[House Report 107-288]
[From the U.S. Government Publishing Office]
107th Congress Rept. 107-288
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
MEDICARE REGULATORY AND CONTRACTING REFORM ACT OF 2001
_______
November 13, 2001.--Ordered to be printed
_______
Mr. Thomas, from the Committee on Ways and Means, submitted the
following
R E P O R T
[To accompany H.R. 2768]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 2768) to amend title XVIII of the Social Security
Act to provide regulatory relief and contracting flexibility
under the Medicare Program, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
CONTENTS
Page
I. Introduction.....................................................22
A. Purpose and Summary................................... 22
B. Background and Need for Legislation................... 22
C. Legislative History................................... 23
II. Explanation of Provisions........................................24
III.Votes of the Subcommittee........................................46
IV. Budget Effects of the Bill.......................................46
A. Committee Estimate of Budget Effects.................. 46
B. Statement Regarding New Budget Authority and Tax
Expenditures......................................... 46
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 46
V. Other Matters To Be Discussed Under the Rules of the House.......52
A. Committee Oversight Findings and Recommendations...... 52
B. Summary of General Performance Goals and Objectives... 53
C. Constitutional Authority Statement.................... 53
VI. Changes in Existing Law Made by the Bill, as Reported............53
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare Regulatory
and Contracting Reform Act of 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) 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. Issuance of regulations.
Sec. 3. Compliance with changes in regulations and policies.
Sec. 4. Increased flexibility in medicare administration.
Sec. 5. Provider education and technical assistance.
Sec. 6. Small provider technical assistance demonstration program.
Sec. 7. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman.
Sec. 8. Provider appeals.
Sec. 9. Recovery of overpayments and prepayment review; enrollment of
providers.
Sec. 10. Beneficiary outreach demonstration program.
Sec. 11. Policy development regarding evaluation and management (E & M)
documentation guidelines.
Sec. 12. Improvement in oversight of technology and coverage.
Sec. 13. Miscellaneous provisions.
(d) Construction.--Nothing in this Act shall be construed--
(1) 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); or
(2) to prevent or impede the Department of Health and Human
Services in any way from its ongoing efforts to eliminate
waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative contracting
set forth in this Act does not constitute consolidation of the Federal
Hospital Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund or reflect any position on that issue.
(e) Use of Term Supplier in Medicare.--Section 1861 (42 U.S.C. 1395x)
is amended by inserting after subsection (c) the following new
subsection:
``Supplier
``(d) The term `supplier' means, unless the context otherwise
requires, a physician or other practitioner, a facility, or other
entity (other than a provider of services) that furnishes items or
services under this title.''.
SEC. 2. 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) The Secretary shall issue proposed or final (including
interim final) regulations to carry out this title only on one business
day of every month unless publication on another date is necessary to
comply with requirements under law.
``(2) The Secretary shall coordinate issuance of new regulations
relating to a category of provider of services or suppliers based on an
analysis of the collective impact of regulatory changes on that
category of providers or suppliers.''.
(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 Secretary of Health and Human Services shall
submit to Congress a report on the feasibility of requiring
that regulations described in section 1871(d) of the Social
Security Act only be promulgated on a single day every calendar
quarter.
(3) Effective date.--The amendment made by paragraph (1)
shall apply to regulations promulgated on or after the date
that is 30 days after the date of the enactment of this Act.
(b) Regular Timeline for Publication of Final Rules.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is
amended by adding at the end the following new paragraph:
``(3)(A) The Secretary, in consultation with the Director of the
Office of Management and Budget, shall establish and publish a regular
timeline for the publication of final regulations based on the previous
publication of a proposed regulation or an interim final regulation.
``(B) Such timeline may vary among different regulations based on
differences in the complexity of the regulation, the number and scope
of comments received, and other relevant factors. If the Secretary
intends to vary such timeline with respect to the publication of a
final regulation, the Secretary shall cause to have published in the
Federal Register notice of the different timeline by not later than the
end of the comment period respecting such regulation. Such notice shall
include a brief explanation of the justification for such variation.
``(C) In the case of interim final regulations, upon the expiration
of the regular timeline established under this paragraph for the
publication of a final regulation after opportunity for public comment,
the interim final regulation shall not continue in effect unless the
Secretary publishes a notice of continuation of the regulation that
includes an explanation of why the regular timeline was not complied
with. If such a notice is published, the regular timeline for
publication of the final regulation shall be treated as having begun
again as of the date of publication of the notice.
``(D) The Secretary shall annually submit to Congress a report that
describes the instances in which the Secretary failed to publish a
final regulation within theapplicable timeline under this paragraph and
that provides an explanation for such failures.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act. The
Secretary of Health and Human Services 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) If the Secretary publishes notice of proposed rulemaking
relating to a regulation (including an interim final regulation),
insofar as such final regulation includes a provision that is not a
logical outgrowth of such notice of proposed rulemaking, 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. 3. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.
(a) No Retroactive Application of Substantive Changes; Timeline for
Compliance With Substantive Changes After Notice.--Section 1871 (42
U.S.C. 1395hh), as amended by section 2(a), is amended by adding at the
end the following new subsection:
``(e)(1)(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
date the change was issued, unless the Secretary determines that such
retroactive application would have a positive impact on beneficiaries
or providers of services and suppliers or would be necessary to comply
with statutory requirements.
``(B) A substantive change in regulations, manual instructions,
interpretative rules, statements of policy, or guidelines of general
applicability under this title shall not become effective until at
least 30 days after the Secretary issues the substantive change.
``(C) No action shall be taken against a provider of services or
supplier with respect to noncompliance with such a substantive change
for items and services furnished before the effective date of such a
change.''.
(b) Reliance on Guidance.--Section 1871(e), as added by subsection
(a), is further amended by adding at the end the following new
paragraph:
``(2)(A) If--
``(i) a provider of services or supplier follows the written
guidance (which may be transmitted electronically) provided by
the Secretary or by a medicare contractor (as defined in
section 1889(g)) acting within the scope of the contractor's
contract authority, with respect to the furnishing of items or
services and submission of a claim for benefits for such items
or services with respect to such provider or supplier;
``(ii) the Secretary determines that the provider of services
or supplier has accurately presented the circumstances relating
to such items, services, and claim to the contractor in
writing; and
``(iii) the guidance was in error;
the provider of services or supplier shall not be subject to any
sanction (including any penalty or requirement for repayment of any
amount) if the provider of services or supplier reasonably relied on
such guidance.
``(B) Subparagraph (A) shall not be construed as preventing the
recoupment or repayment (without any additional penalty) relating to an
overpayment insofar as the overpayment was solely the result of a
clerical or technical operational error.''.
(c) GAO Study on Advisory Opinion Authority.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to determine the feasibility and
appropriateness of establishing in the Secretary of Health and
Human Services and the Secretary's contractors authority to
provide legally binding advisory opinions on appropriate
interpretation and application of regulations to carry out the
medicare program under title XVIII of the Social Security Act.
Such study shall examine the appropriate timeframe for issuing
such advisory opinions, as well as the need for additional
staff and funding to provide such opinions.
(2) Report.--The Comptroller General shall submit to Congress
a report on the study conducted under paragraph (1) by not
later than January 1, 2003.
SEC. 4. 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 entity to serve as a medicare
administrative contractor with respect to the performance of
any or all of the functions described in paragraph (3) or parts
of those functions (or, to the extent provided in a contract,
to secure performance thereof by other entities).
``(2) 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 or supplier (or class of such providers of
services or suppliers), the `appropriate' medicare
administrative contractor is the medicare
administrative contractor that has a contract under
this section with respect to the performance of that
function or activity in relation to that individual,
provider of services or supplier or class of provider
of services or supplier.
``(3) Functions described.--The functions referred to in
paragraph (1) 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,
suppliers and individuals.
``(B) Making payments.--Making payments described in
subparagraph (A) (including receipt, disbursement, and
accounting for funds in making such payments).
``(C) Beneficiary education and assistance.--
Providing education and outreach to individuals
entitled to benefits under part A or enrolled under
part B, or both, and providing assistance to those
individuals with specific issues, concerns or problems.
``(D) Provider consultative services.--Providing
consultative services to institutions, agencies, and
other persons to enable them to establish and maintain
fiscal records necessary for purposes of this title and
otherwise to qualify as providers of services or
suppliers.
``(E) Communication with providers.--Communicating to
providers of services and suppliers any information or
instructions furnished to the medicare administrative
contractor by the Secretary and serving as a channel of
communication from providers of services and suppliers
to the Secretary.
``(F) Provider education and technical assistance.--
Performing the functions relating to provider
education, training, and technical assistance.
``(G) Additional functions.--Performing such other
functions as are necessary to carry out the purposes of
this title.
``(4) Relationship to mip contracts.--
``(A) Nonduplication of duties.--In entering into
contracts under this section, the Secretary shall
assure that functions of medicare administrative
contractors in carrying out activities under parts A
and B do not duplicate activities carried out under the
Medicare Integrity Program under section 1893. The
previous sentence shall not apply with respect to the
activity described in section 1893(b)(5) (relating to
prior authorization of certain items of durable medical
equipment under section 1834(a)(15)).
``(B) Construction.--An entity shall not be treated
as a medicare administrative contractor merely by
reason of having entered into a contract with the
Secretary under section 1893.
``(b) Contracting Requirements.--
``(1) Use of competitive procedures.--
``(A) In general.--Except as provided in laws with
general applicability to Federal acquisition and
procurement or in subparagraph (B), the Secretary shall
use competitive procedures when entering into contracts
with medicare administrative contractors under this
section, taking into account performance quality as
well as price and other factors.
``(B) Renewal of contracts.--The Secretary may renew
a contract with a medicare administrative contractor
under this section from term to term without regard to
section 5 of title 41, United States Code, or any other
provision of law requiring competition, if the medicare
administrative contractor has met or exceeded the
performance requirements applicable with respect to the
contract and contractor, except that the Secretary
shall provide for the application of competitive
procedures under such a contract not less frequently
than once every five years.
``(C) Transfer of functions.--Functions may be
transferred among medicare administrative contractors
consistent with the provisions of this paragraph. The
Secretary shall ensure that performance quality is
considered in such transfers.
``(D) Incentives for quality.--The Secretary shall
provide incentives for medicare administrative
contractors to provide quality service and to promote
efficiency.
``(2) Compliance with requirements.--No contract under this
section shall be entered into with any medicare administrative
contractor unless the Secretary finds that such medicare
administrative contractor will perform its obligations under
the contract efficiently and effectively and will meet such
requirements as to financial responsibility, legal authority,
quality of services provided, and other matters as the
Secretary finds pertinent.
``(3) Development of specific performance requirements.--In
developing contract performance requirements, the Secretary
shall develop performance requirements to carry out the
specific requirements applicable under this title to a function
described in subsection (a)(3). In developing such
requirements, the Secretary may consult with providers of
services and suppliers and organizations and agencies
performing functions necessary to carry out the purposes of
this section with respect to such performance requirements.
``(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)(3)(B).
``(2) Prohibition on mandates for certain data collection.--
The Secretary may not require, as a condition of entering into
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.--A
medicare administrative contractor shall be liable to the
United States for a payment referred to in paragraph (1) or (2)
if, in connection with such payment, an individual referred to
in either such paragraph acted with gross negligence or intent
to defraud the United States.
``(4) Indemnification by secretary.--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, if due care was exercised by the
contractor or person 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 of Health and Human Services
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'';
(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.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on October 1, 2003, and the Secretary of Health and
Human Services is authorized to take such steps before such
date as may be necessary to implement such amendments on a
timely basis.
(2) General transition rules.--The Secretary shall take such
steps 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), consistent with
the requirements under such section to competitively bid all
contracts within 5 years after the effective date in paragraph
(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), 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).
SEC. 5. 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 (i), including under section
1893) in order to maximize the effectiveness of Federal education
efforts for providers of services and suppliers.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(3) Report.--Not later than October 1, 2002, the Secretary of
Health and Human Services 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 4(a)(1),
is amended by adding at the end the following new subsection:
``(e) Incentives To Improve Contractor Performance in Provider
Education and Outreach.--
``(1) Methodology to measure contractor error rates.--In
order to give medicare administrative contractors an incentive
to implement effective education and outreach programs for
providers of services and suppliers, the Secretary shall, in
consultation with representatives of providers and suppliers,
develop and implement by October 1, 2003, a methodology to
measure the specific claims payment error rates of such
contractors in the processing or reviewing of medicare claims.
``(2) Identification of best practices.--The Secretary shall
identify the best practices developed by individual medicare
administrative contractors for educating providers of services
and suppliers and how to encourage the use of such best
practices nationwide.''.
(2) Report.--Not later than October 1, 2003, the Secretary of
Health and Human Services shall submit to Congress a report
that describes how the Secretary intends to use the methodology
developed under section 1874A(e)(1) ofthe Social Security Act,
as added by paragraph (1), in assessing medicare contractor performance
in implementing effective education and outreach programs, including
whether to use such methodology as the basis for performance bonuses.
The report shall include an analysis of the sources of identified
errors and potential changes in systems of contractors and rules of the
Secretary that could reduce claims error rates.
(c) Provision of Access to and Prompt Responses From Medicare
Administrative Contractors.--
(1) In general.--Section 1874A, as added by section 4(a)(1)
and as amended by subsection (b), is further amended by adding
at the end the following new subsection:
``(f) Response to Inquiries; Toll-Free Lines.--
``(1) Contractor responsibility.--Each medicare
administrative contractor shall, for those providers of
services and suppliers which submit claims to the contractor
for claims processing--
``(A) respond in a clear, concise, and accurate
manner to specific billing and cost reporting questions
of providers of services and suppliers;
``(B) maintain a toll-free telephone number at which
providers of services and suppliers may obtain
information regarding billing, coding, and other
appropriate information under this title;
``(C) maintain a system for identifying (and
disclosing, upon request) who provides the information
referred to in subparagraphs (A) and (B); and
``(D) monitor the accuracy, consistency, and
timeliness of the information so provided.
``(2) Evaluation.--In conducting evaluations of individual
medicare administrative contractors, the Secretary shall take
into account the results of the monitoring conducted under
paragraph (1)(D). The Secretary shall, in consultation with
organizations representing providers of services and suppliers,
establish standards relating to the accuracy, consistency, and
timeliness of the information so provided.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect October 1, 2003.
(d) Improved Provider Education and Training.--
(1) In general.--Section 1889, as added by subsection (a), is
amended by adding at the end the following new subsections:
``(b) Enhanced Education and Training.--
``(1) Additional resources.--For each of fiscal years 2003
and 2004, there are authorized to be appropriated to the
Secretary (in appropriate part from the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund) $10,000,000 .
``(2) Use.--The funds made available under paragraph (1)
shall be used to increase the conduct by medicare contractors
of education and training of providers of services and
suppliers regarding billing, coding, and other appropriate
items.
``(c) Tailoring Education and Training Activities for Small Providers
or Suppliers.--
``(1) In general.--Insofar as a medicare contractor conducts
education and training activities, it shall tailor such
activities to meet the special needs of small providers of
services or suppliers (as defined in paragraph (2)).
``(2) Small provider of services or supplier.--In this
subsection, the term `small provider of services or supplier'
means--
``(A) a provider of services with fewer than 25 full-
time-equivalent employees; or
``(B) a supplier with fewer than 10 full-time-
equivalent employees.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2002.
(e) Requirement To Maintain Internet Sites.--
(1) In general.--Section 1889, as added by subsection (a) and
as amended by subsection (d), is further amended by adding at
the end the following new subsection:
``(d) Internet Sites; FAQs.--The Secretary, and each medicare
contractor insofar as it provides services (including claims
processing) for providers of services or suppliers, shall maintain an
Internet site which--
``(1) provides answers in an easily accessible format to
frequently asked questions, and
``(2) includes other published materials of the contractor,
that relate to providers of services and suppliers under the programs
under this title (and title XI insofar as it relates to such
programs).''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2002.
(f) Additional Provider Education Provisions.--
(1) In general.--Section 1889, as added by subsection (a) and
as amended by subsections (d) and (e), is further amended by
adding at the end the following new subsections:
``(e) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of attendance
at (or failure to attend) educational activities or other information
gathered during an educational program conducted under this section or
otherwise by the Secretary to select or track providers of services or
suppliers for the purpose of conducting any type of audit or prepayment
review.
``(f) Construction.--Nothing in this section or section 1893(g) shall
be construed as providing for disclosure by a medicare contractor--
``(1) of the screens used for identifying claims that will be
subject to medical review; or
``(2) of information that would compromise pending law
enforcement activities or reveal findings of law enforcement-
related audits.
``(g) Definitions.--For purposes of this section, the term `medicare
contractor' includes the following:
``(1) A medicare administrative contractor with a contract
under section 1874A, including a fiscal intermediary with a
contract under section 1816 and a carrier with a contract under
section 1842.
``(2) An eligible entity with a contract under section 1893.
Such term does not include, with respect to activities of a specific
provider of services or supplier an entity that has no authority under
this title or title IX with respect to such activities and such
provider of services or supplier.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
SEC. 6. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION PROGRAM.
(a) Establishment.--
(1) In general.--The Secretary of Health and Human Services
shall establish a demonstration program (in this section
referred to as the ``demonstration program'') under which
technical assistance described in paragraph (2) is made
available, upon request and on a voluntary basis, to small
providers of services or suppliers in order to improve
compliance with the applicable requirements of the programs
under medicare program under title XVIII of the Social Security
Act (including provisions of title XI of such Act insofar as
they relate to such title and are not administered by the
Office of the Inspector General of the Department of Health and
Human Services).
(2) Forms of technical assistance.--The technical assistance
described in this paragraph is--
(A) evaluation and recommendations regarding billing
and related systems; and
(B) information and assistance regarding policies and
procedures under the medicare program, including coding
and reimbursement.
(3) Small providers of services or suppliers.--In this
section, the term ``small providers of services or suppliers''
means--
(A) a provider of services with fewer than 25 full-
time-equivalent employees; or
(B) a supplier with fewer than 10 full-time-
equivalent employees.
(b) Qualification of Contractors.--In conducting the demonstration
program, the Secretary of Health and Human Services shall enter into
contracts with qualified organizations (such as peer review
organizations or entities described in section 1889(g)(2) of the Social
Security Act, as inserted by section 5(f)(1)) with appropriate
expertise with billing systems of the full range of providers of
services and suppliers to provide the technical assistance. In awarding
such contracts, the Secretary shall consider any prior investigations
of the entity's work by the Inspector General of Department of Health
and Human Services or the Comptroller General of the United States.
(c) Description of Technical Assistance.--The technical assistance
provided under the demonstration program shall include a direct and in-
person examination of billing systems and internal controls of small
providers of services or suppliers to determine program compliance and
to suggest more efficient or effective means of achieving such
compliance.
(d) Avoidance of Recovery Actions for Problems Identified as
Corrected.--The Secretary of Health and Human Services shall provide
that, absentevidence of fraud and notwithstanding any other provision
of law, any errors found in a compliance review for a small provider of
services or supplier that participates in the demonstration program
shall not be subject to recovery action if the technical assistance
personnel under the program determine that--
(1) the problem that is the subject of the compliance review
has been corrected to their satisfaction within 30 days of the
date of the visit by such personnel to the small provider of
services or supplier; and
(2) such problem remains corrected for such period as is
appropriate.
(e) GAO Evaluation.--Not later than 2 years after the date of the
date the demonstration program is first implemented, the Comptroller
General, in consultation with the Inspector General of the Department
of Health and Human Services, shall conduct an evaluation of the
demonstration program. The evaluation shall include a determination of
whether claims error rates are reduced for small providers of services
or suppliers who participated in the program and the extent of improper
payments made as a result of the demonstration program. The Comptroller
General shall submit a report to the Secretary and the Congress on such
evaluation and shall include in such report recommendations regarding
the continuation or extension of the demonstration program.
(f) Financial Participation by Providers.--The provision of technical
assistance to a small provider of services or supplier under the
demonstration program is conditioned upon the small provider of
services or supplier paying an amount estimated (and disclosed in
advance of a provider's or supplier's participation in the program) to
be equal to 25 percent of the cost of the technical assistance.
(g) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary of Health and Human Services (in
appropriate part from the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund) to carry out the
demonstration program--
(1) for fiscal year 2003, $1,000,000, and
(2) for fiscal year 2004, $6,000,000.
SEC. 7. MEDICARE PROVIDER OMBUDSMAN; MEDICARE BENEFICIARY OMBUDSMAN.
(a) Medicare Provider Ombudsman.--Section 1868 (42 U.S.C. 1395ee) is
amended--
(1) by adding at the end of the heading the following: ``;
medicare provider ombudsman'';
(2) by inserting ``Practicing Physicians Advisory Council.--
(1)'' after ``(a)'';
(3) in paragraph (1), as so redesignated under paragraph (2),
by striking ``in this section'' and inserting ``in this
subsection'';
(4) by redesignating subsections (b) and (c) as paragraphs
(2) and (3), respectively; and
(5) by adding at the end the following new subsection:
``(b) Medicare Provider Ombudsman.--The Secretary shall appoint a
Medicare Provider Ombudsman. The Ombudsman shall--
``(1) provide assistance, on a confidential basis, to
providers of services and suppliers with respect to complaints,
grievances, and requests for information concerning the
programs under this title (including provisions of title XI
insofar as they relate to this title and are not administered
by the Office of the Inspector General of the Department of
Health and Human Services) and in the resolution of unclear or
conflicting guidance given by the Secretary and medicare
contractors to such providers of services and suppliers
regarding such programs and provisions and requirements under
this title and such provisions; and
``(2) submit recommendations to the Secretary for improvement
in the administration of this title and such provisions,
including--
``(A) recommendations to respond to recurring
patterns of confusion in this title and such provisions
(including recommendations regarding suspending
imposition of sanctions where there is widespread
confusion in program administration), and
``(B) recommendations to provide for an appropriate
and consistent response (including not providing for
audits) in cases of self-identified overpayments by
providers of services and suppliers.''.
(b) Medicare Beneficiary Ombudsman.--Title XVIII is amended by
inserting after section 1806 the following new section:
``medicare beneficiary ombudsman
``Sec. 1807. (a) In General.--The Secretary shall appoint within the
Department of Health and Human Services a Medicare Beneficiary
Ombudsman who shall have expertise and experience in the fields of
health care and advocacy.
``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
``(1) receive complaints, grievances, and requests for
information submitted by a medicare beneficiary, with respect
to any aspect of the medicare program;
``(2) provide assistance with respect to complaints,
grievances, and requests referred to in paragraph (1),
including--
``(A) assistance in collecting relevant information
for such beneficiaries, to seek an appeal of a decision
or determination made by a fiscal intermediary,
carrier, Medicare+Choice organization, or the
Secretary; and
``(B) assistance to such beneficiaries with any
problems arising from disenrollment from a
Medicare+Choice plan under part C; and
``(3) submit annual reports to Congress and the Secretary
that describe the activities of the Office and that include
such recommendations for improvement in the administration of
this title as the Ombudsman determines appropriate.''.
(c) Funding.--There are authorized to be appropriated to the
Secretary of Health and Human Services (in appropriate part from the
Federal Hospital Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund) to carry out the provisions of subsection
(b) of section 1868 of the Social Security Act (relating to the
Medicare Provider Ombudsman), as added by subsection (a)(5) and section
1807 of such Act (relating to the Medicare Beneficiary Ombudsman), as
added by subsection (b), such sums as are necessary for fiscal year
2002 and each succeeding fiscal year.
(d) Use of Central, Toll-Free Number (1-800-MEDICARE).--Section
1804(b) (42 U.S.C. 1395b-2(b)) is amended by adding at the end the
following: ``The Secretary shall provide, through the toll-free number
1-800-MEDICARE, for a means by which individuals seeking information
about, or assistance with, such programs who phone such toll-free
number are transferred (without charge) to appropriate entities for the
provision of such information or assistance. Such toll-free number
shall be the toll-free number listed for general information and
assistance in the annual notice under subsection (a) instead of the
listing of numbers of individual contractors.''.
SEC. 8. PROVIDER APPEALS.
(a) Medicare Administrative Law Judges.--Section 1869 (42 U.S.C.
1395ff), as amended by section 521(a) of Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (114 Stat. 2763A-534),
as enacted into law by section 1(a)(6) of Public Law 106-554, is
amended by adding at the end the following new subsection:
``(g) Medicare Administrative Law Judges.--
``(1) Transition plan.--Not later than October 1, 2003, the
Commissioner of Social Security and the Secretary shall develop
and implement a plan under which the functions of
administrative law judges responsible for hearing cases under
this title (and related provisions in title XI) shall be
transferred from the responsibility of the Commissioner and the
Social Security Administration to the Secretary and the
Department of Health and Human Services. The plan shall include
recommendations with respect to--
``(A) the number of administrative law judges and
support staff required to hear and decide such cases in
a timely manner; and
``(B) funding levels required for fiscal year 2004
and subsequent fiscal years under this subsection to
hear such cases in a timely manner.
Nothing in this subsection shall be construed as affecting the
independence of administrative law judges from the Department
of Health and Human Services and from medicare contractors in
carrying out their responsibilities for hearing and deciding
cases.
``(2) Increased financial support.--In addition to any
amounts otherwise appropriated, 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 to increase the number
of administrative law judges described in paragraph (1) and to
improve education and training for such judges and their staffs
in carrying out functions under this title, $5,000,000 for
fiscal year 2003 and such sums as are necessary for fiscal year
2004 and each subsequent fiscal year.
``(3) Submittal of plan to congress and gao; report of gao.--
Not later than July 1, 2003, the Secretary shall submit to the
Committee on Ways and Means of the House of Representatives,
the Committee on Finance of the Senate, and the Comptroller
General of the United States the terms of the plan developed
under paragraph (1). No later than September 1, 2003, the
Comptroller General shall submit to such Committees a report
containing an evaluation of the terms of such plan.''.
(b) Process for Expedited Access to Judicial Review.--
(1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)) as
amended by Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (114 Stat. 2763A-534), as enacted
into law by section 1(a)(6) of Public Law 106-554, is amended--
(A) in paragraph (1)(A), by inserting ``, subject to
paragraph (2),'' before ``to judicial review of the
Secretary's final decision''; and
(B) by adding at the end the following new paragraph:
``(2) Expedited access to judicial review.--
``(A) In general.--The Secretary shall establish a
process under which a provider of services or supplier
that furnishes an item or service or a beneficiary who
has filed an appeal under paragraph (1) (other than an
appeal filed under paragraph (1)(F)) may obtain access
to judicial review when a review panel (described in
subparagraph (D)), on its own motion or at the request
of the appellant, determines that it 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 in a case of an appeal.
``(B) Prompt determinations.--If, after or coincident
with appropriately filing a request for an
administrative hearing, the appellant requests a
determination by the appropriate review panel that no
review panel has the authority to decide the question
of law or regulations relevant to the matters in
controversy and that there is no material issue of fact
in dispute and if such request is accompanied by the
documents and materials as the appropriate review panel
shall require for purposes of making such
determination, such review panel shall make a
determination on the request in writing within 60 days
after the date such review panel receives the request
and such accompanying documents and materials. Such a
determination by such review panel shall be considered
a final decision and not subject to review by the
Secretary.
``(C) Access to judicial review.--
``(i) In general.--If the appropriate review
panel--
``(I) determines that there are no
material issues of fact in dispute and
that the only issue is one of law or
regulation that no review panel has the
authority to decide; or
``(II) fails to make such
determination within the period
provided under subparagraph (B);
then the appellant may bring a civil action as
described in this subparagraph.
``(ii) Deadline for filing.--Such action
shall be filed, in the case described in--
``(I) clause (i)(I), within 60 days
of date of the determination described
in such subparagraph; or
``(II) clause (i)(II), within 60 days
of the end of the period provided under
subparagraph (B) for the determination.
``(iii) Venue.--Such action shall be brought
in the district court of the United States for
the judicial district in which the appellant is
located (or, in the case of an action brought
jointly by more than one applicant, the
judicial district in which the greatest number
of applicants are located) or in the district
court for the District of Columbia.
``(iv) Interest on amounts in controversy.--
Where a provider of services or supplier seeks
judicial review pursuant to this paragraph, the
amount in controversy shall be subject to
annual interest beginning on the first day of
the first month beginning after the 60-day
period as determined pursuant to clause (ii)
and equal to the rate of interest on
obligations issued for purchase by the Federal
Hospital Insurance Trust Fund for the month in
which the civil action authorized under this
paragraph is commenced, to be awarded by the
reviewing court in favor of the prevailing
party. No interest awarded pursuant to the
preceding sentence shall be deemed income or
cost for the purposes of determining
reimbursement due providers of services or
suppliers under this Act.
``(D) Review panels.--For purposes of this
subsection, a `review panel' is an administrative law
judge, the Departmental Appeals Board, a qualified
independent contractor (as defined in subsection
(c)(2)), or an entity designated by the Secretary for
purposes of making determinations under this
paragraph.''.
(2) Application to termination proceedings.--Section 1866(h)
(42 U.S.C. 1395cc(h)) is amended by adding at the end the
following new paragraph:
``(3) The provisions of section 1869(b)(2) shall apply with respect
to determinations described in paragraph (1) in the same manner as they
apply to a provider of services that has filed an appeal under section
1869(b)(1).''.
(3) Effective date.--The amendments made by this subsection
shall apply to appeals filed on or after October 1, 2002.
(c) Requiring Full and Early Presentation of Evidence.--
(1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as
amended by Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (114 Stat. 2763A-534), as enacted
into law by section 1(a)(6) of Public Law 106-554, and as
amended by subsection (b), is further amended by adding at the
end the following new paragraph:
``(3) Requiring full and early presentation of evidence by
providers.--A provider of services or supplier may not
introduce evidence in any appeal under this section that was
not presented at the reconsideration conducted by the qualified
independent contractor under subsection (c), unless there is
good cause which precluded the introduction of such evidence at
or before that reconsideration.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2002.
SEC. 9. RECOVERY OF OVERPAYMENTS AND PREPAYMENT REVIEW; ENROLLMENT OF
PROVIDERS.
(a) Recovery of Overpayments and Prepayment Review.--Section 1893 (42
U.S.C. 1395ddd) is amended by adding at the end the following new
subsections:
``(f) Recovery of Overpayments and Prepayment Review.--
``(1) Use of repayment plans.--
``(A) In general.--If the repayment, within 30 days
by a provider of services or supplier, of an
overpayment under this title would constitute a
hardship (as defined in subparagraph (B)), subject to
subparagraph (C), the Secretary shall enter into a plan
(which meets terms and conditions determined to be
appropriate by the Secretary) with the provider of
services or supplier for the offset or repayment of
such overpayment over a period of not longer than 3
years, or in the case of extreme hardship (as
determined by the Secretary) over a period of not
longer than 5 years. Interest shall accrue on the
balance through the period of repayment.
``(B) Hardship.--
``(i) In general.--For purposes of
subparagraph (A), the repayment of an
overpayment (or overpayments) within 30 days is
deemed to constitute a hardship if--
``(I) in the case of a provider of
services that files cost reports, the
aggregate amount of the overpayments
exceeds 10 percent of the amount paid
under this title to the provider of
services for the cost reporting period
covered by the most recently submitted
cost report; or
``(II) in the case of another
provider of services or supplier, the
aggregate amount of the overpayments
exceeds 10 percent of the amount paid
under this title to the provider of
services or supplier for the previous
calendar year.
``(ii) Rule of application.--The Secretary
shall establish rules for the application of
this subparagraph in the case of a provider of
services or supplier that was not paid under
this title during the previous year or was paid
under this title only during a portion of that
year.
``(iii) Treatment of previous overpayments.--
If a provider of services or supplier has
entered into a repayment plan under
subparagraph (A) with respect to a specific
overpayment amount, such payment amount under
the repayment plan shall not be taken into
account under clause (i) with respect to
subsequent overpayment amounts.
``(C) Exceptions.--Subparagraph (A) shall not apply
if the Secretary has reason to suspect that the
provider of services or supplier may file for
bankruptcy or otherwise cease to do business or if
there is an indication of fraud or abuse committed
against the program.
``(D) Immediate collection if violation of repayment
plan.--If a provider of services or supplier fails to
make a payment in accordance with a repayment plan
under this paragraph, the Secretary may immediately
seek to offset or otherwise recover the total balance
outstanding (including applicable interest) under the
repayment plan.
``(2) Limitation on recoupment until determination by
qualified independent contractor.--
``(A) In general.--In the case of a provider of
services or supplier that is determined to have
received an overpayment under this title and that seeks
a reconsideration by a qualified independent contractor
on such determination under section 1869(b)(1), the
Secretary may not take any action (or authorize any
other person, including any medicare contractor, as
defined in paragraph (9)) to recoup the overpayment
until the date the decision on the reconsideration has
been rendered.
``(B) Collection with interest.--Insofar as the
determination on such appeal is against the provider of
services or supplier, interest on the overpayment shall
accrue on and after the date of the original notice of
overpayment. Insofar as such determination against the
provider of services or supplier is later reversed, the
Secretary shall provide for repayment of the amount
recouped plus interest at the same rate as would apply
under the previous sentence for the period in which the
amount was recouped.
``(3) Standardization of random prepayment review.--
``(A) In general.--A medicare contractor may conduct
random prepayment review only to develop a contractor-
wide or program-wide claims payment error rates or
under such additional circumstances as may be provided
under regulations, developed in consultation with
providers of services and suppliers.
``(B) Construction.--Nothing in subparagraph (A)
shall be construed as preventing the denial of payments
for claims actually reviewed under a random prepayment
review.
``(4) 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).
``(5) Provision of supporting documentation.--In the case of
a provider of services or supplier with respect to which
amounts were previously overpaid, a medicare contractor may
request the periodic production of records or supporting
documentation for a limited sample of submitted claims to
ensure that the previous practice is not continuing.
``(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 or supplier a consent settlement,
the Secretary shall--
``(i) communicate to the provider of services
or supplier in a non-threatening manner that,
based on a review of the medical records
requested by the Secretary, a preliminary
analysis indicates that there would be an
overpayment; and
``(ii) provide for a 45-day period during
which the provider of services or supplier may
furnish additional information concerning the
medical records for the claims that had been
reviewed.
``(C) Consent settlement offer.--The Secretary shall
review any additional information furnished by the
provider of services or supplier under subparagraph
(B)(ii). Taking into consideration such information,
the Secretary shall determine if there still appears to
be an overpayment. If so, the Secretary--
``(i) shall provide notice of such
determination to the provider of services or
supplier, including an explanation of the
reason for such determination; and
``(ii) in order to resolve the overpayment,
may offer the provider of services or
supplier--
``(I) the opportunity for a
statistically valid random sample; or
``(II) a consent settlement.
The opportunity provided under clause (ii)(I) does not
waive any appeal rights with respect to the alleged
overpayment involved.
``(D) Consent settlement defined.--For purposes of
this paragraph, the term `consent settlement' means an
agreement between the Secretary and a provider of
services or supplier whereby both parties agree to
settle a projected overpayment based on less than a
statistically valid sample of claims and the provider
of services or supplier agrees not to appeal the claims
involved.
``(7) Limitations on non-random prepayment review.--
``(A) Limitation on initiation of non-random
prepayment review.--A medicare contractor may
not initiate non-random prepayment review of a
provider of services or supplier based on the
initial identification by that provider of
services or supplier of an improper billing
practice unless there is a sustained or high
level of payment error (as defined in paragraph
(4)(A)).
``(B) Termination of non-random prepayment
review.--The Secretary shall issue regulations
relating to the termination, including
termination dates, of non-random prepayment
review. Such regulations may vary such a
termination date based upon the differences in
the circumstances triggering prepayment review.
``(8) Payment audits.--
``(A) Written notice for post-payment audits.--
Subject to subparagraph (C), if a medicare contractor
decides to conduct a post-payment audit of a provider
of services or supplier under this title, the
contractor shall provide the provider of services or
supplier with written notice of the intent to conduct
such an audit.
``(B) Explanation of findings for all audits.--
Subject to subparagraph (C), if a medicare contractor
audits a provider of services or supplier under this
title, the contractor shall provide for an exit
conference with the provider or supplier during which
the contractor shall--
``(i) give the provider of services or
supplier a full review and explanation of the
findings of the audit in a manner that is
understandable to the provider of services or
supplier and permits the development of an
appropriate corrective action plan;
``(ii) inform the provider of services or
supplier of the appeal rights under this title;
``(iii) give the provider of services or
supplier an opportunity to provide additional
information to the contractor; and
``(iv) take into account information
provided, on a timely basis, by the provider of
services or supplier under clause (iii).
``(C) Exception.--Subparagraphs (A) and (B) shall not
apply if the provision of notice or findings would
compromise pending law enforcement activities or reveal
findings of law enforcement-related audits.
``(9) Definitions.--For purposes of this subsection:
``(A) Medicare contractor.--The term `medicare
contractor' has the meaning given such term in section
1889(g).
``(B) Random prepayment review.--The term `random
prepayment review' means a demand for the production of
records or documentation absent cause with respect to a
claim.
``(g) Notice of Over-Utilization of Codes.--The Secretary shall
establish a process under which the Secretary provides for notice to
classes of providers of services and suppliers served by the contractor
in cases in which the contractor has identified that particular billing
codes may be overutilized by that class of providers of services or
suppliers under the programs under this title (or provisions of title
XI insofar as they relate to such programs).''.
(b) Provider Enrollment Process; Right of Appeal.--
(1) In general.--Section 1866 (42 U.S.C. 1395cc) is amended--
(A) by adding at the end of the heading the
following: ``; enrollment processes''; and
(B) by adding at the end the following new
subsection:
``(j) Enrollment Process for Providers of Services and Suppliers.--
``(1) In general.--The Secretary shall establish by
regulation a process for the enrollment of providers of
services and suppliers under this title.
``(2) Appeal process.--Such process shall provide--
``(A) a method by which providers of services and
suppliers whose application to enroll (or, if
applicable, to renew enrollment) are denied are
provided a mechanism to appeal such denial; and
``(B) prompt deadlines for actions on applications
for enrollment (and, if applicable, renewal of
enrollment) and for consideration of appeals.''.
(2) Effective date.--The Secretary of Health and Human
Services shall provide for the establishment of the enrollment
and appeal process under the amendment made by paragraph (1)
within 6 months after the date of the enactment of this Act.
(c) Process for Correction of Minor Errors and Omissions on Claims
Without Pursuing Appeals Process.--The Secretary of Health and Human
Services shall develop, in consultation with appropriate medicare
contractors (as defined in section 1889(g) of the Social Security Act,
as inserted by section 5(f)(1)) and representatives of providers of
services and suppliers, a process whereby, in the case of minor errors
or omissions that are detected in the submission of claims under the
programs under title XVIII of such Act, a provider of services or
supplier is given an opportunity to correct such an error or omission
without the need to initiate an appeal. Such process shall include the
ability to resubmit corrected claims.
SEC. 10. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.
(a) In General.--The Secretary of Health and Human Services shall
establish a demonstration program (in this section referred to as the
``demonstration program'') under which medicare specialists employed by
the Department of Health and Human Services provide advice and
assistance to medicare beneficiaries regarding the medicare program at
the location of existing local offices of the Social Security
Administration.
(b) Locations.--
(1) In general.--The demonstration program shall be conducted
in at least 6 offices or areas. Subject to paragraph (2), in
selecting such offices and areas, the Secretary shall provide
preference for offices with a high volume of visits by medicare
beneficiaries.
(2) Assistance for rural beneficiaries.--The Secretary shall
provide for the selection of at least 2 rural areas to
participate in the demonstration program. In conducting the
demonstration program in such rural areas, the Secretary shall
provide for medicare specialists to travel among local offices
in a rural area on a scheduled basis.
(c) Duration.--The demonstration program shall be conducted over a 3-
year period.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall provide for an
evaluation of the demonstration program. Such evaluation shall
include an analysis of--
(A) utilization of, and beneficiary satisfaction
with, the assistance provided under the program; and
(B) the cost-effectiveness of providing beneficiary
assistance through out-stationing medicare specialists
at local social security offices.
(2) Report.--The Secretary shall submit to Congress a report
on such evaluation and shall include in such report
recommendations regarding the feasibility of permanently out-
stationing medicare specialists at local offices of the Social
Security Administration.
SEC. 11. POLICY DEVELOPMENT REGARDING EVALUATION AND MANAGEMENT (E & M)
DOCUMENTATION GUIDELINES.
(a) In General.--The Secretary of Health and Human Services 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 and provided for an assessment of the
proposed guidelines by the physician community;
(2) has established a plan that contains specific goals,
including a schedule, for improving the use of such guidelines;
(3) has conducted appropriate and representative pilot
projects under subsection (b) to test modifications to the
evaluation and management documentation guidelines;
(4) finds that the objectives described in subsection (c)
will be met in the implementation of such guidelines; and
(5) has conducted appropriate outreach to physicians for
education and training with respect to the guidelines.
The Secretary shall make changes to the manner in which existing
evaluation and management documentation guidelines are implemented to
reduce paperwork burdens on physicians.
(b) Pilot Projects To Test Evaluation and Management Documentation
Guidelines.--
(1) Length and consultation.--Each pilot project under this
subsection shall--
(A) be of sufficient length to allow for preparatory
physician and medicare contractor education, analysis,
and use and assessment of potential evaluation and
management guidelines; and
(B) be conducted, in development and throughout the
planning and operational stages of the project, in
consultation with practicing physicians.
(2) 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) 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 one shall be conducted in a
setting other than a teaching setting.
(3) 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.
(4) Study of impact.--Each pilot project shall examine the
effect of the modified 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.
(c) Objectives for Evaluation and Management Guidelines.--The
objectives for modified evaluation and management documentation
guidelines developed by the Secretary shall be to--
(1) enhance clinically relevant documentation needed to code
accurately and assess coding levels accurately;
(2) decrease the level of non-clinically pertinent and
burdensome documentation time and content in the physician's
medical record;
(3) increase accuracy by reviewers; and
(4) educate both physicians and reviewers.
(d) Study of Simpler, Alternative Systems of Documentation for
Physician Claims.--
(1) Study.--The Secretary of Health and Human Services shall
carry out a study of the matters described in paragraph (2).
(2) Matters described.--The matters referred to in paragraph
(1) are--
(A) the development of a simpler, alternative system
of requirements for documentation accompanying claims
for evaluation and management physician services for
which payment is made under title XVIII of the Social
Security Act; and
(B) consideration of systems other than current
coding and documentation requirements for payment for
such physician services.
(3) Consultation with practicing physicians.--In designing
and carrying out the study under paragraph (1), the Secretary
shall consult with practicing physicians, including physicians
who are part of group practices.
(4) Application of hipaa uniform coding requirements.--In
developing an alternative system under paragraph (2), the
Secretary shall consider requirements of administrative
simplification under part C of title XI of the Social Security
Act.
(5) Report to congress.--(A) The Secretary shall submit to
Congress a report on the results of the study conducted under
paragraph (1).
(B) The Medicare Payment Advisory Commission shall conduct an
analysis of the results of the study included in the report
under subparagraph (A) and shall submit a report on such
analysis to Congress.
(e) Study on Appropriate Coding of Certain Extended Office Visits.--
The Secretary shall conduct a study of the appropriateness of coding in
cases of extended office visits in which there is no diagnosis made.
The Secretary shall submit a report to Congress on such study and shall
include recommendations on how to code appropriately for such visits in
a manner that takes into account the amount of time the physician spent
with the patient.
(f) Definitions.--In this section--
(1) the term ``rural area'' has the meaning given that term
in section 1886(d)(2)(D) of the Social Security Act, 42 U.S.C.
1395ww(d)(2)(D); and
(2) the term ``teaching settings'' are those settings
described in section 415.150 of title 42, Code of Federal
Regulations.
SEC. 12. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY AND COVERAGE.
(a) Improved Coordination Between FDA and CMS on Coverage of
Breakthrough Medical Devices.--
(1) In general.--Upon request by an applicant and to the
extent feasible (as determined by the Secretary of Health and
Human Services), the Secretary shall, in the case of a class
III medical device that is subject to premarket approval under
section 515 of the Federal Food, Drug, and Cosmetic Act,
coordinate reviews of coverage decisions under title XVIII of
the Social Security Act with the review for application for
premarket approval conducted by the Food and Drug
Administration under such section. Such coordination shall
include the sharing of appropriate information.
(2) Publication of plan.--Not later than 6 months after the
date of the enactment of this Act, the Secretary shall submit
to appropriate Committees of Congress a report that contains
the plan for improving such coordination and for shortening the
time lag between the premarket approval by the Food and Drug
Administration and coding and coverage decisions by the Centers
for Medicare & Medicaid Services.
(3) Construction.--Nothing in this subsection shall be
construed as changing the criteria for coverage of a medical
device under title XVIII of the Social Security Act nor
premarket approval by the Food and Drug Administration.
(b) Council for Technology and Innovation.--
(1) Establishment.--The Secretary of Health and Human
Services shall establish a Council for Technology and
Innovation within the Centers for Medicare & Medicaid Services
(in this section referred to as ``CMS'').
(2) Composition.--The Council shall be composed of senior CMS
staff and clinicians and shall be chaired by the Executive
Coordinator for Technology and Innovation (appointed or
designated under paragraph (4)).
(3) Duties.--The Council shall coordinate the activities of
coverage, coding, and payment processes under title XVIII of
the Social Security Act with respect to new technologies and
procedures, including new drug therapies, and shall coordinate
the exchange of information on new technologies between CMS and
other entities that make similar decisions.
(4) Executive coordinator for technology and innovation.--The
Secretary shall appoint (or designate) a noncareer appointee
(as defined in section 3132(a)(7) of title 5, United States
Code) who shall serve as the Executive Coordinator for
Technology and Innovation. Such executive coordinator shall
report to the Administrator of CMS, shall chair the Council,
shall oversee the execution of its duties, and shall serve as a
single point of contact for outside groups and entities
regarding the coverage, coding, and payment processes under
title XVIII of the Social Security Act.
(c) GAO Study on Improvements in External Data Collection for Use in
the Medicare Inpatient Payment System.--
(1) Study.--The Comptroller General of the United States
shall conduct a study that analyzes which external data can be
collected in a shorter time frame by the Centers For Medicare &
Medicaid Services for use in computing payments for inpatient
hospital services. The study may include an evaluation of the
feasibility and appropriateness of using of quarterly samples
or special surveys or any other methods. The study shall
include an analysis of whether other executive agencies, such
as the Bureau of Labor Statistics in the Department of
Commerce, are best suited to collect this information.
(2) Report.--By not later than October 1, 2002, the
Comptroller General shall submit a report to Congress on the
study under paragraph (1).
(d) Application of OSHA Bloodborne Pathogens Standard to Certain
Hospitals.--
(1) In general.--Section 1866 (42 U.S.C. 1395cc) is amended--
(A) in subsection (a)(1)--
(i) in subparagraph (R), by striking ``and''
at the end;
(ii) in subparagraph (S), by striking the
period at the end and inserting ``, and''; and
(iii) by inserting after subparagraph (S) the
following new subparagraph:
``(T) in the case of hospitals that are not otherwise subject
to the Occupational Safety and Health Act of 1970, to comply
with the Bloodborne Pathogens standard under section 1910.1030
of title 29 of the Code of Federal Regulations (or as
subsequently redesignated).''; and
(B) by adding at the end of subsection (b) the
following new paragraph:
``(4)(A) A hospital that fails to comply with the requirement of
subsection (a)(1)(T) (relating to the Bloodborne Pathogens standard) is
subject to a civil money penalty in an amount described in subparagraph
(B), but is not subject to termination of an agreement under this
section.
``(B) The amount referred to in subparagraph (A) is an amount that is
similar to the amount of civil penalties that may be imposed under
section 17 of the Occupational Safety and Health Act of 1970 for a
violation of the Bloodborne Pathogens standard referred to in
subsection (a)(1)(T) by a hospital that is subject to the provisions of
such Act.
``(C) A civil money penalty under this paragraph shall be imposed and
collected in the same manner as civil money penalties under subsection
(a) of section 1128A are imposed and collected under that section.''.
(2) Effective date.--The amendments made by this paragraph
(1) shall apply to hospitals as of July 1, 2002.
(e) IOM Study on Local Coverage Determinations.--
(1) Study.--The Secretary shall enter into an arrangement
with the Institute of Medicine of the National Academy of
Sciences under which the Institute shall conduct a study on the
capabilities and information available for local coverage
determinations (including the application of local medical
review policies) under the medicare program under title XVIII
of the Social Security Act. Such study shall examine--
(A) the consistency of the definitions used in such
determinations;
(B) the extent to which such determinations are based
on evidence, including medical and scientific evidence;
(C) the advantages and disadvantages of local
coverage decisionmaking, including the flexibility it
offers for ensuring timely patient access to new
medical technology for which data are still be
collected;
(D) whether local coverage determinations are made,
in the absence of adequate data, in order to collect
such data in a manner that results in coverage of
experimental items or services; and
(E) the advantages and disadvantages of maintaining
local medicare contractor advisory committees that can
advise on local coverage decisions based on an open,
collaborative public process.
(2) Report.--Such arrangement shall provide that the
Institute shall submit to the Secretary a report on such study
by not later than 3 years after the date of the enactment of
this Act. The Secretary shall promptly transmit a copy of such
report to Congress.
(f) 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. 13. MISCELLANEOUS PROVISIONS.
(a) Treatment of Hospitals for Certain Services Under Medicare
Secondary Payor (MSP) Provisions.--
(1) In general.--The Secretary of Health and Human Services
shall not require a hospital (including a critical access
hospital) to ask questions (or obtain information) relating to
the application of section 1862(b) of the Social Security Act
(relating to medicare secondary payor provisions) in the case
of reference laboratory services described in paragraph (2), if
the Secretary does not impose such requirement in the case of
such services furnished by an independent laboratory.
(2) Reference laboratory services described.--Reference
laboratory services described in this paragraph are clinical
laboratory diagnostic tests (or the interpretation of such
tests, or both) furnished without a face-to-face encounter
between the beneficiary and the hospital involved and in which
the hospital submits a claim only for such test or
interpretation.
(b) Clarification of Prudent Layperson Test for Emergency Services
Under the Medicare Fee-for-Service Program.--
(1) In general.--Section 1862 (42 U.S.C. 1395y) is amended by
inserting after subsection (c) the following new subsection:
``(d) In the case of hospital services and physicians' services
that--
``(1) are furnished, to an individual who is not enrolled in
a Medicare+Choice plan under part C, by a hospital or a
critical access hospital; and
``(2) are needed to evaluate or stabilize an emergency
medical condition (as defined in section 1852(d)(3)(B),
relating to application of a prudent layperson rule) and that
are provided to meet the requirements of section 1867,
such services shall be deemed to be reasonable and necessary for the
diagnosis or treatment of illness or injury for purposes of subsection
(a)(1)(A).''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to items and services furnished on or after January
1, 2002.
(c) Prompt Submission of Overdue Reports on Payment and Utilization
of Outpatient Therapy Services.--The Secretary of Health and Human
Services shall submit to Congress as expeditiously as practicable the
reports required under section 4541(d)(2) of the Balanced Budget Act of
1997 (relating to alternatives to a single annual dollar cap on
outpatient therapy) and under section 221(d) of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act of 1999 (relating to
utilization patterns for outpatient therapy).
(d) Authorizing Use of Arrangements With Other Hospice Programs To
Provide Core Hospice Services in Certain Circumstances.--
(1) In general.--Section 1861(dd)(5) (42 U.S.C. 1395x(dd)(5))
is amended by adding at the end the following new subparagraph:
``(D) In extraordinary, exigent, or other non-routine circumstances,
such as unanticipated periods of high patient loads, staffing shortages
due to illness or other events, or temporary travel of a patient
outside a hospice program's service area, a hospice program may enter
into arrangements with another hospice program for the provision by
that other program of services described in paragraph (2)(A)(ii)(I).
The provisions of paragraph (2)(A)(ii)(II) shall apply with respect to
the services provided under such arrangements.''.
(2) Conforming payment provision.--Section 1814(i) (42 U.S.C.
1395f(i)) is amended by adding at the end the following new
paragraph:
``(4) In the case of hospice care provided by a hospice program under
arrangements under section 1861(dd)(5)(D) made by another hospice
program, the hospice program that made the arrangements shall bill and
be paid for the hospice care.''.
(3) Effective date.--The amendments made by this subsection
shall apply to hospice care provided on or after the date of
the enactment of this Act.
I. INTRODUCTION
A. Purpose and Summary
The primary purpose of H.R. 2768 is to create a more
collaborative, less confrontational relationship between
providers and the Centers for Medicare and Medicaid Services.
H.R. 2768 will diminish the paperwork load required to meet
complex and technical regulatory requirements, and allow
providers to spend more time with patients. H.R. 2768
streamlines the regulatory process, enhances education and
technical assistance for doctors and other health care
providers, and protects the rights of providers in the audit
and recovery process to ensure that the repayment process is
fair and open.
In addition, H.R. 2768 gives the Secretary the tools to
manage Medicare program operations efficiently. For the first
time, the Centers for Medicare and Medicaid Services will be
able to competitively contract with the best entities available
to process claims, make payments and answer questions. The
Secretary will be free to promote quality by creating
incentives for the Medicare Administrative Contractors to
provide outstanding service to seniors and health care
providers. Contractor reform initiatives will eliminate
artificial distinctions between Medicare's Part A and Part B
with regard to contracting practices. But this does not
constitute a combination of the Part A and Part B trust funds
or any position on that matter.
Finally, HR 2768 includes several provisions to help
beneficiaries interact with and better understand the Medicare
program, including the establishment of an internal beneficiary
ombudsman program, a demonstration program to place Medicare
specialist in Social Security offices, and an improved 800-
number to facilitate communication between beneficiaries and
CMS or its contractors.
B. Background and Need for the Legislation
H.R. 2768 was developed through months of consultation with
health care providers and other experts, including public
hearings before the Ways and Means Subcommittee on Health.
Working closely with the Bush Administration, the Subcommittee
began a thorough process of evaluation of the regulatory
relationship between health care providers and suppliers and
the Centers for Medicare and Medicaid Services (CMS). At the
first public hearing that focused on bringing regulatory relief
to Medicare providers, held on March 15, 2001, the Subcommittee
received testimony from witnesses frustrated with a system that
forces health care providers to spend their time and office
resources on paperwork rather than patients.
The message delivered by health care providers in that
first hearing was unanimous--doctors and hospitals, home health
agencies and nursing homes all told the Subcommittee that they
are overwhelmed. Instead of caring for patients, health care
providers testified that they spend too much time filling out
unnecessary and confusing forms.
In addition, Medicare's current contracting represents an
antiquated, inefficient, and closed system based on cozy
relationships between the government, contractors and
providers.
The Medicare contracting program is antiquated because
contractors may not service the entire Medicare program, or
particular functions within the program; rather Fiscal
Intermediaries administer claims for facilities and carriers
administer claims for all other providers. It has failed to
keep pace with integrated delivery in the private sector.
Medicare's contracting program is inefficient because
Medicare does not award contracts through competitive
procedures, but rather on provider nomination.
Medicare's contracting program is closed. All but one of
the contractors today have been with Medicare since the
program's inception 36 years ago, and only insurers can provide
contracting services.
C. Legislative History
After the March 15 hearing, Chairman Nancy Johnson and
Ranking Member Pete Stark wrote Secretary Thompson with a
number of suggestions regarding regulatory improvements the
Department could make using existing administrative authority.
Many of those changes have already been adopted.
However, because many of the problems identified through
the Subcommittee's work could not be corrected
administratively, the Subcommittee began work in March on a
legislative package. Through extensive collaboration with the
provider community, the General Accounting Office and the Bush
Administration, a draft bill was developed. The bill was
responsive to issues raised by the Office of Inspector General
in order to ensure that the package extends regulatory relief
to providers while protecting taxpayers and beneficiaries from
waste, fraud, and abuse. The bill was introduced on August 2 as
H.R. 2768 and referred to the Committee on Ways and Means'
Subcommittee on Health and the Committee on Energy and
Commerce.
On September 25, the Subcommittee held a follow-up hearing
on H.R. 2768 to elicit additional suggestions on the bill as
introduced. Testimony was provided by CMS Administrator Tom
Scully, the General Accounting Office and representatives of
provider groups.
After approving Representative Johnson's amendment in the
nature of a substitute, the Subcommittee on Health ordered
favorably reported the bill on October 4, 2001 to the full Ways
and Means Committee by voice vote with a quorum present with no
additional amendments.
On October 11, after approving Chairman Thomas' amendment
in the nature of a substitute, the full Committee on Ways and
Means ordered favorably reported H.R. 2768 to the House of
Representatives by voice vote with a quorum present. There were
no additional amendments.
II. EXPLANATION OF PROVISIONS
Section 1. Short title; Amendments to Social Security Act; table of
contents
Current Law.--No provision.
Explanation of Provision.--Except as otherwise specified,
the provisions would amend or repeal a section or other
provisions of the Social Security Act. 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 consolidation of other items related to
Part A and Part B. Finally, the term, ``supplier,'' means a
physician, practitioner, facility, or other nonprovider entity
that furnishes Medicare items or services unless otherwise
indicated.
Effective Date.--Upon enactment.
Reason for Change.--The Subcommittee is committed to
extending needed regulatory relief to providers and suppliers
while at the same time protecting taxpayers from waste, fraud
and abuse.
Section 2. Issuance of regulations
(a) Consolidation of promulgation to once a month
Current Law.--The Secretary is required to issue
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 that determines
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 contained in 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.
Explanation of Provision.--The Secretary would be required
(1) to issue proposed or final regulation (including interim
final regulation) only on one business day of the month unless
publication on another date is necessary to comply with
statutory requirements and (2) coordinate the issuance of new
regulations relating to a category of provider or supplier
based on an analysis of the collective impact of the regulatory
changes on such category. No later than 3 years after
enactment, the Secretary would be required to report to
Congress on the feasibility of issuing regulations only on one
day in each calendar quarter.
Effective Date.--The provisions would apply to regulations
issued 30 days after enactment.
Reason for Change.--The volume of Medicare regulations
issued by CMS can be difficult for health care providers and
suppliers, particularly small providers and suppliers, to
monitor. By requiring periodicity on the release of
regulations, providers and suppliers will be better able to
keep informed of program changes.
The collective impact provision ensures that the Department
will consider the overall impact of any changes it is making on
categories of providers and suppliers. If the Department
determines that many changes affecting a particular category of
providers or suppliers are underway, the Department should
consult with representatives of that category to determine
whether providers and suppliers would be better able to make
the systems changes needed to accommodate thosechanges if all
the new regulations were released simultaneously or staggered. Because
of the burden implementing multiple regulations simultaneously can
cause, the Secretary needs to coordinate new regulations based on an
analysis of the collective impact the regulatory changes will have on
any given category of provider or supplier.
(b) Regular time line for publication of final rules
Current Law.--See above. The Secretary must publish in the
Federal Register no less frequently than every 3 months, a list
of all manual instructions, interpretative rules, statements of
policy, and guidelines which are promulgated to carry out
Medicare's law.
Explanation of Provision.--The Secretary, in consultation
with the Director of the Office of Management and Budget, would
establish and publish a regular time line for the publication
of final regulations based on the previous publication of a
proposed regulation or an interim final regulation. The time
line may vary by regulation due to complexity, number and scope
of comments received and other factors. The Secretary would be
required to publish in the Federal Register any variations in
the time line for publication of the final regulation. This
notice of the different time line would need to: (1) be
published no later than the end of the comment period for the
proposed regulation and (2) include a brief explanation of the
justification for such variation. If the regular time line
established for an interim final regulation expires without
promulgation of a final regulation (and associated public
comment period), the interim final regulation would not remain
in effect unless the Secretary publishes a notice of
continuation that would include an explanation for not
complying with the regular time line. The interim regulation's
regular time line would be restarted on the date that the
notice of continuation is published. The Secretary would be
required to submit a report to Congress that describes and
explains the instances where the final regulation was not
published within the applicable time line.
Effective Date.--Upon enactment. The Secretary would be
required to provide for a transition period for previously
published interim final regulations.
Reason for Change.--Numerous regulations have been issued
by CMS as interim final regulations and never finalized. This
injects an element of uncertainty into the regulation in
question, and it precludes the ability of CMS to incorporate
changes based on comments received by interested parties into a
final regulation. The provision ensures that proposed
regulations will move through the process of finalization in a
predictable and timely manner.
(c) Limitation on new matter in final regulations
Current Law.--No provision.
Explanation of Provision.--A provision in a final
regulation that is not a logical outgrowth of the proposed
regulation would be treated as a proposed regulation and would
not take effect without a separate public comment period
followed by publication as a final regulation.
Effective Date.--Upon enactment.
Reason for Change.--The provision ensures that interested
parties will be given an opportunity to comment on issues
addressed in regulations before they take effect. The Committee
recognizes that proposed regulations for annual payment updates
for providers and suppliers include proposed overall payment
updates, and that specific payment amounts for specific codes
or specific payment areas are not typically included until
final rules. The
Committee does not intend to change past custom to
recognize such details in final rules as a ``logical
outgrowth'' of proposed rules.
Section 3. Compliance with changes in regulations and policies
(a) No retroactive application of substantive changes; time
line for compliance with substantive changes after
notice
Current Law.--No provision.
Explanation of Provision.--A substantive change in Medicare
regulations, manual instructions, interpretive rules, policy
statements, or guidelines would not be applied retroactively to
items or services furnished before the date it was issued,
unless the Secretary determines that retroactive application
would be necessary to comply with statutory requirements or
would have a positive impact onbeneficiaries or providers and
suppliers. The substantive change would not be effective until at least
30 days after it is issued. No compliance action could be taken against
a provider or supplier with respect to the change for items and
services furnished before the effective date.
Effective Date.--Upon enactment.
Reason for Change.--This provision will ensure providers
and suppliers will have sufficient time to make any changes to
systems needed to comply with changes in regulations.
(b) Reliance on guidance
Current Law.--No provision.
Explanation of Provision.--If (1) a provider or supplier
follows written guidance (which may be transmitted
electronically) provided by the Secretary or a Medicare
contractor when furnishing an item or service and submitting a
claim; (2) the Secretary finds that the circumstances relating
to the furnished items and services have been accurately
presented in writing to the contractor and (3) the guidance is
inaccurate, the provider or supplier would not be subject to
any sanction including repayment or any penalty. This provision
would not be construed to prevent repayment (or payment of
penalties) to the extent that the overpayments result from a
clerical or technical operational error. GAO is instructed to
conduct a study on the feasibility and appropriateness of
legally binding advisory opinions on appropriate interpretation
and application of Medicare regulations.
Effective Date.--Upon enactment.
Reason for Change.--This provision will ensure that
providers and suppliers who acted in good faith based on the
information they received from their contractors will not be
vulnerable to recovery if it turns out that the contractor was
in error. Providers should be able to rely on the directions or
guidance provided to them by their Medicare contractors, even
if there is a technical or clerical error on the part of the
contractor in developing or providing the direction or
guidance. The protections of new section 9(b) are not available
in the case of a technical or clerical error that is not
incorporated into direction or guidance and therefore not
relied upon by the provider in providing supplies or services.
For example, a simple miscalculation in the payment of a claim
that results in the wrong amount being sent to a provider would
be recoverable.
Section 4. Increased flexibility in Medicare administration
(a) Consolidation and flexibility in Medicare
administration
Current Law.--Section 1816 of the Social Security Act
authorizes the Secretary to establish agreements with fiscal
intermediaries nominated by different provider associations to
make Medicare payments for health care services furnished by
institutional providers. Section 1842 of the Act authorizes the
Secretary to enter into contracts with health insurer 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 to
improve or maintaining good performance as well. The Secretary
may not require that carriers or intermediaries match data
obtained in its other activities with Medicare data in order to
identify beneficiaries who have other insurance coverage as
part of the Medicare Secondary Payer (MSP) program. With the
exception of prior authorization of DME claims, an entity may
not perform activities (or receive related payments) under a
claims processing contractto the extent that the activities are
carried out pursuant to a MIP contract. Performance standards with
respect to the timeliness of reviews, fair hearings, reconsideration
and exemption decisions are established as well.
A Medicare contract with an intermediary or carrier may
require any of its employees certifying or making payments
provide a surety bond to the United States in an amount
established by the Secretary. Neither the contractor nor the
contractor's employee who certifies the amount of Medicare
payments is liable for erroneous payments in the absence of
gross negligence or intent to defraud the United States.
Neither the contractor nor the contractor's employee who
disburses payments is liable for erroneous payments in the
absence of gross negligence or intent to defraud the United
States, if such payments are based upon a voucher signed by the
certifying employee.
Explanation of Provision.--The legislation would add
Section 1874A to the Social Security Act which would permit the
Secretary to enter into contracts with any entity to serve as a
Medicare administrative contractor. These contractors would
perform, or secure the performance of (through subcontracting),
some or all of the following tasks: determine payment amounts;
making payments; educate and assist beneficiaries; consult and
communicate with and assist providers and suppliers; and
perform additional functions as necessary. 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 or supplier, or class of
provider or supplier.
The Secretary would be required to use competitive
procedures when entering into a Medicare administrative
contract but would be able to renew a contract for up to five
years without regard to statutory requirements concerning
competitive contracting if the entity has exceeded specified
performance standards. These standards would take into account
performance, quality, price, and other factors. Functions would
be able to be transferred among Medicare administrative
contractors, consistent with these provisions. The Secretary
would be required to (1) consider performance quality in such
transfers; (2) provide incentives for the Medicare
administrative contractors to provide efficient, high-quality
services; and (3) develop performance standards with respect to
each of the payment, provider service, and beneficiary service
functions required of the contractors. With respect to
developing the performance standards, the Secretary would be
able to consult with providers, suppliers and organizations
performing the contracting functions. The Secretary would be
required to contract only with those entities that (1) will
perform efficiently and effectively; (2) will meet standards
for financial responsibility, legal authority and service
quality among other pertinent matters; (3) will agree to
furnish timely and necessary data; and (4) will maintain and
provide access to necessary records and data. The Secretary
retains his authority to cover the termination costs of current
contractors.
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. As under current law, the Secretary
would not be able to require existing or new contractors to
match their data with Medicare data for the purposes of the
identifying beneficiaries with other insurance coverage. The
Secretary would assure that the activities of the Medicare
administrative contractors do not duplicate the Medicare
Integrity Program (MIP) functions except with respect to the
prior authorization of DME. An entity with a MIP contract would
not be treated as a Medicare administrative contractor, solely
by reason of the MIP contract. 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, reconsideration and exemption
decisions.
A Medicare administrative contractor and any of its
employees certifying or disbursing payments may be required to
provide a surety bond to the United States in an amount
established by the Secretary. It is the intent of Congress that
the definition of a surety bond in this instance includes
fidelity bonds and the Secretary has the authority to request
fidelity bonds. The liability standard of ``gross negligence or
intent to defraud'' is retained for individuals and designated
officers but the agency and organization are now also liable
under a ``gross negligence or intent to defraud'' standard;
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
an authorization from the certifyingemployee AND the
authorization meets the internal control standards established by
General Accounting Office (GAO). The Secretary would pay the Medicare
administrative contractor, its employees, or their legal
representatives for defending these contractors or employees in a civil
action related to the performance of their contractual duties, if due
care was exercised in the performance of such duties. These payments
would be equal to the reasonable amount of legal expense incurred.
Effective Date.--See subsection (d).
Reason for Change.--Medicare's current contracting
represents an antiquated, inefficient, and closed system based
on cozy relationships between the government, contractors and
providers.
The Medicare contracting program is antiquated because
contractors may not provide service for the entire Medicare
program, or particular functions within the program; rather
Fiscal Intermediaries administer claims for facilities and
carriers administer claims for all other providers. It has
failed to keep pace with integrated claims administration
practices in the private sector.
Medicare's contracting program is inefficient because
Medicare does not award contracts through competitive
procedures, but rather on provider nomination.
Medicare's contracting program is closed. All but one of
the contractors today have been with Medicare since the
program's inception 36 years ago, and only insurers can provide
contracting services.
This provision permits greater flexibility in contracting
for administrative services between the Secretary and the
Medicare contractors (entities that process claims under part A
and part B of the Medicare program), including the flexibility
to separately contract for all or parts of the contractor
functions. The Secretary also may contract with a wider range
of entities, so that the most efficient and effective
contractor can be selected.
These amendments require the Secretary to contract
competitively at least once every five years for the
administration of benefits under parts A and B. In conjunction
with the elimination of cost contracts, it is intended to
create incentives for improved service to beneficiaries and to
providers of services and suppliers. Finally, it establishes a
liability standard of gross negligence or intent to defraud for
the agency or organization, to eliminate a statutory ambiguity
that appeared to extend immunity to that entity for fraudulent
payments certified and disbursed to Medicare Part A providers.
(b) Conforming amendments to section 1816 (relating to
fiscal intermediaries)
Current Law.--Section 1816 of the Social Security Act
establishes the provider nomination process, the contracting
specifications, and performance standards for fiscal
intermediaries that currently contract with Medicare to process
claims and perform other related administrative activities for
institutional providers.
Explanation of Provision.--The provisions establish that
the activities of fiscal intermediaries in administering
Medicare would be conducted through contracts with Medicare
administrative contractors as set forth in subsection (a). The
provider nomination process and contracting specifications
would be repealed. Certain performance standards with respect
to the processing of clean claims would be retained. Certain
annual reporting requirements concerning the contractor's
overpayment recovery efforts would be retained.
Effective Date.--See subsection (d).
Reason for Change.--These amendments provide a basis for a
unified contracting system for the administration of parts A
and B, identical to the recent Congressionally mandated
structure of the Medicare Integrity Program contractors.
Consolidation of contracting duties as set forth in this
legislation does not constitute consolidation of the Hospital
Insurance and Medical Supplementary Insurance Trust Funds, or
reflect any position on that issue. In addition, the
elimination of provider nomination, which has been rarely
allowed in recent years, is essential for bringing full and
open competition into the contracting functions of the Medicare
program.
(c) Conforming amendments to section 1842 (relating to
carriers)
Current Law.--Section 1842 of the Social Security Act
establishes that carriers will be used to administer certain
Medicare benefits as well as the contracting requirements and
certain performance standards for those activities.
Explanation of Provision.--The provisions would establish
that the activities of carriers administering Medicare would be
conducted through contracts with Medicare administrative
contractors as set forth in subsection (a). Certain
instructions including those pertaining to nursing facilities'
payments, claims assignment, physician participation,
overpayment recoveries and billing by suppliers would be
retained. Certain performance standards with respect to the
processing of clean claims would be retained. Contracting
specifications and other conforming changes would be
established. The Secretary, not the contractor, would be
responsible for taking necessary actions to assure that
reasonable payments are made, for those made on both 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. Certain
annual reporting requirements concerning the contractor's
overpayment recovery efforts would be retained.
Effective Date.--See subsection (d).
Reason for Change.--The provision establishes a basis for a
unified contracting system, identical to the structure
implemented for the Medicare Integrity Program contractors. It
is important to note, however, that consolidation of
contracting duties as set forth in this legislation does not
constitute consolidation of the Hospital Insurance and Medical
Supplementary Insurance Trust Funds, or reflect any position on
that issue. In addition, the Secretary would have the
flexibility to choose the best contractor(s) to provide
telephone information on suppliers which is intended to reduce
administrative costs and improve quality.
(d) Effective date; transition rule
Current Law.--No provision.
Explanation of Provision.--Except as otherwise provided in
this subsection, the provisions in this section would be
effective October 1, 2003. The Secretary would be authorized to
take necessary actions prior to that date in order to implement
these amendments on a timely basis to transition from the
contracts established under sections 1816 and 1842 of the
Social Security Act to those established under the new section
1874A created by this legislation. The transition would be
consistent with the requirement that the administrative
contracts be competitively bid by October 1, 2008. The
requirement that MIP contracts be awarded on a competitive
basis would continue to apply and would not be affected by the
provisions in this section. The MIP contracting exception that
allows agreements according to current law would be deemed to
be a contract established under the new authority of 1874A and
would continue existing activities. The Secretary has the
authority to recognize the appropriate termination costs of
current cost contracts in the transition from current cost
contracts to competitively bid contracts.
Reason for Change.--The provision provides for the
appropriate transition between the current contracting system
and these amendments.
(e) References
Current Law.--No provision.
Explanation of Provision.--After this section becomes
effective, any reference to fiscal intermediary or carrier
would be considered a reference to the appropriate Medicare
administrative contractor.
Reason for Change.--These amendments are necessary to
conform existing law to the new structure.
Section 5. Provider education and technical assistance
(a) Coordination of education funding
Current Law.--Medicare's provider education activities are
funded through the program management appropriation and through
the Education and Training component of the Medicare Integrity
Program (MIP). Both claims processingcontractors (fiscal
intermediaries and carriers) and MIP contractors may undertake provider
education activities.
Explanation of Provision.--The provision would add Section
1889 to the Social Security Act which would require the
Secretary to (1) coordinate the educational activities provided
through the Medicare administrative and MIP contractors and (2)
to submit an evaluation to Congress on actions taken to
coordinate the funding of provider education.
Effective Date.--Upon enactment with report due to Congress
no later than October 1, 2002.
Reason for Change.--This provision is intended to ensure
that federal spending on provider education is coordinated and
used as efficiently as possible to maximize the value obtained
from the investment. It is not intended to change the
proportion or Medicare Integrity Program funds spent on
provider education.
(b) Incentives to improve contractor performance
Current Law.--No specific statutory provision. Since
FY1996, as part of the audit required by the Chief Financial
Officers Act, an estimate of improper payments in Medicare fee-
for-service has been established annually. As a recent
initiative, CMS is implementing a comprehensive error rate
testing program to produce national, contractor specific,
benefit category specific and provider specific paid claim
error rates.
Explanation of Provision.--The Secretary would be required
to (1) develop a methodology, in consultation with
representatives of providers and suppliers, to measure the
specific claims payment error rates at each Medicare
administrative contractor; and (2) identify best practices
developed at each contractor for educating providers and
suppliers. The Secretary would be required to report to
Congress on (1) the use of the claims error rate methodology in
assessing the effectiveness of contractors' provider education
and outreach programs and (2) whether methodology should be
used as the basis of bonuses for contractors. The report shall
also include an analysis of the sources of identified errors
and potential changes in systems of contractors and rules of
the Secretary that could reduce claims error rates.
Effective Date.--Methodology is to be implemented and
report is due to Congress by October 1, 2003.
Reason for Change.--This provision would ensure that the
Department monitors contractor level performance as it relates
to claims payment error rates, and it would identify best
practices for provider education--all with the goal of reducing
payment errors and helping providers and suppliers better
comply with program requirements.
(c) Provision of access to and prompt responses from
Medicare administrative contractors
Current Law.--No specific statutory provision. Statutory
provisions generally instruct carriers to assist providers and
others who furnish services in developing procedures relating
to utilization practices and to serve as a channel of
communication relating information on program administration.
Fiscal intermediaries are generally instructed to (1) provide
consultative services to institutions and other agencies to
enable them to establish and maintain fiscal records necessary
for program participation and payment and (2) serve as a center
for any information as well as a channel for communication with
providers.
Explanation of Provision.--Each Medicare administrative
contractor would be required to (1) respond clearly, concisely
and accurately to billing and cost reporting questions; (2)
maintain a toll-free telephone number for such inquiries; (3)
maintain a system for identifying, and disclosing on request,
which employee provided the information; and (4) monitor the
quality of the information provided. The Secretary would be
required, in consultation with provider organizations, to
establish performance standards with respect to telephone
inquiries from providers and suppliers.
Effective Date.--October 1, 2003.
Reason for Change.--This provision is intended to improve
contractor accountability to make contractors more responsive
to providers and suppliers, and to increase the accuracy and
reliability of the information provided in response to the
questions received.
(d) Improved provider education and training
Current Law.--In FY2000, $54.8 million was spent on
provider education and training activities: about $43 million
from the program management appropriation and about $12 million
came from the provider education and training component of MIP.
In FY2001, about $57.3 million was budgeted for these
activities.
Explanation of Provision.--The provision would authorize an
increased $10 million appropriation from Medicare Trust Funds
(as appropriate from the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund) in
FY2003 and FY2004 to increase Medicare contractors' billing,
coding and other provider training activities. Medicare
administrative contractors would be required to conduct
education and training activities for small providers of
services or suppliers, that is, institutional providers with
less than 25 full-time equivalents (FTEs) or suppliers with
less than 10 FTEs.
Effective Date.--October 1, 2002.
Reason for Change.--This provision acknowledges that
contractors are being instructed to significantly improve their
provider education and training efforts, and accordingly
authorizes new funds to be available for those purposes.
(e) Requirement to maintain Internet sites
Current Law.--No provision.
Explanation of Provision.--The Secretary and each Medicare
administrative contractor would be required to maintain an
Internet site which provides easily accessible answers to
frequently asked questions as well as other published materials
of the contractor.
Effective Date.--October 1, 2002.
Reason for Change.--This provision will facilitate greater
ease of provider and supplier access to information provided by
Medicare's contractors.
(f) Additional provider education provisions
Current Law.--No provision.
Explanation of Provision.--A Medicare contractor would not
be able to use attendance records at educational programs or
information gathered during these programs to select or track
providers or suppliers for audit or prepayment review. Nothing
in the proposed legislation would require Medicare
administrative contractors to disclose claims processing
screens (computer edits that trigger medical review) or
information that would compromise pending law enforcement
activities or law enforcement-related audits.
Effective Date.--Upon enactment.
Reason for Change.--This provision addresses a concern
raised by providers and suppliers that their participation in
educational forums has been used to trigger audits.
Participation in educational forums should be encouraged not
discouraged.
Section 6. Small provider technical assistance demonstration program
Current Law.--No provision.
Explanation of Provision.--The Secretary would be required
to establish a demonstration program that offers technical
assistance, upon request, to small providers or suppliers
(institutional providers with less than 25 full-time
equivalents (FTEs) or suppliers with less than 10 FTEs.)
Technical assistance would include direct in-person examination
of billing systems and internal controls by qualified entities,
such as peer review organizations or other entities. The
technical assistance would also make available information and
assistance regarding policies and procedures under Medicare,
including coding and reimbursement. In awarding these
contracts, the Secretary would be required to consider any
prior investigations of the entity's work by the Office of the
Inspector General (OIG) in HHS or the GAO. Participating
providers and suppliers would be required to pay an amount
estimated and disclosed in advance that would equal 25% of the
cost of the technical assistance they received. Absent
indications of fraud, errors found in the review would not be
subject to recovery if the problem is corrected within 30 days
of the on-site visit and remains corrected for anappropriate
period. GAO, in consultation with the OIG, would be required to
evaluate and recommend continuation of the demonstration project no
later than two years after its implementation. The evaluation would
include a determination of whether claims error rates were reduced for
providers and suppliers who participated in the program. The evaluation
would also study whether improper payments were made as a result of the
demonstration. The provision would authorize $1 million in FY2003 and
$6 million in FY2004 of appropriations from the Medicare Trust Funds to
carry out demonstration project.
Effective Date.--Upon enactment.
Reason for Change.--Many large providers and suppliers have
contracts with private consulting firms to help them navigate
their interactions with the Medicare program. This type of
assistance can be prohibitively expensive for small providers
and suppliers--but they too are required to comply with complex
program rules and regulations. This provision creates a new
demonstration program to facilitate small provider and supplier
access to expert technical assistance. The demonstration will
also test whether encouraging technical assistance on the front
end to help providers and suppliers play by the rules can save
the program money in the longer term by promoting greater
program compliance.
Section 7. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman
Current Law.--No statutory provisions address Medicare
Provider or Beneficiary Ombudsman programs. The Secretary is
required to prepare and distribute an annual notice explaining
Medicare benefits and limitations to coverage to Medicare
beneficiaries. The Secretary is also required to provide
information via a toll-free telephone number.
Explanation of Provision.--The Secretary would be required
to appoint a Medicare Provider Ombudsman to (1) to resolve
unclear guidance and provide confidential assistance to
providers and suppliers regarding complaints or questions about
the Medicare program, including peer review and administrative
requirements; and (2) recommend changes to improve program
administration.
The Secretary would also be required to appoint an internal
Medicare Beneficiary Ombudsman from individuals with health
care expertise and advocacy. The ombudsman would (1) receive
complaints, grievances, and requests for information from
Medicare beneficiaries; (2) provide assistance with respect to
those complaints, grievances and requests, including assistance
to beneficiaries who appeal claims determinations or those
affected by the decisions of Medicare+Choice organizations to
leave Medicare; and (3) submit an annual report to Congress and
the Secretary describing activities and recommending changes to
improve program administration from a beneficiary perspective.
The provision would authorize appropriations of necessary
sums in FY2002 and subsequently from the appropriate Medicare
Trust Funds for these Ombudsman programs.
Finally, the Secretary would be required to establish a
toll-free number (1-800-MEDICARE) to triage individuals with
questions or seeking help to the appropriate individuals or
entities. The triage would occur with no charge. This toll-free
number would be the only general information and assistance
number listed in the Medicare handbook and annual notice
provided to Medicare beneficiaries, replacing phone numbers for
Medicare contractors. However, assistance numbers that are not
Medicare contractors would continue to be listed separately,
such as numbers for State Health Insurance Counseling and
Assistance Programs.
Effective Date.--Upon enactment.
Reason for Change.--Beneficiaries and providers are
currently confronted with a morass of bureaucracy and
regulation, with no clear individual to assist them. The
beneficiary handbook currently provides many pages of phone
numbers, which can be very confusing for beneficiaries, rather
than a single number that then triage beneficiaries to the
appropriate person or entity. The provisions in this section
are intended to help providers and beneficiaries navigate
Medicare's complicated rules and regulations.
Section 8. Provider appeals
(a) Medicare administrative law judges
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 was amended by Benefits
Improvement and Protection Act of 2000 (BIPA) in its entirety,
but the BIPA provisions are not yet effective. Generally,
parties who have been denied coverage of an item or service
have the right to appeal that decision through a series of
administrative appeals and then into federal district court if
the amounts of disputed claims in question meet certain
thresholds at each step of the appeals process. A hearing by an
administrative law judge (ALJ) in the Social Security
Administration (SSA) is one component of the administrative
appeals process.
Explanation of Provision.--By October 1, 2003, the
Commissioner of SSA and the Secretary would be required to
develop and implement a plan to transfer the functions of the
ALJs responsible for hearing Medicare cases from SSA to Health
and Human Services. This plan would include recommendations on
the number of judges and support staff required to adjudicate
cases on a timely basis and funding needed for FY2004 and
subsequently. The Secretary of HHS is required to submit to the
Committee on Ways and Means of the House of Representatives,
the Committee on Finance of the Senate, and the Comptroller
General the terms of the plan by July 1, 2003. By September 1
of that year, GAO has to report back to the Committees with an
evaluation of the transfer plan. The provision would authorize
increased appropriations, in addition to amounts otherwise
appropriated, from the appropriate Medicare Trust Fund of $5
million in FY2003 and as necessary in subsequent years in order
to increase the number of administrative law judges and to
improve education and training programs for judges and their
staff in carrying out their Medicare activities. Nothing in
this provision would be construed to affect the independence of
ALJs in carrying out their responsibilities for adjudicating
cases.
Effective Date.--Upon enactment, with the mandated report
concerning ALJ transfer due by October 1, 2003.
Reason for Change.--The Office of Inspector General has
identified moving the functions of the Medicare Administrative
Law Judges to the Department of Health and Human Services as an
important priority in improving the appeals system. This
provision makes that transition and increases the emphasis on
providing training Administrative Law Judges and their staffs
to increase their expertise in Medicare's rules and
regulations. The SSA Commissioner and the Secretary are
instructed to work together on the transition plans in order to
assure that the transition does not adversely affect the SSA
ALJ appeals system.
(b) Process for expedited access to judicial review
Current Law.--Section 1869 (as modified by BIPA but not yet
implemented) provides for expedited proceedings. Under BIPA
provisions, an expedited determination is available to a
beneficiary who has received notice: (1) that a provider plans
to terminate services and a physician certifies that failure to
continue services is likely to place the beneficiary's health
at risk; or (2) the provider plans to discharge the
beneficiary. In instances where the moving party alleges that
no material issues of fact are in dispute, the Secretary will
make an expedited determination as to whether any such facts
are in dispute and, if not, will render a decision
expeditiously.
Explanation of Provision.--The Secretary would be required
to establish a process where a provider or supplier of a
service or a beneficiary who has filed an appeal may obtain
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 it does not have
the authority over law or regulation in question and where
material facts are not in dispute. If so decided, the appellant
would be able to bring a civil court action if the civil action
is filed within 60 days. The venue for judicial review would be
the U.S. District Court where the appellant is located, or
where the greatest number of appellants are located, or in the
district court in DC. The amount in controversy would be
subject to annual interest awarded to the prevailing party by
the reviewing court. The provision for expedited access to
judicial review would apply to a provider's appeal concerning
program participation.
A review panel would be an administrative law judge (ALJ),
the Departmental Appeals Board (DAB), a Qualified Independent
Contractor (QIC) or other designated entity. A decision by the
review panel would be a final decision and would not be subject
to review by the Secretary. The appellant would be able to
request this determination only once with respect to a
particular question of law or regulation.
These expedited access to judicial review provisions will
also apply to application of termination proceedings, relating
to survey and certification determinations, under 1866(h).
Effective Date.--Applies to appeals filed on or after
October 1, 2002.
Reason for Change.--This provision ensures that if a review
board certifies that there are no material facts in dispute and
that the appeals process does not have authority to resolve the
question at issue, the provider, supplier, or beneficiary may
take their case to court in an expedited manner. This will
facilitate more prompt resolution of challenges to the
underlying validity of CMS regulations and determinations.
(c) Requiring full and early presentation of evidence
Current Law.--No provision.
Explanation of Provision.--A provider of services or
supplier would not be able to introduce evidence that was not
presented at reconsideration conducted by the QIC unless a good
cause precluded its introduction at or before that
reconsideration.
Effective Date.--On or before October 1, 2002.
Reason for Change.--The Office of Inspector General
identified this change as a priority to promote more
expeditious resolution of appeals of denied claims. This
provision requires prompt introduction of evidence relevant to
a provider appeal.
Section 9. Recovery of overpayments and prepayment review; enrollment
of providers
(a) Recovery of overpayments and prepayment review
Current Law.--No specific statutory provisions address the
payment plans, consent settlements, prepayment, or post-payment
actions. Section 1833(j) of the Social Security Act provides
that interest accrues on under- payments or overpayments
starting 30 days of the date of the final determination of the
accurate payment amount.
Explanation of Provision.--Subject to certain
qualifications, in circumstances where refund of an overpayment
within 30 days would constitute a hardship, providers and
suppliers would be allowed to repay overpayment amounts over a
period of up to three years when their overpayment obligation
exceeds a 10% threshold of their annual payments from Medicare.
The Secretary would be able to determine cases of extreme
hardship where a repayment period of up to five years could be
established. Interest would accrue on the balance through the
repayment period. The Secretary would be required to establish
the way that newly-participating providers and suppliers could
qualify for a repayment plan under this hardship provision.
Previous overpayment amounts already included in an ongoing
repayment plans would not be included in the calculation of the
hardship threshold. The Secretary would be allowed to seek
immediate collection if payments are not made as scheduled.
Exceptions to this provision would be permitted in cases where
bankruptcy may be declared or fraud or abuse is suspected.
For providers and suppliers who appeal an overpayment
determination, the Secretary would be prevented from recovering
an overpayment until the date of the qualified independent
contractor decision. The Secretary would be required (1) to
collect interest that accrues starting on the date of the
overpayment notice if the appeal decision is against the
provider, physician, practitioner or supplier and (2) to pay
the recouped amount plus interest if the appeal decision is
subsequently reversed.
Medicare contractors, both MIP and Medicare administrative
contractors, would be able to conduct random prepayment reviews
only in order to develop contractor-wide or program-wide claims
payment error rates. These random prepayment reviews would be
developed in consultation with providers and suppliers.
Contractors would be able to deny payments for claims subject
to the prepayment reviews.
Medicare contractors would not be able to use extrapolation
to determine overpayment amounts unless a sustained or high
level of payment error exists (as defined by the Secretary
through regulations) or a documented educationalintervention
did not correct the payment error.
Medicare contractors would be permitted to periodically
request records or documentation for a limited sample of claims
from providers or suppliers who had been overpaid to ensure
that the previous practices have been corrected.
The Secretary would be able to use a consent settlement to
resolve a projected overpayment. As part of the process, the
Secretary would be required to (1) communicate in a non-
threatening manner to a provider, or supplier that, based on a
preliminary analysis of medical records, an overpayment may
exist; (2) provide 45 days where additional information may be
submitted by the provider and supplier regarding these medical
records; (3) after considering the additional information,
provide notice and explanation of any remaining overpayment
determination; and (4) offer the opportunity for a
statistically valid random sample (which would not waive appeal
rights) or a consent settlement (based on a smaller sample with
a waiver of appeal rights) to resolve the overpayment amounts.
Medicare contractors would not be able to implement non-
random prepayment review based on initial identification of an
improper billing practice by the provider or supplier unless a
sustained or high level of payment error exists. The Secretary
would be required to issue regulations concerning the timing
and termination of prepayment reviews as well as the different
circumstances that would affect the duration of these reviews.
Medicare contractors would be required to provide a written
notice of the intent to conduct a post-payment audit to
providers, and suppliers selected as audit candidates. During
the exit conference between the provider or supplier and the
contractor, the contractor would be required to provide a full
review and understandable explanation of the findings to those
who have been audited. This full review (1) would permit the
development of an appropriate corrective action plan; (2) would
provide information on appeal rights; (3) would provide for an
opportunity to supply additional information to the contractor;
and (4) take into account that additional information which was
provided on a timely basis. A notice of audit or explanation of
findings would not be required if law enforcement activities or
audits would be compromised.
The Secretary would be required to establish a process
where classes of providers and suppliers are notified that
their Medicare contractor has identified specific billing codes
that may be over-utilized.
Effective Date.--Upon enactment.
Reason for Change.--These provisions build greater
consistency and predictability into Medicare's rules for
recovery of overpayments and prepayment review, while
protecting program integrity.
(b) Enrollment process for providers of services and
suppliers
Current Law.--Providers and, to some extent, suppliers have
access to certain appeal mechanisms if their application to
participate in Medicare is denied or terminated. Section
1866(h) of the Social Security Act provides for a hearing and
for judicial review of that hearing for any institution or
agency dissatisfied with a determination that it is not a
provider (or that it can no longer be a provider). There is no
statutory provision extending such judicial appeal rights to
suppliers. Sections 1128(a) and (b) of the Act provide for the
exclusion of certain individuals or entities because of the
conviction of crimes related to their participation in
Medicare; Section 1128(f) provides for hearing and judicial
review for exclusions. In 1999, the Health Care Financing
Administration (HCFA--now the Centers for Medicare and Medicaid
Services or CMS) published a proposed regulation that would
revise existing Medicare Part B administrative appeals
procedures and extend them to all suppliers not currently
covered.
Explanation of Provision.--The Secretary would be required
to establish by regulation an enrollment process which provides
an appeal mechanism with prompt deadlines for those providers
and suppliers whose applications to participate in Medicare are
denied.
Effective Date.--Within 6 months of enactment.
Reason for Change.--This provision gives providers and
suppliers an opportunity to appeal denials of their
applications to participate in the Medicare program.
(c) Process for correction of minor errors and omissions on
claims without pursuing appeals process
Current Law.--No provision.
Explanation of Provision.--The Secretary would be required
to develop, in consultation with appropriate Medicare
contractors and health care associations, a process where minor
claims errors can be corrected and resubmitted without
appealing the claims denial.
Effective Date.--Upon enactment.
Reason for Change.--Many of the providers and suppliers who
testified before the Subcommittee or contacted members directly
emphasized the need to create a process in which they could
correct claims that were denied because they were incomplete or
contained minor errors without having to pursue a formal
appeal. This provision instructs the Secretary to create such a
process, which will alleviate pressure on the appeals system.
The Subcommittee would be concerned, however, if this process
were to become an incentive for providers to knowingly or
negligently submit incomplete information.
The Committee intends that the process for correction of
minor errors and omissions on claims cover both the submission
of prepayment and post-payment review claims. For example, if
in the case of a home health claim, the physician has signed
the plan of care and/or physician's order but has not dated it,
the claim shall be returned to the home health agency and may
be resubmitted by the home health agency with any incomplete or
missing information without having to appeal the claim.
Section 10. Beneficiary outreach demonstration program
Current Law.--No provision.
Explanation of Provision.--The Secretary would be required
to establish a 3-year demonstration project where Medicare
specialists who are HHS employees are placed in at least six
SSA offices to advise and assist Medicare beneficiaries. The
SSA offices would be those with a high-volume of visits by
Medicare beneficiaries; at least two of the offices 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.
Effective Date.--Upon enactment.
Reason for Change.--This provision makes Medicare experts
available in six Social Security Administration offices to
assist beneficiaries and answer their questions. The
demonstration will test whether such outsourced Medicare
specialists improve beneficiary utilization and understanding
of the program, and beneficiary satisfaction.
Section 11. Policy development regarding evaluation and management
(E&M) documentation guidelines
Current Law.--No provision.
Explanation of Provision.--The Secretary would not be
permitted to implement any documentation guidelines for
evaluation and management (E&M) physician services unless the
guidelines (1) are developed in collaboration with practicing
physicians after assessment by the physician community; (2)
based on a plan with deadlines for improving use of E&M codes;
(3) are developed after completion of the pilot projects to
test modifications to the codes; (4) are found to meet the
desired objectives; and (5) are preceded by appropriate
outreach and education of the physician community. The
Secretary would make changes to existing E&M guidelines to
reduce paperwork burdens on physicians. The Secretary would be
required to modify E&M guidelines to (1) enhance clinically
relevant documentation: (2) decrease the non-clinically
pertinent documentation; (3) increase the reviewers' accuracy;
and (4) educate the physicians and the reviewers.
The provisions would establish different pilot projects in
specified settings that would be (1) conducted in consultation
with practicing physicians; (2) be ofsufficient length to
educate physicians and contractors on E&M guidelines and (3) allow for
an assessment of E&M guidelines and their use. A range of different
projects would be established, including a peer review method by
physicians as well as projects in a rural area, outside rural areas as
well as in a teaching setting and non-teaching setting. One of the
pilot programs would focus on an alternative method to detailed
guidelines, based on physician documentation of face to face encounter
time with a patient. 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. The
Secretary, in consultation with practicing physicians, would be
required to evaluate the development of alternative E&M documentation
systems with respect to administrative simplification requirements and
report results of the study to Congress. The Medicare Payment Advisory
Commission would conduct an analysis of the results of this study and
submit a report to Congress.
The Secretary would be required to conduct a study of the
appropriate coding of extended office visits where no diagnosis
is made and submit a report with recommendations to Congress.
Effective Date.--Upon enactment.
Reason for Change.--This provision is designed to promote
greater consultation with practicing physicians with regard to
the complicated evaluation and management and coding
requirements governing Medicare payment for physician services.
Section 12. Improvement in oversight of technology and coverage
(a) Improved coordination between FDA and CMS on coverage
of breakthrough medical devices
Current Law.--No provision.
Explanation of Provision.--At the request of the applicant
and to the extent feasible and upon request, the Secretary
would be required to coordinate and share appropriate
information under reviews of Medicare coverage decisions and
Food and Drug Administration's (FDA) reviews of applications
for pre-market approval of class III medical devices under
Section 515 of the Federal Food, Drug, and Cosmetic Act. The
Secretary would be required to submit a report on the
implementation plan to lessen the delay between FDA's pre-
market approval and Medicare's coding and coverage decisions to
the appropriate Congressional committees. This provision would
not change Medicare's coverage nor FDA's pre-market approval
criteria.
Effective Date.--Upon enactment with report to Congress on
implementation plan due no later than six months after
enactment.
Reason for Change.--After the FDA pre-market approval, the
Medicare program does a second evaluation of breakthrough
technologies to determine effectiveness and cost of those
technologies compared to existing technologies. The review is
necessary and appropriate, but it can take months between FDA
approval and the availability of new technology for Medicare
beneficiaries. By coordinating FDA and CMS approval of
breakthrough medical devices, where feasible, this provision is
intended to facilitate a more efficient process for the
coverage of certain new technology by the Medicare program.
(b) Council for Technology and Innovation
Current Law.--No provision.
Explanation of Provision.--The Secretary is required to
establish a Council for Technology and Innovation within the
Centers for Medicare and Medicaid Services (CMS) and appoint or
designate a Executive Coordinator for Technology and
Innovation. The Council would be composed of senior CMS staff
chaired by the Executive Coordinator who reports to the CMS
administrator. The Council shall coordinate Medicare's
coverage, coding, and payment processes as well as information
exchange with other entities with respect to new technologies
and procedures, including drug therapies.
Effective Date.--Upon enactment.
Reason for Change.--CMS personnel responsible for coverage,
coding and payment of medical innovation are often not well
coordinated. This provisioncreates a focal point for technology
and innovation within the Centers for Medicare and Medicaid Services by
creating a Council to coordinate across the different Centers and
Offices with responsibilities in this area. The Executive Coordinator
also provides a single point of contact for outside groups, similar to
recent initiatives launched by the Secretary for specific issues and
types of providers.
(c) GAO study on improvements in external data collection
for use in the Medicare inpatient payment system
Current Law.--No provision.
Explanation of Provision.--GAO would be required to conduct
a study which analyzes how external data can be collected for
use in computing Medicare's inpatient hospital payments. The
study may include an evaluation of the feasibility and
appropriateness of using quarterly samples or special surveys
among other methods. The study would include an analysis of
whether other agencies, such as the Bureau of Labor Statistics
in the Department of Commerce, are best suited to collect this
information.
Effective Date.--Report is due no later than October 1,
2002.
(d) Application of OSHA Blood Borne Pathogens standards to
certain hospitals
Current Law.--No provision.
Explanation of Provision.--Public hospitals that are not
otherwise subject to the Occupational Safety and Health Act of
1970 would be required to comply with the Blood Borne Pathogens
standard under section 1910.1030 of title 29 of the Code of
Federal Regulations. A hospital that fails to comply with the
requirement would be subject to a civil monetary penalty, but
would not be terminated from participating in Medicare.
Effective Date.--Applies to hospitals as of July 1, 2002.
Reason for Change.--Last year, Congress enacted legislation
that requires hospitals to utilize safe needles. However, that
legislation only applies to non-government hospitals. Twenty-
four states have similar requirements on public hospitals. This
provision would protect the health and safety of health care
workers in those facilities by requiring public hospitals in
the other 26 states and the District of Columbia to comply with
this important standard.
(e) IOM study on local coverage determinations
Current Law.--No provision.
Explanation of Provision.--The Secretary would be required
to arrange for a study by the Institute of Medicine (IOM) that
would examine the capabilities and information available to
establish Medicare's local coverage determinations. The study
would examine: (1) the consistency of definitions used in the
determinations; (2) the extent to which the determinations are
based on evidence; (3) the advantages and disadvantages of
local decision making; (4) whether, in the absence of adequate
data, determinations to cover experimental items or services
are made in order to collect data; (5) the advantages and
disadvantages of maintaining local medicare contractor advisory
committees.
Effective Date.--The IOM study would be due to the
Secretary no later than three years after enactment when it
would be promptly transmitted to Congress.
(f) Methods for determining payment basis for new lab tests
Current Law.--No provision.
Explanation of Provision.--The Secretary would be required
to establish by regulation procedures for determining the basis
for any new clinical diagnostic laboratory test. The Secretary
must make information available to the public on the
methodology and data.
Effective Date.--January 1, 2003.
Reason for Change.--The Secretary of Health and Human
Services is required to establish by regulation an open process
for any clinical diagnostic laboratory test. Under the
regulations, the Secretary shall develop criteria for use
indetermining whether a laboratory test should be established through
gap-filling or cross-walking to an existing code. When existing
services are not sufficient and gap filling must be used, the criteria
shall explain the basis of the data, the collection of the data, and
the methodology for computing the rate.
The intent of Congress is to open the process to allow CMS
to have access to information from beneficiaries, physicians,
health care experts and laboratories. Using the information it
receives through this new process, CMS shall develop and make
available to the public the information used to arrive at a
final determination. The information will include the rationale
for each such determination, the data on which the
determination is based, and responses to public comments.
Section 13. Miscellaneous provisions
(a) Treatment of hospitals for certain services under the
Medicare Secondary Payor (MSP) provisions
Current Law.--In certain instances when a beneficiary has
other insurance coverage, Medicare becomes the secondary
insurance. Medicare Secondary Payor is the Medicare program's
process for coordination of benefits with other insurers.
Section 1862(b)(6) of the Social Security Act requires an
entity furnishing a Part B service to obtain information from
the beneficiary on whether other insurance coverage is
available.
Explanation of Provision.--The Secretary would not require
a hospital or a critical access hospital to ask questions or
obtain information relating to the Medicare secondary payor
provisions in the case of reference laboratory services if the
same requirements are not imposed upon those provided by an
independent laboratory. Reference laboratory services would be
those clinical laboratory diagnostic tests and interpretations
of same that are furnished without a face-to-face encounter
between the beneficiary and the hospital where the hospital
submits a claim for the services.
Effective Date.--Upon enactment.
Reason for Change.--Hospitals would not have to directly
contact each beneficiary on their retirement date, black lung
status and other insurance information for reference laboratory
services. While current law provisions for a claim containing
valid insurance information are maintained, this provision is
intended to reduce the amount of paperwork and regulatory
burden related to the provision of these reference laboratory
services by hospital-based entities.
(b) Clarification of prudent layperson test for emergency
services under the Medicare fee-for-service program
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 insurance status of the patient.
Explanation of Provision.--Services that are provided by a
hospital or a critical access hospital to a Medicare
beneficiary who is not enrolled in Medicare+Choice plans in
order to evaluate or stabilize an emergency medical condition
that meets the application of the prudent layperson rule are
deemed to be reasonable and necessary covered services.
Effective Date.--Effective for items or services furnished
on or after January 1, 2002.
Reason for Change.--This change is intended to clarify that
services provided by hospitals under the Federal mandate on the
provision of emergency services to assure the health and safety
of Medicare beneficiaries are covered by the Medicare fee-for-
service program. It will eliminate regulatory burden by
eliminating the necessity for the hospital to provide
additional documentation or to appeal the denial of services
provided under the prudent layperson standard. It is not
intended to eliminate the section flexibility in a broader
policy.
(c) Submission of overdue reports on payment and
utilization of outpatient therapy services
Current Law.--Congress required the Secretary to submit a
report by January 1, 2001 on the establishment of a mechanism
for assuring appropriate utilization of outpatient therapy
services. The Secretary was also required to conduct a study on
the utilization of therapy services by June 30, 2001.
Explanation of Provision.--The moratoria delaying annual
outpatient therapy caps imposed by the Balanced Budget Act of
1997 will expire on October 1, 2002. The Committee believes
that the reimbursement policy for outpatient therapy services
should be based on a policy that is not arbitrary but protects
the program from the provision of inappropriate services. The
Secretary is urged to submit the required reports to Congress
immediately so that Congress can review any alternative
policies on this issue as soon as possible.
Effective Date.--Upon enactment.
(d) Authorizing use of arrangements with other hospice
programs to provide core hospice services in
certain circumstances
Current Law.--Hospice programs are not permitted to use
services provided under arrangement rather to deliver hospice
services. Services provided under arrangement are permitted for
Part A and Part B hospital services as well as skilled nursing
services. However, the originating hospital or skilled nursing
facility is required to bill for the service and be responsible
for the quality of care delivered by the subcontractor
Explanation of Provision.--Hospice programs may enter into
arrangements with another certified hospice program to provide
services. The provision for under arrangement services is
limited to extraordinary or non-routine circumstances, such as
unanticipated periods of staffing shortages. The originating
hospice program continues to bear the legal responsibility for
billing and maintaining quality of care.
Effective Date.--Upon enactment.
Reason for Change.--Hospice programs would be allowed to
use personnel from other hospice programs to provide services
to hospice patients. The program is given the flexibility so
that a hospice program could continue to serve a patient if he
or she was temporarily out of the area due to travel.
Otherwise, the provision of the care to the patient might be
delayed by the paperwork and requirements in starting up a new
service at another agency. It is the intent of Congress that
the originating hospice maintains control over the billing and
quality of care.
III. VOTES
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statements are made
concerning the votes of the Committee on Ways and Means in its
consideration of H.R. 2768.
MOTION TO REPORT THE BILL
H.R. 2768 was approved by voice vote with a quorum present
VOTES ON AMENDMENTS
Chairman Thomas' amendment in the nature of a substitute
was approved by voice vote with a quorum present.
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made:
The Committee agrees with the estimate prepared by the
Congressional Budget Office (CBO) which is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
Committee bill results in no increase in federal direct
spending.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives requiring a cost estimate
prepared by the Congressional Budget Office (CBO), the
following report prepared by CBO is provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 5, 2001.
Hon. William M. Thomas,
Chairman, Committee on Ways and Means,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2768, 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 M. Lieberman
(For Dan L. Crippen, Director).
Enclosure.
H.R. 2768--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, and would place new
requirements on those entities. It would require the Secretary
of HHS to conduct several demonstrations, and would require the
completion of several studies and reports.
Assuming the appropriation of the necessary funds, CBO
estimates that implementing H.R. 2768 would cost $41 million in
2002 and $548 million over the 2002-2006 period.
The procedural changes required by H.R. 2768 would affect
spending for services covered by Medicare, which is direct
spending. However, many of the bill's requirements codify
existing practices, while the other requirements would cause
minor increases or decreases in spending for covered services.
CBO estimates that the changes in direct spending would be
insignificant. Because the bill would affect direct spending,
pay-as-you-go procedures would apply.
H.R. 2768 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA). The requirement for
public hospitals participating in the Medicare program to
comply with the bloodborne pathogens standard promulgated by
the Occupational Safety and Health Administration (OSHA) would
have cost implications for state and local governments.
However, those requirements would be conditions of
participating in a voluntary federal program and thus would not
be intergovernmental mandates as defined in UMRA. H.R. 2768
contains no private-sector mandates as defined in UMRA.
Estimated Cost to the Federal Government: For this
estimate, CBO assumes that the legislation would be enacted
this fall and that estimated amounts would be appropriated each
year. The costs of this legislation fall within budget function
570 (Medicare).
Basis of estimate: Table 1 shows the estimated
authorization levels and outlays for Medicare administrative
expenses under current law and under H.R. 2768. Assuming
appropriation of the estimated amounts, CBO estimates that
enacting H.R. 2768 would cost $41 million in 2002 and $548
million over the 2002-2006 period.
TABLE 1.--ESTIMATED BUDGET IMPACT OF H.R. 2768
----------------------------------------------------------------------------------------------------------------
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..................................... 3,267 3,464 3,631 3,757 3,913 4,074
Proposed changes:
Estimated authorization level......................... 0 46 125 134 126 130
Estimated outlays..................................... 0 41 116 133 128 129
Spending for Medicare administrative costs under H.R.
2768:
Estimated authorization level......................... 3,352 3,546 3,771 3,931 4,081 4,248
Estimated outlays..................................... 3,267 3,505 3,747 3,890 4,041 4,203
----------------------------------------------------------------------------------------------------------------
\1\ Budget authority for 2001 is the amount appropriated for that year.
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 both the method by which
CMS enters into contracts and the activities required of
contractors. CBO expects that these provisions would increase
the cost of administering contracts, the total amount CMS
spends on contracts, and spending by contractors on the
education of providers about Medicare billing practices. We
estimate the cost of implementing these provisions would be $14
million in 2002 and $336 million during the 2002--2006 period.
H.R. 2768 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. 2768 would require CMS to competitively bid contracts
with fiscal intermediaries and carriers at least every five
years. CBO expects that an additional 3-5 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.
In addition, the bill would direct the 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 a contractor-wide error rate.
The bill would also expand the requirement for contractors to
monitor the accuracy of information given to providers, and
would limit the liability of contractors for payment errors.
CBO estimates that complying with these provisions would cost
about $27 million over the 2002-2006 period.
The bill also would instruct contractors to tailor their
educational efforts toward providers with staffs of fewer than
26 people, or physicians with fewer than 11 staff members. The
bill would authorize the appropriation of $10 million in 2003
and in 2004 to provide additional educational services. CBO
estimates that 80 percent of the authorized amount would be
spent in the current fiscal year and 20 percent the year after.
Appeals and Claims Payment Reform.--H.R. 2768 would change
the processes by which Medicare pays claims and adjudicates
appeals by providers of payment denials. CBO estimates that
implementing these provisions would cost $9 million in 2002 and
$104 million over the 2002-2006 period.
Resubmission of claims.--Under current law, providers may
pursue payment for claims initially submitted to contractors
with errors and omissions either via resubmission of claims in
some instances or via the appeals process. H.R. 2768 would
direct CMS to expand the instances in which providers may
resubmit claims directly to contractors. CBO expects that this
provision would lead to an increase in the number of incomplete
claims submitted and a 1 percent increase in the number of
claims processed. We estimate that processing those incomplete
claims would increase costs by $5 million in 2002 and by $46
million over the 2002-2006 period.
Reliance on guidance.--H.R. 2768 would prohibit any
sanction (including recoupment of overpayments) of a provider
who relies on written guidance from contractors. CBO assumes
this provision would increase the number of requests for
written guidance by 50 percent. Under current law, contractors
are required to respond to those requests. CBO estimates that
the cost to contractors of issuing written responses to the
additional requests, and the cost to CMS of oversight of those
responses, would total less than $500,000 in 2002 and $29
million over the 2002-2006 period.
Standardization of compliance actions.--The bill would also
standardize existing policies regarding:
Using random and non-random prepayment review;
Using extrapolation after finding of overpayment;
Enrolling providers and adjudicating appeals of
enrollment denials;
Communicating findings of overpayment to providers;
Notifying providers regarding billing codes that the
contractor suspects are being overused;
Requiring providers to act within 45 days during the
consent settlement process;
Collecting overpayments from providers.
CBO estimates that implementing those provisions would cost
$28 million over the 2002-2006 period.
Appeals reform.--H.R. 2768 would modify the current appeals
system. The bill would allow appellants to petition review
boards for expedited access to judicial review outside of the
Medicare review system. The bill would also require appellants
to present all relevant evidence at the reconsideration level.
These provisions are estimated to reduce administrative outlays
by about $6 million over the 2002-2006 period because they are
expected to reduce the caseload at the third and fourth level
of appeals.
The bill would transfer certain administrative law judges
(ALJs) from the Social Security Administration to the
Department of Health and Human Services. CBO estimates that the
costs of planning and implementing the transfer, and providing
the ALJs with additional training on Medicare issues, would
total $8 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.
Demonstrations and New Program Areas.--H.R. 2768 would
direct CMS to expand its programs to educate beneficiaries and
providers. CBO estimates that implementing these provisions
would cost $9 million in 2002 and $69 million during the 2002-
2006 period.
The bill would create a demonstration project for the
provision of technical services to small providers.
Participating providers would receive education specifically
related to their practice, as well as information about general
Medicare billing and documentation requirements. Participants
would contribute 25 percent of the costs of the technical
assistance. The bill would authorize the appropriation of $1
million in 2003 and $6 million in 2004 for the demonstration.
The bill would also 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 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. 2768 would require CMS to develop two new ombudsman
offices, for providers and beneficiaries, within the Medicare
program. Each office would act as a liaison between either
providers or beneficiaries and the agency. The offices would be
responsible for offering advice and assistance to individuals
regarding the program, as well as conveying the concerns of
providers and beneficiaries to program officials. The bill
would authorize such sums as may be necessary in 2002 and
thereafter for these ombudsman offices. CBO estimates that the
number of staff required to perform these functions would grow
from 85 FTEs in 2002 to 155 FTEs in 2006. We estimate these
ombudsman activities would cost $54 million over the 2002-2006
period.
H.R. 2768 would also require CMS to establish a Council for
Technology and Innovation within CMS. The Secretary would
appoint an Executive Coordinator for the council. CBO estimates
that CMS would spend about $1 million a year to staff and
operate the Council for Technology and Innovation.
Development of Policies, Procedures, and Time Lines.--H.R.
2768 would require CMS to develop new policies, procedures, and
time lines with regard to the issuance of regulations,
documentation guidelines for evaluation and management
services, and the Medicare Secondary Payer program. CBO
estimates the cost of implementing these provisions would be $9
million in 2002 and $36 million during the 2002-2006 period.
Final regulations.--The bill would require CMS to create a
time line for the publication of final regulations and 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.
CBO estimates that it would cost about $9 million in 2002
to finalize existing interim final rules. We estimate the CMS
would need to hire an additional 3 to 5 staff, at the GS-11
level or higher, and spend an additional $10 million through
2006 to comply with the requirement to finalize all future
interim regulations and to produce the required reports.
Documentation guidelines for evaluation and management
(E&M) services.--H.R. 2768 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 development and implementing new E&M
guidelines. Establishing new guidelines for E&M documentation
would require the hiring of at least two FTEs for
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.
Medicare Secondary Payer program.--The Medicare Secondary
Payer program requires providers and suppliers to collect
insurance information from beneficiaries to determine whether
Medicare will be the secondary payer on a claim. The bill would
restrict Medicare from implementing special requirements for
hospital-based laboratories that act as referral laboratories,
with respect to gathering insurance information from patients,
unlessindependent laboratories are also required to collect
such information. Under current policy, referral laboratories, which
conduct tests without direct contact with patients, would have to begin
gathering this information beginning in January 2002. CBO estimates
that the costs of complying with this provision would be negligible.
Medicare Coverage Policies.--H.R. 2768 would change the
timing of CMS's national coverage decisions concerning certain
new technologies. Upon request by an applicant, the Secretary
would be required, to the extent feasible, to coordinate
reviews of coverage decisions with the review for premarket
approval conducted by the Food and Drug Administration. H.R.
2768 would require the Secretary to submit to the Congress a
plan for achieving such coordination within six months. CBO
estimates that establishing and operating the coordination
process would cost $1 million in 2002 and $3 million over the
2002-2006 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. CBO
estimates that the bill would not affect receipts and would
have no significant effect on direct spending.
Estimated impact on state, local, and tribal governments:
H.R. 2768 contains no intergovernmental mandates as defined in
the Unfunded Mandates Reform Act. The requirement for public
hospitals participating in the Medicare program to comply with
OSHA's bloodborne pathogens standard would have cost
implications for state and local governments. The current OSHA
standard applies to all private-sector employers with one or
more employees, as well as to federal civilian employees. This
bill would extend the requirement to all hospitals
participating in the Medicare program, including state and
local public hospitals. About half of the states currently have
bloodborne pathogen standards that apply to these hospitals
that are at least as stringent as the federal standard. Public
hospitals in the remaining states could face additional costs
as a result of the new requirement. Those costs, however, would
result from participating in Medicare, a voluntary federal
program, and thus would not be costs of an intergovernmental
mandate as defined in UMRA.
Estimated impact on the private sector: H.R. 2768 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.
V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports that the
need for this legislation was confirmed by the oversight
hearings of the Subcommittee of Health. The hearings were as
follows:
The Subcommittee on Health held a hearing on March 15, 2001
to examine how government can do its job better to ensure that
beneficiaries are protected and that taxpayer dollars are used
wisely and responsibly without placing undue burdens on
providers. Testimony at the hearing was presented by the Office
of the Inspector General, patient and provider groups and
experts on the Medicare program.
On September 25, 2001, the Subcommittee held a hearing on
H.R. 2768, which includes provisions for facilitating access by
beneficiaries and providers to information on the Medicare
program, for improving the administration of the Medicare
program and for reducing regulatory burden. The hearing
included testimony from the Administration, the General
Accounting Office, and health care providers.
B. Summary of General Performance Goals and Objectives
In compliance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
primary purpose of H.R. 2768 is to create a more collaborative,
less confrontational relationship between providers and CMS.
C. Constitutional Authority Statement
In compliance with clause 3(d)(1) of rule XIII of the Rules
of the House of Representatives, relating to constitutional
Authority, the Committee states that the Committee's action in
reporting the bill is derived from Article I of the
Constitution, Section 8 (``The Congress shall have power to lay
and collect taxes, duties, imposts and excises, to pay the
debts and to provide for * * * the general Welfare of the
United States * * *'').
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules
of the House of Representatives, changes in existing law made
by the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SOCIAL SECURITY ACT
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
notice of medicare benefits; medicare and medigap information
Sec. 1804. (a) * * *
(b) The Secretary shall provide information via a toll-free
telephone number on the programs under this title. The
Secretary shall provide, through the toll-free number 1-800-
MEDICARE, for a means by which individuals seeking information
about, or assistance with, such programs who phone such toll-
free number are transferred (without charge) to appropriate
entities for the provision of such information or assistance.
Such toll-free number shall be the toll-free number listed for
general information and assistance in the annual notice under
subsection (a) instead of the listing of numbers of individual
contractors.
* * * * * * *
medicare beneficiary ombudsman
Sec. 1807. (a) In General.--The Secretary shall appoint
within the Department of Health and Human Services a Medicare
Beneficiary Ombudsman who shall have expertise and experience
in the fields of health care and advocacy.
(b) Duties.--The Medicare Beneficiary Ombudsman shall--
(1) receive complaints, grievances, and requests for
information submitted by a medicare beneficiary, with
respect to any aspect of the medicare program;
(2) provide assistance with respect to complaints,
grievances, and requests referred to in paragraph (1),
including--
(A) assistance in collecting relevant
information for such beneficiaries, to seek an
appeal of a decision or determination made by a
fiscal intermediary, carrier, Medicare+Choice
organization, or the Secretary; and
(B) assistance to such beneficiaries with any
problems arising from disenrollment from a
Medicare+Choice plan under part C; and
(3) submit annual reports to Congress and the
Secretary that describe the activities of the Office
and that include such recommendations for improvement
in the administration of this title as the Ombudsman
determines appropriate.
* * * * * * *
Part A--Hospital Insurance Benefits for the Aged and Disabled
* * * * * * *
CONDITIONS OF AND LIMITATIONS ON PAYMENT FOR SERVICES
Requirement of Requests and Certifications
Sec. 1814. (a) * * *
* * * * * * *
Payment for Hospice Care
(i)(1) * * *
* * * * * * *
(4) In the case of hospice care provided by a hospice program
under arrangements under section 1861(dd)(5)(D) made by another
hospice program, the hospice program that made the arrangements
shall bill and be paid for the hospice care.
* * * * * * *
[USE OF PUBLIC AGENCIES OR PRIVATE ORGANIZATIONS TO FACILITATE PAYMENT
TO PROVIDERS OF SERVICES]
provisions relating to the administration of part a
Sec. 1816. [(a) If any group or association of providers of
services wishes to have payments under this part to such
providers made through a national, State, or other public or
private agency or organization and nominates such agency or
organization for this purpose, the Secretary is authorized to
enter into an agreement with such agency or organization
providing for the determination by such agency or organization
(subject to the provisions of section 1878 and to such review
by the Secretary as may be provided for by the agreement) of
the amount of the payments required pursuant to this part to be
made to such providers (and to providers assigned to such
agency or organization under subsection (e)), and for the
making of such payments by such agency or organization to such
providers (and to providers assigned to such agency or
organization under subsection (e)). Such agreement may also
include provision for the agency or organization to do all or
any part of the following: (1) to provide consultative services
to institutions or agencies to enable them to establish and
maintain fiscal records necessary for purposes of this part and
otherwise to qualify as hospitals, extended care facilities, or
home health agencies, and (2) with respect to the providers of
services which are to receive payments through it (A) to serve
as a center for, and communicate to providers, any information
or instructions furnished to it by the Secretary, and serve as
a channel of communication from providers to the Secretary; (B)
to make such audits of the records ofproviders 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, andsuch
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 ofgross 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.]
* * * * * * *
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 ora new methodology for
measuring an existing analyte-specific test).
* * * * * * *
[USE OF CARRIERS FOR ADMINISTRATION OF BENEFITS]
provisions relating to the administration of part b
Sec. 1842. [(a) In order to provide for the administration of
the benefits under this part with maximum efficiency and
convenience for individuals entitled to benefits under this
part and for providers of services and other persons furnishing
services to such individuals, and with a view to furthering
coordination of the administration of the benefits under part A
and under this part, the Secretary is authorized to enter into
contracts with carriers, including carriers with which
agreements under section 1816 are in effect, which will perform
some or all of the following functions (or, to the extent
provided in such contracts, will secure performance thereof by
other organizations); and, with respect to any of the following
functions which involve payments for physicians' services on a
reasonable charge basis, the Secretary shall to the extent
possible enter into such contracts:
[(1)(A) make determinations of the rates and amounts
of payments required pursuant to this part to be made
to providers of services and other persons on a
reasonable cost or reasonable charge basis (as may be
applicable);
[(B) receive, disburse, and account for funds in
making such payments; and
[(C) make such audits of the records of providers of
services as may be necessary to assure that proper
payments are made under this part;
[(2)(A) determine compliance with the requirements of
section 1861(k) as to utilization review; and
[(B) assist providers of services and other persons
who furnish services for which payment may be made
under this part in the development of procedures
relating to utilization practices, make studies of the
effectiveness of such procedures and methods for their
improvement, assist in the application of safeguards
against unnecessary utilization of services furnished
by providers of services and other persons to
individuals entitled to benefits under this part, and
provide procedures for and assist in arranging, where
necessary, the establishment of groups outside
hospitals (meeting the requirements of section
1861(k)(2)) to make reviews of utilization;
[(3) serve as a channel of communication of
information relating to the administration of this
part; and
[(4) otherwise assist, in such manner as the contract
may provide, in discharging administrative duties
necessary to carry out the purposes of this part.]
(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.
(b)[(1) Contracts with carriers under subsection (a) may be
entered into without regard to section 3709 of the Revised
Statutes or any other provision of law requiring competitive
bidding.]
(2)[(A) No such contract shall be entered into with any
carrier unless the Secretary finds that such carrier will
perform its obligations under the contract efficiently and
effectively and will meet such requirements as to financial
responsibility, legal authority, and other matters as he finds
pertinent. The Secretary shall publish in the Federal Register
standards and criteria for the efficient and effective
performance of contract obligations under this section, and
opportunity shall be provided for public comment prior to
implementation. In establishing such standards and criteria,
the Secretary shall provide a system to measure a carrier's
performance of responsibilities described in paragraph (3)(H),
subsection (h), and section 1845(e)(2). The Secretary may not
require, as a condition of entering into or renewing a contract
under this section or under section 1871, that a carrier match
data obtained other than in its activities under this part with
data used in the administration of this part for purposes of
identifying situations in which section 1862(b) may apply.
[(B) The Secretary shall establish standards for evaluating
carriers' performance of reviews of initial carrier
determinations and of fair hearings under paragraph (3)(C),
under which a carrier is expected--
[(i) to complete such reviews, within 45 days after
the date of a request by an individual enrolled under
this part for such a review, in 95 percent of such
requests, and
[(ii) to make a final determination, within 120 days
after the date of receipt of a request by an individual
enrolled under this part for a fair hearing under
paragraph (3)(C), in 90 percent of such cases.]
(C) In the case of residents of nursing facilities who
receive services described in clause (i) or (ii) of section
1861(s)(2)(K) performed by a member of a team, the Secretary
shall instruct [carriers] medicare administrative contractors
to develop mechanisms which permit routine payment under this
part for up to 1.5 visits per month per resident. In the
previous sentence, the term ``team'' refers to a physician and
includes a physician assistant acting under the supervision of
the physician or a nurse practitioner working in collaboration
with that physician, or both.
[(D) In addition to any other standards and criteria
established by the Secretary for evaluating carrier performance
under this paragraph relating to avoiding erroneous payments,
the carrier shall be subject to standards and criteria relating
to the carrier's success in recovering payments made under this
part for items or services for which payment has been or could
be made under a primary plan (as defined in section
1862(b)(2)(A)).
[(E) With respect to the payment of claims for home health
services under this part that, but for the amendments made by
section 4611 of the Balanced Budget Act of 1997, would be
payable under part A instead of under this part, the Secretary
shall continue administration of such claims through fiscal
intermediaries under section 1816.]
(3) [Each such contract shall provide that the carrier] The
Secretary--
(A) [will] shall take such action as may be necessary
to assure that, where payment under this part for a
service is ona 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) on the basis of an itemized bill; or
(ii) on the basis of an assignment under the
terms of which (I) the reasonable charge is the
full charge for the service, (II) the physician
or other person furnishing such service agrees
not to charge (and to refund amounts already
collected) for services for which payment under
this title is denied under section 1154(a)(2)
by reason of a determination under section
1154(a)(1)(B), and (III) the physician or other
person furnishing such service agrees not to
charge (and to refund amounts already
collected) for such service if payment may not
be made therefor by reason of the provisions of
paragraph (1) of section 1862(a), and if the
individual to whom such service was furnished
was without fault in incurring the expenses of
such service, and if the Secretary's
determination that payment (pursuant to such
assignment) was incorrect and was made
subsequent to the third year following the year
in which notice of such payment was sent to
such individual; except that the Secretary may
reduce such three-year period to not less than
one year if he finds such reduction is
consistent with the objectives of this title
(except in the case of physicians' services and
ambulance service furnished as described in
section 1862(a)(4), other than for purposes of
section 1870(f));
but (in the case of bills submitted, or requests for
payment made, after March 1968) only if the bill is
submitted, or a written request for payment is made in
such other form as may be permitted under regulations,
no later than the close of the calendar year following
the year in which such service is furnished (deeming
any service furnished in the last 3 months of any
calendar year to have been furnished in the succeeding
calendar year);
[(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, wouldcover 75 percent of the customary charges made
for similar services in the same locality during the 12-month period
ending on the June 30 last preceding the start of the calendar year in
which the service is rendered. In the case of physicians' services the
prevailing charge level determined for purposes of clause (ii) of the
preceding sentence for any twelve-month period (beginning after June
30, 1973) specified in clause (ii) of such sentence may not exceed (in
the aggregate) the level determined under such clause for the fiscal
year ending June 30, 1973, or (with respect to physicians' services
furnished in a year after 1987) the level determined under this
sentence (or under any other provision of law affecting the prevailing
charge level) for the previous year except to the extent that the
Secretary finds, on the basis of appropriate economic index data, that
such higher level is justified by year-to-year economic changes. With
respect to power-operated wheelchairs for which payment may be made in
accordance with section 1861(s)(6), charges determined to be reasonable
may not exceed the lowest charge at which power-operated wheelchairs
are available in the locality. In the case of medical services,
supplies, and equipment (including equipment servicing) that, in the
judgment of the Secretary, do not generally vary significantly in
quality from one supplier to another, the charges incurred after
December 31, 1972, determined to be reasonable may not exceed the
lowest charge levels at which such services, supplies, and equipment
are widely and consistently available in a locality except to the
extent and under the circumstances specified by the Secretary. The
requirement in subparagraph (B) that a bill be submitted or request for
payment be made by the close of the following calendar year shall not
apply if (I) failure to submit the bill or request the payment by the
close of such year is due to the error or misrepresentation of an
officer, employee, fiscal intermediary, carrier, medicare
administrative contractor, or agent of the Department of Health and
Human Services performing functions under this title and acting within
the scope of his or its authority, and (II) the bill is submitted or
the payment is requested promptly after such error or misrepresentation
is eliminated or corrected. Notwithstanding the provisions of the third
and fourth sentences preceding this sentence, the prevailing charge
level in the case of a physician service in a particular locality
determined pursuant to such third and fourth sentences for any calendar
year after 1974 shall, if lower than the prevailing charge level for
the fiscal year ending June 30, 1975, in the case of a similar
physician service in the same locality by reason of the application of
economic index data, be raised to such prevailing charge level for the
fiscal year ending June 30, 1975, and shall remain at such prevailing
charge level until the prevailing charge for a year (as adjusted by
economic index data) equals or exceeds such prevailing charge level.
The amount of any charges for outpatient services which shall be
considered reasonable shall be subject to the limitations established
by regulations issued by the Secretary pursuant to section
1861(v)(1)(K), and in determining the reasonable charge for such
services, the Secretary may limit such reasonable charge to a
percentage of the amount of the prevailing charge for similar services
furnished in a physician's office, taking into account the extent to
which overhead costs associated with such outpatient services have been
included in the reasonable cost or charge of the facility.
* * * * * * *
[(5) Each contract under this section shall be for a term of
at least one year, and may be made automatically renewable from
term to term in the absence of notice by either party of
intention to terminate at the end of the current term; except
that the Secretary may terminate any such contract at any time
(after such reasonable notice and opportunity for hearing to
the carrier involved as he may provide in regulations) if he
finds that the carrier has failed substantially to carry out
the contract or is carrying out the contract in a manner
inconsistent with the efficient and effective administration of
the insurance program established by this part.]
(6) No payment under this part for a service provided to any
individual shall (except as provided in section 1870) be made
to anyone other than such individual or (pursuant to an
assignment described in subparagraph (B)(ii) of paragraph (3))
the physician or other person who provided the service, except
that (A) payment may be made (i) to the employer of such
physician or other person if such physician or other person is
required as a condition of his employment to turn over his fee
for such service to his employer, or (ii) (where the service
was provided in a hospital, critical access hospital, clinic,
or other facility) to the facility in which the service was
provided if there is a contractual arrangement between such
physician or other person and such facility under which such
facility submits the bill for such service, (B) payment may be
made to an entity (i) which provides coverage of the services
under a health benefits plan, but only to the extent that
payment is not made under this part, (ii) which has paid the
person who provided the service an amount (including the amount
payable under this part) which that person has accepted as
payment in full for the service, and (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 indicatesthat 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 SocialSecurity
Administration, in the offices of [carriers] medicare administrative
contractors, and to senior citizen organizations.
(B) The annual notice provided under subparagraph (A) shall
include--
(i) * * *
* * * * * * *
(iii) an explanation of the assistance offered by
[carriers] medicare administrative contractors in
obtaining the names of participating physicians and
suppliers, and
* * * * * * *
(l)(1)(A) Subject to subparagraph (C), if--
(i) * * *
* * * * * * *
(iii)(I) a [carrier] medicare administrative
contractor determines under this part or a peer review
organization determines under part B of title XI that
payment may not be made by reason of section 1862(a)(1)
because a service otherwise covered under this title is
not reasonable and necessary under the standards
described in that section or (II) payment under this
title for such services is denied under section
1154(a)(2) by reason of a determination under section
1154(a)(1)(B), and
* * * * * * *
(2) Each [carrier] medicare administrative contractor with a
contract in effect under this section with respect to
physicians and each peer review organization with a contract
under part B of title XI shall send any notice of denial of
payment for physicians' services based on section 1862(a)(1)
and for which payment is not requested on an assignment-related
basis to the physician and the individual involved.
* * * * * * *
(p)(1) * * *
* * * * * * *
(3) In the case of a request for payment for an item or
service furnished by a physician not submitted on an
assignment-related basis and which does not include the code
(or codes) required under paragraph (1)--
(A) if the physician knowingly and willfully fails to
provide the code (or codes) promptly upon request of
the Secretary or a [carrier] medicare administrative
contractor, the physician may be subject to a civil
money penalty in an amount not to exceed $2,000, and
* * * * * * *
(q)(1)(A) The Secretary, in consultation with groups
representing physicians who furnish anesthesia services, shall
establish by regulation a relative value guide for use in all
[carrier] localities in making payment for physician anesthesia
services furnished under this part. Such guide shall be
designed so as to result in expenditures under this title for
such services in an amount that would not exceed the amount of
such expenditures which would otherwise occur.
* * * * * * *
Part D--Miscellaneous Provisions
definitions of services, institutions, etc.
Sec. 1861. For purposes of this title--
Spell of Illness
(a) * * *
* * * * * * *
Supplier
(d) The term ``supplier'' means, unless the context otherwise
requires, a physician or other practitioner, a facility, or
other entity (other than a provider of services) that furnishes
items or services under this title.
* * * * * * *
Hospice Care; Hospice Program
(dd)(1) * * *
* * * * * * *
(5)(A) * * *
* * * * * * *
(D) In extraordinary, exigent, or other non-routine
circumstances, such as unanticipated periods of high patient
loads, staffing shortages due to illness or other events, or
temporary travel of a patient outside a hospice program's
service area, a hospice program may enter into arrangements
with another hospice program for the provision by that other
program of services described in paragraph (2)(A)(ii)(I). The
provisions of paragraph (2)(A)(ii)(II) shall apply with respect
to the services provided under such arrangements.
* * * * * * *
exclusions from coverage and medicare as secondary payer
Sec. 1862. (a) * * *
* * * * * * *
(d) In the case of hospital services and physicians' services
that--
(1) are furnished, to an individual who is not
enrolled in a Medicare+Choice plan under part C, by a
hospital or a critical access hospital; and
(2) are needed to evaluate or stabilize an emergency
medical condition (as defined in section 1852(d)(3)(B),
relating to application of a prudent layperson rule)
and that are provided to meet the requirements of
section 1867,
such services shall be deemed to be reasonable and necessary
for the diagnosis or treatment of illness or injury for
purposes of subsection (a)(1)(A).
* * * * * * *
agreements with providers of services; enrollment processes
Sec. 1866. (a)(1) Any provider of services (except a fund
designated for purposes of section 1814(g) and section 1835(e))
shall be qualified to participate under this title and shall be
eligible for payments under this title if it files with the
Secretary an agreement--
(A) * * *
* * * * * * *
(R) to contract only with a health care clearinghouse
(as defined in section 1171) that meets each standard
and implementation specification adopted or established
under part C of title XI on or after the date on which
the health care clearinghouse is required to comply
with the standard or specification, [and]
(S) in the case of a hospital that has a financial
interest (as specified by the Secretary in regulations)
in an entity to which individuals are referred as
described in section 1861(ee)(2)(H)(ii), or in which
such an entity has such a financial interest, or in
which another entity has such a financial interest
(directly or indirectly) with such hospital and such an
entity, to maintain and disclose to the Secretary (in a
form and manner specified by the Secretary) information
on--
(i) * * *
* * * * * * *
(iii) the percentage of such individuals who
received such services from such provider (or
another such provider)[.], and
(T) in the case of hospitals that are not otherwise
subject to the Occupational Safety and Health Act of
1970, to comply with the Bloodborne Pathogens standard
under section 1910.1030 of title 29 of the Code of
Federal Regulations (or as subsequently redesignated).
* * * * * * *
(b)(1) * * *
* * * * * * *
(4)(A) A hospital that fails to comply with the requirement
of subsection (a)(1)(T) (relating to the Bloodborne Pathogens
standard) is subject to a civil money penalty in an amount
described in subparagraph (B), but is not subject to
termination of an agreement under this section.
(B) The amount referred to in subparagraph (A) is an amount
that is similar to the amount of civil penalties that may be
imposed under section 17 of the Occupational Safety and Health
Act of 1970 for a violation of the Bloodborne Pathogens
standard referred to in subsection (a)(1)(T) by a hospital that
is subject to the provisions of such Act.
(C) A civil money penalty under this paragraph shall be
imposed and collected in the same manner as civil money
penalties under subsection (a) of section 1128A are imposed and
collected under that section.
* * * * * * *
(h)(1) * * *
* * * * * * *
(3) The provisions of section 1869(b)(2) shall apply with
respect to determinations described in paragraph (1) in the
same manner as they apply to a provider of services that has
filed an appeal under section 1869(b)(1).
* * * * * * *
(j) Enrollment Process for Providers of Services and
Suppliers.--
(1) In general.--The Secretary shall establish by
regulation a process for the enrollment of providers of
services and suppliers under this title.
(2) Appeal process.--Such process shall provide--
(A) a method by which providers of services
and suppliers whose application to enroll (or,
if applicable, to renew enrollment) are denied
are provided a mechanism to appeal such denial;
and
(B) prompt deadlines for actions on
applications for enrollment (and, if
applicable, renewal of enrollment) and for
consideration of appeals.
* * * * * * *
practicing physicians advisory council; medicare provider ombudsman
Sec. 1868. (a) Practicing Physicians Advisory Council.--(1)
The Secretary shall appoint, based upon nominations submitted
by medical organizations representing physicians, a Practicing
Physicians Advisory Council ([in this section] in this
subsection referred to as the ``Council'') to be composed of 15
physicians, each of whom has submitted at least 250 claims for
physicians' services under this title in the previous year. At
least 11 of the members of the Council shall be physicians
described in section 1861(r)(1) and the members of the Council
shall include both participating and nonparticipating
physicians and physicians practicing in rural areas and
underserved urban areas.
[(b)] (2) The Council shall meet once during each calendar
quarter to discuss certain proposed changes in regulations and
carrier manual instructions related to physician services
identified by the Secretary. To the extent feasible and
consistent with statutory deadlines, such consultation shall
occur before the publication of such proposed changes.
[(c)] (3) Members of the Council shall be entitled to receive
reimbursement of expenses and per diem in lieu of subsistence
in the same manner as other members of advisory councils
appointed by the Secretary are provided such reimbursement and
per diem under this title.
(b) Medicare Provider Ombudsman.--The Secretary shall appoint
a Medicare Provider Ombudsman. The Ombudsman shall--
(1) provide assistance, on a confidential basis, to
providers of services and suppliers with respect to
complaints, grievances, and requests for information
concerning the programs under this title (including
provisions of title XI insofar as they relate to this
title and are not administered by the Office of the
Inspector General of the Department of Health and Human
Services) and in the resolution of unclear or
conflicting guidance given by the Secretary and
medicare contractors to such providers of services and
suppliers regarding such programs and provisions and
requirements under this title and such provisions; and
(2) submit recommendations to the Secretary for
improvement in the administration of this title and
such provisions, including--
(A) recommendations to respond to recurring
patterns of confusion in this title and such
provisions (including recommendations regarding
suspending imposition of sanctions where there
is widespread confusion in program
administration), and
(B) recommendations to provide for an
appropriate and consistent response (including
not providing for audits) in cases of self-
identified overpayments by providers of
services and suppliers.
The 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) * * *
(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.
* * * * * * *
(2) Expedited access to judicial review.--
(A) In general.--The Secretary shall
establish a process under which a provider of
services or supplier that furnishes an item or
service or a beneficiary who has filed an
appeal under paragraph (1) (other than an
appeal filed under paragraph (1)(F)) may obtain
access to judicial review when a review panel
(described in subparagraph (D)), on its own
motion or at the request of the appellant,
determines that it 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
in a case of an appeal.
(B) Prompt determinations.--If, after or
coincident with appropriately filing a request
for an administrative hearing, the appellant
requests a determination by the appropriate
review panel that no review panel has the
authority to decide the question of law or
regulations relevant to the matters in
controversy and that there is no material issue
of fact in dispute and if such request is
accompanied by the documents and materials as
the appropriate review panel shall require for
purposes of making such determination, such
review panel shall make a determination on the
request in writing within 60 days after the
date such review panel receives the request and
such accompanying documents and materials. Such
a determination by such review panel shall be
considered a final decision and not subject to
review by the Secretary.
(C) Access to judicial review.--
(i) In general.--If the appropriate
review panel--
(I) determines that there are
no material issues of fact in
dispute and that the only issue
is one of law or regulation
that no review panel has the
authority to decide; or
(II) fails to make such
determination within the period
provided under subparagraph
(B);
then the appellant may bring a civil
action as described in this
subparagraph.
(ii) Deadline for filing.--Such
action shall be filed, in the case
described in--
(I) clause (i)(I), within 60
days of date of the
determination described in such
subparagraph; or
(II) clause (i)(II), within
60 days of the end of the
period provided under
subparagraph (B) for the
determination.
(iii) Venue.--Such action shall be
brought in the district court of the
United States for the judicial district
in which the appellant is located (or,
in the case of an action brought
jointly by more than one applicant, the
judicial district in which the greatest
number of applicants are located) or in
the district court for the District of
Columbia.
(iv) Interest on amounts in
controversy.--Where a provider of
services or supplier seeks judicial
review pursuant to this paragraph, the
amount in controversy shall be subject
to annual interest beginning on the
first day of the first month beginning
after the 60-day period as determined
pursuant to clause (ii) and equal to
the rate of interest on obligations
issuedfor purchase by the Federal
Hospital Insurance Trust Fund for the month in which the civil action
authorized under this paragraph is commenced, to be awarded by the
reviewing court in favor of the prevailing party. No interest awarded
pursuant to the preceding sentence shall be deemed income or cost for
the purposes of determining reimbursement due providers of services or
suppliers under this Act.
(D) Review panels.--For purposes of this
subsection, a ``review panel'' is an
administrative law judge, the Departmental
Appeals Board, a qualified independent
contractor (as defined in subsection (c)(2)),
or an entity designated by the Secretary for
purposes of making determinations under this
paragraph.
(3) Requiring full and early presentation of evidence
by providers.--A provider of services or supplier may
not introduce evidence in any appeal under this section
that was not presented at the reconsideration conducted
by the qualified independent contractor under
subsection (c), unless there is good cause which
precluded the introduction of such evidence at or
before that reconsideration.
* * * * * * *
(g) Medicare Administrative Law Judges.--
(1) Transition plan.--Not later than October 1, 2003,
the Commissioner of Social Security and the Secretary
shall develop and implement a plan under which the
functions of administrative law judges responsible for
hearing cases under this title (and related provisions
in title XI) shall be transferred from the
responsibility of the Commissioner and the Social
Security Administration to the Secretary and the
Department of Health and Human Services. The plan shall
include recommendations with respect to--
(A) the number of administrative law judges
and support staff required to hear and decide
such cases in a timely manner; and
(B) funding levels required for fiscal year
2004 and subsequent fiscal years under this
subsection to hear such cases in a timely
manner.
Nothing in this subsection shall be construed as
affecting the independence of administrative law judges
from the Department of Health and Human Services and
from medicare contractors in carrying out their
responsibilities for hearing and deciding cases.
(2) Increased financial support.--In addition to any
amounts otherwise appropriated, 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 to increase the number of administrative law
judges described in paragraph (1) and to improve
education and training for such judges and their staffs
in carrying out functions under this title, $5,000,000
for fiscal year 2003 and such sums as are necessary for
fiscal year 2004 and each subsequent fiscal year.
(3) Submittal of plan to congress and gao; report of
gao.--Not later than July 1, 2003, the Secretary shall
submit to the Committee on Ways and Means of the House
of Representatives, the Committee on Finance of the
Senate, and the Comptroller General of the United
States the terms of the plan developed under paragraph
(1). No later than September 1, 2003, the Comptroller
General shall submit to such Committees a report
containing an evaluation of the terms of such plan.
* * * * * * *
REGULATIONS
Sec. 1871. (a)(1) * * *
* * * * * * *
(3)(A) The Secretary, in consultation with the Director of
the Office of Management and Budget, shall establish and
publish a regular timeline for the publication of final
regulations based on the previous publication of a proposed
regulation or an interim final regulation.
(B) Such timeline may vary among different regulations based
on differences in the complexity of the regulation, the number
and scope of comments received, and other relevant factors. If
the Secretary intends to vary such timeline with respect to the
publication of a final regulation, the Secretary shall cause to
have published in the Federal Register notice of the different
timeline by not later than the end of the comment period
respecting such regulation. Such notice shall include a brief
explanation of the justification for such variation.
(C) In the case of interim final regulations, upon the
expiration of the regular timeline established under this
paragraph for the publication of a final regulation after
opportunity for public comment, the interim final regulation
shall not continue in effect unless the Secretary publishes a
notice of continuation of the regulation that includes an
explanation of why the regular timeline was not complied with.
If such a notice is published, the regular timeline for
publication of the final regulation shall be treated as having
begun again as of the date of publication of the notice.
(D) The Secretary shall annually submit to Congress a report
that describes the instances in which the Secretary failed to
publish a final regulation within the applicable timeline under
this paragraph and that provides an explanation for such
failures.
(4) If the Secretary publishes notice of proposed rulemaking
relating to a regulation (including an interim final
regulation), insofar as such final regulation includes a
provision that is not a logical outgrowth of such notice of
proposed rulemaking, 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) The Secretary shall issue proposed or final (including
interim final) regulations to carry out this title only on one
business day of every month unless publication on another date
is necessary to comply with requirements under law.
(2) The Secretary shall coordinate issuance of new
regulations relating to a category of provider of services or
suppliers based on an analysis of the collective impact of
regulatory changes on that category of providers or suppliers.
(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 date the change was
issued, unless the Secretary determines that such retroactive
application would have a positive impact on beneficiaries or
providers of services and suppliers or would be necessary to
comply with statutory requirements.
(B) A substantive change in regulations, manual instructions,
interpretative rules, statements of policy, or guidelines of
general applicability under this title shall not become
effective until at least 30 days after the Secretary issues the
substantive change.
(C) No action shall be taken against a provider of services
or supplier with respect to noncompliance with such a
substantive change for items and services furnished before the
effective date of such a change.
(2)(A) If--
(i) a provider of services or supplier follows the
written guidance (which may be transmitted
electronically) provided by the Secretary or by a
medicare contractor (as defined in section 1889(f))
acting within the scope of the contractor's contract
authority, with respect to the furnishing of items or
services and submission of a claim for benefits for
such items or services with respect to such provider or
supplier;
(ii) the Secretary determines that the provider of
services or supplier has accurately presented the
circumstances relating to such items, services, and
claim to the contractor in writing; and
(iii) the guidance was in error;
the provider of services or supplier shall not be subject to
any sanction (including any penalty or requirement for
repayment of any amount) if the provider of services or
supplier reasonably relied on such guidance.
(B) Subparagraph (A) shall not be construed as preventing the
recoupment or repayment (without any additional penalty)
relating to an overpayment insofar as the overpayment was
solely the result of a clerical or technical operational error.
* * * * * * *
contracts with medicare administrative contractors
Sec. 1874A. (a) Authority.--
(1) Authority to enter into contracts.--The Secretary
may enter into contracts with any entity to serve as a
medicare administrative contractor with respect to the
performance of any or all of the functions described in
paragraph (3) or parts of those functions (or, to the
extent provided in a contract, to secure performance
thereof by other entities).
(2) 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 or supplier (or
class of such providers of services or
suppliers), the ``appropriate'' medicare
administrative contractor is the medicare
administrative contractor that has a contract
under this section with respect to the
performance of that function or activity in
relation to that individual, provider of
services or supplier or class of provider of
services or supplier.
(3) Functions described.--The functions referred to
in paragraph (1) 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, suppliers and individuals.
(B) Making payments.--Making payments
described in subparagraph (A) (including
receipt, disbursement, and accounting for funds
in making such payments).
(C) Beneficiary education and assistance.--
Providing education and outreach to individuals
entitled to benefits under part A or enrolled
under part B, or both, and providing assistance
to those individuals with specific issues,
concerns or problems.
(D) Provider consultative services.--
Providing consultative services to
institutions, agencies, and other persons to
enable them to establish and maintain fiscal
records necessary for purposes of this title
and otherwise to qualify as providers of
services or suppliers.
(E) Communication with providers.--
Communicating to providers of services and
suppliers any information or instructions
furnished to the medicare administrative
contractor by the Secretary and serving as a
channel of communication from providers of
services and suppliers to the Secretary.
(F) Provider education and technical
assistance.--Performing the functions relating
to provider education, training, and technical
assistance.
(G) Additional functions.--Performing such
other functions as are necessary to carry out
the purposes of this title.
(4) Relationship to mip contracts.--
(A) Nonduplication of duties.--In entering
into contracts under this section, the
Secretary shall assure that functions of
medicare administrative contractors in carrying
out activities under parts A and B do not
duplicate activities carried out under the
Medicare Integrity Programunder 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.
(b) Contracting Requirements.--
(1) Use of competitive procedures.--
(A) In general.--Except as provided in laws
with general applicability to Federal
acquisition and procurement or in subparagraph
(B), the Secretary shall use competitive
procedures when entering into contracts with
medicare administrative contractors under this
section, taking into account performance
quality as well as price and other factors.
(B) Renewal of contracts.--The Secretary may
renew a contract with a medicare administrative
contractor under this section from term to term
without regard to section 5 of title 41, United
States Code, or any other provision of law
requiring competition, if the medicare
administrative contractor has met or exceeded
the performance requirements applicable with
respect to the contract and contractor, except
that the Secretary shall provide for the
application of competitive procedures under
such a contract not less frequently than once
every five years.
(C) Transfer of functions.--Functions may be
transferred among medicare administrative
contractors consistent with the provisions of
this paragraph. The Secretary shall ensure that
performance quality is considered in such
transfers.
(D) Incentives for quality.--The Secretary
shall provide incentives for medicare
administrative contractors to provide quality
service and to promote efficiency.
(2) Compliance with requirements.--No contract under
this section shall be entered into with any medicare
administrative contractor unless the Secretary finds
that such medicare administrative contractor will
perform its obligations under the contract efficiently
and effectively and will meet such requirements as to
financial responsibility, legal authority, quality of
services provided, and other matters as the Secretary
finds pertinent.
(3) Development of specific performance
requirements.--In developing contract performance
requirements, the Secretary shall develop performance
requirements to carry out the specific requirements
applicable under this title to a function described in
subsection (a)(3). In developing such requirements, the
Secretary may consult with providers of services and
suppliers and organizations and agencies performing
functions necessary to carry out the purposes of this
section with respect to such performance requirements.
(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)(3)(B).
(2) Prohibition on mandates for certain data
collection.--The Secretary may not require, as a
condition of entering into 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.--A medicare administrative contractor shall
be liable to the United States for a payment referred
to in paragraph (1) or (2) if, in connection with such
payment, an individual referred to in either such
paragraph acted with gross negligence or intent to
defraud the United States.
(4) Indemnification by secretary.--The Secretary
shall make payment to a medicare administrative
contractor undercontract 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, if due care was
exercised by the contractor or person in the performance of such duty,
function, or activity.
(e) Incentives To Improve Contractor Performance in Provider
Education and Outreach.--
(1) Methodology to measure contractor error rates.--
In order to give medicare administrative contractors an
incentive to implement effective education and outreach
programs for providers of services and suppliers, the
Secretary shall, in consultation with representatives
of providers and suppliers, develop and implement by
October 1, 2003, a methodology to measure the specific
claims payment error rates of such contractors in the
processing or reviewing of medicare claims.
(2) Identification of best practices.--The Secretary
shall identify the best practices developed by
individual medicare administrative contractors for
educating providers of services and suppliers and how
to encourage the use of such best practices nationwide.
(f) Response to Inquiries; Toll-Free Lines.--
(1) Contractor responsibility.--Each medicare
administrative contractor shall, for those providers of
services and suppliers which submit claims to the
contractor for claims processing--
(A) respond in a clear, concise, and accurate
manner to specific billing and cost reporting
questions of providers of services and
suppliers;
(B) maintain a toll-free telephone number at
which providers of services and suppliers may
obtain information regarding billing, coding,
and other appropriate information under this
title;
(C) maintain a system for identifying (and
disclosing, upon request) who provides the
information referred to in subparagraphs (A)
and (B); and
(D) monitor the accuracy, consistency, and
timeliness of the information so provided.
(2) Evaluation.--In conducting evaluations of
individual medicare administrative contractors, the
Secretary shall take into account the results of the
monitoring conducted under paragraph (1)(D). The
Secretary shall, in consultation with organizations
representing providers of services and suppliers,
establish standards relating to the accuracy,
consistency, and timeliness of the information so
provided.
* * * * * * *
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 (i),
including under section 1893) in order to maximize the
effectiveness of Federal education efforts for providers of
services and suppliers.
(b) Enhanced Education and Training.--
(1) Additional resources.--For each of fiscal years
2003 and 2004, there are authorized to be appropriated
to the Secretary (in appropriate part from the Federal
Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) $10,000,000
.
(2) Use.--The funds made available under paragraph
(1) shall be used to increase the conduct by medicare
contractors of education and training of providers of
services and suppliers regarding billing, coding, and
other appropriate items.
(c) Tailoring Education and Training Activities for Small
Providers or Suppliers.--
(1) In general.--Insofar as a medicare contractor
conducts education and training activities, it shall
tailor such activities to meet the special needs of
small providers of services or suppliers (as defined in
paragraph (2)).
(2) Small provider of services or supplier.--In this
subsection, the term ``small provider of services or
supplier'' means--
(A) a provider of services with fewer than 25
full-time-equivalent employees; or
(B) a supplier with fewer than 10 full-time-
equivalent employees.
(d) Internet Sites; FAQs.--The Secretary, and each medicare
contractor insofar as it provides services (including claims
processing) for providers of services or suppliers, shall
maintain an Internet site which--
(1) provides answers in an easily accessible format
to frequently asked questions, and
(2) includes other published materials of the
contractor,
that relate to providers of services and suppliers under the
programs under this title (and title XI insofar as it relates
to such programs).
(e) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of
attendance at (or failure to attend) educational activities or
other information gathered during an educational program
conducted under this section or otherwise by the Secretary to
select or track providers of services or suppliers for the
purpose of conducting any type of audit or prepayment review.
(f) Construction.--Nothing in this section or section 1893(g)
shall be construed as providing for disclosure by a medicare
contractor--
(1) of the screens used for identifying claims that
will be subject to medical review; or
(2) of information that would compromise pending law
enforcement activities or reveal findings of law
enforcement-related audits.
(g) Definitions.--For purposes of this section, the term
``medicare contractor'' includes the following:
(1) A medicare administrative contractor with a
contract under section 1874A, including a fiscal
intermediary with a contract under section 1816 and a
carrier with a contract under section 1842.
(2) An eligible entity with a contract under section
1893.
Such term does not include, with respect to activities of a
specific provider of services or supplier an entity that has no
authority under this title or title IX with respect to such
activities and such provider of services or supplier.
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Medicare integrity program
Sec. 1893. (a) * * *
* * * * * * *
(f) Recovery of Overpayments and Prepayment Review.--
(1) Use of repayment plans.--
(A) In general.--If the repayment, within 30
days by a provider of services or supplier, of
an overpayment under this title would
constitute a hardship (as defined in
subparagraph (B)), subject to subparagraph (C),
the Secretary shall enter into a plan (which
meets terms and conditions determined to be
appropriate by the Secretary) with the provider
of services or supplier for the offset or
repayment of such overpayment over a period of
not longer than 3 years, or in the case of
extreme hardship (as determined by the
Secretary) over a period of not longer than 5
years. Interest shall accrue on the balance
through the period of repayment.
(B) Hardship.--
(i) In general.--For purposes of
subparagraph (A), the repayment of an
overpayment (or overpayments) within 30
days is deemed to constitute a hardship
if--
(I) in the case of a provider
of services that files cost
reports, the aggregate amount
of the overpayments exceeds 10
percent of the amount paid
under this title to the
provider of services for the
cost reporting period covered
by the most recently submitted
cost report; or
(II) in the case of another
provider of services or
supplier, the aggregate amount
of the overpayments exceeds 10
percent of the amount paid
under this title to the
provider of services or
supplier for the previous
calendar year.
(ii) Rule of application.--The
Secretary shall establish rules for the
application of this subparagraph in the
case of a provider of services or
supplier that was not paid under this
title during the previous year or was
paid under this title only during a
portion of that year.
(iii) Treatment of previous
overpayments.--If a provider of
services or supplier has entered into a
repayment plan under subparagraph (A)
with respect to a specific overpayment
amount, such payment amount under the
repayment plan shall not be taken into
account under clause (i) with respect
to subsequent overpayment amounts.
(C) Exceptions.--Subparagraph (A) shall not
apply if the Secretary has reason to suspect
that the provider of services or supplier may
file for bankruptcy or otherwise cease to do
business or if there is an indication of fraud
or abuse committed against the program.
(D) Immediate collection if violation of
repayment plan.--If a provider of services or
supplier fails to make a payment in accordance
with a repayment plan under this paragraph, the
Secretary may immediately seek to offset or
otherwise recover the total balance outstanding
(including applicable interest) under the
repayment plan.
(2) Limitation on recoupment until determination by
qualified independent contractor.--
(A) In general.--In the case of a provider of
services or supplier that is determined to have
received an overpayment under this title and
that seeks a reconsideration by a qualified
independent contractor on such determination
under section 1869(b)(1), the Secretary may not
take any action (or authorize any other person,
including any medicare contractor, as defined
in paragraph (9)) to recoup the overpayment
until the date the decision on the
reconsideration has been rendered.
(B) Collection with interest.--Insofar as the
determination on such appeal is against the
provider of services or supplier, interest on
the overpayment shall accrue on and after the
date of the original notice of overpayment.
Insofar as such determination against the
provider of services or supplier is later
reversed, the Secretary shall provide for
repayment of the amount recouped plus interest
at the same rate as would apply under the
previous sentence for the period in which the
amount was recouped.
(3) Standardization of random prepayment review.--
(A) In general.--A medicare contractor may
conduct random prepayment review only to
develop a contractor-wide or program-wide
claims payment error rates or under such
additional circumstances as may be provided
under regulations, developed in consultation
with providers of services and suppliers.
(B) Construction.--Nothing in subparagraph
(A) shall be construed as preventing the denial
of payments for claims actually reviewed under
a random prepayment review.
(4) Limitation on use of extrapolation.--A medicare
contractor may not use extrapolation to determine
overpaymentamounts 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).
(5) Provision of supporting documentation.--In the
case of a provider of services or supplier with respect
to which amounts were previously overpaid, a medicare
contractor may request the periodic production of
records or supporting documentation for a limited
sample of submitted claims to ensure that the previous
practice is not continuing.
(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 or
supplier a consent settlement, the Secretary
shall--
(i) communicate to the provider of
services or supplier in a non-
threatening manner that, based on a
review of the medical records requested
by the Secretary, a preliminary
analysis indicates that there would be
an overpayment; and
(ii) provide for a 45-day period
during which the provider of services
or supplier may furnish additional
information concerning the medical
records for the claims that had been
reviewed.
(C) Consent settlement offer.--The Secretary
shall review any additional information
furnished by the provider of services or
supplier under subparagraph (B)(ii). Taking
into consideration such information, the
Secretary shall determine if there still
appears to be an overpayment. If so, the
Secretary--
(i) shall provide notice of such
determination to the provider of
services or supplier, including an
explanation of the reason for such
determination; and
(ii) in order to resolve the
overpayment, may offer the provider of
services or supplier--
(I) the opportunity for a
statistically valid random
sample; or
(II) a consent settlement.
The opportunity provided under clause (ii)(I)
does not waive any appeal rights with respect
to the alleged overpayment involved.
(D) Consent settlement defined.--For purposes
of this paragraph, the term ``consent
settlement'' means an agreement between the
Secretary and a provider of services or
supplier whereby both parties agree to settle a
projected overpayment based on less than a
statistically valid sample of claims and the
provider of services or supplier agrees not to
appeal the claims involved.
(7) Limitations on non-random prepayment review.--
(A) Limitation on initiation of non-
random prepayment review.--A medicare
contractor may not initiate non-random
prepayment review of a provider of
services or supplier based on the
initial identification by that provider
of services or supplier of an improper
billing practice unless there is a
sustained or high level of payment
error (as defined in paragraph (4)(A)).
(B) Termination of non-random
prepayment review.--The Secretary shall
issue regulations relating to the
termination, including termination
dates, of non-random prepayment review.
Such regulations may vary such a
termination date based upon the
differences in the circumstances
triggering prepayment review.
(8) Payment audits.--
(A) Written notice for post-payment audits.--
Subject to subparagraph (C), if a medicare
contractor decides to conduct a post-payment
audit of a provider of services or supplier
under this title, the contractor shall provide
the provider of services or supplier with
written notice of the intent to conduct such an
audit.
(B) Explanation of findings for all audits.--
Subject to subparagraph (C), if a medicare
contractor audits a provider of services or
supplier under this title, the contractor shall
provide for an exit conference with the
provider or supplier during which the
contractor shall--
(i) give the provider of services or
supplier a full review and explanation
of the findings of the audit in a
manner that is understandable to the
provider of services or supplier and
permits the development of an
appropriate corrective action plan;
(ii) inform the provider of services
or supplier of the appeal rights under
this title;
(iii) give the provider of services
or supplier an opportunity to provide
additional information to the
contractor; and
(iv) take into account information
provided, on a timely basis, by the
provider of services or supplier under
clause (iii).
(C) Exception.--Subparagraphs (A) and (B)
shall not apply if the provision of notice or
findings would compromise pending law
enforcement activities or reveal findings of
law enforcement-related audits.
(9) Definitions.--For purposes of this subsection:
(A) Medicare contractor.--The term ``medicare
contractor'' has the meaning given such term in
section 1889(f).
(B) Random prepayment review.--The term
``random prepayment review'' means a demand for
the production of records or documentation
absent cause with respect to a claim.
(g) Notice of Over-Utilization of Codes.--The Secretary shall
establish a process under which the Secretary provides for
notice to classes of providers of services and suppliers served
by the contractor in cases in which the contractor has
identified that particular billing codes may be overutilized by
that class of providers of services or suppliers under the
programs under this title (or provisions of title XI insofar as
they relate to such programs).
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