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

    108th Congress                                             Rept. 108-74
                            HOUSE OF REPRESENTATIVES
     1st Session                                                     Part 2

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

             MEDICARE REGULATORY AND CONTRACTING REFORM ACT OF 2003

                                    _______

     April 29, 2003.--Committed to the Committee of the Whole House on the
                  State of the Union and ordered to be printed

                                    _______

     Mr. Tauzin, from the Committee on Energy and Commerce, submitted the
                                   following

                                  R E P O R T

                            [To accompany H.R. 810]

          [Including cost estimate of the Congressional Budget Office]

        The Committee on Energy and Commerce, 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
    Amendment........................................................     1
    Purpose and Summary..............................................    37
    Background and Need for Legislation..............................    37
    Hearings.........................................................    38
    Committee Consideration..........................................    38
    Committee Votes..................................................    39
    Committee Oversight Findings.....................................    39
    Statement of General Performance Goals and Objectives............    39
    New Budget Authority, Entitlement Authority, and Tax Expenditures    39
    Committee Cost Estimate..........................................    39
    Congressional Budget Office Estimate.............................    39
    Federal Mandates Statement.......................................    46
    Advisory Committee Statement.....................................    46
    Constitutional Authority Statement...............................    46
    Applicability to Legislative Branch..............................    46
    Section-by-Section Analysis of the Legislation...................    46
    Changes in Existing Law Made by the Bill, as Reported............    68

                                   Amendment

        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 on
    claims 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. Enhancement of program integrity efforts in medicare provider
    enrollment.
    Sec. 512. Other provisions.

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

    SEC. 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 the
            requirements under paragraph (2)(D)(i) of such section).
              ``(2) Independent audits.--
                      ``(A) Performance of annual evaluations.--Each year a
                    medicare administrative contractor that performs the
                    functions referred to in subparagraphs (A) and (B) of
                    subsection (a)(4) (relating to determining and making
                    payments) shall undergo an evaluation of the
                    information security of the contractor with respect to
                    such functions under this title. The evaluation shall--
                              ``(i) be performed by an entity that meets
                            such requirements for independence as the
                            Inspector General of the Department of Health
                            and Human Services may establish; and
                              ``(ii) test the effectiveness of information
                            security control techniques of an appropriate
                            subset of the contractor's information systems
                            (as defined in section 3502(8) of title 44,
                            United States Code) relating to such functions
                            under this title and an assessment of
                            compliance with the requirements of this
                            subsection and related information security
                            policies, procedures, standards and guidelines,
                            including policies and procedures as may be
                            prescribed by the Director of the Office of
                            Management and Budget and applicable
                            information security standards promulgated
                            under section 11331 of title 40, United States
                            Code.
                      ``(B) Deadline for initial evaluation.--
                              ``(i) New contractors.--In the case of a
                            medicare administrative contractor covered by
                            this subsection that has not previously
                            performed the functions referred to in
                            subparagraphs (A) and (B) of subsection (a)(4)
                            (relating to determining and making payments)
                            as a fiscal intermediary or carrier under
                            section 1816 or 1842, the first independent
                            evaluation conducted pursuant 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, but shall not report to, or be
            subject to supervision by, another 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.

    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), each 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 ON
                        CLAIMS WITHOUT PURSUING APPEALS PROCESS.

      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.

    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 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 foreach 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, 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. ENHANCEMENT OF PROGRAM INTEGRITY EFFORTS IN MEDICARE PROVIDER
                        ENROLLMENT.

      (a) In General.--Section 1842(b)(6)(A) (42 U.S.C. 1395u(b)(6)(A)) is
    amended--
              (1) by striking ``or'' before ``(ii)''; and
              (2) by inserting after ``for such service,'' the following:
            ``or (iii) where the service was provided under a contractual
            arrangement between such physician or other person and an
            entity (such as a medical group, physician practice management
            organization, or a staffing company), to the entity if under
            such arrangement such entity submits the bill for such service
            and such arrangement meets such other qualifications to assure
            program integrity as the Secretary may provide,''.
      (b) Effective Date.--The amendments made by section shall apply to
    payments made on or after the date of the enactment of this Act.

    SEC. 512. OTHER PROVISIONS.

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

                              Purpose and Summary

        The purpose of H.R. 810, the Medicare and Contracting
    Reform Act of 2003, is to streamline Medicare's regulatory
    process, ease paperwork burdens, and improve Medicare's
    responsiveness to beneficiaries and health care providers. Most
    importantly, this legislation addresses the need for consistent
    and accurate written responses from Medicare contractors. It
    also includes significant reform of Medicare's contracting and
    administrative appeals processes, and improvements in
    beneficiary and provider outreach and education.

                      Background and Need For Legislation

        Covering about 40 million beneficiaries at an annual cost
    of nearly $240 billion, the Medicare program is the nation's
    largest health insurance program. It enrolls and pays claims
    from nearly one million providers of services, physicians,
    practitioners, facilities, suppliers, and health plans. The
    Centers for Medicare and Medicaid Services (CMS) is the federal
    agency that administers Medicare, relying on contractors to
    annually process and pay about 900 million claims for services
    furnished under the traditional fee-for-service program.
        The complexity of the Medicare program and the environment
    in which CMS operates is widely recognized. Because of the
    large number of laws and regulations that govern the Medicare
    program, many health care providers feel as though they are
    forced to spend as much time with paperwork as they do with
    patients. Complaints about confusing and burdensome regulations
    are common.
        During the 107th Congress, the Subcommittee on Health and
    the Subcommittee on Oversight and Investigations conducted a
    comprehensive review of the major programs, policies, and
    operations of CMS, focusing specifically on the agency's
    administration of the Medicare program. As part of this ongoing
    initiative, known as ``Patients First: A 21st Century Promise
    to Ensure Quality and Affordable Health Coverage,'' the
    Subcommittees examined the current complexities in the Medicare
    program, the extent to which such complexities are affecting
    patient care, and the role Congress can play in addressing
    these concerns.
        In an effort to identify concerns and burdens that Medicare
    beneficiaries and health care providers face on a daily basis,
    the Committee on Energy and Commerce disseminated two surveys,
    one for beneficiaries and the other for health care providers.
    These surveys were designed to elicit input about ways the
    delivery of quality health care could be improved and waste,
    mismanagement, and bureaucratic delays could be eliminated. The
    surveys asked Medicare's true stakeholders--beneficiaries and
    health care providers-to report on their interactions with the
    Medicare program and identify areas where problems exist. The
    provider survey also asked providers of services, physicians,
    practitioners, facilities, and suppliers to identify some of
    the most burdensome regulations they deal with routinely, as
    well as provide recommendations to improve the federal health
    care system. With more than 3,500 responses, the surveys were a
    valuable Committee resource.
        Through the ``Patients First'' project and survey
    responses, the Committee documented and identified many of the
    complexities of the Medicare program and the systemic problems
    faced by Medicare beneficiaries and health care providers. For
    example, the majority of health care providers who responded to
    the Committee's survey described the difficulty associated with
    getting guidance from CMS to appropriately navigate the federal
    rules and regulations governing Medicare, often describing the
    inconsistent information they receive when seeking answers to
    their questions. In addition, many health care providers stated
    that the educational materials they receive from Medicare are
    neither clear nor concise. Further, many beneficiaries reported
    problems with Medicare's customer service.
        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.

                                    Hearings

        The Committee on Energy and Commerce has not held hearings
    on the legislation during the 108th Congress.

                            Committee Consideration

        On Wednesday, March 26, 2003, the Full Committee met in
    open markup session and favorably ordered H.R. 810 reported to
    the House, as amended, by a voice vote, a quorum being present.

                                Committee Votes

        There were no record votes taken in connection with
    ordering H.R. 810 reported. A motion by Mr. Tauzin to order
    H.R. 810 reported to the House, as amended, was agreed to by a
    voice vote.

                          Committee Oversight Findings

        Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
    House of Representatives, the Committee has not held oversight
    or legislative hearings on this legislation.

             Statement of General Performance Goals and Objectives

        The objective of H.R. 810 is to provide regulatory relief
    to providers of services, physicians, practitioners,
    facilities, and suppliers furnishing health care services to
    Medicare beneficiaries and improve education and outreach to
    beneficiaries and providers.

       New Budget Authority, Entitlement Authority, and Tax Expenditures

        In compliance with clause 3(c)(2) of rule XIII of the Rules
    of the House of Representatives, the Committee finds that H.R.
    810, the Medicare Regulatory and Contracting Reform Act of
    2003, would result in no new or increased budget authority,
    entitlement authority, or tax expenditures or revenues.

                            Committee Cost Estimate

        The Committee adopts as its own the cost estimate prepared
    by the Director of the Congressional Budget Office pursuant to
    section 402 of the Congressional Budget Act of 1974.

                      Congressional Budget Office Estimate

        Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
    House of Representatives, the following is the cost estimate
    provided by the Congressional Budget Office pursuant to section
    402 of the Congressional Budget Act of 1974:

                                         U.S. Congress,
                                   Congressional Budget Office,
                                         Washington, DC, April 8, 2003.
    Hon. W.J. ``Billy'' Tauzin,
    Chairman, Committee on Energy and Commerce,
    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
    $68 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 or 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 would expand an existing intergovernmental and
    private-sector mandate, as defined by the Unfunded Mandates
    Reform Act (UMRA), but CBO cannot estimate whether any new
    costs of complying with the mandate would exceed the thresholds
    established by UMRA. (In 2003, the thresholds are $59 million
    for intergovernmental mandates and $117 million for private-
    sector mandates.)
        Under current law, the Secretary of HHS establishes
    standards for collecting and reporting health data based on the
    recommendations of the National Committee on Vital and Health
    Statistics (NCVHS). H.R. 810 would allow the Secretary to
    establish a new coding system without such a recommendation.
    This expanded authority could increase the cost of the existing
    mandate on public and private health plans and providers
    regarding the coding system they must use. Because such a
    change would depend on future actions of the Secretary,
    however, CBO does not have a basis for estimating the increased
    cost.
        The bill also includes a requirement for public hospitals
    that participate in the Medicare program to comply with the
    Occupational Safety and Health Administration (OSHA) bloodborne
    pathogens standard. That requirement would be a condition of
    participating in the Medicare program, and thus not an
    intergovernmental mandate.
        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 $68 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         76        489        397        313        329
        Estimated Outlays.........................          0         68        448        406        321        327
    Spending for Medicare Administrative Costs
     Under H.R. 810:
        Estimated Authorization Level.............      3,798      4,007      4,567      4,633      4,731      4,955
        Estimated Outlays.........................      3,797      3,993      4,512      4,615      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 developing new
    policies concerning the issuance of regulations and guidelines.
        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 of 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 that 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 dollars 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 administrative 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 thecosts 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 Programs. 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.
        Development of Policies, Procedures, and Time Lines. H.R.
    810 would require CMS to develop new policies, procedures, and
    time lines with regard to the issuance of regulations and
    documentation guidelines for evaluation and management
    services. CBO estimates the cost of implementing these
    provisions would be $9 million in 2004 and $37 million during
    the 2004-2008 period.
        Final Regulations. The bill would require CMS to create a
    time line for publishing final regulations and would limit
    publication of new regulations to once a month. The estimate
    assumes there currently are about 20 ``interim final rules'';
    the bill would require CMS to make those rules final, and would
    require CMS to finalize all future regulations. We estimate
    that CMS would need to hire an additional 3-to-5 people, at the
    GS-11 level or higher, to comply with the requirement to
    finalize all future interim regulations and to produce the
    required reports. CBO estimates the cost of implementing these
    provisions would be $9 million in 2004 and $19 million during
    the 2004-2008 period.
        Documentation Guidelines for Evaluation and Management
    (E&M) Services. H.R. 810 would restrict CMS from implementing
    new documentation guidelines for evaluation and management
    services until several conditions have been met. Those
    conditions include:
               Establishing plans to improve the
            guidelines;
               Completing pilot projects to test
            modifications to the guidelines;
               Educating providers about the guidelines;
            and
               Consulting providers during the entire
            process of testing and establishing the guidelines.
        CMS currently has E&M guidelines in place, and the bill
    would not require changes in those guidelines. CBO assumes that
    CMS will attempt to update those guidelines during the next few
    years, because both CMS and provider groups have expressed
    interest in doing so. The new procedural requirements would
    increase the cost of developing and implementing new E&M
    documentation would require the hiring of at least two FTEs for
    the administration of the pilot projects, for outreach to
    providers, and for consultation with providers. CBO further
    estimates that CMS would conduct at least three pilot project
    with each project costing around $1 million per year, and that
    the studies and reports required by these provisions would cost
    another $1 million.
        Miscellaneous provisions. H.R. 810 would require the
    Secretary, the Comptroller General, and the Office of the
    Inspector General to conduct several studies, produce reports,
    and conduct evaluations. In addition, the bill would 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.
    CBO estimates that conducting these activities would cost $12
    million over the 2004-2008 period.

    Direct spending

        H.R. 810 would change the conditions under which Medicare
    would pay for services and would create a process to establish
    whether an item or service is covered prior to a beneficiary
    receiving the service. 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 regulations 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.
        Intergovenrmental and private-sector impact: H.R. 810 would
    expand an existing intergovernmental and private-sector
    mandate, as defined by UMRA, but CBO cannot estimate whether
    any new costs of complying with the mandate would exceed the
    thresholds established by UMRA. (In 2003, the thresholds are
    $59 million for intergovernmental mandates and $117 million for
    private-sector mandates. The thresholds are adjusted annually
    for inflation.)

    Intergovernmental and private-sector mandates

        Current law directs the Secretary of HHS to establish
    standards for collecting and reporting health data under the
    health Insurance Portability and Accountability Act. As a
    result, public and private health plans, health care
    clearinghouses, and health care providers must use the coding
    systems authorized by the Secretary when they record and
    exchange health care information. The law also requires the
    Secretary to rely on the recommendations, of the National
    Committee on Vital and Health Statistics when establishing
    those coding standards H.R. 810 would allow the Secretary to
    establish a new coding system (the International Classification
    of Diseases, 10th Revision: ICD-10) in the absence of an
    explicit recommendation from the NCVHS to move to that new
    system.
        This expanded authority could increase the cost of the
    existing mandate on public and private health plans and
    providers regarding the coding system they must use. It is
    unclear however, whether the Secretary would actually require
    the implementation of the ICD-10 in the absence of a
    recommendation from the NCVHS, and it is also unclear whether
    the NCVHS will recommend a new system in the near future under
    current law. As a result, CBO does not have a basis for
    determining whether the affected entities would face additional
    costs, of if they did, whether those increased costs would
    exceed the intergovernmental and private-sector thresholds
    specified in UMRA ($50 million and $117 million, respectively,
    in 2003, adjusted annually for inflation). Information about
    the potential effects of such a change are limited. However,
    HHS is conducting a study of the costs of moving of the ICD-10,
    as well as the savings that plans and providers would obtain by
    operating under the new, more efficient system. HHS expects to
    release the findings of that study late in the summer of 2003.
        Other impacts on state, local, and tribal governments:
    Although not an intergovernmental mandate as defined by UMRA,
    the requirement for public hospitals that participate in the
    Medicare program to comply with the OSHA 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 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 other hospitals have voluntarily established
    comparable standards. Consequently, CBO does not expect the
    costs of the requirement to be significant, and any such costs
    would result from participating in a voluntary federal program
    and thus would not be costs of an intergovernmental mandate as
    defined in UMRA.
        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.

                           Federal Mandates Statement

        The Committee adopts as its own the estimate of Federal
    mandates prepared by the Director of the Congressional Budget
    Office pursuant to section 423 of the Unfunded Mandates Reform
    Act.

                          Advisory Committee Statement

        No advisory committees within the meaning of section 5(b)
    of the Federal Advisory Committee Act were created by this
    legislation.

                       Constitutional Authority Statement

        Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
    House of Representatives, the Committee finds that the
    Constitutional authority for this legislation is provided in
    Article I, section 8, clause 3, which grants Congress the power
    to regulate commerce with foreign nations, among the several
    States, and with the Indian tribes.

                      Applicability to Legislative Branch

        The Committee finds that the legislation does not relate to
    the terms and conditions of employment or access to public
    services or accommodations within the meaning of section
    102(b)(3) of the Congressional Accountability Act.

                 Section-by-Section Analysis of the Legislation

    Section 1. Short title; amendments to Social Security Act; table of
            contents

        Section 1 establishes the short title as the ``Medicare
    Regulatory and Contracting Reform Act of 2003.''

    Section 2. Findings and construction

        Section 2 states that none of the provisions will be
    construed to (1) compromise existing remedies for addressing
    Medicare fraud or abuse with respect to criminal prosecution,
    civil enforcement, or administrative remedies, including those
    established by the False Claims Act or (2) prevent the
    Department of Health and Human Services (HHS) from its efforts
    to eliminate waste, fraud, and abuse in Medicare. Also,
    consolidation of Medicare's administrative contracting 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 does not reflect any position on that issue.

    Section 3. Definitions

        Section 3 defines a ``supplier'' as a physician,
    practitioner, facility or other non-provider entity that
    furnishes Medicare items or services unless otherwise
    indicated, and ``Secretary'' as the Secretary of Health and
    Human Services.

                           TITLE I--REGULATORY REFORM

    Section 101. Issuance of regulations

        Section 101(a) requires the Secretary, in consultation with
    the Director of the Office of Management and Budget, to
    establish and publish a regular timeline for the publication of
    final regulations based on the previous publication of a
    proposed regulation or an interim final regulation. The
    timeline may vary by regulation due to complexity, number and
    scope of comments received and other factors, but would not be
    longer than 3 years unless there are exceptional circumstances.
    If the Secretary intends to vary a regulation's timeline, a
    notice of the different timeline would be required to be
    published in the Federal Register. This notice would include a
    brief explanation of the justification for such variation. If
    the timeline established for an interim final regulation
    expires without promulgation of a final regulation (including
    the public comment period), the interim final regulation would
    not remain in effect unless the Secretary publishes a notice of
    continuation that includes an explanation for not complying
    with the deadlines. This provision applies to the regular
    timelines and any subsequent 1-year extension to the timeline.
    If a notice of continuation is published, the regular timeline
    or the timeline as previously extended would be extended for 1
    additional year. The Secretary would be required to submit a
    report to Congress that describes and explains the instances
    where the final regulation was not published within the
    applicable timeline. The Secretary would be required to provide
    for a transition period for previously published interim final
    regulations.
        Subsection (b) states a provision in a final regulation
    that is not a logical outgrowth of the proposed regulation
    (including an interim final regulation) 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. This provision would apply to final
    regulations published on or after enactment.

    Section 102. Compliance with changes in regulations and policies

        Section 102(a) states that a substantive change in a
    regulatory or a sub-regulatory 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. This provision would apply
    to substantive changes issued on or after enactment.
        Subsection (b) states 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
    against a provider or supplier for goods and services furnished before
    the effective date of the substantive change would be permitted. This
    provision would apply to compliance actions undertaken on or after
    enactment.
        Subsection (c) states if (1) a 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,
    then the provider or supplier who reasonably relied on the
    guidance would not be subject to any sanction or penalty,
    including repayment. This provision would not be construed to
    prevent recoupment or repayment (without additional penalty) if
    the overpayment was solely the result of a clerical or
    technical operational error. This provision would be effective
    upon enactment, but would not apply to sanctions where notice
    was provided on or before enactment.

    Section 103. Reports and studies relating to regulatory reform

        Section 103 requires the General Accounting Office (GAO) 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 timeframe for issuing the opinions as
    well as the need for additional staff and funding. GAO would
    submit the study to Congress no later than one year after
    enactment.
        This section would require the Secretary 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 2
    years after enactment and every 2 years thereafter.

                          TITLE II--CONTRACTING REFORM

    Section 201. Increased flexibility in medicare administration

        Section 201(a) adds section 1874A to the Act which permits
    the Secretary to enter into contracts with any eligible 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: (1)
    determine payment amounts; (2) make payments; (3) educate and
    assist beneficiaries; (4) provide consultative services; (5)
    communicate with providers and suppliers; (6) educate and offer
    technical assistance to providers; and, (7) perform additional
    functions as necessary. An entity eligible to enter into a
    contract with respect to the performance of a particular
    function would (1) have demonstrated capability to carry out
    such function; (2) comply with conflict of interest standards
    that are generally applicable to 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 a 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.
        The Federal Acquisition Regulations (FAR) would apply to
    Medicare administration contracts except to the extent
    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 5 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) that
    describes the transferred functions and the affected providers
    and suppliers and also 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. The Secretary may include satisfaction of
    beneficiaries as a standard for measuring performance. In
    developing the performance standards, the Secretary would be
    able to consult with providers and suppliers, organizations
    representing Medicare beneficiaries, and Medicare contractors.
    The Secretary would be required to contract only with those
    entities that (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
    administrativecontractors, the Secretary would be required to
    consider the existing timeliness standards for reconsiderations,
    applications for exemption, and initial determinations.
        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 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, solely by
    reason of the MIP contract.
        A Medicare administrative contractor and any of its
    employees certifying or disbursing payments may be required to
    give 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. The contractor's employee who certifies payments will
    not be liable for erroneous payments in the absence of reckless
    disregard or intent to defraud the United States. The
    contractor's employee who disburses payments would not be
    liable for erroneous payments in the absence of reckless
    disregard or intent to defraud the United States, if such
    payments are based upon an authorization from the certifying
    employee and the authorization meets the internal control
    standards established by GAO. The contractor would not be
    liable for payments made by certifying or disbursing officers
    unless in connection with such a payment the Medicare
    administrative contractor acted with reckless disregard or
    intent to defraud the United States. Section 202(d) clarifies
    that Medicare administrative contractors are not liable for
    inadvertent billing errors but, as in the past, 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 subsection 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, fraudulent, or grossly
    negligent; if such indemnification is provided before this
    determination, the contractor would reimburse the Secretary for
    the 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 FAR.
        Subsection (b) establishes that the existing administrative
    activities of fiscal intermediaries would be conducted through
    contracts with Medicare administrative contractors set forth
    previously. 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.
        Subsection (c) establishes that the existing administrative
    activities of carriers would be conducted through contracts
    with Medicare administrative contractors set forth previously.
    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.
    The requirements for carrier fair hearings would be eliminated
    to conform with existing law. Certain annual reporting
    requirements concerning the contractor's overpayment recovery
    efforts would be retained.
        Subsection (d) states, 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 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 MIP contracts be awarded on a
    competitive basis would continue to apply and would not be
    affected by the provisions in this section. Any reference to a
    contract in the existing MIP contracting exceptions would be
    deemed to include a contract under the new 1874A that continues
    such MIP activities.
        Subsection (e) states that after this section becomes
    effective, any reference to fiscal intermediary or carrier
    would be considered a reference to the appropriate Medicare
    administrative contractor.
        Subsection (f) requires the Secretary to 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 6 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.

    Section 202. Requirements for information security for medicare
            administrative contractors

        Section 202 requires Medicare administrative contractors
    that determine and make payments 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 Inspector General (OIG) in HHS, and (2) would test
    the effectiveness of information security control 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 1 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.

                       TITLE III--EDUCATION AND OUTREACH

    Section 301. Provider education and technical assistance

        Section 301(a) adds section 1889 to the Act to require the
    Secretary (1) to 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, 2004, on actions taken to coordinate the funding of provider
    education.
        Subsection (b) requires the Secretary to use the specific
    claims payment error rates or similar methodology at each
    Medicare administrative contractor. 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 such
    methodology should be used as a basis of contractors'
    performance bonuses.
        Subsection (c) requires the Secretary, by October 1, 2004,
    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.
        Subsection (d) authorizes $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 be tailored to
    the special needs of small providers and suppliers. The
    provision defines a small provider as an institution with fewer
    than 25 full-time equivalents employees (FTEs) and a small
    supplier as one with fewer than 10 FTEs.
        Subsection (e) requires the Secretary and each contractor,
    by October 1, 2004, 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.
        Subsection (f) would not permit a Medicare contractor 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. 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

        Section 302 requires the Secretary 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 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
    OIG in HHS or GAO. Participating providers and suppliers would
    be required to pay an amount estimated and disclosed in advance
    that would equal 25% 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 recommend continuation of the
    demonstration project no later than 2 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 demonstration
    project would be authorized at $1 million in FY2005 and $6
    million in FY2006 of appropriations from the Medicare Trust
    Funds.

    Section 303. Medicare Provider Ombudsman; Medicare Beneficiary
            Ombudsman

        Section 303(a) requires the Secretary, one year after
    enactment, 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. 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.
        Subsection (b) requires the Secretary, one year after
    enactment, 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 (M+C)
    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
    Counseling Programs, authorized under section 4360 of Omnibus
    Reconciliation Act of 1990, to facilitate the provision of
    information to Medicare beneficiaries regarding M+C plans and
    any changes related to those plans. Nothing in this subsection
    would preclude further collaboration between the Medicare
    Beneficiary Ombudsman and these programs.
        Subsection (c) requires the Secretary to appoint the
    Medicare Provider Ombudsman and the Medicare Beneficiary
    Ombudsman by no later than 1 year after enactment.
        Subsection (d) authorizes appropriations of necessary sums
    in FY 2004 and subsequently from the appropriate Medicare Trust
    Funds for the ombudsman programs.
        Subsection (e) requires the Secretary 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.
        The Secretary would be required to establish a toll-free
    number (1-800-MEDICARE) that 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 1 year from enactment.

    Section 304. Beneficiary outreach demonstration program

        Section 304 requires the Secretary to establish a 3-year
    demonstration project where Medicare specialists who are HHS
    employees are placed in at least six Social Security
    Administration (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 established on a permanent basis.

    Section 305. Inclusion of additional information in notices to
            beneficiaries about skilled nursing facility benefits

        Beneficiaries currently utilizing skilled nursing
    facilities (SNFs) are sometimes unaware that their Medicare
    coverage is ending and they must secure other means of payment
    for their nursing home care. Section 305 requires the Secretary
    to provide in Medicare beneficiary notices (sec. 1806(a) of the
    SSA title XVIII) information on the number of days of coverage
    of nursing home services remaining well in advance of the end
    of the 100 days of care. This shall apply to notices provided
    more than 6 months after the date of enactment of this Act.

    Section 306. Information on medicare-certified skilled nursing
            facilities in hospital discharge plans

        Some hospitals discharge patients, who would otherwise be
    eligible for the Medicare SNF benefit, to facilities that are
    not Medicare-certified without informing the beneficiary that
    they would not receive Medicare coverage for their care or that
    other Medicare-certified facilities may be available. Section
    306 requires the Secretary to provide public information that
    enables hospital discharger planners, Medicare beneficiaries,
    and the public to identify skilled nursing facilities that are
    participating in the Medicare program. This shall apply to
    discharge plans made no more than 6 months after the date the
    Secretary provides for the availability of information under
    this section.

                         TITLE IV--APPEALS AND RECOVERY

    Section 401. Transfer of responsibility for medicare appeals

        Section 401 requires, by October 1, 2004, the Commissioner
    of SSA and the Secretary to develop and transmit a plan to
    Congress and GAO describing the transfer of 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. GAO would evaluate the plan and submit a
    report to Congress within 6 months. The Secretary and the
    Commissioner of SSA would implement the transitional plan and
    transfer the ALJ functions no earlier than July 1, 2005 and no
    later than October 1, 2005. The Secretary would assure the
    independence of the ALJs performing the ALJ function from the
    Centers of Medicare and Medicaid Services (CMS) and its
    contractors by placing the ALJs in an administrative office
    that is organizationally and functionally separate from CMS.
    Such judges would not report to or be subject to any officer
    within the Department except the Secretary. The Secretary would
    also 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 Departmental Appeals Board (DAB)
    staff.
        The transition plan shall include information on the
    following:
        1. Workload--The number of such ALJs 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.
        2. Cost Projections--Funding levels required for fiscal
    year 2004 and subsequent fiscal years under this subsection to
    hear such cases in a timely manner.
        3. Transition Timetable--A timetable for the transition.
        4. Regulations--The establishment of specific regulations
    to govern the appeals process.
        5. 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.
        6. 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 addresses broad
    legal issues.
        7. Access to ALJs--The feasibility of filing appeals with
    ALJs electronically and the feasibility of conducting hearings
    using tele- or video-conference technologies.

    Section 402. Process for expedited access to review

        Section 402 (a) requires the Secretary to establish an
    appeals process for a provider, supplier, or beneficiary which
    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 requests 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 the 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 Qualified
    Independent Contractor (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
    thiscivil 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.
        Subsection (b) concerns section 1866(h) of the Act and
    provides for a hearing and for judicial review for any
    institution or agency dissatisfied with a determination that it
    is not a provider (or that it can no longer be a provider).
        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.
        Subsection (c) establishes the effective date and states
    that amendments in the section would apply to appeals filed on
    or after October 1, 2004.
        Subsection (d) requires the Secretary to 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 the immediate 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 FY 2003 and subsequently would be authorized in
    order to (1) reduce the average time for administrative
    determinations on provider participation appeals by 50%; (2)
    increase the number of ALJs and their staff as well as
    appellate level staff at the DAB; and, (3) educate such judges
    and their staff on long-term care issues.
        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.

    Section 403. Revisions to medicare appeals process

        Section 403(a) states that starting no later than October
    1, 2004, 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.
        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.
        Subsection (b) requires medical records of the individual
    involved in the appeal to be included as part of the applicable
    information used by QICs in their reconsideration process.
        Subsection (c) establishes requirements for initial
    determination and redetermination notices. In all instances
    notices must be provided in printed form, be written in a
    manner easily understood by the beneficiary, and must include
    both procedures for obtaining additional information about the
    determination and notification of the right to and process for
    appealing the determination.
        The notice of initial determination shall also include the
    reasons for the determination, including whether a local
    medical review policy or local coverage determination was used.
    The redetermination shall include the specific reasons for the
    determination and as appropriate, a summary of the clinical or
    scientific evidence used in making the determination.
        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.
        Subsection (d) states that 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 the treatment was furnished or the item or
    service was provided by a physician, each 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
    relationship 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 beneficiarywould be (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. An individual affiliated with a fiscal
    intermediary, carrier or other contractor would be able to act as a QIC
    reviewer if (1) the individual is not involved with the provision of
    the item or service of the case; (2) the 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. An individual with
    staff privileges at the institution where treatment occurs would be
    able to serve as a reviewer if the affiliation is disclosed without
    objection.
        Each reviewing professional would be required to be (1) an
    allopathic or osteopathic physician or health care professional
    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 appropriate for the case, or
    (2) a health care professional who is legally authorized in one
    or more states (in accordance with state law or according to
    the appropriate state regulatory mechanism) to furnish the
    health care items or service and has medical expertise in the
    field of practice appropriate for the case. A sufficient number
    of qualified independent contractors (but not fewer than four)
    shall be available to conduct appeals consistent with the
    timeframes under this section.

    Section 404. Prepayment review

        Section 404 states that 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 a 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 of such non-random prepayment reviews that
    could incorporate differences in the circumstances that
    triggered such a review that may affect its duration. 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. The provisions would be effective no later than 1
    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 1 year from enactment).

    Section 405. Recovery of overpayments

        Section 405 states that 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 6 months and up to 3 years
    when their obligation exceeds a 10% threshold of their annual
    payments from Medicare. The Secretary would be able to
    establish a repayment period of up to 5 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 plan 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, if the provider or supplier
    may otherwise cease to do business or discontinue participating
    in the Medicare program, or where fraud or abuse against
    Medicare is indicated. This provision would not affect the
    application of existing no-fault provisions which preclude
    recovery under 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 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 1 year after enactment, a Medicare
    contractor would not be able to use extrapolation to determine
    overpayment amounts for statistically valid random samples
    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 tocommunicate 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 1 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 1 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.

    Section 406. Provider enrollment process; right of appeal

        Section 406 requires the Secretary to (1) establish by
    regulation an enrollment process for providers and suppliers
    which would include deadlines for actions on enrollment
    applications within 6 months of enactment; (2) monitor the
    performance of Medicare administrative contractors in meeting
    the deadlines; and, (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
    1 year from enactment.

    Section 407. Process for correction of minor errors and omissions on
            claims without pursuing appeals process

        Section 407 requires the Secretary 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. 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 the 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.

    Section 408. Prior determination process for certain items and
            services; advance beneficiary notices

        Section 408 requires the Secretary to establish a process
    through regulation where physicians and beneficiaries can
    establish whether Medicare covers certain items and services
    before such services are provided. Under current law, a
    beneficiary or provider does not find out definitively whether
    an item or service will be covered by Medicare until after it
    is provided. This process may only be used by either (1) a
    physician, but only with respect to eligible items and services
    for which the physician may be paid directly or (2) a Medicare
    beneficiary who receives an advance beneficiary notice (ABN)
    from the physician who may be paid directly for the service in
    question.
        The Secretary may establish by regulation reasonable limits
    on the categories of eligible items and services for which a
    prior determination may be requested. The Secretary would be
    able to require that the request be accompanied by a
    description of the item or service and other supporting
    documentation including a copy of the ABN if the beneficiary is
    requesting the prior determination.
        The contractor would be required to provide the eligible
    requester with a written notice stating whether or not the item
    or service is covered (or that the information provided is
    insufficient to make a determination). The notice must be
    provided in accordance with existing deadlines for initial
    determinations and must include a brief explanation of the
    basis for the decision and the right to redetermination. In the
    case of a request by a physician, both the physician and the
    beneficiary would be informed of the decision. Prior
    determinations would be binding on the Medicare contractor,
    absent fraud or misrepresentation of facts.
        If unsuccessful, the requestor would have the right to
    request a redetermination of the decision, however,
    contractors' priordeterminations (and redeterminations on such
    prior determinations) would not be subject to further administrative or
    judicial review. This limitation on further review only applies to
    cases under section 408; an individual would retain existing rights to
    administrative or judicial review after receiving the service or
    receiving a determination that a service would not be covered. No prior
    determinations would be rendered after services are rendered or items
    are provided.
        The Secretary would be required to (1) establish the
    process to allow for the processing of such requests beginning
    18 months after enactment; (2) collect data on the advance
    determinations; and, (3) establish a beneficiary and provider
    outreach and education program.
        GAO would be required to report on the use of the advance
    beneficiary notice and prior determination process no later
    than 18 months of its implementation.

                       TITLE V--MISCELLANEOUS PROVISIONS

    Section 501. Policy development regarding evaluation and management
            (E&M) documentation guidelines

        Section 501 prohibits the Secretary from implementing 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 by establishment of 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 non-teaching 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.

    Section 502. Improvement in oversight of technology and coverage

        Section 502(a) requires the Secretary to establish a
    Council for Technology and Innovation within 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.
        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.
        Subsection (b) requires the Secretary, as part of this
    procedure, 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; and, (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.
        Subsection (c) requires GAO to conduct a study analyzing
    which external data can be collected by CMS for use in
    computing Medicare's inpatient hospital payments. The study may
    include an evaluation of the feasibility and appropriateness of
    using quarterly samples or special surveys among other methods.
    The study would include an analysis of whether other agencies,
    such as the Bureau of Labor Statistics in the Department of
    Commerce, are best suited to collect this information. The
    report would be submitted to Congress no later than October 1,
    2004.
        In subsection (d), if the National Committee on Vital and
    Health Statistics (NCVHS) has not made a recommendation to the
    Secretarybefore the date of enactment 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), the Secretary may adopt ICD-10-PCS and ICD-10-CM as a standard
    on or after enactment of this Act.

    Section 503. Treatment of hospitals for certain services under the
            medicare secondary payor (MSP) provisions

        Section 503 states that 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 the 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.

    Section 504. EMTALA improvements

        Section 504 states that 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 patient's presenting symptoms or complaint
    available to the treating physician or practitioner at the time
    the services were ordered 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 or after 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 5 business days would apply to such a PRO
    review. The Secretary would be required to provide a copy of
    the report to the hospital or physician, consistent with
    existing confidentiality requirements. This provision would
    apply to terminations initiated on or after enactment.

    Section 505. Emergency Medical Treatment and Active Labor (EMTALA) Task
            Force

        Section 505 requires the Secretary to establish a 19-member
    technical advisory group under specified requirements to review
    issues related to EMTALA. The advisory group would be comprised
    of: the CMS administrator; the OIG; four hospital
    representatives who have EMTALA experience (including one
    person from a public hospital and at least 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 (1) consider
    qualified individuals who are nominated by organizations
    representing providers and patients in selecting the task
    force, and (2) establish the advisory group without regard to
    any limits on the number of such groups that may be established
    (within HHS or otherwise).
        The advisory group would be required to (1) elect a member
    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.

    Section 506. Authorizing use of arrangements to provide core hospice
            services in certain circumstances

        Section 506 states that hospice programs may enter into
    arrangements with another certified hospice program to provide
    services if the services are highly specialized services of a
    registered nurse. The services that could be provided under
    these arrangements would be limited to extraordinary or non-
    routine circumstances, such as unanticipated periods of
    staffing shortages. The originating hospice program would
    continue to be responsible for billing and maintaining quality
    of care.

    Section 507. Application of OSHA bloodborne pathogens standard to
            certain hospitals

        As of July 1, 2004, 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. Section 507 states that 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.

    Section 508. BIPA-related technical amendments and corrections

        Section 508 would incorporate section 1114 of the Act which
    relates to the appointment of advisory councils and other
    advisory groups into section 1862 of the Act which relates to
    exclusions from Medicare coverage. Other terms established by
    BIPA would be changed-from ``policy'' to ``determinations.''

    Section 509. Conforming authority to waive a program exclusion

        Section 509 permits the Administrator of a federal health
    program 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.

    Section 510. Treatment of Certain Dental Claims

        Section 510 prohibits 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.

    Section 511. Enhancement of program integrity efforts in medicare
            provider enrollment

        Section 511 amends the Social Security Act to allow
    physicians providing Medicare covered services to reassign
    Medicare payment to entities with which they have an
    independent contractor arrangement (such as a medical group, a
    physician practice management organization, or a staffing
    company) so long as there is a contractual arrangement between
    the physician and the entity under which the entity submits the
    bill for such service. As a result, the Secretary could enroll
    these entities in the Medicare program. The Secretary may also
    provide for other enrollment qualifications to assure program
    integrity.
        This provision will streamline Medicare enrollment while
    also enhancing HHS' program integrity efforts. By permitting
    entities that retain independent contractors to enroll with the
    Medicare program, HHS will be able to monitor the claims
    submitted by the entities that retain independent contractors
    as well as those entities that employ physicians. The Secretary
    may develop enrollment qualifications to assure program
    integrity. The Committee supports appropriate program integrity
    efforts for any entities billing the Medicare program including
    entities with employees as well as independent contractors. The
    changes made by this provision shall apply to Medicare payments
    made on or after date of enactment.

    Section 512. Other provisions

        Section 512(a) states that 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.
        Subsection (b) requires the Secretary 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.
        Subsection (c) requires the GAO to submit to Congress a
    report on the implications if there were flexibility in the
    application of the Medicare Conditions of Participation (COP)
    for home health agencies with respect to groups or types of
    patients who are not Medicare beneficiaries. This report shall
    be submitted to Congress no later than 6 months after enactment
    of the Act.
        Subsection (d) requires the HHS OIG to submit a report to
    Congress that examines the (1) the extent to which hospitals
    provide notice to Medicare beneficiaries in accordance with
    application requirement before they use their 60 lifetime
    reserve days and (2) the appropriateness and feasibility of
    hospitals providing a notice to such beneficiaries before they
    completely exhaust their lifetime reserve days. The OIG shall
    submit this report no later than one year after enactment of
    the Act.

             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, or (iii) where the
    service was provided under a contractual arrangement between
    such physician or other person and an entity (such as a medical
    group, physician practice management organization, or a
    staffing company), to the entity if under such arrangement such
    entity submits the bill for such service and such arrangement
    meets such other qualifications to assure program integrity as
    the Secretary may provide, (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 (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] medicare administrative contractor
    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) 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

               *       *       *       *       *       *       *

                      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.

               *       *       *       *       *       *       *

                        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, 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), each 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)(A) The Secretary, in consultation with the Director of
    the Office of Management and Budget, shall establish and
    publish a regular timeline for the publication of final
    regulations based on the previous publication of a proposed
    regulation or an interim final regulation.
      (B) Such timeline may vary among different regulations based
    on differences in the complexity of the regulation, the number
    and scope of comments received, and other relevant factors, but
    shall not be longer than 3 years except under exceptional
    circumstances. If the Secretary intends to vary such timeline
    with respect to the publication of a final regulation, the
    Secretary shall cause to have published in the Federal Register
    notice of the different timeline by not later than the timeline
    previously established with respect to such regulation. Such
    notice shall include a brief explanation of the justification
    for such variation.
      (C) In the case of interim final regulations, upon the
    expiration of the regular timeline established under this
    paragraph for the publication of a final regulation after
    opportunity for public comment, the interim final regulation
    shall not continue in effect unless the Secretary publishes (at
    the end of the regular timeline and, if applicable, at the end
    of each succeeding 1-year period) a notice of continuation of
    the regulation that includes an explanation of why the regular
    timeline (and any subsequent 1-year extension) was not complied
    with. If such a notice is published, the regular timeline (or
    such timeline as previously extended under this paragraph) for
    publication of the final regulation shall be treated as having
    been extended for 1 additional year.
      (D) The Secretary shall annually submit to Congress a report
    that describes the instances in which the Secretary failed to
    publish a final regulation within the applicable regular
    timeline under this paragraph and that provides an explanation
    for such failures.
      (4) If the Secretary publishes a final regulation that
    includes a provision that is not a logical outgrowth of a
    previously published notice of proposed rulemaking or interim
    final rule, such provision shall be treated as a proposed
    regulation and shall not take effect until there is the further
    opportunity for public comment and a publication of the
    provision again as a final regulation.

               *       *       *       *       *       *       *

      (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 the requirements under paragraph (2)(D)(i) of such
            section).
              (2) Independent audits.--
                      (A) Performance of annual evaluations.--Each
                    year a medicare administrative contractor that
                    performs the functions referred to in
                    subparagraphs (A) and (B) of subsection (a)(4)
                    (relating to determining and making payments)
                    shall undergo an evaluation of the information
                    security of the contractor with respect to such
                    functions under this title. The evaluation
                    shall--
                              (i) be performed by an entity that
                            meets such requirements for
                            independence as the Inspector General
                            of the Department of Health and Human
                            Services may establish; and
                              (ii) test the effectiveness of
                            information security control techniques
                            of an appropriate subset of the
                            contractor's information systems (as
                            defined in section 3502(8) of title 44,
                            United States Code) relating to such
                            functions under this title and an
                            assessment of compliance with the
                            requirements of this subsection and
                            related information security policies,
                            procedures, standards and guidelines,
                            including policies and procedures as
                            may be prescribed by the Director of
                            the Office of Management and Budget and
                            applicable information security
                            standards promulgated under section
                            11331 of title 40, United States Code.
                      (B) Deadline for initial evaluation.--
                              (i) New contractors.--In the case of
                            a medicare administrative contractor
                            covered by this subsection that has not
                            previously performed the functions
                            referred to in subparagraphs (A) and
                            (B) of subsection (a)(4) (relating to
                            determining and making payments) as a
                            fiscal intermediary or carrier under
                            section 1816 or 1842, the first
                            independent evaluation conducted
                            pursuant 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.

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                  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.

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                           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.

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