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107th Congress                                            Rept. 107-313
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

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



 
MEDICARE REGULATORY, APPEALS, CONTRACTING, AND EDUCATION REFORM ACT OF 
                                  2001

                                _______
                                

                December 4, 2001.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 3046]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3046) 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, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................    33
Background and Need for Legislation..............................    33
Hearings.........................................................    35
Committee Consideration..........................................    36
Committee Votes..................................................    36
Committee Oversight Findings.....................................    36
Statement of General Performance Goals and Objectives............    36
New Budget Authority, Entitlement Authority, and Tax Expenditures    36
Committee Cost Estimate..........................................    36
Congressional Budget Office Estimate.............................    37
Federal Mandates Statement.......................................    44
Advisory Committee Statement.....................................    44
Constitutional Authority Statement...............................    44
Applicability to Legislative Branch..............................    44
Section-by-Section Analysis of the Legislation...................    45
Changes in Existing Law Made by the Bill, as Reported............    70

                               Amendment

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

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

    (a) Short Title.--This Act may be cited as the ``Medicare 
Regulatory, Appeals, Contracting, and Education Reform Act of 2001''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act an amendment is expressed 
in terms of an amendment to or repeal of a section or other provision, 
the reference shall be considered to be made to that section or other 
provision of the Social Security Act.
    (c) 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 regulatory burdens.
Sec. 104. GAO report on the sustainable growth rate and regulatory 
costs.
Sec. 105. GAO report on requirement for submission of claims for 
categorically excluded dental services.

                    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.
Sec. 206. Appeals by providers when there is no other party available.
Sec. 207. Process for exceptions to national coverage determinations 
under special medical circumstances.
Sec. 208. Prior determination process for certain items and services.
Sec. 209. BIPA-related technical amendments and corrections.

                     TITLE III--CONTRACTING REFORM

Sec. 301. Increased flexibility in medicare administration.
Sec. 302. Requirements for information security.

             TITLE IV--EDUCATION AND OUTREACH IMPROVEMENTS

Sec. 401. Provider education and technical assistance.
Sec. 402. Access to and prompt responses from medicare administrative 
contractors.
Sec. 403. Reliance on guidance.
Sec. 404. Facilitation of consistent information to providers.
Sec. 405. Policy development regarding evaluation and management (E & 
M) documentation guidelines.
Sec. 406. Beneficiary outreach demonstration program; report on 1-800 
medicare number.
Sec. 407. Provider enrollment applications.

           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--EMTALA IMPROVEMENTS

Sec. 601. Payment for EMTALA-mandated screening and stabilization 
services.
Sec. 602. Emergency Medical Treatment and Active Labor Act (EMTALA) 
Task Force.
Sec. 603. Notification of providers when EMTALA investigation closed.
Sec. 604. Prior review by peer review organizations in EMTALA cases 
involving termination of participation.

                 TITLE VII--MISCELLANEOUS IMPROVEMENTS

Sec. 701. Methods for determining payment basis for new lab tests.
Sec. 702. One year delay in lock in procedures for Medicare+Choice 
plans.

SEC. 2. FINDINGS.

    Congress finds the following:
          (1) The overwhelming majority of providers of services, 
        physicians, practitioners, facilities, and suppliers in the 
        United States are law-abiding persons who provide important 
        health care services to patients each day.
          (2) The Secretary of Health and Human Services should work to 
        streamline paperwork requirements under the medicare program 
        and communicate clearer instructions to providers of services, 
        physicians, practitioners, facilities, and suppliers so that 
        they may spend more time caring for patients.

SEC. 3. CONSTRUCTION.

    (a) No Effect on Legal Authority.--Nothing in this Act shall be 
construed to compromise or affect existing legal authority for 
addressing fraud or abuse, whether it be criminal prosecution, civil 
enforcement, or administrative remedies, including under sections 3729 
through 3733 of title 31, United States Code (known as the False Claims 
Act).
    (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.
    (c) Clarification Related to Medicare Trust Funds.--The 
consolidation of medicare administrative contracting set forth in this 
Act does not constitute (or reflect any position on the issue of) 
consolidation of the Federal Hospital Insurance Trust Fund and the 
Federal Supplementary Medical Insurance Trust Fund.

                       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 final 
(including interim final) regulations to carry out this title only on 
one business day of every month.
    ``(2) The Secretary may issue a 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 3 years after the date of the enactment 
        of this Act, the Comptroller General of the United States shall 
        submit to Congress a report on the feasibility of requiring 
        that regulations described in section 1871(d) of the Social 
        Security Act be promulgated on a quarterly basis rather than on 
        a monthly basis.
          (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 
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. The 
        Secretary shall provide for an appropriate transition to take 
        into account the backlog of previously published interim final 
        regulations.
    (c) Limitations on New Matter in Final Regulations.--
          (1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as 
        amended by subsection (b), is further amended by adding at the 
        end the following new paragraph:
    ``(4) Insofar as a final regulation (other than an interim final 
regulation) includes a provision that is not a logical outgrowth of the 
relevant notice of proposed rulemaking relating to such regulation, 
that provision shall be treated as a proposed regulation and shall not 
take effect until there is the further opportunity for public comment 
and a publication of the provision again as a final regulation.''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to final regulations published on or after the date 
        of the enactment of this Act.

SEC. 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, facility, or supplier with respect 
to noncompliance with a substantive change referred to in subparagraph 
(A) 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 
referred to in subparagraph (A) may not take effect before the end of 
the 30-day period that begins on the date that the Secretary has issued 
or published, as the case may be, the substantive change.
    ``(ii) The Secretary may provide for such a substantive change to 
take effect on a date that precedes the end of the 30-day period under 
clause (i) if the Secretary finds that waiver of such 30-day period is 
necessary to comply with statutory requirements or that the application 
of such 30-day period is contrary to the public interest. If the 
Secretary provides for an earlier effective date pursuant to this 
clause, the Secretary shall include in the issuance or publication of 
the substantive change a finding described in the first sentence, and a 
brief statement of the reasons for such finding.''.
          (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 REGULATORY BURDENS.

    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, facilities, and suppliers, and from 
        the individual under section 404 of the Medicare Regulatory, 
        Appeals, Contracting, and Education Reform Act of 2001 with 
        respect to such areas of inconsistency and conflict; and
          ``(B) information from medicare contractors that tracks the 
        nature of written and telephone inquiries.
    ``(3) A report under paragraph (1) shall include a description of 
efforts by the Secretary to reduce such inconsistency or conflicts, and 
recommendations for legislation or administrative action that the 
Secretary determines appropriate to further reduce such inconsistency 
or conflicts.''.

SEC. 104. GAO REPORT ON THE SUSTAINABLE GROWTH RATE AND REGULATORY 
                    COSTS.

    Not later than 18 months after the date of the enactment of this 
Act, the Comptroller General of the United States shall submit to 
Congress a report on the accuracy of the sustainable growth rate (under 
section 1848(f) of the Social Security Act, 42 U.S.C. 1395w-4(f)) for 
2002 and succeeding years in accounting for regulatory costs imposed on 
physicians.

SEC. 105. GAO REPORT ON REQUIREMENT FOR SUBMISSION OF CLAIMS FOR 
                    CATEGORICALLY EXCLUDED DENTAL SERVICES.

    Not later than 18 months after the date of the enactment of this 
Act, the Comptroller General of the United States shall submit to 
Congress a report on the extent to which--
          (1) group health plans or other third party payors require 
        that claims for medicare categorically excluded dental services 
        be denied by under the medicare program before the plan or 
        payor will make payment for such claims; and
          (2) medicare beneficiaries request dentists to submit claims 
        for such categorically excluded dental services.

                    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 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 such cases, 
        giving priority to those judges with prior experience in 
        handling medicare appeals and in a manner consistent with 
        paragraph (3), and to hire support staff for such judges.
          (5) Financing.--Amounts payable under law to the Commissioner 
        for judges performing the administrative law judge functions 
        transferred under paragraph (1) from the Federal Hospital 
        Insurance Trust Fund and the Federal Supplementary Medical 
        Insurance Trust Fund shall become payable to the Secretary for 
        the functions so transferred.
          (6) Shared resources.--The Secretary shall enter into such 
        arrangements with the Commissioner as may be appropriate with 
        respect to transferred functions of administrative law judges 
        to share office space, support staff, and other resources, with 
        appropriate reimbursement from the Trust Funds described in 
        paragraph (5).
    (c) Increased Financial Support.--In addition to any amounts 
otherwise appropriated, to ensure timely action on appeals before 
administrative law judges and the Departmental Appeals Board consistent 
with section 1869 of the Social Security Act (as amended by section 521 
of BIPA, 114 Stat. 2763A-534), there are authorized to be appropriated 
(in appropriate part from the Federal Hospital Insurance Trust Fund and 
the Federal Supplementary Medical Insurance Trust Fund) to the 
Secretary such sums as are necessary for fiscal year 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''.

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) 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 the date of the determination 
                                described in such subparagraph; or
                                  ``(II) clause (i)(II), within 60 days 
                                of the end of the period provided under 
                                subparagraph (B) for the determination.
                          ``(iii) Venue.--Such action shall be brought 
                        in the district court of the United States for 
                        the judicial district in which the appellant is 
                        located (or, in the case of an action brought 
                        jointly by more than one applicant, the 
                        judicial district in which the greatest number 
                        of applicants are located) or in the district 
                        court for the District of Columbia.
                          ``(iv) Interest on 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 and 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 Immediate Sanctions.--The Secretary shall develop 
and implement a process to expedite proceedings under sections 1866(h) 
of the Social Security Act (42 U.S.C. 1395cc(h)) in which the sanction 
of termination of participation or 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. Under such process priority shall be 
provided in cases of termination.
  (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 additional 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 such individual.
                  ``(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,
                          ``(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--
                  (A) by inserting ``be written in a manner calculated 
                to be understood by the beneficiary, and shall include 
                (to the extent appropriate)'' after ``in writing, ''; 
                and
                  (B) by inserting ``and a notification of the right to 
                appeal such determination and instructions on how to 
                initiate such appeal under this section'' after ``such 
                decision, ''.
          (3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)) is 
        amended--
                  (A) in the heading, by inserting ``; Notice'' after 
                ``Secretary''; and
                  (B) by adding at the end the following new paragraph:
          ``(4) Notice.--Notice of the decision of an administrative 
        law judge shall be in writing in a manner calculated to be 
        understood by the 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 a 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) typically treats the condition, makes the 
                diagnosis, or provides the type of treatment under 
                review.
          ``(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.

  (a) Hearing Rights.--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.--A provider 
of services, physician, practitioner, facility, or supplier whose 
application to enroll (or, if applicable, to renew enrollment) under 
this title is denied may have a hearing and judicial review of such 
denial under the procedures that apply under subsection (h)(1)(A) to a 
provider of services that is dissatisfied with a determination by the 
Secretary.''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to denials occurring on or after such date (not later than 1 year after 
the date of the enactment of this Act) as the Secretary specifies.

SEC. 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, facility, or supplier to appeal any determination of the 
Secretary under this title relating to services rendered under this 
title to an individual who subsequently dies, if there is no other 
party available to appeal such determination, so long as the estate of 
the individual, and the individual's family and heirs, are not liable 
for paying for the item or service and are not liable for any increased 
coinsurance or deductible amounts resulting from any decision 
increasing the reimbursement amount for the provider of services, 
physician, practitioner, facility, or supplier.''.
  (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. PROCESS FOR EXCEPTIONS TO NATIONAL COVERAGE DETERMINATIONS 
                    UNDER SPECIAL MEDICAL CIRCUMSTANCES

  (a) In General.--Section 1869(f) (42 U.S.C. 1395ff(f)), as added by 
section 522 of BIPA, is amended--
          (1) by redesignating paragraphs (6) through (8) as paragraphs 
        (7) through (9); and
          (2) by inserting after paragraph (5) the following new 
        paragraph:
          ``(6) Process for exceptions to national coverage 
        determinations under special medical circumstances.--
                  ``(A) Establishment of process.--The Secretary shall 
                establish a process whereby an individual described in 
                paragraph (5) may submit to the Secretary a request for 
                a determination that a national coverage determination, 
                which has the effect of denying coverage under this 
                title for items and services for the treatment of a 
                serious or life-threatening condition of the 
                individual, should not apply to the individual due to 
                the special medical circumstances of the individual 
                that involve medical factors that were not considered 
                during the national coverage determination 
                decisionmaking procedure and make the application of 
                the national coverage determination inappropriate for 
                the individual's particular case. Such request shall be 
                accompanied by supporting documentation and may be made 
                before the receipt of the items or services involved.
                  ``(B) Use of panel.--Under such process, the 
                Secretary shall provide that--
                          ``(i) the initial decision on the request is 
                        made by a panel described in subparagraph (C); 
                        or
                          ``(ii) the individual is provided the 
                        opportunity to appeal the initial decision on 
                        the request to such a panel.
                  ``(C) Panel.--A panel described in this subparagraph 
                is a panel of physicians or other appropriate health 
                care professionals in which each member of the panel 
                meets the requirements of paragraphs (2) and (4) of 
                subsection (g) (relating to independence and licensure 
                and expertise).
                  ``(D) Appeal.--A decision on a request under this 
                paragraph shall be subject to further review (after any 
                appeal described in subparagraph (B)(ii)) by the 
                Departmental Appeals Board and to judicial review, in 
                the same manner as provided under subsection (b) with 
                respect to review of a final decision of the Secretary.
                  ``(E) Expedition.--The process under this paragraph 
                shall provide for reasonable expedition for making 
                decisions on requests when the need for expedition is 
                certified by a physician.
                  ``(F) Effect of decision.--If a request under this 
                paragraph is approved for an individual with respect to 
                a treatment, the national coverage determination shall 
                not be applied by any medicare administrative 
                contractor with respect to the treatment for that 
                individual.
                  ``(G) Notice.--The Secretary shall provide, in an 
                appropriate annual publication available to the public, 
                a list of national coverage determinations and 
                information on how to get more information with respect 
                to such determinations, made in the previous year.''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply as if included in the enactment of section 522 of BIPA.

SEC. 208. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND SERVICES.

  (a) In General.--Section 1869 (42 U.S.C. 1395ff(b)), as amended by 
sections 521 and 522 of BIPA and section 204(d)(2)(B), is further 
amended by adding at the end the following new subsection:
  ``(h) Prior Determination Process for Certain Items and Services.--
          ``(1) Establishment of process.--
                  ``(A) In general.--With respect to a medicare 
                administrative contractor that has a contract under 
                section 1874A that provides for making payments under 
                this title with respect to items and services, the 
                Secretary shall establish a prior determination process 
                that meets the requirements of this subsection and that 
                shall be applied by such contractor in the case of 
                eligible requesters.
                  ``(B) Eligible requester.--For purposes of this 
                subsection, the term `eligible requester' means--
                          ``(i) a physician, but only in the case of 
                        items and services that may be furnished (or 
                        ordered to be furnished) by the physician; and
                          ``(ii) an individual entitled to benefits 
                        under this title, but only with respect to an 
                        item or service for which the individual 
                        receives an advance beneficiary notice from the 
                        provider or supplier of the item or service 
                        under section 1879 that payment may not be made 
                        (or may no longer be made) for the item or 
                        service under this title.
          ``(2) Establishing eligible categories.--The Secretary shall 
        establish by regulation limits on the categories of items and 
        services for which a prior determination of coverage may be 
        requested under this subsection. In establishing such limits, 
        the Secretary may consider the dollar amount involved with 
        respect to the item or service, administrative costs and 
        burdens, and other relevant factors.
          ``(3) Request for prior determination.--
                  ``(A) In general.--Subject to paragraph (2), under 
                the process established under this subsection any 
                eligible requester may submit to the contractor a 
                request for a determination, before the furnishing (or 
                ordering the furnishing) of the item or service 
                involved as to whether the item or service is covered 
                under this title consistent with the applicable 
                requirements of section 1862(a) (relating to medical 
                necessity, etc.).
                  ``(B) Accompanying documentation.--The request shall 
                be accompanied by a description of the item or service, 
                its billing code (as appropriate), supporting 
                documentation relating to the medical necessity for the 
                item or service, and any other appropriate 
                documentation that the Secretary may require. In the 
                case of a request submitted by an eligible requester 
                that is described in paragraph (1)(B)(ii), the request 
                shall also be accompanied by a copy of the advance 
                beneficiary notice involved.
          ``(4) Response to request.--
                  ``(A) In general.--Under such process, the contractor 
                shall provide the eligible requester with written 
                notice of a determination as to whether--
                          ``(i) the item or service is so covered;
                          ``(ii) the item or service is not so covered; 
                        or
                          ``(iii) the contractor lacks sufficient 
                        information to make a coverage determination.
                In the case of a request in which an eligible requester 
                is not the beneficiary described in paragraph 
                (1)(B)(i), the process shall provide that the 
                beneficiary involved shall be informed of any 
                determination described in clause (ii) (relating to a 
                determination of non-coverage).
                  ``(B) Deadline to respond.--Such notice shall be 
                provided within the same time period as the time period 
                applicable to the contractor providing notice of 
                initial determinations on a claim for benefits under 
                subsection (a)(2)(A).
          ``(5) Effect of determinations.--
                  ``(A) Binding nature of positive determination.--If 
                the contractor makes the determination described in 
                paragraph (4)(A)(i), such determination shall be 
                binding on the contractor in the absence of fraud or 
                evidence of misrepresentation of facts presented to the 
                contractor.
                  ``(B) Right to redetermination in case of a denial.--
                          ``(i) In general.--If the contractor makes 
                        the determination described in paragraph 
                        (4)(A)(ii)--
                                  ``(I) the eligible requester has the 
                                right to a redetermination by the 
                                contractor on the determination that 
                                the item or service is not so covered; 
                                and
                                  ``(II) the contractor shall include 
                                in notice under paragraph (4)(A) a 
                                brief explanation of the basis for the 
                                determination and the right to such a 
                                redetermination.
                          ``(ii) Deadline for redeterminations.--The 
                        contractor shall complete and provide notice of 
                        such redetermination within the same time 
                        period as the time period applicable to the 
                        contractor providing notice of redeterminations 
                        relating to a claim for benefits under 
                        subsection (a)(3)(C)(ii).
                  ``(C) Description of additional information 
                required.--If the contractor makes the determination 
                described in paragraph (4)(A)(iii), the contractor 
                shall include in the notice under paragraph (4)(A) a 
                description of the additional information required to 
                make the coverage determination.
          ``(6) Limitation on further review.--
                  ``(A) In general.--Contractor determinations 
                described in paragraph (4)(A)(ii) or (4)(A)(iii) (and 
                redeterminations made under paragraph (5)(B)), relating 
                to pre-service claims are not subject to further 
                administrative appeal or judicial review under this 
                section or otherwise.
                  ``(B) Construction.--Nothing in this subsection shall 
                be construed as affecting the right of an individual, 
                after receiving items or services for which the 
                contractor has made a determination described in 
                paragraph (4)(A)(ii), from submitting a claim for such 
                item or service or from obtaining administrative or 
                judicial review respecting such claim under the other 
                applicable provisions of this section.''.
  (b) Effective Date; Transition.--
          (1) Effective date.--The Secretary shall establish the prior 
        determination process under the amendment made by subsection 
        (a) in such a manner as to provide for the acceptance of 
        requests for determinations under such process filed not later 
        than 18 months after the date of the enactment of this Act.
          (2) Transition.--During the period in which the amendment 
        made by subsection (a) has become effective but contracts are 
        not provided under section 1874A of the Social Security Act 
        with medicare administrative contractors, any reference in 
        section 1869(g) of such Act (as added by such amendment) to 
        such a contractor is deemed a reference to a fiscal 
        intermediary or carrier with an agreement under section 1816, 
        or contract under section 1842, respectively, of such Act.
  (c) Provisions Relating to Advance Beneficiary Notices.--
          (1) Data collection.--The Secretary shall establish a process 
        for the collection of information on the instances in which an 
        advance beneficiary notice (as defined in paragraph (4)) has 
        been provided and on instances in which a beneficiary indicates 
        on such a notice that the beneficiary does not intend to seek 
        to have the item or service that is the subject of the notice 
        furnished.
          (2) Outreach and education.--The Secretary shall establish a 
        program of outreach and education for beneficiaries and 
        providers of services and other persons on the appropriate use 
        of advance beneficiary notices and coverage and coverage 
        policies under the medicare program.
          (3) GAO report.--Not later than 18 months after the date on 
        which section 1869(g) of the Social Security Act (as added by 
        subsection (a)) takes effect, the Comptroller General of the 
        United States shall submit to Congress a report on the use of 
        advance beneficiary notices under title XVIII of such Act. Such 
        report shall include information concerning the providers of 
        services and other persons that have provided such notices and 
        the response of beneficiaries to such notices, including the 
        use of the prior determination process under such section 
        1869(g) and their receipt of services.
          (4) Advance beneficiary notice defined.--In this subsection, 
        the term ``advance beneficiary notice'' means a written notice 
        provided under section 1879 of the Social Security Act (42 
        U.S.C. 1395pp) to an individual entitled to benefits under part 
        A or B of title XVIII of such Act before items or services are 
        furnished under such part in cases where a provider of services 
        or other person that would furnish the item or service believes 
        that payment will not be made for some or all of such items or 
        services under such title on the basis that they are not 
        reasonable and necessary consistent with the applicable 
        requirements of section 1862(a) (relating to medical necessity, 
        etc.) of such title.

SEC. 209. BIPA-RELATED TECHNICAL AMENDMENTS AND CORRECTIONS.

  (a) Technical Amendments Relating to Advisory Committee under BIPA 
Section 522.--(1) Subsection (i) of section 1114 (42 U.S.C. 1314)--
          (A) is transferred to section 1862 and added at the end of 
        such section; and
          (B) is redesignated as subsection (j).
  (2) Section 1862 (42 U.S.C. 1395y) is amended--
          (A) in the last sentence of subsection (a), by striking 
        ``section 1114(f)'' and inserting ``section 222 of the Public 
        Health Service Act''; and
          (B) in subsection (j), as so transferred and redesignated--
                  (i) by striking ``subsection (f)'' and inserting 
                ``section 222 of the Public Health Service Act'';
                  (ii) by striking ``section 1862(a)(1)'' and inserting 
                ``subsection (a)(1)''.
  (b) Terminology Corrections.--(1) Section 1869(c)(3)(I)(ii) (42 
U.S.C. 1395ff(c)(3)(I)(ii)), as amended by section 521 of BIPA, is 
amended--
          (A) in subclause (III), by striking ``policy'' and inserting 
        ``determination''; and
          (B) in subclause (IV), by striking ``medical review 
        policies'' and inserting ``coverage determinations''.
  (2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is amended by 
striking ``policy'' and ``policy'' and inserting ``determination'' each 
place it appears and ``determination'', respectively.
  (c) Reference Corrections.--Section 1869(f)(4) (42 U.S.C. 
1395ff(f)(4)), as added by section 522 of BIPA, is amended--
          (1) in subparagraph (A)(iv), by striking ``subclause (I), 
        (II), or (III)'' and inserting ``clause (i), (ii), or (iii)'';
          (2) in subparagraph (B), by striking ``clause (i)(IV)'' and 
        ``clause (i)(III)'' and inserting ``subparagraph (A)(iv)'' and 
        ``subparagraph (A)(iii)'', respectively; and
          (3) in subparagraph (C), by striking ``clause (i)'', 
        ``subclause (IV)'' and ``subparagraph (A)'' and inserting 
        ``subparagraph (A)'', ``clause (iv)'' and ``paragraph (1)(A)'', 
        respectively each place it appears.
  (d) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of BIPA.

                     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 or activity 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 or activity in relation to an 
                individual entitled to benefits under part A or 
                enrolled under part B, or both, a specific provider of 
                services, physician, practitioner, 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 or activity 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 five 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 shall 
                provide incentives for medicare administrative 
                contractors to provide quality service and to promote 
                efficiency.
          ``(2) Compliance with requirements.--No contract under this 
        section shall be entered into with any medicare administrative 
        contractor unless the Secretary finds that such medicare 
        administrative contractor will perform its obligations under 
        the contract efficiently and effectively and will meet such 
        requirements as to financial responsibility, legal authority, 
        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) Limitation on civil liability.--
                  ``(A) In general.--No medicare administrative 
                contractor having a contract with the Secretary under 
                this section, and no person employed by, or having a 
                fiduciary relationship with, any such medicare 
                administrative contractor or who furnishes professional 
                services to such medicare administrative contractor, 
                shall by reason of the performance of any duty, 
                function, or activity required or authorized pursuant 
                to this section or to a valid contract entered into 
                under this section, be held civilly liable under any 
                law of the United States or of any State (or political 
                subdivision thereof) provided due care was exercised in 
                the performance of such duty, function, or activity.
                  ``(B) Reimbursement of certain expenses.--The 
                Secretary shall make payment to a medicare 
                administrative contractor under contract with the 
                Secretary pursuant to this section, or to any member or 
                employee thereof, or to any person who furnishes legal 
                counsel or services to such medicare administrative 
                contractor, in an amount equal to the reasonable amount 
                of the expenses incurred, as determined by the 
                Secretary, in connection with the defense of any civil 
                suit, action, or proceeding brought against such 
                medicare administrative contractor or person related to 
                the performance of any duty, function, or activity 
                under such contract, provided due care was exercised in 
                the performance of such duty, function, or activity.''.
          (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 or dates (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.--The Secretary shall take such 
        steps, consistent with paragraph (1)(B) and (1)(C), as are 
        necessary to provide for an appropriate transition from 
        contracts under section 1816 and section 1842 of the Social 
        Security Act (42 U.S.C. 1395h, 1395u) to contracts under 
        section 1874A, as added by subsection (a)(1).
          (3) Authorizing continuation of mip functions under current 
        contracts and agreements and under rollover contracts.--The 
        provisions contained in the exception in section 1893(d)(2) of 
        the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall 
        continue to apply notwithstanding the amendments made by this 
        section, and any reference in such provisions to an agreement 
        or contract shall be deemed to include a contract under section 
        1874A of such Act, as inserted by subsection (a)(1), that 
        continues the activities referred to in such provisions.
  (e) References.--On and after the effective date provided under 
subsection (d)(1), any reference to a fiscal intermediary or carrier 
under title XI or XVIII of the Social Security Act (or any regulation, 
manual instruction, interpretative rule, statement of policy, or 
guideline issued to carry out such titles) shall be deemed a reference 
to an appropriate medicare administrative contractor (as provided under 
section 1874A of the Social Security Act).
  (f) 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.

SEC. 302. REQUIREMENTS FOR INFORMATION SECURITY.

  (a) In General.--Section 1874A, as added by section 301, is amended 
by adding at the end the following new subsection:
  ``(e) Requirements for Information Security.--
          ``(1) Development of information security program.--A 
        medicare administrative contractor that performs the functions 
        referred to in subparagraphs (A) and (B) of subsection (a)(4) 
        (relating to determining and making payments) shall implement a 
        contractor-wide information security program to provide 
        information security for the operation and assets of the 
        contractor with respect to such functions under this title. An 
        information security program under this paragraph shall meet 
        the requirements for information security programs imposed on 
        Federal agencies under section 3534(b)(2) of title 44, United 
        States Code (other than requirements under subparagraphs 
        (B)(ii), (F)(iii), and (F)(iv) of such section).
          ``(2) Independent audits.--
                  ``(A) Performance of annual evaluations.--Each year a 
                medicare administrative contractor that performs the 
                functions referred to in subparagraphs (A) and (B) of 
                subsection (a)(4) (relating to determining and making 
                payments) shall undergo an evaluation of the 
                information security of the contractor with respect to 
                such functions under this title. The evaluation shall--
                          ``(i) be performed by an entity that meets 
                        such requirements for independence as the 
                        Inspector General of the Department of Health 
                        and Human Services may establish; and
                          ``(ii) test the effectiveness of information 
                        security control techniques for an appropriate 
                        subset of the contractor's information systems 
                        (as defined in section 3502(8) of title 44, 
                        United States Code) relating to such functions 
                        under this title and an assessment of 
                        compliance with the requirements of this 
                        subsection and related information security 
                        policies, procedures, standards and guidelines.
                  ``(B) Deadline for initial evaluation.--
                          ``(i) New contractors.--In the case of a 
                        medicare administrative contractor covered by 
                        this subsection that has not previously 
                        performed the functions referred to in 
                        subparagraphs (A) and (B) of subsection (a)(4) 
                        (relating to determining and making payments) 
                        as a fiscal intermediary or carrier under 
                        section 1816 or 1842, the first independent 
                        evaluation conducted pursuant subparagraph (A) 
                        shall be completed prior to commencing such 
                        functions.
                          ``(ii) Other contractors.--In the case of a 
                        medicare administrative contractor covered by 
                        this subsection that is not described in clause 
                        (i), the first independent evaluation conducted 
                        pursuant subparagraph (A) shall be completed 
                        within 1 year after the date the contractor 
                        commences functions referred to in clause (i) 
                        under this section.
                  ``(C) Reports on evaluations.--
                          ``(i) To the inspector general.--The results 
                        of independent evaluations under subparagraph 
                        (A) shall be submitted promptly to the 
                        Inspector General of the Department of Health 
                        and Human Services.
                          ``(ii) To congress.--The Inspector General of 
                        Department of Health and Human Services shall 
                        submit to Congress annual reports on the 
                        results of such evaluations.''.
  (b) Application of Requirements to Fiscal Intermediaries and 
Carriers.--
          (1) In general.--The provisions of section 1874A(e)(2) of the 
        Social Security Act (other than subparagraph (B)), as added by 
        subsection (a), shall apply to each fiscal intermediary under 
        section 1816 of the Social Security Act (42 U.S.C. 1395h) and 
        each carrier under section 1842 of such Act (42 U.S.C. 1395u) 
        in the same manner as they apply to medicare administrative 
        contractors under such provisions.
          (2) Deadline for initial evaluation.--In the case of such a 
        fiscal intermediary or carrier with an agreement or contract 
        under such respective section in effect as of the date of the 
        enactment of this Act, the first evaluation under section 
        1874A(e)(2)(A) of the Social Security Act (as added by 
        subsection (a)), pursuant to paragraph (1), shall be completed 
        (and a report on the evaluation submitted to the Secretary) by 
        not later than 1 year after such date.

             TITLE 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 (f), including under section 
1893) in order to maximize the effectiveness of Federal education 
efforts for providers of services, physicians, practitioners, 
facilities, 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) 
        and as amended by section 302, is amended by adding at the end 
        the following new subsection:
  ``(f) Incentives To Improve Contractor Performance in Provider 
Education and Outreach.--In order to give medicare administrative 
contractors an incentive to implement effective education and outreach 
programs for providers of services, physicians, practitioners, 
facilities, and suppliers, the Secretary shall implement, a methodology 
to measure the specific claims payment error rates of such contractors 
in the processing or reviewing of medicare claims.''.
          (2) Application to fiscal intermediaries and carriers.--The 
        provisions of section 1874A(f) of the Social Security Act, as 
        added by paragraph (1), shall apply to each fiscal intermediary 
        under section 1816 of the Social Security Act (42 U.S.C. 1395h) 
        and each carrier under section 1842 of such Act (42 U.S.C. 
        1395u) in the same manner as they apply to medicare 
        administrative contractors under such provisions.
          (3) Reports.--Not later than October 1, 2002--
                  (A) the Secretary shall submit to Congress a report 
                that describes how the Secretary intends to use the 
                methodology in assessing medicare contractor 
                performance in implementing effective education and 
                outreach programs, including whether to use such 
                methodology as a basis for performance bonuses; and
                  (B) the Comptroller General of the United States 
                shall submit to Congress and to the Secretary a report 
                on the adequacy of such methodology and shall include 
                in the report such recommendations as the Comptroller 
                General determines appropriate with respect to the 
                methodology.
  (c) Requirement To Maintain Internet Sites.--
          (1) In general.--Section 1889, as added by subsection (a), is 
        amended by adding at the end the following new subsection:
  ``(b) Internet Sites; FAQs.--The Secretary, and each medicare 
contractor insofar as it provides services (including claims 
processing) for providers of services, physicians, practitioners, 
facilities, or suppliers, shall maintain an Internet site which--
          ``(1) provides answers in an easily accessible format to 
        frequently asked questions, and
          ``(2) includes all materials published by the Secretary or 
        the contractor, respectively,
relating to such providers of services, physicians, practitioners, 
facilities, and suppliers under the programs under this title and title 
XI insofar as it relates to such programs.''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2002.
  (d) 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 ``, subject to 
                subparagraph (B)'' and inserting ``and functions 
                described in subparagraph (C)(ii), subject to 
                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, 
                        facilities, 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, facilities, and suppliers.''.
          (2) Tailoring education and training for small providers or 
        suppliers.--
                  (A) In general.--Section 1889, as added by subsection 
                (a) and as amended by subsection (c), is further 
                amended by adding at the end the following new 
                subsection:
  ``(c) Tailoring Education and Training Activities for Small Providers 
or Suppliers.--
          ``(1) In general.--Insofar as a medicare contractor conducts 
        education and training activities, it shall 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, facility, 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.
  (e) Additional Provider Education Provisions.--
          (1) In general.--Section 1889, as added by subsection (a) and 
        as amended by subsections (c) and (d)(2), is further amended by 
        adding at the end the following new subsections:
  ``(d) Encouragement of Participation in Education Program 
Activities.--A medicare contractor may not use a record of attendance 
at (or failure to attend) educational activities or other information 
gathered during an educational program conducted under this section or 
otherwise by the Secretary to select or track providers of services, 
physicians, practitioners, facilities, or suppliers for the purpose of 
conducting any type of audit or prepayment review.
  ``(e) Construction.--Nothing in this section or section 1893(g) shall 
be construed as providing for disclosure by a medicare contractor of 
information that would compromise pending law enforcement activities or 
reveal findings of law enforcement-related audits.
  ``(f) 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, facility, 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, facility, 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 ADMINISTRATIVE 
                    CONTRACTORS.

  (a) In General.--Section 1874A, as added by section 301 and as 
amended by sections 302 and 401(b)(1), is further amended by adding at 
the end the following new subsection:
  ``(g) Communications with Beneficiaries, Providers of Services, 
Physicians, Practitioners, Facilities, and Suppliers.--
          ``(1) Communication strategy.--The Secretary shall develop a 
        strategy for communications with beneficiaries and with 
        providers of services, physicians, practitioners, facilities, 
        and suppliers under this title.
          ``(2) Response to written inquiries.--Each medicare 
        administrative contractor shall, for those providers of 
        services, physicians, practitioners, facilities, and suppliers 
        which submit claims to the contractor for claims processing and 
        for those beneficiaries with respect to which claims are 
        submitted for claims processing, provide general written 
        responses (which may be through electronic transmission) in a 
        clear, concise, and accurate manner to inquiries by 
        beneficiaries, providers of services, physicians, 
        practitioners, facilities, 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.--Each medicare 
        administrative contractor shall, for those providers of 
        services, physicians, practitioners, facilities, and suppliers 
        which submit claims to the contractor for claims processing and 
        for those beneficiaries with respect to which claims are 
        submitted for claims processing, maintain a toll-free telephone 
        number at which beneficiaries, providers, physicians, 
        practitioners, facilities, and suppliers may obtain information 
        regarding billing, coding, claims, coverage, and other 
        appropriate information under this title.
          ``(4) Monitoring of contractor responses.--
                  ``(A) In general.--Each medicare administrative 
                contractor shall, consistent with standards developed 
                by the Secretary under subparagraph (B)--
                          ``(i) maintain a system for identifying who 
                        provides the information referred to in 
                        paragraphs (2) and (3); and
                          ``(ii) monitor the accuracy, consistency, and 
                        timeliness of the information so provided.
                  ``(B) Development of standards.--
                          ``(i) In general.--The Secretary shall 
                        establish (and publish in the Federal Register) 
                        standards to monitor the accuracy, consistency, 
                        and timeliness of the information provided in 
                        response to written and telephone inquiries 
                        under this subsection. Such standards shall be 
                        consistent with the performance requirements 
                        established under subsection (b)(3).
                          ``(ii) Evaluation.--In conducting evaluations 
                        of individual medicare administrative 
                        contractors, the Secretary shall take into 
                        account the results of the monitoring conducted 
                        under subparagraph (A) taking into account as 
                        performance requirements the standards 
                        established under clause (i).
                  ``(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.''.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect October 1, 2002.
  (c) Application to Fiscal Intermediaries and Carriers.--The 
provisions of section 1874A(g) of the Social Security Act, as added by 
subsection (a), shall apply to each fiscal intermediary under section 
1816 of the Social Security Act (42 U.S.C. 1395h) and each carrier 
under section 1842 of such Act (42 U.S.C. 1395u) in the same manner as 
they apply to medicare administrative contractors under such 
provisions.

SEC. 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, 
        facility, or supplier follows written guidance (which may have 
        been transmitted electronically) provided--
                  ``(i) by the Secretary; or
                  ``(ii) by a medicare contractor (as defined in 
                section 1889(f) and whether in the form of a written 
                response to a written inquiry under section 1874A(g)(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 an item or service or the submission of a claim for benefits 
        for such an item or service;
          ``(B) the Secretary determines that--
                  ``(i) the provider of services, physician, 
                practitioner, facility, or supplier has accurately 
                presented the circumstances relating to such item, 
                service, 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, facility, or supplier against the program 
                under this title; and
          ``(C) the guidance was in error;
the provider of services, physician, practitioner, facility, or 
supplier shall not be subject to any penalty or interest (relating to 
an overpayment, if any) under this title (or the provisions of title XI 
insofar as they relate to this title) relating to the provision of such 
item or service or such claim if the provider of services, physician, 
practitioner, facility, 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. 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).''.
  (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. FACILITATION OF CONSISTENT INFORMATION TO PROVIDERS.

  The Secretary shall appoint an individual within the Department of 
Health and Human Services who shall be responsible--
          (1) for responding to complaints and grievances from 
        providers of services, physicians, practitioners, facilities, 
        and suppliers under the medicare program under title XVIII of 
        the Social Security Act (including provisions of title XI of 
        the Social Security Act insofar as they relate to such title 
        XVIII and are not administered by the Office of the Inspector 
        General of the Department of Health and Human Services) 
        concerning inconsistent information or inconsistent responses 
        provided under such program; and
          (2) in so responding, for facilitating an appropriate 
        response from the Department of Health and Human Services or 
        from appropriate medicare contractors.
Such individual shall not serve as an advocate for any specific policy 
within the Department.

SEC. 405. POLICY DEVELOPMENT REGARDING EVALUATION AND MANAGEMENT (E & 
                    M) DOCUMENTATION GUIDELINES.

  (a) In General.--The Secretary may not implement any new 
documentation guidelines for evaluation and management physician 
services under the title XVIII of the Social Security Act on or after 
the date of the enactment of this Act unless the Secretary--
          (1) has developed the guidelines in collaboration with 
        practicing physicians (including both generalists and 
        specialists) and provided for an assessment of the proposed 
        guidelines by the physician community;
          (2) has established a plan that contains specific goals, 
        including a schedule, for improving the use of such guidelines;
          (3) has conducted appropriate and representative pilot 
        projects under subsection (b) to test the evaluation and 
        management documentation guidelines;
          (4) finds that the objectives described in subsection (c) 
        will be met in the implementation of such guidelines; and
          (5) has established, and is implementing, a program to 
        educate physicians on the use of such guidelines.
The Secretary may make changes to the manner in which existing 
evaluation and management documentation guidelines are implemented to 
reduce paperwork burdens on physicians.
  (b) Pilot Projects to Test Evaluation and Management Documentation 
Guidelines.--
          (1) In general.--The Secretary shall conduct under this 
        subsection appropriate and representative pilot projects to 
        test new evaluation and management documentation guidelines 
        referred to in subsection (a).
          (2) Length and consultation.--Each pilot project under this 
        subsection shall--
                  (A) be voluntary;
                  (B) be of sufficient length as determined by the 
                Secretary to allow for preparatory physician and 
                medicare contractor education, analysis, and use and 
                assessment of potential evaluation and management 
                guidelines; and
                  (C) be conducted, in development and throughout the 
                planning and operational stages of the project, in 
                consultation with practicing physicians (including both 
                generalists and specialists).
          (3) Range of pilot projects.--Of the pilot projects conducted 
        under this subsection--
                  (A) at least one shall focus on a peer review method 
                by physicians (not employed by a medicare contractor) 
                which evaluates medical record information for claims 
                submitted by physicians identified as statistical 
                outliers relative to definitions published in the 
                Current Procedures Terminology (CPT) code book of the 
                American Medical Association;
                  (B) at least one shall focus on an alternative method 
                to detailed guidelines based on physician documentation 
                of face to face encounter time with a patient;
                  (C) at least one shall be conducted for services 
                furnished in a rural area and at least one for services 
                furnished outside such an area; and
                  (D) at least one shall be conducted in a setting 
                where physicians bill under physicians services in 
                teaching settings and at least one shall be conducted 
                in a setting other than a teaching setting.
          (4) Banning of targeting of pilot project participants.--Data 
        collected under this subsection shall not be used as the basis 
        for overpayment demands or post-payment audits. Such limitation 
        applies only to claims filed as part of the pilot project and 
        lasts only for the duration of the pilot project and only as 
        long as the provider is a participant in the pilot project.
          (5) Study of impact.--Each pilot project shall examine the 
        effect of the new evaluation and management documentation 
        guidelines on--
                  (A) different types of physician practices, including 
                those with fewer than 10 full-time-equivalent employees 
                (including physicians); and
                  (B) the costs of physician compliance, including 
                education, implementation, auditing, and monitoring.
          (6) Periodic reports.--The Secretary shall submit to Congress 
        periodic reports on the pilot projects under this subsection.
  (c) Objectives for Evaluation and Management Guidelines.--The 
objectives for new evaluation and management documentation guidelines 
developed by the Secretary shall be to--
          (1) identify clinically relevant documentation needed to code 
        accurately and assess coding levels accurately;
          (2) decrease the level of non-clinically pertinent and 
        burdensome documentation time and content in the physician's 
        medical record;
          (3) increase accuracy by reviewers; and
          (4) educate both physicians and reviewers.
  (d) Definitions.--In this section--
          (1) the term ``rural area'' has the meaning given that term 
        in section 1886(d)(2)(D) of the Social Security Act, 42 U.S.C. 
        1395ww(d)(2)(D); and
          (2) the term ``teaching settings'' are those settings 
        described in section 415.150 of title 42, Code of Federal 
        Regulations.

SEC. 406. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM; REPORT ON 1-800 
                    MEDICARE NUMBER.

  (a) Beneficiary Outreach Demonstration Program.--
          (1) In general.--The Secretary shall establish a 
        demonstration program (in this subsection 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.
          (2) Locations.--
                  (A) In general.--The demonstration program shall be 
                conducted in at least 6 offices or areas. Subject to 
                subparagraph (B), in selecting such offices and areas, 
                the Secretary shall provide preference for offices with 
                a high volume of visits by medicare beneficiaries.
                  (B) 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.
          (3) Duration.--The demonstration program shall be conducted 
        over a 3-year period.
          (4) Evaluation and report.--
                  (A) Evaluation.--The Secretary shall provide for an 
                evaluation of the demonstration program. Such 
                evaluation shall include an analysis of--
                          (i) utilization of, and beneficiary 
                        satisfaction with, the assistance provided 
                        under the program; and
                          (ii) the cost-effectiveness of providing 
                        beneficiary assistance through out-stationing 
                        medicare specialists at local offices of the 
                        Social Security Administration.
                  (B) Report.--The Secretary shall submit to Congress a 
                report on such evaluation and shall include in such 
                report recommendations regarding the feasibility of 
                permanently out-stationing medicare specialists at 
                local offices of the Social Security Administration.
  (b) Report on 1-800 Medicare Number.--
          (1) Study.--The Comptroller General of the United States 
        shall conduct a study to monitor the accuracy and consistency 
        of information provided to medicare beneficiaries through the 
        toll-free 1-800 Medicare Number, including an assessment of 
        whether the information provided is sufficient to answer 
        beneficiary questions. In conducting the study, the Comptroller 
        General shall examine the education and training of the 
        individuals providing information through the 1-800 Medicare 
        Number.
          (2) Report.--Not later than 1 year after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1).

SEC. 407. PROVIDER ENROLLMENT APPLICATIONS.

  (a) Deadlines and Monitoring.--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)(1)(A) The Secretary shall establish by regulation procedures 
under which there are deadlines for actions on applications for 
enrollment (and, if applicable, renewal of enrollment).
  ``(B) The Secretary shall monitor the performance of medicare 
administrative contractors in meeting the deadlines established under 
subparagraph (A).''.
  (b) Consultation Before Changing Provider Enrollment Forms.--
          (1) In general.--Section 1871(g) (42 U.S.C. 1395hh(g)), as 
        added by subsection (a), is amended by adding at the end the 
        following new paragraph:
  ``(2) The Secretary shall consult with providers of services, 
physicians, practitioners, facilities, and suppliers before making 
changes in the provider enrollment forms required of such providers, 
physicians, practitioners, facilities, and suppliers to be eligible to 
submit claims for which payment may be made under this title.''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to changes in provider enrollment 
        forms made on or after January 1, 2002.

           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 302, 401(b)(1), and 402, is further amended by 
adding at the end the following new subsection:
  ``(h) Conduct of Prepayment Review.--
          ``(1) Standardization of random prepayment review.--If a 
        medicare administrative contractor conducts a random prepayment 
        review, the contractor may only conduct such review 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, facility, or supplier based on the 
        initial identification by that provider of services, physician, 
        practitioner, facility, 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, facility, 
        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(h) 
        of the Social Security Act, as added by subsection (a), by not 
        later than 1 year after the date of the enactment of this Act.
          (3) Application of standard protocols for random prepayment 
        review.--Section 1874A(h)(1) of the Social Security Act, as 
        added by subsection (a), shall apply to random prepayment 
        reviews conducted on or after such date (not later than 1 year 
        after the date of the enactment of this Act) as the Secretary 
        shall specify.
  (c) Application to Fiscal Intermediaries and Carriers.--The 
provisions of section 1874A(h) of the Social Security Act, as added by 
subsection (a), shall apply to each fiscal intermediary under section 
1816 of the Social Security Act (42 U.S.C. 1395h) and each carrier 
under section 1842 of such Act (42 U.S.C. 1395u) in the same manner as 
they apply to medicare administrative contractors under such 
provisions.

SEC. 502. RECOVERY OF OVERPAYMENTS.

  (a) In General.--Section 1874A, as added by section 301 and as 
amended by sections 302, 401(b)(1), 402, and 501(a), is further amended 
by adding at the end the following new subsection:
  ``(i) 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, facility, or supplier, of an 
                overpayment under this title meets the standards 
                developed under subparagraph (B), subject to 
                subparagraph (C), and the provider, physician, 
                practitioner, facility, 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, 
                facility, or supplier for the offset or repayment (at 
                the election of the provider, physician, practitioner, 
                facility, 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, 
                        facility, 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, facility, 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, facility, 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, facility, or 
                supplier.
                  ``(C) Exceptions.--Subparagraph (A) shall not apply 
                if--
                          ``(i) the Secretary has reason to suspect 
                        that the provider of services, physician, 
                        practitioner, facility, 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, facility, 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, facility, or supplier that is 
                determined to have received an overpayment under this 
                title and that seeks a reconsideration by a qualified 
                independent contractor on such determination under 
                section 1869(b)(1), the Secretary may not take any 
                action (or authorize any other person, including any 
                medicare contractor, as defined in subparagraph (C)) to 
                recoup the overpayment until the date the decision on 
                the reconsideration has been rendered. If the 
                provisions of section 1869(b)(1) (providing for such a 
                reconsideration by a qualified independent contractor) 
                are not in effect, in applying the previous sentence 
                any reference to such a reconsideration shall be 
                treated as a reference to a redetermination by the 
                fiscal intermediary or carrier involved.
                  ``(B) 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, facility, 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, facility, 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(f).
          ``(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, facility, or 
                supplier under this title, the contractor shall provide 
                the provider of services, physician, practitioner, 
                facility, 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, 
                facility, or supplier under this title, the contractor 
                shall--
                          ``(i) give the provider of services, 
                        physician, practitioner, facility, 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, facility, or supplier and permits 
                        the development of an appropriate corrective 
                        action plan;
                          ``(ii) inform the provider of services, 
                        physician, practitioner, facility, or supplier 
                        of the appeal rights under this title as well 
                        as consent settlement options (which are at the 
                        discretion of the Secretary);
                          ``(iii) give the provider of services, 
                        physician, practitioner, facility, or supplier 
                        an opportunity to provide additional 
                        information to the contractor; and
                          ``(iv) take into account information 
                        provided, on a timely basis, by the provider of 
                        services, physician, practitioner, facility, or 
                        supplier under clause (iii).
                  ``(C) Exception.--Subparagraphs (A) and (B) shall not 
                apply if the provision of notice or findings would 
                compromise pending law enforcement activities, whether 
                civil or criminal, or reveal findings of law 
                enforcement-related audits.
          ``(4) Notice of over-utilization of codes.--The Secretary 
        shall establish, in consultation with organizations 
        representing the classes of providers of services, physicians, 
        practitioners, facilities, and suppliers, a process under which 
        the Secretary provides for notice to classes of providers of 
        services, physicians, practitioners, facilities, 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, facilities, 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 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, 
                facility, or supplier a consent settlement, the 
                Secretary shall--
                          ``(i) communicate to the provider of 
                        services, physician, practitioner, facility, or 
                        supplier in a non-threatening manner--
                                  ``(I) that, based on a review of the 
                                medical records requested by the 
                                Secretary, a preliminary evaluation of 
                                those records indicates that there 
                                would be an overpayment;
                                  ``(II) the nature of the problems 
                                identified in such evaluation; and
                                  ``(III) the steps that the provider 
                                of services, physician, practitioner, 
                                facility, or supplier should take to 
                                address the problems; and
                          ``(ii) provide for a 45-day period during 
                        which the provider of services, physician, 
                        practitioner, facility, 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, 
                facility, 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, facility, 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, facility, 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, facility, 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, facility, or 
                supplier agrees not to appeal the claims involved.
          ``(7) Limitation on use of extrapolation.--A medicare 
        contractor may not use extrapolation to determine overpayment 
        amounts to be recovered by recoupment, offset, or otherwise 
        unless--
                  ``(A) there is a sustained or high level of payment 
                error (as defined by the Secretary by regulation); or
                  ``(B) documented educational intervention has failed 
                to correct the payment error (as determined by the 
                Secretary).''.
  (b) Effective Dates and Deadlines.--
          (1) Not later than 1 year after the date of the enactment of 
        this Act, the Secretary of Health and Human Services shall 
        first--
                  (A) develop standards for the recovery of 
                overpayments under section 1874A(i)(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(i)(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(i)(5) of the Social Security Act, as 
                added by subsection (a).
          (2) Section 1874A(i)(2) of the Social Security Act, as added 
        by subsection (a), shall apply to actions taken after the date 
        of the enactment of this Act.
          (3) Section 1874A(i)(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(i)(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.
          (5) Section 1874A(i)(7) of the Social Security Act, as added 
        by subsection (a), shall apply to statistically valid random 
        samples initiated 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 of Health and Human Services shall first 
develop the process under subsection (a).

SEC. 504. PROGRAM AND PAYMENT EXCLUSIONS.

  (a) Authority To Waive a Program Exclusion.--The first sentence of 
section 1128(c)(3)(B) (42 U.S.C. 1320a-7(c)(3)(B)) is amended to read 
as follows: ``Subject to subparagraph (G), in the case of an exclusion 
under subsection (a), the minimum period of exclusion shall be not less 
than five years, except that, upon the request of the administrator of 
a Federal health care program (as defined in section 1128B(f)) who 
determines that the exclusion would impose a hardship on beneficiaries 
under 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.''.
  (b) Exception for Certain Payment Exclusions.--
          (1) In general.--Section 1862(a)(11) (42 U.S.C. 1395y(a)(11)) 
        is amended--
                  (A) by inserting ``(other than a child)'' after 
                ``immediate relatives''; and
                  (B) by inserting before the semicolon the following; 
                ``, unless the items or services are furnished in a 
                rural area (as defined in section 1886(d)(2)(D))''.
          (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to items and services furnished on or after January 
        1, 2003.

                     TITLE VI--EMTALA IMPROVEMENTS

SEC. 601. 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. 602. EMERGENCY MEDICAL TREATMENT AND ACTIVE LABOR ACT (EMTALA) 
                    TASK FORCE.

  (a) Establishment.--There is established within the Department of 
Health and Human Services the Emergency Medical Treatment and Active 
Labor Act (EMTALA) Task Force (in this section referred to as the 
``Task Force''). In this section, the term ``EMTALA'' refers to the 
provisions of section 1867 of the Social Security Act (42 U.S.C. 
1395dd).
  (b) Membership.--The Task Force shall be composed of 22 members as 
follows:
          (1) The Administrator of the Centers for Medicare & Medicaid 
        Services.
          (2) The Inspector General of the Department of Health and 
        Human Services.
          (3) 5 individuals selected by such Administrator--
                  (A) 4 of whom are staff at regional offices of such 
                Centers involved in investigations of violations of 
                EMTALA, and 1 each from the Northeastern Consortium, 
                Midwestern Consortium, Southern Consortium, and Western 
                Consortium; and
                  (B) 1 of whom is involved in EMTALA policy at the 
                national level.
          (4) 2 individuals who participate in peer review 
        organizations' review of EMTALA determinations.
          (5) 4 hospital administrators who have experience with the 
        application of EMTALA.
          (6) 8 practicing physicians who have experience with the 
        application of EMTALA, of whom--
                  (A) 2 are practicing physicians in the field of 
                emergency medicine;
                  (B) 1 is a practicing physician in the field of 
                general surgery;
                  (C) 1 is a practicing physician in the field of 
                orthopedic surgery;
                  (D) 1 is a practicing physician in the field of 
                neurosurgery;
                  (E) 1 is a practicing physician in the field of 
                ophthalmology;
                  (F) 1 is a practicing physician in the field of 
                obstetrics and gynecology; and
                  (G) 1 is a practicing physician in the field of 
                psychiatry.
          (7) 1 who is a representative of consumers.
          (8) 1 practicing defense attorney specializing in EMTALA 
        defense cases.
The Administrator of the Centers for Medicare & Medicaid Services shall 
select the members described in paragraphs (3) through (8) and shall 
provide special consideration to qualified individuals nominated by 
organizations in the relevant areas of specialty.
  (c) General Responsibilities.--The Task Force--
          (1) shall review EMTALA regulations;
          (2) shall provide advice and recommendations to the Secretary 
        of Health and Human Services with respect to those regulations 
        and their application to hospitals and physicians;
          (3) shall solicit comments and recommendations from 
        hospitals, physicians, and the public regarding the 
        implementation of such regulations; and
          (4) may disseminate information on the application of such 
        regulations to hospitals, physicians, and the public.
  (d) Administrative Matters.--
          (1) Chairperson.--The members of the Task Force shall elect a 
        member to serve as chairperson of the Task Force for the life 
        of the Task Force.
          (2) Meetings.--The Task Force shall first meet at the 
        direction of the Secretary. The Task Force shall then meet 
        twice per year and at such other times as the Task Force may 
        provide.
  (e) Termination.--The Task Force shall terminate 3 years after the 
date of its first meeting.
  (f) Exemption from Advisory Committee Act.--The Task Force shall be 
exempt from the Federal Advisory Committee Act.

SEC. 603. NOTIFICATION OF PROVIDERS WHEN EMTALA INVESTIGATION CLOSED.

  Section 1867(d) (42 U.S.C. 42 U.S.C. 1395dd(d)) is amended by adding 
at the end the following new paragraph:
          ``(4) Notice upon closing an investigation.--The Secretary 
        shall establish a procedure to notify hospitals and physicians 
        when an investigation under this section is closed.''.

SEC. 604. PRIOR REVIEW BY PEER REVIEW ORGANIZATIONS IN EMTALA CASES 
                    INVOLVING TERMINATION OF PARTICIPATION.

  (a) In General.--Section 1867(d)(3) (42 U.S.C. 1395dd(d)(3)) is 
amended--
          (1) in the first sentence, by inserting ``or in terminating a 
        hospital's participation under this title'' after ``in imposing 
        sanctions under paragraph (1)''; and
          (2) by adding at the end the following new sentences: 
        ``Except in the case in which a delay would jeopardize the 
        health or safety of individuals, the Secretary shall also 
        request such a review before making a compliance determination 
        as part of the process of terminating a hospital's 
        participation under this title for violations related to the 
        appropriateness of a medical screening examination, stabilizing 
        treatment, or an appropriate transfer as required by this 
        section, and shall provide a period of 5 business days for such 
        review. The organization shall provide a copy of the report on 
        its findings to the hospital or physician consistent with 
        confidentiality requirements imposed on the organization under 
        such part B.''.
  (b) Effective Date.--The amendments made by subsection (a) shall 
apply to terminations of participation initiated on or after the date 
of the enactment of this Act.

                 TITLE VII--MISCELLANEOUS IMPROVEMENTS

SEC. 701. METHODS FOR DETERMINING PAYMENT BASIS FOR NEW LAB TESTS.

  Section 1833(h) (42 U.S.C. 1395l(h)) is amended by adding at the end 
the following:
  ``(8)(A) The Secretary shall establish by regulation procedures for 
determining the basis for, and amount of, payment under this subsection 
for any clinical diagnostic laboratory test with respect to which a new 
or substantially revised HCPCS code is assigned on or after January 1, 
2003 (in this paragraph referred to as `new tests').
  ``(B) Determinations under subparagraph (A) shall be made only after 
the Secretary--
          ``(i) makes available to the public (through an Internet site 
        and other appropriate mechanisms) a list that includes any such 
        test for which establishment of a payment amount under this 
        subsection is being considered for a year;
          ``(ii) on the same day such list is made available, causes to 
        have published in the Federal Register notice of a meeting to 
        receive comments and recommendations (and data on which 
        recommendations are based) from the public on the appropriate 
        basis under this subsection for establishing payment amounts 
        for the tests on such list;
          ``(iii) not less than 30 days after publication of such 
        notice convenes a meeting, that includes representatives of 
        officials of the Centers for Medicare & Medicaid Services 
        involved in determining payment amounts, to receive such 
        comments and recommendations (and data on which the 
        recommendations are based);
          ``(iv) taking into account the comments and recommendations 
        (and accompanying data) received at such meeting, develops and 
        makes available to the public (through an Internet site and 
        other appropriate mechanisms) a list of proposed determinations 
        with respect to the appropriate basis for establishing a 
        payment amount under this subsection for each such code, 
        together with an explanation of the reasons for each such 
        determination, the data on which the determinations are based, 
        and a request for public written comments on the proposed 
        determination; and
          ``(v) taking into account the comments received during the 
        public comment period, develops and makes available to the 
        public (through an Internet site and other appropriate 
        mechanisms) a list of final determinations of the payment 
        amounts for such tests under this subsection, together with the 
        rationale for each such determination, the data on which the 
        determinations are based, and responses to comments and 
        suggestions received from the public.
  ``(C) Under the procedures established pursuant to subparagraph (A), 
the Secretary shall--
          ``(i) set forth the criteria for making determinations under 
        subparagraph (A); and
          ``(ii) make available to the public the data (other than 
        proprietary data) considered in making such determinations.
  ``(D) The Secretary may convene such further public meetings to 
receive public comments on payment amounts for new tests under this 
subsection as the Secretary deems appropriate.
  ``(E) For purposes of this paragraph:
          ``(i) The term `HCPCS' refers to the Health Care Procedure 
        Coding System.
          ``(ii) A code shall be considered to be `substantially 
        revised' if there is a substantive change to the definition of 
        the test or procedure to which the code applies (such as a new 
        analyte or a new methodology for measuring an existing analyte-
        specific test).''.

SEC. 702. 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.

                          Purpose and Summary

    The purpose of H.R. 3046, the Medicare Regulatory, Appeals, 
Contracting, and Education Reform Act, is to streamline 
Medicare's regulatory process, ease paperwork burdens, and 
improve Medicare's responsiveness to beneficiaries and health 
care providers. Most importantly, this legislation addresses 
the need for consistent and accurate written responses from 
Medicare contractors. It also includes significant reform of 
Medicare's contracting and administrative appeals processes, 
and improvements in beneficiary and provider outreach and 
education.

                  Background and Need for Legislation

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

                                Hearings

    The Subcommittee on Health held four joint hearings with 
the Subcommittee on Oversight and Investigations as part of the 
``Patients First'' initiative.
    The first hearing, held on Thursday, March 1, 2001, 
examined Medicare's processes for determining coverage, 
assigning billing codes, and setting payment levels. The 
Subcommittees received testimony from: Mr. Art Linkletter, 
National Spokesman, United Seniors Association; Dr. Paul 
Shreve, Director, General Nuclear Imaging Section, University 
of Michigan Medical Center; Ms. Kathy Dziuba, Rochester Hills, 
Michigan; Dr. Jeffrey J. Popma, Director, Interventional 
Cardiology, Brigham and Women's Hospital; Mr. Donald Latulippe, 
Boston, Massachusetts; Dr. Jeffrey Kang, Director, Office of 
Clinical Standards and Quality, Health Care Financing 
Administration (now the Centers for Medicare and Medicaid 
Services); Dr. Clifford Goodman, Senior Scientist for Medical 
Technology, Lewin Group; and Dr. Murray N. Ross, Executive 
Director, Medicare Payment Advisory Commission.
    The second hearing, held on Wednesday, April 4, 2001, 
focused on how the Health Care Financing Administration (now 
the Centers for Medicare and Medicaid Services) interacts with 
health care providers regarding the rules and regulations that 
guide the Medicare program. The Subcommittees received 
testimony from: Dr. Mark Miller, Acting Director, Center for 
Health Plans and Providers, Health Care Financing 
Administration (now the Centers for Medicare and Medicaid 
Services); Mr. Michael Mangano, Acting Inspector General, 
Department of Health and Human Services; Dr. David Becker, 
Largo, Florida, on behalf of the Pinellas County Medical 
Society; Jyl D. Bradley, Administrator, Dunning Street 
Ambulatory Care Center, on behalf of the Medical Group 
Management Association; Dr. Douglas L. Wood, Vice Chair, 
Department of Medicine, Mayo Foundation; and Mr. Harvey 
Friedman, Vice President, Medicare and Seniors Program, Blue 
Cross Blue Shield Association.
    The third hearing, held on Thursday, May 10, 2001, featured 
four former administrators of the Health Care Financing 
Administration (now the Centers for Medicare and Medicaid 
Services) to discuss what works at the agency and what can be 
improved. The Subcommittees received testimony from: Mr. 
William L. Roper, Dean of the School of Public Health, 
University of North Carolina at Chapel Hill; Dr. Gail R. 
Wilensky, John M. Olin Senior Fellow, Project HOPE, and Chair 
of the Medicare Payment Advisory Commission; Dr. Bruce C. 
Vladeck, Senior Vice President for Policy, Institute for 
Medicare Practice, Mount Sinai School of Medicine; and Ms. 
Nancy-Ann Min DeParle, the immediate former administrator of 
the Health Care Financing Administration (now the Centers for 
Medicare and Medicaid Services).
    The fourth hearing, held on Thursday, June 28, 2001, 
examined Medicare's existing contracting authority and 
proposals to refine this authority to secure the efficient and 
responsive delivery of high quality services to Medicare 
beneficiaries. The Subcommittees receivedtestimony from: Mr. 
Thomas Scully, Administrator, Centers for Medicare and Medicaid 
Services; Mr. Michael Mangano, Acting Inspector General, Department of 
Health and Human Services; Ms. Leslie G. Aronovitz, Director, Health 
Care-Program Administration and Integrity Issues, U.S. General 
Accounting Office; Mr. Scott P. Serota, President and Chief Executive 
Officer, Blue Cross Blue Shield Association; Mr. Timothy F. Cullen, 
Chairman of the Board, United Government Services, LLC; and Mr. Alfred 
J. Chiplin, Jr., Managing Attorney, Health Care Rights Project, Center 
for Medicare Advocacy.

                        Committee Consideration

    On Wednesday, October 17, 2001, the Subcommittee on Health 
met in open markup session and approved H.R. 3046, the Medicare 
Regulatory, Appeals, Contracting, and Education Reform Act, for 
Full Committee consideration, as amended, by a voice vote. On 
Wednesday, October 31, 2001, the Committee on Energy and 
Commerce met in open markup session and favorably ordered 
reported H.R. 3046, as amended, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 3046 reported. A motion by Mr. Tauzin to order H.R. 3046 
reported to the House, as amended, was agreed to by a voice 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held four oversight 
hearings and made findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The objective of H.R. 3046 is to provide regulatory relief 
to providers of services, physicians, practitioners, 
facilities, and suppliers furnishing health care services to 
Medicare beneficiaries and improve education and outreach to 
beneficiaries and providers.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3046, the Medicare Regulatory, Appeals, Contracting, and 
Education Reform Act, would result in no new or increased 
budget authority, entitlement authority, or tax expenditures or 
revenues.

                        Committee Cost Estimate

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

                  Congressional Budget Office Estimate

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

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, December 4, 2001.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3046, the Medicare 
Regulatory and Contracting Reform Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Alexis 
Ahlstrom and Niall Brennan.
            Sincerely,
                                           Steven Lieberman
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 3046--Medicare Regulatory and Contracting Reform Act of 2001

    Summary: The Medicare Regulatory and Contracting Reform Act 
of 2001 would require the Centers for Medicare and Medicaid 
Services (CMS) to modify how Medicare regulations and policies 
are developed, communicated, and enforced, and would modify the 
procedures used to resolve disputes involving payment for 
services covered by Medicare. The bill would transfer certain 
administrative law judges from the Social Security 
Administration (SSA) to the Department of Health and Human 
Services (HHS). It would change the procedures by which 
Medicare makes contracts with entities to process and pay 
claims, and it would place new requirements on those 
contractors. It would require the Secretary of HHS to conduct 
several demonstrations, and would require the completion of 
several studies and reports.
    The bill would also affect direct spending by changing 
procedures for determining whether a service is covered by 
Medicare, and by appropriating additional funds to the Medicare 
Integrity Program.
    CBO estimates that implementing H.R. 3046 would cost $59 
million in 2002 and $1.4 billion over the 2002-2006 period from 
appropriated funds. CBO also estimates that implementing the 
bill would increase direct spending by $27 million in 2002, 
$1.3 billion over the 2002-2006 period, and $5.4 billion over 
the 2002-2011 period. Because the bill would affect direct 
spending, pay-as-you-go procedures would apply.
    H.R. 3046 would preempt state and local laws governing 
liability for Medicare administrative contractors in some 
cases. This preemption would be an intergovernmental mandate as 
defined in the Unfunded Mandates Reform Act (UMRA) because it 
would prevent the application of state laws. However, because 
the preemption would not require state or local governments to 
make any specific action, it would impose no costs on those 
governments. Other provisions of the bill would have no 
significant effect on the budgets of state, local, or tribal 
governments. H.R. 3046 contains no private-sector mandates as 
defined in UMRA.
    Estimated cost to the Federal Government: Table 1 shows the 
estimated authorization levels and outlays for Medicare 
administrative expenses under current law and under H.R. 3046. 
Assuming appropriation of the estimated amounts, CBO estimates 
that implementing H.R. 3046 would cost $59 million in 2002 and 
$1.4 billion over the 2002-2006 period. The table also shows 
the estimated effect of H.R. 3046 on direct spending, a total 
of $1.3 billion over the 2002-2006 period. The costs of this 
legislation fall within budget function 570 (Medicare).

                                TABLE 1.--ESTIMATED BUDGETARY IMPACT OF H.R. 3046
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2001      2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending for Medicare Administrative Costs Under
 Current Law:
    Estimated Budget Authority \1\..................     3,352     3,500     3,646     3,797     3,955     4,118
    Estimated Outlays...............................     3,321     3,464     3,631     3,757     3,913     4,074
Proposed Changes:
    Estimated Authorization Level...................         0        65       416       347       264       318
    Estimated Outlays...............................         0        59       381       354       273       312
Spending for Medicare Administrative Costs Under
 H.R. 3046:
    Estimated Authorization Level \1\...............     3,352     3,565     4,062     4,144     4,219     4,436
    Estimated Outlays...............................     3,321     3,523     4,012     4,111     4,186     4,386

                                                 DIRECT SPENDING

Medicare Spending Under Current Law \2\:
    Estimated Budget Authority......................   214,473   225,915   240,076   255,769   278,493   294,073
    Estimated Outlays...............................   214,114   225,933   239,855   256,065   278,411   293,843
Proposed Changes:
    Estimated Budget Authority......................         0        27       131       243       385       554
    Estimated Outlays...............................         0        27       122       243       385       554
Medicare Spending Under H.R. 3046 \2\:
    Estimated Budget Authority......................   214,473   225,942   240,207   256,012   278,878   294,627
    Estimated Outlays...............................   214,114   225,960   239,977   256,308   278,796   294,397
----------------------------------------------------------------------------------------------------------------
\1\ Budget authority and outlays for 2001 are the amounts appropriated and spent that year.
\2\ Includes direct spending for benefits and administrative costs less premium receipts.

    Basis of estimate: For this estimate, CBO assumes that the 
legislation would be enacted this fall and that estimated 
amounts would be appropriated each year.

Spending subject to appropriations

    Contracting Reform.--Under current law, CMS contracts with 
fiscal intermediaries and carriers to process and pay claims, 
to educate providers regarding Medicare billing policy, and for 
other purposes. This bill would change the activities required 
of contractors and the methods by which CMS enters into 
contracts and oversees the activities of contractors. CBO 
estimates that these provisions would increase the cost of 
administering contracts and the total amount CMS spends on 
contracts by $35 million in 2002 and $1.2 billion over the 
2002-2006 period.
    Contracting Changes. H.R. 3046 would direct CMS to provide 
incentives to contractors who meet or exceed certain 
performance standards. Based on information furnished by CMS, 
we estimate that the incentive payments would total 3 percent 
of operating payments to contractors, or about $233 million 
over the 2002-2006 period.
    H.R. 3046 would require CMS to competitively bid contracts 
with fiscal intermediaries and carriers at least every five 
years. CBO expects that an additional 3-5 full-time-equivalent 
employees (FTEs) at the GS-12 level would be needed throughout 
the period to write new competitively-bid contracts. The 
estimate assumes that about one-quarter of the contracts would 
be awarded to a nonincumbent bidder, and that it would cost 
about $2 million to transition between contractors. CBO 
estimates that implementing this provision would cost about $54 
million over the 2002-2006 period.
    Contractor Oversight. In addition, the bill would direct 
Medicare program to measure the payment error rates for 
individual contractors, which are believed to indicate how well 
providers understand proper Medicare billing procedures, with 
the intent of identifying contractors who have achieved high 
levels of provider education. This provision would expand 
current practice, which is to calculate system-wide error 
rates. The bill would also expand the requirement for 
contractors to monitor the accuracy of information given to 
providers and the timeliness of contractors' processing of 
providers' enrollment applications. CBO estimates that 
complying with these provisions would cost about $30 million 
over the 2002-2006 period.
    New Contractor Activities. The bill would require 
contractors to respond to written requests for guidance within 
45 days of receipt, and would make that response binding on the 
Medicare program. We expect that contractors would receive 50 
percent more written requests under H.R. 3046 than they would 
under current law, with each request costing $15 dollars to 
process in 2002. This, plus the requirement that contractors 
respond to those requests within 45 days, would require 
contractors to hire additional employees. CBO estimates that 
implementing these provisions would cost $11 million in 2002 
and $76 million over the 2002-2006 period.
    Beginning in July 2003, the bill would require contractors, 
upon request of a beneficiary or provider, to make a 
determination about whether Medicare will cover a particular 
service or item before that service is furnished. The 
contractor would be required to conduct a medical review and to 
make the coverage decision within 45 days. CBO estimates that 
contractors would make about 100,000 determinations a year at 
an average cost of about $100 per determination (at 2003 
prices). We estimate the cost of administering this program 
would total $35 million over the 2002-2006 period.
    The bill would require contractors to create a system by 
which providers may resubmit claims originally submitted with 
errors or omissions without having to pursue payments via the 
appeals process. CBO estimates the cost of developing and 
operating systems to process these resubmitted claims would 
total $5 million in 2002 and $46 million over the 2002-2006 
period.
    The bill would require contractors to give providers or 
beneficiaries, upon request, a summary of the clinical and 
scientific evidence used in making a determination. CBO 
estimates the cost of making available scientific and clinical 
evidence on determinations would total $686 million over the 
2002-2006 period.
    Appeals Reform.--H.R. 3046 would change the processes by 
which Medicare adjudicates appeals by providers of payment 
denials and conducts compliance actions against providers. The 
bill would delay the date by which CMS is required to implement 
certain provisions of the Beneficiary Improvement and 
Protection Act and modify other provisions. It would also 
create a new mechanism for individuals to challenge National 
Coverage Determinations (NCDs.) CBO estimates that implementing 
these provisions would cost $8 million in 2002 and $114 million 
over the 2002-2006 period.
    Administrative Law Judge Transfer. The bill would transfer 
certain administrative law judges (ALJs) from the Social 
Security Administration to the Department of Health and Human 
Services and would permit the Secretary to hire more ALJs. CBO 
estimates that the costs of planning and implementing the 
transfer, adding ALJs, and providing the ALJs with additional 
training on Medicare issues would be $1 million in 2002 and 
would total $39 million over the 2002-2006 period.
    Standardization of Compliance and Appeals Actions. The bill 
would also standardize existing policies regarding the use of 
random and non-random prepayment review, the use of 
extrapolation in the case of overpayments, and the offering of 
repayment plans in the case of overpayment. In addition, H.R. 
3046 would create procedures by which appellants may petition 
for expedited access to judicial review in federal district 
court in certain circumstances. CBO estimates that implementing 
those provisions would cost $34 million over the 2002-2006 
period. These provisions would require CMS to make changes to 
current appeals and compliance systems but would not change the 
conditions under which Medicare would make payments to 
providers. Therefore, CBO estimates that these provisions would 
have no effect on direct spending.
    National Coverage Determinations. H.R. 3046 would also 
establish a process for seeking exceptions to national coverage 
determinations under special medical circumstances. In general, 
new medical technologies are integrated into existing Medicare 
payment systems as soon as they are approved by the Food and 
Drug Administration. However, in certain instances, 
breakthrough technologies that are clinically different from 
existing treatment options require a more detailed examination, 
either at the local level by Medicare contractors, or through 
an NCD issued by CMS.
    Current law provides for a process by which Medicare-
eligible individuals seeking coverage of a service excluded by 
an NCD can appeal that decision. Such an appeal would be 
reviewed by the Departmental Appeals Board (DAB) of the 
Department of Health and Human Services. If the DAB determines 
that there is inadequate information to support the validity of 
an NCD, it can permit the taking of evidence to evaluate the 
reasonableness of the NCD. However, CMS has not yet established 
a formal appeals process for NCDs, and no appeals have been 
filed to date.
    In addition to the current NCD appeals process, H.R. 3046 
would require the Secretary to establish a process whereby 
Medicare-eligible individuals may request an exception, due to 
their special medical circumstances, to an NCD that has the 
effect of denying coverage for items and services for the 
treatment of a serious or life-threatening condition. 
Furthermore, these special medical circumstances must not have 
been considered during the initial NCD process. Each request 
would be reviewed by an independent panel of physicians or 
other health care professionals. If the panel supports the 
request for an exception, the NCD would not be applied by any 
Medicare contractor with respect to treatment for that 
individual.
    CBO assumes that the two appeals process are not perfect 
substitutes. Specifically, CBO assumes that some individuals 
who would not appeal an NCD under current law would request an 
exception to an NCD under the procedures outlined in H.R. 3046. 
CBO estimates that this provision would result in an additional 
3,000 requests for exceptions above and beyond the existing NCD 
appeals process beginning in 2003. CBO estimates that 
adjudicating these requests for exceptions, including 
assembling panels of physicians, would cost $6 million over the 
2002-2006 period. (The additional claims payments that would 
result from this process would be direct spending and are 
discussed later in this estimate.)
    Demonstrations and New program Areas.--H.R. 3046 would 
direct CMS to expand its programs to educate beneficiaries and 
providers. CBO estimates that implementing these provisions 
would cost $6 million in 2002 and $35 million during the 2002-
2006 period.
    The bill would direct CMS to implement a three-year 
outreach demonstration in at least six locations throughout the 
United States. The program would involve the deployment of 
Medicare specialists to local Social Security Administration 
offices to provide beneficiaries assistance and advice 
regarding the Medicare program. CBO estimates that the costs of 
the demonstration, which would include the rental of office 
space, salaries for Medicare specialists, and travel, moving, 
and administrative expenses, would total $4 million over the 
2002-2006 period.
    H.R. 3046 would require CMS to designate a person to act as 
a liaison between providers and Medicare and to respond to 
providers' complaints. CBO assumes that in order to comply with 
this provision, this person would require the aid of several 
staff members. CBO estimates the cost of implementing this 
provision would be $4 million in 2002 and $31 million over the 
2002-2006 period.
    Development of Policies, Procedures, and Time Lines.--H.R. 
3046 would require CMS to develop new policies, procedures, and 
time lines with regard to the issuance of regulations and 
documentation guidelines for evaluation and management 
services. CBO estimates the cost of implementing these 
provisions would be $10 million in 2002 and $38 million during 
the 2002-2006 period.
    Final Regulations. The bill would require CMS to create a 
time line for publishing final regulations and would limit 
publication of new regulations to once a month. There currently 
are 22 ``interim final rules''; the bill would require CMS to 
make those rules final, and would require CMS to finalize all 
future regulations. We estimate that CMS would need to hire an 
additional 3 to 5 people, at the GS-11 level or higher, to 
comply with the requirement to finalize all future interim 
regulations and to produce the required reports. CBO estimates 
the cost of implementing these provisions would be $9 million 
in 2002 and $19 million during the 2002-2006 period.
    Documentation Guidelines for Evaluation and Management 
(E&M;) Services. H.R. 3046 would restrict CMS from implementing 
new documentation guidelines for evaluation and management 
services until several conditions have been met. Those 
conditions include:
           Establishing plans to improve the 
        guidelines;
           Completing pilot projects to test 
        modifications to the guidelines;
           Educating providers about the guidelines; 
        and
           Consulting providers during the entire 
        process of testing and establishing the guidelines.
CMS currently has E&M; guidelines in place, and the bill would 
not require changes in those guidelines. CBO assumes that CMS 
will attempt to update those guidelines during the next few 
years, because both CMS and provider groups have expressed 
interest in doing so. The new procedural requirements would 
increase the cost of developing and implementing new E&M; 
guidelines. Establishing new guidelines for E&M; documentation 
would require the hiring of at least two FTEs for the 
administration of the pilot projects, for outreach to 
providers, and for consultation with providers. CBO further 
estimates that CMS would conduct at least three pilot projects, 
with each project costing around $1 million per year, and that 
the studies and reports required by these provisions would cost 
another $1 million.

Direct spending

    H.R. 3046 would change the conditions under which Medicare 
would pay for services, create a process to establish whether 
an item or service is covered prior to a beneficiary receiving 
the service, and create mechanisms by which previously excluded 
services would be provided in special medical circumstances. 
The bill would also appropriate funds to the Medicare Integrity 
Program.\1\ CBO estimates that implementing H.R. 3046 would 
increase direct spending by $27 million in 2002, $1.3 billion 
over the 2002-2006 period, and $5.4 billion over the 2002-2011 
period.
---------------------------------------------------------------------------
    \1\ Funds appropriated by an authorizing bill are considered direct 
spending.
---------------------------------------------------------------------------
    In general, if a provider is not certain whether Medicare 
will pay for a service or item in a particular case, there is 
no process under current law that enables the provider or 
beneficiary to find out in advance whether Medicare will pay 
for that service or item. In such cases, the provider may 
request that the beneficiary sign an advanced beneficiary 
notice (ABN) by which the beneficiary accepts responsibility 
for paying for the service if Medicare denies payment. (The 
provider is prohibited from charging the beneficiary if the 
beneficiary does not sign an ABN and Medicare subsequently 
denies payment.)
    The bill would authorize the Secretary to specify services 
for which the provider or beneficiary may request a coverage 
determination before a service is furnished. Upon receipt of 
such a request, the bill would require the contractor to 
conduct a medical review and issue a decision within 45 days.
    CBO estimates that contractors would process about 100,000 
requests for prior determination each year, and that half of 
those requests would be approved. CBO assumes that:
     About three-quarters of the approved requests 
would involve beneficiaries who, under current law, would 
choose the lower-priced service when offered the choice of a 
lower-priced service that Medicare is known to cover and a 
higher-priced service involving an ABN; in such cases, the new 
process would result in the use of higher-priced services.
     About one-quarter of the approved requests would 
involve beneficiaries who, under current law, would decline a 
relatively high-cost service when asked to sign an ABN; in such 
cases, the new process would result in the use of additional 
services.
     Very few requests would involve beneficiaries who, 
under current law, would sign an ABN and receive a service for 
which Medicare coverage is uncertain.\2\
---------------------------------------------------------------------------
    \2\ The vast majority of ABNs are for low-cost items and services 
(the average payment for approved services is about $18). CBO believes 
that beneficiaries are unlikely to request prior determination and wait 
up to 45 days for an answer for such low-cost services.
---------------------------------------------------------------------------
    For beneficiaries who would receive a lower-priced service 
under current law, the estimate assumes there would be a 
difference of about $250, on average, between the services 
furnished under current law and services furnished following 
approval for Medicare payment; the average added cost for 
beneficiaries who would decline a service under current law 
would be $500, we estimate. Those amounts are in 2003 prices, 
and include the cost of additional visits for beneficiaries who 
return to a provider after receiving approval for Medicare 
payment. CBO estimates that the cost of complying with this 
provision would be $187 million over the 2002-2011 period.
    Under current law, relatives of beneficiaries cannot 
receive payments from Medicare for the provision of items or 
services to that beneficiary. H.R. 3046 would eliminate that 
restriction for relatives who provide care to beneficiaries in 
rural areas. CBO expects that this provision would have a 
particularly strong impact in the area of home health care--
increasing spending on home health care by an estimated 2 
percent--because some care givers would become employed by home 
health agencies to get paid for the care that they currently 
provide without remuneration. CBO estimates the cost of 
implementing this provision would be $27 million in 2002 and 
$4.6 billion over the 2002-2011 period.
    The bill would allow beneficiaries to appeal national 
coverage determinations based on their individual medical 
circumstances. CBO estimates that this provision would result 
in an additional 3,000 requests for exceptions above and beyond 
the existing NCD appeals process, beginning in 2003. We 
estimate that the cost of paying claims related to these 
exceptions would not increase direct spending in 2002, but 
would increase direct spending by $376 million over the 2002-
2011 period.
    H.R. 3046 would appropriate $35 million a year in 
additional funds to the Medicare Integrity Program beginning in 
fiscal year 2003. CBO estimates this provision would increase 
direct spending by $306 million over the 2002-2011 period.
    Under current law, if a beneficiary dies after receiving 
services from a provider who does not accept assignment (that 
is, for all services furnished to Medicare beneficiaries, agree 
to accept payment at Medicare rates as payment in full), the 
provider may not appeal a denial of payment. The bill would 
permit those providers to make such appeals. CBO estimates that 
enacting this provision would result in about 2,000 denials 
being reversed and paid each year. We estimate that this 
provision would not have a significant effect on spending in 
2002, and would increase spending by $5 million over the 2002-
2011 period.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The 
table below shows the effect of H.R. 3046 on direct spending. 
For pay-as-you-go purposes, only the effects in the current 
year, the budget year, and the succeeding four years are 
counted.

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal year, in millions of dollars--
                                          ----------------------------------------------------------------------
                                            2002   2003   2004   2005   2006   2007   2008   2009   2010   2011
----------------------------------------------------------------------------------------------------------------
Changes in outlays.......................     27    122    243    385    554    629    713    807    912   1,044
Changes in receipts......................                              Not applicable
----------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
H.R. 3046 would preempt state and local laws governing 
liability for Medicare administrative contractors in some 
cases. This preemption would be an intergovernmental mandate as 
defined in UMRA because it would prevent the application of 
state laws. However, because the preemption would not require 
the state or local governments to take any specific action, it 
would impose no costs on those governments. Other provisions of 
the bill would have no significant effect on the budgets of 
state, local, or tribal governments.
    Estimated impact on the private sector: H.R. 3046 contains 
no private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal Costs: Alexis Ahlstrom and 
Niall Brennan. Impact on State, Local, and Tribal Governments: 
Leo Lex. Impact on the Private Sector: Stuart Guterman.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

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

                      Advisory Committee Statement

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

                   Constitutional Authority Statement

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

                  Applicability to Legislative Branch

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

             Section-by-Section Analysis of the Legislation


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

    Section 1 provides the short title of the legislation, the 
Medicare Regulatory, Appeals, Contracting, and Education Reform 
Act. Except as otherwise specified, the provisions of this bill 
would amend or repeal a section or other provisions of the 
Social Security Act. ``BIPA'' means the Medicare, Medicaid, and 
SCHIP Benefits Improvement and Protection Act of 2000 and 
``Secretary'' means the Secretary of the Department of Health 
and Human Services (HHS).

Section 2. Findings

    In this section, Congress finds that the overwhelming 
majority of providers of services, physicians, practitioners, 
facilities, and suppliers are law-abiding citizens providing 
important services and care to Medicare beneficiaries each day 
and directs the Secretary to streamline Medicare's paperwork 
requirements and clarify its instructions so that time spent on 
patient care can increase.

Section 3. Construction

    Section three states that none of the provisions shall be 
construed to (1) compromise the existing legal authority for 
addressing Medicare fraud or abuse with respect to criminal 
prosecution, civil enforcement, or administrative remedies, 
including those established by the False Claims Act or (2) 
prevent the Department of Health and Human Services (HHS) from 
its ongoing efforts to eliminate waste, fraud, and abuse in 
Medicare. Also, consolidation of Medicare's administrative 
contracting (as provided for in this bill) would not 
consolidate the Federal Hospital Insurance Trust Fund, which 
pays for part A services and the Federal Supplementary Medical 
Insurance Trust Fund, which pays for part B services. The bill 
notes that this administrative consolidation does not reflect 
any position on that issue.

                       TITLE I--REGULATORY REFORM

Section 101. Issuance of regulations

    Under current law, the Secretary is required to prescribe 
regulations that are necessary to administer parts A and B of 
the Medicare program. No rule, requirement, or policy statement 
(other than a national coverage determination) that establishes 
or changes a substantive legal standard determining Medicare's 
scope of benefits, level of payment, or eligibility of 
individuals, entities, or organizations to receive benefits or 
furnish services can take effect unless it is promulgated by 
regulation. The Secretary must publish a proposed regulation in 
the Federal Register, with at least 60 days to solicit public 
comment, before issuing the final regulation with the following 
exceptions: (1) the statute permits the regulation to be issued 
in interim final form or provides for a shorter public comment 
period; (2) the statutory deadline for implementation of a 
provision is less than 150 days after the date of enactment of 
the statute containing the provision; (3) under the good cause 
exception containedin the rule-making provision of Title 5 of 
the United States Code, notice and public comment procedures are deemed 
impracticable, unnecessary, or contrary to the public interest. The 
Secretary must publish in the Federal Register no less frequently than 
every three months a list of all manual instructions, interpretative 
rules, statements of policy, and guidelines, which are promulgated to 
carry out Medicare law.
    This section requires the Secretary to issue final and 
interim final regulations on one business day of every month, 
unless the Secretary finds that publication on other dates is 
required to comply with Medicare law or that this restriction 
is contrary to the public interest. In such instances, the 
Secretary would be required to include an explanation of such a 
finding when the regulations are issued. The Comptroller 
General of the U.S. General Accounting Office (GAO) would be 
required to report to Congress within three years on the 
feasibility of issuing regulations on one day each calendar 
quarter.
    The Secretary, in consultation with the Office of 
Management and Budget, would establish a regular timeline for 
the publication of final regulations based on the previous 
publication of a proposed regulation or interim final 
regulation. Timelines may vary for different regulations based 
on differences in the regulatory complexity and the scope and 
number of comments received. However, the Secretary would be 
required to publish a final regulation within the 12-month 
period following the publication of an interim final 
regulation. The final regulation would include responses to 
comments submitted in response to the interim final regulation. 
If the final regulation is not published by that 12-month 
deadline, the interim final regulation would not remain in 
effect unless the Secretary publishes a notice before the 
deadline that establishes a good cause for the delay and 
extends the deadline.
    Provisions that are not logical outgrowths of proposed 
regulations would be effective only after a public comment 
period and separate publication as a final regulation. The 
logical outgrowth provision would not apply to interim final 
regulations. The Committee on Energy and Commerce recognizes 
that proposed regulations for annual payment updates for 
providers and suppliers include proposed overall payment 
updates, and that specific payment amounts for specific codes 
or specific payment areas are not typically included until 
final rules. The Committee does not intend to change past 
custom to recognize such details in final rules as a ``logical 
outgrowth'' of proposed rules.
    The publication restriction applies to regulations 
promulgated on or after 30 days from the date of enactment. The 
regular timeline requirement is effective on enactment. The 
Secretary shall provide for an appropriate transition for the 
backlog of previously published interim regulations. The 
logical outgrowth provision applies to final regulations 
published on or after enactment.

Section 102. Compliance with changes in regulations and policies

    In section 102, a substantive change in a regulatory or a 
subregulatory issuance would not be applied retroactively to 
items or services, unless the Secretary determines that 
retroactive application (1) would be necessary to comply with 
statutory requirements or (2) would be beneficial to the public 
interest.
    After enactment, a compliance action against a provider of 
services, physician, practitioner, facility, or supplier with 
respect to such a substantive change would be permitted for 
items and services furnished on or after the effective date of 
the change. The substantive change would be effective not 
earlier than 30 days after its issuance or publication date 
except when the Secretary waives the 30-day period to comply 
with statutory requirements or finds such a waiver to be in the 
public interest. The Secretary would be required to include a 
brief explanation of such a finding in the issuance or 
publication of the substantive change if an earlier date is 
established.
    The effective date for substantive changes and compliance 
actions is on or after enactment.

Section 103. Report on regulatory burdens

    This section requires the Secretary to report to Congress 
on the administration of the Medicare program and 
inconsistencies among existing Medicare statutory or regulatory 
provisions. The report would include (1) information from 
beneficiaries, providers of services, practitioners, 
facilities, suppliers, provider facilitators (established in 
Section 404 of this legislation), and Medicare contractors; 
(2)descriptions of efforts to reduce inconsistencies; and (3) 
recommendations from the Secretary for appropriate legislation or 
administrative actions. The report would be due no later than two years 
after enactment and every two years thereafter.
    This section is effective upon enactment.

Section 104. GAO report on the sustainable growth rate and regulatory 
        costs

    This section would require the GAO to report to Congress on 
the accuracy of the sustainable growth rate (SGR) in accounting 
for regulatory costs imposed on physicians for 2002 and 
subsequent years. The report is due no later than 18 months 
after enactment.

Section 105. GAO report on requirement for submission of claims for 
        categorically excluded dental services

    This section would require the GAO to submit a report to 
Congress on the extent to which group health plans or other 
insurers require dentists to obtain documentation from Medicare 
that categorically excluded dental services are not covered 
prior to paying the claim. The report would include the number 
of Medicare beneficiaries that request dentists to submit 
claims to Medicare for these excluded dental services. The 
report is due no later than 18 months after enactment.

                    TITLE II--APPEALS PROCESS REFORM

Section 201. Transfer of responsibility for Medicare appeals

    Under current law, Medicare beneficiaries and, in certain 
circumstances, providers and suppliers of health care services 
may appeal claims that are denied or payments that are reduced. 
Section 1869 of the Social Security Act, which governs Medicare 
claims appeals, was amended by BIPA in its entirety. However, 
the BIPA provisions are not yet effective. Generally, parties 
who have been denied coverage of an item or service have the 
right to appeal that decision administratively and then may go 
to federal district court. A hearing by an administrative law 
judge (ALJ) in the Social Security Administration (SSA) and 
review by the Departmental Appeals Board (DAB) are components 
of the administrative appeals process.
    This section requires the Commissioner of SSA and the 
Secretary to develop a plan by October 1, 2002 to transfer the 
functions of the administrative law judges (ALJs) who are 
responsible for hearing Medicare and Medicare-related cases 
from SSA to HHS. The plan would be transmitted to Congress and 
the GAO no later than October 1, 2002, and would include (1) 
information on the number of ALJs and support staff required 
now and in the future to hear and decide cases in a timely 
manner, taking into account the current and anticipated number 
of claims, appeals, beneficiaries, and statutory changes; (2) 
cost projections for FY2004 and subsequently; (3) a timetable 
for the transition; (4) information on regulations needed to 
govern the appeals process; (5) the development of a case 
tracking system that would accommodate the maintenance and 
transfer of case specific data across the fee-for-service and 
managed care components of Medicare; (6) the feasibility of 
giving binding, precedential authority to DAB decisions that 
address broad legal issues; and (7) the feasibility of filing 
appeals electronically or through video conferencing. This plan 
would also include recommendations for further Congressional 
action, including modifications to the appeals requirements and 
deadlines imposed by BIPA. The GAO would evaluate the plan and 
submit a report to Congress by April 1, 2003.
    The Secretary and the Commissioner of SSA would implement 
the transition plan and transfer the ALJ functions no earlier 
than July 1, 2003 but no later than October 1, 2003. The 
Secretary would (1) assure the ALJ's independence from CMS; and 
(2) locate the ALJs with an appropriate geographic distribution 
to ensure continued access.
    Subject to appropriations, the Secretary would be permitted 
to hire ALJs and support staff with priority given to ALJs with 
experience in handling Medicare appeals. Amounts previously 
paid to SSA for the ALJs performing the Medicare ALJ functions 
would be paid to the Secretary. The Secretary would be 
permitted to enter into arrangements with SSA to share office 
space, support staff, and other resources with appropriate 
reimbursement from the Medicare Trust Funds. Increased 
appropriations would be permitted to ensure timely action on 
appeals before ALJs and the DAB. Additional appropriations 
would be used toincrease the number of ALJs and support staff, 
improve education and training for ALJs and their staff, and increase 
DAB staff.
    This section is effective upon enactment unless otherwise 
specified.

Section 202. Expedited access to judicial review

    Section 521 of BIPA (which is not yet implemented) amends 
Section 1869 to establish deadlines for filing appeals and for 
making decisions in the Medicare appeals process. Generally, an 
initial determination is to be completed no later than 45 days 
from the date a claim for benefits is received. An individual 
dissatisfied with an initial determination is entitled to a 
redetermination by a carrier or fiscal intermediary if 
requested within 120 days of the determination date. The 
redetermination is to be completed no later than 30 days from 
the request date. The Secretary may reopen or revise any 
initial determination or reconsidered determination under 
guidelines established by regulation.
    An individual dissatisfied with the redetermination is 
entitled to a reconsideration by a qualified independent 
contractor (QIC) if the request is initiated within 180 days of 
the notice of the adverse redetermination. With certain 
exceptions, a QIC reconsideration decision is to be completed 
within 30 days from the date a timely request has been filed. 
After a QIC's reconsideration, if the contested amount is 
greater than $100, an individual is entitled to a hearing 
before an ALJ and then a review by the DAB. Both the ALJ 
hearing and the DAB review are to be completed within 90 days 
of a timely filed request for such an action.
    If the dispute is not satisfactorily resolved and the 
contested amounts are greater than $1,000, the individual is 
entitled to judicial review of the decision. Under certain 
circumstances, a beneficiary is entitled to an expedited 
determination with accelerated deadlines. BIPA also provides 
for an expedited hearing in cases where the moving party 
alleges that no material issues of fact are in dispute. The 
Secretary makes an expedited determination as to whether any 
such facts are in dispute and, if not, renders a decision 
expeditiously.
    This section would require the Secretary to establish an 
appeals process that would permit access to judicial review 
when a review panel determines, no later than 60 days after the 
date of the written request and submission of supporting 
documentation, that no entity within the administrative appeals 
process has the authority to decide the question of law or 
regulation relevant to the matter in controversy and there are 
no material facts in dispute. A review panel would consist of a 
panel of three members from the DAB. An appellant would go 
straight to the DAB in these cases; no additional steps in the 
administrative appeals process would be necessary. The 
appellant would be able to make such request only once with 
respect to a question of law or regulation for a specific 
dispute. The determination by the review panel would be 
considered a final decision and not subject to review by the 
Secretary. Given such a determination or a failure to make the 
determination within the 60-day deadline, the appellant would 
be able to request judicial review before a civil court. The 
filing deadline for this civil action would be within 60 days 
of the determination or within 60 days of the end of the 
deadline to make such determination. The venue for judicial 
review would be the U.S. District Court where the appellant is 
located, or where the greatest number of appellants is located, 
or in the district court for the District of Columbia. The 
amount in controversy (if any) would be subject to annual 
interest awarded to the prevailing party by the reviewing 
court. Interest (equal to the rate of interest on obligations 
issued for purchase by the Federal Supplementary Medical 
Insurance Trust Fund effective for the month that the civil 
action commences) would accrue beginning on the first day of 
the first month beginning after the filing deadline. The 
interest payments would not be deemed to be Medicare 
reimbursement. The provision for expedited access to judicial 
review would apply to an institution's appeal concerning 
program participation, provided that the same requirements are 
met (no entity in the administrative appeals process has the 
authority to decide the relevant question of law or regulation, 
and no material facts are in dispute). Remedies applied to 
assure quality of care in skilled nursing facilities (under 
Section 1819) would not be affected while such appeals are 
pending.
    To the extent that any part of an appeal poses a factual 
dispute that is being adjudicated before an administrative 
tribunal, this provision would not authorize the severance of 
the legal issues from the underlying factual dispute.
    This section is effective for appeals filed on or after 
October 1, 2003.

Section 203. Expedited review of certain provider agreement 
        determinations

    Section 1866(h) of the Social Security Act permits any 
institution or agency dissatisfied with a determination that it 
is not a provider (or that it can no longer be a provider) 
access to an administrative hearing and judicial review.
    This section requires the Secretary to develop and 
implement a process under 1866(h) to expedite provider 
agreement determinations, including those instances where 
participation is terminated or other sanctions (including the 
denial of payment for new admissions or appointment of 
temporary management) against skilled nursing facilities have 
been imposed. Priority would be given to termination of 
provider agreements.
    Increased appropriations from the Medicare Trust Funds in 
FY2003 and subsequently would be authorized to (1) reduce the 
average time for administrative decisions on appeals of 
provider agreement determinations by 50 percent; (2) increase 
the number of ALJs and their staff; and (3) educate the ALJs 
and their staff on long term care issues.
    This section is effective upon enactment.

Section 204. Revisions to Medicare appeals process

    Section 521 of BIPA (which is not yet implemented) amends 
Section 1869 to establish certain filing and decision making 
deadlines in Medicare's administrative appeals process. The 
Secretary is required to establish in regulation the time 
limits for requesting a hearing by the ALJ or DAB.
    BIPA also established QIC reconsiderations as part of 
Medicare's administrative review process. A QIC is an entity or 
organization that is independent of any organization under 
contract with the Secretary that makes initial determinations 
and meets the established requirements for sufficient training 
and expertise in medical science and legal matters. To 
reconsider whether a service is reasonable and necessary, a QIC 
will employ a panel of physicians or other appropriate health 
care professionals to review the facts and the circumstances of 
the initial determination. This reconsideration is to be based 
on applicable information, including clinical experience, and 
medical, technical, and scientific evidence.
    The BIPA provisions regarding appeals of Medicare's initial 
determinations become effective on or after October 1, 2002, 
and those applying to national coverage determinations become 
effective on or after October 1, 2001.
    Section 1154 of the Social Security Act describes the 
required functions of utilization and quality control peer 
review organizations (PROs). These entities review, subject to 
the provisions of their contract, the professional activities 
of physicians, other practitioners, and institutional providers 
in rendering services to Medicare beneficiaries. Generally, PRO 
reviews focus on determining the reasonableness of care, the 
quality of care, and the appropriateness of the setting. These 
determinations are ordinarily binding for purposes of 
determining whether benefits should be paid.
    Certain PRO review procedures have been established for 
inpatient hospital care. If a hospital determines, and the 
attending physician agrees, that a continued hospital stay for 
a Medicare beneficiary is no longer necessary, the hospital may 
provide the patient (or the patient's representative) a notice 
of noncoverage. If the attending physician does not agree with 
the hospital's determination that care is no longer necessary, 
the hospital may request the PRO to review the validity of its 
determination. If a Medicare beneficiary receives a Medicare 
notice of noncoverage and requests a PRO review, the PRO must 
review the determination and provide notice to the patient, 
hospital, and attending physician, regardless of the patient's 
financial liability for the continued stay. Certain deadlines, 
conditions, and other notice requirements are established for 
these PRO reviews of inpatient care discharges.
    This section establishes a deadline of 90 days to complete 
an appeal record for an ALJ hearing and the subsequent DAB 
review, a deadline that starts the day the request for such 
action is filed. The appellant would be permitted to request an 
extension of the 90-day deadline for theALJ hearing or the DAB 
review for good cause; the ALJ or the DAB may extend the deadline based 
on a finding of good cause. The mandated deadlines for the appeals 
process established elsewhere would begin on the date the record is 
complete. A record would be complete when an ALJ or the DAB has 
received written or testimonial evidence, written or oral arguments, 
the decision and record of any prior appeal, and other evidence 
determined to be necessary.
    The provisions would establish that a written notice of an 
initial determination associated with a claims denial be 
provided. The notice would be written in a manner designed to 
be understood by the beneficiary and would include: (1) the 
reason for the decision and an appropriate summary of the 
evidence used to support the decision; (2) the procedures for 
obtaining additional information concerning the determination 
or redetermination; and (3) the notification of appeal rights 
and associated instructions. A summary of the clinical or 
scientific evidence used to support the determination would be 
provided upon request. This summary would be provided in a 
redetermination notice.
    The provisions would amend the existing requirement that a 
reconsideration decision be written. The reconsideration 
decision would have to be written in a manner that could be 
understood by the beneficiary and would only need to include a 
detailed explanation of the decision to the extent appropriate. 
The requirement that the reconsideration decision include a 
notice of appeal rights and relevant instructions would also be 
established.
    Comparable requirements would be extended to ALJ decisions. 
These decisions would have to be written in an understandable 
manner and include the specific reasons for the decision, an 
appropriate summary of the evidence, and a notification of 
appeal rights and instructions.
    Medical records of the individual would be included as part 
of the applicable information used by QICs in making 
reconsiderations. Otherwise qualified utilization and quality 
control peer review organizations (PROs) would be able to act 
as QICs.
    To qualify as a QIC, an entity would be required to have 
sufficient medical, legal, and other expertise, including 
knowledge of the Medicare program as well as sufficient 
staffing and independence to make reconsiderations. A QIC would 
be required to assure that reviewers meet professional 
qualifications, independence, and compensation requirements. If 
the request for review indicates that the item or service was 
furnished (or was ordered to be furnished) by a physician, each 
reviewing professional shall be a physician. Subject to 
reasonable compensation requirements and other exceptions, 
entities and their professional reviewers would have to meet 
independence requirements and may not: (1) be a ``related'' 
party; (2) have a material familial, financial, or professional 
relationship with a related party; (3) have a conflict of 
interest with respect to a related party. A QIC's compensation 
would not exceed a reasonable level and would not be contingent 
on any decision by the QIC or by any reviewing professional. A 
reviewer's compensation from a QIC would not exceed a 
reasonable level and would not be contingent on any decision 
rendered by the reviewer. In this context, a related party to a 
Medicare case involving an individual beneficiary is (1) the 
Secretary; fiscal intermediary; carrier; any fiduciary, 
officer, director or employee of HHS or a Medicare contractor; 
(2) the individual or authorized representative; (3) the health 
professional, institution, or entity that provides or 
manufactures the item or service involved in the case; and (4) 
any other party with substantial interest in the case, as 
defined by regulation.
    Individuals affiliated with a fiscal intermediary, carrier, 
or other contractor would be able to act as a QIC reviewer if 
(1) a non-affiliated individual is not reasonably available; 
(2) the affiliated individual is not involved in the provision 
of items or services of the case; (3) the fact of the 
affiliation is disclosed to the Secretary, the beneficiary, or 
the authorized representative and no one objects; and (4) the 
affiliated individual is not a direct employee and does not 
provide services exclusively, primarily, or on behalf of a 
Medicare contractor. Individuals with staff privileges at the 
institution where treatment occurs would be able to serve as a 
reviewer if the affiliation is disclosed without objection, 
subject to limits on compensation. Each reviewing professional 
shall be an allopathic or osteopathic physician or health care 
professional who (1) is appropriately credentialed or licensed 
in one or more states or (2) typically treats the condition, 
makes the diagnosis, or provides the treatment under review.
    The effective date of BIPA provisions regarding appeals of 
initial determinations would be changed from on or after 
October 1, 2002 to on or after October 1, 2003; the effective 
date of BIPA provisions with respect to national coverage 
determinations would be changed from on or after October 1, 
2001 to those made on or after October 1, 2002.
    The provisions would modify Section 1154 of the Social 
Security Act. Individuals who receive a notice of termination 
of service or are discharged from a hospital during the 
transition period would be able to request, in writing or 
orally, an expedited review from a PRO. (In the case of a 
termination of service, a physician would need to certify that 
the failure to continue services is likely to place the 
individual's health at significant risk). The transition period 
would be defined for each PRO service area as beginning on the 
date when the last triennial PRO contract becomes effective in 
FY2002 and ending on the expiration date of the PRO contract in 
FY2006. The current references established in 1154(e) would be 
changed to broaden the scope of the PRO review to include the 
other expedited appeal rights for terminations of services 
created under BIPA. The Secretary would transfer the PRO 
hearing functions to the QICs as appropriate. An expedited 
determination or redetermination by a QIC would preclude review 
by a PRO, but the individual would be entitled to an ALJ 
hearing.
    The qualification and compensation requirements for 
reviewers would apply to fiscal intermediaries and carriers as 
well as Medicare administrative contractors.
    These provisions are effective as if included in BIPA, 
subject to the specified modifications.

Section 205. Hearing rights related to decisions by the Secretary to 
        deny or not renew a medicare enrollment agreement

    Under current law, providers and, to some extent suppliers, 
have access to certain appeal mechanisms if their application 
to participate in Medicare is denied or terminated. Section 
1866(h) of the Social Security Act provides for a hearing and 
judicial review of that hearing for any institution or agency 
dissatisfied with a determination that it is not a provider (or 
that it can no longer be a provider). There is no statutory 
provision extending such judicial appeal rights to physicians, 
practitioners, facilities, or suppliers.
    Providers of services, physicians, practitioners, 
facilities or suppliers whose application to enroll or reenroll 
has been denied and who are dissatisfied with the determination 
would be entitled to a hearing and judicial review of the 
determination under the procedures that currently apply to 
providers under section 1866(h).
    This section applies to denials that occur after a date 
specified by the Secretary, but not later than one year after 
the date of enactment.

Section 206. Appeals by providers when there is no other party 
        available

    Under this section, a provider of services, physician, 
practitioner, facility, or supplier would be able to appeal any 
determination for a deceased beneficiary, if there are no other 
parties to appeal the determination, so long as the estate of 
the beneficiary or the beneficiary's family or heirs are not 
liable for increased out-of-pocket expenditures that might 
result from the decision.
    This section applies to items and services furnished after 
enactment.

Section 207. Process for exceptions to national coverage determinations 
        under special medical circumstances

    This section would require the Secretary to establish a 
process where an individual with (1) a serious or life-
threatening condition and (2) special medical circumstances 
that were not considered when forming the national coverage 
determination (NCD) may request an exception to a national 
coverage determination. Unlike the existing process established 
under BIPA, the new additional process would not be a challenge 
to the reasonableness of the NCD as a whole, but would make 
clear that the NCD did not apply to that individual. A panel of 
physicians or other health professionals would make or review 
an initial decision. An expedited review of these decisions 
would be available if certified as necessary by a physician. 
Requests for exceptions would be subject to review by the DAB 
and subsequent judicial review. If an exception is approved for 
an individual, the national coveragedetermination shall not be 
applied to the treatment for that individual by any Medicare 
administrative contractor. The Secretary would provide information on 
(1) national coverage determinations made in the past year and (2) how 
to get more information with respect to the national determinations in 
an annual publication.
    This section is effective as if included in BIPA, as 
subsequently modified.

Section 208. Prior determination process for certain items and services

    Medicare law prohibits payment for items and services that 
are not medically reasonable and necessary for the diagnosis or 
treatment of an illness or an injury. Under certain 
circumstances, Medicare will pay for noncovered services that 
have been provided if both the beneficiary and the provider of 
the services did not know and could not have reasonably been 
expected to know that Medicare payment would not be made for 
these services. However, in most circumstances, either the 
beneficiary or the provider will be liable in the event that 
Medicare does not cover an item or service. There are detailed 
rules on beneficiary and provider liability in the statute.
    A provider may be held liable for providing uncovered 
services, if, for example, specific requirements are published 
by the Medicare contractor or the provider has received a 
denial or reduction of payment for the same or similar service. 
In cases where the provider believes that the service may not 
be covered as reasonable and necessary, the provider may limit 
his liability by providing an acceptable advance notice of 
Medicare's possible denial of payment (ABN) to the patient. The 
notice must be given in writing, in advance of providing the 
service; include the patient's name, date, and description of 
service as well as reasons why the service may not be covered; 
and must be signed and dated by the patient to indicate that 
the beneficiary will assume financial liability for the service 
if Medicare payment is denied or reduced. Currently, there is 
no way for a beneficiary or provider to find out in advance of 
an item or service being provided whether or not Medicare will 
cover that item or service for that particular beneficiary.
    This section requires the Secretary to establish a process 
through regulation where certain categories of physicians and 
beneficiaries can establish whether Medicare covers certain 
items and services before such services are provided. An 
eligible requestor would be either a physician, or a Medicare 
beneficiary who receives an advance beneficiary notice (ABN) 
from a provider or supplier. The provisions would establish (1) 
that such prior determinations would be binding on the Medicare 
contractor, absent fraud or misrepresentation of facts; (2) the 
right to redetermination in the case of a denial; (3) the 
applicability of existing deadlines with respect to those 
redeterminations; (4) that contractors' advance determinations 
(and redeterminations) are not subject to further 
administrative or judicial review; and (5) an individual 
retains all rights to usual administrative or judicial review 
after receiving the service or receiving a determination that a 
service would not be covered. This section also requires that 
whenever a physician requests a pre-service determination (or 
redetermination), beneficiaries must still receive a notice 
that includes information explaining the beneficiary's right to 
receive the service and request that a Medicare claim be 
submitted so that they can access the appeals process under 
section 1869. The Secretary must establish a process to allow 
for the processing of such requests beginning 18 months after 
enactment. The Secretary would be required to collect data on 
the advance determination notices provided and establish a 
beneficiary and provider outreach and education program on the 
use of ABNs and national coverage decisions. The GAO is 
required to report on the use of the advance beneficiary notice 
and prior determination process within 18 months of 
implementation of the process.
    The process would be in place to address requests for 
advance determinations filed on or after 18 months from 
enactment.

Section 209. BIPA-related technical amendments and corrections

    BIPA established an advisory process for national coverage 
determinations where panels of experts formed by advisory 
committees could forward their recommendations directly to the 
Secretary without prior approval from the advisory committee or 
the Executive Committee.
    This section corrects the statutory reference in BIPA to 
the advisory committees by changing the reference to the Public 
Health Service Actto that of the Social Security Act. Other 
BIPA references would be changed from ``policy'' to ``determinations'' 
to match the language in the underlying Medicare statute.
    This section is effective as if included in BIPA.

                     title iii--contracting reform

Section 301. Increased flexibility in Medicare administration

    Section 1816 of the Social Security Act authorizes the 
Secretary to establish agreements with fiscal intermediaries 
nominated by different provider associations to make Medicare 
payments for health care services furnished by institutional 
providers. Section 1842 of the Act authorizes the Secretary to 
enter into contracts with health insurers (or carriers) to make 
Medicare payments to physicians, practitioners, and other 
health care suppliers. Section 1834(a)(12) of the Act 
authorizes separate regional carriers for the payment of 
durable medical equipment (DME) claims. Section 1893 authorizes 
the Secretary to contract for certain program safeguard 
activities under the Medicare Integrity Program (MIP).
    Certain terms and conditions of the contracting agreements 
for fiscal intermediaries and carriers are specified in the 
Medicare statute. Medicare regulations coupled with long-
standing agency practices have further limited the way that 
contracts for claims administration services can be 
established. Specifically, the contracts are awarded without 
full and open competition; generally must cover the range of 
claims processing and related activities; cannot be terminated 
without cause and without the opportunity for a public hearing; 
and incorporate cost-based, not performance-based, 
reimbursement methods with no incentive bonuses.
    Certain functions and responsibilities of the fiscal 
intermediaries and carriers are specified in the statute as 
well. The Secretary may not require a carrier or intermediary 
match data obtained in its other activities with Medicare data 
in order to identify beneficiaries who have other insurance 
coverage as part of the Medicare Secondary Payer (MSP) program. 
With the exception of prior authorization of DME claims, an 
entity may not perform activities (or receive related payments) 
under a claims processing contract to the extent that the 
activities are carried out pursuant to a MIP contract. 
Performance standards with respect to the timeliness of 
reviews, fair hearings, reconsiderations, and exemption 
decisions are established as well.
    A Medicare contract with an intermediary or carrier may 
require any of its employees certifying or making payments to 
provide a surety bond to the United States in an amount 
established by the Secretary. Neither the contractor nor the 
contractor's employee who certifies the amount of Medicare 
payments is liable for erroneous payments in the absence of 
gross negligence or intent to defraud the United States. 
Neither the contractor nor the contractor's employee who 
disburses payments is liable for erroneous payments in the 
absence of gross negligence or intent to defraud the United 
States, if such payments are based upon a voucher signed by the 
certifying employee.
    This section would add Section 1874A to the Social Security 
Act, which would permit the Secretary to enter into contracts 
with any eligible entity to serve as a Medicare administrative 
contractor. These contractors would perform or secure the 
performance (through subcontracting) some or all of the 
following tasks: determine payment amounts; make payments; 
educate and assist beneficiaries; communicate with providers 
and suppliers; educate and offer technical assistance to 
providers; and perform additional functions as necessary. An 
entity eligible to enter into a contract with respect to the 
performance of a particular function or activity must (1) 
demonstrate capability to carry out such function; (2) comply 
with conflict of interest standards that are generally 
applicable to Federal acquisition and procurement; (3) have 
sufficient assets to financially support the performance of 
such functions; and (4) meet other requirements imposed by the 
Secretary. The claims processing jurisdiction of a Medicare 
administrative contractor would be determined by the scope of 
the contract awarded to the entity. Specifically, the Medicare 
administrative contractor that would perform a particular 
function or activity is the entity that has the contract for 
that activity for any given beneficiary, any given provider of 
service, physician, practitioner, facility, or supplier, or 
class of such providers, physicians, practitioners, facilities, 
or suppliers.
    The Federal Acquisition Regulation would apply to Medicare 
administration contracts, except to the extent inconsistent 
with a specificMedicare requirement. Except as provided in laws 
that are generally applicable to Federal acquisition and procurement, 
the Secretary would be required to use competitive procedures when 
entering into a Medicare administrative contract. The Secretary would 
be able to renew a contract for up to five years without regard to 
statutory requirements concerning competitive contracting if the entity 
has met or exceeded specified performance standards. The Secretary 
would be able to transfer functions among contractors without regard to 
any provision of law requiring competition. The Secretary would be 
required to (1) consider performance quality and (2) provide notice of 
such transfer (in the Federal Register or otherwise) that describes the 
transferred functions and includes contractor contact information.
    This section requires the Secretary to (1) provide 
incentives for the Medicare administrative contractors to 
provide efficient, high-quality services; (2) develop 
performance standards with respect to each of the payment, 
provider service, and beneficiary service functions required of 
the contractors; and (3) develop standards for measuring the 
extent to which a contractor has met such requirements. The 
Secretary would be required to contract only with those 
entities that will perform efficiently and effectively; will 
meet standards for financial responsibility, legal authority 
and service quality among other pertinent matters; will agree 
to furnish timely and necessary data; and will maintain and 
provide access to necessary records and data.
    The Committee believes beneficiaries and providers should 
play an important role in evaluating contractor performance. 
The Secretary would be required to publish performance 
requirements and measurement standards in the Federal Register 
and may include beneficiary and provider satisfaction (as 
measured by surveys) as one of the standards. The performance 
requirements (1) would be set forth in the contract between the 
Secretary and the appropriate Medicare contractor; (2) would be 
used to evaluate contractor performance; and (3) would be 
consistent with the contract's written statement of work. A 
Medicare administrative contract would contain provisions 
deemed necessary by the Secretary and may provide for advances 
of Medicare funds for the purposes of making payments to 
providers and suppliers. In developing contract performance 
requirements for Medicare administrative contractors, the 
Secretary would be required to consider the inclusion of the 
existing standards in effect for timeliness of reviews, fair 
hearings, reconsiderations, and exemption decisions.
    The existing MSP provision would apply: the Secretary would 
not be able to require contractors to match their data with 
Medicare data for the purposes of identifying beneficiaries 
with other insurance coverage. The Secretary would assure that 
the activities of the Medicare administrative contractors do 
not duplicate the Medicare Integrity Program (MIP) functions 
except with respect to the prior authorization of durable 
medical equipment (DME). An entity with a MIP contract would 
not be treated as a Medicare administrative contractor solely 
by reason of the MIP contract.
    A Medicare administrative contractor and any of its 
employees certifying or disbursing payments may be required to 
provide a surety bond to the United States in an amount 
established by the Secretary. The liability standard of gross 
negligence is retained. The contractor's employee who certifies 
the amount of Medicare payments is not liable for erroneous 
payments in the absence of gross negligence or intent to 
defraud the United States. The contractor's employee who 
disburses payments is not liable for erroneous payments in the 
absence of gross negligence or intent to defraud the United 
States, if such payments are based upon an authorization from 
the certifying employee and the authorization meets the 
internal control standards established by the GAO. The 
contractor is not liable for payments made by certifying or 
disbursing officers unless grossly negligent when supervising 
or selecting these officers. No Medicare administrative 
contractor, subcontractor, or employee would be held civilly 
liable under any federal, state, or county law for performing 
any duty, function or activity authorized by a valid Medicare 
administrative contract, providing due care was exercised in 
the performance of such duty. The Secretary would pay the 
Medicare administrative contractor, its employees, or their 
legal representatives for defending these contractors or 
employers in a civil action related to the performance of their 
contractual duties, provided due care was exercised in the 
performance of these duties. These payments would be equal to 
the reasonable amount of legal expenses incurred, as determined 
by the Secretary.
    The provisions establish that the activities of fiscal 
intermediaries in administering Medicare would be conducted 
through contracts withMedicare administrative contractors. The 
provider nomination process and contracting specifications would be 
repealed. Certain performance standards with respect to the processing 
of clean claims would be retained. Certain annual reporting 
requirements concerning the contractor's overpayment recovery efforts 
would be retained.
    The provisions would establish that the activities of 
carriers administering Medicare would be conducted through 
contracts with Medicare administrative contractors. Certain 
instructions including those pertaining to nursing facility 
payments, claims assignment, physician participation, 
overpayment recoveries, and billing by suppliers would be 
retained. Certain performance standards with respect to the 
processing of clean claims would be retained. Contracting 
specifications and other conforming changes would be 
established. The Secretary, not the contractor, would be 
responsible for taking necessary actions to assure that 
reasonable payments are made, for those made on both a cost and 
charge basis. The Secretary, not the contractor, would be 
responsible for maintaining a toll-free telephone number for 
beneficiaries to obtain information on participating suppliers. 
Carrier fair hearing requirements would be eliminated. (BIPA 
eliminated the carrier fair hearing step in the administrative 
appeals process). Certain annual reporting requirements 
concerning the contractor's overpayment recovery efforts would 
be retained.
    The provisions would apply to contracts that are 
competitively bid on or after dates specified by the Secretary 
(but not later than two years after enactment). Until the 
provisions are effective, the terms and conditions of contracts 
that are in effect would remain in effect until the date the 
contract is let out for competitive bidding. All Medicare 
administrative contracts would have to be competitively bid by 
October 1, 2008. The requirement that MIP contracts be awarded 
on a competitive basis would continue to apply and would be 
unaffected by the provisions in this section. All references to 
fiscal intermediaries or carriers would be deemed a reference 
to an appropriate Medicare administrative contractor once the 
contracting changes are effective.
    The Secretary would submit a legislative proposal 
containing necessary conforming and technical amendments to the 
appropriate Congressional committees within six months of 
enactment. The Secretary would submit an implementation plan to 
Congress and the GAO one year before the intended 
implementation date. The GAO would evaluate the plan and 
include appropriate recommendations no later than six months 
after the plan is received. No later than October 1, 2006, the 
Secretary would be required to submit a status report to 
Congress including (1) the number of contracts that have been 
competitively bid; (2) the distribution of functions among 
contracts and contractors; (3) a timeline for transition to 
full competition; and (4) a description of changes to 
contractor oversight and management.
    The Committee directs the Secretary's attention to the 
provision of the Balanced Budget Act of 1997 requiring CMS to 
designate no more than five regional carriers to process 
laboratory claims. This provision was passed in order to 
streamline the processing of laboratory claims and was to be 
implemented by July 1, 1999, but CMS has taken no action to 
date. In consultation with the clinical laboratory industry, 
CMS may consider other potential solutions, including the 
designation of a single carrier to process all claims of 
laboratory entities operating in more than one state. CMS is 
directed to report back to the Committee on Energy and Commerce 
within three months detailing the action it has taken to 
implement this directive.
    This section is effective upon enactment.

Section 302. Requirements for information security

    This section requires Medicare administrative contractors, 
that determine and make payments, to implement a contractor-
wide information security program that meets the requirements 
imposed on Federal agencies to ensure the security, integrity, 
confidentiality, authenticity, and availability of operational 
data and systems supporting operations. An annual audit of the 
information security at each Medicare administrative contractor 
(1) would be performed by an independent entity that meets the 
independence requirements specified by the Inspector General 
(OIG) in HHS; and (2) would test the effectiveness of the 
information security techniques for an appropriate subset of 
the contractor's systems. An audit of new contractors (those 
that have not been fiscal intermediaries or carriers) would be 
required prior to the start of their performing Medicare 
payment functions. An audit of existing contractors (those that 
are now fiscal intermediaries and carriers) would be required 
to be completed within one year ofenactment. The results of the 
audits would be reported promptly to the OIG, which will submit a 
report annually to Congress. These provisions would be equally 
applicable to fiscal intermediaries and carriers as to Medicare 
administrative contractors.
    This section is effective upon enactment.

             TITLE IV--EDUCATION AND OUTREACH IMPROVEMENTS

Section 401. Provider education and technical assistance

    Under current law, Medicare's provider education activities 
are funded through the program management appropriation and 
through the Education and Training component of the Medicare 
Integrity Program (MIP). Both claims processing contractors 
(fiscal intermediaries and carriers) and MIP contractors may 
undertake provider education activities.
    This section would add Section 1889 to the Social Security 
Act, which would require the Secretary to (1) coordinate the 
educational activities provided through the Medicare 
administrative and MIP contractors and (2) submit an evaluation 
to Congress, no later than October 1, 2002, on actions taken to 
coordinate the funding of provider education.
    The Secretary would also be required to implement a 
methodology to measure the specific claims payment error rates 
of each contractor. This methodology would apply to existing 
fiscal intermediaries and carriers in the same manner as it 
applies to Medicare administrative contractors. No later than 
October 1, 2002, the Secretary would submit to Congress a 
report that describes how the methodology would be used in 
assessing contractor performance and whether the methodology 
would be a basis for performance bonuses. This section requires 
the GAO to submit to Congress a report on the adequacy of the 
methodology, including recommendations as appropriate, by 
October 1, 2002.
    By October 1, 2002, the Secretary and each contractor would 
be required to maintain an Internet site that provides answers 
to frequently asked questions in an easily accessible format as 
well as all Medicare and Medicare-related materials published 
by the Secretary or the contractor.
    The provisions would authorize a $35 million increase in 
Medicare appropriations starting in FY2003 to increase provider 
education and training and to improve the accuracy and quality 
of contractor information provided in response to written and 
telephone inquiries. In conducting training activities (which 
may include the provision of technical assistance), Medicare 
contractors would be required to take into consideration the 
special needs of small providers and suppliers. The provision 
defines a small provider as an institution with fewer than 25 
full-time equivalents (FTEs) or a physician, practitioner, 
facility, or supplier with fewer than 10 FTEs.
    A Medicare contractor would not be able to use attendance 
records at educational programs or information gathered during 
these programs to select or track candidates for audit or 
prepayment review. Nothing in this section or section 1893(g) 
shall be construed as preventing the disclosure by a Medicare 
contractor of information on attendance at educational 
activities for law enforcement purposes. Nothing in this 
section or section 1893(g) shall be construed as providing for 
the disclosure by a Medicare contractor of the claims 
processing screens or computer edits used for identifying 
claims that will be subject to review. Nothing in the proposed 
legislation would require Medicare administrative contractors 
to disclose information that would compromise pending law 
enforcement activities or reveal findings of law enforcement-
related audits.
    This section is effective upon enactment.

Section 402. Access to and prompt responses from Medicare 
        administrative contractors

    The Medicare statutory provisions generally instruct 
carriers to assist providers and others who furnish services in 
developing procedures relating to utilization practices and to 
serve as a channel of communication relating information on 
program administration. Fiscal intermediaries are generally 
instructed to (1) provide consultative services to institutions 
and other agencies to enable them to establish and maintain 
fiscal records necessary for program participation and 
paymentand (2) serve as a center for any information as well as a 
channel for communication with providers.
    This section requires the Secretary to develop a 
communication strategy with beneficiaries, providers of 
services, physicians, practitioners, facilities, and suppliers. 
Each Medicare administrative contractor would be required to 
(1) provide general written responses (which may be through 
electronic transmission) in a clear, concise and accurate 
manner to inquiries from beneficiaries, providers of services, 
physicians, practitioners, facilities and suppliers within 45 
business days; and (2) maintain a toll-free telephone number 
where these interested parties may obtain billing, coding, 
claims, coverage, and other appropriate Medicare information. 
The Secretary would be required to establish and publish in the 
Federal Register standards to monitor the accuracy, 
consistency, and timeliness of information provided in response 
to written and telephone inquiries. The standards would also be 
also used in contractors' performance evaluations. The 
Secretary would be able to directly monitor the quality of the 
information so provided. These provisions would also apply to 
existing fiscal intermediaries and carriers.
    This section takes effect on October 1, 2002.

Section 403. Reliance on guidance

    Under current law, there is no provision with respect to 
reliance on written guidance. However, under certain 
circumstances, overpayments are not recovered if the incorrect 
payment has been made with respect to an individual who is 
without fault or where the recovery would decrease payments to 
another person who is without fault.
    Under this section, if (1) a provider of services, 
physician, practitioner, facility, or supplier follows written 
guidance (which may be transmitted electronically) provided by 
the Secretary or a Medicare contractor when furnishing an item 
or service and submitting a claim; (2) the Secretary finds that 
the circumstances relating to the furnished items and services 
have been accurately presented in writing to the contractor; 
(3) there is no indication of fraud or abuse; and (4) the 
guidance is inaccurate, then the provider of services, 
physician, practitioner, facility, or supplier would not be 
subject to any penalty or interest, if they reasonably relied 
on such guidance. The Secretary would retain the authority to 
determine whether the guidance in the form of general responses 
to FAQs applied to the particular circumstance of the 
individual claim. This provision would not affect the waiver of 
certain types of overpayments already established in the 
Medicare statute.
    This section is effective for penalties imposed on or after 
enactment.

Section 404. Facilitation of consistent information to providers

    This section requires the Secretary to appoint an 
individual within HHS (who is not an advocate of any specific 
departmental policy) to (1) respond to complaints and 
grievances from providers of services, physicians, 
practitioners, facilities, and suppliers regarding inconsistent 
Medicare and Medicare-related requirements (such as peer review 
and other administrative provisions); and (2) facilitate an 
appropriate response from HHS or the appropriate Medicare 
contractor. The Committee recognizes that as specific functions 
are assigned to separate contractors, there is the possibility 
of conflicting interpretations of policy. In such cases, the 
Committee expects that the provider facilitator created by this 
section would help to resolve these conflicts. This individual 
is not intended to be the first stop for providers of services, 
physicians, practitioners, facilities, and suppliers with 
questions about the Medicare program. Instead, this individual 
is intended to be used as a resource after other attempts to 
resolve conflicting or inconsistent information have failed.
    This section is effective upon enactment.

Section 405. Policy development regarding evaluation and management 
        (E&M;) documentation guidelines

    This section would not permit the Secretary to implement 
any new documentation guidelines for evaluation and management 
(E&M;) physician services unless the guidelines (1) are 
developed in collaboration with practicing physicians (both 
generalists and specialists) after assessment by the physician 
community; (2) based on a plan with deadlines for improving use 
of E&M; codes; (3) are developed after completion of pilot 
projects to test modifications to thecodes; (4) are found to 
meet the desired objectives; and (5) are preceded by the establishment 
(and concurrent implementation) of a program to educate the physician 
community. The Secretary would make changes to existing E&M; guidelines 
to reduce paperwork burdens on physicians. This section requires the 
Secretary to modify E&M; guidelines to (1) identify clinically relevant 
documentation; (2) decrease non-clinically pertinent documentation; (3) 
increase the reviewers' accuracy; and (4) educate the physicians and 
the reviewers.
    The provisions would establish different pilot projects in 
specified settings that would (1) be voluntary; (2) last long 
enough (as determined by the Secretary) to educate physicians 
and contractors on E&M; guidelines; and (3) be conducted in 
consultation with practicing physicians (both generalists and 
specialists) to allow for an assessment of E&M; guidelines and 
their use. A range of different projects would be established, 
including at least one that (1) has a peer review method by 
physicians; (2) has an alternative method based on documented 
face-to-face patient time; (3) is in a rural area; (4) is 
outside a rural area; (5) is in a teaching setting; and (6) is 
in a nonteaching setting. The projects would examine the effect 
of modified E&M; guidelines on different types of physician 
practices in terms of the cost of compliance. Data collected 
under these projects would not be the basis for overpayment 
demands or post-payment audits. This limitation would apply 
only to claims filed as part of the pilot project and would 
last only for the duration of the projects and only as long as 
the provider is a participant in the pilot project. The 
Secretary would be required to submit periodic reports on the 
pilot projects to Congress.
    This section is effective upon enactment.

Section 406. Beneficiary Outreach Demonstration Program; report on 1-
        800 MEDICARE number

    This section requires the Secretary to establish a 3-year 
demonstration project where Medicare specialists who are HHS 
employees are placed in at least six SSA offices to advise and 
assist Medicare beneficiaries. The SSA offices would be those 
with a high-volume of visits by Medicare beneficiaries, at 
least two of which would be in rural areas. In the rural SSA 
offices, the Secretary would provide for the Medicare 
specialists to travel among local offices on a scheduled basis. 
The Secretary would be required to (1) evaluate the project 
with respect to beneficiary utilization, beneficiary 
satisfaction, and cost-effectiveness and (2) recommend whether 
the demonstration should be established on a permanent basis.
    The GAO would be required to (1) monitor the adequacy, 
accuracy, and consistency of the information provided to 
Medicare beneficiaries through the toll-free 1-800 MEDICARE 
number and (2) examine the education and training of those 
providing the information via the toll-free number. This 
section requires that the GAO submit a report to Congress no 
later than one year from enactment.
    This section is effective upon enactment.

Section 407. Provider enrollment applications

    This section requires the Secretary to (1) establish in 
regulation deadlines for actions on applications for enrollment 
and reenrollment; (2) monitor the performance of Medicare 
administrative contractors in meeting the deadlines; and (3) 
consult with providers, physicians, practitioners, facilities, 
and suppliers before changing Medicare's enrollment forms. The 
consultation process would be required for provider enrollment 
forms that are changed on or after January 1, 2002.
    This section is effective upon enactment.

           TITLE V--REVIEW, RECOVERY, AND ENFORCEMENT REFORM

Section 501. Prepayment reviews

    This section would require Medicare contractors who conduct 
random prepayment reviews to do so in accordance with a 
standard protocol developed by the Secretary. Contractors would 
not be able to initiate non-random payment reviews based on the 
initial self-identification by a provider of services, 
physician, practitioner, facility, or supplier of an improper 
billing practice unless there is a likelihood of a sustained or 
high level of payment error. The Secretary would be required to 
issue regulations establishing a concrete endpoint for 
prepayment review. The termination of prepayment review may 
varybased upon the differences in the circumstances triggering 
such a review. No provision would prevent the denial of payment for 
claims actually reviewed under random prepayment review or prevent a 
Medicare administrative contractor from requesting documentation for a 
limited sample of submitted claims to ensure that the previous practice 
is not continuing.
    The regulations required under this section must be issued 
not later than one year after enactment. The use of a standard 
protocol applies to random prepayment audits conducted on or 
after a date specified by the Secretary (which cannot be later 
than one year after the date of enactment).

Section 502. Recovery of overpayments

    There is no current statutory provision with respect to 
repayment plans. Section 1833(j) of the Social Security Act 
provides that interest accrues on underpayments or overpayments 
starting within 30 days of the date of the final determination 
of the accurate payment amount.
    This section requires the Secretary to enter into a 
repayment plan at the request of a provider of services, 
physician, practitioner, facility, or supplier for the offset 
or repayment of an overpayment for a period of at least one 
year but no longer than three years if the provider of 
services, physician, practitioner, facility, or supplier meets 
certain standards. The provider of services, physician, 
practitioner, facility, or supplier may choose between offset 
and a repayment plan provided they meet the established 
standards. Not later than one year after enactment, the 
Secretary would be required to develop standards for the 
recovery of overpayments, which would consider reliance on 
guidance and financial hardship. The financial hardship 
standard would take into account the amount of the proposed 
recovery as a proportion of Medicare payments. The Secretary 
would not be required to establish a repayment plan if (1) 
there is reason to suspect that the provider of services, 
physician, practitioner, facility, or supplier may file 
bankruptcy or discontinue program participation; or (2) there 
is an indication of fraud or abuse. The Secretary would be 
allowed to seek immediate collection if payments including 
interest are not made as scheduled.
    Upon enactment, the Secretary would not be able to initiate 
any overpayment recovery action if the provider of services, 
physician, practitioner, facility, or supplier has sought a 
reconsideration of the Medicare overpayment by a qualified 
independent contractor (QIC) until the date of the 
reconsideration decision. If QICs are not yet in place, the 
overpayment recovery would not be initiated until the date of a 
redetermination decision by a fiscal intermediary or a carrier. 
If monies have been offset or repaid, the Secretary would 
return those amounts plus applicable interest if the original 
overpayment determination is reversed. If such an overpayment 
determination is upheld, interest would accrue beginning on the 
date of the original overpayment notice. The interest amount 
would be the rate otherwise applicable for Medicare 
overpayments.
    For audits initiated after enactment, Medicare contractors 
would be required to provide a written notice (which may be in 
electronic form) of the intent to conduct a post-payment audit 
to those selected as audit candidates. Medicare contractors 
would be required to provide those who have been audited a full 
review and understandable explanation of the findings that: (1) 
permits the development of an appropriate corrective action 
plan; (2) provides information on appeal rights as well as 
consent settlements (which are at the discretion of the 
Secretary); and (3) provides for an opportunity to supply 
additional information to the contractor. Medicare contractors 
would be required to take into account the information provided 
on a timely basis. The provisions requiring notice of audit and 
findings would not apply if pending law enforcement activities 
would be compromised or findings of law enforcement-related 
audits would be revealed.
    Not later than one year after enactment, the Secretary 
would be required to establish, in consultation with health 
care associations, a process under which classes of providers, 
physicians, practitioners, facilities, and suppliers would be 
notified when their Medicare contractor has identified specific 
billing codes that the class may be over-utilizing.
    Not later than one year after enactment, the Secretary 
would be required to establish a standard methodology for 
Medicare contractors to use in selecting a probe sample of 
claims for a review of abnormal billing patterns.
    The Secretary would be able to use a consent settlement to 
resolve a projected overpayment. Before entering into any 
consent settlements after the date of enactment, the Secretary 
would be required to communicate (1) in a non-threatening 
manner to a provider of services, physician, practitioner, 
facility, or supplier that, based on a preliminary evaluation 
of medical records, an overpayment may exist; (2) the nature of 
the identified problems; and (3) the necessary steps to address 
the problem. The Secretary would allow providers of services, 
physicians, practitioners, facilities, and suppliers 45 days to 
submit additional information concerning the claims that have 
been reviewed. After considering the additional information, 
the Secretary would provide notice and explanation of any 
remaining overpayment determination and would offer the 
opportunity for a statistically valid random sample (which 
would not waive appeal rights) or a consent settlement (based 
on a projection from a smaller sample of claims with a waiver 
of appeal rights) to resolve the overpayment amounts.
    A Medicare contractor would not be able to use 
extrapolation to determine overpayment amounts for 
statistically valid random samples initiated after the date of 
enactment, unless, as determined by the Secretary, a sustained 
or high level of payment error exists or a documented 
educational intervention did not correct the payment error.
    These provisions are effective upon enactment, unless 
otherwise specified.

Section 503. Process for correction of minor errors and omissions on 
        claims without pursuing appeals process

    This section requires the Secretary to develop, in 
consultation with appropriate Medicare contractors and health 
care associations, a process under which minor errors and 
omissions on claims can be corrected and the corrected claims 
resubmitted without appealing the claims denial.
    The Committee intends that this provision cover home health 
claims (on a pre- or post-payment basis) that are inadvertently 
submitted prior to the time that a physician certification or 
recertification of a plan of care is signed and dated. The 
claim would be returned to the home health agency, which would 
be allowed to resubmit such claim in lieu of filing an appeal.
    The process required by this section would be developed no 
later than one year after date of enactment.

Section 504. Program and payment exclusions

    Under current law, the Secretary is required to exclude 
individuals and entities from participation in Federal health 
programs who are (1) convicted of a criminal offense related to 
health care delivery under Medicare or under State health 
programs; (2) convicted of a criminal offense related to 
patient abuse or neglect under Federal or State law; (3) 
convicted of a felony relating to fraud, theft, or financial 
misconduct relating to a health care program financed or 
operated by the Federal, State, or local government; or (4) 
convicted of a felony related to a controlled substance. At the 
request of a State, the Secretary is permitted to waive a 
program exclusion with respect to Medicare or Medicaid, but 
only for exclusions described in (1) above.
    Under current law, Medicare will not cover services that 
are furnished by a beneficiary's immediate relative.
    This section allows the administrator of a Federal health 
program to request a waiver of a program exclusion if the 
exclusion of a sole community physician or source of 
specialized services in a community would impose a hardship. 
This conforming change would extend the same waiver authority 
currently in Medicare and Medicaid to Federal health programs. 
In addition, waivers could be requested for Medicare, Medicaid, 
and Federal health programs with respect to all exclusions 
except those related to patient abuse or neglect.
    The exclusions for Medicare coverage would be changed. 
Medicare would be permitted to cover the expenses of providers 
who furnish Medicare services to (and impose charges on) their 
parents. Medicare would also be permitted to cover services 
rendered by all immediate relatives of beneficiaries living in 
rural areas.
    This section is effective for items and services furnished 
on or after January 1, 2003.

                     TITLE VI--EMTALA IMPROVEMENTS

Section 601. Payment for EMTALA-mandated screening and stabilization 
        services

    Under current law, Medicare requires participating 
hospitals that operate an emergency room to provide necessary 
screening and stabilization services to a patient in order to 
determine whether an emergency medical situation exists prior 
to asking about the insurance status of the patient.
    Providers have reported that some Medicare contractors are 
looking at final diagnoses (not presenting symptoms) in 
applying local medical review policies (LMRPs) that match 
particular tests to particular diagnoses--if a test does not 
match a listed diagnosis, payment is denied. Other claims are 
reportedly being denied based on LMRPs that set frequency 
limits for certain tests--if the test's use in the emergency 
room exceeds a frequency limit, payment is denied.
    Under this section, emergency room services provided to 
screen and stabilize a Medicare beneficiary would be evaluated 
as reasonable and necessary on the basis of the information 
available to the treating physician or practitioner at the time 
the services were ordered. This would include the patient's 
presenting symptoms or complaint and not the patient's 
principal diagnosis. The Secretary would not be able to 
consider the frequency with which the item or service was 
provided to the patient before or after the time of admission 
or visit.
    This section applies to items and services furnished after 
January 1, 2002.

Section 602. Emergency Medical Treatment and Labor Act (EMTALA) Task 
        Force

    This section establishes a 23-member task force within HHS. 
In its January 2001 report entitled ``The Emergency Medical 
Treatment and Labor Act: The Enforcement Process,'' the OIG 
recommended that CMS establish an EMTALA technical advisory 
group that includes all EMTALA stakeholders. The members of the 
task force are selected by the CMS Administrator under 
specified requirements. The Task Force would comprise the 
following members: the CMS Administrator; the OIG; four 
regional CMS staff involved in EMTALA investigations; one CMS 
headquarters staff involved in EMTALA policy; two individuals 
who participate in PRO reviews of EMTALA violations; four 
hospital administrators who have EMTALA experience; eight 
practicing physicians with EMTALA experience; one consumer 
representative; and one practicing defense attorney 
specializing in EMTALA cases. The task force would be required 
to (1) elect a member to serve as chairperson; (2) schedule its 
first meeting at the direction of the Secretary and meet at 
least twice a year subsequently; (3) terminate three years 
after the date of its first meeting; and (4) be exempt from the 
Federal Advisory Committee Act. The Task Force would review 
EMTALA regulations; provide advice and recommendations to the 
Secretary; solicit public comments from interested parties; and 
disseminate information on the application of the EMTALA 
regulations.
    This section is effective upon enactment.

Section 603. Notification of providers when EMTALA investigation closed

    This section requires the Secretary to establish a 
procedure to notify hospitals and physicians when an EMTALA 
investigation is closed.
    This section is effective upon enactment.

Section 604. Prior review by peer review organizations in EMTALA cases 
        involving termination of participation

    Under current law, hospitals that are found to be in 
violation of EMTALA requirements may face civil monetary 
penalties and termination of their provider agreements. After a 
state investigation of an EMTALA complaint, the CMS Regional 
Office may ask their local peer review organization (PRO) to 
perform a 5-day review to obtain additional medical expertise. 
This review is discretionary. However, prior to imposing a 
civil monetary penalty, the Secretary is required to request 
that a PRO assess whether the involved beneficiary had an 
emergency condition that had not been stabilized and provide a 
report on its findings. Except in the case where a delay would 
jeopardize the health or safety of individuals, the Secretary 
provides a 60-day period for these requested PRO reviews.
    In its January 2001 report entitled ``The Emergency Medical 
Treatment and Labor Act: The Enforcement Process,'' the OIG 
recommended that CMS ensure that peer review occurs before a 
provider is terminated from the Medicare program for an EMTALA 
violation. This section makes the current discretionary PRO 
review process mandatory. It requires that the Secretary 
request a PRO review in those cases that involve a question of 
medical judgment before making a compliance determination that 
would terminate a hospital's Medicare participation. The 
current period of review for the discretionary review (five 
business days) applies except in the case where a delay would 
jeopardize the health and safety of individuals. The PRO shall 
provide a copy of the report of its findings to the hospital or 
physician, consistent with existing confidentiality 
requirements.
    This section applies to terminations initiated on or after 
enactment.

                 title vii--miscellaneous improvements

Section 701. Methods for determining payment basis for new lab tests

    Under current law, outpatient clinical diagnostic 
laboratory tests are paid on the basis of area-wide fee 
schedules. The law establishes a cap on the payment amounts, 
which is currently set at 74 percent of the median for all fee 
schedules for that test. The cap is set at 100 percent of the 
median for tests performed after January 1, 2001 that the 
Secretary determines are new tests for which no limitation 
amount has previously been established.
    This section requires the Secretary to establish procedures 
(by regulation) for determining the basis for, and amount of, 
payments for new clinical diagnostic laboratory tests. New 
laboratory tests would be defined as those assigned a new HCFA 
Common Procedure Coding System (HCPCS) code on or after January 
1, 2003. The Secretary, as part of this procedure, would be 
required to (1) provide a list (on an Internet site or other 
appropriate venue) of tests for which payments are being 
established in that year; (2) publish a notice of a meeting in 
the Federal Register on the day the list becomes available; (3) 
hold the public meeting no earlier than 30 days after the 
notice to receive public comments and recommendations; (4) take 
into account the comments, recommendations, and accompanying 
data in both proposed and final payment determinations. The 
Secretary would set forth the criteria for making these 
determinations; make public the available data considered in 
making such determinations; and could convene other public 
meetings as necessary.
    Under these regulations, the Secretary shall develop the 
criteria to be applied in making determinations regarding 
whether the payment level for a test should be established 
using gap-filling or cross-walking methodologies, and how these 
methodologies will be used. Among other things, the criteria 
will address when it is appropriate to cross-walk a new test to 
a clinically similar test (and its corresponding payment level) 
for which a fee schedule amount has already been established. 
When cross-walking is not appropriate and gap-filling is used, 
the criteria shall explain how market data may be collected and 
analyzed to arrive at a fair and appropriate payment amount.
    The intent of these provisions is also to improve 
stakeholder input under a transparent and predictable process. 
In the beginning of the process, a code shall be considered to 
be ``substantially revised'' if there is a substantive change 
to the definition of the test or procedure to which the code 
applies (such as the analyte used in the test, the methodology 
employed, the technological features of the test, or the 
measurement used in the test). Using the input CMS receives 
throughout the open, public process, CMS will develop and make 
available to the public final determinations, together with the 
rationale for each such determination, the data on which the 
determination is based, and responses to comments received from 
the public.
    This section is effective upon enactment.

Section 702. One year delay in lock in procedures for Medicare+Choice 
        plans

    Under the provisions in the Balanced Budget Act of 1997, 
Medicare beneficiaries are able to enroll in a Medicare+Choice 
plan, change plans, or return to traditional fee-for-service 
Medicare at any point in the calendar year through 2001. After 
this transition period where beneficiaries are able to make and 
change elections on an ongoing basis, these elections will be 
made and changed only during an annualcoordinated election 
period. There is also a 3-month period after making an election when a 
beneficiary can change their election. Additional election periods 
called ``special election periods'' will apply for newly eligible 
Medicare beneficiaries and beneficiaries who experience certain events.
    December 31, 2001 is the last day of continuous open 
enrollment and disenrollment during which a beneficiary can 
change elections an unlimited number of times. January 1, 2002 
is the first year in which elections become locked in. The 
first six months of 2002 are a transition period when a 
beneficiary can change election only once (other than an 
election during the coordinated annual election period or in 
the case of an event qualifying for a special election). 
Starting January 1, 2003, new elections become effective the 
first day of January following each election period. Each year 
there is a 3-month period when an individual can change her 
election one time. Otherwise, elections cannot be changed until 
the next annual coordinated election period (unless the 
beneficiary qualifies for a special enrollment period). Limited 
exceptions are provided.
    This section delays the implementation of the 
Medicare+Choice lock in provision (which limits beneficiaries' 
ability to enroll and disenroll in Medicare managed care plans) 
from FY2002 to FY2003.
    This section is effective upon enactment.
    The Committee is pleased that the Secretary has published a 
notice of proposed rulemaking to provide Medicare payment for 
clinical psychology internship training programs that would not 
qualify under Medicare's existing provider-operated criteria. 
The Committee notes that Congress has consistently urged the 
Secretary to initiate payment for the training of clinical 
psychologists since 1997. Supportive language has been included 
in conference reports accompanying Medicare legislation in 1999 
(Report 106-479), and in 2000 (Senate Report 106-293).
    The Committee is concerned, however, that a delay in the 
rule may mean that hospitals and institutions will reduce or 
eliminate psychology training programs and urges implementation 
of the rule as soon as possible. The Committee notes that 
clinical psychologists provide valuable and unique services to 
Medicare beneficiaries during their training. Regarding their 
training, clinical psychologists are distinguishable from other 
health care professionals in that they are the only doctoral 
level mental health professionals fully participating in 
Medicare whose clinical training is not currently reimbursed. 
In addition, their clinical internship training is entirely 
controlled, administered, supervised, evaluated, and certified 
by the hospital or institution, separately accredited, and 
distinct from any university training they receive. Clinical 
psychologists are hospital-based in the final stages of their 
training functioning in a parallel status to medical interns 
and residents, not medical nursing or health professional 
students. Where a clinical psychologist has clearly finished 
their educational curriculum and is training solely in the 
hospital setting, it is the intention of Congress that the 
hospital be reimbursed if that training is hospital-based.

         Changes in Existing Law Made by the Bill, as Reported

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

                         SOCIAL SECURITY ACT

           *       *       *       *       *       *       *



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

           *       *       *       *       *       *       *



                      Part A--General Provisions

           *       *       *       *       *       *       *



  exclusion of certain individuals and entities from participation in 
                medicare and state health care programs

  Sec. 1128. (a) * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

  (3)(A) * * *
  (B) [Subject to subparagraph (G), in the case of an exclusion 
under subsection (a), the minimum period of exclusion shall be 
not less than five years, except that, upon the request of a 
State, the Secretary may waive the exclusion under subsection 
(a)(1) in the case of an individual or entity that is the sole 
community physician or sole source of essential specialized 
services in a community.] Subject to subparagraph (G), in the 
case of an exclusion under subsection (a), the minimum period 
of exclusion shall be not less than five years, except that, 
upon the request of the administrator of a Federal health care 
program (as defined in section 1128B(f)) who determines that 
the exclusion would impose a hardship on beneficiaries under 
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. The Secretary's decision whether to 
waive the exclusion shall not be reviewable.

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *



                 functions of peer review organizations

  Sec. 1154. (a) * * *

           *       *       *       *       *       *       *

  (e)(1) * * *

           *       *       *       *       *       *       *

  (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.

           *       *       *       *       *       *       *


                  right to hearing and judicial review

  Sec. 1155. Any beneficiary who is entitled to benefits under 
title XVIII, and, subject to section 1154(a)(3)(D), any 
practitioner or provider, who is dissatisfied with a 
determination made by a contracting peer review organization in 
conducting its review responsibilities under this part, shall 
be entitled to a reconsideration of such determination by the 
reviewing organization. Where the reconsideration is adverse to 
the beneficiary and where the matter in controversy is $200 or 
more, such beneficiary shall be entitled to a hearing by the 
Secretary (to the same extent as beneficiaries under title II 
are entitled to a hearing by the Commissioner of Social 
Security under section 205(b)). For purposes of the preceding 
sentence, subsection (l) of section 205 shall apply, except 
that any reference in such subsection to the Commissioner of 
Social Security or the Social Security Administration shall be 
deemed a reference to the Secretary or the Department of Health 
and Human Services, respectively. Where the amount in 
controversy is $2,000 or more, such beneficiary shall be 
entitled to judicial review of any final decision relating to a 
reconsideration described in this subsection. 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.

           *       *       *       *       *       *       *


        TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *


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


          provisions relating to the administration of part a


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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

  [(d) If the nomination of an agency or organization as 
provided in this section is made by a group or association of 
providers of services, it shall not be binding on members of 
the group or association which notify the Secretary of their 
election to that effect. Any provider may, upon such notice as 
may be specified in the agreement under this section with an 
agency or organization, withdraw its nomination to receive 
payments through such agency or organization. Any provider 
which has withdrawn its nomination, and any provider which has 
not made a nomination, may elect to receive payments from any 
agency or organization which has entered into an agreement with 
the Secretary under this section if the Secretary and such 
agency or organization agree to it.
  [(e)(1) Notwithstanding subsections (a) and (d), the 
Secretary, after taking into consideration any preferences of 
providers of services, may assign or reassign any provider of 
services to any agency or organization which has entered into 
an agreement with him under this section, if he determines, 
after applying the standards, criteria, and procedures 
developed under subsection (f), that such assignment or 
reassignment would result in the more effective and efficient 
administration of this part.
  [(2) Notwithstanding subsections (a) and (d), the Secretary 
may (subject to the provisions of paragraph (4)) designate a 
national or regional agency or organization which has entered 
into an agreement with him under this section to perform 
functions under the agreement with respect to a class of 
providers of services in the Nation or region (as the case may 
be), if he determines, after applying the standards, criteria, 
and procedures developed under subsection (f), that such 
designation would result in more effective and efficient 
administration of this part.
  [(3)(A) Before the Secretary makes an assignment or 
reassignment under paragraph (1) of a provider of services to 
other than the agency or organization nominated by the 
provider, he shall furnish (i) the provider and such agency or 
organization with a full explanation of the reasons for his 
determination as to the efficiency and effectiveness of the 
agency or organization to perform the functions required under 
this part with respect to the provider, and (ii) such agency or 
organization with opportunity for a hearing, and such 
determination shall be subject to judicial review in accordance 
with chapter 7 of title 5, United States Code.
  [(B) Before the Secretary makes a designation under paragraph 
(2) with respect to a class of providers of services, he shall 
furnish (i) such providers and the agencies and organizations 
adversely affected by such designation with a full explanation 
of the reasons for his determination as to the efficiency and 
effectiveness of such agencies and organizations to perform the 
functions required under this part with respect to such 
providers, and (ii) the agencies and organizations adversely 
affected by such designation with opportunity for a hearing, 
and such determination shall be subject to judicial review in 
accordance with chapter 7 of title 5, United States Code.
  [(4) Notwithstanding subsections (a) and (d) and paragraphs 
(1), (2), and (3) of this subsection, the Secretary shall 
designate regional agencies or organizations which have entered 
into an agreement with him under this section to perform 
functions under such agreement with respect to home health 
agencies (as defined in section 1861(o)) in the region, except 
that in assigning such agencies to such designated regional 
agencies or organizations the Secretary shall assign a home 
health agency which is a subdivision of a hospital (and such 
agency and hospital are affiliated or under common control) 
only if, after applying such criteria relating to 
administrative efficiency and effectiveness as he shall 
promulgate, he determines that such assignment would result in 
the more effective and efficient administration of this title. 
By not later than July 1, 1987, the Secretary shall limit the 
number of such regional agencies or organizations to not more 
than ten.
  [(5) Notwithstanding any other provision of this title, the 
Secretary shall designate the agency or organization which has 
entered into an agreement under this section to perform 
functions under such an agreement with respect to each hospice 
program, except that with respect to a hospice program which is 
a subdivision of a provider of services (and such hospice 
program and provider of services are under common control) due 
regard shall be given to the agency or organization which 
performs the functions under this section for the provider of 
services.
  [(f)(1) In order to determine whether the Secretary should 
enter into, renew, or terminate an agreement under this section 
with an agency or organization, whether the Secretary should 
assign or reassign a provider of services to an agency or 
organization, and whether the Secretary should designate an 
agency or organization to perform services with respect to a 
class of providers of services, the Secretary shall develop 
standards, criteria, and procedures to evaluate such agency's 
or organization's (A) overall performance of claims processing 
(including the agency's or organization's success in recovering 
payments made under this title for services for which payment 
has been or could be made under a primary plan (as defined in 
section 1862(b)(2)(A))) and other related functions required to 
be performed by such an agency or organization under an 
agreement entered into under this section, and (B) performance 
of such functions with respect to specific providers of 
services, and the Secretary shall establish standards and 
criteria with respect to the efficient and effective 
administration of this part. No agency or organization shall be 
found under such standards and criteria not to be efficient or 
effective or to be less efficient or effective solely on the 
ground that the agency or organization serves only providers 
located in a single State.
  [(2) The standards and criteria established under paragraph 
(1) shall include--
          [(A) with respect to claims for services furnished 
        under this part by any provider of services other than 
        a hospital--
                  [(i) whether such agency or organization is 
                able to process 75 percent of reconsiderations 
                within 60 days (except in the case of fiscal 
                year 1989, 66 percent of reconsiderations) and 
                90 percent of reconsiderations within 90 days, 
                and
                  [(ii) the extent to which such agency's or 
                organization's determinations are reversed on 
                appeal; and
          [(B) with respect to applications for an exemption 
        from or exception or adjustment to the target amount 
        applicable under section 1886(b) to a hospital that is 
        not a subsection (d) hospital (as defined in section 
        1886(d)(1)(B))--
                  [(i) if such agency or organization receives 
                a completed application, whether such agency or 
                organization is able to process such 
                application not later than 75 days after the 
                application is filed, and
                  [(ii) if such agency or organization receives 
                an incomplete application, whether such agency 
                or organization is able to return the 
                application with instructions on how to 
                complete the application not later than 60 days 
                after the application is filed.
  [(g) An agreement with the Secretary under this section may 
be terminated--
          [(1) by the agency or organization which entered into 
        such agreement at such time and upon such notice to the 
        Secretary, to the public, and to the providers as may 
        be provided in regulations, or
          [(2) by the Secretary at such time and upon such 
        notice to the agency or organization, to the providers 
        which have nominated it for purposes of this section, 
        and to the public, as may be provided in regulations, 
        but only if he finds, after applying the standards, 
        criteria, and procedures developed under subsection (f) 
        and after reasonable notice and opportunity for hearing 
        to the agency or organization, that (A) the agency or 
        organization has failed substantially to carry out the 
        agreement, or (B) the continuation of some or all of 
        the functions provided for in the agreement with the 
        agency or organization is disadvantageous or is 
        inconsistent with the efficient administration of this 
        part.
  [(h) An agreement with an agency or organization under this 
section may require any of its officers or employees certifying 
payments or disbursing funds pursuant to the agreement, or 
otherwise participating in carrying out the agreement, to give 
surety bond to the United States in such amount as the 
Secretary may deem appropriate.
  [(i)(1) No individual designated pursuant to an agreement 
under this section as a certifying officer shall, in the 
absence of gross negligence or intent to defraud the United 
States, be liable with respect to any payments certified by him 
under this section.
  [(2) No disbursing officer shall, in the absence of gross 
negligence or intent to defraud the United States, be liable 
with respect to any payment by him under this section if it was 
based upon a voucher signed by a certifying officer designated 
as provided in paragraph (1) of this subsection.
  [(3) No such agency or organization shall be liable to the 
United States for any payments referred to in paragraph (1) or 
(2).]
  (j) [An agreement with an agency or organization under this 
section] A contract with a medicare administrative contractor 
under section 1874A with respect to the administration of this 
part shall require that, with respect to a claim for home 
health services, extended care services, or post-hospital 
extended care services submitted by a provider to [such agency 
or organization] such medicare administrative contractor that 
is denied, [such agency or organization] such medicare 
administrative contractor--
          (1) furnish the provider and the individual with 
        respect to whom the claim is made with a written 
        explanation of the denial and of the statutory or 
        regulatory basis for the denial; and
          (2) in the case of a request for reconsideration of a 
        denial, promptly notify such individual and the 
        provider of the disposition of such reconsideration.
  (k) [An agreement with an agency or organization under this 
section] A contract with a medicare administrative contractor 
under section 1874A with respect to the administration of this 
part shall require that [such agency or organization] such 
medicare administrative contractor submit an annual report to 
the Secretary describing the steps taken to recover payments 
made for items or services for which payment has been or could 
be made under a primary plan (as defined in section 
1862(b)(2)(A)).
  [(l) No agency or organization may carry out (or receive 
payment for carrying out) any activity pursuant to an agreement 
under this section to the extent that the activity is carried 
out pursuant to a contract under the Medicare Integrity Program 
under section 1893.]

                 FEDERAL HOSPITAL INSURANCE TRUST FUND

  Sec. 1817. (a) * * *

           *       *       *       *       *       *       *

  (k) Health Care Fraud and Abuse Control Account.--
          (1) * * *

           *       *       *       *       *       *       *

          (4) Appropriated amounts to account for Medicare 
        integrity program.--
                  (A) In general.--There are hereby 
                appropriated to the Account from the Trust Fund 
                for each fiscal year such amounts as are 
                necessary to carry out the Medicare Integrity 
                Program under section 1893[, subject to 
                subparagraph (B)] and functions described in 
                subparagraph (C)(ii), subject to subparagraphs 
                (B) and (C) and to be available without further 
                appropriation.
                  (B) Amounts specified.--[The amount 
                appropriated] Subject to subparagraph (C), the 
                amount appropriated under subparagraph (A) for 
                a fiscal year is as follows:
                          (i) * * *

           *       *       *       *       *       *       *

                  (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, facilities, 
                        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, 
                        facilities, and suppliers.

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *


                          PAYMENT OF BENEFITS

  Sec. 1833. (a)  * * *

           *       *       *       *       *       *       *

  (h)(1)  * * *

           *       *       *       *       *       *       *

  (8)(A) The Secretary shall establish by regulation procedures 
for determining the basis for, and amount of, payment under 
this subsection for any clinical diagnostic laboratory test 
with respect to which a new or substantially revised HCPCS code 
is assigned on or after January 1, 2003 (in this paragraph 
referred to as ``new tests'').
  (B) Determinations under subparagraph (A) shall be made only 
after the Secretary--
          (i) makes available to the public (through an 
        Internet site and other appropriate mechanisms) a list 
        that includes any such test for which establishment of 
        a payment amount under this subsection is being 
        considered for a year;
          (ii) on the same day such list is made available, 
        causes to have published in the Federal Register notice 
        of a meeting to receive comments and recommendations 
        (and data on which recommendations are based) from the 
        public on the appropriate basis under this subsection 
        for establishing payment amounts for the tests on such 
        list;
          (iii) not less than 30 days after publication of such 
        notice convenes a meeting, that includes 
        representatives of officials of the Centers for 
        Medicare & Medicaid Services involved in determining 
        payment amounts, to receive such comments and 
        recommendations (and data on which the recommendations 
        are based);
          (iv) taking into account the comments and 
        recommendations (and accompanying data) received at 
        such meeting, develops and makes available to the 
        public (through an Internet site and other appropriate 
        mechanisms) a list of proposed determinations with 
        respect to the appropriate basis for establishing a 
        payment amount under this subsection for each such 
        code, together with an explanation of the reasons for 
        each such determination, the data on which the 
        determinations are based, and a request for public 
        written comments on the proposed determination; and
          (v) taking into account the comments received during 
        the public comment period, develops and makes available 
        to the public (through an Internet site and other 
        appropriate mechanisms) a list of final determinations 
        of the payment amounts for such tests under this 
        subsection, together with the rationale for each such 
        determination, the data on which the determinations are 
        based, and responses to comments and suggestions 
        received from the public.
  (C) Under the procedures established pursuant to subparagraph 
(A), the Secretary shall--
          (i) set forth the criteria for making determinations 
        under subparagraph (A); and
          (ii) make available to the public the data (other 
        than proprietary data) considered in making such 
        determinations.
  (D) The Secretary may convene such further public meetings to 
receive public comments on payment amounts for new tests under 
this subsection as the Secretary deems appropriate.
  (E) For purposes of this paragraph:
          (i) The term ``HCPCS'' refers to the Health Care 
        Procedure Coding System.
          (ii) A code shall be considered to be ``substantially 
        revised'' if there is a substantive change to the 
        definition of the test or procedure to which the code 
        applies (such as a new analyte or a new methodology for 
        measuring an existing analyte-specific test).

           *       *       *       *       *       *       *


            [USE OF CARRIERS FOR ADMINISTRATION OF BENEFITS]


          provisions relating to the administration of part b


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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

  (3)(A) Each contract under this section which provides for 
the disbursement of funds, as described in [subsection 
(a)(1)(B)] section 1874A(a)(3)(B), shall provide that no 
payment shall be issued, mailed, or otherwise transmitted with 
respect to any claim submitted under this title within the 
applicable number of calendar days after the date on which the 
claim is received.

           *       *       *       *       *       *       *

  (4) Neither a [carrier] medicare administrative contractor 
nor the Secretary may impose a fee under this title--
          (A)  * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (iii) an explanation of the assistance offered by 
        [carriers] medicare administrative contractors in 
        obtaining the names of participating physicians and 
        suppliers, and

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

  (p)(1)  * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *


                    Part C--Medicare+Choice Program


                 eligibility, election, and enrollment

  Sec. 1851. (a) * * *

           *       *       *       *       *       *       *

  (e) Coverage Election Periods.--
          (1) * * *
          (2) Open enrollment and disenrollment 
        opportunities.--Subject to paragraph (5)--
                  (A) Continuous open enrollment and 
                disenrollment [through 2001] through 2002.--At 
                any time during 1998, 1999, 2000, [and 2001] 
                2001, and 2002, a Medicare+Choice eligible 
                individual may change the election under 
                subsection (a)(1).
                  (B) Continuous open enrollment and 
                disenrollment for first 6 months [during 2002] 
                during 2003.--
                          (i) In general.--Subject to clause 
                        (ii) and subparagraph (D), at any time 
                        during the first 6 months of [2002] 
                        2003, or, if the individual first 
                        becomes a Medicare+Choice eligible 
                        individual during [2002] 2003, during 
                        the first 6 months during [2002] 2003 
                        in which the individual is a 
                        Medicare+Choice eligible individual, a 
                        Medicare+Choice eligible individual may 
                        change the election under subsection 
                        (a)(1).

           *       *       *       *       *       *       *

                  (C) Continuous open enrollment and 
                disenrollment for first 3 months in subsequent 
                years.--
                          (i) In general.--Subject to clause 
                        (ii) and subparagraph (D), at any time 
                        during the first 3 months of a year 
                        after [2002] 2003, or, if the 
                        individual first becomes a 
                        Medicare+Choice eligible individual 
                        during a year after [2002] 2003, during 
                        the first 3 months of such year in 
                        which the individual is a 
                        Medicare+Choice eligible individual, a 
                        Medicare+
                        Choice eligible individual may change 
                        the election under subsection (a)(1).

           *       *       *       *       *       *       *

                  (D) Continuous open enrollment for 
                institutionalized individuals.--At any time 
                after [2001] 2002 in the case of a 
                Medicare+Choice eligible individual who is 
                institutionalized (as defined by the 
                Secretary), the individual may elect under 
                subsection (a)(1)--
                          (i) to enroll in a Medicare+Choice 
                        plan; or
                          (ii) to change the Medicare+Choice 
                        plan in which the individual is 
                        enrolled.

           *       *       *       *       *       *       *

          (4) Special election periods.--Effective as of 
        January 1, [2002] 2003, an individual may discontinue 
        an election of a Medicare+Choice plan offered by a 
        Medicare+Choice organization other than during an 
        annual, coordinated election period and make a new 
        election under this section if--
                  (A) * * *

           *       *       *       *       *       *       *

        Effective as of January 1, [2002] 2003, an individual 
        who, upon first becoming eligible for benefits under 
        part A at age 65, enrolls in a Medicare+Choice plan 
        under this part, the individual may discontinue the 
        election of such plan, and elect coverage under the 
        original fee-for-service plan, at any time during the 
        12-month period beginning on the effective date of such 
        enrollment.

           *       *       *       *       *       *       *


                  benefits and beneficiary protections

  Sec. 1852. (a) Basic Benefits.--
          (1) * * *
          (2) Satisfaction of requirement.--
                  (A) * * *
  (2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is 
amended by striking ``policy'' and inserting ``determination'' 
both places it appears.

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *


                   Part D--Miscellaneous Provisions

           *       *       *       *       *       *       *



        exclusions from coverage and medicare as secondary payer

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

           *       *       *       *       *       *       *

          (11) where such expenses constitute charges imposed 
        by immediate relatives (other than a child) of such 
        individual or members of his household, unless the 
        items or services are furnished in a rural area (as 
        defined in section 1886(d)(2)(D));

           *       *       *       *       *       *       *

Paragraph (7) shall not apply to Federally qualified health 
center services described in section 1861(aa)(3)(B). In making 
a national coverage determination (as defined in paragraph 
(1)(B) of section 1869(f )) the Secretary shall ensure that the 
public is afforded notice and opportunity to comment prior to 
implementation by the Secretary of the determination; meetings 
of advisory committees established under [section 1114(f )] 
section 222 of the Public Health Service Act with respect to 
the determination are made on the record; in making the 
determination, the Secretary has considered applicable 
information (including clinical experience and medical, 
technical, and scientific evidence) with respect to the subject 
matter of the determination; and in the determination, provide 
a clear statement of the basis for the determination (including 
responses to comments received from the public), the 
assumptions underlying that basis, and make available to the 
public the data (other than proprietary data) considered in 
making the determination.

           *       *       *       *       *       *       *

  (d) For purposes of subsection (a)(1)(A), in the case of any 
item or service that is required to be provided pursuant to 
section 1867 to an individual who is entitled to benefits under 
this title, determinations as to whether the item or service is 
reasonable and necessary shall be made on the basis of the 
information available to the treating physician or practitioner 
(including the patient's presenting symptoms or complaint) at 
the time the item or service was ordered or furnished by the 
physician or practitioner (and not on the patient's principal 
diagnosis). When making such determinations with respect to 
such an item or service, the Secretary shall not consider the 
frequency with which the item or service was provided to the 
patient before or after the time of the admission or visit.

           *       *       *       *       *       *       *

  [(i)] (j)(1) Any advisory committee appointed under 
[subsection (f )] section 222 of the Public Health Service Act 
to advise the Secretary on matters relating to the 
interpretation, application, or implementation of [section 
1862(a)(1)] subsection (a)(1) shall assure the full 
participation of a nonvoting member in the deliberations of the 
advisory committee, and shall provide such nonvoting member 
access to all information and data made available to voting 
members of the advisory committee, other than information 
that--
          (A) is exempt from disclosure pursuant to subsection 
        (a) of section 552 of title 5, United States Code, by 
        reason of subsection (b)(4) of such section (relating 
        to trade secrets); or
          (B) the Secretary determines would present a conflict 
        of interest relating to such nonvoting member.
  (2) If an advisory committee described in paragraph (1) 
organizes into panels of experts according to types of items or 
services considered by the advisory committee, any such panel 
of experts may report any recommendation with respect to such 
items or services directly to the Secretary without the prior 
approval of the advisory committee or an executive committee 
thereof.

           *       *       *       *       *       *       *


      agreements with providers of services; enrollment processes

  Sec. 1866. (a) * * *

           *       *       *       *       *       *       *

  (h)(1)(A) Except as provided in paragraph (2), an institution 
or agency dissatisfied with a determination by the Secretary 
that it is not a provider of services or with a determination 
described in subsection (b)(2) shall be entitled to a hearing 
thereon by the Secretary (after reasonable notice) to the same 
extent as is provided in section 205(b), and to judicial review 
of the Secretary's final decision after such hearing as is 
provided in section 205(g), except that, in so applying such 
sections and in applying section 205(l) thereto, any reference 
therein to the Commissioner of Social Security or the Social 
Security Administration shall be considered a reference to the 
Secretary or the Department of Health and Human Services, 
respectively.
  (B) An institution or agency described in subparagraph (A) 
that has filed for a hearing under subparagraph (A) shall have 
expedited access to judicial review under this subparagraph in 
the same manner as providers of services, suppliers, and 
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.

           *       *       *       *       *       *       *

  (j) Hearing Rights in Cases of Denial or Non-Renewal.--A 
provider of services, physician, practitioner, facility, or 
supplier whose application to enroll (or, if applicable, to 
renew enrollment) under this title is denied may have a hearing 
and judicial review of such denial under the procedures that 
apply under subsection (h)(1)(A) to a provider of services that 
is dissatisfied with a determination by the Secretary.

examination and treatment for emergency medical conditions and women in 
                                 labor

  Sec. 1867. (a) * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (3) Consultation with peer review organizations.--In 
        considering allegations of violations of the 
        requirements of this section in imposing sanctions 
        under paragraph (1) or in terminating a hospital's 
        participation under this title, the Secretary shall 
        request the appropriate utilization and quality control 
        peer review organization (with a contract under part B 
        of title XI) to assess whether the individual involved 
        had an emergency medical condition which had not been 
        stabilized, and provide a report on its findings. 
        Except in the case in which a delay would jeopardize 
        the health or safety of individuals, the Secretary 
        shall request such a review before effecting a sanction 
        under paragraph (1) and shall provide a period of at 
        least 60 days for such review. Except in the case in 
        which a delay would jeopardize the health or safety of 
        individuals, the Secretary shall also request such a 
        review before making a compliance determination as part 
        of the process of terminating a hospital's 
        participation under this title for violations related 
        to the appropriateness of a medical screening 
        examination, stabilizing treatment, or an appropriate 
        transfer as required by this section, and shall provide 
        a period of 5 business days for such review. The 
        organization shall provide of copy of the report on its 
        findings to the hospital or physician consistent with 
        confidentiality requirements imposed on the 
        organization under such part B.
          (4) Notice upon closing an investigation.--The 
        Secretary shall establish a procedure to notify 
        hospitals and physicians when an investigation under 
        this section is closed.

           *       *       *       *       *       *       *


   The text of existing law for section 1869 is shown to reflect the 
   amendments made to that section by Public Law 106-554, effective 
                            October 1, 2002.

                        determinations; appeals

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

                  (F) Expedited proceedings.--
                          (i) * * *
                          [(ii) Expedited hearing.--In a 
                        hearing by the Secretary under this 
                        section, in which the moving party 
                        alleges that no material issues of fact 
                        are in dispute, the Secretary shall 
                        make an expedited determination as to 
                        whether any such facts are in dispute 
                        and, if not, shall render a decision 
                        expeditiously.]
                          (ii) No application during transition 
                        period.--Clause (i) shall not apply 
                        during the transition period described 
                        in section 1154(e)(6)(C).

           *       *       *       *       *       *       *

          (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) 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 the date of the 
                                determination described in such 
                                subparagraph; or
                                  (II) clause (i)(II), within 
                                60 days of the end of the 
                                period provided under 
                                subparagraph (B) for the 
                                determination.
                          (iii) Venue.--Such action shall be 
                        brought in the district court of the 
                        United States for the judicial district 
                        in which the appellant is located (or, 
                        in the case of an action brought 
                        jointly by more than one applicant, the 
                        judicial district in which the greatest 
                        number of applicants are located) or in 
                        the district court for the District of 
                        Columbia.
                          (iv) Interest on 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 and 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.
          (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 such individual.
                  (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,
                          (iv) such other evidence as such 
                        judge or Board, as the case may be, 
                        determines is required to make a 
                        determination on the request.
  (c) Conduct of Reconsiderations by Independent Contractors.--
          (1) * * *
          (2) Qualified independent contractor.--For purposes 
        of this subsection, the term ``qualified independent 
        contractor'' means an entity or organization that 
        (except in the case of a utilization and quality 
        control peer review organization, as defined in section 
        1152) is independent of any organization under contract 
        with the Secretary that makes initial determinations 
        under subsection (a)(1), and that meets the 
        requirements established by the Secretary consistent 
        with paragraph (3)[.] 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.
          (3) Requirements.--Any qualified independent 
        contractor entering into a contract with the Secretary 
        under this subsection shall meet all of the following 
        requirements:
                  (A) In general.--The qualified independent 
                contractor shall perform such duties and 
                functions and assume such responsibilities as 
                may be required by the Secretary to carry out 
                the provisions of this subsection[, and shall 
                have sufficient training and expertise in 
                medical science and legal matters to make 
                reconsiderations under this subsection].
                  (B) Reconsiderations.--
                          (i) In general.--The qualified 
                        independent contractor shall review 
                        initial determinations. Where an 
                        initial determination is made with 
                        respect to whether an item or service 
                        is reasonable and necessary for the 
                        diagnosis or treatment of illness or 
                        injury (under section 1862(a)(1)(A)), 
                        such review shall include consideration 
                        of the facts and circumstances of the 
                        initial determination by a panel of 
                        physicians or other appropriate health 
                        care professionals and any decisions 
                        with respect to the reconsideration 
                        shall be based on applicable 
                        information, including clinical 
                        experience (including the medical 
                        records of the individual involved) and 
                        medical, technical, and scientific 
                        evidence.

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

                  (J) Hearings by the secretary.--The qualified 
                independent contractor shall (i) prepare [such 
                information as is required for an appeal] the 
                record for the appeal of a decision of the 
                contractor with respect to a reconsideration to 
                the Secretary for a hearing, including as 
                necessary, explanations of issues involved in 
                the decision and relevant policies, and (ii) 
                participate in such hearings as required by the 
                Secretary.

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (4) Notice.--Notice of the decision of an 
        administrative law judge shall be in writing in a 
        manner calculated to be understood by the 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.

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (6) Process for exceptions to national coverage 
        determinations under special medical circumstances.--
                  (A) Establishment of process.--The Secretary 
                shall establish a process whereby an individual 
                described in paragraph (5) may submit to the 
                Secretary a request for a determination that a 
                national coverage determination, which has the 
                effect of denying coverage under this title for 
                items and services for the treatment of a 
                serious or life-threatening condition of the 
                individual, should not apply to the individual 
                due to the special medical circumstances of the 
                individual that involve medical factors that 
                were not considered during the national 
                coverage determination decisionmaking procedure 
                and make the application of the national 
                coverage determination inappropriate for the 
                individual's particular case. Such request 
                shall be accompanied by supporting 
                documentation and may be made before the 
                receipt of the items or services involved.
                  (B) Use of panel.--Under such process, the 
                Secretary shall provide that--
                          (i) the initial decision on the 
                        request is made by a panel described in 
                        subparagraph (C); or
                          (ii) the individual is provided the 
                        opportunity to appeal the initial 
                        decision on the request to such a 
                        panel.
                  (C) Panel.--A panel described in this 
                subparagraph is a panel of physicians or other 
                appropriate health care professionals in which 
                each member of the panel meets the requirements 
                of paragraphs (2) and (4) of subsection (g) 
                (relating to independence and licensure and 
                expertise).
                  (D) Appeal.--A decision on a request under 
                this paragraph shall be subject to further 
                review (after any appeal described in 
                subparagraph (B)(ii)) by the Departmental 
                Appeals Board and to judicial review, in the 
                same manner as provided under subsection (b) 
                with respect to review of a final decision of 
                the Secretary.
                  (E) Expedition.--The process under this 
                paragraph shall provide for reasonable 
                expedition for making decisions on requests 
                when the need for expedition is certified by a 
                physician.
                  (F) Effect of decision.--If a request under 
                this paragraph is approved for an individual 
                with respect to a treatment, the national 
                coverage determination shall not be applied by 
                any medicare administrative contractor with 
                respect to the treatment for that individual.
                  (G) Notice.--The Secretary shall provide, in 
                an appropriate annual publication available to 
                the public, a list of national coverage 
                determinations and information on how to get 
                more information with respect to such 
                determinations, made in the previous year.
          [(6)] (7) Publication on the internet of decisions of 
        hearings of the secretary.--Each decision of a hearing 
        by the Secretary with respect to a national coverage 
        determination shall be made public, and the Secretary 
        shall publish each decision on the Medicare Internet 
        site of the Department of Health and Human Services. 
        The Secretary shall remove from such decision any 
        information that would identify any individual, 
        provider of services, or supplier.
          [(7)] (8) Annual report on national coverage 
        determinations.--
                  (A) * * *

           *       *       *       *       *       *       *

          [(8)] (9) Construction.--Nothing in this subsection 
        shall be construed as permitting administrative or 
        judicial review pursuant to this section insofar as 
        such review is explicitly prohibited or restricted 
        under another provision of law.
  (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) typically treats the condition, makes the 
                diagnosis, or provides the type of treatment 
                under review.
          (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.
  (h) Prior Determination Process for Certain Items and 
Services.--
          (1) Establishment of process.--
                  (A) In general.--With respect to a medicare 
                administrative contractor that has a contract 
                under section 1874A that provides for making 
                payments under this title with respect to items 
                and services, the Secretary shall establish a 
                prior determination process that meets the 
                requirements of this subsection and that shall 
                be applied by such contractor in the case of 
                eligible requesters.
                  (B) Eligible requester.--For purposes of this 
                subsection, the term ``eligible requester'' 
                means--
                          (i) a physician, but only in the case 
                        of items and services that may be 
                        furnished (or ordered to be furnished) 
                        by the physician; and
                          (ii) an individual entitled to 
                        benefits under this title, but only 
                        with respect to an item or service for 
                        which the individual receives an 
                        advance beneficiary notice from the 
                        provider or supplier of the item or 
                        service under section 1879 that payment 
                        may not be made (or may no longer be 
                        made) for the item or service under 
                        this title.
          (2) Establishing eligible categories.--The Secretary 
        shall establish by regulation limits on the categories 
        of items and services for which a prior determination 
        of coverage may be requested under this subsection. In 
        establishing such limits, the Secretary may consider 
        the dollar amount involved with respect to the item or 
        service, administrative costs and burdens, and other 
        relevant factors.
          (3) Request for prior determination.--
                  (A) In general.--Subject to paragraph (2), 
                under the process established under this 
                subsection any eligible requester may submit to 
                the contractor a request for a determination, 
                before the furnishing (or ordering the 
                furnishing) of the item or service involved as 
                to whether the item or service is covered under 
                this title consistent with the applicable 
                requirements of section 1862(a) (relating to 
                medical necessity, etc.).
                  (B) Accompanying documentation.--The request 
                shall be accompanied by a description of the 
                item or service, its billing code (as 
                appropriate), supporting documentation relating 
                to the medical necessity for the item or 
                service, and any other appropriate 
                documentation that the Secretary may require. 
                In the case of a request submitted by an 
                eligible requester that is described in 
                paragraph (1)(B)(ii), the request shall also be 
                accompanied by a copy of the advance 
                beneficiary notice involved.
          (4) Response to request.--
                  (A) In general.--Under such process, the 
                contractor shall provide the eligible requester 
                with written notice of a determination as to 
                whether--
                          (i) the item or service is so 
                        covered;
                          (ii) the item or service is not so 
                        covered; or
                          (iii) the contractor lacks sufficient 
                        information to make a coverage 
                        determination.
                In the case of a request in which an eligible 
                requester is not the beneficiary described in 
                paragraph (1)(B)(i), the process shall provide 
                that the beneficiary involved shall be informed 
                of any determination described in clause (ii) 
                (relating to a determination of non-coverage).
                  (B) Deadline to respond.--Such notice shall 
                be provided within the same time period as the 
                time period applicable to the contractor 
                providing notice of initial determinations on a 
                claim for benefits under subsection (a)(2)(A).
          (5) Effect of determinations.--
                  (A) Binding nature of positive 
                determination.--If the contractor makes the 
                determination described in paragraph (4)(A)(i), 
                such determination shall be binding on the 
                contractor in the absence of fraud or evidence 
                of misrepresentation of facts presented to the 
                contractor.
                  (B) Right to redetermination in case of a 
                denial.--
                          (i) In general.--If the contractor 
                        makes the determination described in 
                        paragraph (4)(A)(ii)--
                                  (I) the eligible requester 
                                has the right to a 
                                redetermination by the 
                                contractor on the determination 
                                that the item or service is not 
                                so covered; and
                                  (II) the contractor shall 
                                include in notice under 
                                paragraph (4)(A) a brief 
                                explanation of the basis for 
                                the determination and the right 
                                to such a redetermination.
                          (ii) Deadline for redeterminations.--
                        The contractor shall complete and 
                        provide notice of such redetermination 
                        within the same time period as the time 
                        period applicable to the contractor 
                        providing notice of redeterminations 
                        relating to a claim for benefits under 
                        subsection (a)(3)(C)(ii).
                  (C) Description of additional information 
                required.--If the contractor makes the 
                determination described in paragraph 
                (4)(A)(iii), the contractor shall include in the 
                notice under paragraph (4)(A) a description of 
                the additional information required to make the 
                coverage determination.
          (6) Limitation on further review.--
                  (A) In general.--Contractor determinations 
                described in paragraph (4)(A)(ii) or 
                (4)(A)(iii) (and redeterminations made under 
                paragraph (5)(B)), relating to pre-service 
                claims are not subject to further 
                administrative appeal or judicial review under 
                this section or otherwise.
                  (B) Construction.--Nothing in this subsection 
                shall be construed as affecting the right of an 
                individual, after receiving items or services 
                for which the contractor has made a 
                determination described in paragraph 
                (4)(A)(ii), from submitting a claim for such 
                item or service or from obtaining 
                administrative or judicial review respecting 
                such claim under the other applicable 
                provisions of this section.

   overpayment on behalf of individuals and settlement of claims for 
               benefits on behalf of deceased individuals

  Sec. 1870. (a) * * *

           *       *       *       *       *       *       *

  (h) Notwithstanding subsection (f) or any other provision of 
law, the Secretary shall permit a provider of services, 
physician, practitioner, facility, or supplier to appeal any 
determination of the Secretary under this title relating to 
services rendered under this title to an individual who 
subsequently dies, if there is no other party available to 
appeal such determination, so long as the estate of the 
individual, and the individual's family and heirs, are not 
liable for paying for the item or service and are not liable 
for any increased coinsurance or deductible amounts resulting 
from any decision increasing the reimbursement amount for the 
provider of services, physician, practitioner, facility, or 
supplier.

                              REGULATIONS

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

           *       *       *       *       *       *       *

  (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 as the Secretary 
specifies in such notice.
  (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.

           *       *       *       *       *       *       *

  (d)(1) Subject to paragraph (2), the Secretary shall issue 
final (including interim final) regulations to carry out this 
title only on one business day of every month.
  (2) The Secretary may issue a 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.
  (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.
  (B) A compliance action may be made against a provider of 
services, physician, practitioner, facility, or supplier with 
respect to noncompliance with a substantive change referred to 
in subparagraph (A) 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 referred to in subparagraph (A) may not take effect 
before the end of the 30-day period that begins on the date 
that the Secretary has issued or published, as the case may be, 
the substantive change.
  (ii) The Secretary may provide for such a substantive change 
to take effect on a date that precedes the end of the 30-day 
period under clause (i) if the Secretary finds that waiver of 
such 30-day period is necessary to comply with statutory 
requirements or that the application of such 30-day period is 
contrary to the public interest. If the Secretary provides for 
an earlier effective date pursuant to this clause, the 
Secretary shall include in the issuance or publication of the 
substantive change a finding described in the first sentence, 
and a brief statement of the reasons for such finding.
  (2) If--
          (A) a provider of services, physician, practitioner, 
        facility, or supplier follows written guidance (which 
        may have been transmitted electronically) provided--
                  (i) by the Secretary; or
                  (ii) by a medicare contractor (as defined in 
                section 1889(f) and whether in the form of a 
                written response to a written inquiry under 
                section 1874A(g)(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 an item or service or the submission of a 
        claim for benefits for such an item or service;
          (B) the Secretary determines that--
                  (i) the provider of services, physician, 
                practitioner, facility, or supplier has 
                accurately presented the circumstances relating 
                to such item, service, 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, facility, or supplier 
                against the program under this title; and
          (C) the guidance was in error;
the provider of services, physician, practitioner, facility, or 
supplier shall not be subject to any penalty or interest 
(relating to an overpayment, if any) under this title (or the 
provisions of title XI insofar as they relate to this title) 
relating to the provision of such item or service or such claim 
if the provider of services, physician, practitioner, facility, 
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. 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).
  (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, facilities, and 
        suppliers, and from the individual under section 404 of 
        the Medicare Regulatory, Appeals, Contracting, and 
        Education Reform Act of 2001 with respect to such areas 
        of inconsistency and conflict; and
          (B) information from medicare contractors that tracks 
        the nature of written and telephone inquiries.
  (3) A report under paragraph (1) shall include a description 
of efforts by the Secretary to reduce such inconsistency or 
conflicts, and recommendations for legislation or 
administrative action that the Secretary determines appropriate 
to further reduce such inconsistency or conflicts.
  (g)(1)(A) The Secretary shall establish by regulation 
procedures under which there are deadlines for actions on 
applications for enrollment (and, if applicable, renewal of 
enrollment).
  (B) The Secretary shall monitor the performance of medicare 
administrative contractors in meeting the deadlines established 
under subparagraph (A).
  (2) The Secretary shall consult with providers of services, 
physicians, practitioners, facilities, and suppliers before 
making changes in the provider enrollment forms required of 
such providers, physicians, practitioners, facilities, and 
suppliers to be eligible to submit claims for which payment may 
be made under this title.

           *       *       *       *       *       *       *



           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 or activity 
        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 or activity in relation 
                to an individual entitled to benefits under 
                part A or enrolled under part B, or both, a 
                specific provider of services, physician, 
                practitioner, 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 or activity 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 five 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 
                shall provide incentives for medicare 
                administrative contractors to provide quality 
                service and to promote efficiency.
          (2) Compliance with requirements.--No contract under 
        this section shall be entered into with any medicare 
        administrative contractor unless the Secretary finds 
        that such medicare administrative contractor will 
        perform its obligations under the contract efficiently 
        and effectively and will meet such requirements as to 
        financial responsibility, legal authority, 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) Limitation on civil liability.--
                  (A) In general.--No medicare administrative 
                contractor having a contract with the Secretary 
                under this section, and no person employed by, 
                or having a fiduciary relationship with, any 
                such medicare administrative contractor or who 
                furnishes professional services to such 
                medicare administrative contractor, shall by 
                reason of the performance of any duty, 
                function, or activity required or authorized 
                pursuant to this section or to a valid contract 
                entered into under this section, be held 
                civilly liable under any law of the United 
                States or of any State (or political 
                subdivision thereof) provided due care was 
                exercised in the performance of such duty, 
                function, or activity.
                  (B) Reimbursement of certain expenses.--The 
                Secretary shall make payment to a medicare 
                administrative contractor under contract with 
                the Secretary pursuant to this section, or to 
                any member or employee thereof, or to any 
                person who furnishes legal counsel or services 
                to such medicare administrative contractor, in 
                an amount equal to the reasonable amount of the 
                expenses incurred, as determined by the 
                Secretary, in connection with the defense of 
                any civil suit, action, or proceeding brought 
                against such medicare administrative contractor 
                or person related to the performance of any 
                duty, function, or activity under such 
                contract, provided due care was exercised in 
                the performance of such duty, function, or 
                activity.
  (e) Requirements for Information Security.--
          (1) Development of information security program.--A 
        medicare administrative contractor that performs the 
        functions referred to in subparagraphs (A) and (B) of 
        subsection (a)(4) (relating to determining and making 
        payments) shall implement a contractor-wide information 
        security program to provide information security for 
        the operation and assets of the contractor with respect 
        to such functions under this title. An information 
        security program under this paragraph shall meet the 
        requirements for information security programs imposed 
        on Federal agencies under section 3534(b)(2) of title 
        44, United States Code (other than requirements under 
        subparagraphs (B)(ii), (F)(iii), and (F)(iv) of such 
        section).
          (2) Independent audits.--
                  (A) Performance of annual evaluations.--Each 
                year a medicare administrative contractor that 
                performs the functions referred to in 
                subparagraphs (A) and (B) of subsection (a)(4) 
                (relating to determining and making payments) 
                shall undergo an evaluation of the information 
                security of the contractor with respect to such 
                functions under this title. The evaluation 
                shall--
                          (i) be performed by an entity that 
                        meets such requirements for 
                        independence as the Inspector General 
                        of the Department of Health and Human 
                        Services may establish; and
                          (ii) test the effectiveness of 
                        information security control techniques 
                        for an appropriate subset of the 
                        contractor's information systems (as 
                        defined in section 3502(8) of title 44, 
                        United States Code) relating to such 
                        functions under this title and an 
                        assessment of compliance with the 
                        requirements of this subsection and 
                        related information security policies, 
                        procedures, standards and guidelines.
                  (B) Deadline for initial evaluation.--
                          (i) New contractors.--In the case of 
                        a medicare administrative contractor 
                        covered by this subsection that has not 
                        previously performed the functions 
                        referred to in subparagraphs (A) and 
                        (B) of subsection (a)(4) (relating to 
                        determining and making payments) as a 
                        fiscal intermediary or carrier under 
                        section 1816 or 1842, the first 
                        independent evaluation conducted 
                        pursuant subparagraph (A) shall be 
                        completed prior to commencing such 
                        functions.
                          (ii) Other contractors.--In the case 
                        of a medicare administrative contractor 
                        covered by this subsection that is not 
                        described in clause (i), the first 
                        independent evaluation conducted 
                        pursuant subparagraph (A) shall be 
                        completed within 1 year after the date 
                        the contractor commences functions 
                        referred to in clause (i) under this 
                        section.
                  (C) Reports on evaluations.--
                          (i) To the inspector general.--The 
                        results of independent evaluations 
                        under subparagraph (A) shall be 
                        submitted promptly to the Inspector 
                        General of the Department of Health and 
                        Human Services.
                          (ii) To congress.--The Inspector 
                        General of Department of Health and 
                        Human Services shall submit to Congress 
                        annual reports on the results of such 
                        evaluations.
  (f) Incentives To Improve Contractor Performance in Provider 
Education and Outreach.--In order to give medicare 
administrative contractors an incentive to implement effective 
education and outreach programs for providers of services, 
physicians, practitioners, facilities, and suppliers, the 
Secretary shall implement, a methodology to measure the 
specific claims payment error rates of such contractors in the 
processing or reviewing of medicare claims.
  (g) Communications With Beneficiaries, Providers of Services, 
Physicians, Practitioners, Facilities, and Suppliers.--
          (1) Communication strategy.--The Secretary shall 
        develop a strategy for communications with 
        beneficiaries and with providers of services, 
        physicians, practitioners, facilities, and suppliers 
        under this title.
          (2) Response to written inquiries.--Each medicare 
        administrative contractor shall, for those providers of 
        services, physicians, practitioners, facilities, and 
        suppliers which submit claims to the contractor for 
        claims processing and for those beneficiaries with 
        respect to which claims are submitted for claims 
        processing, provide general written responses (which 
        may be through electronic transmission) in a clear, 
        concise, and accurate manner to inquiries by 
        beneficiaries, providers of services, physicians, 
        practitioners, facilities, 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.--Each medicare 
        administrative contractor shall, for those providers of 
        services, physicians, practitioners, facilities, and 
        suppliers which submit claims to the contractor for 
        claims processing and for those beneficiaries with 
        respect to which claims are submitted for claims 
        processing, maintain a toll-free telephone number at 
        which beneficiaries, providers, physicians, 
        practitioners, facilities, and suppliers may obtain 
        information regarding billing, coding, claims, 
        coverage, and other appropriate information under this 
        title.
          (4) Monitoring of contractor responses.--
                  (A) In general.--Each medicare administrative 
                contractor shall, consistent with standards 
                developed by the Secretary under subparagraph 
                (B)--
                          (i) maintain a system for identifying 
                        who provides the information referred 
                        to in paragraphs (2) and (3); and
                          (ii) monitor the accuracy, 
                        consistency, and timeliness of the 
                        information so provided.
                  (B) Development of standards.--
                          (i) In general.--The Secretary shall 
                        establish (and publish in the Federal 
                        Register) standards to monitor the 
                        accuracy, consistency, and timeliness 
                        of the information provided in response 
                        to written and telephone inquiries 
                        under this subsection. Such standards 
                        shall be consistent with the 
                        performance requirements established 
                        under subsection (b)(3).
                          (ii) Evaluation.--In conducting 
                        evaluations of individual medicare 
                        administrative contractors, the 
                        Secretary shall take into account the 
                        results of the monitoring conducted 
                        under subparagraph (A) taking into 
                        account as performance requirements the 
                        standards established under clause (i).
                  (C) Direct monitoring.--Nothing in this 
                paragraph shall be construed as preventing the 
                Secretary from directly monitoring the 
                accuracy, consistency, and timeliness of the 
                information so provided.
  (h) Conduct of Prepayment Review.--
          (1) Standardization of random prepayment review.--If 
        a medicare administrative contractor conducts a random 
        prepayment review, the contractor may only conduct such 
        review 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, facility, or supplier based on the 
        initial identification by that provider of services, 
        physician, practitioner, facility, 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, facility, 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.
  (i) 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, facility, or 
                supplier, of an overpayment under this title 
                meets the standards developed under 
                subparagraph (B), subject to subparagraph (C), 
                and the provider, physician, practitioner, 
                facility, 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, facility, or supplier for the 
                offset or repayment (at the election of the 
                provider, physician, practitioner, facility, 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, 
                        facility, 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, facility, 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, facility, 
                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, facility, or supplier.
                  (C) Exceptions.--Subparagraph (A) shall not 
                apply if--
                          (i) the Secretary has reason to 
                        suspect that the provider of services, 
                        physician, practitioner, facility, 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, facility, 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, facility, or 
                supplier that is determined to have received an 
                overpayment under this title and that seeks a 
                reconsideration by a qualified independent 
                contractor on such determination under section 
                1869(b)(1), the Secretary may not take any 
                action (or authorize any other person, 
                including any medicare contractor, as defined 
                in subparagraph (C)) to recoup the overpayment 
                until the date the decision on the 
                reconsideration has been rendered. If the 
                provisions of section 1869(b)(1) (providing for 
                such a reconsideration by a qualified 
                independent contractor) are not in effect, in 
                applying the previous sentence any reference to 
                such a reconsideration shall be treated as a 
                reference to a redetermination by the fiscal 
                intermediary or carrier involved.
                  (B) 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, facility, 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, facility, 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(f).
          (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, facility, or supplier under this 
                title, the contractor shall provide the 
                provider of services, physician, practitioner, 
                facility, 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, facility, or supplier 
                under this title, the contractor shall--
                          (i) give the provider of services, 
                        physician, practitioner, facility, 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, facility, or supplier and 
                        permits the development of an 
                        appropriate corrective action plan;
                          (ii) inform the provider of services, 
                        physician, practitioner, facility, or 
                        supplier of the appeal rights under 
                        this title as well as consent 
                        settlement options (which are at the 
                        discretion of the Secretary);
                          (iii) give the provider of services, 
                        physician, practitioner, facility, or 
                        supplier an opportunity to provide 
                        additional information to the 
                        contractor; and
                          (iv) take into account information 
                        provided, on a timely basis, by the 
                        provider of services, physician, 
                        practitioner, facility, or supplier 
                        under clause (iii).
                  (C) Exception.--Subparagraphs (A) and (B) 
                shall not apply if the provision of notice or 
                findings would compromise pending law 
                enforcement activities, whether civil or 
                criminal, or reveal findings of law 
                enforcement-related audits.
          (4) Notice of over-utilization of codes.--The 
        Secretary shall establish, in consultation with 
        organizations representing the classes of providers of 
        services, physicians, practitioners, facilities, and 
        suppliers, a process under which the Secretary provides 
        for notice to classes of providers of services, 
        physicians, practitioners, facilities, 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, facilities, 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 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, facility, or supplier 
                a consent settlement, the Secretary shall--
                          (i) communicate to the provider of 
                        services, physician, practitioner, 
                        facility, or supplier in a non-
                        threatening manner--
                                  (I) that, based on a review 
                                of the medical records 
                                requested by the Secretary, a 
                                preliminary evaluation of those 
                                records indicates that there 
                                would be an overpayment;
                                  (II) the nature of the 
                                problems identified in such 
                                evaluation; and
                                  (III) the steps that the 
                                provider of services, 
                                physician, practitioner, 
                                facility, or supplier should 
                                take to address the problems; 
                                and
                          (ii) provide for a 45-day period 
                        during which the provider of services, 
                        physician, practitioner, facility, 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, facility, 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, 
                        facility, 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, 
                        facility, 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, facility, 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, 
                facility, or supplier agrees not to appeal the 
                claims involved.
          (7) Limitation on use of extrapolation.--A medicare 
        contractor may not use extrapolation to determine 
        overpayment amounts to be recovered by recoupment, 
        offset, or otherwise unless--
                  (A) there is a sustained or high level of 
                payment error (as defined by the Secretary by 
                regulation); or
                  (B) documented educational intervention has 
                failed to correct the payment error (as 
                determined by the Secretary).

           *       *       *       *       *       *       *



              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 (f), 
including under section 1893) in order to maximize the 
effectiveness of Federal education efforts for providers of 
services, physicians, practitioners, facilities, and suppliers.
  (b) Internet Sites; FAQs.--The Secretary, and each medicare 
contractor insofar as it provides services (including claims 
processing) for providers of services, physicians, 
practitioners, facilities, or suppliers, shall maintain an 
Internet site which--
          (1) provides answers in an easily accessible format 
        to frequently asked questions, and
          (2) includes all materials published by the Secretary 
        or the contractor, respectively,
relating to such providers of services, physicians, 
practitioners, facilities, and suppliers under the programs 
under this title and title XI insofar as it relates to such 
programs.
  (c) Tailoring Education and Training Activities for Small 
Providers or Suppliers.--
          (1) In general.--Insofar as a medicare contractor 
        conducts education and training activities, it shall 
        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, facility, or 
                supplier with fewer than 10 full-time-
                equivalent employees.
  (d) Encouragement of Participation in Education Program 
Activities.--A medicare contractor may not use a record of 
attendance at (or failure to attend) educational activities or 
other information gathered during an educational program 
conducted under this section or otherwise by the Secretary to 
select or track providers of services, physicians, 
practitioners, facilities, or suppliers for the purpose of 
conducting any type of audit or prepayment review.
  (e) Construction.--Nothing in this section or section 1893(g) 
shall be construed as providing for disclosure by a medicare 
contractor of information that would compromise pending law 
enforcement activities or reveal findings of law enforcement-
related audits.
  (f) 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, 
facility, 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, facility, or 
supplier.

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                              ----------                              


 MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT AND PROTECTION ACT 
                               OF 2000

           *       *       *       *       *       *       *


             TITLE V--PROVISIONS RELATING TO PARTS A AND B

           *       *       *       *       *       *       *


      Subtitle C--Changes in Medicare Coverage and Appeals Process

SEC. 521. REVISIONS TO MEDICARE APPEALS PROCESS.

  (a) * * *

           *       *       *       *       *       *       *

  [(c) Conforming Amendment.--Section 1154(e) (42 U.S.C. 1320c-
3(e)) is amended by striking paragraphs (2), (3), and (4).]
  (d) Effective Date.--The amendments made by this section 
shall apply with respect to initial determinations made on or 
after October 1, [2002] 2003.

SEC. 522. REVISIONS TO MEDICARE COVERAGE PROCESS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Effective Date.--The amendments made by this section 
shall apply with respect to--
          (1) * * *

           *       *       *       *       *       *       *

on or after October 1, [2001] 2002.

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