[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1738 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1738
To amend title XVIII of the Social Security Act to provide regulatory
relief, appeals process reforms, contracting flexibility, and education
improvements under the medicare program, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 28, 2001
Mr. Kerry (for himself, Mr. Murkowski, Mr. Baucus, Mr. Grassley, Mr.
Jeffords, Mr. Inhofe, Mrs. Lincoln, Mr. Thompson, Mr. Breaux, Mr.
Hutchinson, Mr. Daschle, Mr. Craig, Mr. Hollings, Mrs. Murray, Mr.
Carper, Mr. Johnson, Mr. Bingaman, and Mr. Hatch) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide regulatory
relief, appeals process reforms, contracting flexibility, and education
improvements under the medicare program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare Appeals,
Regulatory, and Contracting Improvement Act of 2001''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this Act an amendment is expressed
in terms of an amendment to or repeal of a section or other provision,
the reference shall be considered to be made to that section or other
provision of the Social Security Act.
(c) BIPA; Secretary.--In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(d) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; amendments to Social Security Act; table of
contents.
Sec. 2. Findings.
Sec. 3. Construction.
TITLE I--REGULATORY REFORM
Sec. 101. Issuance of regulations.
Sec. 102. Compliance with changes in regulations and policies.
Sec. 103. Report on legal and regulatory inconsistencies.
TITLE II--APPEALS PROCESS REFORM
Sec. 201. Transfer of responsibility for medicare appeals.
Sec. 202. Expedited access to judicial review.
Sec. 203. Expedited review of certain provider agreement
determinations.
Sec. 204. Revisions to medicare appeals process.
Sec. 205. Hearing rights related to decisions by the Secretary to deny
or not renew a medicare enrollment
agreement; consultation before changing
provider enrollment forms.
Sec. 206. Appeals by providers when there is no other party available.
Sec. 207. Study and report to Congress on ways to improve the medicare
appeals processes.
TITLE III--CONTRACTING REFORM
Sec. 301. Increased flexibility in medicare administration.
TITLE IV--EDUCATION AND OUTREACH IMPROVEMENTS
Sec. 401. Provider education and technical assistance.
Sec. 402. Access to and prompt responses from medicare contractors.
Sec. 403. Reliance on guidance.
Sec. 404. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman.
Sec. 405. Beneficiary outreach demonstration program.
TITLE V--REVIEW, RECOVERY, AND ENFORCEMENT REFORM
Sec. 501. Prepayment review.
Sec. 502. Recovery of overpayments.
Sec. 503. Process for correction of minor errors and omissions on
claims without pursuing appeals process.
Sec. 504. Authority to waive a program exclusion.
TITLE VI--OTHER PROVISIONS
Sec. 601. Treatment of hospitals for certain services under medicare
secondary payor (MSP) provisions.
Sec. 602. Emergency Medical Treatment and Active Labor Act (EMTALA)
Task Force.
Sec. 603. Review and report to Congress on reducing medicare reporting
burdens.
Sec. 604. Authorizing use of arrangements with other hospice programs
to provide core hospice services in certain
circumstances.
Sec. 605. One year delay in lock in procedures for Medicare+Choice
plans.
Sec. 606. Temporary moratorium on requirement of home health agencies
to collect OASIS data from non-medicare
patients.
Sec. 607. Coordinated survey demonstration program.
SEC. 2. FINDINGS.
Congress finds the following:
(1) The overwhelming majority of providers of services,
physicians, practitioners, and suppliers in the United States
are law-abiding persons who provide important health care
services to patients each day.
(2) The Secretary should place greater emphasis on
education of, and outreach to, health care providers under the
medicare program in order to increase understanding and
compliance with the regulations and requirements under such
program. The Secretary should also ensure that new Medicare
program requirements are communicated clearly and consistently
throughout the country.
(3) Beneficiaries and health care providers under the
medicare program currently struggle to navigate the medicare
appeals processes for the purpose of settling billing, payment,
and enforcement disputes. Such appeals processes suffer from a
lack of oversight, inadequate resources, and structural
deficiencies. For example, the average adjudication time for a
medicare appeal before an administrative law judge is 382 days.
Changes to the medicare appeals processes should result in more
timely decisions. Further, Congress should create needed
oversight of, and reporting requirements for, such appeals
process in order to provide information for future
improvements.
(4) Administration of the medicare program is hampered by
antiquated restrictions on the contracting authority of the
Secretary. These restrictions impose burdens and inefficiencies
on contractors, taxpayers, providers, and beneficiaries. The
Secretary should have more flexibility in medicare contracting
and should have contracting authority consistent with other Federal
agencies.
SEC. 3. CONSTRUCTION.
(a) No Effect on Legal Authority.--Nothing in this Act shall be
construed 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).
(b) No Effect on Medicare Waste, Fraud, and Abuse Efforts.--Nothing
in this Act shall be construed 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.
TITLE I--REGULATORY REFORM
SEC. 101. ISSUANCE OF REGULATIONS.
(a) Consolidation of Promulgation to Once a Month.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh) is amended
by adding at the end the following new subsection:
``(d)(1) Subject to paragraph (2), the Secretary shall issue
proposed or final (including interim final) regulations to carry out
this title only on one business day of every month.
``(2) The Secretary may issue a proposed or final regulation
described in paragraph (1) on any other day than the day described in
paragraph (1) if the Secretary--
``(A) finds that issuance of such regulation on another day
is necessary to comply with requirements under law; or
``(B) finds that with respect to that regulation the
limitation of issuance on the date described in paragraph (1)
is contrary to the public interest.
If the Secretary makes a finding under this paragraph, the Secretary
shall include such finding, and brief statement of the reasons for such
finding, in the issuance of such regulation.''.
(2) Report on publication of regulations on a quarterly
basis.--Not later than 2 years after the date of the enactment
of this Act, the Secretary shall submit to Congress a report on
the feasibility of requiring that regulations described in
section 1871(d) of the Social Security Act only be promulgated
on a single day every calendar quarter.
(3) Effective date.--The amendment made by paragraph (1)
shall apply to regulations promulgated on or after the date
that is 30 days after the date of the enactment of this Act.
(b) Regular Timeline for Publication of Final Regulations.--
(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 a regular timeline for
the publication of final regulations based on the previous publication
of a proposed regulation or an interim final regulation.
``(B) With respect to publication of final regulations based on the
previous publication of a proposed regulation, such timeline may vary
among different regulations based on differences in the complexity of
the regulation, the number and scope of comments received, and other
relevant factors.
``(C)(i) With respect to the publication of final regulations based
on the previous publication of an interim final regulation--
``(I) subject to clause (ii), the Secretary shall publish
the final regulation within the 12-month period that begins on
the date of publication of the interim final regulation;
``(II) if a final regulation is not published by the
deadline established under this subparagraph, the interim final
regulation shall not continue in effect unless the Secretary
publishes a notice described in clause (ii) by such deadline;
and
``(III) the final regulation shall include responses to
comments submitted in response to the interim final regulation.
``(ii) If the Secretary determines before the deadline otherwise
established in this subparagraph that there is good cause, specified in
a notice published before such deadline, for delaying the deadline
otherwise applicable under this subparagraph, the deadline otherwise
established under this subparagraph shall be extended for such period
(not to exceed 12 months) as the Secretary specifies in such notice.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act and
shall apply to proposed regulations and interim final
regulations published on or after such date.
(3) Status of pending interim final regulations.--Not later
than six months after the date of the enactment of this Act,
the Secretary shall publish a notice in the Federal Register
that provides the status of each interim final regulation that
was published on or before the date of the enactment of this
Act and for which no final regulation has been published. Such
notice shall include the date by which the Secretary plans to
publish the final regulation that is based on the interim final
rule.
(c) Limitations on New Matter in Final Regulations.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as
amended by subsection (b), is further amended by adding at the
end the following new paragraph:
``(4) Insofar as a final regulation (other than an interim
final regulation) includes a provision that is not a logical
outgrowth of the relevant notice of proposed rulemaking
relating to such regulation, that provision shall be treated as
a proposed regulation and shall not take effect until there is
the further opportunity for public comment and a publication of
the provision again as a final regulation.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to final regulations published on or after the date
of the enactment of this Act.
SEC. 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:
``(e)(1)(A) A substantive change in regulations, manual
instructions, interpretative rules, statements of policy, or guidelines
of general applicability under this title shall not be applied (by
extrapolation or otherwise) retroactively to items and services
furnished before the effective date of the change, unless the Secretary
determines that--
``(i) such retroactive application is necessary to comply
with statutory requirements; or
``(ii) failure to apply the change retroactively would be
contrary to the public interest.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to substantive changes issued on or after the date
of the enactment of this Act.
(b) Timeline for Compliance With Substantive Changes After
Notice.--
(1) In general.--Section 1871(e)(1), as added by subsection
(a), is further amended by adding at the end the following:
``(B) A compliance action may be made against a provider of
services, physician, practitioner, or other supplier with respect to
noncompliance with such a substantive change only for items and
services furnished on or after the effective date of the change.
``(C)(i) Except as provided in clause (ii), a substantive change
may not take effect until not earlier than the date that is 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 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.''.
(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.
SEC. 103. REPORT ON LEGAL AND REGULATORY INCONSISTENCIES.
Section 1871 (42 U.S.C. 1395hh), as amended by sections 101(a) and
102, is amended by adding at the end the following new subsection:
``(f)(1) Not later than 2 years after the date of the enactment of
this subsection, and every 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 beneficiaries, providers of
services, physicians, practitioners, and other suppliers with
respect to such areas of inconsistency and conflict; and
``(B) information from medicare contractors that tracks the
nature of all communications and correspondence.
``(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--APPEALS PROCESS REFORM
SEC. 201. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.
(a) Transition Plan.--
(1) In general.--Not later than October 1, 2002, the
Commissioner of Social Security and the Secretary shall develop
and transmit to Congress and the Comptroller General of the
United States a plan under which the functions of
administrative law judges responsible for hearing cases under
title XVIII of the Social Security Act (and related provisions
in title XI of such Act) are transferred from the
responsibility of the Commissioner and the Social Security
Administration to the Secretary and the Department of Health
and Human Services.
(2) Contents.--The plan shall include information on the
following:
(A) Workload.--The number of such administrative
law judges and support staff required now and in the
future to hear and decide such cases in a timely
manner, taking into account the current and anticipated
claims volume, appeals, number of beneficiaries, and
statutory changes.
(B) Cost projections.--Funding levels required for
fiscal year 2004 and subsequent fiscal years under this
subsection to hear such cases in a timely manner.
(C) Transition timetable.--A timetable for the
transition.
(D) Regulations.--The establishment of specific
regulations to govern the appeals process.
(E) Case tracking.--The development of a unified
case tracking system that will facilitate the
maintenance and transfer of case specific data across
both the fee-for-service and managed care components of
the medicare program.
(F) Feasibility of precedential authority.--The
feasibility of developing a process to give decisions
of the Departmental Appeals Board in the Department of
Health and Human Services addressing broad legal issues
binding, precedential authority.
(G) Access to administrative law judges.--The
feasibility of filing appeals with administrative law
judges electronically, and the feasibility of
conducting hearings using tele- or video-conference technologies.
(3) Additional information.--The plan may also include
recommendations for further Congressional action, including
modifications to the requirements and deadlines established
under section 1869 of the Social Security Act (as amended by
sections 521 and 522 of BIPA, 114 Stat. 2763A-534).
(4) GAO evaluation.--The Comptroller General of the United
States shall evaluate the plan and, not later than April 1,
2003, shall submit to Congress a report on such evaluation.
(b) Transfer of Adjudication Authority.--
(1) In general.--Not earlier than July 1, 2003, and not
later than October 1, 2003, the Commissioner of Social Security
and the Secretary shall implement the transition plan developed
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 judges performing the administrative
law judge functions transferred under paragraph (1) from the
Centers for Medicare & Medicaid Services and its contractors.
(3) Geographic distribution.--The Secretary shall provide
for an appropriate geographic distribution of 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 cases under
title XVIII of the Social Security Act and to hire support
staff for such judges.
(5) Performance standards.--The Secretary shall establish
performance standards for administrative law judges hearing
cases under title XVIII of the Social Security Act with respect
to--
(A) timelines for decisions in such cases; and
(B) adherence to laws and regulations related to
such title.
(6) Financing.--Amounts payable under law to the
Commissioner of Social Security for 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.
(7) Shared resources.--The Secretary shall enter into such
arrangements with the Commissioner of Social Security 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 2003 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'' in the matter preceding subclause (I).
SEC. 202. EXPEDITED ACCESS TO JUDICIAL REVIEW.
(a) In General.--Section 1869(b) (42 U.S.C. 1395ff(b)), as amended
by section 521 of BIPA, 114 Stat. 2763A-534, is amended--
(1) in paragraph (1)(A), by inserting ``, subject to
paragraph (2),'' before ``to judicial review of the Secretary's
final decision''; and
(2) 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 a beneficiary who
has filed an appeal under paragraph (1) (other than an
appeal filed under paragraph (1)(F)) may obtain access to judicial
review when a review panel (described in subparagraph (D)), on its own
motion or at the request of the appellant, determines that the
Departmental Appeals Board does not have the authority to decide the
question of law or regulation relevant to the matters in controversy
and that there is no material issue of fact in dispute. The appellant
may make such request only once with respect to a question of law or
regulation for a specific matter in dispute in a case of an appeal.
``(B) Prompt determinations.--If, after or
coincident with appropriately filing a request for an
administrative hearing, the appellant requests a
determination by the appropriate review panel that the
Departmental Appeals Board does not have the authority
to decide the question of law or regulations relevant
to the matters in controversy and that there is no
material issue of fact in dispute and if such request
is accompanied by the documents and materials as the
appropriate review 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 the Departmental
Appeals Board does not have authority
to decide; or
``(II) fails to make such
determination within the period
provided under subparagraph (B);
then the appellant may bring a civil action as
described in this subparagraph.
``(ii) Deadline for filing.--Such action
shall be filed, in the case described in--
``(I) clause (i)(I), within 60 days
of date of the determination described
in such clause; or
``(II) clause (i)(II), within 60
days of the end of the period provided
under subparagraph (B) for the
determination.
``(iii) Venue.--Such action shall be
brought in the district court of the United
States for the judicial district in which the
appellant is located (or, in the case of an
action brought jointly by more than one
applicant, the judicial district in which the
greatest number of applicants are located) or
in the district court for the District of
Columbia.
``(iv) Interest on any amounts in
controversy.--Where a provider of services or
supplier seeks judicial review pursuant to this
paragraph, the amount in controversy (if any)
shall be subject to annual interest beginning
on the first day of the first month beginning
after the 60-day period as determined pursuant
to clause (ii) and equal to the rate of
interest on obligations issued for purchase by
the Federal Supplementary Medical Insurance
Trust Fund for the month in which the civil
action authorized under this paragraph is
commenced, to be awarded by the reviewing court
in favor of the prevailing party. No interest
awarded pursuant to the preceding sentence
shall be deemed income or cost for the purposes
of determining reimbursement due providers of
services, physicians, practitioners, and other
suppliers under this Act.
``(D) Review panel defined.--For purposes of this
subsection, a `review panel' is a panel of 3 members
from the Departmental Appeals Board, selected for the
purpose 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 beneficiaries 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, 2003.
SEC. 203. EXPEDITED REVIEW OF CERTAIN PROVIDER AGREEMENT
DETERMINATIONS.
(a) Termination and Certain Other Immediate Remedies.--
(1) In general.--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--
(A) the remedy of termination of participation has
been imposed; or
(B) a sanction described in clause (i) or (iii) of
section 1819(h)(2)(B) of such Act (42 U.S.C. 1395i-
3(h)(2)(B)) has been imposed, but only if such sanction
has been imposed on an immediate basis.
(2) Priority for cases of termination.--Under the process
described in paragraph (1), priority shall be provided in cases
of termination described in subparagraph (A) of such paragraph.
(b) 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 sums for fiscal year 2003 and each subsequent
fiscal year as may be necessary to increase the number of
administrative law judges (and their staffs) at the Departmental
Appeals Board of the Department of Health and Human Services and to
educate such judges and staff on long-term care issues.
SEC. 204. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) Timeframes for the Completion of the Record.--Section 1869(b)
(42 U.S.C. 1395ff(b)), as amended by section 521 of BIPA, 114 Stat.
2763A-534, and as amended in section 202(a), is further amended by
adding at the end the following new paragraph:
``(3) Timely completion of the record.--
``(A) Deadline.--Subject to subparagraph (B), the
deadline to complete the record in a hearing before an
administrative law judge or a review by the
Departmental Appeals Board is 90 days after the date
the request for the appeal is filed.
``(B) Extensions for good cause.--The person filing
a request under subparagraph (A) may request an
extension of such deadline for good cause. The
administrative law judge, in the case of a hearing, and
the Departmental Appeals Board, in the case of a
review, may extend such deadline based upon a finding
of good cause to a date specified by the judge or
Board, as the case may be.
``(C) Delay in decision deadlines until completion
of record.--Notwithstanding any other provision of this
section, the deadlines otherwise established under
subsection (d) for the making of determinations in
hearings or review under this section shall begin on
the date on which the record is complete.
``(D) Complete described.--For purposes of this
paragraph, a record is complete when the administrative
law judge, in the case of a hearing, or the
Departmental Appeals Board, in the case of a review,
has received--
``(i) written or testimonial evidence, or
both, submitted by the person filing the
request,
``(ii) written or oral argument, or both,
is presented,
``(iii) the decision of, and the record
for, the prior level of appeal, and
``(iv) such other evidence as such judge or
Board, as the case may be, determines is
required to make a determination on the
request.''.
(b) Use of Patients' Medical Records.--Section 1869(c)(3)(B)(i) (42
U.S.C. 1395ff(c)(3)(B)(i)) is amended by inserting ``(including the
medical records of the individual involved)'' after ``clinical
experience''.
(c) Notice Requirements for Medicare Appeals.--
(1) Initial determinations and redeterminations.--Section
1869(a) (42 U.S.C. 1395ff(a)) is amended by adding at the end
the following new paragraph:
``(4) Requirements of notice of determinations and
redeterminations.--A written notice of a determination on an
initial determination or on a redetermination, insofar as such
determination or redetermination results in a denial of a claim
for benefits, shall be provided in printed form and written in
a manner calculated to be understood by the beneficiary and
shall include--
``(A) the specific reasons for the determination,
including, as appropriate--
``(i) upon request in the case of an
initial determination, a summary of the
clinical or scientific evidence used in making
the determination; and
``(ii) in the case of a redetermination,
such a summary;
``(B) the procedures for obtaining additional
information concerning the determination or
redetermination; and
``(C) notification of the right to seek a
redetermination or otherwise appeal the determination
and instructions on how to initiate such a
redetermination or appeal under this section.''.
(2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C.
1395ff(c)(3)(E)) is amended to read as follows:
``(E) Explanation of decision.--Any decision with
respect to a reconsideration of a qualified independent
contractor shall be in writing in a manner calculated
to be understood by the beneficiary and shall include--
``(i) to the extent appropriate, a detailed
explanation of the decision as well as a
discussion of the pertinent facts and
applicable regulations applied in making such
decision,
``(ii) a notification of the right to
appeal such determination and instructions on
how to initiate such appeal under this section;
and
``(iii) 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.''.
(3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)) is
amended--
(A) in the heading, by inserting ``; Notice'' after
``Secretary''; and
(B) by adding at the end the following new
paragraph:
``(4) Notice.--Notice of the decision of an administrative
law judge shall be in writing in a manner calculated to be
understood by the beneficiary 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) Preparation of record for appeal.--Section
1869(c)(3)(J) (42 U.S.C. 1395ff(c)(3)(J)) by striking ``such
information as is required for an appeal'' and inserting ``the
record for the appeal''.
(d) Qualified Independent Contractors.--
(1) Eligibility requirements of qualified independent
contractors.--Section 1869(c) (42 U.S.C. 1395ff(c)) is
amended--
(A) in paragraph (2)--
(i) by inserting ``(except in the case of a
utilization and quality control peer review
organization, as defined in section 1152)''
after ``means an entity or organization that'';
and
(ii) by striking the period at the end and
inserting the following: ``and meets the
following requirements:
``(A) General requirements.--
``(i) The entity or organization has
(directly or through contracts or other
arrangements) sufficient medical, legal, and
other expertise (including knowledge of the
program under this title) and sufficient
staffing to carry out duties of a qualified
independent contractor under this section on a
timely basis.
``(ii) The entity or organization has
provided assurances that it will conduct
activities consistent with the applicable
requirements of this section, including that it
will not conduct any activities in a case
unless the independence requirements of
subparagraph (B) are met with respect to the
case.
``(iii) The entity or organization meets
such other requirements as the Secretary
provides by regulation.
``(B) Independence requirements.--
``(i) In general.--Subject to clause (ii),
an entity or organization meets the
independence requirements of this subparagraph
with respect to any case if 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
(as determined under regulations).
``(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--
``(I) not exceed a reasonable
level; and
``(II) not be contingent on any
decision rendered by the contractor or
by any reviewing professional.''; and
(B) in paragraph (3)(A), by striking ``, and shall
have sufficient training and expertise in medical
science and legal matters to make reconsiderations
under this subsection''.
(2) Eligibility requirements for reviewers.--Section 1869
(42 U.S.C. 1395ff) is amended--
(A) by amending subsection (c)(3)(D) to read as
follows:
``(D) Qualifications for reviewers.--The
requirements of subsection (g) shall be met (relating
to qualifications of reviewing professionals).''; and
(B) by adding at the end the following new
subsection:
``(g) Qualifications of Reviewers.--
``(1) In general.--In reviewing determinations under this
section, a qualified independent contractor shall assure that--
``(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'), each
reviewing professional meets the qualifications
described in paragraph (4) and, if the request for
review indicates that the item or service involved was
furnished (or ordered to be furnished) by a physician,
each reviewing professional shall be a physician.
``(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 (as determined under
regulations).
``(B) Exception.--Nothing in subparagraph (A) shall
be construed to--
``(i) prohibit an individual, solely on the
basis of affiliation with a fiscal
intermediary, carrier, or other contractor,
from serving as an reviewing professional if--
``(I) a non-affiliated individual
is not reasonably available;
``(II) the affiliated individual is
not involved in the provision of items
or services in the case under review;
``(III) the fact of such an
affiliation is disclosed to the
Secretary and the beneficiary (or
authorized representative) and neither
party objects; and
``(IV) the affiliated 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 such
affiliation if the affiliation is disclosed to
the Secretary and the beneficiary (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).
``(3) Limitations on reviewer compensation.--Compensation
provided by a qualified independent contractor to a reviewer in
connection with a review under this section shall--
``(A) not exceed a reasonable level; and
``(B) not be contingent on the decision rendered by
the reviewer.
``(4) Licensure and expertise.--Each reviewing professional
shall be a physician (allopathic or osteopathic) or health care
professional who--
``(A) is appropriately credentialed or licensed in
1 or more States to deliver health care services; and
``(B) has medical expertise in the field of
practice that is appropriate for the items or services
at issue.
``(5) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a case under
this title involving an individual beneficiary, 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.''.
(e) Implementation of Certain BIPA Reforms.--
(1) 1-year delay in effective dates.--(A) Section 521(d) of
BIPA (114 Stat. 2763A-543) is amended by striking ``October 1,
2002'' and inserting ``October 1, 2003''.
(B) Section 522(d) of BIPA (114 Stat. 2763A-547) is amended
by striking ``October 1, 2001'' and inserting ``October 1,
2002''.
(2) Use of peer review organizations to conduct expedited
review during transition period.--
(A) In general.--Section 1154(e) (42 U.S.C. 1320c-
3(e)) is amended by adding at the end the following:
``(6)(A) In applying this subsection during the transition period
(described in subparagraph (C)), any reference in this subsection--
``(i) to a hospital is deemed a reference to a provider of
services;
``(ii) to inpatient hospital care or services is deemed a
reference to services of such a provider of services;
``(iii) a notice under paragraph (1) is deemed to include--
``(I) a notice to discharge the individual from the
provider of services; or
``(II) a notice of termination of services by a
provider of services, but only in the case in which a
physician certifies that failure to continue the
provision of such services is likely to place the
individual's health at significant risk; and
``(iv) an inpatient is deemed a reference to a patient.
``(B) After the transition period, paragraphs (2) through (5) shall
not apply.
``(C) For purposes of this paragraph and section 1869(b)(1)(F)(ii),
the transition period, with respect to an individual who resides in an
area served by a peer review organization--
``(i) begins on the date on which the last triennial
contract with any peer review organization under this part
becomes effective during 2002; and
``(ii) ends on the date that the triennial contract under
this part with the organization that serves such area expires
in 2006.''.
(B) Conforming amendment to bipa.--Subsection (c)
of section 521 of BIPA is repealed.
(C) Conforming amendment to section 1869.--Section
1869(b)(1)(F) (42 U.S.C. 1395ff(b)(1)(F)), as amended
by section 521 of BIPA, is amended by striking clause
(ii) and inserting the following:
``(ii) No application during transition
period.--Clause (i) shall not apply during the
transition period described in section
1154(e)(6)(C).''.
(D) Section 1155 transition.--Section 1155 (42
U.S.C. 1320c-4) is amended by adding at the end the
following: ``In the case of a determination made under
section 1154(e)(6)(A) during the period in which the
provisions of subsection (b) of section 1869 (as added
by section 521 of 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) are in effect, this section shall not apply but
the individual shall be entitled to a hearing on the
determination before an administrative law judge under
such subsection (b) in the same manner as such section
applies to a hearing under subsection (a) of such
section 1869.''.
(f) Effective Date.--The amendments made by this section 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.
(g) Transition.--In applying section 1869(g) of the Social Security
Act (as added by subsection (d)(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. 205. HEARING RIGHTS RELATED TO DECISIONS BY THE SECRETARY TO DENY
OR NOT RENEW A MEDICARE ENROLLMENT AGREEMENT;
CONSULTATION BEFORE CHANGING PROVIDER ENROLLMENT FORMS.
(a) Hearing Rights.--
(1) In general.--Section 1866 (42 U.S.C. 1395cc) is amended
by adding at the end the following new subsection:
``(j) Hearing Rights in Cases of Denial or Non-Renewal.--The
Secretary shall establish by regulation procedures under which--
``(1) there are deadlines for actions on applications for
enrollment (and, if applicable, renewal of enrollment); and
``(2) providers of services, physicians, practitioners, and
suppliers whose application to enroll (or, if applicable, to
renew enrollment) are denied are provided a mechanism to appeal
such denial and a deadline for consideration of such
appeals.''.
(2) Effective date.--The Secretary shall provide for the
establishment of the procedures under the amendment made by
paragraph (1) within 18 months after the date of the enactment
of this Act.
(b) Consultation Before Changing Provider Enrollment Forms.--
Section 1871 (42 U.S.C. 1395hh), as amended by sections 101(a), 102,
and 103, is further amended by adding at the end the following new
subsection:
``(g) The Secretary shall consult with providers of services,
physicians, practitioners, and suppliers before making changes in the
provider enrollment forms required of such providers, physicians,
practitioners, and suppliers to be eligible to submit claims for which
payment may be made under this title.''.
SEC. 206. APPEALS BY PROVIDERS WHEN THERE IS NO OTHER PARTY AVAILABLE.
(a) In General.--Section 1870 (42 U.S.C. 1395gg) is amended by
adding at the end the following new subsection:
``(h) Notwithstanding subsection (f) or any other provision of law,
the Secretary shall permit a provider of services, physician,
practitioner, or other supplier to appeal any determination of the
Secretary under this title relating to services rendered under this
title to an individual who subsequently dies if there is no other party
available to appeal such determination.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act and shall apply to
items and services furnished on or after such date.
SEC. 207. STUDY AND REPORT TO CONGRESS ON WAYS TO IMPROVE THE MEDICARE
APPEALS PROCESSES.
(a) Study.--The Secretary shall conduct a study on ways to improve
the appeals processes under the medicare program under title XVIII of
the Social Security Act for both beneficiaries and providers and
suppliers under such program. In conducting such study, the Secretary
shall consult with the relevant offices within the Department of Health
and Human Services that work on issues related to the medicare program.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Secretary shall submit a report on the
findings of the study conducted under subsection (a) to the Committee
on Ways and Means and the Committee on Energy and Commerce of the House
of Representatives and the Committee on Finance of the Senate. Such
report shall include such recommendations for legislation and
administrative action that the Secretary determines are appropriate.
TITLE III--CONTRACTING REFORM
SEC. 301. 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,
physician, practitioner, facility, or supplier (or
class of such providers of services, physicians,
practitioners, facilities, 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, physician, practitioner, facility, or
supplier or class of provider of services, physician,
practitioner, facility, or supplier.
``(4) Functions described.--The functions referred to in
paragraphs (1) and (2) are payment functions, provider services
functions, and beneficiary services functions as follows:
``(A) Determination of payment amounts.--
Determining (subject to the provisions of section 1878
and to such review by the Secretary as may be provided
for by the contracts) the amount of the payments
required pursuant to this title to be made to providers
of services, physicians, practitioners, facilities,
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.--
Serving as a center for, and communicating to
individuals entitled to benefits under part A or
enrolled under part B, or both, with respect to
education and outreach for those individuals, and
assistance with specific issues, concerns, or problems
of those individuals.
``(D) Provider consultative services.--Providing
consultative services to institutions, agencies, and
other persons to enable them to establish and maintain
fiscal records necessary for purposes of this title and
otherwise to qualify as providers of services,
physicians, practitioners, facilities, or suppliers.
``(E) Communication with providers.--Serving as a
center for, and communicating to providers of services,
physicians, practitioners, facilities, and suppliers,
any information or instructions furnished to the
medicare administrative contractor by the Secretary,
and serving as a channel of communication from such
providers, physicians, practitioners, facilities, and
suppliers to the Secretary.
``(F) Provider education and technical
assistance.--Performing the functions described in
subsections (e) and (f), relating to education,
training, and technical assistance to providers of
services, physicians, practitioners, facilities, and
suppliers.
``(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 functions carried out under the
Medicare Integrity Program under section 1893. The
previous sentence shall not apply with respect to the
activity described in section 1893(b)(5) (relating to
prior authorization of certain items of durable medical
equipment under section 1834(a)(15)).
``(B) Construction.--An entity shall not be treated
as a medicare administrative contractor merely by
reason of having entered into a contract with the
Secretary under section 1893.
``(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.
``(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 six years.
``(C) Transfer of functions.--The Secretary may
transfer functions among medicare administrative
contractors without regard to any provision of law
requiring competition. The Secretary shall ensure that
performance quality is considered in such transfers.
The Secretary shall provide notice (whether in the
Federal Register or otherwise) of any such transfer
(including a description of the functions so
transferred and contact information for the contractors
involved) to providers of services, physicians,
practitioners, facilities, and suppliers affected by
the transfer.
``(D) Incentives for quality.--The Secretary may
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,
and other matters as the Secretary finds pertinent.
``(3) Performance requirements.--
``(A) Development of specific performance
requirements.--The Secretary shall develop contract
performance requirements to carry out the specific
requirements applicable under this title to a function
described in subsection (a)(4) and shall develop
standards for measuring the extent to which a
contractor has met such requirements. The Secretary
shall publish in the Federal Register such performance
requirements and measurement standards.
``(B) Considerations.--The Secretary may include as
one of the standards satisfaction level as measured by
provider and beneficiary surveys.
``(C) Inclusion in contracts.--All contractor
performance requirements shall be set forth in the
contract between the Secretary and the appropriate
medicare administrative contractor. Such performance
requirements--
``(i) shall reflect the performance
requirements published under subparagraph (A),
but may include additional performance
requirements;
``(ii) shall be used for evaluating
contractor performance under the contract; and
``(iii) shall be consistent with the
written statement of work provided under the
contract.
``(4) Information requirements.--The Secretary shall not
enter into a contract with a medicare administrative contractor
under this section unless the contractor agrees--
``(A) to furnish to the Secretary such timely
information and reports as the Secretary may find
necessary in performing his functions under this title;
and
``(B) to maintain such records and afford such
access thereto as the Secretary finds necessary to
assure the correctness and verification of the
information and reports under subparagraph (A) and
otherwise to carry out the purposes of this title.
``(5) Surety bond.--A contract with a medicare
administrative contractor under this section may require the
medicare administrative contractor, and any of its officers or
employees certifying payments or disbursing funds pursuant to
the contract, or otherwise participating in carrying out the
contract, to give surety bond to the United States in such
amount as the Secretary may deem appropriate.
``(c) Terms and Conditions.--
``(1) In general.--A contract with any medicare
administrative contractor under this section may contain such
terms and conditions as the Secretary finds necessary or
appropriate and may provide for advances of funds to the
medicare administrative contractor for the making of payments
by it under subsection (a)(4)(B).
``(2) Prohibition on mandates for certain data
collection.--The Secretary may not require, as a condition of
entering into, or renewing, a contract under this section, that
the medicare administrative contractor match data obtained
other than in its activities under this title with data used in
the administration of this title for purposes of identifying
situations in which the provisions of section 1862(b) may
apply.
``(d) Limitation on Liability of Medicare Administrative
Contractors and Certain Officers.--
``(1) Certifying officer.--No individual designated
pursuant to a contract under this section as a certifying
officer shall, in the absence of gross negligence or intent to
defraud the United States, be liable with respect to any
payments certified by the individual under this section.
``(2) Disbursing officer.--No disbursing officer shall, in
the absence of gross negligence or intent to defraud the United
States, be liable with respect to any payment by such officer
under this section if it was based upon an authorization (which
meets the applicable requirements for such internal controls
established by the Comptroller General) of a certifying officer
designated as provided in paragraph (1) of this subsection.
``(3) Liability of medicare administrative contractor.--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 or in the
supervision of or selection of such officer the medicare
administrative contractor acted with gross negligence.
``(4) Indemnification by secretary.--
``(A) In general.--Notwithstanding any other
provision of law and subject to the succeeding
provisions of this paragraph, 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 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 Secretary to be criminal in
nature, fraudulent, or grossly negligent.
``(C) Scope of indemnification.--Indemnification by
the Secretary under subparagraph (A) may include
payment of judgements, 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 a settlement. Any
indemnification under subparagraph (A) with respect to
amounts paid under a settlement are conditioned upon
the Secretary's prior written approval of the final
settlement.
``(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,''; and
(II) by striking ``carrier'' and
inserting ``medicare administrative
contractor'';
(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), 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), by striking ``carrier'' and
inserting ``medicare administrative contractor'';
(E) in paragraph (5), by striking ``contract under
this section which provides for the disbursement of
funds, as described in subsection (a)(1)(B), shall
require the carrier'' and ``carrier responses'' and
inserting ``contract under section 1874A that provides
for making payments under this part shall require the
medicare administrative contractor'' and ``contractor
responses'', respectively; and
(F) by striking paragraph (6).
(5) Subsections (d), (e), and (f) are repealed.
(6) Subsection (g) is amended by striking ``carrier or
carriers'' and inserting ``medicare administrative contractor
or contractors''.
(7) Subsection (h) is amended--
(A) in paragraph (2)--
(i) by striking ``Each carrier having an
agreement with the Secretary under subsection
(a)'' and inserting ``The Secretary''; and
(ii) by striking ``Each such carrier'' and
inserting ``The Secretary'';
(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) Application to competitively bid contracts.--
The amendments made by this section shall apply to
contracts that are competitively bid on or after such
date (but not later than 2 years after the date of the
enactment of this Act) as the Secretary specifies.
(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 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, 2008.
(2) General transition rules.--
(A) Authority to continue to enter into
contracts.--Prior to the date described in paragraph
(1)(A), the Secretary may, consistent with subparagraph
(B), continue to enter into contracts under section
1816 and section 1842 of the Social Security Act (42
U.S.C. 1395h, 1395u).
(B) Appropriate transition.--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 activities 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) Secretarial Submission of Legislative Proposal.--Not later than
6 months after the date of the enactment of this Act, the Secretary
shall submit to the appropriate committees of Congress a legislative
proposal providing for such technical and conforming amendments in the
law as are required by the provisions of this section.
(g) Reports on Implementation.--
(1) Proposal for implementation.--At least 1 year before
the date the Secretary proposes to first implement the plan for
implementation of the amendments made by this section, the
Secretary shall submit a report to Congress and the Comptroller
General of the United States that describes such plan. 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, 2006, 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.
TITLE IV--EDUCATION AND OUTREACH IMPROVEMENTS
SEC. 401. 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 (e), including under section
1893) in order to maximize the effectiveness of Federal education
efforts for providers of services, physicians, practitioners, and
suppliers.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(3) Report.--Not later than October 1, 2002, the Secretary
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
301(a)(1), is amended by adding at the end the following new
subsection:
``(e) Incentives To Improve Contractor Performance in Provider
Education and Outreach.--
``(1) Methodology to measure contractor error rates.--In
order to give medicare contractors (as defined in paragraph
(3)) an incentive to implement effective education and outreach
programs for providers of services, physicians, practitioners,
and suppliers, the Secretary shall develop and implement by
October 1, 2002, a methodology to measure the specific claims
payment error rates of such contractors in the processing or reviewing
of medicare claims.
``(2) GAO review of methodology.--The Comptroller General
of the United States shall review, and make recommendations to
the Secretary, regarding the adequacy of such methodology.
``(3) Medicare contractor defined.--For purposes of this
subsection, the term `medicare contractor' includes a medicare
administrative contractor, a fiscal intermediary with a
contract under section 1816, and a carrier with a contract
under section 1842.''.
(2) Report.--The Secretary shall submit to Congress a
report that describes how the Secretary intends to use the
methodology developed under section 1874A(e)(1) of the Social
Security Act, as added by paragraph (1), in assessing medicare
contractor performance in implementing effective education and
outreach programs, including whether to use such methodology as
a basis for performance bonuses.
(c) Improved Provider Education and Training.--
(1) Increased funding for enhanced education and training
through medicare integrity program.--Section 1817(k)(4) (42
U.S.C. 1395i(k)(4)) is amended--
(A) in subparagraph (A), by striking ``subparagraph
(B)'' and inserting ``subparagraphs (B) and (C)'';
(B) in subparagraph (B), by striking ``The amount
appropriated'' and inserting ``Subject to subparagraph
(C), the amount appropriated''; and
(C) by adding at the end the following new
subparagraph:
``(C) Enhanced provider education and training.--
``(i) In general.--In addition to the
amount appropriated under subparagraph (B), the
amount appropriated under subparagraph (A) for
a fiscal year (beginning with fiscal year 2003)
is increased by $35,000,000.
``(ii) Use.--The funds made available under
this subparagraph shall be used only to
increase the conduct by medicare contractors of
education and training of providers of
services, physicians, practitioners, and
suppliers regarding billing, coding, and other
appropriate items and may also be used to
improve the accuracy, consistency, and
timeliness of contractor responses to written
and phone inquiries from providers of services,
physicians, practitioners, and suppliers.''.
(2) Tailoring education and training for small providers or
suppliers.--
(A) In general.--Section 1889, as added by
subsection (a), is amended by adding at the end the
following new subsection:
``(b) 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 take into
consideration the special needs of small providers of services
or suppliers (as defined in paragraph (2)). Such education and
training activities for small providers or services and
suppliers may include the provision of technical assistance
(such as review of billing systems and internal controls to
determine program compliance and to suggest more efficient and
effective means of achieving such compliance).
``(2) Small provider of services or supplier.--In this
subsection, the term `small provider of services or supplier'
means--
``(A) an institutional provider of services with
fewer than 25 full-time-equivalent employees; or
``(B) a physician, practitioner, or supplier with
fewer than 10 full-time-equivalent employees.''.
(B) Effective date.--The amendment made by
subparagraph (A) shall take effect on October 1, 2002.
(d) Additional Provider Education Provisions.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsection (c)(2), is further amended by
adding at the end the following new subsections:
``(c) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of attendance
at (or failure to attend) educational activities or other information
gathered during an educational program conducted under this section or
otherwise by the Secretary to select or track providers of services,
physicians, practitioners, or suppliers for the purpose of conducting
any type of audit or prepayment review.
``(d) Construction.--Nothing in this section or section 1893(g)
shall be construed as providing for disclosure by a medicare
contractor--
``(1) of the screens used for identifying claims that will
be subject to medical review; or
``(2) of information that would compromise pending law
enforcement activities or reveal findings of law enforcement-
related audits.
``(e) Definitions.--For purposes of this section and section
1817(k)(4)(C), the term `medicare contractor' includes the following:
``(1) A medicare administrative contractor with a contract
under section 1874A, a fiscal intermediary with a contract
under section 1816, and a carrier with a contract under section
1842.
``(2) An eligible entity with a contract under section
1893.
Such term does not include, with respect to activities of a specific
provider of services, physician, practitioner, or supplier an entity
that has no authority under this title or title XI with respect to such
activities and such provider of services, physician, practitioner, or
supplier.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
SEC. 402. ACCESS TO AND PROMPT RESPONSES FROM MEDICARE CONTRACTORS.
(a) In General.--Section 1874A, as added by section 301 and as
amended by section 401(b)(1), is further amended by adding at the end
the following new subsection:
``(f) Communicating With Beneficiaries and Providers.--
``(1) Communication process.--The Secretary shall develop a
process for communicating with beneficiaries and with providers
of services, physicians, practitioners, and suppliers under
this title.
``(2) Response to written inquiries.--Each medicare
contractor (as defined in paragraph (5)) shall provide general
written responses (which may be through electronic
transmission) in a clear, concise, and accurate manner to
inquiries by beneficiaries, providers of services, physicians,
practitioners, and suppliers 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 medicare contractors provide a toll-free telephone
number at which beneficiaries, providers, physicians,
practitioners, 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 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 publish in the Federal Register)
standards regarding the accuracy, consistency,
and timeliness of the information provided in
response to 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 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).
``(C) Direct monitoring.--Nothing in this paragraph
shall be construed as preventing the Secretary from
directly monitoring the accuracy, consistency, and
timeliness of the information so provided.
``(5) Medicare contractor defined.--For purposes of this
subsection, the term `medicare contractor' has the meaning
given such term in subsection (e)(3).''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect October 1, 2002.
SEC. 403. RELIANCE ON GUIDANCE.
(a) In General.--Section 1871(e), as added by section 102(a), is
further amended by adding at the end the following new paragraph:
``(2) If--
``(A) a provider of services, physician, practitioner, or
other supplier follows written guidance provided--
``(i) by the Secretary; or
``(ii) by a medicare contractor (as defined in
section 1889(e) and whether in the form of a written
response to a written inquiry under section 1874A(f)(1)
or otherwise) acting within the scope of the
contractor's contract authority,
in response to a written inquiry with respect to the furnishing
of items or services or the submission of a claim for benefits
for such items or services;
``(B) the Secretary determines that--
``(i) the provider of services, physician,
practitioner, or supplier has accurately presented the
circumstances relating to such items, services, and
claim to the Secretary or the contractor in the written
guidance; and
``(ii) there is no indication of fraud or abuse
committed by the provider of services, physician,
practitioner, or supplier against the program under
this title; and
``(C) the guidance was in error;
the provider of services, physician, practitioner, or supplier shall
not be subject to any penalty or interest under this title (or the
provisions of title XI insofar as they relate to this title) relating
to the provision of such items or service or such claim if the provider
of services, physician, practitioner, or supplier reasonably relied on
such guidance. In applying this paragraph with respect to guidance in
the form of general responses to frequently asked questions, the
Secretary retains authority to determine the extent to which such
general responses apply to the particular circumstances of individual
claims.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to penalties imposed on or after the date of the enactment of
this Act.
SEC. 404. 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.--By not later than 1 year after
the date of the enactment of the Medicare Appeals, Regulatory, and
Contracting Improvement Act of 2001, the Secretary shall appoint 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.''.
(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.--By not later than 1 year after the
date of the enactment of the Medicare Appeals, Regulatory, and
Contracting Improvement Act of 2001, 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 advocacy.
``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
``(1) receive complaints, grievances, and requests for
information submitted by a medicare beneficiary, 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 beneficiaries, 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 beneficiaries 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.''.
(c) 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 2002 and each succeeding fiscal
year.
(d) Use of Central, Toll-Free Number (1-800-MEDICARE).--Section
1804(b) (42 U.S.C. 1395b-2(b)) is amended by adding at the end the
following: ``By not later than 1 year after the date of the enactment
of the Medicare Appeals, Regulatory, and Contracting Improvement Act of
2001, 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.''.
SEC. 405. 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 medicare
beneficiaries at the location of existing local offices of the Social
Security Administration.
(b) Locations.--
(1) In general.--The demonstration program shall be
conducted in at least 6 offices or areas. Subject to paragraph
(2), in selecting such offices and areas, the Secretary shall
provide preference for offices with a high volume of visits by
medicare beneficiaries.
(2) Assistance for rural beneficiaries.--The Secretary
shall provide for the selection of at least 2 rural areas to
participate in the demonstration program. In conducting the
demonstration program in such rural areas, the Secretary shall
provide for medicare specialists to travel among local offices
in a rural area on a scheduled basis.
(c) Duration.--The demonstration program shall be conducted over a
3-year period.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall provide for an
evaluation of the demonstration program. Such evaluation shall
include an analysis of--
(A) utilization of, and beneficiary satisfaction
with, the assistance provided under the program; and
(B) the cost-effectiveness of providing beneficiary
assistance through out-stationing medicare specialists
at local social security offices.
(2) Report.--The Secretary shall submit to Congress a
report on such evaluation and shall include in such report
recommendations regarding the feasibility of permanently out-
stationing medicare specialists at local social security
offices.
TITLE V--REVIEW, RECOVERY, AND ENFORCEMENT REFORM
SEC. 501. PREPAYMENT REVIEW.
(a) In General.--Section 1874A, as added by section 301 and as
amended by sections 401(b)(1) and 402, is further amended by adding at
the end the following new subsection:
``(g) Conduct of Prepayment Review.--
``(1) Standardization of random prepayment review.--A
medicare administrative contractor shall conduct random
prepayment review only in accordance with a standard protocol
for random prepayment audits developed by the Secretary.
``(2) Limitations on initiation of non-random prepayment
review.--A medicare administrative contractor may not initiate
non-random prepayment review of a provider of services,
physician, practitioner, or supplier based on the initial
identification by that provider of services, physician,
practitioner, or supplier of an improper billing practice
unless there is a likelihood of sustained or high level of
payment error (as defined by the Secretary).
``(3) 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.
``(4) Construction.--Nothing in this subsection shall be
construed as preventing the denial of payments for claims
actually reviewed under a random prepayment review. In the case
of a provider of services, physician, practitioner, or supplier
with respect to which amounts were previously overpaid, nothing
in this subsection shall be construed as limiting the ability
of a medicare administrative contractor to 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) Random prepayment review defined.--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.''.
(b) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendment made by subsection (a) shall take effect on the date
of the enactment of this Act.
(2) Deadline for promulgation of certain regulations.--The
Secretary shall first issue regulations under section 1874A(g)
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(g)(1) 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. The Secretary shall develop and publish the
standard protocol under such section by not later than 1 year
after the date of the enactment of this Act.
SEC. 502. RECOVERY OF OVERPAYMENTS.
(a) In General.--Section 1874A, as added by section 301 and as
amended by sections 401(b)(1), 402, and 501(a), is further amended by
adding at the end the following new subsection:
``(h) Recovery of Overpayments.--
``(1) Use of repayment plans.--
``(A) In general.--If the repayment, within the
period otherwise permitted by a provider of services,
physician, practitioner, or other supplier, of an
overpayment under this title meets the standards
developed under subparagraph (B), subject to
subparagraph (C), and the provider, physician,
practitioner, or supplier requests the Secretary to
enter into a repayment plan with respect to such
overpayment, the Secretary shall enter into a plan with
the provider, physician, practitioner, or supplier for
the offset or repayment (at the election of the
provider, physician, practitioner, or supplier) of such
overpayment over a period of at least one year, but not
longer than 3 years. Interest shall accrue on the
balance through the period of repayment. The repayment
plan shall meet terms and conditions determined to be
appropriate by the Secretary.
``(B) Development of standards.--The Secretary
shall develop standards for the recovery of
overpayments. Such standards shall--
``(i) include a requirement that the
Secretary take into account (and weigh in favor
of the use of a repayment plan) the reliance
(as described in section 1871(e)(2)) by a
provider of services, physician, practitioner,
and supplier on guidance when determining
whether a repayment plan should be offered; and
``(ii) provide for consideration of the
financial hardship imposed on a provider of
services, physician, practitioner, or supplier
in considering such a repayment plan.
In developing standards with regard to financial
hardship with respect to a provider of
services, physician, practitioner, or supplier, the Secretary shall
take into account the amount of the proposed recovery as a proportion
of payments made to that provider, physician, practitioner, or
supplier.
``(C) Exceptions.--Subparagraph (A) shall not apply
if--
``(i) the Secretary has reason to suspect
that the provider of services, physician,
practitioner, or supplier may file for
bankruptcy or otherwise cease to do business or
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, physician,
practitioner, or supplier fails to make a payment in
accordance with a repayment plan under this paragraph,
the Secretary may immediately seek to offset or
otherwise recover the total balance outstanding
(including applicable interest) under the repayment
plan.
``(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) No recoupment until reconsideration
exercised.--In the case of a provider of services,
physician, practitioner, or supplier that is determined
to have received an overpayment under this title and
that seeks a reconsideration of such determination by a
qualified independent contractor under section 1869(c),
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.
``(B) Payment of interest.--
``(i) Return of recouped amount with
interest in case of reversal.--Insofar as such
determination on appeal against the provider of
services, physician, practitioner, or supplier
is later reversed, the Secretary shall provide
for repayment of the amount recouped plus
interest for the period in which the amount was
recouped.
``(ii) Interest in case of affirmation.--
Insofar as the determination on such appeal is
against the provider of services, physician,
practitioner, or supplier, interest on the
overpayment shall accrue on and after the date
of the original notice of overpayment.
``(iii) Rate of interest.--The rate of
interest under this subparagraph shall be the
rate otherwise applicable under this title in
the case of overpayments.
``(C) Medicare contractor defined.--For purposes of
this subsection, the term `medicare contractor' has the
meaning given such term in section 1889(e).
``(3) Payment audits.--
``(A) Written notice for post-payment audits.--
Subject to subparagraph (C), if a medicare contractor
decides to conduct a post-payment audit of a provider
of services, physician, practitioner, or supplier under
this title, the contractor shall provide the provider
of services, physician, practitioner, or supplier with
written notice (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, physician, practitioner,
or supplier under this title, the contractor shall--
``(i) give the provider of services,
physician, practitioner, or supplier a full
review and explanation of the findings of the
audit in a manner that is understandable to the
provider of services, physician, practitioner,
or supplier and permits the development of an
appropriate corrective action plan;
``(ii) inform the provider of services,
physician, practitioner, or supplier of the
appeal rights under this title as well as
consent settlement options (which are at the
discretion of the Secretary); and
``(iii) give the provider of services,
physician, practitioner, or supplier an
opportunity to provide additional information
to the contractor.
``(C) Exception.--Subparagraphs (A) and (B) shall
not apply if the provision of notice or findings would
compromise pending law enforcement activities, whether
civil or criminal, or reveal findings of law
enforcement-related audits.
``(4) Notice of over-utilization of codes.--The Secretary
shall establish, in consultation with organizations
representing the classes of providers of services, physicians,
practitioners, and suppliers, a process under which the
Secretary provides for notice to classes of providers of
services, physicians, practitioners, and suppliers served by a
medicare contractor in cases in which the contractor has
identified that particular billing codes may be overutilized by
that class of providers of services, physicians, practitioners,
or suppliers under the programs under this title (or provisions
of title XI insofar as they relate to such programs).
``(5) Standard methodology for probe sampling.--The
Secretary shall establish a standard methodology for medicare
administrative contractors to use in selecting a sample of
claims for review in the case of an abnormal billing pattern.
``(6) Consent settlement reforms.--
``(A) In general.--The Secretary may use a consent
settlement (as defined in subparagraph (D)) to settle a
projected overpayment.
``(B) Opportunity to submit additional information
before consent settlement offer.--Before offering a
provider of services, physician, practitioner, or
supplier a consent settlement, the Secretary shall--
``(i) communicate to the provider of
services, physician, practitioner, or supplier
in a non-threatening manner that, based on a
review of the medical records requested by the
Secretary, a preliminary evaluation of those
records indicates that there would be an
overpayment; and
``(ii) provide for a 45-day period during
which the provider of services, physician,
practitioner, or supplier may furnish
additional information concerning the medical
records for the claims that had been reviewed.
``(C) Consent settlement offer.--The Secretary
shall review any additional information furnished by
the provider of services, physician, practitioner, or
supplier under subparagraph (B)(ii). Taking into
consideration such information, the Secretary shall
determine if there still appears to be an overpayment.
If so, the Secretary--
``(i) shall provide notice of such
determination to the provider of services,
physician, practitioner, or supplier, including
an explanation of the reason for such
determination; and
``(ii) in order to resolve the overpayment,
may offer the provider of services, physician,
practitioner, or supplier--
``(I) the opportunity for a
statistically valid random sample; or
``(II) a consent settlement.
The opportunity provided under clause (ii)(I) does not
waive any appeal rights with respect to the alleged
overpayment involved.
``(D) Consent settlement defined.--For purposes of
this paragraph, the term `consent settlement' means an
agreement between the Secretary and a provider of
services, physician, practitioner, or supplier whereby
both parties agree to settle a projected overpayment
based on less than a statistically valid sample of
claims and the provider of services, physician,
practitioner, or supplier agrees not to appeal the
claims involved.''.
(b) Effective Dates and Deadlines.--
(1) Not later than 1 year after the date of the enactment
of this Act, the Secretary shall first--
(A) develop standards for the recovery of
overpayments under section 1874A(h)(1)(B) of the Social
Security Act, as added by subsection (a);
(B) establish the process for notice of
overutilization of billing codes under section
1874A(h)(4) of the Social Security Act, as added by
subsection (a); and
(C) establish a standard methodology for selection
of sample claims for abnormal billing patterns under
section 1874A(h)(5) of the Social Security Act, as
added by subsection (a).
(2) Section 1874A(h)(2) of the Social Security Act, as
added by subsection (a), shall apply to actions taken after the
date that is 1 year after the date of the enactment of this
Act.
(3) Section 1874A(h)(3) of the Social Security Act, as
added by subsection (a), shall apply to audits initiated after
the date of the enactment of this Act.
(4) Section 1874A(h)(6) 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.
SEC. 503. PROCESS FOR CORRECTION OF MINOR ERRORS AND OMISSIONS ON
CLAIMS WITHOUT PURSUING APPEALS PROCESS.
(a) In General.--The Secretary shall develop, in consultation with
appropriate medicare contractors (as defined in section 1889(f) of the
Social Security Act, as added by section 401(e)(1)) and representatives
of providers of services, physicians, practitioners, facilities, 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, physician, practitioner, facility, or supplier is given an
opportunity to correct such an error or omission without the need to
initiate an appeal. Such process shall include the ability to resubmit
corrected claims.
(b) Deadline.--Not later than 1 year after the date of the
enactment of this Act, the Secretary shall first develop the process
under subsection (a).
SEC. 504. 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 an administrator of a Federal health care program
(as defined in section 1128B(f)) who determines that the exclusion
would impose a hardship on beneficiaries of that program, 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.''.
TITLE VI--OTHER PROVISIONS
SEC. 601. 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 beneficiary and
the hospital involved and in which the hospital submits a claim only
for such test or interpretation.
SEC. 602. PAYMENT FOR EMTALA-MANDATED SCREENING AND STABILIZATION
SERVICES.
(a) 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.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to items and services furnished on or after January 1, 2002.
SEC. 603. REVIEW AND REPORT TO CONGRESS ON REDUCING MEDICARE REPORTING
BURDENS.
(a) Review.--The Secretary shall conduct a review of the cost
reports currently in use under the medicare program under title XVIII
of the Social Security Act for the purpose of--
(1) establishing ways for reducing the reporting burden on
providers and suppliers under such program; and
(2) creating documents which can be used for--
(A) financial reporting consistent with generally
accepted accounting principals; and
(B) cost analysis--
(i) necessary for the Medicare Payment
Advisory Commission and the Secretary to make
recommendations to Congress regarding payment
rates (including margin analysis and potential
benefit expansion); and
(ii) used by the Secretary to perform
audits.
(b) Report.--Not later than October 1, 2003, the Secretary shall
submit to Congress a report on the review conducted under subsection
(a) together with such recommendations for legislation and
administrative action that the Secretary determines are appropriate.
SEC. 604. AUTHORIZING USE OF ARRANGEMENTS WITH OTHER HOSPICE PROGRAMS
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 new subparagraph:
``(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.''.
(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. 605. ONE YEAR DELAY IN LOCK IN PROCEDURES FOR MEDICARE+CHOICE
PLANS.
Section 1851(e) (42 U.S.C. 1395w-21(e)) is amended--
(1) in paragraph (2)(A), by striking ``through 2001'' and
``and 2001'' and inserting ``through 2002'' and ``2001, and
2002'', respectively;
(2) in paragraph (2)(B), by striking ``during 2002'' and
inserting ``during 2003'';
(3) in paragraphs (2)(B)(i) and (2)(C)(i), by striking
``2002'' and inserting ``2003'' each place it appears;
(4) in paragraph (2)(D), by striking ``2001'' and inserting
``2002''; and
(5) in paragraph (4), by striking ``2002'' and inserting
``2003'' each place it appears.
SEC. 606. TEMPORARY MORATORIUM ON REQUIREMENT OF HOME HEALTH AGENCIES
TO COLLECT OASIS DATA FROM NON-MEDICARE PATIENTS.
(a) Moratorium.--
(1) In general.--During the period beginning on the date of
enactment of this Act and ending on the date that the Secretary
submits to Congress the report described in subsection (b)(2),
the data collection and reporting requirements under the
Outcome and Assessment Information Set (OASIS), required by
reason of section 4602(e) of Balanced Budget Act of 1997 (42
U.S.C. 1395fff note), shall be optional with respect to
patients of home health agencies who are not beneficiaries
under the medicare program under title XVIII of the Social
Security Act.
(2) Rule of construction regarding state law.--Nothing in
paragraph (1) shall prohibit a State from requiring a home
health agency to collect and report the data described in such
paragraph during the period described in such paragraph.
(b) Study and Report.--
(1) Study.--The Secretary shall conduct a study on whether
the data collection and reporting requirements under OASIS with
respect to patients of home health agencies who are not
beneficiaries under the medicare program under title XVIII of
the Social Security Act should be eliminated. In conducting
such study, the Secretary shall consult with home health
agencies and entities representing such agencies.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Secretary shall submit to Congress a
report on the study conducted under paragraph (1), together
with recommendations for such legislation and administrative
actions as the Secretary considers appropriate.
SEC. 607. COORDINATED SURVEY DEMONSTRATION PROGRAM.
(a) Establishment.--
(1) In general.--The Secretary shall establish a
demonstration program to test and evaluate the effectiveness of
permitting all the entities within a health care organization
to be subject to a coordinated survey for purposes of
determining whether such entities are in compliance with the
requirements for participation under the medicare and medicaid
programs with respect to all items and services provided by
those entities under such programs rather than being subject to
multiple surveys for different types of items and services
provided by such entities under such programs.
(2) Development of guidelines for coordinated survey.--
(A) Submission of proposals by states participating
in the demonstration program.--Under the demonstration
program under this section a State participating in the
demonstration (as determined by the Secretary pursuant
to paragraph (3)) shall submit to the Secretary a
proposal for guidelines with respect to the coordinated
survey described in paragraph (1) that will be
applicable to health care organizations located in the
State. Such proposal shall be submitted to the
Secretary at such time and in such manner as the
Secretary determines appropriate.
(B) Review and approval.--
(i) In general.--Under the demonstration
program under this section the Secretary shall
establish procedures for reviewing and
approving proposals submitted under
subparagraph (A).
(ii) Consultation.--The Secretary shall
consult with State hospital associations in
establishing the procedures under clause (i).
(3) Sites.--The Secretary shall conduct the demonstration
program under this section in up to 5 States and shall ensure
that all health care organizations located in those States are
permitted at the option of the organization to participate in
the program.
(4) Duration.--The demonstration program under this section
shall be conducted for not more than 5 years.
(b) Waiver Authority.--The Secretary may waive such requirements of
titles XI, XVIII, and XIX of the Social Security Act (42 U.S.C. 1301 et
seq.; 1395 et seq.; 1396 et seq.) as may be necessary for the purpose
of carrying out the demonstration program under this section.
(c) Report.--Not later than 6 months after the completion of the
demonstration program under this section, the Secretary shall submit to
Congress a report on such program, together with recommendations
regarding whether to implement coordinated survey guidelines for health
care organizations on a permanent basis.
(d) Definitions.--In this section:
(1) Critical access hospital.--The term ``critical access
hospital'' has the meaning given such term in section
1861(mm)(1) of the Social Security Act (42 U.S.C.
1395x(mm)(1)).
(2) Health care organization.--The term ``health care
organization'' means a governing entity that includes--
(A) a critical access hospital; and
(B) at least 1 other provider or supplier that is
certified to provide items or services under the
medicare or medicaid program.
(3) Medicaid program.--The term ``medicaid program'' means
the health benefits program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.).
(4) Medicare program.--The term ``medicare program'' means
the health benefits program under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.).
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