Revises requirements with regard to Medicare: (1) part A concerning rural health care, inpatient hospital services, skilled nursing facility services, and hospices; (2) part B concerning physicians' and other services; and (3) part A and B concerning home health services, direct graduate medical education, and other specified matters.
Establishes the Medicare Benefits Administration.
Amends SSA title XVIII part E (Miscellaneous) (previously part D) to include a number of regulatory reduction, contracting, and administrative changes.
Establishes the National Bipartisan Commission on the Future of Medicaid.
Amends SSA title XIX (Medicaid) to revise requirements regarding State disproportionate share (DSH) allotments.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5451 Introduced in House (IH)]
107th CONGRESS
2d Session
H. R. 5451
To amend title XVIII of the Social Security Act to modernize and reform
payments and the regulatory structure of the Medicare Program to assure
access to health care for senior citizens, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 24, 2002
Mr. Weldon of Florida introduced the following bill; which was referred
to the Committee on Ways and Means, and in addition to the Committee on
Energy and Commerce, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to modernize and reform
payments and the regulatory structure of the Medicare Program to assure
access to health care for senior citizens, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES
TO BIPA AND SECRETARY; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Seniors' Access to
Health Care Act of 2002''.
(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.
TITLE I--REFERENCES IN ACT
Sec. 101. References in Act.
TITLE II--MEDICARE+CHOICE REVITALIZATION AND MEDICARE+CHOICE
COMPETITION PROGRAM
Subtitle A--Medicare+Choice Revitalization
Sec. 201. Medicare+Choice improvements.
Sec. 202. Making permanent change in Medicare+Choice reporting
deadlines and annual, coordinated election
period.
Sec. 203. Avoiding duplicative State regulation.
Sec. 204. Specialized Medicare+Choice plans for special needs
beneficiaries.
Sec. 205. Medicare MSAs.
Sec. 206. Extension of reasonable cost and SHMO contracts.
Subtitle B--Medicare+Choice Competition Program
Sec. 211. Medicare+Choice competition program.
Sec. 212. Demonstration program for competitive-demonstration areas.
Sec. 213. Conforming amendments.
TITLE III--RURAL HEALTH CARE IMPROVEMENTS
Sec. 301. Reference to full market basket increase for sole community
hospitals.
Sec. 302. Enhanced disproportionate share hospital (DSH) treatment for
rural hospitals and urban hospitals with
fewer than 100 beds.
Sec. 303. 2-year phased-in increase in the standardized amount in rural
and small urban areas to achieve a single,
uniform standardized amount.
Sec. 304. More frequent update in weights used in hospital market
basket.
Sec. 305. Improvements to critical access hospital program.
Sec. 306. Extension of temporary increase for home health services
furnished in a rural area.
Sec. 307. Reference to 10 percent increase in payment for hospice care
furnished in a frontier area and rural
hospice demonstration project.
Sec. 308. Reference to priority for hospitals located in rural or small
urban areas in redistribution of unused
graduate medical education residencies.
Sec. 309. GAO study of geographic differences in payments for
physicians' services.
Sec. 310. Providing safe harbor for certain collaborative efforts that
benefit medically underserved populations.
Sec. 311. Relief for certain non-teaching hospitals.
TITLE IV--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
Sec. 401. Revision of acute care hospital payment updates.
Sec. 402. 2-year increase in level of adjustment for indirect costs of
medical education (IME).
Sec. 403. Recognition of new medical technologies under inpatient
hospital PPS.
Sec. 404. Phase-in of Federal rate for hospitals in Puerto Rico.
Sec. 405. Reference to provision relating to enhanced disproportionate
share hospital (DSH) payments for rural
hospitals and urban hospitals with fewer
than 100 beds.
Sec. 406. Reference to provision relating to 2-year phased-in increase
in the standardized amount in rural and
small urban areas to achieve a single,
uniform standardized amount.
Sec. 407. Reference to provision for more frequent updates in the
weights used in hospital market basket.
Sec. 408. Reference to provision making improvements to critical access
hospital program.
Sec. 409. GAO study on improving the hospital wage index.
Subtitle B--Skilled Nursing Facility Services
Sec. 411. Payment for covered skilled nursing facility services.
Subtitle C--Hospice
Sec. 421. Coverage of hospice consultation services.
Sec. 422. 10 percent increase in payment for hospice care furnished in
a frontier area.
Sec. 423. Rural hospice demonstration project.
Subtitle D--Other Provisions
Sec. 431. Demonstration project for use of recovery audit contractors
for part A services.
TITLE V--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
Sec. 501. Revision of updates for physicians' services.
Sec. 502. Studies on access to physicians' services.
Sec. 503. MedPAC report on payment for physicians' services.
Sec. 504. 1-year extension of treatment of certain physician pathology
services under medicare.
Sec. 505. Physician fee schedule wage index revision.
Subtitle B--Other Services
Sec. 511. Payment for ambulance services.
Sec. 512. 2-year extension of moratorium on therapy caps; provisions
relating to reports.
Sec. 513. Coverage of an initial preventive physical examination.
Sec. 514. Renal dialysis services.
Sec. 515. Improved payment for certain mammography services.
Sec. 516. Waiver of part B late enrollment penalty for certain military
retirees; special enrollment period.
Sec. 517. Coverage of cholesterol and blood lipid screening.
TITLE VI--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 601. Elimination of 15 percent reduction in payment rates under
the prospective payment system.
Sec. 602. Update in home health services.
Sec. 603. OASIS Task Force; suspension of certain OASIS data collection
requirements pending Task Force submittal
of report.
Sec. 604. MedPAC study on medicare margins of home health agencies.
Sec. 605. Clarification of treatment of occasional absences in
determining whether an individual is
confined to the home.
Subtitle B--Direct Graduate Medical Education
Sec. 611. Extension of update limitation on high cost programs.
Sec. 612. Redistribution of unused resident positions.
Subtitle C--Other Provisions
Sec. 621. Modifications to Medicare Payment Advisory Commission
(MedPAC).
Sec. 622. Demonstration project for disease management for certain
medicare beneficiaries with diabetes.
Sec. 623. Demonstration project for medical adult day care services.
Sec. 624. Publication on final written guidance concerning prohibitions
against discrimination by national origin
with respect to health care services.
TITLE VII--MEDICARE BENEFITS ADMINISTRATION
Sec. 701. Establishment of Medicare Benefits Administration.
TITLE VIII--REGULATORY REDUCTION AND CONTRACTING REFORM
Subtitle A--Regulatory Reform
Sec. 801. Construction; definition of supplier.
Sec. 802. Issuance of regulations.
Sec. 803. Compliance with changes in regulations and policies.
Sec. 804. Reports and studies relating to regulatory reform.
Subtitle B--Contracting Reform
Sec. 811. Increased flexibility in medicare administration.
Sec. 812. Requirements for information security for medicare
administrative contractors.
Subtitle C--Education and Outreach
Sec. 821. Provider education and technical assistance.
Sec. 822. Small provider technical assistance demonstration program.
Sec. 823. Medicare provider ombudsman; medicare beneficiary ombudsman.
Sec. 824. Beneficiary outreach demonstration program.
Subtitle D--Appeals and Recovery
Sec. 831. Transfer of responsibility for medicare appeals.
Sec. 832. Process for expedited access to review.
Sec. 833. Revisions to medicare appeals process.
Sec. 834. Prepayment review.
Sec. 835. Recovery of overpayments.
Sec. 836. Provider enrollment process; right of appeal.
Sec. 837. Process for correction of minor errors and omissions on
claims without pursuing appeals process.
Sec. 838. Prior determination process for certain items and services;
advance beneficiary notices.
Subtitle E--Miscellaneous Provisions
Sec. 841. Policy development regarding evaluation and management (E &
M) documentation guidelines.
Sec. 842. Improvement in oversight of technology and coverage.
Sec. 843. Treatment of hospitals for certain services under medicare
secondary payor (MSP) provisions.
Sec. 844. EMTALA improvements.
Sec. 845. Emergency Medical Treatment and Labor Act (EMTALA) Technical
Advisory Group.
Sec. 846. Authorizing use of arrangements with other hospice programs
to provide core hospice services in certain
circumstances.
Sec. 847. Application of OSHA bloodborne pathogens standard to certain
hospitals.
Sec. 848. BIPA-related technical amendments and corrections.
Sec. 849. Conforming authority to waive a program exclusion.
Sec. 850. Treatment of certain dental claims.
Sec. 851. Annual publication of list of national coverage
determinations.
TITLE IX--MEDICAID PROVISIONS
Sec. 901. National Bipartisan Commission on the Future of Medicaid.
Sec. 902. Disproportionate share hospital (DSH) payments.
TITLE I--REFERENCES IN ACT
SEC. 101. REFERENCES IN ACT.
In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
TITLE II--MEDICARE+CHOICE REVITALIZATION AND MEDICARE+CHOICE
COMPETITION PROGRAM
Subtitle A--Medicare+Choice Revitalization
SEC. 201. MEDICARE+CHOICE IMPROVEMENTS.
(a) Equalizing Payments Between Fee-for-Service and
Medicare+Choice.--
(1) In general.--Section 1853(c)(1) (42 U.S.C. 1395w-
23(c)(1)) is amended by adding at the end the following:
``(D) Based on 100 percent of fee-for-service
costs.--
``(i) In general.--For 2003 and 2004, the
adjusted average per capita cost for the year
involved, determined under section 1876(a)(4)
for the Medicare+Choice payment area for
services covered under parts A and B for
individuals entitled to benefits under part A
and enrolled under part B who are not enrolled
in a Medicare+Choice plan under this part for
the year, but adjusted to exclude costs
attributable to payments under section 1886(h).
``(ii) Inclusion of costs of va and dod
military facility services to medicare-eligible
beneficiaries.--In determining the adjusted
average per capita cost under clause (i) for a
year, such cost shall be adjusted to include
the Secretary's estimate, on a per capita
basis, of the amount of additional payments
that would have been made in the area involved
under this title if individuals entitled to
benefits under this title had not received
services from facilities of the Department of
Veterans Affairs or the Department of
Defense.''.
(2) Conforming amendment.--Such section is further amended,
in the matter before subparagraph (A), by striking ``or (C)''
and inserting ``(C), or (D)''.
(b) Revision of Blend.--
(1) Revision of national average used in calculation of
blend.--Section 1853(c)(4)(B)(i)(II) (42 U.S.C. 1395w-
23(c)(4)(B)(i)(II)) is amended by inserting ``who (with respect
to determinations for 2003 and for 2004) are enrolled in a
Medicare+Choice plan'' after ``the average number of medicare
beneficiaries''.
(2) Change in budget neutrality.--Section 1853(c) (42
U.S.C. 1395w-23(c)) is amended--
(A) in paragraph (1)(A), by inserting ``(for a year
before 2003)'' after ``multiplied''; and
(B) in paragraph (5), by inserting ``(before
2003)'' after ``for each year''.
(c) Revision in Minimum Percentage Increase for 2003 and 2004.--
Section 1853(c)(1)(C) (42 U.S.C. 1395w-23(c)(1)(C)) is amended by
striking clause (iv) and inserting the following:
``(iv) For 2002, 102 percent of the annual
Medicare+Choice capitation rate under this
paragraph for the area for 2001.
``(v) For 2003 and 2004, 103 percent of the
annual Medicare+Choice capitation rate under
this paragraph for the area for the previous
year.
``(vi) For 2005 and each succeeding year,
102 percent of the annual Medicare+Choice
capitation rate under this paragraph for the
area for the previous year.''.
(d) Inclusion of Costs of DOD and VA Military Facility Services to
Medicare-eligible Beneficiaries in Calculation of Medicare+Choice
Payment Rates.--Section 1853(c)(3) (42 U.S.C. 1395w-23(c)(3)) is
amended--
(1) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B) and (E)'', and
(2) by adding at the end the following new subparagraph:
``(E) Inclusion of costs of dod and va military
facility services to medicare-eligible beneficiaries.--
In determining the area-specific Medicare+Choice
capitation rate under subparagraph (A) for a year
(beginning with 2003), the annual per capita rate of
payment for 1997 determined under section 1876(a)(1)(C)
shall be adjusted to include in the rate the
Secretary's estimate, on a per capita basis, of the
amount of additional payments that would have been made
in the area involved under this title if individuals
entitled to benefits under this title had not received
services from facilities of the Department of Defense
or the Department of Veterans Affairs.''.
(e) Announcement of Revised Medicare+Choice Payment Rates.--Within
4 weeks after the date of the enactment of this Act, the Secretary
shall determine, and shall announce (in a manner intended to provide
notice to interested parties) Medicare+Choice capitation rates under
section 1853 of the Social Security Act (42 U.S.C. 1395w-23) for 2003,
revised in accordance with the provisions of this section.
(f) MedPAC Study of AAPCC.--
(1) Study.--The Medicare Payment Advisory Commission shall
conduct a study that assesses the method used for determining
the adjusted average per capita cost (AAPCC) under section
1876(a)(4) of the Social Security Act (42 U.S.C. 1395mm(a)(4)).
Such study shall examine--
(A) the bases for variation in such costs between
different areas, including differences in input prices,
utilization, and practice patterns;
(B) the appropriate geographic area for payment
under the Medicare+Choice program under part C of title
XVIII of such Act; and
(C) the accuracy of risk adjustment methods in
reflecting differences in costs of providing care to
different groups of beneficiaries served under such
program.
(2) Report.--Not later than 9 months after the date of the
enactment of this Act, the Commission shall submit to Congress
a report on the study conducted under paragraph (1). Such
report shall include recommendations regarding changes in the
methods for computing the adjusted average per capita cost
among different areas.
(g) Report on Impact of Increased Financial Assistance to
Medicare+Choice Plans.--Not later than July 1, 2003, the Secretary of
Health and Human Services shall submit to Congress a report that
describes the impact of additional financing provided under this Act
and other Acts (including the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 and BIPA) on the availability of
Medicare+Choice plans in different areas and its impact on lowering
premiums and increasing benefits under such plans.
SEC. 202. MAKING PERMANENT CHANGE IN MEDICARE+CHOICE REPORTING
DEADLINES AND ANNUAL, COORDINATED ELECTION PERIOD.
(a) Change in Reporting Deadline.--Section 1854(a)(1) (42 U.S.C.
1395w-24(a)(1)), as amended by section 532(b)(1) of the Public Health
Security and Bioterrorism Preparedness and Response Act of 2002, is
amended by striking ``2002, 2003, and 2004 (or July 1 of each other
year)'' and inserting ``2002 and each subsequent year (or July 1 of
each year before 2002)''.
(b) Delay in Annual, Coordinated Election Period.--Section
1851(e)(3)(B) (42 U.S.C. 1395w-21(e)(3)(B)), as amended by section
532(c)(1)(A) of the Public Health Security and Bioterrorism
Preparedness and Response Act of 2002, is amended by striking ``and
after 2005, the month of November before such year and with respect to
2003, 2004, and 2005'' and inserting ``, the month of November before
such year and with respect to 2003 and any subsequent year''.
(c) Annual Announcement of Payment Rates.--Section 1853(b)(1) (42
U.S.C. 1395w-23(b)(1)), as amended by section 532(d)(1) of the Public
Health Security and Bioterrorism Preparedness and Response Act of 2002,
is amended by striking ``and after 2005 not later than March 1 before
the calendar year concerned and for 2004 and 2005'' and inserting ``not
later than March 1 before the calendar year concerned and for 2004 and
each subsequent year''.
(d) Requiring Provision of Available Information Comparing Plan
Options.--The first sentence of section 1851(d)(2)(A)(ii) (42 U.S.C.
1395w-21(d)(2)(A)(ii)) is amended by inserting before the period the
following: ``to the extent such information is available at the time of
preparation of materials for the mailing''.
SEC. 203. AVOIDING DUPLICATIVE STATE REGULATION.
(a) In General.--Section 1856(b)(3) (42 U.S.C. 1395w-26(b)(3)) is
amended to read as follows:
``(3) Relation to state laws.--The standards established
under this subsection shall supersede any State law or
regulation (other than State licensing laws or State laws
relating to plan solvency) with respect to Medicare+Choice
plans which are offered by Medicare+Choice organizations under
this part.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
SEC. 204. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS
BENEFICIARIES.
(a) Treatment as Coordinated Care Plan.--Section 1851(a)(2)(A) (42
U.S.C. 1395w-21(a)(2)(A)) is amended by adding at the end the following
new sentence: ``Specialized Medicare+Choice plans for special needs
beneficiaries (as defined in section 1859(b)(4)) may be any type of
coordinated care plan.''.
(b) Specialized Medicare+Choice Plan for Special Needs
Beneficiaries Defined.--Section 1859(b) (42 U.S.C. 1395w-29(b)) is
amended by adding at the end the following new paragraph:
``(4) Specialized medicare+choice plans for special needs
beneficiaries.--
``(A) In general.--The term `specialized
Medicare+Choice plan for special needs beneficiaries'
means a Medicare+Choice plan that exclusively serves
special needs beneficiaries (as defined in subparagraph
(B)).
``(B) Special needs beneficiary.--The term `special
needs beneficiary' means a Medicare+Choice eligible
individual who--
``(i) is institutionalized (as defined by
the Secretary);
``(ii) is entitled to medical assistance
under a State plan under title XIX; or
``(iii) meets such requirements as the
Secretary may determine would benefit from
enrollment in such a specialized
Medicare+Choice plan described in subparagraph (A) for individuals with
severe or disabling chronic conditions.''.
(c) Restriction on Enrollment Permitted.--Section 1859 (42 U.S.C.
1395w-29) is amended by adding at the end the following new subsection:
``(f) Restriction on Enrollment for Specialized Medicare+Choice
Plans for Special Needs Beneficiaries.--In the case of a specialized
Medicare+Choice plan (as defined in subsection (b)(4)), notwithstanding
any other provision of this part and in accordance with regulations of
the Secretary and for periods before January 1, 2007, the plan may
restrict the enrollment of individuals under the plan to individuals
who are within one or more classes of special needs beneficiaries.''.
(d) Report to Congress.--Not later than December 31, 2005, the
Medicare Benefits Administrator shall submit to Congress a report that
assesses the impact of specialized Medicare+Choice plans for special
needs beneficiaries on the cost and quality of services provided to
enrollees. Such report shall include an assessment of the costs and
savings to the medicare program as a result of amendments made by
subsections (a), (b), and (c).
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a),
(b), and (c) shall take effect upon the date of the enactment
of this Act.
(2) Deadline for issuance of requirements for special needs
beneficiaries; transition.--No later than 6 months after the
date of the enactment of this Act, the Secretary of Health and
Human Services shall issue final regulations to establish
requirements for special needs beneficiaries under section
1859(b)(4)(B)(iii) of the Social Security Act, as added by
subsection (b).
SEC. 205. MEDICARE MSAS.
(a) Exemption From Reporting Enrollee Encounter Data.--
(1) In general.--Section 1852(e)(1) (42 U.S.C. 1395w-
22(e)(1)) is amended by inserting ``(other than MSA plans)''
after ``Medicare+Choice plans''.
(2) Conforming amendments.--Section 1852 (42 U.S.C. 1395w-
22) is amended--
(A) in subsection (c)(1)(I), by inserting before
the period at the end the following: ``if required
under such section''; and
(B) in subparagraphs (A) and (B) of subsection
(e)(2), by striking ``, a non-network MSA plan,'' and
``, non-network msa plans,'' each place it appears.
(b) Making Program Permanent and Eliminating Cap.--Section
1851(b)(4) (42 U.S.C. 1395w-21(b)(4)) is amended--
(1) in the heading, by striking ``on a demonstration
basis'';
(2) by striking the first sentence of subparagraph (A); and
(3) by striking the second sentence of subparagraph (C).
(c) Applying Limitations on Balance Billing.--Section 1852(k)(1)
(42 U.S.C. 1395w-22(k)(1)) is amended by inserting ``or with an
organization offering a MSA plan'' after ``section 1851(a)(2)(A)''.
(d) Additional Amendment.--Section 1851(e)(5)(A) (42 U.S.C. 1395w-
21(e)(5)(A)) is amended--
(1) by adding ``or'' at the end of clause (i);
(2) by striking ``, or'' at the end of clause (ii) and
inserting a semicolon; and
(3) by striking clause (iii).
SEC. 206. EXTENSION OF REASONABLE COST AND SHMO CONTRACTS.
(a) Reasonable Cost Contracts.--
(1) In general.--Section 1876(h)(5)(C) (42 U.S.C.
1395mm(h)(5)(C)) is amended--
(A) by inserting ``(i)'' after ``(C)'';
(B) by inserting before the period the following:
``, except (subject to clause (ii)) in the case of a
contract for an area which is not covered in the
service area of 1 or more coordinated care
Medicare+Choice plans under part C''; and
(C) by adding at the end the following new clause:
``(ii) In the case in which--
``(I) a reasonable cost reimbursement contract includes an
area in its service area as of a date that is after December
31, 2003;
``(II) such area is no longer included in such service area
after such date by reason of the operation of clause (i)
because of the inclusion of such area within the service area
of a Medicare+Choice plan; and
``(III) all Medicare+Choice plans subsequently terminate
coverage in such area;
such reasonable cost reimbursement contract may be extended and renewed
to cover such area (so long as it is not included in the service area
of any Medicare+Choice plan).''.
(2) Study.--The Medicare Benefits Administrator shall
conduct a study of an appropriate transition for plans offered
under reasonable cost contracts under section 1876 of the
Social Security Act on and after January 1, 2005. Such a
transition may take into account whether there are one or more
coordinated care Medicare+Choice plans being offered in the
areas involved. Not later than February 1, 2004, the
Administrator shall submit to Congress a report on such study
and shall include recommendations regarding any changes in the
amendment made by paragraph (1) as the Administrator determines
to be appropriate.
(b) Extension of Social Health Maintenance Organization (SHMO)
Demonstration Project.--
(1) In general.--Section 4018(b)(1) of the Omnibus Budget
Reconciliation Act of 1987 is amended by striking ``the date
that is 30 months after the date that the Secretary submits to
Congress the report described in section 4014(c) of the
Balanced Budget Act of 1997'' and inserting ``December 31, 2004''.
(2) SHMOs offering medicare+choice plans.--Nothing in such
section 4018 shall be construed as preventing a social health
maintenance organization from offering a Medicare+Choice plan
under part C of title XVIII of the Social Security Act.
Subtitle B--Medicare+Choice Competition Program
SEC. 211. MEDICARE+CHOICE COMPETITION PROGRAM.
(a) Submission of Bid Amounts.--Section 1854 (42 U.S.C. 1395w-24)
is amended--
(1) in the heading by inserting ``and bid amounts'' after
``premiums'';
(2) in subsection (a)(1)(A)--
(A) by striking ``(A)'' and inserting ``(A)(i) if
the following year is before 2005,''; and
(B) by inserting before the semicolon at the end
the following: ``or (ii) if the following year is 2005
or later, the information described in paragraph
(6)(A)''; and
(3) by adding at the end of subsection (a) the following:
``(6) Submission of bid amounts by medicare+choice
organizations.--
``(A) Information to be submitted.--The information
described in this subparagraph is as follows:
``(i) The monthly aggregate bid amount for
provision of all items and services under this
part and the actuarial basis for determining
such amount.
``(ii) The proportions of such bid amount
that are attributable to--
``(I) the provision of statutory
benefits (such portion referred to in
this part as the `unadjusted monthly
bid amount'); and
``(II) the provision of non-
statutory benefits;
and the actuarial basis for determining such
proportions.
``(iii) Such additional information as the
Administrator may require to verify the
actuarial bases described in clauses (i) and
(ii).
``(B) Statutory benefits defined.--For purposes of
this part, the term `statutory benefits' means benefits
under parts A and B.
``(C) Acceptance and negotiation of bid amounts.--
The Administrator has the authority to negotiate
regarding monthly bid amounts submitted under
subparagraph (A) (and the proportion described in
subparagraph (A)(ii)). The Administrator may reject
such a bid amount or proportion if the Administrator
determines that such amount or proportion is not
supported by the actuarial bases provided under
subparagraph (A).''.
(b) Providing for Beneficiary Savings for Certain Plans.--
(1) In general.--Section 1854(b) (42 U.S.C. 1395w-24(b)) is
amended--
(A) by adding at the end of paragraph (1) the
following new subparagraph:
``(C) Beneficiary rebate rule.--
``(i) Requirement.--The Medicare+Choice
plan shall provide to the enrollee a monthly
rebate equal to 75 percent of the average per
capita savings (if any) described in paragraph
(3) applicable to the plan and year involved.
``(iii) Form of rebate.--A rebate required
under this subparagraph shall be provided--
``(I) through the crediting of the
amount of the rebate towards the
Medicare+Choice monthly supplementary
beneficiary premium;
``(II) through a direct monthly
payment (through electronic funds
transfer or otherwise); or
``(III) through other means
approved by the Medicare Benefits
Administrator,
or any combination thereof.''; and
(B) by adding at the end the following new
paragraph:
``(3) Computation of average per capita monthly savings.--
For purposes of paragraph (1)(C)(i), the average per capita
monthly savings referred to in such paragraph for a
Medicare+Choice plan and year is computed as follows:
``(A) Determination of state-wide average risk
adjustment.--
``(i) In general.--The Medicare Benefits
Administrator shall determine, at the same time
rates are promulgated under section 1853(b)(1)
(beginning with 2005), for each State the
average of the risk adjustment factors to be
applied to enrollees under section
1853(a)(1)(A) in that State. In the case of a
State in which a Medicare+Choice plan was
offered in the previous year, the Administrator
may compute such average based upon risk
adjustment factors applied in that State in a
previous year.
``(ii) Treatment of new states.--In the
case of a State in which no Medicare+Choice
plan was offered in the previous year, the
Administrator shall estimate such average. In
making such estimate, the Administrator may use
average risk adjustment factors applied to
comparable States or applied on a national
basis.
``(B) Determination of risk adjusted benchmark and
risk-adjusted bid.--For each Medicare+Choice plan
offered in a State, the Administrator shall--
``(i) adjust the fee-for-service area-
specific benchmark amount by the applicable
average risk adjustment factor computed under
subparagraph (A); and
``(ii) adjust the unadjusted monthly bid
amount by such applicable average risk
adjustment factor.
``(C) Determination of average per capita monthly
savings.--The average per capita monthly savings
described in this subparagraph is equal to the amount
(if any) by which--
``(i) the risk-adjusted benchmark amount
computed under subparagraph (B)(i), exceeds
``(ii) the risk-adjusted bid computed under
subparagraph (B)(ii).
``(D) Authority to determine risk adjustment for
areas other than states.--The Administrator may provide
for the determination and application of risk
adjustment factors under this paragraph on the basis of
areas other than States.''.
(2) Computation of fee-for-service area-specific
benchmark.--Section 1853 (42 U.S.C. 1395w-23) is amended by
adding at the end the following new subsection:
``(j) Computation of Fee-for-Service Area-Specific Benchmark
Amount.--For purposes of this part, the term `fee-for-service area-
specific benchmark amount' means, with respect to a Medicare+Choice
payment area for a month in a year, an amount equal to the greater of
the following (but in no case less than \1/12\ of the rate computed
under subsection (c)(1), without regard to subparagraph (A), for the
year):
``(1) Based on 100 percent of fee-for-service costs in the
area.--An amount equal to \1/12\ of 100 percent (for 2005
through 2007, or 95 percent for 2008 and years thereafter) of
the adjusted average per capita cost for the year involved,
determined under section 1876(a)(4) for the Medicare+Choice
payment area, for the area and the year involved, for services
covered under parts A and B for individuals entitled to
benefits under part A and enrolled under part B who are not
enrolled in a Medicare+Choice plan under this part for the
year, and adjusted to exclude from such cost the amount the
Medicare Benefits Administrator estimates is payable for costs
described in subclauses (I) and (II) of subsection (c)(3)(C)(i)
for the year involved and also adjusted in the manner described
in subsection (c)(1)(D)(ii) (relating to inclusion of costs of
VA and DOD military facility services to medicare-eligible
beneficiaries).
``(2) Minimum monthly amount.--The minimum amount specified
in this paragraph is the amount specified in subsection
(c)(1)(B)(iv) for the year involved.''.
(c) Payment of Plans Based on Bid Amounts.--
(1) In general.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-23)
is amended by striking ``in an amount'' and all that follows
and inserting the following: ``in an amount determined as
follows:
``(i) Payment before 2005.--For years
before 2005, the payment amount shall be equal
to \1/12\ of the annual Medicare+Choice
capitation rate (as calculated under subsection
(c)) with respect to that individual for that
area, reduced by the amount of any reduction
elected under section 1854(f)(1)(E) and
adjusted under clause (iii).
``(ii) Payment for statutory benefits
beginning with 2005.--For years beginning with
2005--
``(I) Plans with bids below
benchmark.--In the case of a plan for
which there are average per capita
monthly savings described in section
1854(b)(3)(C), the payment under this
subsection is equal to the unadjusted
monthly bid amount, adjusted under
clause (iii), plus the amount of the
monthly rebate computed under section
1854(b)(1)(C)(i) for that plan and
year.
``(II) Plans with bids at or above
benchmark.--In the case of a plan for
which there are no average per capita
monthly savings described in section
1854(b)(3)(C), the payment amount under
this subsection is equal to the fee-
for-service area-specific benchmark
amount, adjusted under clause (iii).
``(iii) Demographic adjustment, including
adjustment for health status.--The
Administrator shall adjust the payment amount
under clause (i), the unadjusted monthly bid
amount under clause (ii)(I), and the fee-for-
service area-specific benchmark amount under
clause (ii)(II) for such risk factors as age,
disability status, gender, institutional
status, and such other factors as the
Administrator determines to be appropriate,
including adjustment for health status under
paragraph (3), so as to ensure actuarial
equivalence. The Administrator may add to,
modify, or substitute for such adjustment
factors if such changes will improve the
determination of actuarial equivalence.''.
(d) Conforming Amendments.--
(1) Protection against beneficiary selection.--Section
1852(b)(1)(A) (42 U.S.C. 1395w-22(b)(1)(A)) is amended by
adding at the end the following: ``The Administrator shall not
approve a plan of an organization if the Administrator
determines that the benefits are designed to substantially
discourage enrollment by certain Medicare+Choice eligible
individuals with the organization.''.
(2) Conforming amendment to premium terminology.--
Subparagraphs (A) and (B) of section 1854(b)(2) (42 U.S.C.
1395w-24(b)(2)) are amended to read as follows:
``(A) Medicare+choice monthly basic beneficiary
premium.--The term `Medicare+Choice monthly basic
beneficiary premium' means, with respect to a Medicare+Choice plan--
``(i) described in section
1853(a)(1)(A)(ii)(I) (relating to plans
providing rebates), zero; or
``(ii) described in section
1853(a)(1)(A)(ii)(II), the amount (if any) by
which the unadjusted monthly bid amount exceeds
the fee-for-service area-specific benchmark
amount.
``(B) Medicare+choice monthly supplemental
beneficiary premium.--The term `Medicare+Choice monthly
supplemental beneficiary premium' means, with respect
to a Medicare+Choice plan, the portion of the aggregate
monthly bid amount submitted under clause (i) of
subsection (a)(6)(A) for the year that is attributable
under such section to the provision of nonstatutory
benefits.''.
(3) Requirement for uniform bid amounts.--Section 1854(c)
(42 U.S.C. 1395w-24(c)) is amended to read as follows:
``(c) Uniform Bid Amounts.--The Medicare+Choice monthly bid amount
submitted under subsection (a)(6) of a Medicare+Choice organization
under this part may not vary among individuals enrolled in the plan.''.
(4) Permitting beneficiary rebates.--
(A) Section 1851(h)(4)(A) (42 U.S.C. 1395w-
21(h)(4)(A)) is amended by inserting ``except as
provided under section 1854(b)(1)(C)'' after ``or
otherwise''.
(B) Section 1854(d) (42 U.S.C. 1395w-24(d)) is
amended by inserting ``, except as provided under
subsection (b)(1)(C),'' after ``and may not provide''.
(e) Effective Date.--The amendments made by this section shall
apply to payments and premiums for months beginning with January 2005.
SEC. 212. DEMONSTRATION PROGRAM FOR COMPETITIVE-DEMONSTRATION AREAS.
(a) Identification of Competitive-Demonstration Areas for
Demonstration Program; Computation of Choice Benchmarks.--Section 1853,
as amended by section 211(b)(2), is amended by adding at the end the
following new subsection:
``(k) Establishment of Competitive Demonstration Program.--
``(1) Designation of competitive-demonstration areas as
part of program.--
``(A) In general.--For purposes of this part, the
Administrator shall establish a demonstration program
under which the Administrator designates
Medicare+Choice areas as competitive-demonstration
areas consistent with the following limitations:
``(i) Limitation on number of areas that
may be designated.--The Administrator may not
designate more than 4 areas as competitive-
demonstration areas.
``(ii) Limitation on period of designation
of any area.--The Administrator may not
designate any area as a competitive-
demonstration area for a period of more than 2
years.
The Administrator has the discretion to decide whether
or not to designate as a competitive-demonstration area
an area that qualifies for such designation.
``(B) Qualifications for designation.--For purposes
of this title, a Medicare+Choice area (which is a
metropolitan statistical area or other area with a
substantial number of Medicare+Choice enrollees) may
not be designated as a `competitive-demonstration area'
for a 2-year period beginning with a year unless the
Administrator determines, by such date before the
beginning of the year as the Administrator determines
appropriate, that--
``(i) there will be offered during the open
enrollment period under this part before the
beginning of the year at least 2
Medicare+Choice plans (in addition to the fee-
for-service program under parts A and B), each
offered by a different Medicare+Choice
organization; and
``(ii) during March of the previous year at
least 50 percent of the number of
Medicare+Choice eligible individuals who reside
in the area were enrolled in a Medicare+Choice
plan.
``(2) Choice benchmark amount.--For purposes of this part,
the term `choice benchmark amount' means, with respect to a
Medicare+Choice payment area for a month in a year, the sum of
the 2 components described in paragraph (3) for the area and
year. The Administrator shall compute such benchmark amount for
each competitive-demonstration area before the beginning of
each annual, coordinated election period under section
1851(e)(3)(B) for each year (beginning with 2005) in which it
is designated as such an area.
``(3) Two components.--For purposes of paragraph (2), the
two components described in this paragraph for an area and a
year are the following:
``(A) Fee-for-service component weighted by
national fee-for-service market share.--The product of
the following:
``(i) National fee-for-service market
share.--The national fee-for-service market
share percentage (determined under paragraph
(5)) for the year.
``(ii) Fee-for-service area-specific bid.--
The fee-for-service area-specific bid (as
defined in paragraph (6)) for the area and
year.
``(B) M+C component weighted by national
medicare+choice market share.--The product of the
following:
``(i) National medicare+choice market
share.--1 minus the national fee-for-service
market share percentage for the year.
``(ii) Weighted average of plan bids in
area.--The weighted average of the plan bids
for the area and year (as determined under
paragraph (4)(A)).
``(4) Determination of weighted average bids for an area.--
``(A) In general.--For purposes of paragraph
(3)(B)(ii), the weighted average of plan bids for an
area and a year is the sum of the following products
for Medicare+Choice plans described in subparagraph (C)
in the area and year:
``(i) Proportion of each plan's enrollees
in the area.--The number of individuals
described in subparagraph (B), divided by the
total number of such individuals for all
Medicare+Choice plans described in subparagraph
(C) for that area and year.
``(ii) Monthly bid amount.--The unadjusted
monthly bid amount.
``(B) Counting of individuals.--The Administrator
shall count, for each Medicare+Choice plan described in
subparagraph (C) for an area and year, the number of
individuals who reside in the area and who were
enrolled under such plan under this part during March
of the previous year.
``(C) Exclusion of plans not offered in previous
year.--For an area and year, the Medicare+Choice plans
described in this subparagraph are plans that are
offered in the area and year and were offered in the
area in March of the previous year.
``(5) Computation of national fee-for-service market share
percentage.--The Administrator shall determine, for a year, the
proportion (in this subsection referred to as the `national
fee-for-service market share percentage') of Medicare+Choice
eligible individuals who during March of the previous year were
not enrolled in a Medicare+Choice plan.
``(6) Fee-for-service area-specific bid.--For purposes of
this part, the term `fee-for-service area-specific bid' means,
for an area and year, the amount described in section
1853(j)(1) for the area and year, except that any reference to
a percent of less than 100 percent shall be deemed a reference
to 100 percent.''.
(b) Application of Choice Benchmark in Competitive-Demonstration
Areas.--
(1) In general.--Section 1854 is amended--
(A) in subsection (b)(1)(C)(i), as added by section
211(b)(1)(A), by striking ``(i) Requirement.--The'' and
inserting ``(i) Requirement for non-competitive-
demonstration areas.--In the case of a Medicare+Choice
payment area that is not a competitive-demonstration
area designated under section 1853(k)(1), the'';
(B) in subsection (b)(1)(C), as so added, by
inserting after clause (i) the following new clause:
``(ii) Requirement for competitive-
demonstration areas.--In the case of a
Medicare+Choice payment area that is designated
as a competitive-demonstration area under
section 1853(k)(1), if there are average per
capita monthly savings described in paragraph
(4) for a Medicare+Choice plan and year, the
Medicare+Choice plan shall provide to the
enrollee a monthly rebate equal to 75 percent
of such savings.'';
(C) by adding at the end of subsection (b), as
amended by section 211(b)(1), the following new
paragraph:
``(4) Computation of average per capita monthly savings for
competitive-demonstration areas.--For purposes of paragraph
(1)(C)(ii), the average per capita monthly savings referred to
in such paragraph for a Medicare+Choice plan and year shall be
computed in the same manner as the average per capita monthly
savings is computed under paragraph (3) except that the
reference to the fee-for-service area-specific benchmark amount
in paragraph (3)(B)(i) (or to the benchmark amount as adjusted
under paragraph (3)(C)(i)) is deemed to be a reference to the
choice benchmark amount (or such amount as adjusted in the
manner described in paragraph (3)(B)(i)).''; and
(D) in subsection (d), as amended by section
211(d)(4), by inserting ``and subsection (b)(1)(D)''
after ``subsection (b)(1)(C)''.
(2) Conforming amendments.--
(A) Payment of plans.--Section 1853(a)(1)(A)(ii),
as amended by section 211(c)(1), is amended--
(i) in subclause (I), by inserting ``(or,
in the case of a competitive-demonstration
area, the choice benchmark amount)'' after
``unadjusted monthly bid amount''; and
(ii) in subclauses (I) and (II), by
inserting ``(or, in the case of a competitive-
demonstration area, described in section
1854(b)(4))'' after ``section 1854(b)(3)(C)''.
(B) Definition of monthly basic premium.--Section
1854(b)(2)(A)(ii), as amended by section 211(d)(2), is
amended by inserting ``(or, in the case of a
competitive-demonstration area, the choice benchmark
amount)'' after ``benchmark amount''.
(c) Premium Adjustment.--Section 1839 (42 U.S.C. 1395r) is amended
by adding at the end the following new subsection:
``(h)(1) In the case of an individual who resides in a competitive-
demonstration area designated under section 1851(k)(1) and who is not
enrolled in a Medicare+Choice plan under part C, the monthly premium
otherwise applied under this part (determined without regard to
subsections (b) and (f) or any adjustment under this subsection) shall
be adjusted as follows: If the fee-for-service area-specific bid (as
defined in section 1853(k)(6)) for the Medicare+Choice area in which
the individual resides for a month--
``(A) does not exceed the choice benchmark (as determined
under section 1853(k)(2)) for such area, the amount of the
premium for the individual for the month shall be reduced by an
amount equal to 75 percent of the amount by which such
benchmark exceeds such fee-for-service bid; or
``(B) exceeds such choice benchmark, the amount of the
premium for the individual for the month shall be adjusted to
ensure that--
``(i) the sum of the amount of the adjusted premium
and the choice benchmark for the area, is equal to
``(ii) the sum of the unadjusted premium plus
amount of the fee-for-service area-specific bid for the
area.
``(2) Nothing in this subsection shall be construed as preventing a
reduction under paragraph (1)(A) in the premium otherwise applicable
under this part to zero or from requiring the provision of a rebate to
the extent such premium would otherwise be required to be less than
zero.
``(3) The adjustment in the premium under this subsection shall be
effected in such manner as the Medicare Benefits Administrator
determines appropriate.
``(4) In order to carry out this subsection (insofar as it is
effected through the manner of collection of premiums under 1840(a)),
the Medicare Benefits Administrator shall transmit to the Commissioner
of Social Security--
``(A) at the beginning of each year, the name, social
security account number, and the amount of the adjustment (if
any) under this subsection for each individual enrolled under
this part for each month during the year; and
``(B) periodically throughout the year, information to
update the information previously transmitted under this
paragraph for the year.''.
(d) Conforming Amendment.--Section 1844(c) (42 U.S.C. 1395w(c)) is
amended by inserting ``and without regard to any premium adjustment
effected under section 1839(h)'' before the period at the end.
(e) Report on Demonstration Program.--Not later than 6 months after
the date on which the designation of the 4th competitive-demonstration
area under section 1851(k)(1) of the Social Security Act ends, the
Medicare Payment Advisory Commission shall submit to Congress a report
on the impact of the demonstration program under the amendments made by
this section, including such impact on premiums of medicare
beneficiaries, savings to the medicare program, and on adverse
selection.
(f) Effective Date.--The amendments made by this section shall
apply to payments and premiums for periods beginning on or after
January 1, 2005.
SEC. 213. CONFORMING AMENDMENTS.
(a) Conforming Amendments Relating to Bids.--
(1) Section 1854 (42 U.S.C. 1395w-24) is amended--
(A) in the heading of subsection (a), by inserting
``and Bid Amounts'' after ``Premiums''; and
(B) in subsection (a)(5)(A), by inserting
``paragraphs (2), (3), and (4) of'' after ``filed
under''.
(b) Additional Conforming Amendments.--
(1) Annual determination and announcement of certain
factors.--Section 1853(b) (42 U.S.C. 1395w-23(b)) is amended--
(A) in paragraph (1), by striking ``the respective
calendar year'' and all that follows and inserting the
following: ``the calendar year concerned with respect
to each Medicare+Choice payment area, the following:
``(A) Pre-competition information.--For years
before 2005, the following:
``(i) Medicare+choice capitation rates.--
The annual Medicare+Choice capitation rate for
each Medicare+Choice payment area for the year.
``(ii) Adjustment factors.--The risk and
other factors to be used in adjusting such
rates under subsection (a)(1)(A) for payments
for months in that year.
``(B) Competition information.--For years beginning
with 2005, the following:
``(i) Benchmarks.--The fee-for-service
area-specific benchmark under section 1853(j)
and, if applicable, the choice benchmark under
section 1853(k)(2), for the year involved and,
if applicable, the national fee-for-service
market share percentage.
``(ii) Adjustment factors.--The adjustment
factors applied under section
1853(a)(1)(A)(iii) (relating to demographic
adjustment), section 1853(a)(1)(B) (relating to
adjustment for end-stage renal disease), and
section 1853(a)(3) (relating to health status
adjustment).
``(iii) Projected fee-for-service bid.--In
the case of a competitive area, the projected
fee-for-service area-specific bid (as
determined under subsection (k)(6)) for the
area.
``(iv) Individuals.--The number of
individuals counted under subsection (k)(4)(B)
and enrolled in each Medicare+Choice plan in
the area.''; and
(B) in paragraph (3), by striking ``in sufficient
detail'' and all that follows up to the period at the
end.
(2) Repeal of provisions relating to adjusted community
rate (acr).--
(A) In general.--Subsections (e) and (f) of section
1854 (42 U.S.C. 1395w-24) are repealed.
(B) Conforming amendment.--Section 1839(a)(2) (42
U.S.C. 1395r(a)(2)) is amended by striking ``, and to
reflect'' and all that follows and inserting a period.
(3) Prospective implementation of national coverage
determinations.--Section 1852(a)(5) (42 U.S.C. 1395w-22(a)(5))
is amended to read as follows:
``(5) Prospective implementation of national coverage
determinations.--The Secretary shall only implement a national
coverage determination that will result in a significant change
in the costs to a Medicare+Choice organization in a prospective
manner that applies to announcements made under section 1853(b)
after the date of the implementation of the determination.''.
(4) Permitting geographic adjustment to consolidate
multiple medicare+choice payment areas in a state into a single
statewide medicare+choice payment area.--Section 1853(d)(3) (42
U.S.C. 1395w-23(e)(3)) is amended--
(A) by amending clause (i) of subparagraph (A) to
read as follows:
``(i) to a single statewide Medicare+Choice
payment area,''; and
(B) by amending subparagraph (B) to read as
follows:
``(B) Budget neutrality adjustment.--In the case of
a State requesting an adjustment under this paragraph,
the Medicare Benefits Administrator shall initially
(and annually thereafter) adjust the payment rates
otherwise established under this section for
Medicare+Choice payment areas in the State in a manner
so that the aggregate of the payments under this
section in the State shall not exceed the aggregate
payments that would have been made under this section
for Medicare+Choice payment areas in the State in the
absence of the adjustment under this paragraph.''.
(c) Effective Date.--The amendments made by this section shall
apply to payments and premiums for periods beginning on or after
January 1, 2005.
TITLE III--RURAL HEALTH CARE IMPROVEMENTS
SEC. 301. REFERENCE TO FULL MARKET BASKET INCREASE FOR SOLE COMMUNITY
HOSPITALS.
For provision eliminating any reduction from full market basket in
the update for inpatient hospital services for sole community
hospitals, see section 401.
SEC. 302. ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH) TREATMENT FOR
RURAL HOSPITALS AND URBAN HOSPITALS WITH FEWER THAN 100
BEDS.
(a) Blending of Payment Amounts.--
(1) In general.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended by adding at the end the following
new clause:
``(xiv)(I) In the case of discharges in a fiscal year beginning on
or after October 1, 2002, subject to subclause (II), there shall be
substituted for the disproportionate share adjustment percentage
otherwise determined under clause (iv) (other than subclause (I)) or
under clause (viii), (x), (xi), (xii), or (xiii), the old blend
proportion (specified under subclause (III)) of the disproportionate
share adjustment percentage otherwise determined under the respective
clause and 100 percent minus such old blend proportion of the
disproportionate share adjustment percentage determined under clause
(vii) (relating to large, urban hospitals).
``(II) Under subclause (I), the disproportionate share adjustment
percentage shall not exceed 10 percent for a hospital that is not
classified as a rural referral center under subparagraph (C).
``(III) For purposes of subclause (I), the old blend proportion for
fiscal year 2003 is 80 percent, for each subsequent year (through 2006)
is the old blend proportion under this subclause for the previous year
minus 20 percentage points, and for each year beginning with 2007 is 0
percent.''.
(2) Conforming amendments.--Section 1886(d)(5)(F) (42
U.S.C. 1395ww(d)(5)(F)) is amended--
(A) in each of subclauses (II), (III), (IV), (V),
and (VI) of clause (iv), by inserting ``subject to
clause (xiv) and'' before ``for discharges occurring'';
(B) in clause (viii), by striking ``The formula''
and inserting ``Subject to clause (xiv), the formula'';
and
(C) in each of clauses (x), (xi), (xii), and
(xiii), by striking ``For purposes'' and inserting
``Subject to clause (xiv), for purposes''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to discharges occurring on or after October 1, 2002.
SEC. 303. 2-YEAR PHASED-IN INCREASE IN THE STANDARDIZED AMOUNT IN RURAL
AND SMALL URBAN AREAS TO ACHIEVE A SINGLE, UNIFORM
STANDARDIZED AMOUNT.
Section 1886(d)(3)(A)(iv) (42 U.S.C. 1395ww(d)(3)(A)(iv)) is
amended--
(1) by striking ``(iv) For discharges'' and inserting
``(iv)(I) Subject to the succeeding provisions of this clause,
for discharges''; and
(2) by adding at the end the following new subclauses:
``(II) For discharges occurring during fiscal year 2003,
the average standardized amount for hospitals located other
than in a large urban area shall be increased by \1/2\ of the
difference between the average standardized amount determined
under subclause (I) for hospitals located in large urban areas
for such fiscal year and such amount determined (without regard
to this subclause) for other hospitals for such fiscal year.
``(III) For discharges occurring in a fiscal year beginning
with fiscal year 2004, the Secretary shall compute an average
standardized amount for hospitals located in any area within
the United States and within each region equal to the average
standardized amount computed for the previous fiscal year under this
subparagraph for hospitals located in a large urban area (or, beginning
with fiscal year 2005, for hospitals located in any area) increased by
the applicable percentage increase under subsection (b)(3)(B)(i).''.
SEC. 304. MORE FREQUENT UPDATE IN WEIGHTS USED IN HOSPITAL MARKET
BASKET.
(a) More Frequent Updates in Weights.--After revising the weights
used in the hospital market basket under section 1886(b)(3)(B)(iii) of
the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(iii)) to reflect the
most current data available, the Secretary shall establish a frequency
for revising such weights in such market basket to reflect the most
current data available more frequently than once every 5 years.
(b) Report.--Not later than October 1, 2003, the Secretary shall
submit a report to Congress on the frequency established under
subsection (a), including an explanation of the reasons for, and
options considered, in determining such frequency.
SEC. 305. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.
(a) Reinstatement of Periodic Interim Payment (PIP).--Section
1815(e)(2) (42 U.S.C. 1395g(e)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (C);
(2) by adding ``and'' at the end of subparagraph (D); and
(3) by inserting after subparagraph (D) the following new
subparagraph:
``(E) inpatient critical access hospital services;''.
(b) Condition for Application of Special Physician Payment
Adjustment.--Section 1834(g)(2) (42 U.S.C. 1395m(g)(2)) is amended by
adding after and below subparagraph (B) the following:
``The Secretary may not require, as a condition for applying
subparagraph (B) with respect to a critical access hospital,
that each physician providing professional services in the
hospital must assign billing rights with respect to such
services, except that such subparagraph shall not apply to
those physicians who have not assigned such billing rights.''.
(c) Flexibility in Bed Limitation for Hospitals.--Section 1820 (42
U.S.C. 1395i-4) is amended--
(1) in subsection (c)(2)(B)(iii), by inserting ``subject to
paragraph (3)'' after ``(iii) provides'';
(2) by adding at the end of subsection (c) the following
new paragraph:
``(3) Increase in maximum number of beds for hospitals with
strong seasonal census fluctuations.--
``(A) In general.--Subject to subparagraph (C), in
the case of a hospital that demonstrates that it meets
the standards established under subparagraph (B) and
has not made the election described in subsection
(f)(2)(A), the bed limitations otherwise applicable
under paragraph (2)(B)(iii) and subsection (f) shall be
increased by 5 beds.
``(B) Standards.--The Secretary shall specify
standards for determining whether a critical access
hospital has sufficiently strong seasonal variations in
patient admissions to justify the increase in bed
limitation provided under subparagraph (A).''; and
(3) in subsection (f)--
(A) by inserting ``(1)'' after ``(f)''; and
(B) by adding at the end the following new
paragraph:
``(2)(A) A hospital may elect to treat the reference in paragraph
(1) to `15 beds' as a reference to `25 beds', but only if no more than
10 beds in the hospital are at any time used for non-acute care
services. A hospital that makes such an election is not eligible for
the increase provided under subsection (c)(3)(A).
``(B) The limitations in numbers of beds under the first sentence
of paragraph (1) are subject to adjustment under subsection (c)(3).''.
(d) 5-Year Extension of the Authorization for Appropriations for
Grant Program.--Section 1820(j) (42 U.S.C. 1395i-4(j)) is amended by
striking ``through 2002'' and inserting ``through 2007''.
(e) Prohibition of Retroactive Recoupment.--The Secretary shall not
recoup (or otherwise seek to recover) overpayments made for outpatient
critical access hospital services under part B of title XVIII of the
Social Security Act, for services furnished in cost reporting periods
that began before October 1, 2002, insofar as such overpayments are
attributable to payment being based on 80 percent of reasonable costs
(instead of 100 percent of reasonable costs minus 20 percent of
charges).
(f) Effective Dates.--
(1) Reinstatement of pip.--The amendments made by
subsection (a) shall apply to payments made on or after January
1, 2003.
(2) Physician payment adjustment condition.--The amendment
made by subsection (b) shall be effective as if included in the
enactment of section 403(d) of the Medicare, Medicaid, and
SCHIP Balanced Budget Refinement Act of 1999 (113 Stat. 1501A-
371).
(3) Flexibility in bed limitation.--The amendments made by
subsection (c) shall apply to designations made on or after
January 1, 2003, but shall not apply to critical access
hospitals that were designated as of such date.
SEC. 306. EXTENSION OF TEMPORARY INCREASE FOR HOME HEALTH SERVICES
FURNISHED IN A RURAL AREA.
(a) In General.--Section 508(a) BIPA (114 Stat. 2763A-533) is
amended--
(1) by striking ``24-Month Increase Beginning April 1,
2001'' and inserting ``In General''; and
(2) by striking ``April 1, 2003'' and inserting ``January
1, 2005''.
(b) Conforming Amendment.--Section 547(c)(2) of BIPA (114 Stat.
2763A-553) is amended by striking ``the period beginning on April 1,
2001, and ending on September 30, 2002,'' and inserting ``a period
under such section''.
SEC. 307. REFERENCE TO 10 PERCENT INCREASE IN PAYMENT FOR HOSPICE CARE
FURNISHED IN A FRONTIER AREA AND RURAL HOSPICE
DEMONSTRATION PROJECT.
For--
(1) provision of 10 percent increase in payment for hospice
care furnished in a frontier area, see section 422; and
(2) provision of a rural hospice demonstration project, see
section 423.
SEC. 308. REFERENCE TO PRIORITY FOR HOSPITALS LOCATED IN RURAL OR SMALL
URBAN AREAS IN REDISTRIBUTION OF UNUSED GRADUATE MEDICAL
EDUCATION RESIDENCIES.
For provision providing priority for hospitals located in rural or
small urban areas in redistribution of unused graduate medical
education residencies, see section 612.
SEC. 309. GAO STUDY OF GEOGRAPHIC DIFFERENCES IN PAYMENTS FOR
PHYSICIANS' SERVICES.
(a) Study.--The Comptroller General of the United States shall
conduct a study of differences in payment amounts under the physician
fee schedule under section 1848 of the Social Security Act (42 U.S.C.
1395w-4) for physicians' services in different geographic areas. Such
study shall include--
(1) an assessment of the validity of the geographic
adjustment factors used for each component of the fee schedule;
(2) an evaluation of the measures used for such adjustment,
including the frequency of revisions; and
(3) an evaluation of the methods used to determine
professional liability insurance costs used in computing the
malpractice component, including a review of increases in
professional liability insurance premiums and variation in such
increases by State and physician specialty and methods used to
update the geographic cost of practice index and relative
weights for the malpractice component.
(b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Comptroller General shall submit to Congress a report
on the study conducted under subsection (a). The report shall include
recommendations regarding the use of more current data in computing
geographic cost of practice indices as well as the use of data directly
representative of physicians' costs (rather than proxy measures of such
costs).
SEC. 310. PROVIDING SAFE HARBOR FOR CERTAIN COLLABORATIVE EFFORTS THAT
BENEFIT MEDICALLY UNDERSERVED POPULATIONS.
(a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-7(b)(3)) is
amended--
(1) in subparagraph (E), by striking ``and'' after the
semicolon at the end;
(2) in subparagraph (F), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(G) any remuneration between a public or
nonprofit private health center entity described under
clause (i) or (ii) of section 1905(l)(2)(B) and any
individual or entity providing goods, items, services,
donations or loans, or a combination thereof, to such
health center entity pursuant to a contract, lease,
grant, loan, or other agreement, if such agreement
contributes to the ability of the health center entity
to maintain or increase the availability, or enhance
the quality, of services provided to a medically
underserved population served by the health center
entity.''.
(b) Rulemaking for Exception for Health Center Entity
Arrangements.--
(1) Establishment.--
(A) In general.--The Secretary of Health and Human
Services (in this subsection referred to as the
``Secretary'') shall establish, on an expedited basis,
standards relating to the exception described in
section 1128B(b)(3)(H) of the Social Security Act, as
added by subsection (a), for health center entity
arrangements to the antikickback penalties.
(B) Factors to consider.--The Secretary shall
consider the following factors, among others, in
establishing standards relating to the exception for
health center entity arrangements under subparagraph
(A):
(i) Whether the arrangement between the
health center entity and the other party
results in savings of Federal grant funds or
increased revenues to the health center entity.
(ii) Whether the arrangement between the
health center entity and the other party
restricts or limits a patient's freedom of
choice.
(iii) Whether the arrangement between the
health center entity and the other party
protects a health care professional's
independent medical judgment regarding
medically appropriate treatment.
The Secretary may also include other standards and
criteria that are consistent with the intent of
Congress in enacting the exception established under
this section.
(2) Interim final effect.--No later than 180 days after the
date of enactment of this Act, the Secretary shall publish a
rule in the Federal Register consistent with the factors under
paragraph (1)(B). Such rule shall be effective and final
immediately on an interim basis, subject to such change and
revision, after public notice and opportunity (for a period of
not more than 60 days) for public comment, as is consistent
with this subsection.
SEC. 311. RELIEF FOR CERTAIN NON-TEACHING HOSPITALS.
(a) In General.--In the case of a non-teaching hospital that meets
the condition of subsection (b), in each of fiscal years 2003, 2004,
and 2005 the amount of payment made to the hospital under section
1886(d) of the Social Security Act for discharges occurring during such
fiscal year only shall be increased as though the applicable percentage
increase (otherwise applicable to discharges occurring during such
fiscal year under section 1886(b)(3)(B)(i) of the Social Security Act
(42 U.S.C. 1395ww(b)(3)(B)(i)) had been increased by 5 percentage
points. The previous sentence shall be applied for each such fiscal
year separately without regard to its application in a previous fiscal
year and shall not affect payment for discharges for any hospital
occurring during a fiscal year after fiscal year 2005.
(b) Condition.--A non-teaching hospital meets the condition of this
subsection if--
(1) it is located in a rural area and the amount of the
aggregate payments under subsection (d) of section 1886 of the
Social Security Act for hospitals located in rural areas in the
State for their cost reporting periods beginning during fiscal
year 1999 is less than the aggregate allowable operating costs
of inpatient hospital services (as defined in subsection (a)(4)
of such section) for all subsection (d) hospitals in such areas
in such State with respect to such cost reporting periods; or
(2) it is located in an urban area and the amount of the
aggregate payments under subsection (d) of such section for
hospitals located in urban areas in the State for their cost
reporting periods beginning during fiscal year 1999 is less
than 103 percent of the aggregate allowable operating costs of
inpatient hospital services (as defined in subsection (a)(4) of
such section) for all subsection (d) hospitals in such areas in
such State with respect to such cost reporting periods.
The amounts under paragraphs (1) and (2) shall be determined by the
Secretary of Health and Human Services based on data of the Medicare
Payment Advisory Commission.
(c) Definitions.--For purposes of this section:
(1) Non-teaching hospital.--The term ``non-teaching
hospital'' means, for a cost reporting period, a subsection (d)
hospital (as defined in subsection (d)(1)(B) of section 1886 of
the Social Security Act, 42 U.S.C. 1395ww)) that is not
receiving any additional payment under subsection (d)(5)(B) of
such section or a payment under subsection (h) of such section
for discharges occurring during the period. A subsection (d)
hospital that receives additional payments under subsection
(d)(5)(B) or (h) of such section shall, for purposes of this
section, also be treated as a non-teaching hospital unless a
chairman of a department in the medical school with which the
hospital is affiliated is serving or has been appointed as a
clinical chief of service in the hospital.
(2) Rural; urban.--The terms ``rural'' and ``urban'' have
the meanings given such terms for purposes of section 1886(d)
of the Social Security Act (42 U.S.C. 1395ww(d)).
TITLE IV--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 401. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATES.
Subclause (XVIII) of section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended to read as follows:
``(XVIII) for fiscal year 2003, the market basket
percentage increase for sole community hospitals and such
increase minus 0.25 percentage points for other hospitals,
and''.
SEC. 402. 2-YEAR INCREASE IN LEVEL OF ADJUSTMENT FOR INDIRECT COSTS OF
MEDICAL EDUCATION (IME).
Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is
amended--
(1) in subclause (VI) by striking ``and'' at the end;
(2) by redesignating subclause (VII) as subclause (IX);
(3) in subclause (IX) as so redesignated, by striking
``2002'' and inserting ``2004''; and
(4) by inserting after subclause (VI) the following new
subclause:
``(VII) during fiscal year 2003, `c' is equal to
1.47;
``(VIII) during fiscal year 2004, `c' is equal to
1.45; and''.
SEC. 403. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER INPATIENT
HOSPITAL PPS.
(a) Improving Timeliness of Data Collection.--Section 1886(d)(5)(K)
(42 U.S.C. 1395ww(d)(5)(K)) is amended by adding at the end the
following new clause:
``(vii) Under the mechanism under this subparagraph, the Secretary
shall provide for the addition of new diagnosis and procedure codes in
April 1 of each year, but the addition of such codes shall not require
the Secretary to adjust the payment (or diagnosis-related group
classification) under this subsection until the fiscal year that begins
after such date.''.
(b) Eligibility Standard.--
(1) Minimum period for recognition of new technologies.--
Section 1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)) is
amended--
(A) by inserting ``(I)'' after ``(vi)''; and
(B) by adding at the end the following new
subclause:
``(II) Under such criteria, a service or technology shall not be
denied treatment as a new service or technology on the basis of the
period of time in which the service or technology has been in use if
such period ends before the end of the 2 to 3-year period that begins
on the effective date of implementation of a code under ICD-9-CM (or a
successor coding methodology) that enables the identification of a
significant sample of specific discharges in which the service or
technology has been used.''.
(2) Adjustment of threshold.--Section 1886(d)(5)(K)(ii)(I)
(42 U.S.C. 1395ww(d)(5)(K)(ii)(I)) is amended by inserting
``(applying a threshold specified by the Secretary that is the
lesser of 50 percent of the national average standardized
amount for operating costs of inpatient hospital services for
all hospitals and all diagnosis-related groups or one standard
deviation for the diagnosis-related group involved)'' after
``is inadequate''.
(3) Criterion for substantial improvement.--Section
1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)), as amended
by paragraph (1), is further amended by adding at the end the
following subclause:
``(III) The Secretary shall by regulation provide for further
clarification of the criteria applied to determine whether a new
service or technology represents an advance in medical technology that
substantially improves the diagnosis or treatment of beneficiaries.
Under such criteria, in determining whether a new service or technology
represents an advance in medical technology that substantially improves
the diagnosis or treatment of beneficiaries, the Secretary shall deem a
service or technology as meeting such requirement if the service or
technology is a drug or biological that is designated under section 506
or 526 of the Federal Food, Drug, and Cosmetic Act, approved under
section 314.510 or 601.41 of title 21, Code of Federal Regulations, or
designated for priority review when the marketing application for such
drug or biological was filed or is a medical device for which an
exemption has been granted under section 520(m) of such Act, or for
which priority review has been provided under section 515(d)(5) of such
Act.''.
(4) Process for public input.--Section 1886(d)(5)(K) (42
U.S.C. 1395ww(d)(5)(K)), as amended by paragraph (1), is
amended--
(A) in clause (i), by adding at the end the
following: ``Such mechanism shall be modified to meet
the requirements of clause (viii).''; and
(B) by adding at the end the following new clause:
``(viii) The mechanism established pursuant to clause (i) shall be
adjusted to provide, before publication of a proposed rule, for public
input regarding whether a new service or technology not described in
the second sentence of clause (vi)(III) represents an advance in
medical technology that substantially improves the diagnosis or
treatment of beneficiaries as follows:
``(I) The Secretary shall make public and periodically
update a list of all the services and technologies for which an
application for additional payment under this subparagraph is
pending.
``(II) The Secretary shall accept comments,
recommendations, and data from the public regarding whether the
service or technology represents a substantial improvement.
``(III) The Secretary shall provide for a meeting at which
organizations representing hospitals, physicians, medicare
beneficiaries, manufacturers, and any other interested party
may present comments, recommendations, and data to the clinical
staff of the Centers for Medicare & Medicaid Services before
publication of a notice of proposed rulemaking regarding
whether service or technology represents a substantial
improvement.''.
(c) Preference for Use of DRG Adjustment.--Section 1886(d)(5)(K)
(42 U.S.C. 1395ww(d)(5)(K)) is further amended by adding at the end the
following new clause:
``(ix) Before establishing any add-on payment under this
subparagraph with respect to a new technology, the Secretary shall seek
to identify one or more diagnosis-related groups associated with such
technology, based on similar clinical or anatomical characteristics and
the cost of the technology. Within such groups the Secretary shall
assign an eligible new technology into a diagnosis-related group where
the average costs of care most closely approximate the costs of care of
using the new technology. In such case, no add-on payment under this
subparagraph shall be made with respect to such new technology and this
clause shall not affect the application of paragraph (4)(C)(iii).''.
(d) Improvement in Payment for New Technology.--Section
1886(d)(5)(K)(ii)(III) (42 U.S.C. 1395ww(d)(5)(K)(ii)(III)) is amended
by inserting after ``the estimated average cost of such service or
technology'' the following: ``(based on the marginal rate applied to
costs under subparagraph (A))''.
(e) Effective Date.--
(1) In general.--The Secretary shall implement the
amendments made by this section so that they apply to
classification for fiscal years beginning with fiscal year
2004.
(2) Reconsiderations of applications for fiscal year 2003
that are denied.--In the case of an application for a
classification of a medical service or technology as a new
medical service or technology under section 1886(d)(5)(K) of
the Social Security Act (42 U.S.C. 1395ww(d)(5)(K)) that was
filed for fiscal year 2003 and that is denied--
(A) the Secretary shall automatically reconsider
the application as an application for fiscal year 2004
under the amendments made by this section; and
(B) the maximum time period otherwise permitted for
such classification of the service or technology shall
be extended by 12 months.
SEC. 404. PHASE-IN OF FEDERAL RATE FOR HOSPITALS IN PUERTO RICO.
Section 1886(d)(9) (42 U.S.C. 1395ww(d)(9)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``for discharges
beginning on or after October 1, 1997, 50 percent (and
for discharges between October 1, 1987, and September
30, 1997, 75 percent)'' and inserting ``the applicable
Puerto Rico percentage (specified in subparagraph
(E))''; and
(B) in clause (ii), by striking ``for discharges
beginning in a fiscal year beginning on or after
October 1, 1997, 50 percent (and for discharges between
October 1, 1987, and September 30, 1997, 25 percent)''
and inserting ``the applicable Federal percentage
(specified in subparagraph (E))''; and
(2) by adding at the end the following new subparagraph:
``(E) For purposes of subparagraph (A), for discharges occurring--
``(i) between October 1, 1987, and September 30, 1997, the
applicable Puerto Rico percentage is 75 percent and the
applicable Federal percentage is 25 percent;
``(ii) on or after October 1, 1997, and before October 1,
2003, the applicable Puerto Rico percentage is 50 percent and
the applicable Federal percentage is 50 percent;
``(iii) during fiscal year 2004, the applicable Puerto Rico
percentage is 45 percent and the applicable Federal percentage
is 55 percent;
``(iv) during fiscal year 2005, the applicable Puerto Rico
percentage is 40 percent and the applicable Federal percentage
is 60 percent;
``(v) during fiscal year 2006, the applicable Puerto Rico
percentage is 35 percent and the applicable Federal percentage
is 65 percent;
``(vi) during fiscal year 2007, the applicable Puerto Rico
percentage is 30 percent and the applicable Federal percentage
is 70 percent; and
``(vii) on or after October 1, 2007, the applicable Puerto
Rico percentage is 25 percent and the applicable Federal
percentage is 75 percent.''.
SEC. 405. REFERENCE TO PROVISION RELATING TO ENHANCED DISPROPORTIONATE
SHARE HOSPITAL (DSH) PAYMENTS FOR RURAL HOSPITALS AND
URBAN HOSPITALS WITH FEWER THAN 100 BEDS.
For provision enhancing disproportionate share hospital (DSH)
treatment for rural hospitals and urban hospitals with fewer than 100
beds, see section 302.
SEC. 406. REFERENCE TO PROVISION RELATING TO 2-YEAR PHASED-IN INCREASE
IN THE STANDARDIZED AMOUNT IN RURAL AND SMALL URBAN AREAS
TO ACHIEVE A SINGLE, UNIFORM STANDARDIZED AMOUNT.
For provision phasing in over a 2-year period an increase in the
standardized amount for rural and small urban areas to achieve a
single, uniform, standardized amount, see section 303.
SEC. 407. REFERENCE TO PROVISION FOR MORE FREQUENT UPDATES IN THE
WEIGHTS USED IN HOSPITAL MARKET BASKET.
For provision providing for more frequent updates in the weights
used in hospital market basket, see section 304.
SEC. 408. REFERENCE TO PROVISION MAKING IMPROVEMENTS TO CRITICAL ACCESS
HOSPITAL PROGRAM.
For provision providing making improvements to critical access
hospital program, see section 305.
SEC. 409. GAO STUDY ON IMPROVING THE HOSPITAL WAGE INDEX.
(a) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct a study on the improvements that can be
made in the measurement of regional differences in hospital
wages reflected in the hospital wage index under section
1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)).
(2) Examination of use of metropolitan statistical areas
(msas).--The study shall specifically examine the use of
metropolitan statistical areas for purposes of computing and
applying the wage index and whether the boundaries of such
areas accurately reflect local labor markets. In addition, the
study shall examine whether regional inequities are created as
a result of infrequent updates of such boundaries and policies
of the Bureau of the Census relating to commuting criteria.
(3) Wage data.--The study shall specifically examine the
portions of the hospital cost reports relating to wages, and
methods for improving the accuracy of the wage data and for
reducing inequities resulting from differences among hospitals
in the reporting of wage data.
(b) Consultation With OMB.--The Comptroller General shall consult
with the Director of Office of Management and Budget in conducting the
study under subsection (a)(2).
(c) Report.--Not later than May 1, 2003, the Comptroller General
shall submit to Congress a report on the study conducted under
subsection (a) and shall include in the report such recommendations as
may be appropriate on--
(1) changes in the definition of labor market areas used
for purposes of the area wage index under section 1886 of the
Social Security Act; and
(2) improvements in methods for the collection of wage
data.
Subtitle B--Skilled Nursing Facility Services
SEC. 411. PAYMENT FOR COVERED SKILLED NURSING FACILITY SERVICES.
(a) Temporary Increase in Nursing Component of PPS Federal Rate.--
Section 312(a) of BIPA is amended by adding at the end the following
new sentence: ``The Secretary of Health and Human Services shall
increase by 12, 10, and 8 percent the nursing component of the case-mix
adjusted Federal prospective payment rate specified in Tables 3 and 4
of the final rule published in the Federal Register by the Health Care
Financing Administration on July 31, 2000 (65 Fed. Reg. 46770) and as
subsequently updated under section 1888(e)(4)(E)(ii) of the Social
Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)), effective for services
furnished during fiscal years 2003, 2004, and 2005, respectively.''.
(b) Adjustment to RUGs for AIDS Residents.--
(1) In general.--Paragraph (12) of section 1888(e) (42
U.S.C. 1395yy(e)) is amended to read as follows:
``(12) Adjustment for residents with aids.--
``(A) In general.--Subject to subparagraph (B), in
the case of a resident of a skilled nursing facility
who is afflicted with acquired immune deficiency
syndrome (AIDS), the per diem amount of payment
otherwise applicable shall be increased by 128 percent
to reflect increased costs associated with such
residents.
``(B) Sunset.--Subparagraph (A) shall not apply on
and after such date as the Secretary certifies that
there is an appropriate adjustment in the case mix
under paragraph (4)(G)(i) to compensate for the
increased costs associated with residents described in
such subparagraph.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to services furnished on or after October 1, 2003.
Subtitle C--Hospice
SEC. 421. COVERAGE OF HOSPICE CONSULTATION SERVICES.
(a) Coverage of Hospice Consultation Services.--Section 1812(a) (42
U.S.C. 1395d(a)) is amended--
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``; and''; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) for individuals who are terminally ill, have not made
an election under subsection (d)(1), and have not previously
received services under this paragraph, services that are
furnished by a physician who is either the medical director or
an employee of a hospice program and that consist of--
``(A) an evaluation of the individual's need for
pain and symptom management;
``(B) counseling the individual with respect to
end-of-life issues and care options; and
``(C) advising the individual regarding advanced
care planning.''.
(b) Payment.--Section 1814(i) (42 U.S.C. l395f(i)) is amended by
adding at the end the following new paragraph:
``(4) The amount paid to a hospice program with respect to the
services under section 1812(a)(5) for which payment may be made under
this part shall be equal to an amount equivalent to the amount
established for an office or other outpatient visit for evaluation and
management associated with presenting problems of moderate severity
under the fee schedule established under section 1848(b), other than
the portion of such amount attributable to the practice expense
component.''.
(c) Conforming Amendment.--Section 1861(dd)(2)(A)(i) (42 U.S.C.
1395x(dd)(2)(A)(i)) is amended by inserting before the comma at the end
the following: ``and services described in section 1812(a)(5)''.
(d) Effective Date.--The amendments made by this section shall
apply to services provided by a hospice program on or after January 1,
2004.
SEC. 422. 10 PERCENT INCREASE IN PAYMENT FOR HOSPICE CARE FURNISHED IN
A FRONTIER AREA.
(a) In General.--Section 1814(i)(1) (42 U.S.C. 1395f(i)(1)) is
amended by adding at the end the following new subparagraph:
``(D) With respect to hospice care furnished in a frontier area on
or after January 1, 2003, and before January 1, 2008, the payment rates
otherwise established for such care shall be increased by 10 percent.
For purposes of this subparagraph, the term `frontier area' means a
county in which the population density is less than 7 persons per
square mile.''.
(b) Report on Costs.--Not later than January 1, 2007, the
Comptroller General of the United States shall submit to Congress a
report on the costs of furnishing hospice care in frontier areas. Such
report shall include recommendations regarding the appropriateness of
extending, and modifying, the payment increase provided under the
amendment made by subsection (a).
SEC. 423. RURAL HOSPICE DEMONSTRATION PROJECT.
(a) In General.--The Secretary shall conduct a demonstration
project for the delivery of hospice care to medicare beneficiaries in
rural areas. Under the project medicare beneficiaries who are unable to
receive hospice care in the home for lack of an appropriate caregiver
are provided such care in a facility of 20 or fewer beds which offers,
within its walls, the full range of services provided by hospice
programs under section 1861(dd) of the Social Security Act (42 U.S.C.
1395x(dd)).
(b) Scope of Project.--The Secretary shall conduct the project
under this section with respect to no more than 3 hospice programs over
a period of not longer than 5 years each.
(c) Compliance With Conditions.--Under the demonstration project--
(1) the hospice program shall comply with otherwise
applicable requirements, except that it shall not be required
to offer services outside of the home or to meet the
requirements of section 1861(dd)(2)(A)(iii) of the Social
Security Act; and
(2) payments for hospice care shall be made at the rates
otherwise applicable to such care under title XVIII of such
Act.
The Secretary may require the program to comply with such additional
quality assurance standards for its provision of services in its
facility as the Secretary deems appropriate.
(d) Report.--Upon completion of the project, the Secretary shall
submit a report to Congress on the project and shall include in the
report recommendations regarding extension of such project to hospice
programs serving rural areas.
Subtitle D--Other Provisions
SEC. 431. DEMONSTRATION PROJECT FOR USE OF RECOVERY AUDIT CONTRACTORS.
(a) In General.--The Secretary of Health and Human Services shall
conduct a demonstration project under this section (in this section
referred to as the ``project'') to demonstrate the use of recovery
audit contractors under the Medicare Integrity Program in identifying
underpayments and overpayments and recouping overpayments under the
medicare program for services for which payment is made under part A of
title XVIII of the Social Security Act. Under the project--
(1) payment may be made to such a contractor on a
contingent basis;
(2) a percentage of the amount recovered may be retained by
the Secretary and shall be available to the program management
account of the Centers for Medicare & Medicaid Services; and
(3) the Secretary shall examine the efficacy of such use
with respect to duplicative payments, accuracy of coding, and
other payment policies in which inaccurate payments arise.
(b) Scope and Duration.--The project shall cover at least 2 States
and at least 3 contractors and shall last for not longer than 3 years.
(c) Waiver.--The Secretary of Health and Human Services shall waive
such provisions of title XVIII of the Social Security Act as may be
necessary to provide for payment for services under the project in
accordance with subsection (a).
(d) Qualifications of Contractors.--
(1) In general.--The Secretary shall enter into a recovery
audit contract under this section with an entity only if the
entity has staff that has knowledge of and experience with the
payment rules and regulations under the medicare program or the
entity has or will contract with another entity that has such
knowledgeable and experienced staff.
(2) Ineligibility of certain contractors.--The Secretary
may not enter into a recovery audit contract under this section
with an entity to the extent that the entity is a fiscal
intermediary under section 1816 of the Social Security Act (42
U.S.C. 1395h), a carrier under section 1842 of such Act (42
U.S.C. 1395u), or a Medicare Administrative Contractor under
section 1874A of such Act.
(3) Preference for entities with demonstrated proficiency
with private insurers.--In awarding contracts to recovery audit
contractors under this section, the Secretary shall give
preference to those entities that the Secretary determines have
demonstrated proficiency in recovery audits with private
insurers or under the medicaid program under title XIX of such
Act.
(e) Report.--The Secretary of Health and Human Services shall
submit to Congress a report on the project not later than 6 months
after the date of its completion. Such reports shall include
information on the impact of the project on savings to the medicare
program and recommendations on the cost-effectiveness of extending or
expanding the project.
TITLE V--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
SEC. 501. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.
(a) Update for 2003 through 2005.--
(1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is
amended by adding at the end the following new paragraphs:
``(5) Update for 2003.--The update to the single conversion
factor established in paragraph (1)(C) for 2003 is 3 percent.
``(6) Special rules for update for 2004 and 2005.--The
following rules apply in determining the update adjustment
factors under paragraph (4)(B) for 2004 and 2005:
``(A) Use of 2002 data in determining allowable
costs.--
``(i) The reference in clause (ii)(I) of
such paragraph to April 1, 1996, is deemed to
be a reference to January 1, 2002.
``(ii) The allowed expenditures for 2002 is
deemed to be equal to the actual expenditures
for physicians' services furnished during 2002,
as estimated by the Secretary.
``(B) 1 percentage point increase in gdp under
sgr.--The annual average percentage growth in real
gross domestic product per capita under subsection
(f)(2)(C) for each of 2003, 2004, and 2005 is deemed to
be increased by 1 percentage point.''.
(2) Conforming amendment.--Paragraph (4)(B) of such section
is amended, in the matter before clause (i), by inserting ``and
paragraph (6)'' after ``subparagraph (D)''.
(3) Not treated as change in law and regulation in
sustainable growth rate determination.--The amendments made by
this subsection shall not be treated as a change in law for
purposes of applying section 1848(f)(2)(D) of the Social
Security Act (42 U.S.C. 1395w-4(f)(2)(D)).
(b) Use of 10-Year Rolling Average in Computing Gross Domestic
Product.--
(1) In general.--Section 1848(f)(2)(C) (42 U.S.C. 1395w-
4(f)(2)(C)) is amended--
(A) by striking ``projected'' and inserting
``annual average''; and
(B) by striking ``from the previous applicable
period to the applicable period involved'' and
inserting ``during the 10-year period ending with the
applicable period involved''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to computations of the sustainable growth rate for
years beginning with 2002.
(c) Elimination of Transitional Adjustment.--Section 1848(d)(4)(F)
(42 U.S.C. 1395w-4(d)(4)(F)) is amended by striking ``subparagraph
(A)'' and all that follows and inserting ``subparagraph (A), for each
of 2001 and 2002, of -0.2 percent.''.
(d) GAO Study of Medicare Payment for Inhalation Therapy.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to examine the adequacy of current
reimbursements for inhalation therapy under the medicare
program.
(2) Report.--Not later than May 1, 2003, the Comptroller
General shall submit to Congress a report on the study
conducted under paragraph (1).
SEC. 502. STUDIES ON ACCESS TO PHYSICIANS' SERVICES.
(a) GAO Study on Beneficiary Access to Physicians' Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access of medicare beneficiaries to
physicians' services under the medicare program. The study
shall include--
(A) an assessment of the use by beneficiaries of
such services through an analysis of claims submitted
by physicians for such services under part B of the
medicare program;
(B) an examination of changes in the use by
beneficiaries of physicians' services over time;
(C) an examination of the extent to which
physicians are not accepting new medicare beneficiaries
as patients.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1).
The report shall include a determination whether--
(A) data from claims submitted by physicians under
part B of the medicare program indicate potential
access problems for medicare beneficiaries in certain
geographic areas; and
(B) access by medicare beneficiaries to physicians'
services may have improved, remained constant, or
deteriorated over time.
(b) Study and Report on Supply of Physicians.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to conduct a study
on the adequacy of the supply of physicians (including
specialists) in the United States and the factors that affect
such supply.
(2) Report to congress.--Not later than 2 years after the
date of enactment of this section, the Secretary shall submit
to Congress a report on the results of the study described in
paragraph (1), including any recommendations for legislation.
SEC. 503. MEDPAC REPORT ON PAYMENT FOR PHYSICIANS' SERVICES.
Not later than 1 year after the date of the enactment of this Act,
the Medicare Payment Advisory Commission shall submit to Congress a
report on the effect of refinements to the practice expense component
of payments for physicians' services, after the transition to a full
resource-based payment system in 2002, under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4). Such report shall examine the
following matters by physician specialty:
(1) The effect of such refinements on payment for
physicians' services.
(2) The interaction of the practice expense component with
other components of and adjustments to payment for physicians'
services under such section.
(3) The appropriateness of the amount of compensation by
reason of such refinements.
(4) The effect of such refinements on access to care by
medicare beneficiaries to physicians' services.
(5) The effect of such refinements on physician
participation under the medicare program.
SEC. 504. 1-YEAR EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY
SERVICES UNDER MEDICARE.
Section 542(c) of BIPA is amended by striking ``2-year period'' and
inserting ``3-year period''.
SEC. 505. PHYSICIAN FEE SCHEDULE WAGE INDEX REVISION.
(a) Index Revision.--
(1) In general.--Subject to paragraph (2), notwithstanding
any other provision of law, for purposes of payment under the
physician fee schedule under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4) for physicians' services
furnished during 2004, in no case may the work geographic index
otherwise calculated under subsection (e)(1)(A)(iii) of such
section be less than 0.985.
(2) Secretarial discretion.--Paragraph (1) shall not take
effect or be in force if the Secretary determines, taking into
account the report of the Comptroller General under subsection
(b)(2), that there is no sound economic rationale for the
implementation of such paragraph.
(3) Exemption from limitation on annual adjustments.--Any
increase in expenditures attributable to paragraph (1) during
2004 shall not be taken into account in applying section
1848(c)(2)(B)(ii)(II) of the Social Security Act (42 U.S.C.
1395w-4(c)(2)(B)(ii)(II)) for that year.
(b) GAO Report.--
(1) Evaluation.--As part of the study on geographic
differences in payments for physicians' services conducted
under section 309, the Comptroller General shall evaluate the
following:
(A) Whether there is a sound economic basis for the
implementation of the adjustment under subsection
(a)(1) in those areas in which the adjustment applies.
(B) The effect of such adjustment on physician
location and retention in areas affected by such
adjustment, taking into account--
(i) differences in recruitment costs and
retention rates for physicians, including
specialists, between large urban areas and
other areas; and
(ii) the mobility of physicians, including
specialists, over the last decade.
(C) The appropriateness of establishing a floor of
1.0 for the work geographic index.
(2) Report.--By not later than September 1, 2003, the
Comptroller General shall submit to Congress and to the
Secretary a report on the evaluation conducted under paragraph
(1).
Subtitle B--Other Services
SEC. 511. PAYMENT FOR AMBULANCE SERVICES.
(a) Phase-In Providing Floor Using Blend of Fee Schedule and
Regional Fee Schedules.--Section 1834(l) (42 U.S.C. 1395m(l)) is
amended--
(1) in paragraph (2)(E), by inserting ``consistent with
paragraph (10)'' after ``in an efficient and fair manner'';
(2) by redesignating the paragraph (8) added by section
221(a) of BIPA as paragraph (9); and
(3) by adding at the end the following new paragraph:
``(10) Phase-in providing floor using blend of fee schedule
and regional fee schedules.--In carrying out the phase-in under
paragraph (2)(E) for each level of service furnished in a year
before January 1, 2007, the portion of the payment amount that
is based on the fee schedule shall not be less than the
following blended rate of the fee schedule under paragraph (1)
and of a regional fee schedule for the region involved:
``(A) For 2003, the blended rate shall be based 20
percent on the fee schedule under paragraph (1) and 80
percent on the regional fee schedule.
``(B) For 2004, the blended rate shall be based 40
percent on the fee schedule under paragraph (1) and 60
percent on the regional fee schedule.
``(C) For 2005, the blended rate shall be based 60
percent on the fee schedule under paragraph (1) and 40
percent on the regional fee schedule.
``(D) For 2006, the blended rate shall be based 80
percent on the fee schedule under paragraph (1) and 20
percent on the regional fee schedule.
For purposes of this paragraph, the Secretary shall establish a
regional fee schedule for each of the 9 Census divisions using
the methodology (used in establishing the fee schedule under
paragraph (1)) to calculate a regional conversion factor and a
regional mileage payment rate and using the same payment
adjustments and the same relative value units as used in the
fee schedule under such paragraph.''.
(b) Adjustment in Payment for Certain Long Trips.--Section 1834(l),
as amended by subsection (a), is further amended by adding at the end
the following new paragraph:
``(11) Adjustment in payment for certain long trips.--In
the case of ground ambulance services furnished on or after
January 1, 2003, and before January 1, 2008, regardless of
where the transportation originates, the fee schedule
established under this subsection shall provide that, with
respect to the payment rate for mileage for a trip above 50
miles the per mile rate otherwise established shall be
increased by \1/4\ of the payment per mile otherwise applicable
to such miles.''.
(c) Effective Date.--The amendments made by this section shall
apply to ambulance services furnished on or after January 1, 2003.
SEC. 512. 2-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS; PROVISIONS
RELATING TO REPORTS.
(a) 2-Year Extension of Moratorium on Therapy Caps.--Section
1833(g)(4) (42 U.S.C. 1395l(g)(4)) is amended by striking ``and 2002''
and inserting ``2002, 2003, and 2004''.
(b) Prompt Submission of Overdue Reports on Payment and Utilization
of Outpatient Therapy Services.--Not later than December 31, 2002, the
Secretary shall submit to Congress 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).
(c) Identification of Conditions and Diseases Justifying Waiver of
Therapy Cap.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to identify
conditions or diseases that should justify conducting an
assessment of the need to waive the therapy caps under section
1833(g)(4) of the Social Security Act (42 U.S.C. 1395l(g)(4)).
(2) Reports to congress.--Not later than September 1, 2003,
the Secretary shall submit to Congress a preliminary report on
the conditions and diseases identified under paragraph (1) and
not later than December 31, 2003, a final report on the
conditions and diseases so identified.
(d) GAO Study of Patient Access to Physical Therapist Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access to physical therapist services
in States authorizing such services without a physician
referral and in States that require such a physician referral.
The study shall--
(A) examine the use of and referral patterns for
physical therapist services for patients age 50 and
older in States that authorize such services without a
physician referral and in States that require such a
physician referral;
(B) examine the use of and referral patterns for
physical therapist services for patients who are
medicare beneficiaries;
(C) examine the potential effect of prohibiting a
physician from referring patients to physical therapy
services owned by the physician and provided in the
physician's office;
(D) examine the delivery of physical therapists'
services within the facilities of Department of
Defense; and
(E) analyze the potential impact on medicare
beneficiaries and on expenditures under the medicare
program of eliminating the need for a physician
referral and physician certification for physical
therapist services under the medicare program.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1) by
not later than 1 year after the date of the enactment of this
Act.
SEC. 513. COVERAGE OF AN INITIAL PREVENTIVE PHYSICAL EXAMINATION.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is
amended--
(1) in subparagraph (U), by striking ``and'' at the end;
(2) in subparagraph (V), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(W) an initial preventive physical examination (as
defined in subsection (ww));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x) is amended
by adding at the end the following new subsection:
``Initial Preventive Physical Examination
``(ww) The term `initial preventive physical examination' means
physicians' services consisting of a physical examination with the goal
of health promotion and disease detection and includes items and
services (excluding clinical laboratory tests), as determined by the
Secretary, consistent with the recommendations of the United States
Preventive Services Task Force.''.
(c) Waiver of Deductible and Coinsurance.--
(1) Deductible.--The first sentence of section 1833(b) (42
U.S.C. 1395l(b)) is amended--
(A) by striking ``and'' before ``(6)'', and
(B) by inserting before the period at the end the
following: ``, and (7) such deductible shall not apply
with respect to an initial preventive physical
examination (as defined in section 1861(ww))''.
(2) Coinsurance.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended--
(A) in clause (N), by inserting ``(or 100 percent
in the case of an initial preventive physical
examination, as defined in section 1861(ww))'' after
``80 percent''; and
(B) in clause (O), by inserting ``(or 100 percent
in the case of an initial preventive physical
examination, as defined in section 1861(ww))'' after
``80 percent''.
(d) Payment as Physicians' Services.--Section 1848(j)(3) (42 U.S.C.
1395w-4(j)(3)) is amended by inserting ``(2)(W),'' after ``(2)(S),''.
(e) Other Conforming Amendments.--Section 1862(a) (42 U.S.C.
1395y(a)) is amended--
(1) in paragraph (1)--
(A) by striking ``and'' at the end of subparagraph
(H);
(B) by striking the semicolon at the end of
subparagraph (I) and inserting ``, and''; and
(C) by adding at the end the following new
subparagraph:
``(J) in the case of an initial preventive physical
examination, which is performed not later than 6 months after
the date the individual's first coverage period begins under
part B;''; and
(2) in paragraph (7), by striking ``or (H)'' and inserting
``(H), or (J)''.
(f) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 2004, but only for
individuals whose coverage period begins on or after such date.
SEC. 514. RENAL DIALYSIS SERVICES.
(a) Report on Differences in Costs in Different Settings.--Not
later than 1 year after the date of the enactment of this Act, the
Comptroller General of the United States shall submit to Congress a
report containing--
(1) an analysis of the differences in costs of providing
renal dialysis services under the medicare program in home
settings and in facility settings;
(2) an assessment of the percentage of overhead costs in
home settings and in facility settings; and
(3) an evaluation of whether the charges for home dialysis
supplies and equipment are reasonable and necessary.
(b) Restoring Composite Rate Exceptions for Pediatric Facilities.--
(1) In general.--Section 422(a)(2) of BIPA is amended--
(A) in subparagraph (A), by striking ``and (C)''
and inserting ``, (C), and (D)'';
(B) in subparagraph (B), by striking ``In the
case'' and inserting ``Subject to subparagraph (D), in
the case''; and
(C) by adding at the end the following new
subparagraph:
``(D) Inapplicability to pediatric facilities.--
Subparagraphs (A) and (B) shall not apply, as of
October 1, 2002, to pediatric facilities that do not
have an exception rate described in subparagraph (C) in
effect on such date. For purposes of this
subparagraph, the term `pediatric facility' means a renal facility at
least 50 percent of whose patients are individuals under 18 years of
age.''.
(2) Conforming amendment.--The fourth sentence of section
1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is amended by striking
``The Secretary'' and inserting ``Subject to section 422(a)(2)
of the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, the Secretary''.
(c) Increase in Renal Dialysis Composite Rate for Services
Furnished in 2004.--Notwithstanding any other provision of law, with
respect to payment under part B of title XVIII of the Social Security
Act for renal dialysis services furnished in 2004, the composite
payment rate otherwise established under section 1881(b)(7) of such Act
(42 U.S.C. 1395rr(b)(7)) shall be increased by 1.2 percent.
SEC. 515. IMPROVED PAYMENT FOR CERTAIN MAMMOGRAPHY SERVICES.
(a) Exclusion From OPD Fee Schedule.--Section 1833(t)(1)(B)(iv) (42
U.S.C. 1395l(t)(1)(B)(iv)) is amended by inserting before the period at
the end the following: ``and does not include screening mammography (as
defined in section 1861(jj)) and unilateral and bilateral diagnostic
mammography''.
(b) Adjustment to Technical Component.--For diagnostic mammography
performed on or after January 1, 2004, for which payment is made under
the physician fee schedule under section 1848 of the Social Security
Act (42 U.S.C. 1395w-4), the Secretary, based on the most recent cost
data available, shall provide for an appropriate adjustment in the
payment amount for the technical component of the diagnostic
mammography.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to mammography performed on or after January 1, 2004.
SEC. 516. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR CERTAIN MILITARY
RETIREES; SPECIAL ENROLLMENT PERIOD.
(a) Waiver of Penalty.--
(1) In general.--Section 1839(b) (42 U.S.C. 1395r(b)) is
amended by adding at the end the following new sentence: ``No
increase in the premium shall be effected for a month in the
case of an individual who is 65 years of age or older, who
enrolls under this part during 2001, 2002, or 2003, and who
demonstrates to the Secretary before December 31, 2003, that
the individual is a covered beneficiary (as defined in section
1072(5) of title 10, United States Code). The Secretary of
Health and Human Services shall consult with the Secretary of
Defense in identifying individuals described in the previous
sentence.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to premiums for months beginning with January 2003.
The Secretary of Health and Human Services shall establish a
method for providing rebates of premium penalties paid for
months on or after January 2003 for which a penalty does not
apply under such amendment but for which a penalty was
previously collected.
(b) Medicare Part B Special Enrollment Period.--
(1) In general.--In the case of any individual who, as of
the date of the enactment of this Act, is 65 years of age or
older, is eligible to enroll but is not enrolled under part B
of title XVIII of the Social Security Act, and is a covered
beneficiary (as defined in section 1072(5) of title 10, United
States Code), the Secretary of Health and Human Services shall
provide for a special enrollment period during which the
individual may enroll under such part. Such period shall begin
as soon as possible after the date of the enactment of this Act
and shall end on December 31, 2003.
(2) Coverage period.--In the case of an individual who
enrolls during the special enrollment period provided under
paragraph (1), the coverage period under part B of title XVIII
of the Social Security Act shall begin on the first day of the
month following the month in which the individual enrolls.
SEC. 517. COVERAGE OF CHOLESTEROL AND BLOOD LIPID SCREENING.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), as
amended by section 513(a), is amended--
(1) in subparagraph (V), by striking ``and'' at the end;
(2) in subparagraph (W), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(X) cholesterol and other blood lipid screening
tests (as defined in subsection (XX));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x), as amended
by section 513(b), is amended by adding at the end the following new
subsection:
``Cholesterol and Other Blood Lipid Screening Test
``(xx)(1) The term `cholesterol and other blood lipid screening
test' means diagnostic testing of cholesterol and other lipid levels of
the blood for the purpose of early detection of abnormal cholesterol
and other lipid levels.
``(2) The Secretary shall establish standards, in consultation with
appropriate organizations, regarding the frequency and type of
cholesterol and other blood lipid screening tests, except that such
frequency may not be more often than once every 2 years.''.
(c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)), as
amended by section 513(e), is amended--
(1) by striking ``and'' at the end of subparagraph (I);
(2) by striking the semicolon at the end of subparagraph
(J) and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(K) in the case of a cholesterol and other blood lipid
screening test (as defined in section 1861(xx)(1)), which is
performed more frequently than is covered under section
1861(xx)(2).''.
(d) Effective Date.--The amendments made by this section shall
apply to tests furnished on or after January 1, 2004.
TITLE VI--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 601. ELIMINATION OF 15 PERCENT REDUCTION IN PAYMENT RATES UNDER
THE PROSPECTIVE PAYMENT SYSTEM.
(a) In General.--Section 1895(b)(3)(A) (42 U.S.C. 1395fff(b)(3)(A))
is amended to read as follows:
``(A) Initial basis.--Under such system the
Secretary shall provide for computation of a standard
prospective payment amount (or amounts) as follows:
``(i) Such amount (or amounts) shall
initially be based on the most current audited
cost report data available to the Secretary and
shall be computed in a manner so that the total
amounts payable under the system for fiscal
year 2001 shall be equal to the total amount
that would have been made if the system had not
been in effect and if section 1861(v)(1)(L)(ix)
had not been enacted.
``(ii) For fiscal year 2002 and for the
first quarter of fiscal year 2003, such amount
(or amounts) shall be equal to the amount (or
amounts) determined under this paragraph for
the previous fiscal year, updated under
subparagraph (B).
``(iii) For 2003, such amount (or amounts)
shall be equal to the amount (or amounts)
determined under this paragraph for fiscal year
2002, updated under subparagraph (B) for 2003.
``(iv) For 2004 and each subsequent year,
such amount (or amounts) shall be equal to the
amount (or amounts) determined under this
paragraph for the previous year, updated under
subparagraph (B).
Each such amount shall be standardized in a manner that
eliminates the effect of variations in relative case
mix and area wage adjustments among different home
health agencies in a budget neutral manner consistent
with the case mix and wage level adjustments provided
under paragraph (4)(A). Under the system, the Secretary
may recognize regional differences or differences based
upon whether or not the services or agency are in an
urbanized area.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect as if included in the amendments made by section 501 of the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (as enacted into law by section 1(a)(6) of Public Law 106-554).
SEC. 602. UPDATE IN HOME HEALTH SERVICES.
(a) Change to Calendar Year Update.--
(1) In general.--Section 1895(b) (42 U.S.C. 1395fff(b)(3))
is amended--
(A) in paragraph (3)(B)(i)--
(i) by striking ``each fiscal year
(beginning with fiscal year 2002)'' and
inserting ``fiscal year 2002 and for each
subsequent year (beginning with 2003)''; and
(ii) by inserting ``or year'' after ``the
fiscal year'';
(B) in paragraph (3)(B)(ii)--
(i) in subclause (II), by striking ``fiscal
year'' and inserting ``year'' and by
redesignating such subclause as subclause
(III); and
(ii) in subclause (I), by striking ``each
of fiscal years 2002 and 2003'' and inserting
the following: ``fiscal year 2002, the home
health market basket percentage increase (as
defined in clause (iii)) minus 1.1 percentage
points;
``(II) 2003'';
(C) in paragraph (3)(B)(iii), by inserting ``or
year'' after ``fiscal year'' each place it appears;
(D) in paragraph (3)(B)(iv)--
(i) by inserting ``or year'' after ``fiscal
year'' each place it appears; and
(ii) by inserting ``or years'' after
``fiscal years''; and
(E) in paragraph (5), by inserting ``or year''
after ``fiscal year''.
(2) Transition rule.--The standard prospective payment
amount (or amounts) under section 1895(b)(3) of the Social
Security Act for the calendar quarter beginning on October 1,
2002, shall be such amount (or amounts) for the previous
calendar quarter.
(b) Changes in Updates for 2003, 2004, and 2005.--Section
1895(b)(3)(B)(ii) (42 U.S.C. 1395fff(b)(3)(B)(ii)), as amended by
subsection (a)(1)(B), is amended--
(1) in subclause (II), by striking ``the home health market
basket percentage increase (as defined in clause (iii)) minus
1.1 percentage points'' and inserting ``2.0 percentage
points'';
(2) by striking ``or'' at the end of subclause (II);
(3) by redesignating subclause (III) as subclause (V); and
(4) by inserting after subclause (II) the following new
subclause:
``(III) 2004, 1.1 percentage
points;
``(IV) 2005, 2.7 percentage points;
or''.
(c) Payment Adjustment.--
(1) In general.--Section 1895(b)(5) (42 U.S.C.
1395fff(b)(5)) is amended by striking ``5 percent'' and
inserting ``3 percent''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to years beginning with 2003.
SEC. 603. OASIS TASK FORCE; SUSPENSION OF CERTAIN OASIS DATA COLLECTION
REQUIREMENTS PENDING TASK FORCE SUBMITTAL OF REPORT.
(a) Establishment.--The Secretary of Health and Human Services
shall establish and appoint a task force (to be known as the ``OASIS
Task Force'') to examine the data collection and reporting requirements
under OASIS. For purposes of this section, the term ``OASIS'' means the
Outcome and Assessment Information Set required by reason of section
4602(e) of Balanced Budget Act of 1997 (42 U.S.C. 1395fff note).
(b) Composition.--The OASIS Task Force shall be composed of the
following:
(1) Staff of the Centers for Medicare & Medicaid Services
with expertise in post-acute care.
(2) Representatives of home health agencies.
(3) Health care professionals and research and health care
quality experts outside the Federal Government with expertise
in post-acute care.
(4) Advocates for individuals requiring home health
services.
(c) Duties.--
(1) Review and recommendations.--The OASIS Task Force shall
review and make recommendations to the Secretary regarding
changes in OASIS to improve and simplify data collection for
purposes of--
(A) assessing the quality of home health services;
and
(B) providing consistency in classification of
patients into home health resource groups (HHRGs) for
payment under section 1895 of the Social Security Act
(42 U.S.C. 1395fff).
(2) Specific items.--In conducting the review under
paragraph (1), the OASIS Task Force shall specifically
examine--
(A) the 41 outcome measures currently in use;
(B) the timing and frequency of data collection;
and
(C) the collection of information on comorbidities
and clinical indicators.
(3) Report.--The OASIS Task Force shall submit a report to
the Secretary containing its findings and recommendations for
changes in OASIS by not later than 18 months after the date of
the enactment of this Act.
(d) Sunset.--The OASIS Task Force shall terminate 60 days after the
date on which the report is submitted under subsection (c)(2).
(e) Nonapplication of FACA.--The provisions of the Federal Advisory
Committee Act shall not apply to the OASIS Task Force.
(f) Suspension of OASIS Requirement for Collection of Data on Non-
Medicare and Non-Medicaid Patients Pending Task Force Report.--
(1) In general.--During the period described in paragraph
(2), the Secretary of Health and Human Services may not
require, under section 4602(e) of the Balanced Budget Act of
1997 or otherwise under OASIS, a home health agency to gather
or submit information that relates to an individual who is not
eligible for benefits under either title XVIII or title XIX of
the Social Security Act.
(2) Period of suspension.--The period described in this
paragraph--
(A) begins on January 1, 2003, and
(B) ends on the last day of the 2nd month beginning
after the date the report is submitted under subsection
(c)(2).
SEC. 604. MEDPAC STUDY ON MEDICARE MARGINS OF HOME HEALTH AGENCIES.
(a) Study.--The Medicare Payment Advisory Commission shall conduct
a study of payment margins of home health agencies under the home
health prospective payment system under section 1895 of the Social
Security Act (42 U.S.C. 1395fff). Such study shall examine whether
systematic differences in payment margins are related to differences in
case mix (as measured by home health resource groups (HHRGs)) among
such agencies. The study shall use the partial or full-year cost
reports filed by home health agencies.
(b) Report.--Not later than 2 years after the date of the enactment
of this Act, the Commission shall submit to Congress a report on the
study under subsection (a).
SEC. 605. CLARIFICATION OF TREATMENT OF OCCASIONAL ABSENCES IN
DETERMINING WHETHER AN INDIVIDUAL IS CONFINED TO THE
HOME.
(a) In General.--The penultimate sentence of section 1814(a) (42
U.S.C. 1395f(a) and the penultimate sentence of section 1835(a) (42
U.S.C. 1395n(a)) are each amended to read as follows: ``Any other
absence of an individual from the home shall not so disqualify the
individual if the absence is infrequent or of relatively short
duration, such as an occasional trip to the barber or a walk around the
block, and is not inconsistent with the assessment underlying the
individual's plan of care for home health services.''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect on the date of the enactment of this Act.
Subtitle B--Direct Graduate Medical Education
SEC. 611. EXTENSION OF UPDATE LIMITATION ON HIGH COST PROGRAMS.
Section 1886(h)(2)(D)(iv) (42 U.S.C. 1395ww(h)(2)(D)(iv)) is
amended--
(1) in subclause (I)--
(A) by striking ``and 2002'' and inserting
``through 2012'';
(B) by striking ``during fiscal year 2001 or fiscal
year 2002'' and inserting ``during the period beginning
with fiscal year 2001 and ending with fiscal year
2012''; and
(C) by striking ``subject to subclause (III),'';
(2) by striking subclause (II); and
(3) in subclause (III)--
(A) by redesignating such subclause as subclause
(II); and
(B) by striking ``or (II)''.
SEC. 612. REDISTRIBUTION OF UNUSED RESIDENT POSITIONS.
(a) In General.--Section 1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is
amended--
(1) in subparagraph (F)(i), by inserting ``subject to
subparagraph (I),'' after ``October 1, 1997,'';
(2) in subparagraph (H)(i), by inserting ``subject to
subparagraph (I),'' after ``subparagraphs (F) and (G),''; and
(3) by adding at the end the following new subparagraph:
``(I) Redistribution of unused resident
positions.--
``(i) Reduction in limit based on unused
positions.--
``(I) In general.--If a hospital's
resident level (as defined in clause
(iii)(I)) is less than the otherwise
applicable resident limit (as defined
in clause (iii)(II)) for each of the
reference periods (as defined in
subclause (II)), effective for cost
reporting periods beginning on or after
January 1, 2003, the otherwise
applicable resident limit shall be
reduced by 75 percent of the difference
between such limit and the reference
resident level specified in subclause
(III) (or subclause (IV) if
applicable).
``(II) Reference periods defined.--
In this clause, the term `reference
periods' means, for a hospital, the 3
most recent consecutive cost reporting
periods of the hospital for which cost
reports have been settled (or, if not,
submitted) on or before September 30,
2001.
``(III) Reference resident level.--
Subject to subclause (IV), the
reference resident level specified in
this subclause for a hospital is the
highest resident level for the hospital
during any of the reference periods.
``(IV) Adjustment process.--Upon
the timely request of a hospital, the
Secretary may adjust the reference
resident level for a hospital to be the
resident level for the hospital for the
cost reporting period that includes
July 1, 2002.
``(ii) Redistribution.--
``(I) In general.--The Secretary is
authorized to increase the otherwise
applicable resident limits for
hospitals by an aggregate number
estimated by the Secretary that does
not exceed the aggregate reduction in
such limits attributable to clause (i)
(without taking into account any
adjustment under subclause (IV) of such
clause).
``(II) Effective date.--No increase
under subclause (I) shall be permitted
or taken into account for a hospital
for any portion of a cost reporting
period that occurs before July 1, 2003,
or before the date of the hospital's
application for an increase under this
clause. No such increase shall be
permitted for a hospital unless the
hospital has applied to the Secretary
for such increase by December 31, 2004.
``(III) Considerations in
redistribution.--In determining for
which hospitals the increase in the
otherwise applicable resident limit is
provided under subclause (I), the
Secretary shall take into account the
need for such an increase by specialty
and location involved, consistent with
subclause (IV).
``(IV) Priority for rural and small
urban areas.--In determining for which
hospitals and residency training
programs an increase in the otherwise
applicable resident limit is provided
under subclause (I), the Secretary
shall first distribute the increase to
programs of hospitals located in rural
areas or in urban areas that are not
large urban areas (as defined for
purposes of subsection (d)) on a first-
come-first-served basis (as determined
by the Secretary) based on a
demonstration that the hospital will
fill the positions made available under
this clause and not to exceed an
increase of 25 full-time equivalent
positions with respect to any hospital.
``(V) Application of locality
adjusted national average per resident
amount.--With respect to additional
residency positions in a hospital
attributable to the increase provided
under this clause, notwithstanding any
other provision of this subsection, the
approved FTE resident amount is deemed
to be equal to the locality adjusted
national average per resident amount
computed under subparagraph (E) for
that hospital.
``(VI) Construction.--Nothing in
this clause shall be construed as
permitting the redistribution of
reductions in residency positions
attributable to voluntary reduction
programs under paragraph (6) or as
affecting the ability of a hospital to
establish new medical residency
training programs under subparagraph
(H).
``(iii) Resident level and limit defined.--
In this subparagraph:
``(I) Resident level.--The term
`resident level' means, with respect to
a hospital, the total number of full-
time equivalent residents, before the
application of weighting factors (as
determined under this paragraph), in
the fields of allopathic and
osteopathic medicine for the hospital.
``(II) Otherwise applicable
resident limit.--The term `otherwise
applicable resident limit' means, with
respect to a hospital, the limit
otherwise applicable under
subparagraphs (F)(i) and (H) on the
resident level for the hospital
determined without regard to this
subparagraph.''.
(b) No Application of Increase to IME.--Section 1886(d)(5)(B)(v)
(42 U.S.C. 1395ww(d)(5)(B)(v)) is amended by adding at the end the
following: ``The provisions of clause (i) of subparagraph (I) of
subsection (h)(4) shall apply with respect to the first sentence of
this clause in the same manner as it applies with respect to
subparagraph (F) of such subsection, but the provisions of clause (ii)
of such subparagraph shall not apply.''.
(c) Report on Extension of Applications Under Redistribution
Program.--Not later than July 1, 2004, the Secretary shall submit to
Congress a report containing recommendations regarding whether to
extend the deadline for applications for an increase in resident limits
under section 1886(h)(4)(I)(ii)(II) of the Social Security Act (as
added by subsection (a)).
Subtitle C--Other Provisions
SEC. 621. MODIFICATIONS TO MEDICARE PAYMENT ADVISORY COMMISSION
(MEDPAC).
(a) Examination of Budget Consequences.--Section 1805(b) (42 U.S.C.
1395b-6(b)) is amended by adding at the end the following new
paragraph:
``(8) Examination of budget consequences.--Before making
any recommendations, the Commission shall examine the budget
consequences of such recommendations, directly or through
consultation with appropriate expert entities.''.
(b) Consideration of Efficient Provision of Services.--Section
1805(b)(2)(B)(i) (42 U.S.C. 1395b-6(b)(2)(B)(i)) is amended by
inserting ``the efficient provision of'' after ``expenditures for''.
(c) Additional Reports.--
(1) Data needs and sources.--The Medicare Payment Advisory
Commission shall conduct a study, and submit a report to
Congress by not later than June 1, 2003, on the need for
current data, and sources of current data available, to
determine the solvency and financial circumstances of hospitals
and other medicare providers of services. The Commission shall
examine data on uncompensated care, as well as the share of
uncompensated care accounted for by the expenses for treating
illegal aliens.
(2) Use of tax-related returns.--Using return information
provided under Form 990 of the Internal Revenue Service, the
Commission shall submit to Congress, by not later than June 1,
2003, a report on the following:
(A) Investments and capital financing of hospitals
participating under the medicare program and related
foundations.
(B) Access to capital financing for private and for
not-for-profit hospitals.
SEC. 622. DEMONSTRATION PROJECT FOR DISEASE MANAGEMENT FOR CERTAIN
MEDICARE BENEFICIARIES WITH DIABETES.
(a) In General.--The Secretary of Health and Human Services shall
conduct a demonstration project under this section (in this section
referred to as the ``project'') to demonstrate the impact on costs and
health outcomes of applying disease management to certain medicare
beneficiaries with diagnosed diabetes. In no case may the number of
participants in the project exceed 30,000 at any time.
(b) Voluntary Participation.--
(1) Eligibility.--Medicare beneficiaries are eligible to
participate in the project only if--
(A) they are a member of a health disparity
population (as defined in section 485E(d) of the Public
Health Service Act), such as Hispanics;
(B) they meet specific medical criteria
demonstrating the appropriate diagnosis and the
advanced nature of their disease;
(C) their physicians approve of participation in
the project; and
(D) they are not enrolled in a Medicare+Choice
plan.
(2) Benefits.--A medicare beneficiary who is enrolled in
the project shall be eligible--
(A) for disease management services related to
their diabetes; and
(B) for payment for all costs for prescription
drugs without regard to whether or not they relate to
the diabetes, except that the project may provide for
modest cost-sharing with respect to prescription drug
coverage.
(c) Contracts With Disease Management Organizations.--
(1) In general.--The Secretary of Health and Human Services
shall carry out the project through contracts with up to three
disease management organizations. The Secretary shall not enter
into such a contract with an organization unless the
organization demonstrates that it can produce improved health
outcomes and reduce aggregate medicare expenditures consistent
with paragraph (2).
(2) Contract provisions.--Under such contracts--
(A) such an organization shall be required to
provide for prescription drug coverage described in
subsection (b)(2)(B);
(B) such an organization shall be paid a fee
negotiated and established by the Secretary in a manner
so that (taking into account savings in expenditures
under parts A and B of the medicare program under title
XVIII of the Social Security Act) there will be no net increase, and to
the extent practicable, there will be a net reduction in expenditures
under the medicare program as a result of the project; and
(C) such an organization shall guarantee, through
an appropriate arrangement with a reinsurance company
or otherwise, the prohibition on net increases in
expenditures described in subparagraph (B).
(3) Payments.--Payments to such organizations shall be made
in appropriate proportion from the Trust Funds established
under title XVIII of the Social Security Act.
(d) Application of Medigap Protections to Demonstration Project
Enrollees.--(1) Subject to paragraph (2), the provisions of section
1882(s)(3) (other than clauses (i) through (iv) of subparagraph (B))
and 1882(s)(4) of the Social Security Act shall apply to enrollment
(and termination of enrollment) in the demonstration project under this
section, in the same manner as they apply to enrollment (and
termination of enrollment) with a Medicare+Choice organization in a
Medicare+Choice plan.
(2) In applying paragraph (1)--
(A) any reference in clause (v) or (vi) of section
1882(s)(3)(B) of such Act to 12 months is deemed a reference to
the period of the demonstration project; and
(B) the notification required under section 1882(s)(3)(D)
of such Act shall be provided in a manner specified by the
Secretary of Health and Human Services.
(e) Duration.--The project shall last for not longer than 3 years.
(f) Waiver.--The Secretary of Health and Human Services shall waive
such provisions of title XVIII of the Social Security Act as may be
necessary to provide for payment for services under the project in
accordance with subsection (c)(3).
(g) Report.--The Secretary of Health and Human Services shall
submit to Congress an interim report on the project not later than 2
years after the date it is first implemented and a final report on the
project not later than 6 months after the date of its completion. Such
reports shall include information on the impact of the project on costs
and health outcomes and recommendations on the cost-effectiveness of
extending or expanding the project.
(h) Working Group on Medicare Disease Management Programs.--The
Secretary shall establish within the Department of Health and Human
Services a working group consisting of employees of the Department to
carry out the following:
(1) To oversee the project.
(2) To establish policy and criteria for medicare disease
management programs within the Department, including the
establishment of policy and criteria for such programs.
(3) To identify targeted medical conditions and targeted
individuals.
(4) To select areas in which such programs are carried out.
(5) To monitor health outcomes under such programs.
(6) To measure the effectiveness of such programs in
meeting any budget neutrality requirements.
(7) Otherwise to serve as a central focal point within the
Department for dissemination of information on medicare disease
management programs.
(i) GAO Study on Disease Management Programs.--The Comptroller
General of the United States shall conduct a study that compares
disease management programs under title XVIII of the Social Security
Act with such programs conducted in the private sector, including the
prevalence of such programs and programs for case management. The study
shall identify the cost-effectiveness of such programs and any savings
achieved by such programs. The Comptroller General shall submit a
report on such study to Congress by not later than 18 months after the
date of the enactment of this Act.
SEC. 623. DEMONSTRATION PROJECT FOR MEDICAL ADULT DAY CARE SERVICES.
(a) Establishment.--Subject to the succeeding provisions of this
section, the Secretary of Health and Human Services shall establish a
demonstration project (in this section referred to as the
``demonstration project'') under which the Secretary shall, as part of
a plan of an episode of care for home health services established for a
medicare beneficiary, permit a home health agency, directly or under
arrangements with a medical adult day care facility, to provide medical
adult day care services as a substitute for a portion of home health
services that would otherwise be provided in the beneficiary's home.
(b) Payment.--
(1) In general.--The amount of payment for an episode of
care for home health services, a portion of which consists of
substitute medical adult day care services, under the
demonstration project shall be made at a rate equal to 95
percent of the amount that would otherwise apply for such home
health services under section 1895 of the Social Security Act
(42 U.S.C. 1395fff). In no case may a home health agency, or a
medical adult day care facility under arrangements with a home
health agency, separately charge a beneficiary for medical
adult day care services furnished under the plan of care.
(2) Budget neutrality for demonstration project.--
Notwithstanding any other provision of law, the Secretary shall
provide for an appropriate reduction in the aggregate amount of
additional payments made under section 1895 of the Social
Security Act (42 U.S.C. 1395fff) to reflect any increase in
amounts expended from the Trust Funds as a result of the
demonstration project conducted under this section.
(c) Demonstration Project Sites.--The project established under
this section shall be conducted in not more than 5 States selected by
the Secretary that license or certify providers of services that
furnish medical adult day care services.
(d) Duration.--The Secretary shall conduct the demonstration
project for a period of 3 years.
(e) Voluntary Participation.--Participation of medicare
beneficiaries in the demonstration project shall be voluntary. The
total number of such beneficiaries that may participate in the project
at any given time may not exceed 15,000.
(f) Preference in Selecting Agencies.--In selecting home health
agencies to participate under the demonstration project, the Secretary
shall give preference to those agencies that are currently licensed or
certified through common ownership and control to furnish medical adult
day care services.
(g) Waiver Authority.--The Secretary may waive such requirements of
title XVIII of the Social Security Act as may be necessary for the
purposes of carrying out the demonstration project, other than waiving
the requirement that an individual be homebound in order to be eligible
for benefits for home health services.
(h) Evaluation and Report.--The Secretary shall conduct an
evaluation of the clinical and cost effectiveness of the demonstration
project. Not later 30 months after the commencement of the project, the
Secretary shall submit to Congress a report on the evaluation, and
shall include in the report the following:
(1) An analysis of the patient outcomes and costs of
furnishing care to the medicare beneficiaries participating in
the project as compared to such outcomes and costs to
beneficiaries receiving only home health services for the same
health conditions.
(2) Such recommendations regarding the extension,
expansion, or termination of the project as the Secretary
determines appropriate.
(i) Definitions.--In this section:
(1) Home health agency.--The term ``home health agency''
has the meaning given such term in section 1861(o) of the
Social Security Act (42 U.S.C. 1395x(o)).
(2) Medical adult day care facility.--The term ``medical
adult day care facility'' means a facility that--
(A) has been licensed or certified by a State to
furnish medical adult day care services in the State
for a continuous 2-year period;
(B) is engaged in providing skilled nursing
services and other therapeutic services directly or
under arrangement with a home health agency;
(C) meets such standards established by the
Secretary to assure quality of care and such other
requirements as the Secretary finds necessary in the
interest of the health and safety of individuals who
are furnished services in the facility; and
(D) provides medical adult day care services.
(3) Medical adult day care services.--The term ``medical
adult day care services'' means--
(A) home health service items and services
described in paragraphs (1) through (7) of section
1861(m) furnished in a medical adult day care facility;
(B) a program of supervised activities furnished in
a group setting in the facility that--
(i) meet such criteria as the Secretary
determines appropriate; and
(ii) is designed to promote physical and
mental health of the individuals; and
(C) such other services as the Secretary may
specify.
(4) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual entitled to benefits under
part A of this title, enrolled under part B of this title, or
both.
SEC. 624. PUBLICATION ON FINAL WRITTEN GUIDANCE CONCERNING PROHIBITIONS
AGAINST DISCRIMINATION BY NATIONAL ORIGIN WITH RESPECT TO
HEALTH CARE SERVICES.
Not later than January 1, 2003, the Secretary shall issue final
written guidance concerning the application of the prohibition in title
VI of the Civil Rights Act of 1964 against national origin
discrimination as it affects persons with limited English proficiency
with respect to access to health care services under the medicare
program.
TITLE VII--MEDICARE BENEFITS ADMINISTRATION
SEC. 701. ESTABLISHMENT OF MEDICARE BENEFITS ADMINISTRATION.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is amended by
inserting after 1806 the following new section:
``medicare benefits administration
``Sec. 1807. (a) Establishment.--There is established within the
Department of Health and Human Services an agency to be known as the
Medicare Benefits Administration.
``(b) Administrator; Deputy Administrator; Chief Actuary.--
``(1) Administrator.--
``(A) In general.--The Medicare Benefits
Administration shall be headed by an administrator to
be known as the `Medicare Benefits Administrator' (in
this section referred to as the `Administrator') who
shall be appointed by the President, by and with the
advice and consent of the Senate. The Administrator
shall be in direct line of authority to the Secretary.
``(B) Compensation.--The Administrator shall be
paid at the rate of basic pay payable for level III of
the Executive Schedule under section 5314 of title 5,
United States Code.
``(C) Term of office.--The Administrator shall be
appointed for a term of 5 years. In any case in which a
successor does not take office at the end of an
Administrator's term of office, that Administrator may
continue in office until the entry upon office of such
a successor. An Administrator appointed to a term of
office after the commencement of such term may serve
under such appointment only for the remainder of such
term.
``(D) General authority.--The Administrator shall
be responsible for the exercise of all powers and the
discharge of all duties of the Administration, and
shall have authority and control over all personnel and
activities thereof.
``(E) Rulemaking authority.--The Administrator may
prescribe such rules and regulations as the
Administrator determines necessary or appropriate to
carry out the functions of the Administration. The
regulations prescribed by the Administrator shall be
subject to the rulemaking procedures established under
section 553 of title 5, United States Code.
``(F) Authority to establish organizational
units.--The Administrator may establish, alter,
consolidate, or discontinue such organizational units
or components within the Administration as the
Administrator considers necessary or appropriate,
except as specified in this section.
``(G) Authority to delegate.--The Administrator may
assign duties, and delegate, or authorize successive
redelegations of, authority to act and to render
decisions, to such officers and employees of the
Administration as the Administrator may find necessary.
Within the limitations of such delegations,
redelegations, or assignments, all official acts and
decisions of such officers and employees shall have the
same force and effect as though performed or rendered
by the Administrator.
``(2) Deputy administrator.--
``(A) In general.--There shall be a Deputy
Administrator of the Medicare Benefits Administration
who shall be appointed by the President, by and with
the advice and consent of the Senate.
``(B) Compensation.--The Deputy Administrator shall
be paid at the rate of basic pay payable for level IV
of the Executive Schedule under section 5315 of title
5, United States Code.
``(C) Term of office.--The Deputy Administrator
shall be appointed for a term of 5 years. In any case
in which a successor does not take office at the end of
a Deputy Administrator's term of office, such Deputy
Administrator may continue in office until the entry
upon office of such a successor. A Deputy Administrator
appointed to a term of office after the commencement of
such term may serve under such appointment only for the
remainder of such term.
``(D) Duties.--The Deputy Administrator shall
perform such duties and exercise such powers as the
Administrator shall from time to time assign or
delegate. The Deputy Administrator shall be Acting
Administrator of the Administration during the absence
or disability of the Administrator and, unless the
President designates another officer of the Government
as Acting Administrator, in the event of a vacancy in
the office of the Administrator.
``(3) Chief actuary.--
``(A) In general.--There is established in the
Administration the position of Chief Actuary. The Chief
Actuary shall be appointed by, and in direct line of
authority to, the Administrator of such Administration.
The Chief Actuary shall be appointed from among
individuals who have demonstrated, by their education
and experience, superior expertise in the actuarial
sciences. The Chief Actuary may be removed only for
cause.
``(B) Compensation.--The Chief Actuary shall be
compensated at the highest rate of basic pay for the
Senior Executive Service under section 5382(b) of title
5, United States Code.
``(C) Duties.--The Chief Actuary shall exercise
such duties as are appropriate for the office of the
Chief Actuary and in accordance with professional
standards of actuarial independence.
``(4) Secretarial coordination of program administration.--
The Secretary shall ensure appropriate coordination between the
Administrator and the Administrator of the Centers for Medicare
& Medicaid Services in carrying out the programs under this
title.
``(c) Duties; Administrative Provisions.--
``(1) Duties.--
``(A) General duties.--The Administrator shall
carry out part C, including negotiating, entering into,
and enforcing, contracts with plans for the offering of
Medicare+Choice plans under part C.
``(B) Other duties.--The Administrator shall carry
out any duty provided for under part C, including
demonstration projects carried out in part or in whole
under such parts, the programs of all-inclusive care
for the elderly (PACE program) under section 1894, the
social health maintenance organization (SHMO)
demonstration projects (referred to in section 4104(c)
of the Balanced Budget Act of 1997), and through a
Medicare+Choice project that demonstrates the
application of capitation payment rates for frail
elderly medicare beneficiaries through the use of a
interdisciplinary team and through the provision of
primary care services to such beneficiaries by means of
such a team at the nursing facility involved).
``(C) Annual reports.--Not later March 31 of each
year, the Administrator shall submit to Congress and
the President a report on the administration of part C
during the previous fiscal year.
``(2) Staff.--
``(A) In general.--The Administrator, with the
approval of the Secretary, may employ, without regard
to chapter 31 of title 5, United States Code, other
than sections 3110 and 3112, such officers and
employees as are necessary to administer the activities
to be carried out through the Medicare Benefits
Administration. The Administrator shall employ staff
with appropriate and necessary expertise in negotiating
contracts in the private sector.
``(B) Flexibility with respect to compensation.--
``(i) In general.--The staff of the
Medicare Benefits Administration shall, subject
to clause (ii), be paid without regard to the
provisions of chapter 51 (other than section
5101) and chapter 53 (other than section 5301)
of such title (relating to classification and
schedule pay rates).
``(ii) Maximum rate.--In no case may the
rate of compensation determined under clause
(i) exceed the rate of basic pay payable for
level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(C) Limitation on full-time equivalent staffing
for current cms functions being transferred.--The
Administrator may not employ under this paragraph a
number of full-time equivalent employees, to carry out
functions that were previously conducted by the Centers
for Medicare & Medicaid Services and that are conducted
by the Administrator by reason of this section, that
exceeds the number of such full-time equivalent
employees authorized to be employed by the Centers for
Medicare & Medicaid Services to conduct such functions
as of the date of the enactment of this Act.
``(3) Redelegation of certain functions of the centers for
medicare & medicaid services.--
``(A) In general.--The Secretary, the
Administrator, and the Administrator of the Centers for
Medicare & Medicaid Services shall establish an
appropriate transition of responsibility in order to
redelegate the administration of part C from the
Secretary and the Administrator of the Centers for
Medicare & Medicaid Services to the Administrator as is
appropriate to carry out the purposes of this section.
``(B) Transfer of data and information.--The
Secretary shall ensure that the Administrator of the
Centers for Medicare & Medicaid Services transfers to
the Administrator of the Medicare Benefits
Administration such information and data in the
possession of the Administrator of the Centers for
Medicare & Medicaid Services as the Administrator of
the Medicare Benefits Administration requires to carry
out the duties described in paragraph (1).
``(C) Construction.--Insofar as a responsibility of
the Secretary or the Administrator of the Centers for
Medicare & Medicaid Services is redelegated to the
Administrator under this section, any reference to the
Secretary or the Administrator of the Centers for
Medicare & Medicaid Services in this title or title XI
with respect to such responsibility is deemed to be a
reference to the Administrator.
``(d) Office of Beneficiary Assistance.--
``(1) Establishment.--The Secretary shall establish within
the Medicare Benefits Administration an Office of Beneficiary
Assistance to coordinate functions relating to outreach and
education of medicare beneficiaries under this title, including
the functions described in paragraph (2). The Office shall be
separate operating division within the Administration.
``(2) Dissemination of information on benefits and appeals
rights.--
``(A) Dissemination of benefits information.--The
Office of Beneficiary Assistance shall disseminate,
directly or through contract, to medicare
beneficiaries, by mail, by posting on the Internet site
of the Medicare Benefits Administration and through a
toll-free telephone number, information with respect to
the following:
``(i) Benefits, and limitations on payment
(including cost-sharing, stop-loss provisions,
and formulary restrictions) under parts C and
D.
``(ii) Benefits, and limitations on payment
under parts A and B, including information on
medicare supplemental policies under section
1882.
Such information shall be presented in a manner so that
medicare beneficiaries may compare benefits under parts
A, B, D, and medicare supplemental policies with
benefits under Medicare+Choice plans under part C.
``(B) Dissemination of appeals rights
information.--The Office of Beneficiary Assistance
shall disseminate to medicare beneficiaries in the
manner provided under subparagraph (A) a description of
procedural rights (including grievance and appeals
procedures) of beneficiaries under the original
medicare fee-for-service program under parts A and B,
the Medicare+Choice program under part C.
``(e) Medicare Policy Advisory Board.--
``(1) Establishment.--There is established within the
Medicare Benefits Administration the Medicare Policy Advisory
Board (in this section referred to the `Board'). The Board
shall advise, consult with, and make recommendations to the
Administrator of the Medicare Benefits Administration with
respect to the administration of parts C and D, including the
review of payment policies under such parts.
``(2) Reports.--
``(A) In general.--With respect to matters of the
administration of parts C and D, the Board shall submit
to Congress and to the Administrator of the Medicare
Benefits Administration such reports as the Board
determines appropriate. Each such report may contain
such recommendations as the Board determines
appropriate for legislative or administrative changes
to improve the administration of such parts, including
the topics described in subparagraph (B). Each such
report shall be published in the Federal Register.
``(B) Topics described.--Reports required under
subparagraph (A) may include the following topics:
``(i) Fostering competition.--
Recommendations or proposals to increase
competition under parts C and D for services
furnished to medicare beneficiaries.
``(ii) Education and enrollment.--
Recommendations for the improvement to efforts
to provide medicare beneficiaries information
and education on the program under this title,
and specifically parts C and D, and the program
for enrollment under the title.
``(iii) Implementation of risk-
adjustment.--Evaluation of the implementation
under section 1853(a)(3)(C) of the risk
adjustment methodology to payment rates under
that section to Medicare+Choice organizations
offering Medicare+Choice plans that accounts
for variations in per capita costs based on
health status and other demographic factors.
``(iv) Disease management programs.--
Recommendations on the incorporation of disease
management programs under parts C and D.
``(v) Rural access.--Recommendations to
improve competition and access to plans under
parts C and D in rural areas.
``(C) Maintaining independence of board.--The Board
shall directly submit to Congress reports required
under subparagraph (A). No officer or agency of the
United States may require the Board to submit to any
officer or agency of the United States for approval,
comments, or review, prior to the submission to
Congress of such reports.
``(3) Duty of administrator of medicare benefits
administration.--With respect to any report submitted by the
Board under paragraph (2)(A), not later than 90 days after the
report is submitted, the Administrator of the Medicare Benefits
Administration shall submit to Congress and the President an
analysis of recommendations made by the Board in such report.
Each such analysis shall be published in the Federal Register.
``(4) Membership.--
``(A) Appointment.--Subject to the succeeding
provisions of this paragraph, the Board shall consist
of seven members to be appointed as follows:
``(i) Three members shall be appointed by
the President.
``(ii) Two members shall be appointed by
the Speaker of the House of Representatives,
with the advice of the chairmen and the ranking
minority members of the Committees on Ways and
Means and on Energy and Commerce of the House
of Representatives.
``(iii) Two members shall be appointed by
the President pro tempore of the Senate with
the advice of the chairman and the ranking
minority member of the Senate Committee on
Finance.
``(B) Qualifications.--The members shall be chosen
on the basis of their integrity, impartiality, and good
judgment, and shall be individuals who are, by reason
of their education and experience in health care
benefits management, exceptionally qualified to perform
the duties of members of the Board.
``(C) Prohibition on inclusion of federal
employees.--No officer or employee of the United States
may serve as a member of the Board.
``(5) Compensation.--Members of the Board shall receive,
for each day (including travel time) they are engaged in the
performance of the functions of the board, compensation at
rates not to exceed the daily equivalent to the annual rate in
effect for level IV of the Executive Schedule under section
5315 of title 5, United States Code.
``(6) Terms of office.--
``(A) In general.--The term of office of members of
the Board shall be 3 years.
``(B) Terms of initial appointees.--As designated
by the President at the time of appointment, of the
members first appointed--
``(i) one shall be appointed for a term of
1 year;
``(ii) three shall be appointed for terms
of 2 years; and
``(iii) three shall be appointed for terms
of 3 years.
``(C) Reappointments.--Any person appointed as a
member of the Board may not serve for more than 8
years.
``(D) Vacancy.--Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member's predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member's term
until a successor has taken office. A vacancy in the
Board shall be filled in the manner in which the
original appointment was made.
``(7) Chair.--The Chair of the Board shall be elected by
the members. The term of office of the Chair shall be 3 years.
``(8) Meetings.--The Board shall meet at the call of the
Chair, but in no event less than three times during each fiscal
year.
``(9) Director and staff.--
``(A) Appointment of director.--The Board shall
have a Director who shall be appointed by the Chair.
``(B) In general.--With the approval of the Board,
the Director may appoint, without regard to chapter 31
of title 5, United States Code, such additional
personnel as the Director considers appropriate.
``(C) Flexibility with respect to compensation.--
``(i) In general.--The Director and staff
of the Board shall, subject to clause (ii), be
paid without regard to the provisions of
chapter 51 and chapter 53 of such title
(relating to classification and schedule pay
rates).
``(ii) Maximum rate.--In no case may the
rate of compensation determined under clause
(i) exceed the rate of basic pay payable for
level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(D) Assistance from the administrator of the
medicare benefits administration.--The Administrator of
the Medicare Benefits Administration shall make
available to the Board such information and other
assistance as it may require to carry out its
functions.
``(10) Contract authority.--The Board may contract with and
compensate government and private agencies or persons to carry
out its duties under this subsection, without regard to section
3709 of the Revised Statutes (41 U.S.C. 5).
``(f) Funding.--There is authorized to be appropriated, in
appropriate part from the Federal Hospital Insurance Trust Fund and
from the Federal Supplementary Medical Insurance Trust Fund, such sums
as are necessary to carry out this section.''.
(b) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
(2) Timing of initial appointments.--The Administrator and
Deputy Administrator of the Medicare Benefits Administration
may not be appointed before March 1, 2003.
(3) Duties with respect to eligibility determinations and
enrollment.--The Administrator of the Medicare Benefits
Administration shall carry out enrollment under title XVIII of
the Social Security Act, make eligibility determinations under
such title, and carry out part C of such title for years
beginning or after January 1, 2005.
(4) Transition.--Before the date the Administrator of the
Medicare Benefits Administration is appointed and assumes
responsibilities under this section and section 1807 of the
Social Security Act, the Secretary of Health and Human Services
shall provide for the conduct of any responsibilities of such
Administrator that are otherwise provided under law.
(c) Miscellaneous Administrative Provisions.--
(1) Administrator as member of the board of trustees of the
medicare trust funds.--Section 1817(b) and section 1841(b) (42
U.S.C. 1395i(b), 1395t(b)) are each amended by striking ``and
the Secretary of Health and Human Services, all ex officio,''
and inserting ``the Secretary of Health and Human Services, and
the Administrator of the Medicare Benefits Administration, all
ex officio,''.
(2) Increase in grade to executive level iii for the
administrator of the centers for medicare & medicaid services;
level for medicare benefits administrator.--
(A) In general.--Section 5314 of title 5, United
States Code, by adding at the end the following:
``Administrator of the Centers for Medicare & Medicaid
Services.
``Administrator of the Medicare Benefits Administration.''.
(B) Conforming amendment.--Section 5315 of such
title is amended by striking ``Administrator of the
Health Care Financing Administration.''.
(C) Effective date.--The amendments made by this
paragraph take effect on January 1, 2003.
TITLE VIII--REGULATORY REDUCTION AND CONTRACTING REFORM
Subtitle A--Regulatory Reform
SEC. 801. CONSTRUCTION; DEFINITION OF SUPPLIER.
(a) Construction.--Nothing in this title shall be construed--
(1) to compromise or affect existing legal remedies for
addressing fraud or abuse, whether it be criminal prosecution,
civil enforcement, or administrative remedies, including under
sections 3729 through 3733 of title 31, United States Code
(known as the False Claims Act); or
(2) to prevent or impede the Department of Health and Human
Services in any way from its ongoing efforts to eliminate
waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative contracting
set forth in this Act does not constitute consolidation of the Federal
Hospital Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund or reflect any position on that issue.
(b) Definition of Supplier.--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. 802. ISSUANCE OF REGULATIONS.
(a) Consolidation of Promulgation to Once a Month.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh) is amended
by adding at the end the following new subsection:
``(d)(1) Subject to paragraph (2), the Secretary shall issue
proposed or final (including interim final) regulations to carry out
this title only on one business day of every month.
``(2) The Secretary may issue a proposed or final regulation
described in paragraph (1) on any other day than the day described in
paragraph (1) if the Secretary--
``(A) finds that issuance of such regulation on another day
is necessary to comply with requirements under law; or
``(B) finds that with respect to that regulation the
limitation of issuance on the date described in paragraph (1)
is contrary to the public interest.
If the Secretary makes a finding under this paragraph, the Secretary
shall include such finding, and brief statement of the reasons for such
finding, in the issuance of such regulation.
``(3) The Secretary shall coordinate issuance of new regulations
described in paragraph (1) 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) GAO report on publication of regulations on a quarterly
basis.--Not later than 3 years after the date of the enactment
of this Act, the Comptroller General of the United States shall
submit to Congress a report on the feasibility of requiring
that regulations described in section 1871(d) of the Social
Security Act be promulgated on a quarterly basis rather than on
a monthly basis.
(3) Effective date.--The amendment made by paragraph (1)
shall apply to regulations promulgated on or after the date
that is 30 days after the date of the enactment of this Act.
(b) Regular Timeline for Publication of Final Rules.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is
amended by adding at the end the following new paragraph:
``(3)(A) The Secretary, in consultation with the Director of the
Office of Management and Budget, shall establish and publish a regular
timeline for the publication of final regulations based on the previous
publication of a proposed regulation or an interim final regulation.
``(B) Such timeline may vary among different regulations based on
differences in the complexity of the regulation, the number and scope
of comments received, and other relevant factors, but shall not be
longer than 3 years except under exceptional circumstances. If the
Secretary intends to vary such timeline with respect to the publication
of a final regulation, the Secretary shall cause to have published in
the Federal Register notice of the different timeline by not later than
the timeline previously established with respect to such regulation.
Such notice shall include a brief explanation of the justification for
such variation.
``(C) In the case of interim final regulations, upon the expiration
of the regular timeline established under this paragraph for the
publication of a final regulation after opportunity for public comment,
the interim final regulation shall not continue in effect unless the
Secretary publishes (at the end of the regular timeline and, if
applicable, at the end of each succeeding 1-year period) a notice of
continuation of the regulation that includes an explanation of why the
regular timeline (and any subsequent 1-year extension) was not complied
with. If such a notice is published, the regular timeline (or such
timeline as previously extended under this paragraph) for publication
of the final regulation shall be treated as having been extended for 1
additional year.
``(D) The Secretary shall annually submit to Congress a report that
describes the instances in which the Secretary failed to publish a
final regulation within the applicable regular timeline under this
paragraph and that provides an explanation for such failures.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act. The
Secretary shall provide for an appropriate transition to take
into account the backlog of previously published interim final
regulations.
(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. 803. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.
(a) No Retroactive Application of Substantive Changes.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh), as
amended by section 802(a), is amended by adding at the end the
following new subsection:
``(e)(1)(A) A substantive change in regulations, manual
instructions, interpretative rules, statements of policy, or guidelines
of general applicability under this title shall not be applied (by
extrapolation or otherwise) retroactively to items and services
furnished before the effective date of the change, unless the Secretary
determines that--
``(i) such retroactive application is necessary to comply
with statutory requirements; or
``(ii) failure to apply the change retroactively would be
contrary to the public interest.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to substantive changes issued on or after the date
of the enactment of this Act.
(b) Timeline for Compliance With Substantive Changes After
Notice.--
(1) In general.--Section 1871(e)(1), as added by subsection
(a), is amended by adding at the end the following:
``(B)(i) Except as provided in clause (ii), a substantive change
referred to in subparagraph (A) shall not become effective before the
end of the 30-day period that begins on the date that the Secretary has
issued or published, as the case may be, the substantive change.
``(ii) The Secretary may provide for such a substantive change to
take effect on a date that precedes the end of the 30-day period under
clause (i) if the Secretary finds that waiver of such 30-day period is
necessary to comply with statutory requirements or that the application
of such 30-day period is contrary to the public interest. If the
Secretary provides for an earlier effective date pursuant to this
clause, the Secretary shall include in the issuance or publication of
the substantive change a finding described in the first sentence, and a
brief statement of the reasons for such finding.
``(C) No action shall be taken against a provider of services or
supplier with respect to noncompliance with such a substantive change
for items and services furnished before the effective date of such a
change.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to compliance actions undertaken on or after the
date of the enactment of this Act.
(c) Reliance on Guidance.--
(1) In general.--Section 1871(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.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act but
shall not apply to any sanction for which notice was provided
on or before the date of the enactment of this Act.
SEC. 804. REPORTS AND STUDIES RELATING TO REGULATORY REFORM.
(a) GAO Study on Advisory Opinion Authority.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to determine the feasibility and
appropriateness of establishing in the Secretary authority to
provide legally binding advisory opinions on appropriate
interpretation and application of regulations to carry out the
medicare program under title XVIII of the Social Security Act.
Such study shall examine the appropriate timeframe for issuing
such advisory opinions, as well as the need for additional
staff and funding to provide such opinions.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1) by
not later than January 1, 2004.
(b) Report on Legal and Regulatory Inconsistencies.--Section 1871
(42 U.S.C. 1395hh), as amended by section 803(a), is amended by adding
at the end the following new subsection:
``(f)(1) Not later than 2 years after the date of the enactment of
this subsection, and every 2 years thereafter, the Secretary shall
submit to Congress a report with respect to the administration of this
title and areas of inconsistency or conflict among the various
provisions under law and regulation.
``(2) In preparing a report under paragraph (1), the Secretary
shall collect--
``(A) information from individuals entitled to benefits
under part A or enrolled under part B, or both, providers of
services, and suppliers and from the Medicare Beneficiary
Ombudsman and the Medicare Provider Ombudsman with respect to
such areas of inconsistency and conflict; and
``(B) information from medicare contractors that tracks the
nature of written and telephone inquiries.
``(3) A report under paragraph (1) shall include a description of
efforts by the Secretary to reduce such inconsistency or conflicts, and
recommendations for legislation or administrative action that the
Secretary determines appropriate to further reduce such inconsistency
or conflicts.''.
Subtitle B--Contracting Reform
SEC. 811. INCREASED FLEXIBILITY IN MEDICARE ADMINISTRATION.
(a) Consolidation and Flexibility in Medicare Administration.--
(1) In general.--Title XVIII is amended by inserting after
section 1874 the following new section:
``contracts with medicare administrative contractors
``Sec. 1874A. (a) Authority.--
``(1) Authority to enter into contracts.--The Secretary may
enter into contracts with any eligible entity to serve as a
medicare administrative contractor with respect to the
performance of any or all of the functions described in
paragraph (4) or parts of those functions (or, to the extent
provided in a contract, to secure performance thereof by other
entities).
``(2) Eligibility of entities.--An entity is eligible to
enter into a contract with respect to the performance of a
particular function described in paragraph (4) only if--
``(A) the entity has demonstrated capability to
carry out such function;
``(B) the entity complies with such conflict of
interest standards as are generally applicable to
Federal acquisition and procurement;
``(C) the entity has sufficient assets to
financially support the performance of such function;
and
``(D) the entity meets such other requirements as
the Secretary may impose.
``(3) Medicare administrative contractor defined.--For
purposes of this title and title XI--
``(A) In general.--The term `medicare
administrative contractor' means an agency,
organization, or other person with a contract under
this section.
``(B) Appropriate medicare administrative
contractor.--With respect to the performance of a
particular function in relation to an individual
entitled to benefits under part A or enrolled under
part B, or both, a specific provider of services or
supplier (or class of such providers of services or
suppliers), the `appropriate' medicare administrative
contractor is the medicare administrative contractor
that has a contract under this section with respect to
the performance of that function in relation to that
individual, provider of services or supplier or class
of provider of services or supplier.
``(4) Functions described.--The functions referred to in
paragraphs (1) and (2) are payment functions, provider services
functions, and functions relating to services furnished to
individuals entitled to benefits under part A or enrolled under
part B, or both, as follows:
``(A) Determination of payment amounts.--
Determining (subject to the provisions of section 1878
and to such review by the Secretary as may be provided
for by the contracts) the amount of the payments
required pursuant to this title to be made to providers
of services, suppliers and individuals.
``(B) Making payments.--Making payments described
in subparagraph (A) (including receipt, disbursement,
and accounting for funds in making such payments).
``(C) Beneficiary education and assistance.--
Providing education and outreach to individuals
entitled to benefits under part A or enrolled under
part B, or both, and providing assistance to those
individuals with specific issues, concerns or problems.
``(D) Provider consultative services.--Providing
consultative services to institutions, agencies, and
other persons to enable them to establish and maintain
fiscal records necessary for purposes of this title and
otherwise to qualify as providers of services or
suppliers.
``(E) Communication with providers.--Communicating
to providers of services and suppliers any information
or instructions furnished to the medicare
administrative contractor by the Secretary, and
facilitating communication between such providers and
suppliers and the Secretary.
``(F) Provider education and technical
assistance.--Performing the functions relating to
provider education, training, and technical assistance.
``(G) Additional functions.--Performing such other
functions as are necessary to carry out the purposes of
this title.
``(5) Relationship to mip contracts.--
``(A) Nonduplication of duties.--In entering into
contracts under this section, the Secretary shall
assure that functions of medicare administrative
contractors in carrying out activities under parts A
and B do not duplicate activities carried out under the
Medicare Integrity Program under section 1893. The
previous sentence shall not apply with respect to the
activity described in section 1893(b)(5) (relating to
prior authorization of certain items of durable medical
equipment under section 1834(a)(15)).
``(B) Construction.--An entity shall not be treated
as a medicare administrative contractor merely by
reason of having entered into a contract with the
Secretary under section 1893.
``(6) Application of federal acquisition regulation.--
Except to the extent inconsistent with a specific requirement
of this title, the Federal Acquisition Regulation applies to
contracts under this title.
``(b) Contracting Requirements.--
``(1) Use of competitive procedures.--
``(A) In general.--Except as provided in laws with
general applicability to Federal acquisition and
procurement or in subparagraph (B), the Secretary shall
use competitive procedures when entering into contracts
with medicare administrative contractors under this
section, taking into account performance quality as
well as price and other factors.
``(B) Renewal of contracts.--The Secretary may
renew a contract with a medicare administrative
contractor under this section from term to term without
regard to section 5 of title 41, United States Code, or
any other provision of law requiring competition, if
the medicare administrative contractor has met
or exceeded the performance requirements applicable with respect to the
contract and contractor, except that the Secretary shall provide for
the application of competitive procedures under such a contract not
less frequently than once every five years.
``(C) Transfer of functions.--The Secretary may
transfer functions among medicare administrative
contractors consistent with the provisions of this
paragraph. The Secretary shall ensure that performance
quality is considered in such transfers. The Secretary
shall provide public notice (whether in the Federal
Register or otherwise) of any such transfer (including
a description of the functions so transferred, a
description of the providers of services and suppliers
affected by such transfer, and contact information for
the contractors involved).
``(D) Incentives for quality.--The Secretary shall
provide incentives for medicare administrative
contractors to provide quality service and to promote
efficiency.
``(2) Compliance with requirements.--No contract under this
section shall be entered into with any medicare administrative
contractor unless the Secretary finds that such medicare
administrative contractor will perform its obligations under
the contract efficiently and effectively and will meet such
requirements as to financial responsibility, legal authority,
quality of services provided, and other matters as the
Secretary finds pertinent.
``(3) Performance requirements.--
``(A) Development of specific performance
requirements.--In developing contract performance
requirements, the Secretary shall develop performance
requirements applicable to functions described in
subsection (a)(4).
``(B) Consultation.-- In developing such
requirements, the Secretary may consult with providers
of services and suppliers, organizations representing
individuals entitled to benefits under part A or
enrolled under part B, or both, and organizations and
agencies performing functions necessary to carry out
the purposes of this section with respect to such
performance requirements.
``(C) Inclusion in contracts.--All contractor
performance requirements shall be set forth in the
contract between the Secretary and the appropriate
medicare administrative contractor. Such performance
requirements--
``(i) shall reflect the performance
requirements developed under subparagraph (A),
but may include additional performance
requirements;
``(ii) shall be used for evaluating
contractor performance under the contract; and
``(iii) shall be consistent with the
written statement of work provided under the
contract.
``(4) Information requirements.--The Secretary shall not
enter into a contract with a medicare administrative contractor
under this section unless the contractor agrees--
``(A) to furnish to the Secretary such timely
information and reports as the Secretary may find
necessary in performing his functions under this title;
and
``(B) to maintain such records and afford such
access thereto as the Secretary finds necessary to
assure the correctness and verification of the
information and reports under subparagraph (A) and
otherwise to carry out the purposes of this title.
``(5) Surety bond.--A contract with a medicare
administrative contractor under this section may require the
medicare administrative contractor, and any of its officers or
employees certifying payments or disbursing funds pursuant to
the contract, or otherwise participating in carrying out the
contract, to give surety bond to the United States in such
amount as the Secretary may deem appropriate.
``(c) Terms and Conditions.--
``(1) In general.--A contract with any medicare
administrative contractor under this section may contain such
terms and conditions as the Secretary finds necessary or
appropriate and may provide for advances of funds to the
medicare administrative contractor for the making of payments
by it under subsection (a)(4)(B).
``(2) Prohibition on mandates for certain data
collection.--The Secretary may not require, as a condition of
entering into, or renewing, a contract under this section, that
the medicare administrative contractor match data obtained
other than in its activities under this title with data used in
the administration of this title for purposes of identifying
situations in which the provisions of section 1862(b) may
apply.
``(d) Limitation on Liability of Medicare Administrative
Contractors and Certain Officers.--
``(1) Certifying officer.--No individual designated
pursuant to a contract under this section as a certifying
officer shall, in the absence of gross negligence or intent to
defraud the United States, be liable with respect to any
payments certified by the individual under this section.
``(2) Disbursing officer.--No disbursing officer shall, in
the absence of gross negligence or intent to defraud the United
States, be liable with respect to any payment by such officer
under this section if it was based upon an authorization (which
meets the applicable requirements for such internal controls
established by the Comptroller General) of a certifying officer
designated as provided in paragraph (1) of this subsection.
``(3) Liability of medicare administrative contractor.--No
medicare administrative contractor shall be liable to the
United States for a payment by a certifying or disbursing
officer unless in connection with such payment or in the
supervision of or selection of such officer the medicare
administrative contractor acted with gross negligence.
``(4) Indemnification by secretary.--
``(A) In general.--Subject to subparagraphs (B) and
(D), in the case of a medicare administrative
contractor (or a person who is a director, officer, or
employee of such a contractor or who is engaged by the
contractor to participate directly in the claims
administration process) who is made a party to any
judicial or administrative proceeding arising from or
relating directly to the claims administration process
under this title, the Secretary may, to the extent the
Secretary determines to be appropriate and as specified
in the contract with the contractor, indemnify the
contractor and such persons.
``(B) Conditions.--The Secretary may not provide
indemnification under subparagraph (A) insofar as the
liability for such costs arises directly from conduct
that is determined by the judicial proceeding or by the
Secretary to be criminal in nature, fraudulent, or
grossly negligent. If indemnification is provided by
the Secretary with respect to a contractor before a
determination that such costs arose directly from such
conduct, the contractor shall reimburse the Secretary
for costs of indemnification.
``(C) Scope of indemnification.--Indemnification by
the Secretary under subparagraph (A) may include
payment of judgments, settlements (subject to
subparagraph (D)), awards, and costs (including
reasonable legal expenses).
``(D) Written approval for settlements.--A
contractor or other person described in subparagraph
(A) may not propose to negotiate a settlement or
compromise of a proceeding described in such
subparagraph without the prior written approval of the
Secretary to negotiate such settlement or compromise.
Any indemnification under subparagraph (A) with respect
to amounts paid under a settlement or compromise of a
proceeding described in such subparagraph are
conditioned upon prior written approval by the
Secretary of the final settlement or compromise.
``(E) Construction.--Nothing in this paragraph
shall be construed--
``(i) to change any common law immunity
that may be available to a medicare
administrative contractor or person described
in subparagraph (A); or
``(ii) to permit the payment of costs not
otherwise allowable, reasonable, or allocable
under the Federal Acquisition Regulations.''.
(2) Consideration of incorporation of current law
standards.--In developing contract performance requirements
under section 1874A(b) of the Social Security Act, as inserted
by paragraph (1), the Secretary shall consider inclusion of the
performance standards described in sections 1816(f)(2) of such
Act (relating to timely processing of reconsiderations and
applications for exemptions) and section 1842(b)(2)(B) of such
Act (relating to timely review of determinations and fair
hearing requests), as such sections were in effect before the
date of the enactment of this Act.
(b) Conforming Amendments to Section 1816 (Relating to Fiscal
Intermediaries).--Section 1816 (42 U.S.C. 1395h) is amended as follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part a''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted through
contracts with medicare administrative contractors under section
1874A.''.
(3) Subsection (b) is repealed.
(4) Subsection (c) is amended--
(A) by striking paragraph (1); and
(B) in each of paragraphs (2)(A) and (3)(A), by
striking ``agreement under this section'' and inserting
``contract under section 1874A that provides for making
payments under this part''.
(5) Subsections (d) through (i) are repealed.
(6) Subsections (j) and (k) are each amended--
(A) by striking ``An agreement with an agency or
organization under this section'' and inserting ``A
contract with a medicare administrative contractor
under section 1874A with respect to the administration
of this part''; and
(B) by striking ``such agency or organization'' and
inserting ``such medicare administrative contractor''
each place it appears.
(7) Subsection (l) is repealed.
(c) Conforming Amendments to Section 1842 (Relating to Carriers).--
Section 1842 (42 U.S.C. 1395u) is amended as follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part b''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted through
contracts with medicare administrative contractors under section
1874A.''.
(3) Subsection (b) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)--
(i) by striking subparagraphs (A) and (B);
(ii) in subparagraph (C), by striking
``carriers'' and inserting ``medicare
administrative contractors''; and
(iii) by striking subparagraphs (D) and
(E);
(C) in paragraph (3)--
(i) in the matter before subparagraph (A),
by striking ``Each such contract shall provide
that the carrier'' and inserting ``The
Secretary'';
(ii) by striking ``will'' the first place
it appears in each of subparagraphs (A), (B),
(F), (G), (H), and (L) and inserting ``shall'';
(iii) in subparagraph (B), in the matter
before clause (i), by striking ``to the
policyholders and subscribers of the carrier''
and inserting ``to the policyholders and subscribers of the medicare
administrative contractor'';
(iv) by striking subparagraphs (C), (D),
and (E);
(v) in subparagraph (H)--
(I) by striking ``if it makes
determinations or payments with respect
to physicians' services,'' in the
matter preceding clause (i); and
(II) by striking ``carrier'' and
inserting ``medicare administrative
contractor'' in clause (i);
(vi) by striking subparagraph (I);
(vii) in subparagraph (L), by striking the
semicolon and inserting a period;
(viii) in the first sentence, after
subparagraph (L), by striking ``and shall
contain'' and all that follows through the
period; and
(ix) in the seventh sentence, by inserting
``medicare administrative contractor,'' after
``carrier,''; and
(D) by striking paragraph (5);
(E) in paragraph (6)(D)(iv), by striking
``carrier'' and inserting ``medicare administrative
contractor''; and
(F) in paragraph (7), by striking ``the carrier''
and inserting ``the Secretary'' each place it appears.
(4) Subsection (c) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)(A), by striking ``contract
under this section which provides for the disbursement
of funds, as described in subsection (a)(1)(B),'' and
inserting ``contract under section 1874A that provides
for making payments under this part'';
(C) in paragraph (3)(A), by striking ``subsection
(a)(1)(B)'' and inserting ``section 1874A(a)(3)(B)'';
(D) in paragraph (4), in the matter preceding
subparagraph (A), by striking ``carrier'' and inserting
``medicare administrative contractor''; and
(E) by striking paragraphs (5) and (6).
(5) Subsections (d), (e), and (f) are repealed.
(6) Subsection (g) is amended by striking ``carrier or
carriers'' and inserting ``medicare administrative contractor
or contractors''.
(7) Subsection (h) is amended--
(A) in paragraph (2)--
(i) by striking ``Each carrier having an
agreement with the Secretary under subsection
(a)'' and inserting ``The Secretary''; and
(ii) by striking ``Each such carrier'' and
inserting ``The Secretary'';
(B) in paragraph (3)(A)--
(i) by striking ``a carrier having an
agreement with the Secretary under subsection
(a)'' and inserting ``medicare administrative
contractor having a contract under section
1874A that provides for making payments under
this part''; and
(ii) by striking ``such carrier'' and
inserting ``such contractor'';
(C) in paragraph (3)(B)--
(i) by striking ``a carrier'' and inserting
``a medicare administrative contractor'' each
place it appears; and
(ii) by striking ``the carrier'' and
inserting ``the contractor'' each place it
appears; and
(D) in paragraphs (5)(A) and (5)(B)(iii), by
striking ``carriers'' and inserting ``medicare
administrative contractors'' each place it appears.
(8) Subsection (l) is amended--
(A) in paragraph (1)(A)(iii), by striking
``carrier'' and inserting ``medicare administrative
contractor''; and
(B) in paragraph (2), by striking ``carrier'' and
inserting ``medicare administrative contractor''.
(9) Subsection (p)(3)(A) is amended by striking ``carrier''
and inserting ``medicare administrative contractor''.
(10) Subsection (q)(1)(A) is amended by striking
``carrier''.
(d) Effective Date; Transition Rule.--
(1) Effective date.--
(A) In general.--Except as otherwise provided in
this subsection, the amendments made by this section
shall take effect on October 1, 2004, and the Secretary
is authorized to take such steps before such date as
may be necessary to implement such amendments on a
timely basis.
(B) Construction for current contracts.--Such
amendments shall not apply to contracts in effect
before the date specified under subparagraph (A) that
continue to retain the terms and conditions in effect
on such date (except as otherwise provided under this
Act, other than under this section) until such date as
the contract is let out for competitive bidding under
such amendments.
(C) Deadline for competitive bidding.--The
Secretary shall provide for the letting by competitive
bidding of all contracts for functions of medicare
administrative contractors for annual contract periods
that begin on or after October 1, 2009.
(D) Waiver of provider nomination provisions during
transition.--During the period beginning on the date of
the enactment of this Act and before the date specified
under subparagraph (A), the Secretary may enter into
new agreements under section 1816 of the Social
Security Act (42 U.S.C. 1395h) without regard to any of
the provider nomination provisions of such section.
(2) General transition rules.--The Secretary shall take
such steps, consistent with paragraph (1)(B) and (1)(C), as
are necessary to provide for an appropriate transition from contracts
under section 1816 and section 1842 of the Social Security Act (42
U.S.C. 1395h, 1395u) to contracts under section 1874A, as added by
subsection (a)(1).
(3) Authorizing continuation of mip functions under current
contracts and agreements and under rollover contracts.--The
provisions contained in the exception in section 1893(d)(2) of
the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall
continue to apply notwithstanding the amendments made by this
section, and any reference in such provisions to an agreement
or contract shall be deemed to include a contract under section
1874A of such Act, as inserted by subsection (a)(1), that
continues the activities referred to in such provisions.
(e) References.--On and after the effective date provided under
subsection (d)(1), any reference to a fiscal intermediary or carrier
under title XI or XVIII of the Social Security Act (or any regulation,
manual instruction, interpretative rule, statement of policy, or
guideline issued to carry out such titles) shall be deemed a reference
to an appropriate medicare administrative contractor (as provided under
section 1874A of the Social Security Act).
(f) Reports on Implementation.--
(1) Plan for implementation.--By not later than October 1,
2003, the Secretary shall submit a report to Congress and the
Comptroller General of the United States that describes the
plan for implementation of the amendments made by this section.
The Comptroller General shall conduct an evaluation of such
plan and shall submit to Congress, not later than 6 months
after the date the report is received, a report on such
evaluation and shall include in such report such
recommendations as the Comptroller General deems appropriate.
(2) Status of implementation.--The Secretary shall submit a
report to Congress not later than October 1, 2007, that
describes the status of implementation of such amendments and
that includes a description of the following:
(A) The number of contracts that have been
competitively bid as of such date.
(B) The distribution of functions among contracts
and contractors.
(C) A timeline for complete transition to full
competition.
(D) A detailed description of how the Secretary has
modified oversight and management of medicare
contractors to adapt to full competition.
SEC. 812. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDICARE
ADMINISTRATIVE CONTRACTORS.
(a) In General.--Section 1874A, as added by section 811(a)(1), is
amended by adding at the end the following new subsection:
``(e) Requirements for Information Security.--
``(1) Development of information security program.--A
medicare administrative contractor that performs the functions
referred to in subparagraphs (A) and (B) of subsection (a)(4)
(relating to determining and making payments) shall implement a
contractor-wide information security program to provide
information security for the operation and assets of the
contractor with respect to such functions under this title. An
information security program under this paragraph shall meet
the requirements for information security programs imposed on
Federal agencies under section 3534(b)(2) of title 44, United
States Code (other than requirements under subparagraphs
(B)(ii), (F)(iii), and (F)(iv) of such section).
``(2) Independent audits.--
``(A) Performance of annual evaluations.--Each year
a medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall undergo an evaluation of the
information security of the contractor with respect to
such functions under this title. The evaluation shall--
``(i) be performed by an entity that meets
such requirements for independence as the
Inspector General of the Department of Health
and Human Services may establish; and
``(ii) test the effectiveness of
information security control techniques for an
appropriate subset of the contractor's
information systems (as defined in section
3502(8) of title 44, United States Code)
relating to such functions under this title and
an assessment of compliance with the
requirements of this subsection and related
information security policies, procedures,
standards and guidelines.
``(B) Deadline for initial evaluation.--
``(i) New contractors.--In the case of a
medicare administrative contractor covered by
this subsection that has not previously
performed the functions referred to in
subparagraphs (A) and (B) of subsection (a)(4)
(relating to determining and making payments)
as a fiscal intermediary or carrier under
section 1816 or 1842, the first independent
evaluation conducted pursuant subparagraph (A)
shall be completed prior to commencing such
functions.
``(ii) Other contractors.--In the case of a
medicare administrative contractor covered by
this subsection that is not described in clause
(i), the first independent evaluation conducted
pursuant subparagraph (A) shall be completed
within 1 year after the date the contractor
commences functions referred to in clause (i)
under this section.
``(C) Reports on evaluations.--
``(i) To the inspector general.--The
results of independent evaluations under
subparagraph (A) shall be submitted promptly to
the Inspector General of the Department of
Health and Human Services.
``(ii) To congress.--The Inspector General
of Department of Health and Human Services
shall submit to Congress annual reports on the
results of such evaluations.''.
(b) Application of Requirements to Fiscal Intermediaries and
Carriers.--
(1) In general.--The provisions of section 1874A(e)(2) of
the Social Security Act (other than subparagraph (B)), as added
by subsection (a), shall apply to each fiscal intermediary
under section 1816 of the Social Security Act (42 U.S.C. 1395h)
and each carrier under section 1842 of such Act (42 U.S.C.
1395u) in the same manner as they apply to medicare
administrative contractors under such provisions.
(2) Deadline for initial evaluation.--In the case of such a
fiscal intermediary or carrier with an agreement or contract
under such respective section in effect as of the date of the
enactment of this Act, the first evaluation under section
1874A(e)(2)(A) of the Social Security Act (as added by
subsection (a)), pursuant to paragraph (1), shall be completed
(and a report on the evaluation submitted to the Secretary) by
not later than 1 year after such date.
Subtitle C--Education and Outreach
SEC. 821. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.
(a) Coordination of Education Funding.--
(1) In general.--The Social Security Act is amended by
inserting after section 1888 the following new section:
``provider education and technical assistance
``Sec. 1889. (a) Coordination of Education Funding.--The Secretary
shall coordinate the educational activities provided through medicare
contractors (as defined in subsection (g), including under section
1893) in order to maximize the effectiveness of Federal education
efforts for providers of services and suppliers.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(3) Report.--Not later than October 1, 2003, the Secretary
shall submit to Congress a report that includes a description
and evaluation of the steps taken to coordinate the funding of
provider education under section 1889(a) of the Social Security
Act, as added by paragraph (1).
(b) Incentives To Improve Contractor Performance.--
(1) In general.--Section 1874A, as added by section
811(a)(1) and as amended by section 812(a), is amended by
adding at the end the following new subsection:
``(f) Incentives To Improve Contractor Performance in Provider
Education and Outreach.--In order to give medicare administrative
contractors an incentive to implement effective education and outreach
programs for providers of services and suppliers, the Secretary shall
develop and implement a methodology to measure the specific claims
payment error rates of such contractors in the processing or reviewing
of medicare claims.''.
(2) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(f) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal intermediary
under section 1816 of the Social Security Act (42 U.S.C. 1395h)
and each carrier under section 1842 of such Act (42 U.S.C.
1395u) in the same manner as they apply to medicare
administrative contractors under such provisions.
(3) GAO report on adequacy of methodology.--Not later than
October 1, 2003, the Comptroller General of the United States
shall submit to Congress and to the Secretary a report on the
adequacy of the methodology under section 1874A(f) of the
Social Security Act, as added by paragraph (1), and shall
include in the report such recommendations as the Comptroller
General determines appropriate with respect to the methodology.
(4) Report on use of methodology in assessing contractor
performance.--Not later than October 1, 2003, the Secretary
shall submit to Congress a report that describes how the
Secretary intends to use such methodology in assessing medicare
contractor performance in implementing effective education and
outreach programs, including whether to use such methodology as
a basis for performance bonuses. The report shall include an
analysis of the sources of identified errors and potential
changes in systems of contractors and rules of the Secretary
that could reduce claims error rates.
(c) Provision of Access to and Prompt Responses From Medicare
Administrative Contractors.--
(1) In general.--Section 1874A, as added by section
811(a)(1) and as amended by section 812(a) and subsection (b),
is further amended by adding at the end the following new
subsection:
``(g) Communications With Beneficiaries, Providers of Services and
Suppliers.--
``(1) Communication strategy.--The Secretary shall develop
a strategy for communications with individuals entitled to
benefits under part A or enrolled under part B, or both, and
with providers of services and suppliers under this title.
``(2) Response to written inquiries.--Each medicare
administrative contractor shall, for those providers of
services and suppliers which submit claims to the contractor
for claims processing and for those individuals entitled to
benefits under part A or enrolled under part B, or both, with
respect to whom claims are submitted for claims processing,
provide general written responses (which may be through
electronic transmission) in a clear, concise, and accurate
manner to inquiries of providers of services, suppliers and
individuals entitled to benefits under part A or enrolled
under part B, or both, concerning the programs under this title within
45 business days of the date of receipt of such inquiries.
``(3) Response to toll-free lines.--The Secretary shall
ensure that each medicare administrative contractor shall
provide, for those providers of services and suppliers which
submit claims to the contractor for claims processing and for
those individuals entitled to benefits under part A or enrolled
under part B, or both, with respect to whom claims are
submitted for claims processing, a toll-free telephone number
at which such individuals, providers of services and suppliers
may obtain information regarding billing, coding, claims,
coverage, and other appropriate information under this title.
``(4) Monitoring of contractor responses.--
``(A) In general.--Each medicare administrative
contractor shall, consistent with standards developed
by the Secretary under subparagraph (B)--
``(i) maintain a system for identifying who
provides the information referred to in
paragraphs (2) and (3); and
``(ii) monitor the accuracy, consistency,
and timeliness of the information so provided.
``(B) Development of standards.--
``(i) In general.--The Secretary shall
establish and make public standards to monitor
the accuracy, consistency, and timeliness of
the information provided in response to written
and telephone inquiries under this subsection.
Such standards shall be consistent with the
performance requirements established under
subsection (b)(3).
``(ii) Evaluation.--In conducting
evaluations of individual medicare
administrative contractors, the Secretary shall
take into account the results of the monitoring
conducted under subparagraph (A) taking into
account as performance requirements the
standards established under clause (i). The
Secretary shall, in consultation with
organizations representing providers of
services, suppliers, and individuals entitled
to benefits under part A or enrolled under part
B, or both, establish standards relating to the
accuracy, consistency, and timeliness of the
information so provided.
``(C) Direct monitoring.--Nothing in this paragraph
shall be construed as preventing the Secretary from
directly monitoring the accuracy, consistency, and
timeliness of the information so provided.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect October 1, 2003.
(3) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(g) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal intermediary
under section 1816 of the Social Security Act (42 U.S.C. 1395h)
and each carrier under section 1842 of such Act (42 U.S.C.
1395u) in the same manner as they apply to medicare
administrative contractors under such provisions.
(d) Improved Provider Education and Training.--
(1) In general.--Section 1889, as added by subsection (a),
is amended by adding at the end the following new subsections:
``(b) Enhanced Education and Training.--
``(1) Additional resources.--There are authorized to be
appropriated to the Secretary (in appropriate part from the
Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) $25,000,000 for
each of fiscal years 2004 and 2005 and such sums as may be
necessary for succeeding fiscal years.
``(2) Use.--The funds made available under paragraph (1)
shall be used to increase the conduct by medicare contractors
of education and training of providers of services and
suppliers regarding billing, coding, and other appropriate
items and may also be used to improve the accuracy,
consistency, and timeliness of contractor responses.
``(c) Tailoring Education and Training Activities for Small
Providers or Suppliers.--
``(1) In general.--Insofar as a medicare contractor
conducts education and training activities, it shall tailor
such activities to meet the special needs of small providers of
services or suppliers (as defined in paragraph (2)).
``(2) Small provider of services or supplier.--In this
subsection, the term `small provider of services or supplier'
means--
``(A) a provider of services with fewer than 25
full-time-equivalent employees; or
``(B) a supplier with fewer than 10 full-time-
equivalent employees.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2003.
(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, 2003.
(f) Additional Provider Education Provisions.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsections (d) and (e), is further amended
by adding at the end the following new subsections:
``(e) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of attendance
at (or failure to attend) educational activities or other information
gathered during an educational program conducted under this section or
otherwise by the Secretary to select or track providers of services or
suppliers for the purpose of conducting any type of audit or prepayment
review.
``(f) Construction.--Nothing in this section or section 1893(g)
shall be construed as providing for disclosure by a medicare contractor
of information that would compromise pending law enforcement activities
or reveal findings of law enforcement-related audits.
``(g) Definitions.--For purposes of this section, the term
`medicare contractor' includes the following:
``(1) A medicare administrative contractor with a contract
under section 1874A, including a fiscal intermediary with a
contract under section 1816 and a carrier with a contract under
section 1842.
``(2) An eligible entity with a contract under section
1893.
Such term does not include, with respect to activities of a specific
provider of services or supplier an entity that has no authority under
this title or title IX with respect to such activities and such
provider of services or supplier.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
SEC. 822. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION PROGRAM.
(a) Establishment.--
(1) In general.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which technical assistance
described in paragraph (2) is made available, upon request and
on a voluntary basis, to small providers of services or
suppliers in order to improve compliance with the applicable
requirements of the programs under medicare program under title
XVIII of the Social Security Act (including provisions of title
XI of such Act insofar as they relate to such title and are not
administered by the Office of the Inspector General of the
Department of Health and Human Services).
(2) Forms of technical assistance.--The technical
assistance described in this paragraph is--
(A) evaluation and recommendations regarding
billing and related systems; and
(B) information and assistance regarding policies
and procedures under the medicare program, including
coding and reimbursement.
(3) Small providers of services or suppliers.--In this
section, the term ``small providers of services or suppliers''
means--
(A) a provider of services with fewer than 25 full-
time-equivalent employees; or
(B) a supplier with fewer than 10 full-time-
equivalent employees.
(b) Qualification of Contractors.--In conducting the demonstration
program, the Secretary shall enter into contracts with qualified
organizations (such as peer review organizations or entities described
in section 1889(g)(2) of the Social Security Act, as inserted by
section 5(f)(1)) with appropriate expertise with billing systems of the
full range of providers of services and suppliers to provide the
technical assistance. In awarding such contracts, the Secretary shall
consider any prior investigations of the entity's work by the Inspector
General of Department of Health and Human Services or the Comptroller
General of the United States.
(c) Description of Technical Assistance.--The technical assistance
provided under the demonstration program shall include a direct and in-
person examination of billing systems and internal controls of small
providers of services or suppliers to determine program compliance and
to suggest more efficient or effective means of achieving such
compliance.
(d) Avoidance of Recovery Actions for Problems Identified as
Corrected.--The Secretary shall provide that, absent evidence of fraud
and notwithstanding any other provision of law, any errors found in a
compliance review for a small provider of services or supplier that
participates in the demonstration program shall not be subject to
recovery action if the technical assistance personnel under the program
determine that--
(1) the problem that is the subject of the compliance
review has been corrected to their satisfaction within 30 days
of the date of the visit by such personnel to the small
provider of services or supplier; and
(2) such problem remains corrected for such period as is
appropriate.
The previous sentence applies only to claims filed as part of the
demonstration program and lasts only for the duration of such program
and only as long as the small provider of services or supplier is a
participant in such program.
(e) GAO Evaluation.--Not later than 2 years after the date of the
date the demonstration program is first implemented, the Comptroller
General, in consultation with the Inspector General of the Department
of Health and Human Services, shall conduct an evaluation of the
demonstration program. The evaluation shall include a determination of
whether claims error rates are reduced for small providers of services
or suppliers who participated in the program and the extent of improper
payments made as a result of the demonstration program. The Comptroller
General shall submit a report to the Secretary and the Congress on such
evaluation and shall include in such report recommendations regarding
the continuation or extension of the demonstration program.
(f) Financial Participation by Providers.--The provision of
technical assistance to a small provider of services or supplier under
the demonstration program is conditioned upon the small provider of
services or supplier paying an amount estimated (and disclosed in
advance of a provider's or supplier's participation in the program) to
be equal to 25 percent of the cost of the technical assistance.
(g) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary (in appropriate part from the Federal
Hospital Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund) to carry out the demonstration program--
(1) for fiscal year 2004, $1,000,000, and
(2) for fiscal year 2005, $6,000,000.
SEC. 823. MEDICARE PROVIDER OMBUDSMAN; MEDICARE BENEFICIARY OMBUDSMAN.
(a) Medicare Provider Ombudsman.--Section 1868 (42 U.S.C. 1395ee)
is amended--
(1) by adding at the end of the heading the following: ``;
medicare provider ombudsman'';
(2) by inserting ``Practicing Physicians Advisory
Council.--(1)'' after ``(a)'';
(3) in paragraph (1), as so redesignated under paragraph
(2), by striking ``in this section'' and inserting ``in this
subsection'';
(4) by redesignating subsections (b) and (c) as paragraphs
(2) and (3), respectively; and
(5) by adding at the end the following new subsection:
``(b) Medicare Provider Ombudsman.--The Secretary shall appoint
within the Department of Health and Human Services a Medicare Provider
Ombudsman. The Ombudsman shall--
``(1) provide assistance, on a confidential basis, to
providers of services and suppliers with respect to complaints,
grievances, and requests for information concerning the
programs under this title (including provisions of title XI
insofar as they relate to this title and are not administered
by the Office of the Inspector General of the Department of
Health and Human Services) and in the resolution of unclear or
conflicting guidance given by the Secretary and medicare
contractors to such providers of services and suppliers
regarding such programs and provisions and requirements under
this title and such provisions; and
``(2) submit recommendations to the Secretary for
improvement in the administration of this title and such
provisions, including--
``(A) recommendations to respond to recurring
patterns of confusion in this title and such provisions
(including recommendations regarding suspending
imposition of sanctions where there is widespread
confusion in program administration), and
``(B) recommendations to provide for an appropriate
and consistent response (including not providing for
audits) in cases of self-identified overpayments by
providers of services and suppliers.
The Ombudsman shall not serve as an advocate for any increases in
payments or new coverage of services, but may identify issues and
problems in payment or coverage policies.''.
(b) Medicare Beneficiary Ombudsman.--Title XVIII, as amended by
section 701, is amended by inserting after section 1807 the following
new section:
``medicare beneficiary ombudsman
``Sec. 1808. (a) In General.--The Secretary shall appoint within
the Department of Health and Human Services a Medicare Beneficiary
Ombudsman who shall have expertise and experience in the fields of
health care and education of (and assistance to) individuals entitled
to benefits under this title.
``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
``(1) receive complaints, grievances, and requests for
information submitted by individuals entitled to benefits under
part A or enrolled under part B, or both, with respect to any
aspect of the medicare program;
``(2) provide assistance with respect to complaints,
grievances, and requests referred to in paragraph (1),
including--
``(A) assistance in collecting relevant information
for such individuals, to seek an appeal of a decision
or determination made by a fiscal intermediary,
carrier, Medicare+Choice organization, or the
Secretary; and
``(B) assistance to such individuals with any
problems arising from disenrollment from a
Medicare+Choice plan under part C; and
``(3) submit annual reports to Congress and the Secretary
that describe the activities of the Office and that include
such recommendations for improvement in the administration of
this title as the Ombudsman determines appropriate.
The Ombudsman shall not serve as an advocate for any increases in
payments or new coverage of services, but may identify issues and
problems in payment or coverage policies.
``(c) Working With Health Insurance Counseling Programs.--To the
extent possible, the Ombudsman shall work with health insurance
counseling programs (receiving funding under section 4360 of Omnibus
Budget Reconciliation Act of 1990) to facilitate the provision of
information to individuals entitled to benefits under part A or
enrolled under part B, or both regarding Medicare+Choice plans and
changes to those plans. Nothing in this subsection shall preclude
further collaboration between the Ombudsman and such programs.''.
(c) Deadline for Appointment.--The Secretary shall appoint the
Medicare Provider Ombudsman and the Medicare Beneficiary Ombudsman,
under the amendments made by subsections (a) and (b), respectively, by
not later than 1 year after the date of the enactment of this Act.
(d) Funding.--There are authorized to be appropriated to the
Secretary (in appropriate part from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund)
to carry out the provisions of subsection (b) of section 1868 of the
Social Security Act (relating to the Medicare Provider Ombudsman), as
added by subsection (a)(5) and section 1808 of such Act (relating to
the Medicare Beneficiary Ombudsman), as added by subsection (b), such
sums as are necessary for fiscal year 2003 and each succeeding fiscal
year.
(e) Use of Central, Toll-Free Number (1-800-MEDICARE).--
(1) Phone triage system; listing in medicare handbook
instead of other toll-free numbers.--Section 1804(b) (42 U.S.C.
1395b-2(b)) is amended by adding at the end the following:
``The Secretary shall provide, through the toll-free number 1-
800-MEDICARE, for a means by which individuals seeking
information about, or assistance with, such programs who phone
such toll-free number are transferred (without charge) to
appropriate entities for the provision of such information or
assistance. Such toll-free number shall be the toll-free number
listed for general information and assistance in the annual
notice under subsection (a) instead of the listing of numbers
of individual contractors.''.
(2) Monitoring accuracy.--
(A) Study.--The Comptroller General of the United
States shall conduct a study to monitor the accuracy
and consistency of information provided to individuals
entitled to benefits under part A or enrolled under
part B, or both, through the toll-free number 1-800-
MEDICARE, including an assessment of whether the
information provided is sufficient to answer questions
of such individuals. In conducting the study, the
Comptroller General shall examine the education and
training of the individuals providing information
through such number.
(B) Report.--Not later than 1 year after the date
of the enactment of this Act, the Comptroller General
shall submit to Congress a report on the study
conducted under subparagraph (A).
SEC. 824. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.
(a) In General.--The Secretary shall establish a demonstration
program (in this section referred to as the ``demonstration program'')
under which medicare specialists employed by the Department of Health
and Human Services provide advice and assistance to individuals
entitled to benefits under part A of title XVIII of the Social Security
Act, or enrolled under part B of such title, or both, regarding the
medicare program at the location of existing local offices of the
Social Security Administration.
(b) Locations.--
(1) In general.--The demonstration program shall be
conducted in at least 6 offices or areas. Subject to paragraph
(2), in selecting such offices and areas, the Secretary shall
provide preference for offices with a high volume of visits by
individuals referred to in subsection (a).
(2) Assistance for rural beneficiaries.--The Secretary
shall provide for the selection of at least 2 rural areas to
participate in the demonstration program. In conducting the
demonstration program in such rural areas, the Secretary shall
provide for medicare specialists to travel among local offices
in a rural area on a scheduled basis.
(c) Duration.--The demonstration program shall be conducted over a
3-year period.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall provide for an
evaluation of the demonstration program. Such evaluation shall
include an analysis of--
(A) utilization of, and satisfaction of those
individuals referred to in subsection (a) with, the
assistance provided under the program; and
(B) the cost-effectiveness of providing beneficiary
assistance through out-stationing medicare specialists
at local offices of the Social Security Administration.
(2) Report.--The Secretary shall submit to Congress a
report on such evaluation and shall include in such report
recommendations regarding the feasibility of permanently out-
stationing medicare specialists at local offices of the Social
Security Administration.
Subtitle D--Appeals and Recovery
SEC. 831. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.
(a) Transition Plan.--
(1) In general.--Not later than October 1, 2003, the
Commissioner of Social Security and the Secretary shall develop
and transmit to Congress and the Comptroller General of the
United States a plan under which the functions of
administrative law judges responsible for hearing cases under
title XVIII of the Social Security Act (and related provisions
in title XI of such Act) are transferred from the
responsibility of the Commissioner and the Social Security
Administration to the Secretary and the Department of Health
and Human Services.
(2) GAO evaluation.--The Comptroller General of the United
States shall evaluate the plan and, not later than the date
that is 6 months after the date on which the plan is received
by the Comptroller General, shall submit to Congress a report
on such evaluation.
(b) Transfer of Adjudication Authority.--
(1) In general.--Not earlier than July 1, 2004, and not
later than October 1, 2004, the Commissioner of Social Security
and the Secretary shall implement the transition plan under
subsection (a) and transfer the administrative law judge
functions described in such subsection from the Social Security
Administration to the Secretary.
(2) Assuring independence of judges.--The Secretary shall
assure the independence of administrative law judges performing
the administrative law judge functions transferred under
paragraph (1) from the Centers for Medicare & Medicaid Services
and its contractors.
(3) Geographic distribution.--The Secretary shall provide
for an appropriate geographic distribution of administrative
law judges performing the administrative law judge functions
transferred under paragraph (1) throughout the United States to
ensure timely access to such judges.
(4) Hiring authority.--Subject to the amounts provided in
advance in appropriations Act, the Secretary shall have
authority to hire administrative law judges to hear such cases,
giving priority to those judges with prior experience in
handling medicare appeals and in a manner consistent with
paragraph (3), and to hire support staff for such judges.
(5) Financing.--Amounts payable under law to the
Commissioner for administrative law judges performing the
administrative law judge functions transferred under paragraph
(1) from the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund shall become
payable to the Secretary for the functions so transferred.
(6) Shared resources.--The Secretary shall enter into such
arrangements with the Commissioner as may be appropriate with
respect to transferred functions of administrative law judges
to share office space, support staff, and other resources, with
appropriate reimbursement from the Trust Funds described in
paragraph (5).
(c) Increased Financial Support.--In addition to any amounts
otherwise appropriated, to ensure timely action on appeals before
administrative law judges and the Departmental Appeals Board consistent
with section 1869 of the Social Security Act (as amended by section 521
of BIPA, 114 Stat. 2763A-534), there are authorized to be appropriated
(in appropriate part from the Federal Hospital Insurance Trust Fund and
the Federal Supplementary Medical Insurance Trust Fund) to the
Secretary such sums as are necessary for fiscal year 2004 and each
subsequent fiscal year to--
(1) increase the number of administrative law judges (and
their staffs) under subsection (b)(4);
(2) improve education and training opportunities for
administrative law judges (and their staffs); and
(3) increase the staff of the Departmental Appeals Board.
(d) Conforming Amendment.--Section 1869(f)(2)(A)(i) (42 U.S.C.
1395ff(f)(2)(A)(i)), as added by section 522(a) of BIPA (114 Stat.
2763A-543), is amended by striking ``of the Social Security
Administration''.
SEC. 832. PROCESS FOR EXPEDITED ACCESS TO REVIEW.
(a) Expedited Access to Judicial Review.--Section 1869(b) (42
U.S.C. 1395ff(b)) as amended by BIPA, is amended--
(1) in paragraph (1)(A), by inserting ``, subject to
paragraph (2),'' before ``to judicial review of the Secretary's
final decision'';
(2) in paragraph (1)(F)--
(A) by striking clause (ii);
(B) by striking ``proceeding'' and all that follows
through ``determination'' and inserting
``determinations and reconsiderations''; and
(C) by redesignating subclauses (I) and (II) as
clauses (i) and (ii) and by moving the indentation of
such subclauses (and the matter that follows) 2 ems to
the left; and
(3) by adding at the end the following new paragraph:
``(2) Expedited access to judicial review.--
``(A) In general.--The Secretary shall establish a
process under which a provider of services or supplier
that furnishes an item or service or an individual
entitled to benefits under part A or enrolled under
part B, or both, who has filed an appeal under
paragraph (1) may obtain access to judicial review when
a review panel (described in subparagraph (D)), on its
own motion or at the request of the appellant,
determines that no entity in the administrative appeals
process has the authority to decide the question of law
or regulation relevant to the matters in controversy
and that there is no material issue of fact in dispute.
The appellant may make such request only once with
respect to a question of law or regulation in a case of
an appeal.
``(B) Prompt determinations.--If, after or
coincident with appropriately filing a request for an
administrative hearing, the appellant requests a
determination by the appropriate review panel that no
review panel has the authority to decide the question
of law or regulations relevant to the matters in
controversy and that there is no material issue of fact
in dispute and if such request is accompanied by the
documents and materials as the appropriate review panel
shall require for purposes of making such
determination, such review panel shall make a
determination on the request in writing within 60 days
after the date such review panel receives the request
and such accompanying documents and materials. Such a
determination by such review panel shall be considered
a final decision and not subject to review by the
Secretary.
``(C) Access to judicial review.--
``(i) In general.--If the appropriate
review panel--
``(I) determines that there are no
material issues of fact in dispute and
that the only issue is one of law or
regulation that no review panel has the
authority to decide; or
``(II) fails to make such
determination within the period
provided under subparagraph (B);
then the appellant may bring a civil action as
described in this subparagraph.
``(ii) Deadline for filing.--Such action
shall be filed, in the case described in--
``(I) clause (i)(I), within 60 days
of date of the determination described
in such subparagraph; or
``(II) clause (i)(II), within 60
days of the end of the period provided
under subparagraph (B) for the
determination.
``(iii) Venue.--Such action shall be
brought in the district court of the United
States for the judicial district in which the
appellant is located (or, in the case of an
action brought jointly by more than one
applicant, the judicial district in which the
greatest number of applicants are located) or
in the district court for the District of
Columbia.
``(iv) Interest on amounts in
controversy.--Where a provider of services or
supplier seeks judicial review pursuant to this
paragraph, the amount in controversy shall be
subject to annual interest beginning on the
first day of the first month beginning after
the 60-day period as determined pursuant to
clause (ii) and equal to the rate of interest
on obligations issued for purchase by the
Federal Hospital Insurance Trust Fund and by
the Federal Supplementary Medical Insurance
Trust Fund for the month in which the civil
action authorized under this paragraph is
commenced, to be awarded by the reviewing court
in favor of the prevailing party. No interest
awarded pursuant to the preceding sentence
shall be deemed income or cost for the purposes
of determining reimbursement due providers of
services or suppliers under this Act.
``(D) Review panels.--For purposes of this
subsection, a `review panel' is a panel consisting of 3
members (who shall be administrative law judges,
members of the Departmental Appeals Board, or qualified
individuals associated with a qualified independent
contractor (as defined in subsection (c)(2)) or with
another independent entity) designated by the Secretary
for purposes of making determinations under this
paragraph.''.
(b) Application to Provider Agreement Determinations.--Section
1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
(1) by inserting ``(A)'' after ``(h)(1)''; and
(2) by adding at the end the following new subparagraph:
``(B) An institution or agency described in subparagraph (A) that
has filed for a hearing under subparagraph (A) shall have expedited
access to judicial review under this subparagraph in the same manner as
providers of services, suppliers, and individuals entitled to benefits
under part A or enrolled under part B, or both, may obtain expedited
access to judicial review under the process established under section
1869(b)(2). Nothing in this subparagraph shall be construed to affect
the application of any remedy imposed under section 1819 during the
pendency of an appeal under this subparagraph.''.
(c) Effective Date.--The amendments made by this section shall
apply to appeals filed on or after October 1, 2003.
(d) Expedited Review of Certain Provider Agreement
Determinations.--
(1) Termination and certain other immediate remedies.--The
Secretary shall develop and implement a process to expedite
proceedings under sections 1866(h) of the Social Security Act
(42 U.S.C. 1395cc(h)) in which the remedy of termination of
participation, or a remedy described in clause (i) or (iii) of
section 1819(h)(2)(B) of such Act (42 U.S.C. 1395i-3(h)(2)(B))
which is applied on an immediate basis, has been imposed. Under
such process priority shall be provided in cases of
termination.
(2) Increased financial support.--In addition to any
amounts otherwise appropriated, to reduce by 50 percent the
average time for administrative determinations on appeals under
section 1866(h) of the Social Security Act (42 U.S.C.
1395cc(h)), there are authorized to be appropriated (in
appropriate part from the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund) to
the Secretary such additional sums for fiscal year 2004 and
each subsequent fiscal year as may be necessary. The purposes
for which such amounts are available include increasing the
number of administrative law judges (and their staffs) and the
appellate level staff at the Departmental Appeals Board of the
Department of Health and Human Services and educating such
judges and staffs on long-term care issues.
SEC. 833. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) Requiring Full and Early Presentation of Evidence.--
(1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as
amended by BIPA and as amended by section 832(a), is further
amended by adding at the end the following new paragraph:
``(3) Requiring full and early presentation of evidence by
providers.--A provider of services or supplier may not
introduce evidence in any appeal under this section that was
not presented at the reconsideration conducted by the qualified
independent contractor under subsection (c), unless there is
good cause which precluded the introduction of such evidence at
or before that reconsideration.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2003.
(b) Use of Patients' Medical Records.--Section 1869(c)(3)(B)(i) (42
U.S.C. 1395ff(c)(3)(B)(i)), as amended by BIPA, is amended by inserting
``(including the medical records of the individual involved)'' after
``clinical experience''.
(c) Notice Requirements for Medicare Appeals.--
(1) Initial determinations and redeterminations.--Section
1869(a) (42 U.S.C. 1395ff(a)), as amended by BIPA, is amended
by adding at the end the following new paragraph:
``(4) Requirements of notice of determinations and
redeterminations.--A written notice of a determination on an
initial determination or on a redetermination, insofar as such
determination or redetermination results in a denial of a claim
for benefits, shall include--
``(A) the specific reasons for the determination,
including--
``(i) upon request, the provision of the
policy, manual, or regulation used in making
the determination; and
``(ii) as appropriate in the case of a
redetermination, a summary of the clinical or
scientific evidence used in making the
determination;
``(B) the procedures for obtaining additional
information concerning the determination or
redetermination; and
``(C) notification of the right to seek a
redetermination or otherwise appeal the determination
and instructions on how to initiate such a
redetermination or appeal under this section.
The written notice on a redetermination shall be provided in
printed form and written in a manner calculated to be
understood by the individual entitled to benefits under part A
or enrolled under part B, or both.''.
(2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C.
1395ff(c)(3)(E)), as amended by BIPA, is amended--
(A) by inserting ``be written in a manner
calculated to be understood by the individual entitled
to benefits under part A or enrolled under part B, or
both, and shall include (to the extent appropriate)''
after ``in writing, ''; and
(B) by inserting ``and a notification of the right
to appeal such determination and instructions on how to
initiate such appeal under this section'' after ``such
decision,''.
(3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)), as
amended by BIPA, is amended--
(A) in the heading, by inserting ``; Notice'' after
``Secretary''; and
(B) by adding at the end the following new
paragraph:
``(4) Notice.--Notice of the decision of an administrative
law judge shall be in writing in a manner calculated to be
understood by the individual entitled to benefits under part A
or enrolled under part B, or both, and shall include--
``(A) the specific reasons for the determination
(including, to the extent appropriate, a summary of the
clinical or scientific evidence used in making the
determination);
``(B) the procedures for obtaining additional
information concerning the decision; and
``(C) notification of the right to appeal the
decision and instructions on how to initiate such an
appeal under this section.''.
(4) Submission of record for appeal.--Section
1869(c)(3)(J)(i) (42 U.S.C. 1395ff(c)(3)(J)(i)) by striking
``prepare'' and inserting ``submit'' and by striking ``with
respect to'' and all that follows through ``and relevant
policies''.
(d) Qualified Independent Contractors.--
(1) Eligibility requirements of qualified independent
contractors.--Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)), as
amended by BIPA, is amended--
(A) in subparagraph (A), by striking ``sufficient
training and expertise in medical science and legal
matters'' and inserting ``sufficient medical, legal,
and other expertise (including knowledge of the program
under this title) and sufficient staffing''; and
(B) by adding at the end the following new
subparagraph:
``(K) Independence requirements.--
``(i) In general.--Subject to clause (ii),
a qualified independent contractor shall not
conduct any activities in a case unless the
entity--
``(I) is not a related party (as
defined in subsection (g)(5));
``(II) does not have a material
familial, financial, or professional
relationship with such a party in
relation to such case; and
``(III) does not otherwise have a
conflict of interest with such a party.
``(ii) Exception for reasonable
compensation.--Nothing in clause (i) shall be
construed to prohibit receipt by a qualified
independent contractor of compensation from the
Secretary for the conduct of activities under
this section if the compensation is provided
consistent with clause (iii).
``(iii) Limitations on entity
compensation.--Compensation provided by the
Secretary to a qualified independent contractor
in connection with reviews under this section
shall not be contingent on any decision
rendered by the contractor or by any reviewing
professional.''.
(2) Eligibility requirements for reviewers.--Section 1869
(42 U.S.C. 1395ff), as amended by BIPA, is amended--
(A) by amending subsection (c)(3)(D) to read as
follows:
``(D) Qualifications for reviewers.--The
requirements of subsection (g) shall be met (relating
to qualifications of reviewing professionals).''; and
(B) by adding at the end the following new
subsection:
``(g) Qualifications of Reviewers.--
``(1) In general.--In reviewing determinations under this
section, a qualified independent contractor shall assure that--
``(A) each individual conducting a review shall
meet the qualifications of paragraph (2);
``(B) compensation provided by the contractor to
each such reviewer is consistent with paragraph (3);
and
``(C) in the case of a review by a panel described
in subsection (c)(3)(B) composed of physicians or other
health care professionals (each in this
subsection referred to as a `reviewing professional'), each reviewing
professional meets the qualifications described in paragraph (4) and,
where a claim is regarding the furnishing of treatment by a physician
(allopathic or osteopathic) or the provision of items or services by a
physician (allopathic or osteopathic), each reviewing professional
shall be a physician (allopathic or osteopathic).
``(2) Independence.--
``(A) In general.--Subject to subparagraph (B),
each individual conducting a review in a case shall--
``(i) not be a related party (as defined in
paragraph (5));
``(ii) not have a material familial,
financial, or professional relationship with
such a party in the case under review; and
``(iii) not otherwise have a conflict of
interest with such a party.
``(B) Exception.--Nothing in subparagraph (A) shall
be construed to--
``(i) prohibit an individual, solely on the
basis of a participation agreement with a
fiscal intermediary, carrier, or other
contractor, from serving as a reviewing
professional if--
``(I) the individual is not
involved in the provision of items or
services in the case under review;
``(II) the fact of such an
agreement is disclosed to the Secretary
and the individual entitled to benefits
under part A or enrolled under part B,
or both, (or authorized representative)
and neither party objects; and
``(III) the individual is not an
employee of the intermediary, carrier,
or contractor and does not provide
services exclusively or primarily to or
on behalf of such intermediary,
carrier, or contractor;
``(ii) prohibit an individual who has staff
privileges at the institution where the
treatment involved takes place from serving as
a reviewer merely on the basis of having such
staff privileges if the existence of such
privileges is disclosed to the Secretary and
such individual (or authorized representative),
and neither party objects; or
``(iii) prohibit receipt of compensation by
a reviewing professional from a contractor if
the compensation is provided consistent with
paragraph (3).
For purposes of this paragraph, the term `participation
agreement' means an agreement relating to the provision
of health care services by the individual and does not
include the provision of services as a reviewer under
this subsection.
``(3) Limitations on reviewer compensation.--Compensation
provided by a qualified independent contractor to a reviewer in
connection with a review under this section shall not be
contingent on the decision rendered by the reviewer.
``(4) Licensure and expertise.--Each reviewing professional
shall be--
``(A) a physician (allopathic or osteopathic) who
is appropriately credentialed or licensed in one or
more States to deliver health care services and has
medical expertise in the field of practice that is
appropriate for the items or services at issue; or
``(B) a health care professional who is legally
authorized in one or more States (in accordance with
State law or the State regulatory mechanism provided by
State law) to furnish the health care items or services
at issue and has medical expertise in the field of
practice that is appropriate for such items or
services.
``(5) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a case under
this title involving a specific individual entitled to benefits
under part A or enrolled under part B, or both, any of the
following:
``(A) The Secretary, the medicare administrative
contractor involved, or any fiduciary, officer,
director, or employee of the Department of Health and
Human Services, or of such contractor.
``(B) The individual (or authorized
representative).
``(C) The health care professional that provides
the items or services involved in the case.
``(D) The institution at which the items or
services (or treatment) involved in the case are
provided.
``(E) The manufacturer of any drug or other item
that is included in the items or services involved in
the case.
``(F) Any other party determined under any
regulations to have a substantial interest in the case
involved.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) shall be effective as if included in the enactment of
the respective provisions of subtitle C of title V of BIPA,
(114 Stat. 2763A-534).
(4) Transition.--In applying section 1869(g) of the Social
Security Act (as added by paragraph (2)), any reference to a
medicare administrative contractor shall be deemed to include a
reference to a fiscal intermediary under section 1816 of the
Social Security Act (42 U.S.C. 1395h) and a carrier under
section 1842 of such Act (42 U.S.C. 1395u).
SEC. 834. PREPAYMENT REVIEW.
(a) In General.--Section 1874A, as added by section 811(a)(1) and
as amended by sections 812(b), 821(b)(1), and 821(c)(1), is further
amended by adding at the end the following new subsection:
``(h) Conduct of Prepayment Review.--
``(1) Conduct of random prepayment review.--
``(A) In general.--A medicare administrative
contractor may conduct random prepayment review only to
develop a contractor-wide or program-wide claims payment error rates or
under such additional circumstances as may be provided under
regulations, developed in consultation with providers of services and
suppliers.
``(B) Use of standard protocols when conducting
prepayment reviews.--When a medicare administrative
contractor conducts a random prepayment review, the
contractor may conduct such review only in accordance
with a standard protocol for random prepayment audits
developed by the Secretary.
``(C) Construction.--Nothing in this paragraph
shall be construed as preventing the denial of payments
for claims actually reviewed under a random prepayment
review.
``(D) Random prepayment review.--For purposes of
this subsection, the term `random prepayment review'
means a demand for the production of records or
documentation absent cause with respect to a claim.
``(2) Limitations on non-random prepayment review.--
``(A) Limitations on initiation of non-random
prepayment review.--A medicare administrative
contractor may not initiate non-random prepayment
review of a provider of services or supplier based on
the initial identification by that provider of services
or supplier of an improper billing practice unless
there is a likelihood of sustained or high level of
payment error (as defined in subsection (i)(3)(A)).
``(B) Termination of non-random prepayment
review.--The Secretary shall issue regulations relating
to the termination, including termination dates, of
non-random prepayment review. Such regulations may vary
such a termination date based upon the differences in
the circumstances triggering prepayment review.''.
(b) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendment made by subsection (a) shall take effect 1 year after
the date of the enactment of this Act.
(2) Deadline for promulgation of certain regulations.--The
Secretary shall first issue regulations under section 1874A(h)
of the Social Security Act, as added by subsection (a), by not
later than 1 year after the date of the enactment of this Act.
(3) Application of standard protocols for random prepayment
review.--Section 1874A(h)(1)(B) of the Social Security Act, as
added by subsection (a), shall apply to random prepayment
reviews conducted on or after such date (not later than 1 year
after the date of the enactment of this Act) as the Secretary
shall specify.
(c) Application to Fiscal Intermediaries and Carriers.--The
provisions of section 1874A(h) of the Social Security Act, as added by
subsection (a), shall apply to each fiscal intermediary under section
1816 of the Social Security Act (42 U.S.C. 1395h) and each carrier
under section 1842 of such Act (42 U.S.C. 1395u) in the same manner as
they apply to medicare administrative contractors under such
provisions.
SEC. 835. RECOVERY OF OVERPAYMENTS.
(a) In General.--Section 1893 (42 U.S.C. 1395ddd) is amended by
adding at the end the following new subsection:
``(f) Recovery of Overpayments.--
``(1) Use of repayment plans.--
``(A) In general.--If the repayment, within 30 days
by a provider of services or supplier, of an
overpayment under this title would constitute a
hardship (as defined in subparagraph (B)), subject to
subparagraph (C), upon request of the provider of
services or supplier the Secretary shall enter into a
plan with the provider of services or supplier for the
repayment (through offset or otherwise) of such
overpayment over a period of at least 6 months but not
longer than 3 years (or not longer than 5 years in the
case of extreme hardship, as determined by the
Secretary). Interest shall accrue on the balance
through the period of repayment. Such plan shall meet
terms and conditions determined to be appropriate by
the Secretary.
``(B) Hardship.--
``(i) In general.--For purposes of
subparagraph (A), the repayment of an
overpayment (or overpayments) within 30 days is
deemed to constitute a hardship if--
``(I) in the case of a provider of
services that files cost reports, the
aggregate amount of the overpayments
exceeds 10 percent of the amount paid
under this title to the provider of
services for the cost reporting period
covered by the most recently submitted
cost report; or
``(II) in the case of another
provider of services or supplier, the
aggregate amount of the overpayments
exceeds 10 percent of the amount paid
under this title to the provider of
services or supplier for the previous
calendar year.
``(ii) Rule of application.--The Secretary
shall establish rules for the application of
this subparagraph in the case of a provider of
services or supplier that was not paid under
this title during the previous year or was paid
under this title only during a portion of that
year.
``(iii) Treatment of previous
overpayments.--If a provider of services or
supplier has entered into a repayment plan
under subparagraph (A) with respect to a
specific overpayment amount, such payment
amount under the repayment plan shall not be
taken into account under clause (i) with
respect to subsequent overpayment amounts.
``(C) Exceptions.--Subparagraph (A) shall not apply
if--
``(i) the Secretary has reason to suspect
that the provider of services or supplier may
file for bankruptcy or otherwise cease to do
business or discontinue participation in the program under this title;
or
``(ii) there is an indication of fraud or
abuse committed against the program.
``(D) Immediate collection if violation of
repayment plan.--If a provider of services or supplier
fails to make a payment in accordance with a repayment
plan under this paragraph, the Secretary may
immediately seek to offset or otherwise recover the
total balance outstanding (including applicable
interest) under the repayment plan.
``(E) Relation to no fault provision.--Nothing in
this paragraph shall be construed as affecting the
application of section 1870(c) (relating to no
adjustment in the cases of certain overpayments).
``(2) Limitation on recoupment.--
``(A) In general.--In the case of a provider of
services or supplier that is determined to have
received an overpayment under this title and that seeks
a reconsideration by a qualified independent contractor
on such determination under section 1869(b)(1), the
Secretary may not take any action (or authorize any
other person, including any medicare contractor, as
defined in subparagraph (C)) to recoup the overpayment
until the date the decision on the reconsideration has
been rendered. If the provisions of section 1869(b)(1)
(providing for such a reconsideration by a qualified
independent contractor) are not in effect, in applying
the previous sentence any reference to such a
reconsideration shall be treated as a reference to a
redetermination by the fiscal intermediary or carrier
involved.
``(B) Collection with interest.--Insofar as the
determination on such appeal is against the provider of
services or supplier, interest on the overpayment shall
accrue on and after the date of the original notice of
overpayment. Insofar as such determination against the
provider of services or supplier is later reversed, the
Secretary shall provide for repayment of the amount
recouped plus interest at the same rate as would apply
under the previous sentence for the period in which the
amount was recouped.
``(C) Medicare contractor defined.--For purposes of
this subsection, the term `medicare contractor' has the
meaning given such term in section 1889(g).
``(3) Limitation on use of extrapolation.--A medicare
contractor may not use extrapolation to determine overpayment
amounts to be recovered by recoupment, offset, or otherwise
unless--
``(A) there is a sustained or high level of payment
error (as defined by the Secretary by regulation); or
``(B) documented educational intervention has
failed to correct the payment error (as determined by
the Secretary).
``(4) Provision of supporting documentation.--In the case
of a provider of services or supplier with respect to which
amounts were previously overpaid, a medicare contractor may
request the periodic production of records or supporting
documentation for a limited sample of submitted claims to
ensure that the previous practice is not continuing.
``(5) Consent settlement reforms.--
``(A) In general.--The Secretary may use a consent
settlement (as defined in subparagraph (D)) to settle a
projected overpayment.
``(B) Opportunity to submit additional information
before consent settlement offer.--Before offering a
provider of services or supplier a consent settlement,
the Secretary shall--
``(i) communicate to the provider of
services or supplier--
``(I) that, based on a review of
the medical records requested by the
Secretary, a preliminary evaluation of
those records indicates that there
would be an overpayment;
``(II) the nature of the problems
identified in such evaluation; and
``(III) the steps that the provider
of services or supplier should take to
address the problems; and
``(ii) provide for a 45-day period during
which the provider of services or supplier may
furnish additional information concerning the
medical records for the claims that had been
reviewed.
``(C) Consent settlement offer.--The Secretary
shall review any additional information furnished by
the provider of services or supplier under subparagraph
(B)(ii). Taking into consideration such information,
the Secretary shall determine if there still appears to
be an overpayment. If so, the Secretary--
``(i) shall provide notice of such
determination to the provider of services or
supplier, including an explanation of the
reason for such determination; and
``(ii) in order to resolve the overpayment,
may offer the provider of services or
supplier--
``(I) the opportunity for a
statistically valid random sample; or
``(II) a consent settlement.
The opportunity provided under clause (ii)(I) does not
waive any appeal rights with respect to the alleged
overpayment involved.
``(D) Consent settlement defined.--For purposes of
this paragraph, the term `consent settlement' means an
agreement between the Secretary and a provider of
services or supplier whereby both parties agree to
settle a projected overpayment based on less than a
statistically valid sample of claims and the provider
of services or supplier agrees not to appeal the claims
involved.
``(6) Notice of over-utilization of codes.--The Secretary
shall establish, in consultation with organizations
representing the classes of providers of services and
suppliers, a process under which the Secretary provides for
notice to classes of providers of services and suppliers served
by the contractor in cases in which the contractor has
identified that particular billing codes may be overutilized by
that class of providers of services or suppliers under the
programs under this title (or provisions of title XI insofar as
they relate to such programs).
``(7) Payment audits.--
``(A) Written notice for post-payment audits.--
Subject to subparagraph (C), if a medicare contractor
decides to conduct a post-payment audit of a provider
of services or supplier under this title, the
contractor shall provide the provider of services or
supplier with written notice (which may be in
electronic form) of the intent to conduct such an
audit.
``(B) Explanation of findings for all audits.--
Subject to subparagraph (C), if a medicare contractor
audits a provider of services or supplier under this
title, the contractor shall--
``(i) give the provider of services or
supplier a full review and explanation of the
findings of the audit in a manner that is
understandable to the provider of services or
supplier and permits the development of an
appropriate corrective action plan;
``(ii) inform the provider of services or
supplier of the appeal rights under this title
as well as consent settlement options (which
are at the discretion of the Secretary);
``(iii) give the provider of services or
supplier an opportunity to provide additional
information to the contractor; and
``(iv) take into account information
provided, on a timely basis, by the provider of
services or supplier under clause (iii).
``(C) Exception.--Subparagraphs (A) and (B) shall
not apply if the provision of notice or findings would
compromise pending law enforcement activities, whether
civil or criminal, or reveal findings of law
enforcement-related audits.
``(8) Standard methodology for probe sampling.--The
Secretary shall establish a standard methodology for medicare
contractors to use in selecting a sample of claims for review
in the case of an abnormal billing pattern.''.
(b) Effective Dates and Deadlines.--
(1) Use of repayment plans.--Section 1893(f)(1) of the
Social Security Act, as added by subsection (a), shall apply to
requests for repayment plans made after the date of the
enactment of this Act.
(2) Limitation on recoupment.--Section 1893(f)(2) of the
Social Security Act, as added by subsection (a), shall apply to
actions taken after the date of the enactment of this Act.
(3) Use of extrapolation.--Section 1893(f)(3) of the Social
Security Act, as added by subsection (a), shall apply to
statistically valid random samples initiated after the date
that is 1 year after the date of the enactment of this Act.
(4) Provision of supporting documentation.--Section
1893(f)(4) of the Social Security Act, as added by subsection
(a), shall take effect on the date of the enactment of this
Act.
(5) Consent settlement.--Section 1893(f)(5) of the Social
Security Act, as added by subsection (a), shall apply to
consent settlements entered into after the date of the
enactment of this Act.
(6) Notice of overutilization.--Not later than 1 year after
the date of the enactment of this Act, the Secretary shall
first establish the process for notice of overutilization of
billing codes under section 1893A(f)(6) of the Social Security
Act, as added by subsection (a).
(7) Payment audits.--Section 1893A(f)(7) of the Social
Security Act, as added by subsection (a), shall apply to audits
initiated after the date of the enactment of this Act.
(8) Standard for abnormal billing patterns.--Not later than
1 year after the date of the enactment of this Act, the
Secretary shall first establish a standard methodology for
selection of sample claims for abnormal billing patterns under
section 1893(f)(8) of the Social Security Act, as added by
subsection (a).
SEC. 836. PROVIDER ENROLLMENT PROCESS; RIGHT OF APPEAL.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is amended--
(1) by adding at the end of the heading the following: ``;
enrollment processes''; and
(2) by adding at the end the following new subsection:
``(j) Enrollment Process for Providers of Services and Suppliers.--
``(1) Enrollment process.--
``(A) In general.--The Secretary shall establish by
regulation a process for the enrollment of providers of
services and suppliers under this title.
``(B) Deadlines.--The Secretary shall establish by
regulation procedures under which there are deadlines
for actions on applications for enrollment (and, if
applicable, renewal of enrollment). The Secretary shall
monitor the performance of medicare administrative
contractors in meeting the deadlines established under
this subparagraph.
``(C) Consultation before changing provider
enrollment forms.--The Secretary shall consult with
providers of services and suppliers before making
changes in the provider enrollment forms required of
such providers and suppliers to be eligible to submit
claims for which payment may be made under this title.
``(2) Hearing rights in cases of denial or non-renewal.--A
provider of services or supplier whose application to enroll
(or, if applicable, to renew enrollment) under this title is
denied may have a hearing and judicial review of such denial
under the procedures that apply under subsection (h)(1)(A) to a
provider of services that is dissatisfied with a determination
by the Secretary.''.
(b) Effective Dates.--
(1) Enrollment process.--The Secretary shall provide for
the establishment of the enrollment process under section
1866(j)(1) of the Social Security Act, as added by subsection
(a)(2), within 6 months after the date of the enactment of this
Act.
(2) Consultation.--Section 1866(j)(1)(C) of the Social
Security Act, as added by subsection (a)(2), shall apply with
respect to changes in provider enrollment forms made on or
after January 1, 2003.
(3) Hearing rights.--Section 1866(j)(2) of the Social
Security Act, as added by subsection (a)(2), shall apply to
denials occurring on or after such date (not later than 1 year
after the date of the enactment of this Act) as the Secretary
specifies.
SEC. 837. PROCESS FOR CORRECTION OF MINOR ERRORS AND OMISSIONS ON
CLAIMS WITHOUT PURSUING APPEALS PROCESS.
The Secretary shall develop, in consultation with appropriate
medicare contractors (as defined in section 1889(g) of the Social
Security Act, as inserted by section 821(a)(1)) and representatives of
providers of services and suppliers, a process whereby, in the case of
minor errors or omissions (as defined by the Secretary) that are
detected in the submission of claims under the programs under title
XVIII of such Act, a provider of services or supplier is given an
opportunity to correct such an error or omission without the need to
initiate an appeal. Such process shall include the ability to resubmit
corrected claims.
SEC. 838. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND SERVICES;
ADVANCE BENEFICIARY NOTICES.
(a) In General.--Section 1869 (42 U.S.C. 1395ff(b)), as amended by
sections 521 and 522 of BIPA and section 833(d)(2)(B), is further
amended by adding at the end the following new subsection:
``(h) Prior Determination Process for Certain Items and Services.--
``(1) Establishment of process.--
``(A) In general.--With respect to a medicare
administrative contractor that has a contract under
section 1874A that provides for making payments under
this title with respect to eligible items and services
described in subparagraph (C), the Secretary shall
establish a prior determination process that meets the
requirements of this subsection and that shall be
applied by such contractor in the case of eligible
requesters.
``(B) Eligible requester.--For purposes of this
subsection, each of the following shall be an eligible
requester:
``(i) A physician, but only with respect to
eligible items and services for which the
physician may be paid directly.
``(ii) An individual entitled to benefits
under this title, but only with respect to an
item or service for which the individual
receives, from the physician who may be paid
directly for the item or service, an advance
beneficiary notice under section 1879(a) that
payment may not be made (or may no longer be
made) for the item or service under this title.
``(C) Eligible items and services.--For purposes of
this subsection and subject to paragraph (2), eligible
items and services are items and services which are
physicians' services (as defined in paragraph (4)(A) of
section 1848(f) for purposes of calculating the
sustainable growth rate under such section).
``(2) Secretarial flexibility.--The Secretary shall
establish by regulation reasonable limits on the categories of
eligible items and services for which a prior determination of
coverage may be requested under this subsection. In
establishing such limits, the Secretary may consider the dollar
amount involved with respect to the item or service,
administrative costs and burdens, and other relevant factors.
``(3) Request for prior determination.--
``(A) In general.--Subject to paragraph (2), under
the process established under this subsection an
eligible requester may submit to the contractor a
request for a determination, before the furnishing of
an eligible item or service involved as to whether the
item or service is covered under this title consistent
with the applicable requirements of section
1862(a)(1)(A) (relating to medical necessity).
``(B) Accompanying documentation.--The Secretary
may require that the request be accompanied by a
description of the item or service, supporting
documentation relating to the medical necessity for the
item or service, and any other appropriate
documentation. In the case of a request submitted by an
eligible requester who is described in paragraph
(1)(B)(ii), the Secretary may require that the request
also be accompanied by a copy of the advance
beneficiary notice involved.
``(4) Response to request.--
``(A) In general.--Under such process, the
contractor shall provide the eligible requester with
written notice of a determination as to whether--
``(i) the item or service is so covered;
``(ii) the item or service is not so
covered; or
``(iii) the contractor lacks sufficient
information to make a coverage determination.
If the contractor makes the determination described in
clause (iii), the contractor shall include in the
notice a description of the additional information
required to make the coverage determination.
``(B) Deadline to respond.--Such notice shall be
provided within the same time period as the time period
applicable to the contractor providing notice of
initial determinations on a claim for benefits under
subsection (a)(2)(A).
``(C) Informing beneficiary in case of physician
request.--In the case of a request in which an eligible
requester is not the individual described in paragraph
(1)(B)(ii), the process shall provide that the
individual to whom the item or service is proposed to
be furnished shall be informed of any determination
described in clause (ii) (relating to a determination
of non-coverage) and the right (referred to in
paragraph (6)(B)) to obtain the item or service and
have a claim submitted for the item or service.
``(5) Effect of determinations.--
``(A) Binding nature of positive determination.--If
the contractor makes the determination described in
paragraph (4)(A)(i), such determination shall be
binding on the contractor in the absence of fraud or
evidence of misrepresentation of facts presented to the
contractor.
``(B) Notice and right to redetermination in case
of a denial.--
``(i) In general.--If the contractor makes
the determination described in paragraph
(4)(A)(ii)--
``(I) the eligible requester has
the right to a redetermination by the
contractor on the determination that
the item or service is not so covered;
and
``(II) the contractor shall include
in notice under paragraph (4)(A) a
brief explanation of the basis for the
determination, including on what
national or local coverage or
noncoverage determination (if any) the
determination is based, and the right
to such a redetermination.
``(ii) Deadline for redeterminations.--The
contractor shall complete and provide notice of
such redetermination within the same time
period as the time period applicable to the
contractor providing notice of redeterminations
relating to a claim for benefits under
subsection (a)(3)(C)(ii).
``(6) Limitation on further review.--
``(A) In general.--Contractor determinations
described in paragraph (4)(A)(ii) or (4)(A)(iii) (and
redeterminations made under paragraph (5)(B)), relating
to pre-service claims are not subject to further
administrative appeal or judicial review under this
section or otherwise.
``(B) Decision not to seek prior determination or
negative determination does not impact right to obtain
services, seek reimbursement, or appeal rights.--
Nothing in this subsection shall be construed as
affecting the right of an individual who--
``(i) decides not to seek a prior
determination under this subsection with
respect to items or services; or
``(ii) seeks such a determination and has
received a determination described in paragraph
(4)(A)(ii),
from receiving (and submitting a claim for) such items
services and from obtaining administrative or judicial
review respecting such claim under the other applicable
provisions of this section. Failure to seek a prior
determination under this subsection with respect to
items and services shall not be taken into account in
such administrative or judicial review.
``(C) No prior determination after receipt of
services.--Once an individual is provided items and
services, there shall be no prior determination under
this subsection with respect to such items or
services.''.
(b) Effective Date; Transition.--
(1) Effective date.--The Secretary shall establish the
prior determination process under the amendment made by
subsection (a) in such a manner as to provide for the
acceptance of requests for determinations under such process
filed not later than 18 months after the date of the enactment
of this Act.
(2) Transition.--During the period in which the amendment
made by subsection (a) has become effective but contracts are
not provided under section 1874A of the Social Security Act
with medicare administrative contractors, any reference in
section 1869(g) of such Act (as added by such amendment) to
such a contractor is deemed a reference to a fiscal
intermediary or carrier with an agreement under section 1816,
or contract under section 1842, respectively, of such Act.
(3) Limitation on application to sgr.--For purposes of
applying section 1848(f)(2)(D) of the Social Security Act (42
U.S.C. 1395w-4(f)(2)(D)), the amendment made by subsection (a)
shall not be considered to be a change in law or regulation.
(c) Provisions Relating to Advance Beneficiary Notices; Report on
Prior Determination Process.--
(1) Data collection.--The Secretary shall establish a
process for the collection of information on the instances in
which an advance beneficiary notice (as defined in paragraph
(4)) has been provided and on instances in which a beneficiary
indicates on such a notice that the beneficiary does not intend
to seek to have the item or service that is the subject of the
notice furnished.
(2) Outreach and education.--The Secretary shall establish
a program of outreach and education for beneficiaries and
providers of services and other persons on the appropriate use of
advance beneficiary notices and coverage policies under the medicare
program.
(3) GAO report on use of advance beneficiary notices.--Not
later than 18 months after the date on which section 1869(g) of
the Social Security Act (as added by subsection (a)) takes
effect, the Comptroller General of the United States shall
submit to Congress a report on the use of advance beneficiary
notices under title XVIII of such Act. Such report shall
include information concerning the providers of services and
other persons that have provided such notices and the response
of beneficiaries to such notices.
(4) GAO report on use of prior determination process.--Not
later than 18 months after the date on which section 1869(g) of
the Social Security Act (as added by subsection (a)) takes
effect, the Comptroller General of the United States shall
submit to Congress a report on the use of the prior
determination process under such section. Such report shall
include--
(A) information concerning the types of procedures
for which a prior determination has been sought,
determinations made under the process, and changes in
receipt of services resulting from the application of
such process; and
(B) an evaluation of whether the process was useful
for physicians (and other suppliers) and beneficiaries,
whether it was timely, and whether the amount of
information required was burdensome to physicians and
beneficiaries.
(5) Advance beneficiary notice defined.--In this
subsection, the term ``advance beneficiary notice'' means a
written notice provided under section 1879(a) of the Social
Security Act (42 U.S.C. 1395pp(a)) to an individual entitled to
benefits under part A or B of title XVIII of such Act before
items or services are furnished under such part in cases where
a provider of services or other person that would furnish the
item or service believes that payment will not be made for some
or all of such items or services under such title.
Subtitle E--Miscellaneous Provisions
SEC. 841. POLICY DEVELOPMENT REGARDING EVALUATION AND MANAGEMENT (E &
M) DOCUMENTATION GUIDELINES.
(a) In General.--The Secretary may not implement any new
documentation guidelines for evaluation and management physician
services under the title XVIII of the Social Security Act on or after
the date of the enactment of this Act unless the Secretary--
(1) has developed the guidelines in collaboration with
practicing physicians (including both generalists and
specialists) and provided for an assessment of the proposed
guidelines by the physician community;
(2) has established a plan that contains specific goals,
including a schedule, for improving the use of such guidelines;
(3) has conducted appropriate and representative pilot
projects under subsection (b) to test modifications to the
evaluation and management documentation guidelines;
(4) finds that the objectives described in subsection (c)
will be met in the implementation of such guidelines; and
(5) has established, and is implementing, a program to
educate physicians on the use of such guidelines and that
includes appropriate outreach.
The Secretary shall make changes to the manner in which existing
evaluation and management documentation guidelines are implemented to
reduce paperwork burdens on physicians.
(b) Pilot Projects To Test Evaluation and Management Documentation
Guidelines.--
(1) In general.--The Secretary shall conduct under this
subsection appropriate and representative pilot projects to
test new evaluation and management documentation guidelines
referred to in subsection (a).
(2) Length and consultation.--Each pilot project under this
subsection shall--
(A) be voluntary;
(B) be of sufficient length as determined by the
Secretary to allow for preparatory physician and
medicare contractor education, analysis, and use and
assessment of potential evaluation and management
guidelines; and
(C) be conducted, in development and throughout the
planning and operational stages of the project, in
consultation with practicing physicians (including both
generalists and specialists).
(3) Range of pilot projects.--Of the pilot projects
conducted under this subsection--
(A) at least one shall focus on a peer review
method by physicians (not employed by a medicare
contractor) which evaluates medical record information
for claims submitted by physicians identified as
statistical outliers relative to definitions published
in the Current Procedures Terminology (CPT) code book
of the American Medical Association;
(B) at least one shall focus on an alternative
method to detailed guidelines based on physician
documentation of face to face encounter time with a
patient;
(C) at least one shall be conducted for services
furnished in a rural area and at least one for services
furnished outside such an area; and
(D) at least one shall be conducted in a setting
where physicians bill under physicians' services in
teaching settings and at least one shall be conducted
in a setting other than a teaching setting.
(4) Banning of targeting of pilot project participants.--
Data collected under this subsection shall not be used as the
basis for overpayment demands or post-payment audits. Such
limitation applies only to claims filed as part of the pilot
project and lasts only for the duration of the pilot project
and only as long as the provider is a participant in the pilot project.
(5) Study of impact.--Each pilot project shall examine the
effect of the new evaluation and management documentation
guidelines on--
(A) different types of physician practices,
including those with fewer than 10 full-time-equivalent
employees (including physicians); and
(B) the costs of physician compliance, including
education, implementation, auditing, and monitoring.
(6) Periodic reports.--The Secretary shall submit to
Congress periodic reports on the pilot projects under this
subsection.
(c) Objectives for Evaluation and Management Guidelines.--The
objectives for modified evaluation and management documentation
guidelines developed by the Secretary shall be to--
(1) identify clinically relevant documentation needed to
code accurately and assess coding levels accurately;
(2) decrease the level of non-clinically pertinent and
burdensome documentation time and content in the physician's
medical record;
(3) increase accuracy by reviewers; and
(4) educate both physicians and reviewers.
(d) Study of Simpler, Alternative Systems of Documentation for
Physician Claims.--
(1) Study.--The Secretary shall carry out a study of the
matters described in paragraph (2).
(2) Matters described.--The matters referred to in
paragraph (1) are--
(A) the development of a simpler, alternative
system of requirements for documentation accompanying
claims for evaluation and management physician services
for which payment is made under title XVIII of the
Social Security Act; and
(B) consideration of systems other than current
coding and documentation requirements for payment for
such physician services.
(3) Consultation with practicing physicians.--In designing
and carrying out the study under paragraph (1), the Secretary
shall consult with practicing physicians, including physicians
who are part of group practices and including both generalists
and specialists.
(4) Application of hipaa uniform coding requirements.--In
developing an alternative system under paragraph (2), the
Secretary shall consider requirements of administrative
simplification under part C of title XI of the Social Security
Act.
(5) Report to congress.--(A) Not later than October 1,
2004, the Secretary shall submit to Congress a report on the
results of the study conducted under paragraph (1).
(B) The Medicare Payment Advisory Commission shall conduct
an analysis of the results of the study included in the report
under subparagraph (A) and shall submit a report on such
analysis to Congress.
(e) Study on Appropriate Coding of Certain Extended Office
Visits.--The Secretary shall conduct a study of the appropriateness of
coding in cases of extended office visits in which there is no
diagnosis made. Not later than October 1, 2004, 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. 842. 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), 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, ensure the sharing of appropriate
information from the review for application for premarket
approval conducted by the Food and Drug Administration for
coverage decisions under title XVIII of the Social Security
Act.
(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 and
nothing in this subsection shall be construed to increase
premarket approval application requirements under the Federal
Food, Drug, and Cosmetic Act.
(b) Council for Technology and Innovation.--Section 1868 (42 U.S.C.
1395ee), as amended by section 823(a), is amended by adding at the end
the following new subsection:
``(c) Council for Technology and Innovation.--
``(1) Establishment.--The Secretary shall establish a
Council for Technology and Innovation within the Centers for
Medicare & Medicaid Services (in this section referred to as
`CMS').
``(2) Composition.--The Council shall be composed of senior
CMS staff and clinicians and shall be chaired by the Executive
Coordinator for Technology and Innovation (appointed or
designated under paragraph (4)).
``(3) Duties.--The Council shall coordinate the activities
of coverage, coding, and payment processes under this title
with respect to new technologies and procedures, including new
drug therapies, and shall coordinate the exchange of
information on new technologies between CMS and other entities
that make similar decisions.
``(4) Executive coordinator for technology and
innovation.--The Secretary shall appoint (or designate) a
noncareer appointee (as defined in section 3132(a)(7) of title
5, United States Code) who shall serve as the Executive
Coordinator for Technology and Innovation. Such executive
coordinator shall report to the Administrator of CMS, shall
chair the Council, shall oversee the execution of its duties,
and shall serve as a single point of contact for outside groups
and entities regarding the coverage, coding, and payment
processes under this title.''.
(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, 2003, the
Comptroller General shall submit a report to Congress on the
study under paragraph (1).
(d) 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
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 types of evidence on which such
determinations are based, 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 being
collected;
(D) the manner in which the local coverage
determination process is used to develop data needed
for a national coverage determination, including the
need for collection of such data within a protocol and
informed consent by individuals entitled to benefits
under part A of title XVIII of the Social Security Act,
or enrolled under part B of such title, or both; 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.
(e) 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,
2004 (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. 843. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER MEDICARE
SECONDARY PAYOR (MSP) PROVISIONS.
(a) In General.--The Secretary shall not require a hospital
(including a critical access hospital) to ask questions (or obtain
information) relating to the application of section 1862(b) of the
Social Security Act (relating to medicare secondary payor provisions)
in the case of reference laboratory services described in subsection
(b), if the Secretary does not impose such requirement in the case of
such services furnished by an independent laboratory.
(b) Reference Laboratory Services Described.--Reference laboratory
services described in this subsection are clinical laboratory
diagnostic tests (or the interpretation of such tests, or both)
furnished without a face-to-face encounter between the individual
entitled to benefits under part A or enrolled under part B, or both,
and the hospital involved and in which the hospital submits a claim
only for such test or interpretation.
SEC. 844. EMTALA IMPROVEMENTS.
(a) Payment for EMTALA-Mandated Screening and Stabilization
Services.--
(1) In general.--Section 1862 (42 U.S.C. 1395y) is amended
by inserting after subsection (c) the following new subsection:
``(d) For purposes of subsection (a)(1)(A), in the case of any item
or service that is required to be provided pursuant to section 1867 to
an individual who is entitled to benefits under this title,
determinations as to whether the item or service is reasonable and
necessary shall be made on the basis of the information available to
the treating physician or practitioner (including the patient's
presenting symptoms or complaint) at the time the item or service was
ordered or furnished by the physician or practitioner (and not on the
patient's principal diagnosis). When making such determinations with
respect to such an item or service, the Secretary shall not consider
the frequency with which the item or service was provided to the
patient before or after the time of the admission or visit.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to items and services furnished on or after January
1, 2003.
(b) Notification of Providers When EMTALA Investigation Closed.--
Section 1867(d) (42 U.S.C. 1395dd(d)) is amended by adding at the end
the following new paragraph:
``(4) Notice upon closing an investigation.--The Secretary
shall establish a procedure to notify hospitals and physicians
when an investigation under this section is closed.''.
(c) Prior Review by Peer Review Organizations in EMTALA Cases
Involving Termination of Participation.--
(1) In general.--Section 1867(d)(3) (42 U.S.C.
1395dd(d)(3)) is amended--
(A) in the first sentence, by inserting ``or in
terminating a hospital's participation under this
title'' after ``in imposing sanctions under paragraph
(1)''; and
(B) by adding at the end the following new
sentences: ``Except in the case in which a delay would
jeopardize the health or safety of individuals, the
Secretary shall also request such a review before
making a compliance determination as part of the
process of terminating a hospital's participation under
this title for violations related to the
appropriateness of a medical screening examination,
stabilizing treatment, or an appropriate transfer as
required by this section, and shall provide a period of
5 days for such review. The Secretary shall provide a
copy of the organization's report to the hospital or
physician consistent with confidentiality requirements
imposed on the organization under such part B.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to terminations of participation initiated on or
after the date of the enactment of this Act.
SEC. 845. EMERGENCY MEDICAL TREATMENT AND LABOR ACT (EMTALA) TECHNICAL
ADVISORY GROUP.
(a) Establishment.--The Secretary shall establish a Technical
Advisory Group (in this section referred to as the ``Advisory Group'')
to review issues related to the Emergency Medical Treatment and Labor
Act (EMTALA) and its implementation. In this section, the term
``EMTALA'' refers to the provisions of section 1867 of the Social
Security Act (42 U.S.C. 1395dd).
(b) Membership.--The Advisory Group shall be composed of 19
members, including the Administrator of the Centers for Medicare &
Medicaid Services and the Inspector General of the Department of Health
and Human Services and of which--
(1) 4 shall be representatives of hospitals, including at
least one public hospital, that have experience with the
application of EMTALA and at least 2 of which have not been
cited for EMTALA violations;
(2) 7 shall be practicing physicians drawn from the fields
of emergency medicine, cardiology or cardiothoracic surgery,
orthopedic surgery, neurosurgery, obstetrics-gynecology, and
psychiatry, with not more than one physician from any
particular field;
(3) 2 shall represent patients;
(4) 2 shall be staff involved in EMTALA investigations from
different regional offices of the Centers for Medicare &
Medicaid Services; and
(5) 1 shall be from a State survey office involved in
EMTALA investigations and 1 shall be from a peer review
organization, both of whom shall be from areas other than the
regions represented under paragraph (4).
In selecting members described in paragraphs (1) through (3), the
Secretary shall consider qualified individuals nominated by
organizations representing providers and patients.
(c) General Responsibilities.--The Advisory Group--
(1) shall review EMTALA regulations;
(2) may provide advice and recommendations to the Secretary
with respect to those regulations and their application to
hospitals and physicians;
(3) shall solicit comments and recommendations from
hospitals, physicians, and the public regarding the
implementation of such regulations; and
(4) may disseminate information on the application of such
regulations to hospitals, physicians, and the public.
(d) Administrative Matters.--
(1) Chairperson.--The members of the Advisory Group shall
elect a member to serve as chairperson of the Advisory Group
for the life of the Advisory Group.
(2) Meetings.--The Advisory Group shall first meet at the
direction of the Secretary. The Advisory Group shall then meet
twice per year and at such other times as the Advisory Group
may provide.
(e) Termination.--The Advisory Group shall terminate 30 months
after the date of its first meeting.
(f) Waiver of Administrative Limitation.--The Secretary shall
establish the Advisory Group notwithstanding any limitation that may
apply to the number of advisory committees that may be established
(within the Department of Health and Human Services or otherwise).
SEC. 846. AUTHORIZING USE OF ARRANGEMENTS WITH OTHER HOSPICE PROGRAMS
TO PROVIDE CORE HOSPICE SERVICES IN CERTAIN
CIRCUMSTANCES.
(a) In General.--Section 1861(dd)(5) (42 U.S.C. 1395x(dd)(5)) is
amended by adding at the end the following new subparagraph:
``(D) In extraordinary, exigent, or other non-routine
circumstances, such as unanticipated periods of high patient loads,
staffing shortages due to illness or other events, or temporary travel
of a patient outside a hospice program's service area, a hospice
program may enter into arrangements with another hospice program for
the provision by that other program of services described in paragraph
(2)(A)(ii)(I). The provisions of paragraph (2)(A)(ii)(II) shall apply
with respect to the services provided under such arrangements.''.
(b) Conforming Payment Provision.--Section 1814(i) (42 U.S.C.
1395f(i)), as amended by section 421(b), is amended by adding at the
end the following new paragraph:
``(5) In the case of hospice care provided by a hospice program
under arrangements under section 1861(dd)(5)(D) made by another hospice
program, the hospice program that made the arrangements shall bill and
be paid for the hospice care.''.
(c) Effective Date.--The amendments made by this section shall
apply to hospice care provided on or after the date of the enactment of
this Act.
SEC. 847. APPLICATION OF OSHA BLOODBORNE PATHOGENS STANDARD TO CERTAIN
HOSPITALS.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is amended--
(1) in subsection (a)(1)--
(A) in subparagraph (R), by striking ``and'' at the
end;
(B) in subparagraph (S), by striking the period at
the end and inserting ``, and''; and
(C) by inserting after subparagraph (S) the
following new subparagraph:
``(T) in the case of hospitals that are not otherwise
subject to the Occupational Safety and Health Act of 1970, to
comply with the Bloodborne Pathogens standard under section
1910.1030 of title 29 of the Code of Federal Regulations (or as
subsequently redesignated).''; and
(2) by adding at the end of subsection (b) the following
new paragraph:
``(4)(A) A hospital that fails to comply with the requirement of
subsection (a)(1)(T) (relating to the Bloodborne Pathogens standard) is
subject to a civil money penalty in an amount described in subparagraph
(B), but is not subject to termination of an agreement under this
section.
``(B) The amount referred to in subparagraph (A) is an amount that
is similar to the amount of civil penalties that may be imposed under
section 17 of the Occupational Safety and Health Act of 1970 for a
violation of the Bloodborne Pathogens standard referred to in
subsection (a)(1)(T) by a hospital that is subject to the provisions of
such Act.
``(C) A civil money penalty under this paragraph shall be imposed
and collected in the same manner as civil money penalties under
subsection (a) of section 1128A are imposed and collected under that
section.''.
(b) Effective Date.--The amendments made by this subsection (a)
shall apply to hospitals as of July 1, 2003.
SEC. 848. BIPA-RELATED TECHNICAL AMENDMENTS AND CORRECTIONS.
(a) Technical Amendments Relating to Advisory Committee Under BIPA
Section 522.--(1) Subsection (i) of section 1114 (42 U.S.C. 1314)--
(A) is transferred to section 1862 and added at the end of
such section; and
(B) is redesignated as subsection (j).
(2) Section 1862 (42 U.S.C. 1395y) is amended--
(A) in the last sentence of subsection (a), by striking
``established under section 1114(f)''; and
(B) in subsection (j), as so transferred and redesignated--
(i) by striking ``under subsection (f)''; and
(ii) by striking ``section 1862(a)(1)'' and
inserting ``subsection (a)(1)''.
(b) Terminology Corrections.--(1) Section 1869(c)(3)(I)(ii) (42
U.S.C. 1395ff(c)(3)(I)(ii)), as amended by section 521 of BIPA, is
amended--
(A) in subclause (III), by striking ``policy'' and
inserting ``determination''; and
(B) in subclause (IV), by striking ``medical review
policies'' and inserting ``coverage determinations''.
(2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is amended
by striking ``policy'' and ``policy'' and inserting ``determination''
each place it appears and ``determination'', respectively.
(c) Reference Corrections.--Section 1869(f)(4) (42 U.S.C.
1395ff(f)(4)), as added by section 522 of BIPA, is amended--
(1) in subparagraph (A)(iv), by striking ``subclause (I),
(II), or (III)'' and inserting ``clause (i), (ii), or (iii)'';
(2) in subparagraph (B), by striking ``clause (i)(IV)'' and
``clause (i)(III)'' and inserting ``subparagraph (A)(iv)'' and
``subparagraph (A)(iii)'', respectively; and
(3) in subparagraph (C), by striking ``clause (i)'',
``subclause (IV)'' and ``subparagraph (A)'' and inserting
``subparagraph (A)'', ``clause (iv)'' and ``paragraph (1)(A)'',
respectively each place it appears.
(d) Other Corrections.--Effective as if included in the enactment
of section 521(c) of BIPA, section 1154(e) (42 U.S.C. 1320c-3(e)) is
amended by striking paragraph (5).
(e) Effective Date.--Except as otherwise provided, the amendments
made by this section shall be effective as if included in the enactment
of BIPA.
SEC. 849. CONFORMING AUTHORITY TO WAIVE A PROGRAM EXCLUSION.
The first sentence of section 1128(c)(3)(B) (42 U.S.C. 1320a-
7(c)(3)(B)) is amended to read as follows: ``Subject to subparagraph
(G), in the case of an exclusion under subsection (a), the minimum
period of exclusion shall be not less than five years, except that,
upon the request of the administrator of a Federal health care program
(as defined in section 1128B(f)) who determines that the exclusion
would impose a hardship on individuals entitled to benefits under part
A of title XVIII or enrolled under part B of such title, or both, the
Secretary may waive the exclusion under subsection (a)(1), (a)(3), or
(a)(4) with respect to that program in the case of an individual or
entity that is the sole community physician or sole source of essential
specialized services in a community.''.
SEC. 850. TREATMENT OF CERTAIN DENTAL CLAIMS.
(a) In General.--Section 1862 (42 U.S.C. 1395y) is amended by
adding after subsection (g) the following new subsection:
``(h)(1) Subject to paragraph (2), a group health plan (as defined
in subsection (a)(1)(A)(v)) providing supplemental or secondary
coverage to individuals also entitled to services under this title
shall not require a medicare claims determination under this title for
dental benefits specifically excluded under subsection (a)(12) as a
condition of making a claims determination for such benefits under the
group health plan.
``(2) A group health plan may require a claims determination under
this title in cases involving or appearing to involve inpatient dental
hospital services or dental services expressly covered under this title
pursuant to actions taken by the Secretary.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date that is 60 days after the date of the enactment
of this Act.
SEC. 851. ANNUAL PUBLICATION OF LIST OF NATIONAL COVERAGE
DETERMINATIONS.
The Secretary shall provide, in an appropriate annual publication
available to the public, a list of national coverage determinations
made under title XVIII of the Social Security Act in the previous year
and information on how to get more information with respect to such
determinations.
TITLE IX--MEDICAID PROVISIONS
SEC. 901. NATIONAL BIPARTISAN COMMISSION ON THE FUTURE OF MEDICAID.
(a) Establishment.--There is established a commission to be known
as the National Bipartisan Commission on the Future of Medicaid (in
this section referred to as the ``Commission'').
(b) Duties of the Commission.--The Commission shall--
(1) review and analyze the long-term financial condition of
the medicaid program under title XIX of the Social Security Act
(42 U.S.C. 1396 et seq.);
(2) identify the factors that are causing, and the
consequences of, increases in costs under the medicaid program,
including--
(A) the impact of these cost increases upon State
budgets, funding for other State programs, and levels
of State taxes necessary to fund growing expenditures
under the medicaid program;
(B) the financial obligations of the Federal
government arising from the Federal matching
requirement for expenditures under the medicaid
program; and
(C) the size and scope of the current program and
how the program has evolved over time;
(3) analyze potential policies that will ensure both the
financial integrity of the medicaid program and the provision
of appropriate benefits under such program;
(4) make recommendations for establishing incentives and
structures to promote enhanced efficiencies and ways of
encouraging innovative State policies under the medicaid
program;
(5) make recommendations for establishing the appropriate
balance between benefits covered, payments to providers, State
and Federal contributions and, where appropriate, recipient
cost-sharing obligations;
(6) make recommendations on the impact of promoting
increased utilization of competitive, private enterprise models
to contain program cost growth, through enhanced utilization of
private plans, pharmacy benefit managers, and other methods
currently being used to contain private sector health-care
costs;
(7) make recommendations on the financing of prescription
drug benefits currently covered under medicaid programs,
including analysis of the current Federal manufacturer rebate
program, its impact upon both private market prices as well as
those paid by other government purchasers, recent State efforts
to negotiate additional supplemental manufacturer rebates and
the ability of pharmacy benefit managers to lower drug costs;
(8) review and analyze such other matters relating to the
medicaid program as the Commission deems appropriate; and
(9) analyze the impact of impending demographic changes
upon medicaid benefits, including long term care services, and
make recommendations for how best to appropriately divide State
and Federal responsibilities for funding these benefits.
(c) Membership.--
(1) Number and appointment.--The Commission shall be
composed of 17 members, of whom--
(A) four shall be appointed by the President;
(B) six shall be appointed by the Majority Leader
of the Senate, in consultation with the Minority Leader
of the Senate, of whom not more than 4 shall be of the
same political party;
(C) six shall be appointed by the Speaker of the
House of Representatives, in consultation with the
Minority Leader of the House of Representatives, of
whom not more than 4 shall be of the same political
party; and
(D) one, who shall serve as Chairman of the
Commission, appointed jointly by the President,
Majority Leader of the Senate, and the Speaker of the
House of Representatives.
(2) Deadline for appointment.--Members of the Commission
shall be appointed by not later than December 1, 2002.
(3) Terms of appointment.--The term of any appointment
under paragraph (1) to the Commission shall be for the life of
the Commission.
(4) Meetings.--The Commission shall meet at the call of its
Chairman or a majority of its members.
(5) Quorum.--A quorum shall consist of 8 members of the
Commission, except that 4 members may conduct a hearing under
subsection (e).
(6) Vacancies.--A vacancy on the Commission shall be filled
in the same manner in which the original appointment was made
not later than 30 days after the Commission is given notice of
the vacancy and shall not affect the power of the remaining
members to execute the duties of the Commission.
(7) Compensation.--Members of the Commission shall receive
no additional pay, allowances, or benefits by reason of their
service on the Commission.
(8) Expenses.--Each member of the Commission shall receive
travel expenses and per diem in lieu of subsistence in
accordance with sections 5702 and 5703 of title 5, United
States Code.
(d) Staff and Support Services.--
(1) Executive director.--
(A) Appointment.--The Chairman shall appoint an
executive director of the Commission.
(B) Compensation.--The executive director shall be
paid the rate of basic pay for level V of the Executive
Schedule.
(2) Staff.--With the approval of the Commission, the
executive director may appoint such personnel as the executive
director considers appropriate.
(3) Applicability of civil service laws.--The staff of the
Commission shall be appointed without regard to the provisions
of title 5, United States Code, governing appointments in the
competitive service, and shall be paid without regard to the
provisions of chapter 51 and subchapter III of chapter 53 of
such title (relating to classification and General Schedule pay
rates).
(4) Experts and consultants.--With the approval of the
Commission, the executive director may procure temporary and
intermittent services under section 3109(b) of title 5, United
States Code.
(5) Physical facilities.--The Administrator of the General
Services Administration shall locate suitable office space for
the operation of the Commission. The facilities shall serve as
the headquarters of the Commission and shall include all
necessary equipment and incidentals required for the proper
functioning of the Commission.
(e) Powers of Commission.--
(1) Hearings and other activities.--For the purpose of
carrying out its duties, the Commission may hold such hearings
and undertake such other activities as the Commission
determines to be necessary to carry out its duties.
(2) Studies by gao.--Upon the request of the Commission,
the Comptroller General shall conduct such studies or
investigations as the Commission determines to be necessary to
carry out its duties.
(3) Cost estimates by congressional budget office and
office of the chief actuary of cms.--
(A) The Director of the Congressional Budget Office
or the Chief Actuary of the Centers for Medicare &
Medicaid Services, or both, shall provide to the
Commission, upon the request of the Commission, such
cost estimates as the Commission determines to be
necessary to carry out its duties.
(B) The Commission shall reimburse the Director of
the Congressional Budget Office for expenses relating
to the employment in the office of the Director of such
additional staff as may be necessary for the Director
to comply with requests by the Commission under
subparagraph (A).
(4) Detail of federal employees.--Upon the request of the
Commission, the head of any Federal agency is authorized to
detail, without reimbursement, any of the personnel of such
agency to the Commission to assist the Commission in carrying
out its duties. Any such detail shall not interrupt or
otherwise affect the civil service status or privileges of the
Federal employee.
(5) Technical assistance.--Upon the request of the
Commission, the head of a Federal agency shall provide such
technical assistance to the Commission as the Commission
determines to be necessary to carry out its duties.
(6) Use of mails.--The Commission may use the United States
mails in the same manner and under the same conditions as
Federal agencies and shall, for purposes of the frank, be
considered a commission of Congress as described in section
3215 of title 39, United States Code.
(7) Obtaining information.--The Commission may secure
directly from any Federal agency information necessary to
enable it to carry out its duties, if the information may be
disclosed under section 552 of title 5, United States Code.
Upon request of the Chairman of the Commission, the head of
such agency shall furnish such information to the Commission.
(8) Administrative support services.--Upon the request of
the Commission, the Administrator of General Services shall
provide to the Commission on a reimbursable basis such
administrative support services as the Commission may request.
(9) Printing.--For purposes of costs relating to printing
and binding, including the cost of personnel detailed from the
Government Printing Office, the Commission shall be deemed to
be a committee of the Congress.
(f) Report.--Not later than March 1, 2004, the Commission shall
submit a report to the President and Congress which shall contain a
detailed statement of the recommendations, findings, and conclusions of
the Commission.
(g) Termination.--The Commission shall terminate 30 days after the
date of submission of the report required in subsection (f).
(h) Authorization of Appropriations.--There are authorized to be
appropriated $1,500,000 to carry out this section.
SEC. 902. DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS.
Section 1923(f)(3) (42 U.S.C. 1396r-4(f)(3)) is amended--
(1) in subparagraph (A), by amending subparagraph (A) to
read as follows:
``(A) In general.--The DSH allotment for any
State--
``(i) for fiscal year 2003 is equal to the
DSH allotment for the State for fiscal year
2001 under the table in paragraph (2), without
regard to paragraph (4), increased, subject to
subparagraph (B) and paragraph (5), by the
percentage change in the consumer price index
for all urban consumers (all items; U.S. city
average), for fiscal year 2001; and
``(ii) for each succeeding fiscal year is
equal to the DSH allotment for the State for
the previous fiscal year under this
subparagraph increased, subject to subparagraph
(B) and paragraph (5), by 1.7 percent or, in
the case of fiscal years beginning with the
fiscal year specified in subparagraph (C) for
that State, the percentage change in the
consumer price index for all urban consumers
(all items; U.S. city average), for the
previous fiscal year.''; and
(2) by adding at the end the following new subparagraph:
``(C) Fiscal year specified.--For purposes of
subparagraph (A)(ii), the fiscal year specified in this
subparagraph for a State is the first fiscal year for
which the Secretary estimates that the DSH allotment
for that State will equal (or no longer exceed) the DSH
allotment for that State under the law as in effect
before the date of the enactment of this
subparagraph.''.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsor introductory remarks on measure. (CR E1643)
Referred to the Subcommittee on Health, for a period to be subsequently determined by the Chairman.
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