisory committee, any such panel
    of experts may report any recommendation with respect to such
    items or services directly to the Secretary without the prior
    approval of the advisory committee or an executive committee
    thereof.
      (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.

               *       *       *       *       *       *       *

                    [AGREEMENTS WITH PROVIDERS OF SERVICES]

          AGREEMENTS WITH PROVIDERS OF SERVICES; ENROLLMENT PROCESSES

      Sec. 1866. (a)(1) Any provider of services (except a fund
    designated for purposes of section 1814(g) and section 1835(e))
    shall be qualified to participate under this title and shall be
    eligible for payments under this title if it files with the
    Secretary an agreement--
              (A) * * *

               *       *       *       *       *       *       *

              (R) to contract only with a health care clearinghouse
            (as defined in section 1171) that meets each standard
            and implementation specification adopted or established
            under part C of title XI on or after the date on which
            the health care clearinghouse is required to comply
            with the standard or specification, [and]
              (S) in the case of a hospital that has a financial
            interest (as specified by the Secretary in regulations)
            in an entity to which individuals are referred as
            described in section 1861(ee)(2)(H)(ii), or in which
            such an entity has such a financial interest, or in
            which another entity has such a financial interest
            (directly or indirectly) with such hospital and such an
            entity, to maintain and disclose to the Secretary (in a
            form and manner specified by the Secretary) information
            on--
                      (i) * * *

               *       *       *       *       *       *       *

                      (iii) the percentage of such individuals who
                    received such services from such provider (or
                    another such provider)[.], and
              (T) 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 section 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).

               *       *       *       *       *       *       *

      (b)(1) * * *

               *       *       *       *       *       *       *

      (4)(A) A hospital that fails to comply with the requirement
    of subsection (a)(1)(T) (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)(T) 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.

               *       *       *       *       *       *       *

      (h)(1)(A) Except as provided in paragraph (2), an institution
    or agency dissatisfied with a determination by the Secretary
    that it is not a provider of services or with a determination
    described in subsection (b)(2) shall be entitled to a hearing
    thereon by the Secretary (after reasonable notice) to the same
    extent as is provided in section 205(b), and to judicial review
    of the Secretary's final decision after such hearing as is
    provided in section 205(g), except that, in so applying such
    sections and in applying section 205(l) thereto, any reference
    therein to the Commissioner of Social Security or the Social
    Security Administration shall be considered a reference to the
    Secretary or the Department of Health and Human Services,
    respectively.
      (B) An institution or agency described in subparagraph (A)
    that has filed for a hearing under subparagraph (A) shall have
    expedited access to judicial review under this subparagraph in
    the same manner as providers of services, suppliers, and
    individuals entitled to benefits under part A or enrolled under
    part B, or both, may obtain expedited access to judicial review
    under the process established under section 1869(b)(2). Nothing
    in this subparagraph shall be construed to affect the
    application of any remedy imposed under section 1819 during the
    pendency of an appeal under this subparagraph.

               *       *       *       *       *       *       *

      (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.

               *       *       *       *       *       *       *

    EXAMINATION AND TREATMENT FOR EMERGENCY MEDICAL CONDITIONS AND WOMEN IN
                                     LABOR

      Sec. 1867. (a) * * *

               *       *       *       *       *       *       *

      (d) Enforcement.--
              (1) * * *

               *       *       *       *       *       *       *

              (3) Consultation with peer review organizations.--In
            considering allegations of violations of the
            requirements of this section in imposing sanctions
            under paragraph (1) or in terminating a hospital's
            participation under this title, the Secretary shall
            request the appropriate utilization and quality control
            peer review organization (with a contract under part B
            of title XI) to assess whether the individual involved
            had an emergency medical condition which had not been
            stabilized, and provide a report on its findings.
            Except in the case in which a delay would jeopardize
            the health or safety of individuals, the Secretary
            shall request such a review before effecting a sanction
            under paragraph (1) and shall provide a period of at
            least 60 days for such review. 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.
              (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.

               *       *       *       *       *       *       *

                    [PRACTICING PHYSICIANS ADVISORY COUNCIL]

      PRACTICING PHYSICIANS ADVISORY COUNCIL; MEDICARE PROVIDER OMBUDSMAN

      Sec. 1868. (a) Practicing Physicians Advisory Council.--(1)
    The Secretary shall appoint, based upon nominations submitted
    by medical organizations representing physicians, a Practicing
    Physicians Advisory Council (in this [section] subsection
    referred to as the ``Council'') to be composed of 15
    physicians, each of whom has submitted at least 250 claims for
    physicians' services under this title in the previous year. At
    least 11 of the members of the Council shall be physicians
    described in section 1861(r)(1) and the members of the Council
    shall include both participating and nonparticipating
    physicians and physicians practicing in rural areas and
    underserved urban areas.
      [(b)] (2) The Council shall meet once during each calendar
    quarter to discuss certain proposed changes in regulations and
    carrier manual instructions related to physician services
    identified by the Secretary. To the extent feasible and
    consistent with statutory deadlines, such consultation shall
    occur before the publication of such proposed changes.
      [(c)] (3) Members of the Council shall be entitled to receive
    reimbursement of expenses and per diem in lieu of subsistence
    in the same manner as other members of advisory councils
    appointed by the Secretary are provided such reimbursement and
    per diem under this title.
      (b) Medicare Provider Ombudsman.--The Secretary shall appoint
    within the Department of Health and Human Services a Medicare
    Provider Ombudsman. The Ombudsman shall--
              (1) provide assistance, on a confidential basis, to
            providers of services and suppliers with respect to
            complaints, grievances, and requests for information
            concerning the programs under this title (including
            provisions of title XI insofar as they relate to this
            title and are not administered by the Office of the
            Inspector General of the Department of Health and Human
            Services) and in the resolution of unclear or
            conflicting guidance given by the Secretary and
            medicare contractors to such providers of services and
            suppliers regarding such programs and provisions and
            requirements under this title and such provisions; and
              (2) submit recommendations to the Secretary for
            improvement in the administration of this title and
            such provisions, including--
                      (A) recommendations to respond to recurring
                    patterns of confusion in this title and such
                    provisions (including recommendations regarding
                    suspending imposition of sanctions where there
                    is widespread confusion in program
                    administration), and
                      (B) recommendations to provide for an
                    appropriate and consistent response (including
                    not providing for audits) in cases of self-
                    identified overpayments by providers of
                    services and suppliers.
    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.
      (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.

                            DETERMINATIONS; APPEALS

      Sec. 1869. (a) Initial Determinations.--
              (1) * * *

               *       *       *       *       *       *       *

              (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; and
                      (B) the person provided such notice may
                    obtain, upon request, the specific provision of
                    the policy, manual, or regulation used in
                    making the determination.
              (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 person provided such notice may
                    obtain, upon request, information on the
                    specific provision of the policy, manual, or
                    regulation used in making the redetermination.
      (b) Appeal Rights.--
              (1) In general.--
                      (A) Reconsideration of initial
                    determination.--Subject to subparagraph (D),
                    any individual dissatisfied with any initial
                    determination under subsection (a)(1) shall be
                    entitled to reconsideration of the
                    determination, and, subject to subparagraphs
                    (D) and (E), a hearing thereon by the Secretary
                    to the same extent as is provided in section
                    205(b) and, subject to paragraph (2), to
                    judicial review of the Secretary's final
                    decision after such hearing as is provided in
                    section 205(g). For purposes of the preceding
                    sentence, any reference to the ``Commissioner
                    of Social Security'' or the ``Social Security
                    Administration'' in subsection (g) or (l) of
                    section 205 shall be considered a reference to
                    the ``Secretary'' or the ``Department of Health
                    and Human Services'', respectively.

               *       *       *       *       *       *       *

                      (F) Expedited [proceedings.--
                              [(i) Expedited determination]
                            determinations and reconsiderations.--
                            In the case of an individual who has
                            received notice from a provider of
                            services that such provider plans--
                              [(I)] (i) to terminate services
                            provided to an individual and a
                            physician certifies that failure to
                            continue the provision of such services
                            is likely to place the individual's
                            health at significant risk, or
                              [(II)] (ii) to discharge the
                            individual from the provider of
                            services,
                            the individual may request, in writing
                            or orally, an expedited determination
                            or an expedited reconsideration of an
                            initial determination made under
                            subsection (a)(1), as the case may be,
                            and the Secretary shall provide such
                            expedited determination or expedited
                            reconsideration.
                              [(ii) Expedited hearing.--In a
                            hearing by the Secretary under this
                            section, in which the moving party
                            alleges that no material issues of fact
                            are in dispute, the Secretary shall
                            make an expedited determination as to
                            whether any such facts are in dispute
                            and, if not, shall render a decision
                            expeditiously.]

               *       *       *       *       *       *       *

              (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) may
                    obtain access to judicial review when a review
                    panel (described in subparagraph (D)), on its
                    own motion or at the request of the appellant,
                    determines that no entity in the administrative
                    appeals process has the authority to decide the
                    question of law or regulation relevant to the
                    matters in controversy and that there is no
                    material issue of fact in dispute. The
                    appellant may make such request only once with
                    respect to a question of law or regulation in a
                    case of an appeal.
                      (B) Prompt determinations.--If, after or
                    coincident with appropriately filing a request
                    for an administrative hearing, the appellant
                    requests a determination by the appropriate
                    review panel that no review panel has the
                    authority to decide the question of law or
                    regulations relevant to the matters in
                    controversy and that there is no material issue
                    of fact in dispute and if such request is
                    accompanied by the documents and materials as
                    the appropriate review panel shall require for
                    purposes of making such determination, such
                    review panel shall make a determination on the
                    request in writing within 60 days after the
                    date such review panel receives the request and
                    such accompanying documents and materials. Such
                    a determination by such review panel shall be
                    considered a final decision and not subject to
                    review by the Secretary.
                      (C) Access to judicial review.--
                              (i) In general.--If the appropriate
                            review panel--
                                      (I) determines that there are
                                    no material issues of fact in
                                    dispute and that the only issue
                                    is one of law or regulation
                                    that no review panel has the
                                    authority to decide; or
                                      (II) fails to make such
                                    determination within the period
                                    provided under subparagraph
                                    (B);
                            then the appellant may bring a civil
                            action as described in this
                            subparagraph.
                              (ii) Deadline for filing.--Such
                            action shall be filed, in the case
                            described in--
                                      (I) clause (i)(I), within 60
                                    days of date of the
                                    determination described in such
                                    subparagraph; or
                                      (II) clause (i)(II), within
                                    60 days of the end of the
                                    period provided under
                                    subparagraph (B) for the
                                    determination.
                              (iii) Venue.--Such action shall be
                            brought in the district court of the
                            United States for the judicial district
                            in which the appellant is located (or,
                            in the case of an action brought
                            jointly by more than one applicant, the
                            judicial district in which the greatest
                            number of applicants are located) or in
                            the district court for the District of
                            Columbia.
                              (iv) Interest on amounts in
                            controversy.--Where a provider of
                            services or supplier seeks judicial
                            review pursuant to this paragraph, the
                            amount in controversy shall be subject
                            to annual interest beginning on the
                            first day of the first month beginning
                            after the 60-day period as determined
                            pursuant to clause (ii) and equal to
                            the rate of interest on obligations
                            issued for purchase by the Federal
                            Hospital Insurance Trust Fund and 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 Act.
                      (D) Review panels.--For purposes of this
                    subsection, a ``review panel'' is a panel
                    consisting of 3 members (who shall be
                    administrative law judges, members of the
                    Departmental Appeals Board, or qualified
                    individuals associated with a qualified
                    independent contractor (as defined in
                    subsection (c)(2)) or with another independent
                    entity) designated by the Secretary for
                    purposes of making determinations under this
                    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.

               *       *       *       *       *       *       *

      (c) Conduct of Reconsiderations by Independent Contractors.--
              (1) * * *

               *       *       *       *       *       *       *

              (3) Requirements.--Any qualified independent
            contractor entering into a contract with the Secretary
            under this subsection shall meet all of the following
            requirements:
                      (A) In general.--The qualified independent
                    contractor shall perform such duties and
                    functions and assume such responsibilities as
                    may be required by the Secretary to carry out
                    the provisions of this subsection, and shall
                    have [sufficient training and expertise in
                    medical science and legal matters] sufficient
                    medical, legal, and other expertise (including
                    knowledge of the program under this title) and
                    sufficient staffing to make reconsiderations
                    under this subsection.
                      (B) Reconsiderations.--
                              (i) In general.--The qualified
                            independent contractor shall review
                            initial determinations. Where an
                            initial determination is made with
                            respect to whether an item or service
                            is reasonable and necessary for the
                            diagnosis or treatment of illness or
                            injury (under section 1862(a)(1)(A)),
                            such review shall include consideration
                            of the facts and circumstances of the
                            initial determination by a panel of
                            physicians or other appropriate health
                            care professionals and any decisions
                            with respect to the reconsideration
                            shall be based on applicable
                            information, including clinical
                            experience (including the medical
                            records of the individual involved) and
                            medical, technical, and scientific
                            evidence.

               *       *       *       *       *       *       *

                      [(D) Limitation on individual reviewing
                    determinations.--
                              [(i) Physicians and health care
                            professional.--No physician or health
                            care professional under the employ of a
                            qualified independent contractor may
                            review--
                                      [(I) determinations regarding
                                    health care services furnished
                                    to a patient if the physician
                                    or health care professional was
                                    directly responsible for
                                    furnishing such services; or
                                      [(II) determinations
                                    regarding health care services
                                    provided in or by an
                                    institution, organization, or
                                    agency, if the physician or any
                                    member of the family of the
                                    physician or health care
                                    professional has, directly or
                                    indirectly, a significant
                                    financial interest in such
                                    institution, organization, or
                                    agency.
                              [(ii) Family described.--For purposes
                            of this paragraph, the family of a
                            physician or health care professional
                            includes the spouse (other than a
                            spouse who is legally separated from
                            the physician or health care
                            professional under a decree of divorce
                            or separate maintenance), children
                            (including stepchildren and legally
                            adopted children), grandchildren,
                            parents, and grandparents of the
                            physician or health care professional.]
                      (D) Qualifications for reviewers.--The
                    requirements of subsection (g) shall be met
                    (relating to qualifications of reviewing
                    professionals).
                      (E) Explanation of decision.--Any decision
                    with respect to a reconsideration of a
                    qualified independent contractor shall be in
                    writing, 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) and shall include a detailed
                    explanation of the decision as well as a
                    discussion of the pertinent facts and
                    applicable regulations applied in making such
                    decision, and a notification of the right to
                    appeal such determination and instructions on
                    how to initiate such appeal under this section
                    and in the case of a determination of whether
                    an item or service is reasonable and necessary
                    for the diagnosis or treatment of illness or
                    injury (under section 1862(a)(1)(A)) an
                    explanation of the medical and scientific
                    rationale for the decision.

               *       *       *       *       *       *       *

                      (I) Data collection.--
                              (i) * * *
                              (ii) Type of data collected.--Each
                            qualified independent contractor shall
                            keep accurate records of each decision
                            made, consistent with standards
                            established by the Secretary for such
                            purpose. Such records shall be
                            maintained in an electronic database in
                            a manner that provides for
                            identification of the following:
                                      (I) * * *

               *       *       *       *       *       *       *

                                      (III) Situations suggesting
                                    the need for changes in
                                    national or local coverage
                                    [policy] determination.
                                      (IV) Situations suggesting
                                    the need for changes in local
                                    [medical review policies]
                                    coverage determinations.

               *       *       *       *       *       *       *

                      (J) Hearings by the secretary.--The qualified
                    independent contractor shall (i) [prepare]
                    submit such information as is required for an
                    appeal of a decision of the contractor [with
                    respect to a reconsideration to the Secretary
                    for a hearing, including as necessary,
                    explanations of issues involved in the decision
                    and relevant policies], and (ii) participate in
                    such hearings as required by the Secretary.
                      (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.
              (4) Number of qualified independent contractors.--The
            Secretary shall enter into contracts with [not fewer
            than 12 qualified independent contractors under this
            subsection] 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.

               *       *       *       *       *       *       *

      (d) Deadlines for Hearings by the Secretary; Notice.--
              (1) * * *

               *       *       *       *       *       *       *

              (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.

               *       *       *       *       *       *       *

      (f ) Review of Coverage Determinations.--
              (1) * * *
              (2) Local coverage determination.--
                      (A) In general.--Review of any local coverage
                    determination shall be subject to the following
                    limitations:
                              (i) Upon the filing of a complaint by
                            an aggrieved party, such a
                            determination shall be reviewed by an
                            administrative law judge [of the Social
                            Security Administration]. The
                            administrative law judge--
                                      (I) * * *

               *       *       *       *       *       *       *

              (4) Pending national coverage determinations.--
                      (A) In general.--In the event the Secretary
                    has not issued a national coverage or
                    noncoverage determination with respect to a
                    particular type or class of items or services,
                    an aggrieved person (as described in paragraph
                    (5)) may submit to the Secretary a request to
                    make such a determination with respect to such
                    items or services. By not later than the end of
                    the 90-day period beginning on the date the
                    Secretary receives such a request
                    (notwithstanding the receipt by the Secretary
                    of new evidence (if any) during such 90-day
                    period), the Secretary shall take one of the
                    following actions:
                              (i) * * *

               *       *       *       *       *       *       *

                              (iv) Issue a notice that states that
                            the Secretary has not completed a
                            review of the request for a national
                            coverage determination and that
                            includes an identification of the
                            remaining steps in the Secretary's
                            review process and a deadline by which
                            the Secretary will complete the review
                            and take an action described in
                            [subclause (I), (II), or (III)] clause
                            (i), (ii), or (iii).
                      (B) Deemed action by the secretary.--In the
                    case of an action described in [clause (i)(IV)]
                    subparagraph (A)(iv), if the Secretary fails to
                    take an action referred to in such clause by
                    the deadline specified by the Secretary under
                    such clause, then the Secretary is deemed to
                    have taken an action described in [clause
                    (i)(III)] subparagraph (A)(iii) as of the
                    deadline.
                      (C) Explanation of determination.--When
                    issuing a determination under [clause (i)]
                    subparagraph (A), the Secretary shall include
                    an explanation of the basis for the
                    determination. An action taken under clause (i)
                    (other than [subclause (IV)] clause (iv)) is
                    deemed to be a national coverage determination
                    for purposes of review under [subparagraph (A)]
                    paragraph (1)(A).

               *       *       *       *       *       *       *

      (g) Qualifications of Reviewers.--
              (1) In general.--In reviewing determinations under
            this section, a qualified independent contractor shall
            assure that--
                      (A) each individual conducting a review shall
                    meet the qualifications of paragraph (2);
                      (B) compensation provided by the contractor
                    to each such reviewer is consistent with
                    paragraph (3); and
                      (C) in the case of a review by a panel
                    described in subsection (c)(3)(B) composed of
                    physicians or other health care professionals
                    (each in this subsection referred to as a
                    ``reviewing professional''), a reviewing
                    professional meets the qualifications described
                    in paragraph (4) and, where a claim is
                    regarding the furnishing of treatment by a
                    physician (allopathic or osteopathic) or the
                    provision of items or services by a physician
                    (allopathic or osteopathic), a reviewing
                    professional shall be a physician (allopathic
                    or osteopathic).
              (2) Independence.--
                      (A) In general.--Subject to subparagraph (B),
                    each individual conducting a review in a case
                    shall--
                              (i) not be a related party (as
                            defined in paragraph (5));
                              (ii) not have a material familial,
                            financial, or professional relationship
                            with such a party in the case under
                            review; and
                              (iii) not otherwise have a conflict
                            of interest with such a party.
                      (B) Exception.--Nothing in subparagraph (A)
                    shall be construed to--
                              (i) prohibit an individual, solely on
                            the basis of a participation agreement
                            with a fiscal intermediary, carrier, or
                            other contractor, from serving as a
                            reviewing professional if--
                                      (I) the individual is not
                                    involved in the provision of
                                    items or services in the case
                                    under review;
                                      (II) the fact of such an
                                    agreement is disclosed to the
                                    Secretary and the individual
                                    entitled to benefits under part
                                    A or enrolled under part B, or
                                    both, (or 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.
      (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
                    eligible items and services described in
                    subparagraph (C), 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 physician, but only with
                            respect to eligible items and services
                            for which the physician may be paid
                            directly.
                              (ii) An individual entitled to
                            benefits under this title, but only
                            with respect to an item or service for
                            which the individual receives, from the
                            physician who may be paid directly for
                            the item or service, an advance
                            beneficiary notice under section
                            1879(a) that payment may not be made
                            (or may no longer be made) for the item
                            or service under this title.
                      (C) Eligible items and services.--For
                    purposes of this subsection and subject to
                    paragraph (2), eligible items and services are
                    items and services which are physicians'
                    services (as defined in paragraph (4)(A) of
                    section 1848(f) for purposes of calculating the
                    sustainable growth rate under such section).
              (2) Secretarial flexibility.--The Secretary shall
            establish by regulation reasonable limits on the
            categories of eligible items and 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 item or 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 an eligible item or
                    service involved as to whether the item or
                    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 item or
                    service, supporting documentation relating to
                    the medical necessity for the item or 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 item or service is so
                            covered;
                              (ii) the item or service is not so
                            covered; or
                              (iii) the contractor lacks sufficient
                            information to make a coverage
                            determination.
                    If the contractor makes the determination
                    described in clause (iii), the contractor shall
                    include in the notice a description of the
                    additional information required to make the
                    coverage determination.
                      (B) 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).
                      (C) Informing beneficiary in case of
                    physician request.--In the case of a request in
                    which an eligible requester is not the
                    individual described in paragraph (1)(B)(ii),
                    the process shall provide that the individual
                    to whom the item or service is proposed to be
                    furnished shall be informed of any
                    determination described in clause (ii)
                    (relating to a determination of non-coverage)
                    and the right (referred to in paragraph (6)(B))
                    to obtain the item or service and have a claim
                    submitted for the item or service.
              (5) Effect of determinations.--
                      (A) 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.
                      (B) Notice and right to redetermination in
                    case of a denial.--
                              (i) In general.--If the contractor
                            makes the determination described in
                            paragraph (4)(A)(ii)--
                                      (I) the eligible requester
                                    has the right to a
                                    redetermination by the
                                    contractor on the determination
                                    that the item or service is not
                                    so covered; and
                                      (II) the contractor shall
                                    include in notice under
                                    paragraph (4)(A) 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 the right to such a
                                    redetermination.
                              (ii) Deadline for redeterminations.--
                            The contractor shall complete and
                            provide notice of such redetermination
                            within the same time period as the time
                            period applicable to the contractor
                            providing notice of redeterminations
                            relating to a claim for benefits under
                            subsection (a)(3)(C)(ii).
              (6) Limitation on further review.--
                      (A) In general.--Contractor determinations
                    described in paragraph (4)(A)(ii) or
                    (4)(A)(iii) (and redeterminations made under
                    paragraph (5)(B)), 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 items or 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 items 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 items and services 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 items
                    and services, there shall be no prior
                    determination under this subsection with
                    respect to such items or services.

               *       *       *       *       *       *       *

                                  REGULATIONS

      Sec. 1871. (a)(1) * * *

               *       *       *       *       *       *       *

      (3) 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.

               *       *       *       *       *       *       *

      (d)(1)(A) A substantive change in regulations, manual
    instructions, interpretative rules, statements of policy, or
    guidelines of general applicability under this title shall not
    be applied (by extrapolation or otherwise) retroactively to
    items and services furnished before the effective date of the
    change, unless the Secretary determines that--
              (i) such retroactive application is necessary to
            comply with statutory requirements; or
              (ii) failure to apply the change retroactively would
            be contrary to the public interest.
      (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)(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 sanction (including any penalty or requirement for
    repayment of any amount) 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.
      (e)(1) Not later than 2 years after the date of the enactment
    of this subsection, and every 2 years thereafter, the Secretary
    shall submit to Congress a report with respect to the
    administration of this title and areas of inconsistency or
    conflict among the various provisions under law and regulation.
      (2) In preparing a report under paragraph (1), the Secretary
    shall collect--
              (A) information from 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 and the Medicare
            Provider 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.

               *       *       *       *       *       *       *

               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,
            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 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 the
                    Medicare Integrity Program under section 1893.
                    The previous sentence shall not apply with
                    respect to the activity described in section
                    1893(b)(5) (relating to prior authorization of
                    certain items of durable medical equipment
                    under section 1834(a)(15)).
                      (B) Construction.--An entity shall not be
                    treated as a medicare administrative contractor
                    merely by reason of having entered into a
                    contract with the Secretary under section 1893.
              (6) Application of federal acquisition regulation.--
            Except to the extent inconsistent with a specific
            requirement of this title, the Federal Acquisition
            Regulation applies to contracts under this title.
      (b) Contracting Requirements.--
              (1) Use of competitive procedures.--
                      (A) In general.--Except as provided in laws
                    with general applicability to Federal
                    acquisition and procurement 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 five 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.--In developing contract
                    performance requirements, the Secretary shall
                    develop performance requirements applicable to
                    functions described in subsection (a)(4).
                      (B) Consultation.-- In developing such
                    requirements, the Secretary may consult with
                    providers of services and suppliers,
                    organizations representing individuals entitled
                    to benefits under part A or enrolled under part
                    B, or both, and organizations and agencies
                    performing functions necessary to carry out the
                    purposes of this section with respect to such
                    performance requirements.
                      (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 developed 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 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 (commonly known as the ``False Claims Act'').
              (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.--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
                            Regulations.
      (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 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 policies,
                            procedures, and practices of a
                            representative 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 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 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 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.
      (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.
      (g) Communications with Beneficiaries, Providers of Services
    and Suppliers.--
              (1) Communication strategy.--The Secretary shall
            develop a strategy for communications with individuals
            entitled to benefits under part A or enrolled under
            part B, or both, and with providers of services and
            suppliers under this title.
              (2) Response to written inquiries.--Each medicare
            administrative contractor shall, for those providers of
            services and suppliers which submit claims to the
            contractor for claims processing and for those
            individuals entitled to benefits under part A or
            enrolled under part B, or both, with respect to whom
            claims are submitted for claims processing, provide
            general written responses (which may be through
            electronic transmission) in a clear, concise, and
            accurate manner to inquiries of providers of services,
            suppliers and individuals entitled to benefits under
            part A or enrolled under part B, or both, concerning
            the programs under this title within 45 business days
            of the date of receipt of such inquiries.
              (3) Response to toll-free lines.--The Secretary shall
            ensure that each medicare administrative contractor
            shall provide, for those providers of services and
            suppliers which submit claims to the contractor for
            claims processing and for those individuals entitled to
            benefits under part A or enrolled under part B, or
            both, with respect to whom claims are submitted for
            claims processing, a toll-free telephone number at
            which such individuals, providers of services and
            suppliers may obtain information regarding billing,
            coding, claims, coverage, and other appropriate
            information under this title.
              (4) Monitoring of contractor responses.--
                      (A) In general.--Each medicare administrative
                    contractor shall, consistent with standards
                    developed by the Secretary under subparagraph
                    (B)--
                              (i) maintain a system for identifying
                            who provides the information referred
                            to in paragraphs (2) and (3); and
                              (ii) monitor the accuracy,
                            consistency, and timeliness of the
                            information so provided.
                      (B) Development of standards.--
                              (i) In general.--The Secretary shall
                            establish and make public standards to
                            monitor the accuracy, consistency, and
                            timeliness of the information provided
                            in response to written and telephone
                            inquiries under this subsection. Such
                            standards shall be consistent with the
                            performance requirements established
                            under subsection (b)(3).
                              (ii) Evaluation.--In conducting
                            evaluations of individual medicare
                            administrative contractors, the
                            Secretary shall take into account the
                            results of the monitoring conducted
                            under subparagraph (A) taking into
                            account as performance requirements the
                            standards established under clause (i).
                            The Secretary shall, in consultation
                            with organizations representing
                            providers of services, suppliers, and
                            individuals entitled to benefits under
                            part A or enrolled under part B, or
                            both, establish standards relating to
                            the accuracy, consistency, and
                            timeliness of the information so
                            provided.
                      (C) Direct monitoring.--Nothing in this
                    paragraph shall be construed as preventing the
                    Secretary from directly monitoring the
                    accuracy, consistency, and timeliness of the
                    information so provided.
      (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 (as defined in subsection
                    (i)(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.

               *       *       *       *       *       *       *

                  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.
      (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)
            $25,000,000 for each of fiscal years 2005 and 2006 and
            such sums as may be necessary for succeeding fiscal
            years.
              (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)).
              (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.
      (d) Internet Sites; 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 site 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).
      (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 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.

               *       *       *       *       *       *       *

                           MEDICARE INTEGRITY PROGRAM

      Sec. 1893. (a) * * *

               *       *       *       *       *       *       *

      (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 defined in
                    subparagraph (B)), subject to subparagraph (C),
                    upon request of the provider of services or
                    supplier the Secretary shall enter into a plan
                    with the provider of services or supplier for
                    the repayment (through offset or otherwise) of
                    such overpayment over a period of at least 6
                    months but not longer than 3 years (or not
                    longer than 5 years in the case of extreme
                    hardship, as determined by the Secretary).
                    Interest shall accrue on the balance through
                    the period of repayment. Such plan shall meet
                    terms and conditions determined to be
                    appropriate by the Secretary.
                      (B) Hardship.--
                              (i) In general.--For purposes of
                            subparagraph (A), the repayment of an
                            overpayment (or overpayments) within 30
                            days is deemed to constitute a hardship
                            if--
                                      (I) in the case of a provider
                                    of services that files cost
                                    reports, the aggregate amount
                                    of the overpayments exceeds 10
                                    percent of the amount paid
                                    under this title to the
                                    provider of services for the
                                    cost reporting period covered
                                    by the most recently submitted
                                    cost report; or
                                      (II) in the case of another
                                    provider of services or
                                    supplier, the aggregate amount
                                    of the overpayments exceeds 10
                                    percent of the amount paid
                                    under this title to the
                                    provider of services or
                                    supplier for the previous
                                    calendar year.
                              (ii) Rule of application.--The
                            Secretary shall establish rules for the
                            application of this subparagraph in the
                            case of a provider of services or
                            supplier that was not paid under this
                            title during the previous year or was
                            paid under this title only during a
                            portion of that year.
                              (iii) Treatment of previous
                            overpayments.--If a provider of
                            services or supplier has entered into a
                            repayment plan under subparagraph (A)
                            with respect to a specific overpayment
                            amount, such payment amount under the
                            repayment plan shall not be taken into
                            account under clause (i) with respect
                            to subsequent overpayment amounts.
                      (C) Exceptions.--Subparagraph (A) shall not
                    apply if--
                              (i) the Secretary has reason to
                            suspect that the provider of services
                            or supplier may file for bankruptcy or
                            otherwise cease to do business or
                            discontinue participation in the
                            program under this title; or
                              (ii) there is an indication of fraud
                            or abuse committed against the program.
                      (D) Immediate collection if violation of
                    repayment plan.--If a provider of services or
                    supplier fails to make a payment in accordance
                    with a repayment plan under this paragraph, the
                    Secretary may immediately seek to offset or
                    otherwise recover the total balance outstanding
                    (including applicable interest) under the
                    repayment plan.
                      (E) Relation to no fault provision.--Nothing
                    in this paragraph shall be construed as
                    affecting the application of section 1870(c)
                    (relating to no adjustment in the cases of
                    certain overpayments).
              (2) Limitation on recoupment.--
                      (A) In general.--In the case of a provider of
                    services or supplier that is determined to have
                    received an overpayment under this title and
                    that seeks a reconsideration by a qualified
                    independent contractor on such determination
                    under section 1869(b)(1), the Secretary may not
                    take any action (or authorize any other person,
                    including any medicare contractor, as defined
                    in subparagraph (C)) to recoup the overpayment
                    until the date the decision on the
                    reconsideration has been rendered. If the
                    provisions of section 1869(b)(1) (providing for
                    such a reconsideration by a qualified
                    independent contractor) are not in effect, in
                    applying the previous sentence any reference to
                    such a reconsideration shall be treated as a
                    reference to a redetermination by the fiscal
                    intermediary or carrier involved.
                      (B) Collection with interest.--Insofar as the
                    determination on such appeal is against the
                    provider of services or supplier, interest on
                    the overpayment shall accrue on and after the
                    date of the original notice of overpayment.
                    Insofar as such determination against the
                    provider of services or supplier is later
                    reversed, the Secretary shall provide for
                    repayment of the amount recouped plus interest
                    at the same rate as would apply under the
                    previous sentence for the period in which the
                    amount was recouped.
                      (C) Medicare contractor defined.--For
                    purposes of this subsection, the term
                    ``medicare contractor'' has the meaning given
                    such term in section 1889(g).
              (3) Limitation on use of extrapolation.--A medicare
            contractor may not use extrapolation to determine
            overpayment amounts to be recovered by recoupment,
            offset, or otherwise unless--
                      (A) there is a sustained or high level of
                    payment error (as defined by the Secretary by
                    regulation); or
                      (B) documented educational intervention has
                    failed to correct the payment error (as
                    determined by the Secretary).
              (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.

               *       *       *       *       *       *       *

                             VII. DISSENTING VIEWS

        For two years, members of this Committee have worked on a
    bipartisan basis to write this legislation. Democratic and,
    until now, Republican members have faithfully followed the
    ground rules and operating principles established by the
    Chairmen of the Committee and the Health Subcommittee with
    respect to the creation and consideration of the Medicare
    Regulatory and Contracting Reform Act. This common
    understanding helped the Committee set aside partisan
    differences and unified member support on both sides of the
    aisle for this targeted bill. Such consensus on legislation
    affecting Medicare has been virtually non-existent in the
    Committee in recent years.
        We stongly support the legislation as presented in the
    Chairman's mark. Our vote to oppose reporting of the
    legislation was primarily a reflection of our protest of the
    abandonment of a process that had served both the Committee and
    the issues under consideration well.
        The addition of controversial amendments in the Committee
    undercut the process and seriously undermined the trust and
    goodwill that had accumulated among members around the
    development and advancement of this particular legislation.
        We do not normally like to be put in a position where
    amendments are discouraged, as it undermines the free and full
    debate that should be the hallmark of the democratic process.
    However, in this case, it was well-understood to be a
    bipartisan directive. When this legislation was before the
    Committee in the 107th Congress, the Chairman had stipulated
    that amendments could not be offered.
        Given an opportunity for full and fair debate regarding the
    amendments that were offered, some of us might have been able
    to find bipartisan agreement on these issues, as has been done
    on other provisions in the mark. That said, many of us are
    concerned about the issues raised by the beneficiary
    organizations that opposed the amendments. Those organizations,
    whose letters have been inserted elsewhere in the Record,
    include the AARP and the National Citizens' Coalition for
    Nursing Home Reform. Testimony from the Center for Medicare
    Advocacy at the Health Subcommittee hearing on H.R. 810 also
    reflects concerns about both of the proposals that were offered
    as amendments.
        In addition, there was an explicit prior agreement between
    the Chairman and Ranking Member of the Health Subcommittee that
    the OASIS issue dealt with in the Johnson amendment would
    instead be reflected in a General Accounting Office study.
    Furthermore, the Camp amendment to rollback penalties for
    nursing homes with serious deficiencies flies in the face of
    the need to increase oversight and enforcement of quality
    standards in the nursing homes.
        Members and staff have spent countless hours meeting with
    various affected interest groups, the Administration, and
    colleagues on the Energy and Commerce Committee over the past
    two years. The Chairman's Mark consisted of policies that were
    broadly supported on both sides of the aisle. We hope that the
    legislation brought to the floor reflects that agreement.

                                       Pete Stark.
                                       Stephanie Tubbs Jones.
                                       Jerry Kleczka.
                                       Lloyd Doggett.
                                       William J. Jefferson.
                                       Ben Cardin.
                                       Richard E. Neal.
                                       Earl Pomeroy.
                                       Charles B. Rangel.
                                       Sander Levin.
                                       Xavier Becerra.
                                       Michael R. McNulty.
                                       Max Sandlin.
                                       John Lewis.
                                       Jim McDermott.
                                       John S. Tanner.