Amends the Public Health Service Act to give the Secretary the authority to make and guarantee loans from the loan fund to any rural entity for projects for capital improvements.
Amends SSA title XVIII with respect to revising updates and restoring payments under: (1) Medicare part A (Hospital Insurance) relating to inpatient hospital services, skilled nursing facility services, and hospice services; (2) Medicare part B (Supplementary Medical Insurance) relating to physicians' and other services; and (3) both parts A and B relating to home health services, eliminating the 15 percent reduction in PPS payment rates.
Amends SSA title XVIII part C (Medicare+Choice) with respect to: (1) the minimum percentage increase for 2003 and 2004; (2) authority regarding disapproval of unreasonable beneficiary cost-sharing; (3) specialized Medicare+Choice plans for special needs beneficiaries; and (4) extension of new entry bonus.
Revises requirements for Medicare appeals, regulatory procedures, contracting, education and outreach, prepayment review, overpayment recovery, and enforcement.
Amends SSA title XIX (Medicaid) with respect to: (1) Medicaid disproportionate share hospital (DSH) allotments; (2) extension of Medicare cost-sharing for part B premiums for certain additional low-income Medicare beneficiaries; and (3) inpatient drug prices in the best price exemptions for the Medicaid drug rebate program.
Amends SSA title XXI (State Children's Health Insurance) (SCHIP) with respect to SCHIP allotments.
Amends SSA title XI on the process for the development and implementation of Medicaid and SCHIP waivers.
Amends SSA title XX (Block Grants to States for Social Services) to provide for additional temporary grants for State fiscal relief.
Establishes the Safety Net Organizations and Patient Advisory Commission to review health care safety net programs.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 3018 Placed on Calendar Senate (PCS)]
Calendar No. 627
107th CONGRESS
2d Session
S. 3018
To amend title XVIII of the Social Security Act to enhance beneficiary
access to quality health care services under the medicare program, and
for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 1, 2002
Mr. Baucus (for himself, Mr. Grassley, Mr. Bingaman, Mr. Kyl, Mr.
Rockefeller, and Mr. Jeffords) introduced the following bill; which was
read the first time
October 2, 2002
Read the second time and placed on the calendar
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to enhance beneficiary
access to quality health care services under the medicare program, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES
TO BIPA AND SECRETARY; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Beneficiary Access
to Care and Medicare Equity 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) BIPA; Secretary.--In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(d) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; amendments to Social Security Act; references to
BIPA and Secretary; table of contents.
TITLE I--RURAL HEALTH CARE IMPROVEMENTS
Sec. 101. Equalizing urban and rural standardized payment amounts under
the medicare inpatient hospital prospective
payment system.
Sec. 102. Adjustment to wage index.
Sec. 103. Enhanced disproportionate share hospital (DSH) treatment for
rural hospitals and urban hospitals with
fewer than 100 beds.
Sec. 104. One-year extension of hold harmless provisions for small
rural hospitals under medicare prospective
payment system for hospital outpatient
department services.
Sec. 105. Temporary increase in payments for certain services furnished
by small rural hospitals under medicare
prospective payment system for hospital
outpatient department services.
Sec. 106. Two-year treatment of certain clinical diagnostic laboratory
tests furnished by a sole community
hospital.
Sec. 107. Improvements to critical access hospital program.
Sec. 108. Temporary relief for certain non-teaching hospitals.
Sec. 109. Physician fee schedule geographic adjustment factor revision.
Sec. 110. Medicare incentive payment program improvements.
Sec. 111. GAO study of geographic differences in payments for
physicians' services.
Sec. 112. Extension of temporary increase for home health services
furnished in a rural area.
Sec. 113. Ten percent increase in payment for hospice care furnished in
a frontier area.
Sec. 114. Exclusion of certain rural health clinic and Federally
qualified health center services from the
medicare PPS for skilled nursing
facilities.
Sec. 115. Capital infrastructure revolving loan program.
TITLE II--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
Sec. 201. Revision of acute care hospital payment updates.
Sec. 202. More frequent updates in weights used in hospital market
basket.
Sec. 203. Three-year increase in level of adjustment for indirect costs
of medical education (IME).
Sec. 204. Revision of Federal rate for hospitals in Puerto Rico.
Sec. 205. Increase in graduate medical education limitations for
certain geriatric residents.
Sec. 206. Increase for hospitals with disproportionate indigent care
revenues.
Subtitle B--Skilled Nursing Facility Services
Sec. 211. Payment for covered skilled nursing facility services.
Sec. 212. Improving the availability of nursing facility staffing
information.
Subtitle C--Hospice
Sec. 221. Coverage of hospice consultation services.
Sec. 222. Authorizing use of arrangements with other hospice programs
to provide core hospice services in certain
circumstances.
TITLE III--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
Sec. 301. Revision of updates for physicians' services.
Sec. 302. Three-year extension of treatment of certain physician
pathology services under medicare.
Subtitle B--Other Services
Sec. 311. Competitive acquisition of certain items and services.
Sec. 312. Two-year extension of moratorium on therapy caps; provisions
relating to reports.
Sec. 313. Acceleration of reduction of beneficiary copayment for
hospital outpatient department services.
Sec. 314. Renal dialysis services.
Sec. 315. Improved payment for certain mammography services.
Sec. 316. Waiver of part B late enrollment penalty for certain military
retirees; special enrollment period.
Sec. 317. Coverage of cholesterol and blood lipid screening.
Sec. 318. Temporary increase for ground ambulance services.
Sec. 319. Ensuring appropriate coverage of air ambulance services under
ambulance fee schedule.
Sec. 320. Adjustments to local fee schedules for clinical laboratory
tests for improvement in cervical cancer
detection.
Sec. 321. Coverage of immunosuppressive drugs for all medicare
beneficiaries.
Sec. 322. Medicare complex clinical care management payment
demonstration.
Sec. 323. Study and report on new technology payments under the
prospective payment system for hospital
outpatient department services.
TITLE IV--PROVISION RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 401. Elimination of 15 percent reduction in payment rates under
the prospective payment system.
Sec. 402. Update in home health services.
Subtitle B--Other Provisions
Sec. 411. Information technology demonstration project.
Sec. 412. Modifications to Medicare Payment Advisory Commission
(MedPAC).
Sec. 413. Retaining diversity of local coverage determinations.
TITLE V--MEDICARE+CHOICE AND RELATED PROVISIONS
Sec. 501. Revision in minimum percentage increase for 2003 and 2004.
Sec. 502. Clarification of authority regarding disapproval of
unreasonable beneficiary cost-sharing.
Sec. 503. Extension of reasonable cost contracts.
Sec. 504. Extension of social health maintenance organization (SHMO)
demonstration project.
Sec. 505. Specialized Medicare+Choice plans for special needs
beneficiaries.
Sec. 506. Extension of new entry bonus.
Sec. 507. Payment by PACE providers for medicare and medicaid services
furnished by noncontract providers.
Sec. 508. Reference to implementation of certain Medicare+Choice
program provisions in 2003.
TITLE VI--MEDICARE APPEALS, REGULATORY, AND CONTRACTING IMPROVEMENTS
Subtitle A--Regulatory Reform
Sec. 601. Rules for the publication of a final regulation based on the
previous publication of an interim final
regulation.
Sec. 602. Compliance with changes in regulations and policies.
Sec. 603. Report on legal and regulatory inconsistencies.
Subtitle B--Appeals Process Reform
Sec. 611. Submission of plan for transfer of responsibility for
medicare appeals.
Sec. 612. Expedited access to judicial review.
Sec. 613. Expedited review of certain provider agreement
determinations.
Sec. 614. Revisions to medicare appeals process.
Sec. 615. Hearing rights related to decisions by the Secretary to deny
or not renew a medicare enrollment
agreement; consultation before changing
provider enrollment forms.
Sec. 616. Appeals by providers when there is no other party available.
Sec. 617. Provider access to review of local coverage determinations.
Subtitle C--Contracting Reform
Sec. 621. Increased flexibility in medicare administration.
Subtitle D--Education and Outreach Improvements
Sec. 631. Provider education and technical assistance.
Sec. 632. Access to and prompt responses from medicare contractors.
Sec. 633. Reliance on guidance.
Sec. 634. Medicare provider ombudsman; medicare beneficiary ombudsman.
Sec. 635. Beneficiary outreach demonstration program.
Subtitle E--Review, Recovery, and Enforcement Reform
Sec. 641. Prepayment review.
Sec. 642. Recovery of overpayments.
Sec. 643. Process for correction of minor errors and omissions on
claims without pursuing appeals process.
Sec. 644. Authority to waive a program exclusion.
TITLE VII--MEDICAID/SCHIP
Sec. 701. Medicaid DSH allotments.
Sec. 702. Temporary increase in floor for treatment as an extremely low
DSH State.
Sec. 703. Extension of medicare cost-sharing for part B premium for
certain additional low-income medicare
beneficiaries.
Sec. 704. Clarification of inclusion of inpatient drug prices charged
to certain public hospitals in the best
price exemptions for the medicaid drug
rebate program.
Sec. 705. SCHIP allotments.
Sec. 706. Improvement of the process for the development and
implementation of medicaid and SCHIP
waivers.
Sec. 707. Temporary State fiscal relief.
TITLE VIII--OTHER PROVISIONS
Sec. 801. Increase in appropriations for special diabetes programs for
type I diabetes and Indians.
Sec. 802. Disregard of certain payments under the Emergency
Supplemental Act, 2000 in the
administration of Federal programs and
federally assisted programs.
Sec. 803. Safety Net Organizations and Patient Advisory Commission.
Sec. 804. Publication on final written guidance concerning prohibitions
against discrimination by national origin
with respect to health care services.
Sec. 805. Federal reimbursement of emergency health services furnished
to undocumented aliens.
Sec. 806. Extension of medicare municipal health services demonstration
projects.
Sec. 807. Delayed implementation of certain provisions.
TITLE I--RURAL HEALTH CARE IMPROVEMENTS
SEC. 101. EQUALIZING URBAN AND RURAL STANDARDIZED PAYMENT AMOUNTS UNDER
THE MEDICARE INPATIENT HOSPITAL PROSPECTIVE PAYMENT
SYSTEM.
(a) In General.--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 operating standardized amount for hospitals located other
than in a large urban area shall be increased by \1/2\ of the
difference between the operating 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 operating
standardized amount for hospitals located in any area within
the United States and within each region equal to the operating
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) for the fiscal year involved.''.
(b) Conforming Amendments.--
(1) Computing drg-specific rates.--Section 1886(d)(3)(D)
(42 U.S.C. 1395ww(d)(3)(D)) is amended--
(A) in the heading, by striking ``in different
areas'';
(B) in the matter preceding clause (i), by striking
``each of which is'';
(C) in clause (i)--
(i) in the matter preceding subclause (I),
by inserting ``for fiscal years before fiscal
year 2004,'' before ``for hospitals''; and
(ii) in subclause (II), by striking ``and''
after the semicolon at the end;
(D) in clause (ii)--
(i) in the matter preceding subclause (I),
by inserting ``for fiscal years before fiscal
year 2004,'' before ``for hospitals''; and
(ii) in subclause (II), by striking the
period at the end and inserting ``; and''; and
(E) by adding at the end the following new clause:
``(iii) for a fiscal year beginning after fiscal
year 2003, for hospitals located in all areas, to the
product of--
``(I) the applicable operating standardized
amount (computed under subparagraph (A)),
reduced under subparagraph (B), and adjusted or
reduced under subparagraph (C) for the fiscal
year; and
``(II) the weighting factor (determined
under paragraph (4)(B)) for that diagnosis-
related group.''.
(2) Technical conforming sunset.--Section 1886(d)(3) (42
U.S.C. 1395ww(d)(3)) is amended--
(A) in the matter preceding subparagraph (A), by
inserting ``, for fiscal years before fiscal year
1997,'' before ``a regional adjusted DRG prospective
payment rate''; and
(B) in subparagraph (D), in the matter preceding
clause (i), by inserting ``, for fiscal years before
fiscal year 1997,'' before ``a regional DRG prospective
payment rate for each region,''.
SEC. 102. ADJUSTMENT TO WAGE INDEX.
(a) In General.--Section 1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E))
is amended--
(1) by striking ``wage levels.--The Secretary'' and
inserting ``wage levels.--
``(i) In general.--Except as provided in clause (ii), the
Secretary''; and
(2) by adding at the end the following new clause:
``(ii) Alternative proportion to be adjusted in fiscal
years 2003, 2004, and 2005.--
``(I) In general.--Except as provided in subclause
(II), for discharges occurring on or after October 1,
2002, and before October 1, 2005, the Secretary shall
substitute `68 percent' for the proportion described in
the first sentence of clause (i).
``(II) Hold harmless for certain hospitals.--For
discharges occurring on or after October 1, 2002, and
before October 1, 2005, if the application of subclause
(I) would result in lower payments to a hospital than
would otherwise be made, then this subparagraph shall
be applied as if this clause had not been enacted.
(b) Waiving Budget Neutrality.--Section 1886(d)(3)(E) (42 U.S.C.
1395ww(d)(3)(E)), as amended by subsection (a), is amended by adding at
the end of clause (i) the following new sentence: ``The Secretary shall
apply the previous sentence for any period as if the amendments made by
section 102(a) of the Beneficiary Access to Care and Medicare Equity
Act of 2002 had not been enacted.''.
(c) MedPAC Study and Report.--
(1) Study.--The Medicare Payment Advisory Commission
shall--
(A) conduct a study of the methodology used to
determine the proportion of hospitals' costs
attributable to wages and wage-related costs (as
determined under section 1886(d)(3)(E) of the Social
Security Act (42 U.S.C. 1395ww(d)(3)(E)), as amended by
subsections (a) and (b)), which is used to adjust
payments under such section, in order to determine
whether such methodology is appropriate; and
(B) if the Commission determines that such
methodology is not appropriate, develop recommendations
on the establishment of a methodology to be used by the
Secretary to determine the appropriate portion of
hospitals' costs which are attributable to wages and
wage-related for purposes of adjusting payments under
such section.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Commission shall submit to Congress
a report on the study conducted under paragraph (1) together
with any recommendation developed under paragraph (1)(B).
SEC. 103. 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 90 percent, for each subsequent year (through 2011)
is the old blend proportion under this subclause for the previous year
minus 10 percentage points, and for each year beginning with 2012 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. 104. ONE-YEAR EXTENSION OF HOLD HARMLESS PROVISIONS FOR SMALL
RURAL HOSPITALS UNDER MEDICARE PROSPECTIVE PAYMENT SYSTEM
FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES.
Section 1833(t)(7)(D)(i) (42 U.S.C. 1395l(t)(7)(D)(i)) is amended
by striking ``2004'' and inserting ``2005''.
SEC. 105. TEMPORARY INCREASE IN PAYMENTS FOR CERTAIN SERVICES FURNISHED
BY SMALL RURAL HOSPITALS UNDER MEDICARE PROSPECTIVE
PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT
SERVICES.
(a) Increase.--
(1) In general.--In the case of an applicable covered OPD
service (as defined in paragraph (2)) that is furnished by a
hospital described in paragraph (7)(D)(i) of section 1833(t) of
the Social Security Act (42 U.S.C. 1395l(t)) on or after
January 1, 2003, and before January 1, 2006, the Secretary of
Health and Human Services shall increase the medicare OPD fee
schedule amount (as determined under paragraph (4)(A) of such
section) that is applicable for such service in that year
(determined without regard to any increase under this section
in a previous year) by 5 percent.
(2) Applicable covered opd services defined.--For purposes
of this section, the term ``applicable covered OPD service''
means a covered clinic or emergency room visit that is
classified within the groups of covered OPD services (as
defined in paragraph (1)(B) of section 1833(t) of the Social
Security Act (42 U.S.C. 1395l(t))) established under paragraph
(2)(B) of such section.
(b) No Effect on Copayment Amount.--The Secretary of Health and
Human Services shall compute the copayment amount for applicable
covered OPD services under section 1833(t)(8)(A) of the Social Security
Act (42 U.S.C. 1395l(t)(8)(A)) as if this section had not been enacted.
(c) No Effect on Increase Under Hold Harmless or Outlier
Provisions.--The Secretary of Health and Human Services shall apply the
temporary hold harmless provision under paragraph (7)(D)(i) of section
1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) and the outlier
provision under paragraph (5) of such section as if this section had
not been enacted.
(d) Waiving Budget Neutrality and No Revision or Adjustments.--The
Secretary of Health and Human Services shall not make any revision or
adjustment under subparagraph (A), (B), or (C) of section 1833(t)(9) of
the Social Security Act (42 U.S.C. 1395l(t)(9)) because of the
application of subsection (a)(1).
(e) No Effect on Payments After Increase Period Ends.--The
Secretary of Health and Human Services shall not take into account any
payment increase provided under subsection (a)(1) in determining
payments for covered OPD services (as defined in paragraph (1)(B) of
section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t))) under
such section that are furnished after January 1, 2006.
(f) Technical Amendment.--Section 1833(t)(2)(B) (42 U.S.C.
1395l(t)(2)(B)) is amended by inserting ``(and periodically revise such
groups pursuant to paragraph (9)(A))'' after ``establish groups''.
SEC. 106. TWO-YEAR TREATMENT OF CERTAIN CLINICAL DIAGNOSTIC LABORATORY
TESTS FURNISHED BY A SOLE COMMUNITY HOSPITAL.
Notwithstanding subsections (a)(1)(D) and (h) of section 1833 of
the Social Security Act (42 U.S.C. 1395l) and section 1834(d)(1) of
such Act (42 U.S.C. 1395m(d)(1)), in the case of a clinical diagnostic
laboratory test covered under part B of title XVIII of such Act that is
furnished in 2004 or 2005 by a sole community hospital (as defined in
section 1886(d)(5)(D)(iii) of such Act (42 U.S.C.
1395ww(d)(5)(D)(iii))) as part of services provided to patients of the
hospital, the following rules shall apply:
(1) Payment based on reasonable costs.--The amount of
payment for such test shall be 100 percent of the reasonable
costs of the hospital in furnishing such test.
(2) No beneficiary cost-sharing.--No coinsurance,
deductible, copayment, or other cost-sharing otherwise
applicable under such part B shall apply with respect to such
test.
SEC. 107. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.
(a) Authorization 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
critical access 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) Coverage of Costs for Certain Emergency Room On-Call
Providers.--Section 1834(g)(5) (42 U.S.C. 1395m(g)(5)) is amended--
(1) in the heading--
(A) by inserting ``certain'' before ``emergency'';
and
(B) by striking ``physicians'' and inserting
``providers'';
(2) by striking ``emergency room physicians who are on-call
(as defined by the Secretary)'' and inserting ``physicians,
physician assistants, nurse practitioners, and clinical nurse
specialists who are on-call (as defined by the Secretary) to
provide emergency services''; and
(3) by striking ``physicians' services'' and inserting
``services covered under this title''.
(d) 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).
(e) Increased Flexibility for States With Respect to Certain
Frontier Critical Access Hospitals.--Section 1820(c) (42 U.S.C. 1395i-
4(c)) is amended--
(1) in paragraph (2)(B)(ii), by striking ``makes'' and
inserting ``subject to paragraph (3), makes''; and
(2) by adding at the end the following new paragraph:
``(3) State authority to temporarily waive emergency
coverage requirement.--
``(A) In general.--A State may establish procedures
under which the requirement under paragraph (2)(B)(ii)
is temporarily waived with respect to a critical access
hospital designated under paragraph (2) if such
hospital--
``(i) complies with alternative emergency
care procedures established by the State;
``(ii) is located in a frontier area (as
defined in section 1814(i)(1)(D)); and
``(iii) has less than 500 emergency room
visits (determined with respect to all patients
and not just individuals receiving benefits
under this title) per year (as determined by
the State).''.
(f) Permitting Hospitals to Allocate Swing Beds and Acute Care
Inpatient Beds Subject to A Total Limit of 25 Beds.--
(1) In general.--Section 1820(c)(2)(B)(iii) (42 U.S.C.
1395i-4(c)(2)(B)(iii)) is amended to read as follows:
``(iii) provides not more than a total of
25 extended care service beds (pursuant to an
agreement under subsection (f)) or acute care
inpatient beds (meeting such standards as the
Secretary may establish) for providing
inpatient care for a period that does not
exceed, as determined on an annual, average
basis, 96 hours per patient;''.
(2) Conforming amendment.--Section 1820(f) (42 U.S.C.
1395i-4(f)) is amended by striking ``and the number of beds
used at any time for acute care inpatient services does not
exceed 15 beds''.
(g) Provisions Related to Certain Rural Grants.--
(1) Small rural hospital improvement program.--Section
1820(g) (42 U.S.C. 1395i-4(g)) is amended--
(A) by redesignating paragraph (3)(F) as paragraph
(5) and redesignating and indenting appropriately; and
(B) by inserting after paragraph (3) the following
new paragraph:
``(4) Small rural hospital improvement program.--
``(A) Grants to hospitals.--The Secretary may award
grants to hospitals that have submitted applications in
accordance with subparagraph (B) to assist eligible
small rural hospitals (as defined in paragraph (3)(B))
in meeting the costs of reducing medical errors,
increasing patient safety, protecting patient privacy,
and improving hospital quality and performance.
``(B) Application.--A hospital seeking a grant
under this paragraph shall submit an application to the
Secretary on or before such date and in such form and
manner as the Secretary specifies.
``(C) Amount of grant.--A grant to a hospital under
this paragraph may not exceed $50,000.
``(D) Use of funds.--A hospital receiving a grant
under this paragraph may use the funds for the purchase
of computer software and hardware, the education and
training of hospital staff, and obtaining technical
assistance.''.
(2) Five-year authorization for appropriations.--Section
1820(j) (42 U.S.C. 1395i-4(j)) is amended to read as follows:
``(j) Authorization of Appropriations.--
``(1) HI trust fund.--There are authorized to be
appropriated from the Federal Hospital Insurance Trust Fund for
making grants to all States under--
``(A) subsection (g), $25,000,000 in each of the
fiscal years 1998 through 2002; and
``(B) paragraphs (1) and (2) of subsection (g),
$40,000,000 in each of the fiscal years 2003 through
2007.
``(2) General revenues.--There are authorized to be
appropriated from amounts in the treasury not otherwise
appropriated for making grants to all States under subsection
(g)(4), $25,000,000 in each of the fiscal years 2003 through
2007.''.
(3) Requirement that states awarded grants consult with the
state hospital association and rural hospitals on the most
appropriate ways to use such grants.--Section 1820(g) (42
U.S.C. 1395i-4(g)), as amended by paragraph (1), is amended by
adding at the end the following new paragraph:
``(6) Required consultation for states awarded grants.--A
State awarded a grant under paragraph (1) or (2) shall consult
with the hospital association of such State and rural hospitals
located in such State on the most appropriate ways to use the
funds under such grant.''.
(h) Coordinated Survey Demonstration Program.--
(1) Establishment.--
(A) In general.--The Secretary shall establish a
demonstration program to test and evaluate the
effectiveness of permitting all the entities within a
health care organization to be subject to a coordinated
survey for purposes of determining whether such
entities are in compliance with the requirements for
participation under the medicare and medicaid programs
with respect to all items and services provided by
those entities under such programs rather than being
subject to multiple surveys for different types of
items and services provided by such entities under such
programs.
(B) Development of guidelines for coordinated
survey.--
(i) Submission of proposals by states
participating in the demonstration program.--
Under the demonstration program under this
subsection a State participating in the
demonstration (as determined by the Secretary
pursuant to subparagraph (C)) shall submit to
the Secretary a proposal for guidelines with
respect to the coordinated survey described in
subparagraph (A) that will be applicable to
health care organizations located in the State.
Such proposal shall be submitted to the
Secretary at such time and in such manner as
the Secretary determines appropriate.
(ii) Review and approval.--
(I) In general.--Under the
demonstration program under this
subsection the Secretary shall
establish procedures for reviewing and
approving proposals submitted under
clause (i).
(II) Consultation.--The Secretary
shall consult with State hospital
associations in establishing the
procedures under subclause (I).
(C) Sites.--The Secretary shall conduct the
demonstration program under this subsection in up to 5
States and shall ensure that all health care
organizations located in those States are permitted at
the option of the organization to participate in the
program.
(D) Duration.--The demonstration program under this
subsection shall be conducted for not more than 5
years.
(2) Waiver authority.--The Secretary may waive such
requirements of titles XI, XVIII, and XIX of the Social
Security Act (42 U.S.C. 1301 et seq.; 1395 et seq.; 1396 et
seq.) as may be necessary for the purpose of carrying out the
demonstration program under this subsection.
(3) Report.--Not later than 6 months after the completion
of the demonstration program under this subsection, the
Secretary shall submit to Congress a report on such program,
together with recommendations regarding whether to implement
coordinated survey guidelines for health care organizations on
a permanent basis.
(4) Definitions.--In this subsection:
(A) Critical access hospital.--The term ``critical
access hospital'' has the meaning given such term in
section 1861(mm)(1) of the Social Security Act (42
U.S.C. 1395x(mm)(1)).
(B) Health care organization.--The term ``health
care organization'' means a governing entity that
includes--
(i) a critical access hospital; and
(ii) at least 1 other provider or supplier
that is certified to provide items or services
under the medicare or medicaid program.
(C) Medicaid program.--The term ``medicaid
program'' means the health benefits program under title
XIX of the Social Security Act (42 U.S.C. 1396 et
seq.).
(D) Medicare program.--The term ``medicare
program'' means the health benefits program under title
XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.).
(i) Effective Dates.--
(1) Authorization 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 take effect on January 1, 2003.
(3) Emergency room on-call provider costs.--The amendments
made by subsection (c) shall apply to costs incurred on or
after the date of the enactment of this Act.
(4) Required consultation for certain rural grants.--The
amendment made by subsection (g)(3) shall take effect on the
date of the enactment of this Act and shall apply to grants
awarded on or after such date and to grants awarded prior to
such date to the extent that funds under such grants have not
been obligated as of such date.
SEC. 108. TEMPORARY 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)).
SEC. 109. PHYSICIAN FEE SCHEDULE GEOGRAPHIC ADJUSTMENT FACTOR REVISION.
Section 1848(e)(1) (42 U.S.C. 1395w-4(e)(1)) is amended--
(1) in subparagraph (A), by striking ``(B) and (C)'' and
inserting ``(B), (C), and (D)'' in the matter preceding clause
(i);
(2) by redesignating subparagraph (D) as subparagraph (E);
and
(3) by inserting after subparagraph (C) the following new
subparagraph:
``(D) Floor for work geographic indices.--
``(i) In general.--Notwithstanding the work
geographic index otherwise calculated under
subparagraph (A)(iii) (after the application of
the second sentence of subparagraph (C)), no
such index applied for payment under this
section shall be less than 1.000 for services
furnished during 2003, 2004, and 2005.
``(ii) Exemption from limitation on annual
adjustments.--The increase in expenditures
attributable to clause (i) shall not be taken
into account in applying subsection
(c)(2)(B)(ii)(II).''.
SEC. 110. MEDICARE INCENTIVE PAYMENT PROGRAM IMPROVEMENTS.
(a) Procedures for Secretary, and Not Physicians, To Determine When
Bonus Payments Under Medicare Incentive Payment Program Should Be
Made.--Section 1833(m) (42 U.S.C. 1395l(m)) is amended--
(1) by inserting ``(1)'' after ``(m)''; and
(2) by adding at the end the following new paragraph:
``(2) The Secretary shall establish procedures under which the
Secretary, and not the physician furnishing the service, is responsible
for determining when a payment is required to be made under paragraph
(1).''.
(b) Educational Program Regarding the Medicare Incentive Payment
Program.--The Secretary shall establish and implement an ongoing
educational program to provide education to physicians under the
medicare program on the medicare incentive payment program under
section 1833(m) of the Social Security Act (42 U.S.C. 1395l(m)).
(c) Ongoing Study and Annual Report on the Medicare Incentive
Payment Program.--
(1) Ongoing study.--The Secretary shall conduct an ongoing
study on the medicare incentive payment program under section
1833(m) of the Social Security Act (42 U.S.C. 1395l(m)). Such
study shall focus on whether such program increases the access
of medicare beneficiaries who reside in an area that is
designated (under section 332(a)(1)(A) of the Public Health
Service Act (42 U.S.C. 254e(a)(1)(A))) as a health professional
shortage area to physicians' services under the medicare
program.
(2) Annual reports.--Not later than 1 year after the date
of the enactment of this Act, and annually thereafter, the
Secretary shall submit to Congress a report on the study
conducted under paragraph (1), together with recommendations
for such legislation and administrative action as the Secretary
considers appropriate.
SEC. 111. 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;
(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;
(4) an evaluation of whether there is a sound economic
basis for the implementation of the adjustment under section
1848(e)(1)(D) of the Social Security Act, as added by section
109, in those areas in which the adjustment applies;
(5) an evaluation of the effect of such adjustment on
physician location and retention in areas affected by such
adjustment, taking into account--
(A) differences in recruitment costs and retention
rates for physicians, including specialists, between
large urban areas and other areas; and
(B) the mobility of physicians, including
specialists, over the last decade; and
(6) an evaluation of appropriateness of extending such
adjustment or making such adjustment permanent.
(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. 112. EXTENSION OF TEMPORARY INCREASE FOR HOME HEALTH SERVICES
FURNISHED IN A RURAL AREA.
(a) In General.--Section 508(a) of 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. 113. TEN PERCENT INCREASE IN PAYMENT FOR HOSPICE CARE FURNISHED IN
A FRONTIER AREA.
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 an
area with fewer than 6 residents per square mile (based on the latest
population data published by the Bureau of the Census) and that does
not include a metropolitan statistical area.''.
SEC. 114. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC AND FEDERALLY
QUALIFIED HEALTH CENTER SERVICES FROM THE MEDICARE PPS
FOR SKILLED NURSING FACILITIES.
(a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)) is amended--
(1) in paragraph (2)(A)(i)(II), by striking ``clauses (ii)
and (iii)'' and inserting ``clauses (ii), (iii), and (iv)'';
and
(2) by adding at the end of paragraph (2)(A) the following
new clause:
``(iv) Exclusion of certain rural health
clinic and federally qualified health center
services.--Services described in this clause
are--
``(I) rural health clinic services
(as defined in paragraph (1) of section
1861(aa)); and
``(II) Federally qualified health
center services (as defined in
paragraph (3) of such section);
that would be described in clause (ii) if such
services were furnished by a physician or
practitioner not affiliated with a rural health
clinic or a Federally qualified health
center.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to services furnished on or after July 1, 2003.
SEC. 115. CAPITAL INFRASTRUCTURE REVOLVING LOAN PROGRAM.
(a) In General.--Part A of title XVI of the Public Health Service
Act (42 U.S.C. 300q et seq.) is amended by adding at the end the
following new section:
``capital infrastructure revolving loan program
``Sec. 1603. (a) Authority To Make and Guarantee Loans.--
``(1) Authority to make loans.--The Secretary may make
loans from the fund established under section 1602(d) to any
rural entity for projects for capital improvements, including--
``(A) the acquisition of land necessary for the
capital improvements;
``(B) the renovation or modernization of any
building;
``(C) the acquisition or repair of fixed or major
movable equipment; and
``(D) such other project expenses as the Secretary
determines appropriate.
``(2) Authority to guarantee loans.--
``(A) In general.--The Secretary may guarantee the
payment of principal and interest for loans made to
rural entities for projects for any capital improvement
described in paragraph (1) to any non-Federal lender.
``(B) Interest subsidies.--In the case of a
guarantee of any loan made to a rural entity under
subparagraph (A), the Secretary may pay to the holder
of such loan and for and on behalf of the project for
which the loan was made, amounts sufficient to reduce
by not more than 3 percent of the net effective
interest rate otherwise payable on such loan.
``(b) Amount of Loan.--The principal amount of a loan directly made
or guaranteed under subsection (a) for a project for capital
improvement may not exceed $5,000,000.
``(c) Funding Limitations.--
``(1) Government credit subsidy exposure.--The total of the
Government credit subsidy exposure under the Credit Reform Act
of 1990 scoring protocol with respect to the loans outstanding
at any time with respect to which guarantees have been issued,
or which have been directly made, under subsection (a) may not
exceed $50,000,000 per year.
``(2) Total amounts.--Subject to paragraph (1), the total
of the principal amount of all loans directly made or
guaranteed under subsection (a) may not exceed $250,000,000 per
year.
``(d) Capital Assessment and Planning Grants.--
``(1) Nonrepayable grants.--Subject to paragraph (2), the
Secretary may make a grant to a rural entity, in an amount not
to exceed $50,000, for purposes of capital assessment and
business planning.
``(2) Limitation.--The cumulative total of grants awarded
under this subsection may not exceed $2,500,000 per year.
``(e) Termination of Authority.--The Secretary may not directly
make or guarantee any loan under subsection (a) or make a grant under
subsection (d) after September 30, 2006.''.
(b) Rural Entity Defined.--Section 1624 of the Public Health
Service Act (42 U.S.C. 300s-3) is amended by adding at the end the
following new paragraph:
``(15)(A) The term `rural entity' includes--
``(i) a rural health clinic, as defined in section
1861(aa)(2) of the Social Security Act;
``(ii) any medical facility with at least 1, but
less than 50 beds that is located in--
``(I) a county that is not part of a
metropolitan statistical area; or
``(II) a rural census tract of a
metropolitan statistical area (as determined
under the most recent modification of the
Goldsmith Modification, originally published in
the Federal Register on February 27, 1992 (57
Fed. Reg. 6725));
``(iii) a hospital that is classified as a rural,
regional, or national referral center under section
1886(d)(5)(C) of the Social Security Act; and
``(iv) a hospital that is a sole community hospital
(as defined in section 1886(d)(5)(D)(iii) of the Social
Security Act).
``(B) For purposes of subparagraph (A), the fact that a
clinic, facility, or hospital has been geographically
reclassified under the medicare program under title XVIII of
the Social Security Act shall not preclude a hospital from
being considered a rural entity under clause (i) or (ii) of
subparagraph (A).''.
(c) Conforming Amendments.--Section 1602 of the Public Health
Service Act (42 U.S.C. 300q-2) is amended--
(1) in subsection (b)(2)(D), by inserting ``or
1603(a)(2)(B)'' after ``1601(a)(2)(B)''; and
(2) in subsection (d)--
(A) in paragraph (1)(C), by striking ``section
1601(a)(2)(B)'' and inserting ``sections 1601(a)(2)(B)
and 1603(a)(2)(B)''; and
(B) in paragraph (2)(A), by inserting ``or
1603(a)(2)(B)'' after ``1601(a)(2)(B)''.
TITLE II--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 201. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATES.
(a) In General.--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''.
(b) GAO Study and Report on Appropriateness and Need to Rebase
Under the Prospective Payment System for Inpatient Hospital Services.--
(1) Study.--The Comptroller General of the United States,
using the most current data available, shall conduct a study to
determine--
(A) the appropriate level and distribution of
payments under the prospective payment system under
section 1886 of the Social Security Act (42 U.S.C.
1395ww) for inpatient hospital services furnished by
subsection (d) hospitals (as defined subsection
(d)(1)(B) of such section); and
(B) whether there is a need to adjust such payments
under such system to reflect legitimate differences in
costs across different geographic areas and different
hospitals.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report on the study conducted
under paragraph (1) together with such recommendations for
legislative and administrative action as the Comptroller
General determines appropriate.
SEC. 202. MORE FREQUENT UPDATES 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. 203. THREE-YEAR INCREASE IN LEVEL OF ADJUSTMENT FOR INDIRECT COSTS
OF MEDICAL EDUCATION (IME).
(a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C.
1395ww(d)(5)(B)(ii)) is amended--
(1) in subclause (VI)--
(A) by striking ``fiscal year 2002'' and inserting
``fiscal years 2002, 2003, and 2004''; and
(B) by striking ``and'' at the end;
(2) by redesignating subclause (VII) as subclause (VIII);
(3) in subclause (VIII) as so redesignated, by striking
``2002'' and inserting ``2005''; and
(4) by inserting after subclause (VI) the following new
subclause:
``(VII) during fiscal year 2005, `c' is equal to
1.47; and''.
(b) Conforming Amendment Relating to Determination of Standardized
Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is
amended--
(1) by striking ``1999 or'' and inserting ``1999,''; and
(2) by inserting ``, or of section 203(a) of the
Beneficiary Access to Care and Medicare Equity Act of 2002''
after ``2000''.
SEC. 204. REVISION 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,
2002, the applicable Puerto Rico percentage is 50 percent and
the applicable Federal percentage is 50 percent; and
``(iii) on or after October 1, 2002, the applicable Puerto
Rico percentage is 25 percent and the applicable Federal
percentage is 75 percent.''.
SEC. 205. INCREASE IN GRADUATE MEDICAL EDUCATION LIMITATIONS FOR
CERTAIN GERIATRIC RESIDENTS.
(a) Direct Graduate Medical Education.--Section 1886(h)(4)(F) (42
U.S.C. 1395ww(h)(4)(F)) is amended by adding at the end the following
new clauses:
``(iii) Increase in limitation for
geriatric fellowships.--For cost reporting
periods beginning on or after July 1, 2003, in
applying the limitations regarding the total
number of full-time equivalent residents in the
field of allopathic or osteopathic medicine
under clause (i) for a hospital, the Secretary
shall not take into account a maximum of the
applicable number of residents (as defined in
clause (iv)) enrolled in a fellowship in
geriatric medicine within an approved medical
residency training program to the extent that
the hospital increases the number of geriatric
residents above the number of such residents
for the hospital's most recent cost reporting
period ending before July 1, 2003.
``(iv) Applicable number of residents.--For
purposes of clause (i), the term `applicable
number of residents' means--
``(I) for the period beginning on
July 1, 2003, and ending on June 30,
2005, one;
``(II) for the period beginning on
July 1, 2005, and ending on June 30,
2007, two; and
``(II) on or after July 1, 2007,
three.''.
(b) Indirect Medical Education.--Section 1886(d)(5)(B) of the
Social Security Act (42 U.S.C. 1395ww(d)(5)(B)) is amended by adding at
the end the following new clause:
``(ix) Clause (iii) of subsection (h)(4)(F) shall apply to
clause (v) in the same manner and for the same period as such
clause (iii) applies to clause (i) of such subsection.''.
SEC. 206. INCREASE FOR HOSPITALS WITH DISPROPORTIONATE INDIGENT CARE
REVENUES.
(a) Disproportionate Share Adjustment Percentage.--Section
1886(d)(5)(F)(iii) (42 U.S.C. 1395ww(d)(5)(F)(iii)) is amended by
striking ``35 percent'' and inserting ``35 percent (or, for discharges
occurring on or after April 1, 2003, 40 percent)''.
(b) Capital Costs.--Section 1886(g)(1)(B) (42 U.S.C.
1395ww(g)(1)(B)) is amended--
(1) in clause (iii), by striking ``and'' at the end;
(2) in clause (iv), by striking the period at the end and
inserting ``, and''; and
(3) by adding at the end the following new clause:
``(v) in the case of cost reporting periods beginning on or
after October 1, 2003, shall provide for a disproportionate
share adjustment in the same manner as section
1886(d)(5)(F)(iii).''.
Subtitle B--Skilled Nursing Facility Services
SEC. 211. PAYMENT FOR COVERED SKILLED NURSING FACILITY SERVICES.
(a) Temporary Increase in Nursing Component of PPS Federal Rate.--
Section 312(a) of BIPA (114 Stat. 2763A-498) is amended by adding at
the end the following new sentence: ``The Secretary of Health and Human
Services shall increase by 15, 13, and 11 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.
(c) GAO Audit of Nurse Staffing Ratios.--
(1) Audit.--The Comptroller General of the United States
shall conduct an audit of nurse staffing ratios in a
representative sample of medicare skilled nursing facilities.
Such sample shall cover selected States and shall include broad
representation with respect to size, ownership, location, and
medicare volume. Such audit shall include an examination of
payroll records and medicaid cost reports of individual
facilities and the nurse staffing data submitted under sections
1819(b)(8)(D) and 1919(b)(8)(D) of the Social Security Act (as
added by paragraphs (1)(B) and (2)(B), respectively, of section
212(a)).
(2) Report.--Not later than June 1, 2004, the Comptroller
General shall submit to Congress a report on the audits
conducted under paragraph (1). Such report shall include an
assessment of the impact of the increased payments by reason of
the amendments made by subsections (a) and (b) on increased
nurse staffing ratios and shall make recommendations as to
whether increased payments under section 312(a) of BIPA (114
Stat. 2763A-498), as amended by subsection (a), should be
continued.
SEC. 212. IMPROVING THE AVAILABILITY OF NURSING FACILITY STAFFING
INFORMATION.
(a) Nursing Facility Staffing Information.--
(1) Medicare.--Section 1819(b)(8) (42 U.S.C. 1395i-3(b)) is
amended--
(A) in subparagraph (A), by adding at the end the
following new sentence: ``The information posted under
this subparagraph shall include information regarding
nurse staffing with respect to beds made available by
reason of an agreement under section 1883.''; and
(B) by adding at the end the following new
subparagraphs:
``(C) Submission and posting of data.--Beginning on
July 1, 2003, a skilled nursing facility shall submit
to the Secretary in a uniform manner (as prescribed by
the Secretary) the nurse staffing data described in
subparagraph (A) through electronic data submission not
less frequently than quarterly and the Secretary shall
make such data publicly available, including by posting
such data on an Internet website.
``(D) Audit of data.--As part of each standard
survey conducted under subsection (g)(2)(A), there
shall be an audit of the nurse staffing data reported
under subparagraph (C) to ensure that such data are
accurate.''.
(2) Medicaid.--Section 1919(b)(8) (42 U.S.C. 1395r(b)(8))
is amended--
(A) in subparagraph (A), by adding at the end the
following new sentence: ``The information posted under
this subparagraph shall include information regarding
nurse staffing with respect to beds made available by
reason of an agreement under section 1883.''; and
(B) by adding at the end the following new
subparagraphs:
``(C) Submission and posting of data.--Beginning on
July 1, 2003, a nursing facility shall submit to the
Secretary in a uniform manner (as prescribed by the
Secretary) the nurse staffing data described in
subparagraph (A) through electronic data submission not
less frequently than quarterly and the Secretary shall
make such data publicly available, including by posting
such data on an Internet website.
``(D) Audit of data.--As part of each standard
survey conducted under subsection (g)(2)(A), there
shall be an audit of the nurse staffing data reported
under subparagraph (C) to ensure that such data are
accurate.''.
(3) Report.--Not later than October 1, 2003, the Secretary
shall submit to Congress a report on--
(A) the manner in which the Secretary intends to
implement reporting of additional nurse staffing
variables such as unit worked, day of week (weekday and
weekend), and type of care (direct or administrative)
provided; and
(B) the most effective mechanisms for auditing
nurse staffing data under sections 1819(b)(8)(D) and
1919(b)(8)(D) of the Social Security Act (as added by
paragraphs (1)(B) and (2)(B), respectively).
(4) Effective date.--The amendments made by this subsection
shall apply with respect to calendar quarters beginning on and
after January 1, 2003.
(b) Creating a Staffing Quality Measure for Consumers To Compare
Nursing Facilities.--
(1) In General.--Beginning on October 1, 2003, and for as
long as the Secretary publishes quality measures to help the
public compare the quality of care that nursing facilities
provide, these quality measures shall include a quality measure
for nurse staffing that--
(A) includes the average daily total nursing hours
worked for the quarterly reporting period for which
data is submitted under sections 1819(b)(8)(C) and
1919(b)(8)(C) of the Social Security Act (as added by
paragraphs (1)(B) and (2)(B), respectively, of
subsection (a));
(B) is sensitive to case mix and quality outcomes;
and
(C) indicates the percentile in which each nursing
facility falls compared with other nursing facilities
in the State.
The Secretary shall not be required to comply with the
requirements of subparagraph (B) to the extent that the
development of a methodology to comply with such requirement
would delay the implementation of this section.
(2) Form and manner.--The nursing facility staffing measure
described in paragraph (1) shall be displayed in the same form
and manner as information that the Secretary displays to help
the public compare the quality of care that nursing facilities
provide.
(3) Periodic revisions.--The Secretary may revise the
nursing facility staffing measure described in paragraph (1)
from time to time to improve the accuracy of such measure.
Subtitle C--Hospice
SEC. 221. 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 and who have
not made an election under subsection (d)(1), 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, including the need for
hospice care;
``(B) counseling the individual with respect to
end-of-life issues, the benefits of hospice care, and
care options; and
``(C) if appropriate, advising the individual
regarding advanced care planning.''.
(b) Payment.--Section 1814(i) (42 U.S.C. 1395f(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
part A shall be the amount determined under a fee schedule established
by the Secretary.''.
(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. 222. 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 nonroutine 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 221(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.
TITLE III--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
SEC. 301. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.
(a) Revision.--
(1) Update for 2003 through 2005.--
(A) 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.--Notwithstanding paragraph (4) and
subject to the budget-neutrality factor determined by the
Secretary under subsection (c)(2)(B)(ii), the update to the
single conversion factor established in paragraph (1)(C) for
2003 is 2 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.''.
(B) Conforming amendment.--Section 1848(d)(4)(B) is
amended, in the matter preceding clause (i), by
inserting ``and paragraph (6)'' after ``subparagraph
(D)''.
(C) Not treated as change in law and regulation in
sustainable growth rate determination.--The amendments
made by this paragraph 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)).
(2) Use of 10-year rolling average in computing gross
domestic product.--
(A) In general.--Section 1848(f)(2)(C) (42 U.S.C.
1395w-4(f)(2)(C)) is amended--
(i) by striking ``projected'' and inserting
``annual average''; and
(ii) 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''.
(B) Effective date.--The amendments made by
subparagraph (A) shall apply to computations of the
sustainable growth rate for years beginning with 2002.
(3) 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.''.
(b) 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; and
(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.
SEC. 302. THREE-YEAR EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN
PATHOLOGY SERVICES UNDER MEDICARE.
Section 542(c) of BIPA (114 Stat. 2763A-550) is amended by striking
``2-year period'' and inserting ``5-year period''.
Subtitle B--Other Services
SEC. 311. COMPETITIVE ACQUISITION OF CERTAIN ITEMS AND SERVICES.
(a) Program Authorized.--Title XVIII (42 U.S.C. 1395 et seq.) is
amended by redesignating section 1866B as section 1866C and by
inserting after section 1866A the following new section:
``competitive item and service acquisition program
``Sec. 1866B. (a) Program Authority.--
``(1) In general.--The Secretary shall implement programs
and demonstration projects to purchase, on behalf of
individuals enrolled under part B, certain competitively priced
items and services in competitive acquisition areas (in
accordance with the succeeding provisions of this section) for
which payment is made under such part. Such areas may differ in
the items and services provided.
``(2) Rules applicable to programs and demonstration
projects.--With respect to each program and demonstration
project implemented under this section, the following rules
shall apply:
``(A) The Secretary may reject unreasonably low
bids.
``(B) If the Secretary determines that the product
quality or service quality of an entity with a contract
has deteriorated since the contract was entered into,
the Secretary may cancel the contract prior to the date
on which the contract is scheduled to end and award a
contract to a different entity for the remainder of the
term of the contract.
``(C) No device that is in a class of devices
described in section 513(a)(1)(C) of the Federal Food
Drug and Cosmetic Act (21 U.S.C. 360c(a)(1)(C)) may be
furnished under such a program or demonstration
project.
``(3) Phased-in implementation.--The programs implemented
under paragraph (1) shall be phased-in among competitive
acquisition areas over a period of not longer than 4 years in a
manner so that the competition under the programs occurs in--
``(A) at least \1/4\ of such areas in 2003;
``(B) at least \2/4\ of such areas in 2004; and
``(C) at least \3/4\ of such areas in 2005.
``(b) Implementation of Programs in Competitive Acquisition
Areas.--
``(1) Types of programs.--The Secretary shall implement
programs under which competitive acquisition areas are
established for contract award purposes for the furnishing
under part B of--
``(A) covered items (as defined in section
1834(a)(13)) and inhalation drugs used in conjunction
with durable medical equipment (other than items used
in infusion therapy); and
``(B) leg, arm, back, and neck braces described in
section 1861(s)(9), other than custom fabricated
orthotics (as defined by the Secretary).
``(2) Program requirements.--Each program implemented under
paragraph (1) shall--
``(A) include such categories of items and services
as the Secretary may prescribe; and
``(B) be conducted in such competitive acquisition
areas as the Secretary determines are appropriate.
``(3) Criteria for establishment of competitive acquisition
areas.--Each competitive acquisition area established under a
program implemented under paragraph (1) shall--
``(A)(i) be, or shall be within, a metropolitan
statistical area (as defined by the Director of the
Office of Management and Budget and the Secretary of
Commerce) with a population in excess of 500,000; or
``(ii) be an area that was designated as a
competitive acquisition area under section 1847 as of
the date of the enactment of the Beneficiary Access to
Care and Medicare Equity Act of 2002;
``(B) be chosen based on the availability and
accessibility of entities able to furnish items and
services, and the probable savings to be realized by
the use of competitive bidding in the furnishing of
items and services in such area; and
``(C) have multiple suppliers for each product
category.
``(c) Awarding of Contracts in Competitive Acquisition Areas.--
``(1) In general.--The Secretary shall conduct a
competition among entities supplying the items and services to
be furnished under the program implemented under subsection
(b)(1) for each competitive acquisition area established under
subsection (b)(3) for that program.
``(2) Administration by contract.--
``(A) In general.--The Secretary shall administer
the programs under this section by entering into
contracts with entities.
``(B) Conditions for awarding contract.--The
Secretary may not award a contract to any entity under
the competition conducted under paragraph (1) to
furnish an item or service unless the Secretary finds
that--
``(i) the entity meets quality and
financial standards specified by the Secretary
or developed by accreditation entities or
organizations recognized by the Secretary;
``(ii) beneficiary liability is limited to
the applicable percentage of the contract award
price;
``(iii) the entity has an agreement in
effect under section 1866 and has an active
National Supplier Clearinghouse identification
number;
``(iv) the entity complies with all Federal
and State licensure and regulatory
requirements;
``(v) the entity is in compliance with all
the provisions of title XI and this title, such
provisions of title XIX as the Secretary
determines are relevant to competitive bidding,
and any regulations relating thereto;
``(vi) the entity is in compliance with all
billing guidelines relating to the program
under this title;
``(vii) the entity has not been suspended
within the 12 months preceding the date on
which a bid is submitted by any DMERC antifraud
unit for billing for items or services not
furnished; and
``(viii) the total amounts to be paid under
the contract (including costs associated with
the administration of the contract) are
expected to be less than the total amounts that
would otherwise be paid.
``(3) Contents of contract.--A contract entered into with
an entity under the competition conducted under paragraph (1)
shall be subject to such terms and conditions as the Secretary
may specify.
``(4) Limit on number of contractors.--The Secretary may
limit the number of contractors in a competitive acquisition
area to the number needed to meet projected demand for items
and services covered under the contracts.
``(5) Small business protections.--Notwithstanding any
other provision of this section, the Secretary shall allow--
``(A) an entity to bid to become a supplier in a
portion of the competitive acquisition area if the
entity does not have the capacity to service an entire
competitive acquisition area;
``(B) small suppliers to bid for only 1 or a few
product categories instead of all the products in a
competitive acquisition area; and
``(C) small suppliers to join together to form
networks for bidding purposes, as long as the combined
market share of such suppliers does not exceed 25
percent.
``(d) Evaluations and Annual Reports.--
``(1) Evaluations.--The Secretary shall evaluate the impact
of the implementation of the programs implemented under
subsection (b)(1) on--
``(A) payments made and savings realized under this
title;
``(B) the access of beneficiaries to items and
services furnished under such programs and
demonstration projects;
``(C) the diversity of product selection under such
programs and demonstration projects; and
``(D) the quality of items and services furnished
under such programs and demonstration projects.
``(2) Annual reports.--Not less frequently than annually,
the Secretary shall submit to the Committees on Ways and Means
and Energy and Commerce of the House of Representatives and the
Committee on Finance of the Senate a report on the results of
the evaluation conducted under paragraph (1).
``(e) Diagnostic Tests and Surgical Dressings.--
``(1) In general.--The Secretary shall implement
demonstration projects under which competitive acquisition
areas are established for contract award purposes for the
furnishing under part B of--
``(A) diagnostic x-ray tests, clinical diagnostic
laboratory tests, and other diagnostic tests described
in paragraph (3) of section 1861(s); and
``(B) surgical dressings, splints, casts, and other
devices described in paragraph (5) of such section.
``(2) Project requirements.--Each demonstration project
under paragraph (1) shall--
``(A) be conducted in not more than 3 competitive
acquisition areas;
``(B) be operated over a 3-year period; and
``(C) otherwise be subject to the conditions under
subsections (b)(3) and (c) in the same manner as such
conditions apply to the programs established under
subsection (a).
``(3) Reports.--
``(A) Initial report.--Not later than December 31,
2004, the Secretary shall submit to the Committees on
Ways and Means and Energy and Commerce of the House of
Representatives and the Committee on Finance of the
Senate an initial report on the demonstration projects
conducted under this subsection.
``(B) Progress and final reports.--The Secretary
shall submit such progress and final reports to the
committees described in subparagraph (A) after the date
described in such subparagraph as the Secretary
determines appropriate.
``(f) Other Part B Items and Services.--
``(1) In general.--The Secretary may implement not more
than 5 demonstration projects under which competitive
acquisition areas are established for contract award purposes
for the furnishing under part B of any item or service covered
under such part that the Secretary may specify other than--
``(A) any item or service described in subparagraph
(A) or (B) of subsection (e)(1); or
``(B) physicians' services (as defined in section
1861(r)(1)).
``(2) Project requirements.--Each demonstration project
under paragraph (1) shall--
``(A) be conducted in not more than 3 competitive
acquisition areas;
``(B) be operated over a 3-year period; and
``(C) otherwise be subject to the conditions under
subsections (b)(3) and (c) in the same manner as such
conditions apply to the programs established under
subsection (a).
``(3) Reports.--
``(A) Initial report.--Not later than December 31,
2004, the Secretary shall submit to the Committees on
Ways and Means and Energy and Commerce of the House of
Representatives and the Committee on Finance of the
Senate an initial report on the demonstration projects
conducted under this subsection.
``(B) Progress and final reports.--The Secretary
shall submit such progress and final reports to the
committees described in subparagraph (A) after the date
described in such subparagraph as the Secretary
determines appropriate.
``(g) Expansion of Programs and Demonstration Projects.--The
Secretary may expand a program or demonstration project implemented
under subsection (b)(1) to additional competitive acquisition areas if
the Secretary determines, based on the evaluations conducted under
subsection (d)(1), that there is clear evidence that any program or
demonstration project--
``(1) results in a decrease in Federal expenditures under
this title; and
``(2) does not reduce program access, diversity of product
selection, and quality under this title.
``(h) Duration of Programs and Demonstration Projects.--
``(1) Durable medical equipment and orthotics.--The
programs implemented under subparagraph (A) or (B) of
subsection (b)(1) shall terminate on such date as the Secretary
may specify or may continue indefinitely (as determined by the
Secretary).
``(2) Diagnostic tests and surgical dressings.--
``(A) In general.--Except as provided in
subparagraph (B), any demonstration project implemented
under subsection (e)(1) shall terminate not later than
December 31, 2007.
``(B) Exception.--If the Secretary determines that
a demonstration project implemented under subsection
(e)(1) meets the requirements of paragraphs (1) and (2)
of subsection (g), such project shall terminate on such
date as the Secretary may specify or may continue
indefinitely (as determined by the Secretary).
``(3) Other part b items and services.--Any demonstration
project implemented under subsection (f)(1) shall terminate not
later than December 31, 2007.''.
(b) Continuation of Original Demonstration Projects.--Section
1847(e) (42 U.S.C. 1395w-3(e)) is amended to read as follows:
``(e) Termination.--
``(1) In general.--Notwithstanding any other provision of
this section, except as provided in paragraph (2), all projects
under this section shall terminate not later than December 31,
2002.
``(2) Extension of certain projects.--An project
implemented under this section as of the date of enactment of
the Beneficiary Access to Care and Medicare Equity Act of 2002
shall continue under the same terms and conditions applicable
under this section until such time as the competitive
acquisition area under such a project is designated as a
competitive acquisition area for purposes of section 1866B,
except that no project may continue under this section after
December 31, 2006.''.
(c) Items and Services To Be Furnished Only Through Competitive
Acquisition.--Section 1862(a) (42 U.S.C. 1395y(a)), as amended by
section 3(a) of the Administrative Simplification Compliance Act
(Public Law 107-105; 115 Stat. 1006), is amended--
(1) by striking ``or'' at the end of paragraph (21);
(2) by striking the period at the end of paragraph (22) and
inserting ``; or''; and
(3) by inserting after paragraph (22) the following new
paragraph:
``(23) except in such cases of emergency or urgent need as
the Secretary shall prescribe, where the expenses are for an
item or service described in section 1866B(d) that is furnished
in a competitive acquisition area (as established by the
Secretary under section 1866B(b)) by an entity other than an
entity with which the Secretary has entered into an agreement
under section 1866B(c) for the furnishing of such an item or
service in that area.''.
(d) Conforming Amendments Relating to General Provisions for
Administration.--
(1) General administrative authority.--Section 1866C(a) (as
redesignated by subsection (a)) is amended--
(A) in paragraph (1)--
(i) in the matter preceding subparagraph
(A), by striking ``the program under section
1866A (in this section referred to as the
`demonstration program')'' and inserting ``a
program or demonstration project under section
1866A or 1866B'';
(ii) in subparagraph (A), by striking ``and
entitled to benefits under part A; and'' and
inserting a semicolon;
(iii) in subparagraph (B), by striking the
period at the end and inserting ``; and''; and
(iv) by adding at the end the following new
subparagraph:
``(C) in the case of the demonstration program
under section 1866A, is entitled to benefits under part
A.'';
(B) in paragraph (3), by striking ``Items and
services shall'' and inserting ``Except as provided in
the authority for the programs and demonstration
projects under section 1866B, items and services
shall'';
(C) in paragraph (4), by striking ``individuals or
entities'' and inserting ``entities (or, in the case of
the demonstration program under section 1866A,
individuals or entities)'';
(D) in paragraph (5)--
(i) in the first sentence, by striking
``the demonstration program'' and inserting
``the programs and demonstration projects under
sections 1866A and 1866B''; and
(ii) in the second sentence, by striking
``individuals or entities'' and inserting
``entities (or, in the case of the
demonstration program under section 1866A,
individuals or entities)'';
(E) in paragraph (6)--
(i) by striking ``individual or entity''
and inserting ``entity (or, in the case of the
demonstration program under section 1866A, an
individual or entity)''; and
(ii) by striking ``the demonstration
program'' and inserting ``the programs and
demonstration projects under sections 1866A and
1866B'';
(F) in paragraph (7), by striking ``individual or
entity'' each place it appears and inserting ``entity
(or, in the case of the demonstration program under
section 1866A, an individual or entity)''; and
(G) in paragraph (8)--
(i) in subparagraph (A), by striking ``the
demonstration program'' and inserting ``the
programs and demonstration projects under
sections 1866A and 1866B''; and
(ii) in subparagraph (B), by striking
``individual or entity'' and inserting ``entity
(or, in the case of the demonstration program
under section 1866A, an individual or
entity)''.
(2) Contracts for program administration.--Section 1866C(b)
(as so redesignated) is amended--
(A) in paragraph (1), by striking ``the
demonstration program'' and inserting ``the programs
and demonstration projects under sections 1866A and
1866B'';
(B) in paragraph (2), by striking ``contracts.--The
Secretary'' and inserting the following: ``contracts.--
A contract under this subsection may, at the
Secretary's discretion, relate to the administration of
either the program under section 1866A or a program or
demonstration project under section 1866B, or both. The
Secretary''; and
(C) in paragraph (7)--
(i) in subparagraph (D), by inserting
``under section 1866A'' before the period at
the end;
(ii) by redesignating subparagraphs (E)
through (H) as subparagraphs (G) through (J),
respectively; and
(iii) by inserting after subparagraph (D)
the following new subparagraphs:
``(E) List of program participants.--Maintain and
regularly update a list of entities with agreements to
provide health care items and services under the
program under section 1866B, and ensure that such list,
in electronic and hard copy formats, is readily
available, as applicable, to--
``(i) individuals residing in the service
area who are entitled to benefits under part A
or enrolled in the program under part B;
``(ii) the entities responsible under
sections 1816 and 1842 for administering
payments for health care items and services
furnished; and
``(iii) entities providing health care
items and services in the service area.
``(F) Beneficiary enrollment.--Determine
eligibility of individuals to enroll under a program or
demonstration project under section 1866B and provide
enrollment-related services (but only if the Secretary
finds that the program administrator has no conflict of
interest caused by a financial relationship with any
entity furnishing items or services for which payment
may be made under any such program, or any other
conflict of interest with respect to such function).''.
(3) Rules applicable to both program agreements and program
administration contracts.--Section 1866C(c) (as so
redesignated) is amended--
(A) in paragraph (1), by striking ``the
demonstration program'' and inserting ``the programs
and demonstration projects under sections 1866A and
1866B'';
(B) in paragraph (2)--
(i) in the matter preceding subparagraph
(A), by inserting ``under section 1866A'' after
``the demonstration program'';
(ii) in subparagraph (A), by striking ``the
program'' and inserting ``such a program''; and
(iii) in subparagraph (B)(i), by inserting
``under section 1866A'' after ``the
demonstration program''; and
(C) in paragraph (3)--
(i) by striking ``the demonstration
program'' and inserting ``the programs and
demonstration projects under sections 1866A and
1866B''; and
(ii) by striking ``administer the program''
and inserting ``administer such a program or
project''.
(4) Limitations on judicial review.--Section 1866C(d) (as
so redesignated) is amended--
(A) in the matter preceding paragraph (1), by
striking ``the demonstration program'' and inserting
``the programs and demonstration projects under
sections 1866A and 1866B'' in the matter preceding
subparagraph (A);
(B) in paragraph (1), by striking ``the program''
and inserting ``a program or demonstration project
under section 1866A or 1866B'';
(C) in paragraph (2), by striking ``program'' each
place it appears and inserting ``program or
demonstration project''; and
(D) in paragraph (5)--
(i) in the matter preceding subparagraph
(A), by striking ``to the program'' and
inserting ``to a program or demonstration
project'';
(ii) in subparagraph (A), by striking
``or'' after the semicolon at the end; and
(iii) in subparagraph (B), by inserting
``with respect to the demonstration program
under section 1866A,'' before ``as to
whether''.
(5) Application limited to parts a and b.--Section 1866C(e)
(as so redesignated) is amended by striking ``or of the
demonstration program'' and inserting ``, section 1866A, or
section 1866B''.
(6) Other conforming amendments.--
(A) Section 1866A(a)(2) (42 U.S.C. 1395cc-1) is
amended by striking ``section 1866B'' and inserting
``section 1866C''.
(B) The heading of section 1866C (as so
redesignated) is amended to read as follows:
``general provisions for the administration of certain private sector
purchasing and quality improvement programs''.
(e) GAO Study and Report.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on the coverage under the medicare
program under title XVIII of the Social Security Act of new and
innovative durable medical equipment, prosthetics, orthotics,
supplies, and equipment and the coding of such items for
purposes of payment under such program. Such study shall
include an analysis of the review and approval process for the
new and innovative items described in the preceding sentence,
the coding process for such items, and beneficiary access to
such items if such items are not covered under the medicare
program.
(2) Report.--Not later than the date that is 2 years after
the date of the enactment of this Act, the Comptroller General
shall submit a report on the study conducted under paragraph
(1) to the Committee on Ways and Means and the Committee on
Energy and Commerce of the House of Representatives and the
Committee on Finance of the Senate together with such
recommendations for legislative and administrative action as
the Comptroller General determines appropriate.
SEC. 312. TWO-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 (42 U.S.C. 1395l note)
(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 (113 Stat. 1501A-352) (relating
to utilization patterns for outpatient therapy).
(c) Identification of Conditions and Diseases Justifying Waiver of
Therapy Cap.--
(1) Study.--The Secretary, in consultation with clinicians,
shall conduct a study to identify conditions or diseases that
should be excluded from 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 January 1, 2004,
the Secretary shall submit a report to Congress on the study
conducted under paragraph (1) together with recommendations for
such legislation and administrative action as the Secretary
determines appropriate.
SEC. 313. ACCELERATION OF REDUCTION OF BENEFICIARY COPAYMENT FOR
HOSPITAL OUTPATIENT DEPARTMENT SERVICES.
Section 1833(t)(8)(C)(ii) (42 U.S.C. 1395l(t)(8)(C)(ii)) is
amended--
(1) in subclause (V), by striking ``and thereafter'' and
inserting ``through 2011''; and
(2) by adding at the end the following new subclause:
``(VI) For procedures performed in
2012 and thereafter, 30 percent.''.
SEC. 314. RENAL DIALYSIS SERVICES.
(a) Increase in Renal Dialysis Composite Rate for Services
Furnished in 2003 and 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 2003 and 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.
(b) Restoring Composite Rate Exceptions for Pediatric Facilities.--
(1) In general.--Section 422(a)(2) of BIPA (114 Stat.
2763A-516) 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''.
SEC. 315. 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 diagnostic mammography''.
(b) Payment.--Section 1833(a)(2)(E)(i) (42 U.S.C.
1395l(a)(2)(E)(i)) is amended by inserting ``, and for services
furnished on or after January 1, 2004, diagnostic mammography'' after
``screening mammography''.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to mammography performed on or after January 1, 2004.
SEC. 316. 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 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 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 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. 317. COVERAGE OF CHOLESTEROL AND BLOOD LIPID SCREENING.
(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)(iii), by inserting ``and'' at the
end; and
(3) by adding at the end the following new subparagraph:
``(W) cholesterol and other blood lipid screening
tests (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:
``Cholesterol and Other Blood Lipid Screening Test
``(ww)(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)) is
amended--
(1) by striking ``and'' at the end of subparagraph (H);
(2) by striking the semicolon at the end of subparagraph
(I) and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(J) in the case of a cholesterol and other blood lipid
screening test (as defined in section 1861(ww)(1)), which is
performed more frequently than is covered under section
1861(ww)(2).''.
(d) Effective Date.--The amendments made by this section shall
apply to tests furnished on or after January 1, 2004.
SEC. 318. TEMPORARY INCREASE FOR GROUND AMBULANCE SERVICES.
Section 1834(l) (42 U.S.C. 1395m(l)) is amended--
(1) by redesignating paragraph (8), as added by section
221(a) of BIPA (114 Stat. 2763A-486), as paragraph (9); and
(2) by adding at the end the following new paragraph:
``(10) Temporary increase for ground ambulance services.--
``(A) In general.--Notwithstanding any other
provision of this subsection, in the case of ground
ambulance services furnished on or after January 1,
2003, and before January 1, 2006 for which the
transportation originates in--
``(i) a rural area described in paragraph
(9) or in a rural census tract described in
such paragraph, the fee schedule established
under this section shall provide that the rate
for the service otherwise established, after
application of any increase under such
paragraph, shall be increased by 5 percent; and
``(ii) an area not described in clause (i),
the fee schedule established under this section
shall provide that the rate for the service
otherwise established shall be increased by 2
percent
``(B) Application of increased payments after
2005.--The increased payments under subparagraph (A)
shall not be taken into account in calculating payments
for services furnished on or after the period specified
in such subparagraph.''.
SEC. 319. ENSURING APPROPRIATE COVERAGE OF AIR AMBULANCE SERVICES UNDER
AMBULANCE FEE SCHEDULE.
(a) Coverage.--Section 1834(l) (42 U.S.C. 1395m(l)), as amended by
section 318, is amended by adding at the end the following new
paragraph:
``(11) Ensuring appropriate coverage of air ambulance
services.--
``(A) In general.--The regulations described in
section 1861(s)(7) shall ensure that air ambulance
services (as defined in subparagraph (C)) are
reimbursed under this subsection at the air ambulance
rate if the air ambulance service--
``(i) is medically necessary based on the
health condition of the individual being
transported at or immediately prior to the time
of the transport; and
``(ii) complies with equipment and crew
requirements established by the Secretary.
``(B) Medically necessary.--An air ambulance
service shall be considered to be medically necessary
for purposes of subparagraph (A)(i) if such service is
requested--
``(i) by a physician or a hospital in
accordance with the physician's or hospital's
responsibilities under section 1867 (commonly
known as the Emergency Medical Treatment and
Active Labor Act);
``(ii) as a result of a protocol
established by a State or regional emergency
medical service (EMS) agency;
``(iii) by a physician, nurse practitioner,
physician assistant, registered nurse, or
emergency medical responder who reasonably
determines or certifies that the patient's
condition is such that the time needed to
transport the individual by land or the lack of
an appropriate ground ambulance, significantly
increases the medical risks for the individual;
or
``(iv) by a Federal or State agency to
relocate patients following a natural disaster,
an act of war, or a terrorist attack.
``(C) Air ambulance services defined.--For purposes
of this paragraph, the term `air ambulance service'
means fixed wing and rotary wing air ambulance
services.''.
(b) Conforming Amendment.--Section 1861(s)(7) (42 U.S.C.
1395x(s)(7)) is amended by inserting ``, subject to section
1834(l)(11),'' after ``but''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after the date of the enactment of
this Act.
SEC. 320. ADJUSTMENTS TO LOCAL FEE SCHEDULES FOR CLINICAL LABORATORY
TESTS FOR IMPROVEMENT IN CERVICAL CANCER DETECTION.
Section 1833(h)(2) (42 U.S.C. 1395l(h)(2)) is amended by adding at
the end the following new subparagraph:
``(C) Notwithstanding any other provision of law, in the case of a
diagnostic test for the detection of cervical cancer utilizing
automated thin layer preparation techniques for specimens collected in
fluid medium, and for which a national limitation amount has been set
pursuant to the parenthetical in paragraph (4)(B)(viii), furnished on
or after July 1, 2003, and before June 30, 2005, the Secretary shall
permit carriers and medicare administrative contractors, as the case
may be, to raise their local fee schedule amount for purposes of
determining payment for such tests under this section, up to, but not
to exceed the national limitation amount previously established for
that test. Any such adjustment shall not affect such national
limitation amount.
SEC. 321. COVERAGE OF IMMUNOSUPPRESSIVE DRUGS FOR ALL MEDICARE
BENEFICIARIES.
(a) In General.--Section 1861(s)(2)(J) (42 U.S.C. 1395x(s)(2)(J))
is amended by striking ``, to an individual who receives'' and all that
follows before the semicolon at the end and inserting ``to an
individual who has received an organ transplant''.
(b) Effective Date.--The amendments made by this section shall
apply to drugs furnished on or after the date of the enactment of this
Act.
SEC. 322. MEDICARE COMPLEX CLINICAL CARE MANAGEMENT PAYMENT
DEMONSTRATION.
(a) Establishment.--
(1) In general.--The Secretary shall establish a
demonstration program to make the medicare program more
responsive to needs of eligible beneficiaries by promoting
continuity of care, helping stabilize medical conditions,
preventing or minimizing acute exacerbations of chronic
conditions, and reducing adverse health outcomes, such as
adverse drug interactions related to polypharmacy.
(2) Sites.--The Secretary shall designate 4 sites at which
to conduct the demonstration program under this section, of
which 3 shall be in an urban area and 1 shall be in a rural
area.
(3) Duration.--The Secretary shall conduct the
demonstration program under this section for a 3-year period.
(b) Participants.--Any eligible beneficiary who resides in an area
designated by the Secretary as a demonstration site under subsection
(a)(2) may participate in the demonstration program under this section
if such beneficiary identifies a principal care physician who agrees to
manage the complex clinical care of the eligible beneficiary under the
demonstration program.
(c) Principal Care Physician Responsibilities.--The Secretary shall
enter into an agreement with each principal care physician who agrees
to manage the complex clinical care of an eligible beneficiary under
subsection (b) under which the principal care physician shall--
(1) serve as the primary contact of the eligible
beneficiary in accessing items and services for which payment
may be made under the medicare program;
(2) maintain medical information related to care provided
by other health care providers who provide health care items
and services to the eligible beneficiary, including clinical
reports, medication and treatments prescribed by other
physicians, hospital and hospital outpatient services, skilled
nursing home care, home health care, and medical equipment
services;
(3) monitor and advocate for the continuity of care of the
eligible beneficiary and the use of evidence-based guidelines;
(4) promote self-care and family caregiver involvement
where appropriate;
(5) have appropriate staffing arrangements to conduct
patient self-management and other care coordination activities
as specified by the Secretary; and
(6) meet such other complex care management requirements as
the Secretary may specify.
(d) Complex Clinical Care Management Fee.--
(1) Payment.--Under an agreement entered into under
subsection (c), the Secretary shall pay to each principal care
physician, on behalf of each eligible beneficiary under the
care of that physician, the complex clinical care management
fee developed by the Secretary under paragraph (2).
(2) Development of fee.--The Secretary shall develop a
complex care management fee under this paragraph that is paid
on a monthly basis and which shall be payment in full for all
the functions performed by the principal care physician under
the demonstration program, including any functions performed by
other qualified practitioners acting on behalf of the
physician, appropriate staff under the supervision of the
physician, and any other person under a contract with the
physician, including any person who conducts patient self-
management and caregiver education under subsection (c)(4).
(e) Funding.--
(1) In general.--The Secretary shall provide for the
transfer from the Federal Supplementary Insurance Trust Fund
established under section 1841 of the Social Security Act (42
U.S.C. 1395t) of such funds as are necessary for the costs of
carrying out the demonstration program under this section.
(2) Budget neutrality.--In conducting the demonstration
program under this section, the Secretary shall ensure that the
aggregate payments made by the Secretary do not exceed the
amount which the Secretary would have paid if the demonstration
program under this section was not implemented.
(f) Waiver authority.--The Secretary may waive such requirements of
titles XI and XVIII of the Social Security Act (42 U.S.C. 1301 et seq.;
1395 et seq.;) as may be necessary for the purpose of carrying out the
demonstration program under this section.
(g) Report.--Not later than 6 months after the completion of the
demonstration program under this section, the Secretary shall submit to
Congress a report on such program, together with recommendations for
such legislation and administrative action as the Secretary determines
to be appropriate.
(h) Definitions.--In this section:
(1) Activity of daily living.--The term ``activity of daily
living'' means eating, toiling, transferring, bathing,
dressing, and continence.
(2) Chronic condition.--The term ``chronic condition''
means a biological, physical, or mental condition that is
likely to last a year or more, for which there is no known
cure, for which there is a need for ongoing medical care, and
which may affect an individual's ability to carry out
activities of daily living or instrumental activities of daily
living, or both.
(3) Eligible beneficiary.--The term ``eligible
beneficiary'' means any individual who--
(A) is enrolled for benefits under part B of the
medicare program;
(B) has at least 4 complex medical conditions; and
(C) has--
(i) an inability to self-manage their care;
or
(ii) a functional limitation defined as an
impairment in 1 or more activity of daily
living or instrumental activity of daily
living.
(4) Instrumental activity of daily living.--The term
``instrumental activity of daily living'' means meal
preparation, shopping, housekeeping, laundry, money management,
telephone use, and transportation use.
(5) Medicare program.--The term ``medicare program'' means
the health care program under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.).
(6) Principal care physician.--The term ``principal care
physician'' means the physician with primary responsibility for
overall coordination of the care of an eligible beneficiary (as
specified in a written plan of care) who may be a primary care
physician or a specialist.
SEC. 323. STUDY AND REPORT ON NEW TECHNOLOGY PAYMENTS UNDER THE
PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES.
(a) Study.--
(1) In general.--The Secretary shall conduct a study of the
methods by which new medical devices, new drugs, biologicals,
and other new technologies are recognized for payment under the
hospital outpatient department prospective payment system
established under section 1833(t) of the Social Security Act
(42 U.S.C. 1395l(t)) and on possible changes to those methods.
(2) Issues examined.--The study conducted under paragraph
(1) shall examine the following:
(A) The experience to date of the transitional
pass-through payment mechanism for additional costs of
innovative medical devices, drugs, and biologicals
(provided under section 1833(t)(6) of the Social
Security Act (42 U.S.C. 1395l(t)(6))) and of the
provision for new technology ambulatory payment
classifications provided through regulations. In
particular, the study should examine the effect of such
payment mechanism on access of medicare beneficiaries
to orphan and single source drugs.
(B) The impact of transitional pass-through
payments of payment rates for procedures not using new
medical devices, drugs, biologicals, and other new
technologies.
(C) The impact of transitional pass-through
payments on various types of hospitals, including
teaching hospitals, rural hospitals, and small urban
hospitals.
(D) The extent to which additional payments are
necessary to facilitate access to improved treatments
by medicare beneficiaries.
(3) Options considered.--In conducting the study under
paragraph (1), the Secretary shall consider the following
options:
(A) Statutory, regulatory, or administrative
changes that may be desirable to assure appropriate
recognition of the costs to hospitals of delivering
such services. In considering such changes, the
Secretary shall take into account the effect of such
changes on the payment for new technology services, on
payment for services that do not employ such technology
services, and on administrative resources of both the
Department of Health and Human Services and hospitals
that may be necessary to implement various changes in a
reliable fashion.
(B) Appropriate methods for assuring that decisions
concerning the eligibility of new technologies for
additional payment are made and implemented
expeditiously (including possible methods for
shortening the interval between approval of a
technology by the Food and Drug Administration and
commencement of additional payment in instances when a
new technology qualifies for such payment) and for
assuring that additional payments are directed to those
services that add value for medicare beneficiaries by
comparison to other technologies for which they may
substitute.
(C) Methods of setting additional payment rates
that may reasonably reflect hospital costs in
furnishing new technology services, including
alternatives to pricing new drugs based on average
wholesale price.
(D) Methods for appropriately reflecting the costs
of new technology services in payment rates under the
hospital outpatient department prospective payment
system after the period during which additional
payments are made.
(b) Report.--Not later than July 1, 2003, the Secretary shall
submit a report on the study conducted under paragraph (1) to the
Committee on Ways and Means and the Committee on Energy and Commerce of
the House of Representatives and the Committee on Finance of the Senate
together with such recommendations for legislative and administrative
action as the Secretary determines appropriate.
TITLE IV--PROVISION RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 401. 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
BIPA (114 Stat. 2763A-529).
SEC. 402. 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.
Subtitle B--Other Provisions
SEC. 411. INFORMATION TECHNOLOGY DEMONSTRATION PROJECT.
(a) In General.--The Secretary shall conduct a demonstration
project to demonstrate the use of third-party software contractors in
claims processing and quality improvement activities under parts A and
B of title XVIII of the Social Security Act. The Secretary shall enter
into up to 4 contracts with third-party software contractors to carry
out the purposes of the project.
(b) Duration.--The demonstration project under this section shall
last for not longer than 2 years.
(c) Waiver.--The Secretary may waive such provisions of titles XI
and XVIII of the Social Security Act (42 U.S.C. 1301 et seq.; 1395) as
may be necessary to carry out the demonstration project under this
section.
(d) Report to Congress.--Not later than 6 months after the
completion of the demonstration project under this section, the
Secretary shall submit to Congress a report on the project. Such report
shall include information on the cost-effectiveness of using third-
party software contractors for claims processing and quality
improvement activities under the medicare program and recommendations
for such legislation and administrative actions as the Secretary
considers appropriate.
(e) Authorization of Appropriations.--There are authorized to be
appropriated such sums as are necessary to carry out this section.
SEC. 412. 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 Report.--
(1) Data needs and sources.--The Medicare Payment Advisory
Commission shall conduct a study, and submit a report to
Congress by not later than September 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.
(2) Reports in addition to annual report.--The report
required under paragraph (1) shall be in addition to the report
required to be submitted by June 15, 2003, under section
1805(b)(1)(D) of the Social Security Act (42 U.S.C. 1395b-
6(b)(1)(D)).
(d) Reduction in Number of Members.--
(1) Reduction.--Section 1805(c)(1) (42 U.S.C. 1395b-
6(c)(1)) is amended by striking ``17'' and inserting ``15''.
(2) Application.--In order to carry out the amendment made
by paragraph (1), in each of the first 2 calendar years in
which the terms of 2 or more of the members of the Medicare
Payment Advisory Commission would expire (as provided in
section 1805(c)(3)(A) of the Social Security Act (42 U.S.C.
1395b-6(c)(3)(A)), the Comptroller General of the United States
shall not appoint an individual to fill 1 of such vacancies.
SEC. 413. RETAINING DIVERSITY OF LOCAL COVERAGE DETERMINATIONS.
(a) In General.--Section 1874A(b) of the Social Security Act, as
added by section 621, is amended by adding at the end the following new
paragraph:
``(6) Retaining diversity of local coverage
determinations.--A contract with a medicare administrative
contractor under this section to perform the function of
developing local coverage determinations (as defined in section
1869(f)(2)(B)) shall provide that the contractor shall--
``(A) designate at least 1 different individual to
serve as medical director for every 2 States for which
such contract performs such function;
``(B) utilize such medical director in the
performance of such function; and
``(C) appoint a contractor advisory committee with
respect to each such State to provide a formal
mechanism for physicians in the State to be informed
of, and participate in, the development of a local
coverage determination in an advisory capacity.''.
(b) Conforming Amendment.--Section 1874A(a)(4) of the Social
Security Act, as added by section 621, is amended by inserting
``including the function of developing local coverage determinations,
as defined in section 1869(f)(2)(B))'' after ``payment functions''.
(c) Effective Date.--The amendment made by subsection (a) shall
take effect on October 1, 2004.
TITLE V--MEDICARE+CHOICE AND RELATED PROVISIONS
SEC. 501. 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, 104 percent of the annual
Medicare+Choice capitation rate under this
paragraph for the area for 2002.
``(vi) For 2004, 103 percent of the annual
Medicare+Choice capitation rate under this
paragraph for the area for 2003.
``(vii) 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 (determined as if
the amendment made by section 501 of the
Beneficiary Access to Care and Medicare Equity
Act of 2002 had not been enacted).''.
SEC. 502. CLARIFICATION OF AUTHORITY REGARDING DISAPPROVAL OF
UNREASONABLE BENEFICIARY COST-SHARING.
(a) In General.--Section 1854(a)(5) (42 U.S.C. 1395w-24(a)(5)) is
amended by adding at the end the following new subparagraph:
``(C) Clarification of authority regarding
disapproval of unreasonable beneficiary cost-sharing.--
Under the authority under subparagraph (A), the
Secretary may disapprove the values submitted under
paragraphs (2)(A)(iii) and (4)(A)(iii) if the Secretary
determines that the deductibles, coinsurance, or
copayments applicable under the plan discourage access
to covered services or are likely to result in
favorable selection of Medicare+Choice eligible
individuals.''.
(b) Study and Report.--
(1) Study.--The Secretary, in consultation with
beneficiaries, consumer groups, employers, and Medicare+Choice
organizations, shall conduct a study to determine the extent to
which the cost-sharing structures under Medicare+Choice plans
under part C of title XVIII of the Social Security Act
discourage access to covered services or discriminate based on
the health status of Medicare+Choice eligible individuals (as
defined in section 1851(a)(3) (42 U.S.C. 1395w-21(a)(3))).
(2) Report.--Not later than December 31, 2004, the
Secretary shall submit a report to Congress on the study
conducted under paragraph (1) together with recommendations for
such legislation and administrative actions as the Secretary
considers appropriate.
SEC. 503. EXTENSION OF REASONABLE COST CONTRACTS.
(a) Five-Year Extension.--Section 1876(h)(5)(C) (42 U.S.C.
1395mm(h)(5)(C)) is amended by striking ``2004'' and inserting
``2009''.
(b) Application of Certain Medicare+Choice Requirements to Cost
Contracts Extended or Renewed After 2003.--Section 1876(h) (42 U.S.C.
1395mm(h)(5)), as amended by subsection (a), is amended--
(1) by redesignating paragraph (5) as paragraph (6); and
(2) by inserting after paragraph (4) the following new
paragraph:
``(5) Any reasonable cost reimbursement contract with an eligible
organization under this subsection that is extended or renewed on or
after the date of the enactment of the Beneficiary Access to Care and
Medicare Equity Act of 2002 for plan years beginning on or after
January 1, 2004, shall provide that the following provisions of the
Medicare+Choice program under part C shall apply to such organization
and such contract in a substantially similar manner as such provisions
apply to Medicare+Choice organizations and Medicare+Choice plans under
such part:
``(A) Paragraph (1) of section 1852(e) (relating to the
requirement of having an ongoing quality assurance program) and
paragraph (2)(B) of such section (relating to the required
elements for such a program).
``(B) Section 1852(j)(4) (relating to limitations on
physician incentive plans).
``(C) Section 1854(c) (relating to the requirement of
uniform premiums among individuals enrolled in the plan).
``(D) Section 1854(g) (relating to restrictions on
imposition of premium taxes with respect to payments to
organizations).
``(E) Section 1856(b) (regarding compliance with the
standards established by regulation pursuant to such section,
including the provisions of paragraph (3) of such section
relating to relation to State laws).
``(F) Section 1852(a)(3)(A) (regarding the authority of
organizations to include supplemental health care benefits
under the plan subject to the approval of the Secretary).
``(G) The provisions of part C relating to timelines for
benefit filings, contract renewal, and beneficiary
notification.
``(H) Section 1854(a)(5)(C) (relating to proposed cost-
sharing under the contract being subject to review by the
Secretary).''.
SEC. 504. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION (SHMO)
DEMONSTRATION PROJECT.
(a) 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, 2006''.
(b) 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.
SEC. 505. 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
Secretary 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 1 year after the date
of the enactment of this Act, the Secretary 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. 506. EXTENSION OF NEW ENTRY BONUS.
Section 1853(i) (42 U.S.C. 1395w-23(i)) is amended--
(1) in paragraph (1), by inserting ``, or filed notice with
the Secretary as of October 3, 2002, that they will not be
offering such a plan as of January 1, 2002, or as of January 1,
2003'' after ``January 1, 2001'' in the matter preceding
subparagraph (A); and
(2) in paragraph (2), by inserting ``(or 4-year period in
the case of a Medicare+Choice plan that is not a
Medicare+Choice private fee-for-service plan or a plan
operating under demonstration project authority)'' after ``2-
year period''.
SEC. 507. PAYMENT BY PACE PROVIDERS FOR MEDICARE AND MEDICAID SERVICES
FURNISHED BY NONCONTRACT PROVIDERS.
(a) Medicare Services.--
(1) Medicare services furnished by Providers of Services.--
Section 1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O)) is amended--
(A) by striking ``part C or'' and inserting ``part
C, with a PACE provider under section 1894 or 1934,
or'';
(B) by striking ``(i)'';
(C) by striking ``and (ii)''; and
(D) by striking ``members of the organization'' and
inserting ``members of the organization or PACE program
eligible individuals enrolled with the PACE
provider,''.
(2) Medicare services furnished by physicians and other
entities.--Section 1894(b) (42 U.S.C. 1395eee(b)) is amended by
adding at the end the following new paragraphs:
``(3) Treatment of medicare services furnished by
noncontract physicians and other entities.--
``(A) Application of medicare+choice requirement
with respect to medicare services furnished by
noncontract physicians and other entities.--Section
1852(k)(1) (relating to limitations on balance billing
against Medicare+Choice organizations for noncontract
physicians and other entities with respect to services
covered under this title) shall apply to PACE
providers, PACE program eligible individuals enrolled
with such PACE providers, and physicians and other
entities that do not have a contract establishing
payment amounts for services furnished to such an
individual in the same manner as such section applies
to Medicare+Choice organizations, individuals enrolled
with such organizations, and physicians and other
entities referred to in such section.
``(B) Reference to related provision for
noncontract providers of services.--For the provision
relating to limitations on balance billing against PACE
providers for services covered under this title
furnished by noncontract providers of services, see
section 1866(a)(1)(O).
``(4) Reference to related provision for services
covered under title xix but not under this title.--For
provisions relating to limitations on payments to
providers participating under the State plan under
title XIX that do not have a contract with a PACE
provider establishing payment amounts for services
covered under such plan (but not under this title) when
such services are furnished to enrollees of that PACE
provider, see section 1902(a)(66).''.
(b) Medicaid Services.--
(1) Requirement under state plan.--Section 1902(a) (42
U.S.C. 1396a(a) is amended--
(A) in paragraph (64), by striking ``and'' at the
end;
(B) in paragraph (65), by striking the period at
the end and inserting ``; and''; and
(C) by inserting after paragraph (65) the following
new paragraph:
``(66) provide, with respect to services covered
under the State plan (but not under title XVIII) that
are furnished to a PACE program eligible individual
enrolled with a PACE provider by a provider
participating under the State plan that does not have a
contract with the PACE provider that establishes
payment amounts for such services, that such
participating provider may not require the PACE
provider to pay the participating provider an amount
greater than the amount that would otherwise be payable
for the service to the participating provider under the
State plan for the State where the PACE provider is
located (in accordance with regulations issued by the
Secretary).''.
(2) Reference in medicaid statute.--Section 1934(b) (42
U.S.C. 1396u-4(b)) is amended by adding at the end the
following new paragraphs:
``(3) Treatment of medicare services furnished by
noncontract physicians and other entities.--
``(A) Application of medicare+choice requirement
with respect to medicare services furnished by
noncontract physicians and other entities.--Section
1852(k)(1) (relating to limitations on balance billing
against Medicare+Choice organizations for noncontract
physicians and other entities with respect to services
covered under title XVIII) shall apply to PACE
providers, PACE program eligible individuals enrolled
with such PACE providers, and physicians and other
entities that do not have a contract establishing
payment amounts for services furnished to such an
individual in the same manner as such section applies
to Medicare+Choice organizations, individuals enrolled
with such organizations, and physicians and other
entities referred to in such section.
``(B) Reference to related provision for
noncontract providers of services.--For the provision
relating to limitations on balance billing against PACE
providers for services covered under title XVIII
furnished by noncontract providers of services, see
section 1866(a)(1)(O).
``(4) Reference to related provision for services
covered under this title but not under title xviii.--
For provisions relating to limitations on payments to
providers participating under the State plan under this
title that do not have a contract with a PACE provider
establishing payment amounts for services covered under
such plan (but not under title XVIII) when such
services are furnished to enrollees of that PACE
provider, see section 1902(a)(66).''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 2003.
SEC. 508. REFERENCE TO IMPLEMENTATION OF CERTAIN MEDICARE+CHOICE
PROGRAM PROVISIONS IN 2003.
For the provisions related to the implementation of certain
Medicare+Choice program provisions in 2003, see section 807(c).
TITLE VI--MEDICARE APPEALS, REGULATORY, AND CONTRACTING IMPROVEMENTS
Subtitle A--Regulatory Reform
SEC. 601. RULES FOR THE PUBLICATION OF A FINAL REGULATION BASED ON THE
PREVIOUS PUBLICATION OF AN INTERIM FINAL REGULATION.
(a) In General.--Section 1871(a) (42 U.S.C. 1395hh(a)) is amended
by adding at the end the following new paragraph:
``(3)(A) With respect to the publication of a final regulation
based on the previous publication of an interim final regulation--
``(i) subject to subparagraph (ii), the Secretary shall
publish the final regulation within the 12-month period that
begins on the date of publication of the interim final
regulation;
``(ii) if a final regulation is not published by the
deadline established under this paragraph, the interim final
regulation shall not continue in effect unless the Secretary
publishes a notice described in subparagraph (B) by such
deadline; and
``(iii) the final regulation shall include responses to
comments submitted in response to the interim final regulation.
``(B) If the Secretary determines before the deadline otherwise
established in this paragraph that there is good cause, specified in a
notice published before such deadline, for delaying the deadline
otherwise applicable under this paragraph, the deadline otherwise
established under this paragraph shall be extended for such period (not
to exceed 12 months) as the Secretary specifies in such notice.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act and shall apply to
interim final regulations published on or after such date.
(c) Status of Pending Interim Final Regulations.--Not later
than 6 months after the date of the enactment of this Act, the
Secretary shall publish a notice in the Federal Register that
provides the status of each interim final regulation that was
published on or before the date of the enactment of this Act
and for which no final regulation has been published. Such
notice shall include the date by which the Secretary plans to
publish the final regulation that is based on the interim final
regulation.
SEC. 602. COMPLIANCE WITH CHANGES IN REGULATIONS AND POLICIES.
(a) No Retroactive Application of Substantive Changes.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh) is amended
by adding at the end the following new subsection:
``(d)(1)(A) A substantive change in regulations, manual
instructions, interpretative rules, statements of policy, or guidelines
of general applicability under this title shall not be applied (by
extrapolation or otherwise) retroactively to items and services
furnished before the effective date of the change, unless the Secretary
determines that--
``(i) such retroactive application is necessary to comply
with statutory requirements; or
``(ii) failure to apply the change retroactively would be
contrary to the public interest.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to substantive changes issued on or after the date
of the enactment of this Act.
(b) Timeline for Compliance With Substantive Changes After
Notice.--
(1) In general.--Section 1871(d)(1), as added by subsection
(a), is amended by adding at the end the following:
``(B) A compliance action may be made against a provider of
services, physician, practitioner, or other supplier with respect to
noncompliance with such a substantive change only for items and
services furnished on or after the effective date of the change.
``(C)(i) Except as provided in clause (ii), a substantive change
may not take effect until not earlier than the date that is the end of
the 30-day period that begins on the date that the Secretary has issued
or published, as the case may be, the substantive change.
``(ii) The Secretary may provide for a substantive change to take
effect on a date that precedes the end of the 30-day period under
clause (i) if the Secretary finds that waiver of such 30-day period is
necessary to comply with statutory requirements or that the application
of such 30-day period is contrary to the public interest. If the
Secretary provides for an earlier effective date pursuant to this
clause, the Secretary shall include in the issuance or publication of
the substantive change a finding described in the first sentence, and a
brief statement of the reasons for such finding.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to compliance actions undertaken on or after the
date of the enactment of this Act.
SEC. 603. REPORT ON LEGAL AND REGULATORY INCONSISTENCIES.
Section 1871 (42 U.S.C. 1395hh), as amended by section 602(a)(1),
is amended by adding at the end the following new subsection:
``(e)(1) Not later than 2 years after the date of the enactment of
this subsection, and every 2 years thereafter, the Secretary shall
submit to Congress a report with respect to the administration of this
title and areas of inconsistency or conflict among the various
provisions under law and regulation.
``(2) In preparing a report under paragraph (1), the Secretary
shall collect--
``(A) information from beneficiaries, providers of
services, physicians, practitioners, and other suppliers with
respect to such areas of inconsistency and conflict; and
``(B) information from medicare contractors that tracks the
nature of all communications and correspondence.
``(3) A report under paragraph (1) shall include a description of
efforts by the Secretary to reduce such inconsistency or conflicts, and
recommendations for legislation or administrative action that the
Secretary determines appropriate to further reduce such inconsistency
or conflicts.''.
Subtitle B--Appeals Process Reform
SEC. 611. SUBMISSION OF PLAN FOR TRANSFER OF RESPONSIBILITY FOR
MEDICARE APPEALS.
(a) Submission of Transition Plan.--
(1) In general.--Not later than April 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) Contents.--The plan shall include information on the
following:
(A) Workload.--The number of such administrative
law judges and support staff required now and in the
future to hear and decide such cases in a timely
manner, taking into account the current and anticipated
claims volume, appeals, number of beneficiaries, and
statutory changes.
(B) Cost projections and financing.--Funding levels
required for fiscal year 2004 and subsequent fiscal
years to carry out the functions transferred under the
plan and how such transfer should be financed.
(C) Transition timetable.--A timetable for the
transition.
(D) Regulations.--The establishment of specific
regulations to govern the appeals process.
(E) Case tracking.--The development of a unified
case tracking system that will facilitate the
maintenance and transfer of case specific data across
both the fee-for-service and managed care components of
the medicare program.
(F) Feasibility of precedential authority.--The
feasibility of developing a process to give decisions
of the Departmental Appeals Board in the Department of
Health and Human Services addressing broad legal issues
binding, precedential authority.
(G) Access to administrative law judges.--The
feasibility of--
(i) filing appeals with administrative law
judges electronically; and
(ii) conducting hearings using tele- or
video-conference technologies.
(H) Independence of judges.--The steps that should
be taken to ensure the independence of judges
performing the administrative law judge functions that
are transferred under the plan from the Centers for
Medicare & Medicaid Services and its contractors.
(I) Geographic distribution.--The steps that should
be taken to provide for an appropriate geographic
distribution of judges performing the administrative
law judge functions that are transferred under the plan
throughout the United States to ensure timely access to
such judges.
(J) Hiring.--The steps that should be taken to hire
judges (and support staff) to perform the
administrative law judge functions that are transferred
under the plan.
(K) Performance standards.--The establishment of
performance standards for judges performing the
administrative law judge functions that are transferred
under the plan with respect to timelines for decisions
in cases under title XVIII.
(L) Shared resources.--The feasibility of the
Secretary entering into such arrangements with the
Commissioner of Social Security as may be appropriate
with respect to transferred functions under the plan to
share office space, support staff, and other resources,
with appropriate reimbursement.
(M) Training.--The training that should be provided
to judges performing the administrative law judge
functions that are transferred under the plan with
respect to laws and regulations under title XVIII.
(3) Additional information.--The plan may also include
recommendations for further congressional action, including
modifications to the requirements and deadlines established
under section 1869 of the Social Security Act (as amended by
sections 521 and 522 of BIPA (114 Stat. 2763A-534) and this
Act).
(b) GAO Evaluation.--The Comptroller General of the United States
shall--
(1) evaluate the plan submitted under subsection (a); and
(2) not later than 6 months after such submission, submit
to Congress a report on such evaluation.
SEC. 612. EXPEDITED ACCESS TO JUDICIAL REVIEW.
(a) In General.--Section 1869(b) (42 U.S.C. 1395ff(b)) is amended--
(1) in paragraph (1)(A), by inserting ``, subject to
paragraph (2),'' before ``to judicial review of the Secretary's
final decision''; and
(2) by adding at the end the following new paragraph:
``(2) Expedited access to judicial review.--
``(A) In general.--The Secretary shall establish a
process under which a provider of services or supplier
that furnishes an item or service or a beneficiary who
has filed an appeal under paragraph (1) (other than an
appeal filed under paragraph (1)(F)(i)) may obtain
access to judicial review when a review entity
(described in subparagraph (D)), on its own motion or
at the request of the appellant, determines that the
Departmental Appeals Board does not have the authority
to decide the question of law or regulation relevant to
the matters in controversy and that there is no
material issue of fact in dispute. The appellant may
make such request only once with respect to a question
of law or regulation for a specific matter in dispute
in a case of an appeal.
``(B) Prompt determinations.--If, after or
coincident with appropriately filing a request for an
administrative hearing, the appellant requests a
determination by the appropriate review entity that the
Departmental Appeals Board does not have the authority
to decide the question of law or regulations relevant
to the matters in controversy and that there is no
material issue of fact in dispute and if such request
is accompanied by the documents and materials as the
appropriate review entity shall require for purposes of
making such determination, such review entity shall
make a determination on the request in writing within
60 days after the date such review entity receives the
request and such accompanying documents and materials.
Such a determination by such review entity 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 entity--
``(I) determines that there are no
material issues of fact in dispute and
that the only issue is one of law or
regulation that the Departmental
Appeals Board does not have authority
to decide; or
``(II) fails to make such
determination within the period
provided under subparagraph (B);
then the appellant may bring a civil action as
described in this subparagraph.
``(ii) Deadline for filing.--Such action
shall be filed, in the case described in--
``(I) clause (i)(I), within 60 days
of the date of the determination
described in such clause; or
``(II) clause (i)(II), within 60
days of the end of the period provided
under subparagraph (B) for the
determination.
``(iii) Venue.--Such action shall be
brought in the district court of the United
States for the judicial district in which the
appellant is located (or, in the case of an
action brought jointly by more than one
applicant, the judicial district in which the
greatest number of applicants are located) or
in the district court for the District of
Columbia.
``(iv) Interest on any amounts in
controversy.--Where a provider of services or
supplier is granted judicial review pursuant to
this paragraph, the amount in controversy (if
any) shall be subject to annual interest
beginning on the first day of the first month
beginning after the 60-day period as determined
pursuant to clause (ii) and equal to the rate
of interest on obligations issued for purchase
by the Federal Supplementary Medical Insurance
Trust Fund for the month in which the civil
action authorized under this paragraph is
commenced, to be awarded by the reviewing court
in favor of the prevailing party. No interest
awarded pursuant to the preceding sentence
shall be deemed income or cost for the purposes
of determining reimbursement due providers of
services, physicians, practitioners, and other
suppliers under this Act.
``(D) Review entity defined.--For purposes of this
subsection, a `review entity' is a panel of no more
than 3 members from the Departmental Appeals Board,
selected for the purpose of making determinations under
this paragraph.''.
(b) Application to Provider Agreement Determinations.--Section
1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
(1) by inserting ``(A)'' after ``(h)(1)''; and
(2) by adding at the end the following new subparagraph:
``(B) An institution or agency described in subparagraph (A) that
has filed for a hearing under subparagraph (A) shall have expedited
access to judicial review under this subparagraph in the same manner as
providers of services, suppliers, and beneficiaries may obtain
expedited access to judicial review under the process established under
section 1869(b)(2). Nothing in this subparagraph shall be construed to
affect the application of any remedy imposed under section 1819 during
the pendency of an appeal under this subparagraph.''.
(c) Conforming Amendment.--Section 1869(b)(1)(F)(ii) (42 U.S.C.
1395ff(b)(1)(F)(ii)) is amended to read as follows:
``(ii) Reference to expedited access to
judicial review.--For the provision relating to
expedited access to judicial review, see
paragraph (2).''.
(d) Effective Date.--The amendments made by this section shall
apply to appeals filed on or after October 1, 2003.
SEC. 613. EXPEDITED REVIEW OF CERTAIN PROVIDER AGREEMENT
DETERMINATIONS.
(a) Termination and Certain Other Immediate Remedies.--
(1) In general.--The Secretary shall develop and implement
a process to expedite proceedings under sections 1866(h) of the
Social Security Act (42 U.S.C. 1395cc(h)) in which--
(A) the remedy of termination of participation has
been imposed;
(B) a sanction described in clause (i) or (iii) of
section 1819(h)(2)(B) of such Act (42 U.S.C. 1395i-
3(h)(2)(B)) has been imposed, but only if such sanction
has been imposed on an immediate basis; or
(C) the Secretary has required a skilled nursing
facility to suspend operations of a nurse aide training
program.
(2) Priority for cases of termination.--Under the process
described in paragraph (1), priority shall be provided in cases
of termination described in subparagraph (A) of such paragraph.
(b) Increased Financial Support.--In addition to any amounts
otherwise appropriated, to reduce by 50 percent the average time for
administrative determinations on appeals under section 1866(h) of the
Social Security Act (42 U.S.C. 1395cc(h)), there are authorized to be
appropriated (in appropriate part from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund)
to the Secretary such sums for fiscal year 2003 and each subsequent
fiscal year as may be necessary to increase the number of
administrative law judges (and their staffs) at the Departmental
Appeals Board of the Department of Health and Human Services and to
educate such judges and staff on long-term care issues.
SEC. 614. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) Timeframes for the Completion of the Record.--Section 1869(b)
(42 U.S.C. 1395ff(b)), as amended by section 612(a)(2), is amended by
adding at the end the following new paragraph:
``(3) Timely completion of the record.--
``(A) Deadline.--Subject to subparagraph (B), the
deadline to complete the record in a hearing before an
administrative law judge or a review by the
Departmental Appeals Board is 90 days after the date
the request for the review or hearing is filed.
``(B) Extensions for good cause.--The person filing
a request under subparagraph (A) may request an
extension of such deadline for good cause. The
administrative law judge, in the case of a hearing, and
the Departmental Appeals Board, in the case of a
review, may extend such deadline based upon a finding
of good cause to a date specified by the judge or
Board, as the case may be.
``(C) Delay in decision deadlines until completion
of record.--Notwithstanding any other provision of this
section, the deadlines otherwise established under
subsection (d) for the making of determinations in
hearings or review under this section are 90 days after
the date on which the record is complete.
``(D) Complete record described.--For purposes of
this paragraph, a record is complete when the
administrative law judge, in the case of a hearing, or
the Departmental Appeals Board, in the case of a
review, has received--
``(i) written or testimonial evidence, or
both, submitted by the person filing the
request,
``(ii) written or oral argument, or both,
``(iii) the decision of, and the record
for, the prior level of appeal, and
``(iv) such other evidence as such judge or
Board, as the case may be, determines is
required to make a determination on the
request.''.
(b) Use of Patients' Medical Records.--Section 1869(c)(3)(B)(i) (42
U.S.C. 1395ff(c)(3)(B)(i)) is amended by inserting ``(including the
medical records of the individual involved)'' after ``clinical
experience''.
(c) Notice Requirements for Medicare Appeals.--
(1) Initial determinations and redeterminations.--Section
1869(a) (42 U.S.C. 1395ff(a)) is amended by adding at the end
the following new paragraph:
``(4) Requirements of notice of determinations and
redeterminations.--A written notice of a determination on an
initial determination or on a redetermination, insofar as such
determination or redetermination results in a denial of a claim
for benefits, shall be provided in printed form and written in
a manner to be understood by the beneficiary and shall
include--
``(A) the reasons for the determination, including,
as appropriate--
``(i) upon request in the case of an
initial determination, the provision of the
policy, manual, or regulation that resulted in
the denial; and
``(ii) in the case of a redetermination, a
summary of the clinical or scientific evidence
used in making the determination (as
appropriate);
``(B) the procedures for obtaining additional
information concerning the determination or
redetermination; and
``(C) notification of the right to seek a
redetermination or otherwise appeal the determination
and instructions on how to initiate such a
redetermination or appeal under this section.''.
(2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C.
1395ff(c)(3)(E)) is amended to read as follows:
``(E) Explanation of decision.--Any decision with
respect to a reconsideration of a qualified independent
contractor shall be in writing in a manner to be
understood by the beneficiary and shall include--
``(i) to the extent appropriate, a detailed
explanation of the decision as well as a
discussion of the pertinent facts and
applicable regulations applied in making such
decision;
``(ii) a notification of the right to
appeal such determination and instructions on
how to initiate such appeal under this section;
and
``(iii) in the case of a determination of
whether an item or service is reasonable and
necessary for the diagnosis or treatment of
illness or injury (under section 1862(a)(1)(A))
an explanation of the medical or scientific
rationale for the decision.''.
(3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)) is
amended--
(A) in the heading, by inserting ``; Notice'' after
``Secretary''; and
(B) by adding at the end the following new
paragraph:
``(4) Notice.--Notice of the decision of an administrative
law judge shall be in writing in a manner to be understood by
the beneficiary and shall include--
``(A) the specific reasons for the determination
(including, to the extent appropriate, a summary of the
clinical or scientific evidence used in making the
determination);
``(B) the procedures for obtaining additional
information concerning the decision; and
``(C) notification of the right to appeal the
decision and instructions on how to initiate such an
appeal under this section.''.
(4) Preparation of record for appeal.--Section
1869(c)(3)(J) (42 U.S.C. 1395ff(c)(3)(J)) is amended by
striking ``such information as is required for an appeal'' and
inserting ``the record for the appeal''.
(d) Qualified Independent Contractors.--
(1) Eligibility requirements of qualified independent
contractors.--Section 1869(c) (42 U.S.C. 1395ff(c)) is
amended--
(A) in paragraph (2)--
(i) by inserting ``(except in the case of a
utilization and quality control peer review
organization, as defined in section 1152)''
after ``means an entity or organization that'';
and
(ii) by striking the period at the end and
inserting the following: ``and meets the
following requirements:
``(A) General requirements.--
``(i) The entity or organization has
(directly or through contracts or other
arrangements) sufficient medical, legal, and
other expertise (including knowledge of the
program under this title) and sufficient
staffing to carry out duties of a qualified
independent contractor under this section on a
timely basis.
``(ii) The entity or organization has
provided assurances that it will conduct
activities consistent with the applicable
requirements of this section, including that it
will not conduct any activities in a case
unless the independence requirements of
subparagraph (B) are met with respect to the
case.
``(iii) The entity or organization meets
such other requirements as the Secretary
provides by regulation.
``(B) Independence requirements.--
``(i) In general.--Subject to clause (ii),
an entity or organization meets the
independence requirements of this subparagraph
with respect to any case if the entity--
``(I) is not a related party (as
defined in subsection (g)(5));
``(II) does not have a material
familial, financial, or professional
relationship with such a party in
relation to such case; and
``(III) does not otherwise have a
conflict of interest with such a party
(as determined under regulations).
``(ii) Exception for 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.''; and
(B) in paragraph (3)(A), by striking ``, and shall
have sufficient training and expertise in medical
science and legal matters to make reconsiderations
under this subsection''.
(2) Eligibility requirements for reviewers.--Section 1869
(42 U.S.C. 1395ff) is amended--
(A) by amending subsection (c)(3)(D) to read as
follows:
``(D) Qualifications for reviewers.--The
requirements of subsection (g) shall be met (relating
to qualifications of reviewing professionals).''; and
(B) by adding at the end the following new
subsection:
``(g) Qualifications of Reviewers.--
``(1) In general.--In reviewing determinations under this
section, a qualified independent contractor shall assure that--
``(A) each individual conducting a review shall
meet the qualifications of paragraph (2);
``(B) compensation provided by the contractor to
each such reviewer is consistent with paragraph (3);
and
``(C) in the case of a review by a panel described
in subsection (c)(3)(B) composed of physicians or other
health care professionals (each in this subsection
referred to as a `reviewing professional'), each
reviewing professional meets the qualifications
described in paragraph (4).
``(2) Independence.--
``(A) In general.--Subject to subparagraph (B),
each individual conducting a review in a case shall--
``(i) not be a related party (as defined in
paragraph (5));
``(ii) not have a material familial,
financial, or professional relationship with
such a party in the case under review; and
``(iii) not otherwise have a conflict of
interest with such a party (as determined under
regulations).
``(B) Exception.--Nothing in subparagraph (A) shall
be construed to--
``(i) prohibit an individual, solely on the
basis of affiliation with a fiscal
intermediary, carrier, or other contractor,
from serving as a reviewing professional if--
``(I) a nonaffiliated individual is
not reasonably available;
``(II) the affiliated individual is
not involved in the provision of items
or services in the case under review;
``(III) the fact of such an
affiliation is disclosed to the
Secretary and the beneficiary (or
authorized representative) and neither
party objects; and
``(IV) the affiliated individual is
not an employee of the intermediary,
carrier, or contractor and does not
provide services exclusively or
primarily to or on behalf of such
intermediary, carrier, or contractor;
``(ii) prohibit an individual who has staff
privileges at the institution where the
treatment involved takes place from serving as
a reviewer merely on the basis of such
affiliation if the affiliation is disclosed to
the Secretary and the beneficiary (or
authorized representative), and neither party
objects; or
``(iii) prohibit receipt of compensation by
a reviewing professional from a contractor if
the compensation is provided consistent with
paragraph (3).
``(3) Limitations on reviewer compensation.--Compensation
provided by a qualified independent contractor to a reviewer in
connection with a review under this section shall not be
contingent on the decision rendered by the reviewer.
``(4) Licensure and expertise.--Each reviewing professional
shall be a physician (allopathic or osteopathic) or health care
professional who--
``(A) is appropriately credentialed or licensed in
1 or more States to deliver health care services; and
``(B) has medical expertise in the field of
practice that is appropriate for the items or services
at issue.
``(5) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a case under
this title involving an individual beneficiary, any of the
following:
``(A) The Secretary, the medicare administrative
contractor involved, or any fiduciary, officer,
director, or employee of the Department of Health and
Human Services, or of such contractor.
``(B) The individual (or authorized
representative).
``(C) The health care professional that provides
the items or services involved in the case.
``(D) The institution at which the items or
services (or treatment) involved in the case are
provided.
``(E) The manufacturer of any drug or other item
that is included in the items or services involved in
the case.
``(F) Any other party determined under any
regulations to have a substantial interest in the case
involved.''.
(3) Number of qualified independent contractors.--Section
1869(c)(4) (42 U.S.C. 1395ff(c)(4)) is amended by striking
``12'' and inserting ``4''.
(e) Implementation of Certain BIPA Reforms.--
(1) Delay in certain bipa reforms.--Section 521(d) of BIPA
(114 Stat. 2763A-543) is amended to read as follows:
``(d) Effective Date.--
``(1) In general.--Except as specified in paragraph (2),
the amendments made by this section shall apply with respect to
initial determinations made on or after December 1, 2003.
``(2) Expedited proceedings and reconsideration
requirements.--For the following provisions, the amendments
made by subsection (a) shall apply with respect to initial
determinations made on or after October 1, 2002:
``(A) Subsection (b)(1)(F)(i) of section 1869 of
the Social Security Act.
``(B) Subsection (c)(3)(C)(iii) of such section.
``(C) Subsection (c)(3)(C)(iv) of such section to
the extent that it applies to expedited
reconsiderations under subsection (c)(3)(C)(iii) of
such section.
``(3) Transitional use of peer review organizations to
conduct expedited reconsiderations until qics are
operational.--Expedited reconsiderations of initial
determinations under section 1869(c)(3)(C)(iii) of the Social
Security Act shall be made by peer review organizations until
qualified independent contractors are available for such
expedited reconsiderations.''.
(2) Conforming amendment.--Section 521(c) of BIPA (114
Stat. 2763A-543) and section 1869(c)(3)(C)(iii)(III) of the
Social Security Act (42 U.S.C. 1395ff(c)(3)(C)(iii)(III)), as
added by section 521 of BIPA, are repealed.
(f) Effective Date.--The amendments made by this section shall be
effective as if included in the enactment of the respective provisions
of subtitle C of title V of BIPA, 114 Stat. 2763A-534.
(g) Transition.--In applying section 1869(g) of the Social Security
Act (as added by subsection (d)(2)), any reference to a medicare
administrative contractor shall be deemed to include a reference to a
fiscal intermediary under section 1816 of the Social Security Act (42
U.S.C. 1395h) and a carrier under section 1842 of such Act (42 U.S.C.
1395u).
SEC. 615. HEARING RIGHTS RELATED TO DECISIONS BY THE SECRETARY TO DENY
OR NOT RENEW A MEDICARE ENROLLMENT AGREEMENT;
CONSULTATION BEFORE CHANGING PROVIDER ENROLLMENT FORMS.
(a) Hearing Rights.--
(1) In general.--Section 1866 (42 U.S.C. 1395cc) is amended
by adding at the end the following new subsection:
``(j) Hearing Rights in Cases of Denial or Nonrenewal.--The
Secretary shall establish by regulation procedures under which--
``(1) there are deadlines for actions on applications for
enrollment (and, if applicable, renewal of enrollment); and
``(2) providers of services, physicians, practitioners, and
suppliers whose application to enroll (or, if applicable, to
renew enrollment) are denied are provided a mechanism to appeal
such denial and a deadline for consideration of such
appeals.''.
(2) Effective date.--The Secretary shall provide for the
establishment of the procedures under the amendment made by
paragraph (1) within 18 months after the date of the enactment
of this Act.
(b) Consultation Before Changing Provider Enrollment Forms.--
Section 1871 (42 U.S.C. 1395hh), as amended by sections 602 and 603, is
amended by adding at the end the following new subsection:
``(f) The Secretary shall consult with providers of services,
physicians, practitioners, and suppliers before making changes in the
provider enrollment forms required of such providers, physicians,
practitioners, and suppliers to be eligible to submit claims for which
payment may be made under this title.''.
SEC. 616. APPEALS BY PROVIDERS WHEN THERE IS NO OTHER PARTY AVAILABLE.
(a) In General.--Section 1870 (42 U.S.C. 1395gg) is amended by
adding at the end the following new subsection:
``(h) Notwithstanding subsection (f) or any other provision of law,
the Secretary shall permit a provider of services, physician,
practitioner, or other supplier to appeal any determination of the
Secretary under this title relating to services rendered under this
title to an individual who subsequently dies if there is no other party
available to appeal such determination.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act and shall apply to
items and services furnished on or after such date.
SEC. 617. PROVIDER ACCESS TO REVIEW OF LOCAL COVERAGE DETERMINATIONS.
(a) Provider Access To Review of Local Coverage Determinations.--
Section 1869(f)(5) (42 U.S.C. 1395ff(f)(5)) is amended to read as
follows:
``(5) Aggrieved party defined.--In this section, the term
`aggrieved party' means--
``(A) with respect to a national coverage
determination, an individual entitled to benefits under
part A, or enrolled under part B, or both, who is in
need of the items or services that are the subject of
the coverage determination; and
``(B) with respect to a local coverage
determination--
``(i) an individual who is entitled to
benefits under part A, or enrolled under part
B, or both, who is adversely affected by such a
determination; or
``(ii) a provider of services, physician,
practitioner, or supplier that is adversely
affected by such a determination.''.
(b) Clarification of Local Coverage Determination Definition.--
Section 1869(f)(2)(B) (42 U.S.C. 1395ff(f)(2)(B)) is amended by
inserting ``, including, where appropriate, the specific requirements
and clinical indications relating to the medical necessity of an item
or service'' before the period at the end.
(c) Request for Local Coverage Determinations by Providers.--
Section 1869 (42 U.S.C. 1395ff), as amended by section 614(d)(2)(B), is
amended by adding at the end the following new subsection:
``(h) Request for Local Coverage Determinations by Providers.--
``(1) Establishment of process.--The Secretary shall
establish a process under which a provider of services,
physician, practitioner, or supplier who certifies that they
meet the requirements established in paragraph (3) may request
a local coverage determination in accordance with the
succeeding provisions of this subsection.
``(2) Provider local coverage determination request
defined.--In this subsection, the term `provider local coverage
determination request' means a request, filed with the
Secretary, at such time and in such form and manner as the
Secretary may specify, that the Secretary, pursuant to
paragraph (4)(A), require a fiscal intermediary, carrier, or
program safeguard contractor to make or revise a local coverage
determination under this section with respect to an item or
service.
``(3) Request requirements.--Under the process established
under paragraph (1), by not later than 30 days after the date
on which a provider local coverage determination request is
filed under paragraph (1), the Secretary shall determine
whether such request establishes that--
``(A) there have been at least 5 reversals of
redeterminations made by a fiscal intermediary or
carrier after a hearing before an administrative law
judge on claims submitted by the provider in at least 2
different cases before an administrative law judge;
``(B) each reversal described in subparagraph (A)
involves substantially similar material facts;
``(C) each reversal described in subparagraph (A)
involves the same medical necessity issue; and
``(D) at least 50 percent of the total number of
claims submitted by such provider within the past year
involving the substantially similar material facts
described in subparagraph (B) and the same medical
necessity issue described in subparagraph (C) have been
denied and have been reversed by an administrative law
judge.
``(4) Approval or rejection of request.--
``(A) Approval of request.--If the Secretary
determines that subparagraphs (A) through (D) of
paragraph (3) have been satisfied, the Secretary shall
require the fiscal intermediary, carrier, or program
safeguard contractor identified in the provider local
coverage determination request, to make or revise a
local coverage determination with respect to the item
or service that is the subject of the request not later
than the date that is 210 days after the date on which
the Secretary makes the determination. Such fiscal
intermediary, carrier, or program safeguard contractor
shall retain the discretion to determine whether or
not, and/or the circumstances under which, to cover the
item or service for which a local coverage
determination is requested. Nothing in this subsection
shall be construed to require a fiscal intermediary,
carrier or program safeguard contractor to develop a
local coverage determination that is inconsistent with
any national coverage determination, or any coverage
provision in this title or in regulation, manual, or
interpretive guidance of the Secretary.
``(B) Rejection of request.--If the Secretary
determines that subparagraphs (A) through (D) of
paragraph (3) have not been satisfied, the Secretary
shall reject the provider local coverage determination
request and shall notify the provider of services,
physician, practitioner, or supplier that filed the
request of the reason for such rejection and no further
proceedings in relation to such request shall be
conducted.''.
(d) Study and Report on the Use of Contractors To Monitor Medicare
Appeals.--
(1) Study.--The Secretary of Health and Human Services (in
this section referred to as the ``Secretary'') shall conduct a
study on the feasibility and advisability of requiring fiscal
intermediaries and carriers to monitor and track--
(A) the subject matter and status of claims denied
by the fiscal intermediary or carrier (as applicable)
that are appealed under section 1869 of the Social
Security Act (42 U.S.C. 1395ff), as added by section
522 of BIPA (114 Stat. 2763A-543) and amended by this
Act; and
(B) any final determination made with respect to
such claims.
(2) Report.--Not later than the date that is 1 year after
the date of the enactment of this Act, the Secretary shall
submit to Congress a report on the study conducted under
paragraph (1) together with such recommendations for
legislation and administrative action as the Commission
determines appropriate.
(e) Authorization of Appropriations.--There are authorized to be
appropriated such sums as are necessary to carry out the amendments
made by subsections (a), (b), and (c).
(f) Effective Dates.--
(1) Provider access to review of local coverage
determinations.--The amendments made by subsections (a) and (b)
shall apply to--
(A) any review of any local coverage determination
filed on or after October 1, 2002;
(B) any request to make such a determination made
on or after such date; or
(C) any local coverage determination made on or
after such date.
(2) Provider local coverage determination requests.--The
amendment made by subsection (c) shall apply with respect to
provider local coverage determination requests (as defined in
section 1869(h)(2) of the Social Security Act, as added by
subsection (c)) filed on or after the date of the enactment of
this Act.
Subtitle C--Contracting Reform
SEC. 621. INCREASED FLEXIBILITY IN MEDICARE ADMINISTRATION.
(a) Consolidation and Flexibility in Medicare Administration.--
(1) In general.--Title XVIII is amended by inserting after
section 1874 the following new section:
``contracts with medicare administrative contractors
``Sec. 1874A. (a) Authority.--
``(1) Authority to enter into contracts.--The Secretary may
enter into contracts with any eligible entity to serve as a
medicare administrative contractor with respect to the
performance of any or all of the functions described in
paragraph (4) or parts of those functions (or, to the extent
provided in a contract, to secure performance thereof by other
entities).
``(2) Eligibility of entities.--An entity is eligible to
enter into a contract with respect to the performance of a
particular function described in paragraph (4) only if--
``(A) the entity has demonstrated capability to
carry out such function;
``(B) the entity complies with such conflict of
interest standards as are generally applicable to
Federal acquisition and procurement;
``(C) the entity has sufficient assets to
financially support the performance of such function;
and
``(D) the entity meets such other requirements as
the Secretary may impose.
``(3) Medicare administrative contractor defined.--For
purposes of this title and title XI--
``(A) In general.--The term `medicare
administrative contractor' means an agency,
organization, or other person with a contract under
this section.
``(B) Appropriate medicare administrative
contractor.--With respect to the performance of a
particular function in relation to an individual
entitled to benefits under part A or enrolled under
part B, or both, a specific provider of services,
physician, practitioner, facility, or supplier (or
class of such providers of services, physicians,
practitioners, facilities, or suppliers), the
`appropriate' medicare administrative contractor is the
medicare administrative contractor that has a contract
under this section with respect to the performance of
that function in relation to that individual, provider
of services, physician, practitioner, facility, or
supplier or class of provider of services, physician,
practitioner, facility, or supplier.
``(4) Functions described.--The functions referred to in
paragraphs (1) and (2) are payment functions, provider services
functions, and beneficiary services functions as follows:
``(A) Determination of payment amounts.--
Determining (subject to the provisions of section 1878
and to such review by the Secretary as may be provided
for by the contracts) the amount of the payments
required pursuant to this title to be made to providers
of services, physicians, practitioners, facilities,
suppliers, and individuals.
``(B) Making payments.--Making payments described
in subparagraph (A) (including receipt, disbursement,
and accounting for funds in making such payments).
``(C) Beneficiary education and assistance.--
Serving as a center for, and communicating to
individuals entitled to benefits under part A or
enrolled under part B, or both, with respect to
education and outreach for those individuals, and
assistance with specific issues, concerns, or problems
of those individuals.
``(D) Provider consultative services.--Providing
consultative services to institutions, agencies, and
other persons to enable them to establish and maintain
fiscal records necessary for purposes of this title and
otherwise to qualify as providers of services,
physicians, practitioners, facilities, or suppliers.
``(E) Communication with providers.--Serving as a
center for, and communicating to providers of services,
physicians, practitioners, facilities, and suppliers,
any information or instructions furnished to the
medicare administrative contractor by the Secretary,
and serving as a channel of communication from such
providers, physicians, practitioners, facilities, and
suppliers to the Secretary.
``(F) Provider education and technical
assistance.--Performing the functions described in
subsections (e) and (f), relating to education,
training, and technical assistance to providers of
services, physicians, practitioners, facilities, and
suppliers.
``(G) Additional functions.--Performing such other
functions, including (subject to paragraph (5))
functions under the Medicare Integrity Program under
section 1893, as are necessary to carry out the
purposes of this title.
``(5) Relationship to mip contracts.--
``(A) Nonduplication of activities.--In entering
into contracts under this section, the Secretary shall
assure that activities of medicare administrative
contractors do not duplicate activities carried out
under contracts entered into 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, the Federal Acquisition Regulation, or in
subparagraph (B), the Secretary shall use competitive
procedures when entering into contracts with medicare
administrative contractors under this section.
``(B) Renewal of contracts.--The Secretary may
renew a contract with a medicare administrative
contractor under this section from term to term without
regard to section 5 of title 41, United States Code, or
any other provision of law requiring competition, if
the medicare administrative contractor has met or
exceeded the performance requirements applicable with
respect to the contract and contractor, except that the
Secretary shall provide for the application of
competitive procedures under such a contract not less
frequently than once every 6 years.
``(C) Transfer of functions.--The Secretary may
transfer functions among medicare administrative
contractors without regard to any provision of law
requiring competition. The Secretary shall ensure that
performance quality is considered in such transfers.
The Secretary shall provide notice (whether in the
Federal Register or otherwise) of any such transfer
(including a description of the functions so
transferred and contact information for the contractors
involved) to providers of services, physicians,
practitioners, facilities, and suppliers affected by
the transfer.
``(D) Incentives for quality.--The Secretary may
provide incentives for medicare administrative
contractors to provide quality service and to promote
efficiency.
``(2) Compliance with requirements.--No contract under this
section shall be entered into with any medicare administrative
contractor unless the Secretary finds that such medicare
administrative contractor will perform its obligations under
the contract efficiently and effectively and will meet such
requirements as to financial responsibility, legal authority,
and other matters as the Secretary finds pertinent.
``(3) Performance requirements.--
``(A) Development of specific performance
requirements.--The Secretary shall develop contract
performance requirements to carry out the specific
requirements applicable under this title to a function
described in subsection (a)(4) and shall develop
standards for measuring the extent to which a
contractor has met such requirements. In developing
such performance requirements and standards for
measurement, the Secretary shall consult with providers
of services, organizations representative of
beneficiaries under this title, and organizations and
agencies performing functions necessary to carry out
the purposes of this section with respect to such
performance requirements. The Secretary shall make such
performance requirements and measurement standards
available to the public.
``(B) Considerations.--The Secretary shall include,
as one of the standards, provider and beneficiary
satisfaction levels.
``(C) Inclusion in contracts.--All contractor
performance requirements shall be set forth in the
contract between the Secretary and the appropriate
medicare administrative contractor. Such performance
requirements--
``(i) shall reflect the performance
requirements published under subparagraph (A),
but may include additional performance
requirements;
``(ii) shall be used for evaluating
contractor performance under the contract; and
``(iii) shall be consistent with the
written statement of work provided under the
contract.
``(4) Information requirements.--The Secretary shall not
enter into a contract with a medicare administrative contractor
under this section unless the contractor agrees--
``(A) to furnish to the Secretary such timely
information and reports as the Secretary may find
necessary in performing his functions under this title;
and
``(B) to maintain such records and afford such
access thereto as the Secretary finds necessary to
assure the correctness and verification of the
information and reports under subparagraph (A) and
otherwise to carry out the purposes of this title.
``(5) Surety bond.--A contract with a medicare
administrative contractor under this section may require the
medicare administrative contractor, and any of its officers or
employees certifying payments or disbursing funds pursuant to
the contract, or otherwise participating in carrying out the
contract, to give surety bond to the United States in such
amount as the Secretary may deem appropriate.
``(c) Terms and Conditions.--
``(1) In general.--Subject to subsection (a)(6), a contract
with any medicare administrative contractor under this section
may contain such terms and conditions as the Secretary finds
necessary or appropriate and may provide for advances of funds
to the medicare administrative contractor for the making of
payments by it under subsection (a)(4)(B).
``(2) Prohibition on mandates for certain data
collection.--The Secretary may not require, as a condition of
entering into, or renewing, a contract under this section, that
the medicare administrative contractor match data obtained
other than in its activities under this title with data used in
the administration of this title for purposes of identifying
situations in which the provisions of section 1862(b) may
apply.
``(d) Limitation on Liability of Medicare Administrative
Contractors and Certain Officers.--
``(1) Certifying officer.--No individual designated
pursuant to a contract under this section as a certifying
officer shall, in the absence of the reckless disregard of the
individual's obligations or the intent by that individual to
defraud the United States, be liable with respect to any
payments certified by the individual under this section.
``(2) Disbursing officer.--No disbursing officer shall, in
the absence of the reckless disregard of the officer's
obligations or the intent by that officer to defraud the United
States, be liable with respect to any payment by such officer
under this section if it was based upon an authorization (which
meets the applicable requirements for such internal controls
established by the Comptroller General) of a certifying officer
designated as provided in paragraph (1) of this subsection.
``(3) Liability of medicare administrative contractor.--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 a payment, the medicare
administrative contractor acted with reckless disregard of its
obligations under its medicare administrative contract or with
intent to defraud the United States.
``(4) Relationship to false claims act.--Nothing in this
subsection shall be construed to limit liability for conduct
that would constitute a violation of sections 3729 through 3731
of title 31, United States Code (commonly known as the ``False
Claims Act'').
``(5) Indemnification by secretary.--
``(A) In general.--Notwithstanding any other
provision of law and subject to the succeeding
provisions of this paragraph, in the case of a medicare
administrative contractor (or a person who is a
director, officer, or employee of such a contractor or
who is engaged by the contractor to participate
directly in the claims administration process) who is
made a party to any judicial or administrative
proceeding arising from, or relating directly to, the
claims administration process under this title, the
Secretary may, to the extent specified in the contract
with the contractor, indemnify the contractor (and such
persons).
``(B) Conditions.--The Secretary may not provide
indemnification under subparagraph (A) insofar as the
liability for such costs arises directly from conduct
that is determined by the Secretary to be criminal in
nature, fraudulent, or grossly negligent.
``(C) Scope of indemnification.--Indemnification by
the Secretary under subparagraph (A) may include
payment of 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 a settlement. Any
indemnification under subparagraph (A) with respect to
amounts paid under a settlement are conditioned upon
the Secretary's prior written approval of the final
settlement.
``(E) Construction.--Nothing in this paragraph
shall be construed--
``(i) to change any common law immunity
that may be available to a medicare
administrative contractor or person described
in subparagraph (A); or
``(ii) to permit the payment of costs not
otherwise allowable, reasonable, or allocable
under the Federal Acquisition Regulations.''.
(2) Consideration of incorporation of current law
standards.--In developing contract performance requirements
under section 1874A(b) of the Social Security Act (as added by
paragraph (1)) the Secretary shall consider inclusion of the
performance standards described in sections 1816(f)(2) of such
Act (relating to timely processing of reconsiderations and
applications for exemptions) and section 1842(b)(2)(B) of such
Act (relating to timely review of determinations and fair
hearing requests), as such sections were in effect before the
date of the enactment of this Act.
(b) Conforming Amendments to Section 1816 (Relating to Fiscal
Intermediaries).--Section 1816 (42 U.S.C. 1395h) is amended as follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part a''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted through
contracts with medicare administrative contractors under section
1874A.''.
(3) Subsection (b) is repealed.
(4) Subsection (c) is amended--
(A) by striking paragraph (1); and
(B) in each of paragraphs (2)(A) and (3)(A), by
striking ``agreement under this section'' and inserting
``contract under section 1874A that provides for making
payments under this part''.
(5) Subsections (d) through (i) are repealed.
(6) Subsections (j) and (k) are each amended--
(A) by striking ``An agreement with an agency or
organization under this section'' and inserting ``A
contract with a medicare administrative contractor
under section 1874A with respect to the administration
of this part''; and
(B) by striking ``such agency or organization'' and
inserting ``such medicare administrative contractor''
each place it appears.
(7) Subsection (l) is repealed.
(c) Conforming Amendments to Section 1842 (Relating to Carriers).--
Section 1842 (42 U.S.C. 1395u) is amended as follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part b''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted through
contracts with medicare administrative contractors under section
1874A.''.
(3) Subsection (b) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)--
(i) by striking subparagraphs (A) and (B);
(ii) in subparagraph (C), by striking
``carriers'' and inserting ``medicare
administrative contractors''; and
(iii) by striking subparagraphs (D) and
(E);
(C) in paragraph (3)--
(i) in the matter before subparagraph (A),
by striking ``Each such contract shall provide
that the carrier'' and inserting ``The
Secretary'';
(ii) by striking ``will'' the first place
it appears in each of subparagraphs (A), (B),
(F), (G), (H), and (L) and inserting ``shall'';
(iii) in subparagraph (B), in the matter
before clause (i), by striking ``to the
policyholders and subscribers of the carrier''
and inserting ``to the policyholders and
subscribers of the medicare administrative
contractor'';
(iv) by striking subparagraphs (C), (D),
and (E);
(v) in subparagraph (H)--
(I) by striking ``if it makes
determinations or payments with respect
to physicians' services,''; and
(II) by striking ``carrier'' and
inserting ``medicare administrative
contractor'';
(vi) by striking subparagraph (I);
(vii) in subparagraph (L), by striking the
semicolon and inserting a period;
(viii) in the first sentence, after
subparagraph (L), by striking ``and shall
contain'' and all that follows through the
period; and
(ix) in the seventh sentence, by inserting
``medicare administrative contractor,'' after
``carrier,'';
(D) by striking paragraph (5);
(E) in paragraph (6)(D)(iv), by striking
``carrier'' and inserting ``medicare administrative
contractor''; and
(F) in paragraph (7), by striking ``the carrier''
and inserting ``the Secretary'' each place it appears.
(4) Subsection (c) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2), by striking ``contract under
this section which provides for the disbursement of
funds, as described in subsection (a)(1)(B),'' and
inserting ``contract under section 1874A that provides
for making payments under this part'';
(C) in paragraph (3)(A), by striking ``subsection
(a)(1)(B)'' and inserting ``section 1874A(a)(3)(B)'';
(D) in paragraph (4), by striking ``carrier'' and
inserting ``medicare administrative contractor'';
(E) in paragraph (5), by striking ``contract under
this section which provides for the disbursement of
funds, as described in subsection (a)(1)(B), shall
require the carrier'' and ``carrier responses'' and
inserting ``contract under section 1874A that provides
for making payments under this part shall require the
medicare administrative contractor'' and ``contractor
responses'', respectively; and
(F) by striking paragraph (6).
(5) Subsections (d), (e), and (f) are repealed.
(6) Subsection (g) is amended by striking ``carrier or
carriers'' and inserting ``medicare administrative contractor
or contractors''.
(7) Subsection (h) is amended--
(A) in paragraph (2)--
(i) by striking ``Each carrier having an
agreement with the Secretary under subsection
(a)'' and inserting ``The Secretary''; and
(ii) by striking ``Each such carrier'' and
inserting ``The Secretary'';
(B) in paragraph (3)(A)--
(i) by striking ``a carrier having an
agreement with the Secretary under subsection
(a)'' and inserting ``medicare administrative
contractor having a contract under section
1874A that provides for making payments under
this part''; and
(ii) by striking ``such carrier'' and
inserting ``such contractor'';
(C) in paragraph (3)(B)--
(i) by striking ``a carrier'' and inserting
``a medicare administrative contractor'' each
place it appears; and
(ii) by striking ``the carrier'' and
inserting ``the contractor'' each place it
appears; and
(D) in paragraphs (5)(A) and (5)(B)(iii), by
striking ``carriers'' and inserting ``medicare
administrative contractors'' each place it appears.
(8) Subsection (l) is amended--
(A) in paragraph (1)(A)(iii), by striking
``carrier'' and inserting ``medicare administrative
contractor''; and
(B) in paragraph (2), by striking ``carrier'' and
inserting ``medicare administrative contractor''.
(9) Subsection (p)(3)(A) is amended by striking ``carrier''
and inserting ``medicare administrative contractor''.
(10) Subsection (q)(1)(A) is amended by striking
``carrier''.
(d) Effective Date; Transition Rule.--
(1) Effective date.--
(A) 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
title, other than under this section) until such date
as the contract is let out for competitive bidding
under such amendments.
(C) Deadline for competitive bidding.--The
Secretary shall provide for the letting by competitive
bidding of all contracts for functions of medicare
administrative contractors for annual contract periods
that begin on or after October 1, 2010.
(2) General transition rules.--
(A) Authority to continue to enter into agreements
new and contracts and waiver of provider nomination
provisions during transition.--Prior to the date
specified in paragraph (1)(A), the Secretary may,
consistent with subparagraph (B), continue to enter
into agreements under section 1816 and contracts under
section 1842 of the Social Security Act (42 U.S.C.
1395h, 1395u). The Secretary may enter into new
agreements under section 1816 during the time period
without regard to any of the provider nomination
provisions of such section.
(B) Appropriate transition.--The Secretary shall
take such steps as are necessary to provide for an
appropriate transition from agreements under section
1816 and contracts under section 1842 of the Social
Security Act (42 U.S.C. 1395h, 1395u) to contracts
under section 1874A, as added by subsection (a)(1).
(3) Authorizing continuation of mip activities under
current contracts and agreements and under transition
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 agreements and contracts entered into pursuant to
paragraph (2)(A).
(e) References.--On and after the effective date provided under
subsection (d)(1), any reference to a fiscal intermediary or carrier
under title XI or XVIII of the Social Security Act (or any regulation,
manual instruction, interpretative rule, statement of policy, or
guideline issued to carry out such titles) shall be deemed a reference
to an appropriate medicare administrative contractor (as provided under
section 1874A of the Social Security Act).
(f) Secretarial Submission of Legislative Proposal.--Not later than
6 months after the date of the enactment of this Act, the Secretary
shall submit to the appropriate committees of Congress a legislative
proposal providing for such technical and conforming amendments in the
law as are required by the provisions of this section.
(g) Reports on Implementation.--
(1) Proposal for implementation.--At least 1 year before
the date specified in subsection (d)(1)(A), the Secretary shall
submit a report to Congress and the Comptroller General of the
United States that describes a plan for an appropriate
transition. 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.
Subtitle D--Education and Outreach Improvements
SEC. 631. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.
(a) Coordination of Education Funding.--
(1) In general.--The Social Security Act is amended by
inserting after section 1888 the following new section:
``provider education and technical assistance
``Sec. 1889. (a) Coordination of Education Funding.--The Secretary
shall coordinate the educational activities provided through medicare
contractors (as defined in subsection (e), including under section
1893) in order to maximize the effectiveness of Federal education
efforts for providers of services, physicians, practitioners, and
suppliers.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(3) Report.--Not later than October 1, 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
621(a)(1), is amended by adding at the end the following new
subsection:
``(e) Incentives To Improve Contractor Performance in Provider
Education and Outreach.--
``(1) Methodology to measure contractor error rates.--In
order to give medicare contractors (as defined in paragraph
(3)) an incentive to implement effective education and outreach
programs for providers of services, physicians, practitioners,
and suppliers, the Secretary shall develop and implement by
October 1, 2003, a methodology to measure the specific claims
payment error rates of such contractors in the processing or
reviewing of medicare claims.
``(2) GAO review of methodology.--The Comptroller General
of the United States shall review, and make recommendations to
the Secretary, regarding the adequacy of such methodology.
``(3) Medicare contractor defined.--For purposes of this
subsection, the term `medicare contractor' includes a medicare
administrative contractor, a fiscal intermediary with a
contract under section 1816, and a carrier with a contract
under section 1842.''.
(2) Report.--The Secretary shall submit to Congress a
report that describes how the Secretary intends to use the
methodology developed under section 1874A(e)(1) of the Social
Security Act, as added by paragraph (1), in assessing medicare
contractor performance in implementing effective education and
outreach programs, including whether to use such methodology as
a basis for performance bonuses.
(c) Improved Provider Education and Training.--
(1) Increased funding for enhanced education and training
through medicare integrity program.--Section 1817(k)(4) (42
U.S.C. 1395i(k)(4)) is amended--
(A) in subparagraph (A), by striking ``subparagraph
(B)'' and inserting ``subparagraphs (B) and (C)'';
(B) in subparagraph (B), by striking ``The amount
appropriated'' and inserting ``Subject to subparagraph
(C), the amount appropriated''; and
(C) by adding at the end the following new
subparagraph:
``(C) Enhanced provider education and training.--
``(i) In general.--In addition to the
amount appropriated under subparagraph (B), the
amount appropriated under subparagraph (A) for
a fiscal year (beginning with fiscal year 2003)
is increased by $35,000,000.
``(ii) Use.--The funds made available under
this subparagraph shall be used only to
increase the conduct by medicare contractors of
education and training of providers of
services, physicians, practitioners, and
suppliers regarding billing, coding, and other
appropriate items and may also be used to
improve the accuracy, consistency, and
timeliness of contractor responses to written
and phone inquiries from providers of services,
physicians, practitioners, and suppliers.''.
(2) Tailoring education and training for small providers or
suppliers.--
(A) In general.--Section 1889, as added by
subsection (a), is amended by adding at the end the
following new subsection:
``(b) Tailoring Education and Training Activities for Small
Providers or Suppliers.--
``(1) In general.--Insofar as a medicare contractor
conducts education and training activities, it shall take into
consideration the special needs of small providers of services
or suppliers (as defined in paragraph (2)). Such education and
training activities for small providers of services and
suppliers may include the provision of technical assistance
(such as review of billing systems and internal controls to
determine program compliance and to suggest more efficient and
effective means of achieving such compliance).
``(2) Small provider of services or supplier.--In this
subsection, the term `small provider of services or supplier'
means--
``(A) an institutional provider of services with
fewer than 25 full-time-equivalent employees; or
``(B) a physician, practitioner, or supplier with
fewer than 10 full-time-equivalent employees.''.
(B) Effective date.--The amendment made by
subparagraph (A) shall take effect on October 1, 2002.
(d) Additional Provider Education Provisions.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsection (c)(2), is amended by adding at
the end the following new subsections:
``(c) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of attendance
at (or failure to attend) educational activities or other information
gathered during an educational program conducted under this section or
otherwise by the Secretary to select or track providers of services,
physicians, practitioners, or suppliers for the purpose of conducting
any type of audit or prepayment review.
``(d) Construction.--Nothing in this section or section 1893(g)
shall be construed as providing for disclosure by a medicare
contractor--
``(1) of the screens used for identifying claims that will
be subject to medical review; or
``(2) of information that would compromise pending law
enforcement activities or reveal findings of law enforcement-
related audits.
``(e) Definitions.--For purposes of this section and section
1817(k)(4)(C), the term `medicare contractor' includes the following:
``(1) A medicare administrative contractor with a contract
under section 1874A, a fiscal intermediary with a contract
under section 1816, and a carrier with a contract under section
1842.
``(2) An eligible entity with a contract under section
1893.
Such term does not include, with respect to activities of a specific
provider of services, physician, practitioner, or supplier an entity
that has no authority under this title or title XI with respect to such
activities and such provider of services, physician, practitioner, or
supplier.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
SEC. 632. ACCESS TO AND PROMPT RESPONSES FROM MEDICARE CONTRACTORS.
(a) In General.--Section 1874A, as added by section 621(a)(1) and
as amended by section 631(b)(1), is amended by adding at the end the
following new subsection:
``(f) Communicating With Beneficiaries and Providers.--
``(1) Communication process.--The Secretary shall develop a
process for medicare contractors to communicate with
beneficiaries and with providers of services, physicians,
practitioners, and suppliers under this title.
``(2) Response to written inquiries.--Each medicare
contractor (as defined in paragraph (5)) shall provide general
written responses (which may be through electronic
transmission) in a clear, concise, and accurate manner to
inquiries by beneficiaries, providers of services, physicians,
practitioners, and suppliers concerning the programs under this
title within 45 business days of the date of receipt of such
inquiries.
``(3) Response to toll-free lines.--The Secretary shall
ensure that medicare contractors provide a toll-free telephone
number at which beneficiaries, providers, physicians,
practitioners, and suppliers may obtain information regarding
billing, coding, claims, coverage, and other appropriate
information under this title.
``(4) Monitoring of contractor responses.--
``(A) In general.--Each medicare contractor shall,
consistent with standards developed by the Secretary
under subparagraph (B)--
``(i) maintain a system for identifying who
provides the information referred to in
paragraphs (2) and (3); and
``(ii) monitor the accuracy, consistency,
and timeliness of the information so provided.
``(B) Development of standards.--
``(i) In general.--The Secretary shall
establish (and publish in the Federal Register)
standards regarding the accuracy, consistency,
and timeliness of the information provided in
response to inquiries under this subsection.
Such standards shall be consistent with the
performance requirements established under
subsection (b)(3).
``(ii) Evaluation.--In conducting
evaluations of individual medicare contractors,
the Secretary shall take into account the
results of the monitoring conducted under
subparagraph (A) taking into account as
performance requirements the standards
established under clause (i). 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.
``(5) Medicare contractor defined.--For purposes of this
subsection, the term `medicare contractor' has the meaning
given such term in subsection (e)(3).''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect October 1, 2003.
SEC. 633. RELIANCE ON GUIDANCE.
(a) In General.--Section 1871(d), as added by section 602(a), is
amended by adding at the end the following new paragraph:
``(2) If--
``(A) a provider of services, physician, practitioner, or
other supplier follows written guidance provided--
``(i) by the Secretary; or
``(ii) by a medicare contractor (as defined in
section 1889(e) and whether in the form of a written
response to a written inquiry under section 1874A(f)(1)
or otherwise) acting within the scope of the
contractor's contract authority,
in response to a written inquiry with respect to the furnishing
of items or services or the submission of a claim for benefits
for such items or services;
``(B) the Secretary determines that--
``(i) the provider of services, physician,
practitioner, or supplier has accurately presented the
circumstances relating to such items, services, and
claim to the Secretary or the contractor in the written
guidance; and
``(ii) there is no indication of fraud or abuse
committed by the provider of services, physician,
practitioner, or supplier against the program under
this title; and
``(C) the guidance was in error;
the provider of services, physician, practitioner, or supplier shall
not be subject to any penalty or interest under this title (or the
provisions of title XI insofar as they relate to this title) relating
to the provision of such items or service or such claim if the provider
of services, physician, practitioner, or supplier reasonably relied on
such guidance. In applying this paragraph with respect to guidance in
the form of general responses to frequently asked questions, the
Secretary retains authority to determine the extent to which such
general responses apply to the particular circumstances of individual
claims.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to penalties imposed on or after the date of the enactment of
this Act.
SEC. 634. MEDICARE PROVIDER OMBUDSMAN; MEDICARE BENEFICIARY OMBUDSMAN.
(a) Medicare Provider Ombudsman.--Section 1868 (42 U.S.C. 1395ee)
is amended--
(1) by adding at the end of the heading the following: ``;
medicare provider ombudsman'';
(2) by inserting ``Practicing Physicians Advisory
Council.--(1)'' after ``(a)'';
(3) in paragraph (1), as so redesignated under paragraph
(2), by striking ``in this section'' and inserting ``in this
subsection'';
(4) by redesignating subsections (b) and (c) as paragraphs
(2) and (3), respectively; and
(5) by adding at the end the following new subsection:
``(b) Medicare Provider Ombudsman.--By not later than 1 year after
the date of the enactment of the Beneficiary Access to Care and
Medicare Equity Act of 2002, the Secretary shall appoint a Medicare
Provider Ombudsman. The Ombudsman shall--
``(1) provide assistance, on a confidential basis, to
providers of services and suppliers with respect to complaints,
grievances, and requests for information concerning the
programs under this title (including provisions of title XI
insofar as they relate to this title and are not administered
by the Office of the Inspector General of the Department of
Health and Human Services) and in the resolution of unclear or
conflicting guidance given by the Secretary and medicare
contractors to such providers of services and suppliers
regarding such programs and provisions and requirements under
this title and such provisions; and
``(2) submit recommendations to the Secretary for
improvement in the administration of this title and such
provisions, including--
``(A) recommendations to respond to recurring
patterns of confusion in this title and such provisions
(including recommendations regarding suspending
imposition of sanctions where there is widespread
confusion in program administration), and
``(B) recommendations to provide for an appropriate
and consistent response (including not providing for
audits) in cases of self-identified overpayments by
providers of services and suppliers.''.
(b) Medicare Beneficiary Ombudsman.--Title XVIII is amended by
inserting after section 1806 the following new section:
``medicare beneficiary ombudsman
``Sec. 1807. (a) In General.--By not later than 1 year after the
date of the enactment of the Beneficiary Access to Care and Medicare
Equity Act of 2002, the Secretary shall appoint within the Department
of Health and Human Services a Medicare Beneficiary Ombudsman who shall
have expertise and experience in the fields of health care and
advocacy.
``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
``(1) receive complaints, grievances, and requests for
information submitted by a medicare beneficiary, with respect
to any aspect of the medicare program;
``(2) provide assistance with respect to complaints,
grievances, and requests referred to in paragraph (1),
including--
``(A) assistance in collecting relevant information
for such beneficiaries, to seek an appeal of a decision
or determination made by a fiscal intermediary,
carrier, Medicare+Choice organization, or the
Secretary; and
``(B) assistance to such beneficiaries with any
problems arising from disenrollment from a
Medicare+Choice plan under part C; and
``(3) submit annual reports to Congress and the Secretary
that describe the activities of the Office and that include
such recommendations for improvement in the administration of
this title as the Ombudsman determines appropriate.''.
(c) Funding.--There are authorized to be appropriated to the
Secretary (in appropriate part from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund)
to carry out the provisions of subsection (b) of section 1868 of the
Social Security Act (relating to the Medicare Provider Ombudsman), as
added by subsection (a)(5) and section 1807 of such Act (relating to
the Medicare Beneficiary Ombudsman), as added by subsection (b), such
sums as are necessary for fiscal year 2002 and each succeeding fiscal
year.
(d) Use of Central, Toll-Free Number (1-800-MEDICARE).--Section
1804(b) (42 U.S.C. 1395b-2(b)) is amended by adding at the end the
following: ``By not later than 1 year after the date of the enactment
of the Beneficiary Access to Care and Medicare Equity Act of 2002, the
Secretary shall provide, through the toll-free number 1-800-MEDICARE,
for a means by which individuals seeking information about, or
assistance with, such programs who phone such toll-free number are
transferred (without charge) to appropriate entities for the provision
of such information or assistance. Such toll-free number shall be the
toll-free number listed for general information and assistance in the
annual notice under subsection (a) instead of the listing of numbers of
individual contractors.''.
SEC. 635. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.
(a) In General.--The Secretary shall establish a demonstration
program (in this section referred to as the ``demonstration program'')
under which medicare specialists employed by the Department of Health
and Human Services provide advice and assistance to medicare
beneficiaries at the location of existing local offices of the Social
Security Administration.
(b) Locations.--
(1) In general.--The demonstration program shall be
conducted in at least 6 offices or areas. Subject to paragraph
(2), in selecting such offices and areas, the Secretary shall
provide preference for offices with a high volume of visits by
medicare beneficiaries.
(2) Assistance for rural beneficiaries.--The Secretary
shall provide for the selection of at least 2 rural areas to
participate in the demonstration program. In conducting the
demonstration program in such rural areas, the Secretary shall
provide for medicare specialists to travel among local offices
in a rural area on a scheduled basis.
(c) Duration.--The demonstration program shall be conducted over a
3-year period.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall provide for an
evaluation of the demonstration program. Such evaluation shall
include an analysis of--
(A) utilization of, and beneficiary satisfaction
with, the assistance provided under the program; and
(B) the cost-effectiveness of providing beneficiary
assistance through out-stationing medicare specialists
at local social security offices.
(2) Report.--The Secretary shall submit to Congress a
report on such evaluation and shall include in such report
recommendations regarding the feasibility of permanently out-
stationing medicare specialists at local social security
offices.
Subtitle E--Review, Recovery, and Enforcement Reform
SEC. 641. PREPAYMENT REVIEW.
(a) In General.--Section 1874A, as added by section 621(a)(1) and
as amended by sections 631(b)(1) and 632(a), is amended by adding at
the end the following new subsection:
``(g) Conduct of Prepayment Review.--
``(1) Standardization of random prepayment review.--A
medicare administrative contractor shall conduct random
prepayment review only in accordance with a standard protocol
for random prepayment audits developed by the Secretary.
``(2) Limitations on initiation of nonrandom prepayment
review.--A medicare administrative contractor may not initiate
nonrandom prepayment review of a provider of services,
physician, practitioner, or supplier based on the initial
identification by that provider of services, physician,
practitioner, or supplier of an improper billing practice
unless there is a likelihood of sustained or high level of
payment error (as defined by the Secretary).
``(3) Termination of nonrandom prepayment review.--The
Secretary shall establish protocols or standards relating to
the termination, including termination dates, of nonrandom
prepayment review. Such regulations may vary such a termination
date based upon the differences in the circumstances triggering
prepayment review.
``(4) Construction.--Nothing in this subsection shall be
construed as preventing the denial of payments for claims
actually reviewed under a random prepayment review. In the case
of a provider of services, physician, practitioner, or supplier
with respect to which amounts were previously overpaid, nothing
in this subsection shall be construed as limiting the ability
of a medicare administrative contractor to request the periodic
production of records or supporting documentation for a limited
sample of submitted claims to ensure that the previous practice
is not continuing.
``(5) Random prepayment review defined.--For purposes of
this subsection, the term `random prepayment review' means a
demand for the production of records or documentation absent
cause with respect to a claim.''.
(b) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendment made by subsection (a) shall take effect on the date
of the enactment of this Act.
(2) Deadline for promulgation of certain regulations.--The
Secretary shall first issue regulations under section 1874A(g)
of the Social Security Act, as added by subsection (a), by not
later than 1 year after the date of the enactment of this Act.
(3) Application of standard protocols for random prepayment
review.--Section 1874A(g)(1) of the Social Security Act, as
added by subsection (a), shall apply to random prepayment
reviews conducted on or after such date (not later than 1 year
after the date of the enactment of this Act) as the Secretary
shall specify. The Secretary shall develop and publish the
standard protocol under such section by not later than 1 year
after the date of the enactment of this Act.
SEC. 642. RECOVERY OF OVERPAYMENTS.
(a) In General.--Section 1874A, as added by section 621(a)(1) and
as amended by sections 631(b)(1), 632(a), and 641(a), is amended by
adding at the end the following new subsection:
``(h) Recovery of Overpayments.--
``(1) Use of repayment plans.--
``(A) In general.--If the repayment, within the
period otherwise permitted by a provider of services,
physician, practitioner, or other supplier, of an
overpayment under this title meets the standards
developed under subparagraph (B), subject to
subparagraph (C), and the provider, physician,
practitioner, or supplier requests the Secretary to
enter into a repayment plan with respect to such
overpayment, the Secretary shall enter into a plan with
the provider, physician, practitioner, or supplier for
the offset or repayment (at the election of the
provider, physician, practitioner, or supplier) of such
overpayment over a period of at least 1 year, but not
longer than 3 years. Interest shall accrue on the
balance through the period of repayment. The repayment
plan shall meet terms and conditions determined to be
appropriate by the Secretary.
``(B) Development of standards.--The Secretary
shall develop standards for the recovery of
overpayments. Such standards shall--
``(i) include a requirement that the
Secretary take into account (and weigh in favor
of the use of a repayment plan) the reliance
(as described in section 1871(d)(2)) by a
provider of services, physician, practitioner,
and supplier on guidance when determining
whether a repayment plan should be offered; and
``(ii) provide for consideration of the
financial hardship imposed on a provider of
services, physician, practitioner, or supplier
in considering such a repayment plan.
In developing standards with regard to financial
hardship with respect to a provider of services,
physician, practitioner, or supplier, the Secretary
shall take into account the amount of the proposed
recovery as a proportion of payments made to that
provider, physician, practitioner, or supplier.
``(C) Exceptions.--Subparagraph (A) shall not apply
if--
``(i) the Secretary has reason to suspect
that the provider of services, physician,
practitioner, or supplier may file for
bankruptcy or otherwise cease to do business or
discontinue participation in the program under
this title; or
``(ii) there is an indication of fraud or
abuse committed against the program.
``(D) Immediate collection if violation of
repayment plan.--If a provider of services, physician,
practitioner, or supplier fails to make a payment in
accordance with a repayment plan under this paragraph,
the Secretary may immediately seek to offset or
otherwise recover the total balance outstanding
(including applicable interest) under the repayment
plan.
``(E) Relation to no fault provision.--Nothing in
this paragraph shall be construed as affecting the
application of section 1870(c) (relating to no
adjustment in the cases of certain overpayments).
``(2) Limitation on recoupment.--
``(A) No recoupment until reconsideration
exercised.--In the case of a provider of services,
physician, practitioner, or supplier that is determined
to have received an overpayment under this title and
that seeks a reconsideration of such determination by a
qualified independent contractor under section 1869(c),
the Secretary may not take any action (or authorize any
other person, including any medicare contractor, as
defined in subparagraph (C)) to recoup the overpayment
until the date the decision on the reconsideration has
been rendered.
``(B) Payment of interest.--
``(i) Return of recouped amount with
interest in case of reversal.--Insofar as such
determination on appeal against the provider of
services, physician, practitioner, or supplier
is later reversed, the Secretary shall provide
for repayment of the amount recouped plus
interest for the period in which the amount was
recouped.
``(ii) Interest in case of affirmation.--
Insofar as the determination on such appeal is
against the provider of services, physician,
practitioner, or supplier, interest on the
overpayment shall accrue on and after the date
of the original notice of overpayment.
``(iii) Rate of interest.--The rate of
interest under this subparagraph shall be the
rate otherwise applicable under this title in
the case of overpayments.
``(C) Medicare contractor defined.--For purposes of
this subsection, the term `medicare contractor' has the
meaning given such term in section 1889(e).
``(3) Payment audits.--
``(A) Written notice for post-payment audits.--
Subject to subparagraph (C), if a medicare contractor
decides to conduct a post-payment audit of a provider
of services, physician, practitioner, or supplier under
this title, the contractor shall provide the provider
of services, physician, practitioner, or supplier with
written notice (which may be in electronic form) of the
intent to conduct such an audit.
``(B) Explanation of findings for all audits.--
Subject to subparagraph (C), if a medicare contractor
audits a provider of services, physician, practitioner,
or supplier under this title, the contractor shall--
``(i) give the provider of services,
physician, practitioner, or supplier a full
review and explanation of the findings of the
audit in a manner that is understandable to the
provider of services, physician, practitioner,
or supplier and permits the development of an
appropriate corrective action plan;
``(ii) inform the provider of services,
physician, practitioner, or supplier of the
appeal rights under this title as well as
consent settlement options (which are at the
discretion of the Secretary); and
``(iii) give the provider of services,
physician, practitioner, or supplier an
opportunity to provide additional information
to the contractor.
``(C) Exception.--Subparagraphs (A) and (B) shall
not apply if the provision of notice or findings would
compromise pending law enforcement activities, whether
civil or criminal, or reveal findings of law
enforcement-related audits.
``(4) Notice of over-utilization of codes.--The Secretary
shall establish, in consultation with organizations
representing the classes of providers of services, physicians,
practitioners, and suppliers, a process under which the
Secretary provides for notice to classes of providers of
services, physicians, practitioners, and suppliers served by a
medicare contractor in cases in which the contractor has
identified that particular billing codes may be overutilized by
that class of providers of services, physicians, practitioners,
or suppliers under the programs under this title (or provisions
of title XI insofar as they relate to such programs).
``(5) Standard methodology for probe sampling.--The
Secretary shall establish a standard methodology for medicare
administrative contractors to use in selecting a sample of
claims for review in the case of an abnormal billing pattern.
``(6) Consent settlement reforms.--
``(A) In general.--The Secretary may use a consent
settlement (as defined in subparagraph (D)) to settle a
projected overpayment.
``(B) Opportunity to submit additional information
before consent settlement offer.--Before offering a
provider of services, physician, practitioner, or
supplier a consent settlement, the Secretary shall--
``(i) communicate to the provider of
services, physician, practitioner, or supplier
in a nonthreatening manner that, based on a
review of the medical records requested by the
Secretary, a preliminary evaluation of those
records indicates that there would be an
overpayment; and
``(ii) provide for a 45-day period during
which the provider of services, physician,
practitioner, or supplier may furnish
additional information concerning the medical
records for the claims that had been reviewed.
``(C) Consent settlement offer.--The Secretary
shall review any additional information furnished by
the provider of services, physician, practitioner, or
supplier under subparagraph (B)(ii). Taking into
consideration such information, the Secretary shall
determine if there still appears to be an overpayment.
If so, the Secretary--
``(i) shall provide notice of such
determination to the provider of services,
physician, practitioner, or supplier, including
an explanation of the reason for such
determination; and
``(ii) in order to resolve the overpayment,
may offer the provider of services, physician,
practitioner, or supplier--
``(I) the opportunity for a
statistically valid random sample; or
``(II) a consent settlement.
The opportunity provided under clause (ii)(I) does not
waive any appeal rights with respect to the alleged
overpayment involved.
``(D) Consent settlement defined.--For purposes of
this paragraph, the term `consent settlement' means an
agreement between the Secretary and a provider of
services, physician, practitioner, or supplier whereby
both parties agree to settle a projected overpayment
based on less than a statistically valid sample of
claims and the provider of services, physician,
practitioner, or supplier agrees not to appeal the
claims involved.''.
(b) Effective Dates and Deadlines.--
(1) Not later than 1 year after the date of the enactment
of this Act, the Secretary shall first--
(A) develop standards for the recovery of
overpayments under section 1874A(h)(1)(B) of the Social
Security Act, as added by subsection (a);
(B) establish the process for notice of
overutilization of billing codes under section
1874A(h)(4) of the Social Security Act, as added by
subsection (a); and
(C) establish a standard methodology for selection
of sample claims for abnormal billing patterns under
section 1874A(h)(5) of the Social Security Act, as
added by subsection (a).
(2) Section 1874A(h)(2) of the Social Security Act, as
added by subsection (a), shall apply to actions taken after the
date that is 1 year after the date of the enactment of this
Act.
(3) Section 1874A(h)(3) of the Social Security Act, as
added by subsection (a), shall apply to audits initiated after
the date of the enactment of this Act.
(4) Section 1874A(h)(6) of the Social Security Act, as
added by subsection (a), shall apply to consent settlements
entered into after the date of the enactment of this Act.
SEC. 643. PROCESS FOR CORRECTION OF MINOR ERRORS AND OMISSIONS ON
CLAIMS WITHOUT PURSUING APPEALS PROCESS.
(a) In General.--The Secretary shall develop, in consultation with
appropriate medicare contractors (as defined in section 1889(e) of the
Social Security Act, as added by section 631(d)(1)) and representatives
of providers of services, physicians, practitioners, facilities, and
suppliers, a process whereby, in the case of minor errors or omissions
(as defined by the Secretary) that are detected in the submission of
claims under the programs under title XVIII of such Act, a provider of
services, physician, practitioner, facility, or supplier is given an
opportunity to correct such an error or omission without the need to
initiate an appeal. Such process shall include the ability to resubmit
corrected claims.
(b) Deadline.--Not later than 1 year after the date of the
enactment of this Act, the Secretary shall first develop the process
under subsection (a).
SEC. 644. AUTHORITY TO WAIVE A PROGRAM EXCLUSION.
The first sentence of section 1128(c)(3)(B) (42 U.S.C. 1320a-
7(c)(3)(B)) is amended to read as follows: ``Subject to subparagraph
(G), in the case of an exclusion under subsection (a), the minimum
period of exclusion shall be not less than five years, except that,
upon the request of an administrator of a Federal health care program
(as defined in section 1128B(f)) who determines that the exclusion
would impose a hardship on beneficiaries of that program, the Secretary
may waive the exclusion under subsection (a)(1), (a)(3), or (a)(4) with
respect to that program in the case of an individual or entity that is
the sole community physician or sole source of essential specialized
services in a community.''.
TITLE VII--MEDICAID AND SCHIP
SEC. 701. MEDICAID DSH ALLOTMENTS.
(a) Continuation of BIPA Rule for Determination of Allotments for
Fiscal Years 2003 through 2005.--
(1) In general.--Section 1923(f)(4) (42 U.S.C. 1396r-
4(f)(4)) is amended--
(A) in the paragraph heading, by striking ``and
2002'' and inserting ``through 2005'';
(B) in subparagraph (A)--
(i) in clause (i), by striking ``and'' at
the end;
(ii) in clause (ii), by striking the period
and inserting a semicolon; and
(iii) by adding at the end the following:
``(iii) fiscal year 2003, shall be the DSH
allotment determined under clause (ii)
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
2002;
``(iv) fiscal year 2004, shall be the DSH
allotment determined under clause (iii)
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
2003; and
``(v) fiscal year 2005, shall be the DSH
allotment determined under clause (iv)
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
2004.''; and
(C) in subparagraph (C)--
(i) in the subparagraph heading, by
striking ``2002'' and inserting ``2005''; and
(ii) by striking ``2003'' and inserting
``2006''.
(2) DSH allotment for the district of columbia.--Section
1923(f)(4) (42 U.S.C. 1396r-4(f)(4)), as amended by paragraph
(1), is amended--
(A) in subparagraph (A), by inserting ``and except
as provided in subparagraph (C)'' after ``paragraph
(2)'';
(B) by redesignating subparagraph (C) as
subparagraph (D);
(C) in subparagraph (D) (as so redesignated), by
inserting ``or (C)'' after ``(A)''; and
(D) by inserting after subparagraph (B) the
following:
``(C) DSH allotment for the district of columbia.--
Notwithstanding subparagraph (A), the DSH allotment for
the District of Columbia for--
``(i) fiscal year 2003, shall be determined
by substituting ``49'' for ``32'' in the item
in the table contained in paragraph (2) with
respect to the DSH allotment for FY 00 (fiscal
year 2000) for the District of Columbia, and
then increasing such allotment, 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 each of fiscal years 2000, 2001,
and 2002;
``(ii) fiscal year 2004, shall be the DSH
allotment determined under clause (i)
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
2003; and
``(iii) fiscal year 2005, shall be the DSH
allotment determined under clause (ii)
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
2004.''.
(3) Conforming amendments.--Section 1923(f)(3) (42 U.S.C.
1396r-4(f)(3)) is amended--
(A) in the paragraph heading, by striking ``2003''
and inserting ``2006''; and
(B) by striking subparagraph (A) and inserting the
following:
``(A) In general.--The DSH allotment for any
State--
``(i) for fiscal year 2006, is equal to the
DSH allotment determined for the State for
fiscal year 2002 under the table set forth in
paragraph (2), 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 each of fiscal years 2002 through
2005; and
``(ii) for fiscal year 2007 and each
succeeding fiscal year, is equal to the DSH
allotment determined for the State for the
preceding fiscal year under this paragraph,
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 the
previous fiscal year.''.
(4) Effective date.--The amendments made by this subsection
shall take effect as if included in the enactment of section
701 of BIPA (114 Stat. 2763A-569).
(b) Contingent Allotment.--
(1) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)) is
amended--
(A) by redesignating paragraph (6) as paragraph
(7); and
(B) by inserting after paragraph (5) the following:
``(6) Contingent allotment adjustment for certain states.--
In the case of a State that, as of the date of enactment of
this subsection, has a DSH allotment equal to 0, and that has a
State-wide waiver approved under section 1115 with respect to
the requirements of this title (as in effect on such date of
enactment) that is revoked or terminated after such date of
enactment, the Secretary shall--
``(A) permit the State for which the waiver was
revoked or terminated to submit an amendment to its
State plan that would describe the methodology to be
used by the State (after the effective date of such
revocation or termination) to identify and make
payments to disproportionate share hospitals on the
basis of their proportion of patients served by such
hospitals that are low-income patients with special
needs; and
``(B) provide for purposes of this subsection for
computation of an appropriate DSH allotment for the
State that provides for the maximum amount (permitted
consistent with paragraph (3)(B)(ii)) that does not
result in greater expenditures under this title than
would have been made if such waiver had not been
revoked or terminated.''.
(2) Effective date.--The amendment made by this subsection
shall take effect as if enacted on October 1, 2002.
SEC. 702. TEMPORARY INCREASE IN FLOOR FOR TREATMENT AS AN EXTREMELY LOW
DSH STATE.
(a) Temporary Increase.--Section 1923(f)(5) (42 U.S.C. 1396r-
4(f)(5)) is amended--
(1) by striking ``In the case of'' and inserting the
following:
``(A) In general.--In the case of''; and
(2) by adding at the end the following:
``(B) Temporary increase in floor.--During the
period that begins on October 1, 2002, and ends on
September 30, 2005, subparagraph (A) shall be applied--
``(i) by substituting `fiscal year 2003'
for `fiscal year 2001';
``(ii) by substituting `Centers for
Medicare & Medicaid Services' for `Health Care
Financing Administration';
``(iii) by substituting `August 31, 2002'
for `August 31, 2000';
``(iv) by substituting `3 percent' for `1
percent' each place it appears;
``(v) by substituting `fiscal year 2001'
for `fiscal year 1999'; and
``(vi) by substituting for the second
sentence the following: ``With respect to each
of fiscal years 2004 and 2005, such increased
allotment is subject to an increase for
inflation as provided in paragraph (4).''.
(b) Effective Date.--The amendments made by this section shall take
effect as if included in the enactment of section 701 of BIPA (114
Stat. 2763A-569).
SEC. 703. EXTENSION OF MEDICARE COST-SHARING FOR PART B PREMIUM FOR
CERTAIN ADDITIONAL LOW-INCOME MEDICARE BENEFICIARIES.
(a) In General.--Section 1902(a)(10)(E)(iv) (42 U.S.C.
1396a(a)(10)(E)(iv)) is amended to read as follows:
``(iv) subject to sections 1933 and 1905(p)(4), for
making medical assistance available (but only for
premiums payable with respect to months during the
period beginning with January 1998, and ending with
December 2007) for medicare cost-sharing described in
section 1905(p)(3)(A)(ii) for individuals who would be
qualified medicare beneficiaries described in section
1905(p)(1) but for the fact that their income exceeds
the income level established by the State under section
1905(p)(2) and is at least 120 percent, but less than
135 percent, of the official poverty line (referred to
in such section) for a family of the size involved and
who are not otherwise eligible for medical assistance
under the State plan;''.
(b) Total Amount Available for Allocation.--Section 1933(c) (42
U.S.C. 1396u-3(c)) is amended--
(1) in paragraph (1)(E), by striking ``fiscal year 2002''
and inserting ``each of fiscal years 2002 through 2007''; and
(2) in paragraph (2)(A), by striking ``the sum of'' and all
that follows through ``1902(a)(10)(E)(iv)(II) in the State;
to'' and inserting ``twice the total number of individuals
described in section 1902(a)(10)(E)(iv) in the State; to''.
(c) Effective Date.--The amendments made by this section shall take
effect as if enacted on October 1, 2002.
SEC. 704. CLARIFICATION OF INCLUSION OF INPATIENT DRUG PRICES CHARGED
TO CERTAIN PUBLIC HOSPITALS IN THE BEST PRICE EXEMPTIONS
FOR THE MEDICAID DRUG REBATE PROGRAM.
(a) In General.--Section 1927(c)(1)(C)(i)(I) (42 U.S.C. 1396r-
8(c)(1)(C)(i)(I)) is amended by inserting before the semicolon the
following: ``(including inpatient prices charged to hospitals described
in section 340B(a)(4)(L) of the Public Health Service Act)''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect as if enacted on October 1, 2002.
SEC. 705. SCHIP ALLOTMENTS.
(a) Changes to Rules for Redistribution and Extended Availability
of Fiscal Year 2000 and Subsequent Fiscal Year Allotments.--Section
2104(g) (42 U.S.C. 1397dd(g)) is amended--
(1) in the subsection heading--
(A) by striking ``and'' after ``1998'' and
inserting a comma; and
(B) by inserting ``, 2000, and Subsequent Fiscal
Year'' after ``1999'';
(2) in paragraph (1)--
(A) in subparagraph (A)--
(i) in the matter preceding clause (i)--
(I) by inserting ``or for fiscal
year 2000 by the end of fiscal year
2002, or allotments for fiscal year
2001 and subsequent fiscal years by the
end of the last fiscal year for which
such allotments are available under
subsection (e), subject to paragraph
(2)(C),'' after ``2001,''; and
(II) by striking ``1998 or 1999''
and inserting ``1998, 1999, 2000, or
subsequent fiscal year'';
(ii) in clause (i)--
(I) in subclause (I), by striking
``or'' at the end;
(II) in subclause (II), by striking
the period and inserting a semicolon;
and
(III) by adding at the end the
following:
``(III) subject to paragraph
(2)(C), the fiscal year 2000 allotment,
the amount by which the State's
expenditures under this title in fiscal
years 2000, 2001, and 2002 exceed the
State's allotment for fiscal year 2000
under subsection (b);
``(IV) subject to paragraph (2)(C),
the fiscal year 2001 allotment, the
amount by which the State's
expenditures under this title in fiscal
years 2001, 2002, and 2003 exceed the
State's allotment for fiscal year 2001
under subsection (b); or
``(V) subject to paragraph (2)(C),
the allotment for any subsequent fiscal
year, the amount by which the State's
expenditures under this title in the
period such allotment is available
under subsection (e) exceeds the
State's allotment for that fiscal year
under subsection (b).''; and
(iii) in clause (ii), by striking ``1998 or
1999 allotment'' and inserting ``1998, 1999,
2000, or subsequent fiscal year allotment'';
and
(B) in subparagraph (B)--
(i) in the matter preceding clause (i), by
striking ``with respect to fiscal year 1998 or
1999'';
(ii) in clause (ii)--
(I) by inserting ``with respect to
fiscal year 1998 or 1999,'' after
``subsection (e),''; and
(II) by striking ``2002; and'' and
inserting ``2003;'';
(iii) by redesignating clause (iii) as
clause (iv); and
(iv) by inserting after clause (ii), the
following:
``(iii) notwithstanding subsection (e),
with respect to fiscal year 2000 or any
subsequent fiscal year, shall remain available
for expenditure by the State through the end of
the fiscal year in which the State is allotted
a redistribution under this paragraph; and'';
(3) in paragraph (2)--
(A) in the paragraph heading, by striking ``1998
and 1999'' and inserting ``1998, 1999, 2000, and
subsequent fiscal year'';
(B) in subparagraph (A)--
(i) in clause (i), by striking ``2002'' and
inserting ``2003'';
(ii) in clause (ii), by striking ``2002''
and inserting ``2003''; and
(iii) by adding at the end the following:
``(iii) Fiscal year 2000 allotment.--Of the
amounts allotted to a State pursuant to this
section for fiscal year 2000 that were not
expended by the State by the end of fiscal year
2002, the amount specified in subparagraph (B)
for fiscal year 2000 for such State shall
remain available for expenditure by the State
through the end of fiscal year 2003.
``(iv) Fiscal year 2001 allotment.--Of the
amounts allotted to a State pursuant to this
section for fiscal year 2001 that were not
expended by the State by the end of fiscal year
2003, the amount specified in subparagraph (B)
for fiscal year 2001 for such State shall
remain available for expenditure by the State
through the end of fiscal year 2004.
``(v) Subsequent fiscal year allotments.--
Of the amounts allotted to a State pursuant to
this section for any fiscal year after 2001,
that were not expended by the State by the end
of the last fiscal year such amounts are
available under subsection (e), the amount
specified in subparagraph (B) for that fiscal
year for such State shall remain available for
expenditure by the State through the end of the
fiscal year following the last fiscal year such
amounts are available under subsection (e).'';
(C) in subparagraph (B), by striking ``The'' and
inserting ``Subject to subparagraph (C), the'';
(D) by redesignating subparagraph (C) as
subparagraph (D); and
(E) by inserting after subparagraph (B), the
following:
``(C) Floor for allotment for fiscal year 2000 or
any subsequent fiscal year.--
``(i) In general.--With respect to the
allotments for each of fiscal years 2000
through 2003, if the total amounts that would
otherwise be redistributed under paragraph (1)
exceed 60 percent of the total amount available
for redistribution under subsection (f) for the
fiscal year, the amount remaining available for
expenditure by the State under subparagraph (A)
for such fiscal years shall be--
``(I) the amount equal to--
``(aa) the applicable
percent (as determined under
clause (ii)) of the total
amount available for
redistribution under subsection
(f) from the allotments for the
applicable fiscal year;
multiplied by
``(II) the ratio of the amount of
such State's unexpended allotment for
that fiscal year to the total amount
available for redistribution under
subsection (f) from the allotments for
the fiscal year.
``(ii) Applicable percent.--For purposes of
clause (i)(I)(aa), the applicable percent is--
``(I) 40 percent, with respect to
the allotments for each of fiscal years
2000 and 2001;
``(II) 30 percent, with respect to
the allotment for fiscal year 2002; and
``(III) 20 percent, with respect to
the allotment for fiscal year 2003.'';
and
(4) in paragraph (3), by adding at the end the following:
``For purposes of calculating the amounts described in
paragraphs (1) and (2) relating to the allotment for any fiscal
year after 1999, the Secretary shall use the amount reported by
the States not later than November 30 of the applicable
calendar year on HCFA Form 64 or HCFA Form 21, as approved by
the Secretary.''.
(b) Establishment of Caseload Stabilization Pool and Additional
Redistribution of Allotments.--Section 2104 (42 U.S.C. 1397dd) is
amended by adding at the end the following:
``(h) Redistribution of Caseload Stabilization Pool Amounts.--
``(1) Additional redistribution to stabilize caseloads.--
``(A) In general.--With respect to fiscal year 2004
and each fiscal year thereafter, the Secretary shall
redistribute to an eligible State (as defined in
subparagraph (B)) the amount available for
redistribution to the State (as determined under
subparagraph (C)) from the caseload stabilization pool
established under paragraph (3).
``(B) Definition of eligible state.--For purposes
of subparagraph (A), an eligible State is a State whose
total expenditures under this title through the end of
the previous fiscal year exceed the total allotments
made available to the State under subsection (b) or (c)
(not including amounts made available under subsection
(f)) through the previous fiscal year.
``(C) Amount of additional redistribution.--For
purposes of subparagraph (A), the amount available for
redistribution to a State under subparagraph (A) is
equal to--
``(i) the ratio of the State's allotment
for the previous fiscal year under subsection
(b) or (c) to the total allotments made
available under such subsections to eligible
States as defined under subparagraph (A) for
the previous fiscal year; multiplied by
``(ii) the total amounts available in the
caseload stabilization pool established under
paragraph (3).
``(2) Period of availability.--Amounts redistributed under
this subsection shall remain available for expenditure by the
State through the end of the fiscal year in which the State
receives any such amounts.
``(3) Caseload stabilization pool.--For purposes of making
a redistribution under paragraph (1), the Secretary shall
establish a caseload stabilization pool that includes the
following amounts:
``(A) Any amount made available to a State under
subsection (g) but not expended within the periods
required under paragraph (1)(B)(ii), (1)(B)(iii), or
(2)(A) of that subsection.
``(B) Any amount made available to a State under
this subsection but not expended within the period
required under paragraph (2).''.
(c) Authority for Qualifying States To Use Portion of SCHIP Funds
for Medicaid Expenditures.--Section 2105 (42 U.S.C. 1397ee) is amended
by adding at the end the following:
``(g) Authority for Qualifying States To Use Certain Funds for
Medicaid Expenditures.--
``(1) State option.--
``(A) In general.--Notwithstanding any other
provision of law, with respect to fiscal year 2003 and
each fiscal year thereafter, a qualifying State (as
defined in paragraph (2)) may elect to use not more
than 20 percent of the amount allotted to the State
under subsection (b) or (c) of section 2104 for the
fiscal year (instead of for expenditures under this
title) for payments for such fiscal year under title
XIX in accordance with subparagraph (B).
``(B) Payments to states.--
``(i) In general.--In the case of a
qualifying State that has elected the option
described in subparagraph (A), subject to the
total amount of funds described with respect to
the State in subparagraph (A), the Secretary
shall pay the State an amount each quarter
equal to the additional amount that would have
been paid to the State under title XIX for
expenditures of the State for the fiscal year
described in clause (ii) if the enhanced FMAP
(as determined under subsection (b)) had been
substituted for the Federal medical assistance
percentage (as defined in section 1905(b)) of
such expenditures.
``(ii) Expenditures described.--For
purposes of clause (i), the expenditures
described in this clause are expenditures for
such fiscal years for providing medical
assistance under title XIX to individuals who
have not attained age 19 and whose family
income exceeds 150 percent of the poverty line.
``(2) Qualifying state.--In this subsection, the term
`qualifying State' means a State that--
``(A) as of March 31, 1997, has an income
eligibility standard with respect to any 1 or more
categories of children (other than infants) who are
eligible for medical assistance under section
1902(a)(10)(A) that is at least 185 percent of the
poverty line; and
``(B) satisfies the requirements described in
paragraph (3).
``(3) Requirements.--The requirements described in this
paragraph are the following:
``(A) SCHIP income eligibility.--The State has a
State child health plan that (whether implemented under
title XIX or this title)--
``(i) as of January 1, 2001, has an income
eligibility standard that is at least 200
percent of the poverty line;
``(ii) subject to subparagraph (B), does
not limit the acceptance of applications for
children; and
``(iii) provides benefits to all children
in the State who apply for and meet eligibility
standards on a statewide basis.
``(B) No waiting list imposed.--With respect to
children whose family income is at or below 200 percent
of the poverty line, the State does not impose any
numerical limitation, waiting list, or similar
limitation on the eligibility of such children for
child health assistance under such State plan.
``(C) Additional requirements.--The State has
implemented at least 4 of the following policies and
procedures (relating to coverage of children under
title XIX and this title):
``(i) Uniform, simplified application
form.--With respect to children who are
eligible for medical assistance under section
1902(a)(10)(A), the State uses the same
uniform, simplified application form
(including, if applicable, permitting
application other than in person) for purposes
of establishing eligibility for benefits under
title XIX and this title.
``(ii) Elimination of asset test.--The
State does not apply any asset test for
eligibility under section 1902(l) or this title
with respect to children.
``(iii) Adoption of 12-month continuous
enrollment.--The State provides that
eligibility shall not be regularly redetermined
more often than once every year under this
title or for children described in section
1902(a)(10)(A).
``(iv) Same verification and
redetermination policies; automatic
reassessment of eligibility.--With respect to
children who are eligible for medical
assistance under section 1902(a)(10)(A), the
State provides for initial eligibility
determinations and redeterminations of
eligibility using the same verification
policies (including with respect to face-to-
face interviews), forms, and frequency as the
State uses for such purposes under this title,
and, as part of such redeterminations, provides
for the automatic reassessment of the
eligibility of such children for assistance
under title XIX and this title.
``(v) Outstationing enrollment staff.--The
State provides for the receipt and initial
processing of applications for benefits under
this title and for children under title XIX at
facilities defined as disproportionate share
hospitals under section 1923(a)(1)(A) and
Federally-qualified health centers described in
section 1905(l)(2)(B) consistent with section
1902(a)(55).''.
(d) GAO Study and Report Regarding Expenditure of SCHIP
Allotments.--
(1) Study.--The Comptroller General of the United States
shall conduct a study regarding the expenditure of State
allotments under the State children's health insurance program
under title XXI of the Social Security Act (42 U.S.C. 1397aa et
seq.) to determine, with respect to States that have not
expended all of their allotment under that program for fiscal
year 1998, 1999, or 2000, the reasons why the States have not
expended such allotments and to identify any impediments in
title XXI of such Act or under regulations implemented to carry
out such title to the full expenditure of such allotments. As
part of the study, the Comptroller General--
(A) shall evaluate--
(i) the methods used to redistribute
unexpended allotments under title XXI of such
Act as of the date of enactment of this Act;
(ii) the caseload stabilization pool
established under section 2104(h) of the Social
Security Act (as added by subsection (b)); and
(iii) the adequacy of the funding and
resources for the State children's health
insurance program under title XXI of such Act;
and
(B) shall identify the potential benefits and
problems with respect to the matters evaluated under
subparagraph (A).
(2) Reports.--
(A) Interim report.--Not later than October 1,
2004, the Comptroller General of the United States
shall submit an interim report to Congress on the study
conducted under paragraph (1).
(B) Final report.--Not later than October 1, 2005,
the Comptroller General of the United States shall
submit a final report to Congress on the study
conducted under paragraph (1), along with such
recommendations for legislative action as the
Comptroller General determines appropriate.
(e) Effective Date.--This section and the amendments made by this
section shall take effect as if enacted on October 1, 2002.
SEC. 706. IMPROVEMENT OF THE PROCESS FOR THE DEVELOPMENT AND
IMPLEMENTATION OF MEDICAID AND SCHIP WAIVERS.
(a) In General.--Section 1115 (42 U.S.C. 1315) is amended by
inserting after subsection (c) the following:
``(d) In the case of any experimental, pilot, or demonstration
project undertaken under subsection (a) to assist in promoting the
objectives of title XIX or XXI in a State that would result in a
nontrivial impact on eligibility, enrollment, benefits, cost-sharing,
or financing with respect to a State program under title XIX or XXI (in
this subsection referred to as a `medicaid waiver' and a `SCHIP
waiver', respectively,) the following shall apply:
``(1) The Secretary may not approve a proposal for a
medicaid waiver, SCHIP waiver, or an amendment to a previously
approved medicaid waiver or SCHIP waiver unless the State
requesting approval certifies that the following process was
used to develop the proposal:
``(A) Prior to publication of the notice required
under subparagraph (B), the State--
``(i) provided notice (which may have been
accomplished by electronic mail) of the State's
intent to develop the proposal to the medical
care advisory committee established for the
State for purposes of complying with section
1902(a)(4) and any individual or organization
that requests such notice; and
``(ii) convened at least 1 meeting of such
medical care advisory committee at which the
proposal and any modifications of the proposal
were considered and discussed.
``(B) At least 60 days prior to the date that the
State submits the proposal to the Secretary, the State
published for written comment (in accordance with the
State's procedure for issuing regulations) a notice of
the proposal that contains at least the following:
``(i) Information regarding how the public
may submit comments to the State on the
proposal.
``(ii) A statement of the State's
projections regarding the likely effect and
impact of the proposal on any individuals who
are eligible for, or receiving, medical
assistance, child health assistance, or other
health benefits coverage under a State program
under title XIX or XXI and the State's
assumptions on which such projections are
based.
``(iii) A statement of the State's
projections regarding the likely effect and
impact of the proposal on any providers or
suppliers of items or services for which
payment may be made under title XIX or XXI and
the State's assumptions on which such
projections are based.
``(C) Concurrent with the publication of the notice
required under subparagraph (B), the State--
``(i) posted the proposal (and any
modifications of the proposal) on the State's
Internet website; and
``(ii) provided the notice (which may have
been accomplished by electronic mail) to the
medical care advisory committee referred to in
subparagraph (A)(i) and to any individual or
organization that requested such notice.
``(D) Not later than 30 days after publication of
the notice required under subparagraph (B), the State
convened at least 1 open meeting of the medical care
advisory committee referred to in subparagraph (A)(i),
at which the proposal and any modifications of the
proposal were the primary items considered and
discussed.
``(E) After publication of the notice required
under subparagraph (B), the State--
``(i) held at least 2 public hearings on
the proposal and any modifications of the
proposal; and
``(ii) held the last such public hearing at
least 15 days before the State submitted the
proposal to the Secretary.
``(F) The State has a record of all public comments
submitted in response to the notice required under
subparagraph (B) or at any hearings or meetings
required under this paragraph regarding the proposal.
``(2) A State shall include with any proposal submitted to
the Secretary for a medicaid waiver, SCHIP waiver, or an
amendment to a previously approved medicaid waiver or SCHIP
waiver the following:
``(A) A detailed description of the public notice
and input process used to develop the proposal in
accordance with the requirements of paragraph (1).
``(B) Copies of all notices required under
paragraph (1).
``(C) The dates of all meetings and hearings
required under paragraph (1).
``(D) A summary of the public comments received in
response to the notices required under paragraph (1) or
at any hearings or meetings required under that
paragraph regarding the proposal and the State's
response to the comments.
``(E) A certification that the State complied with
any applicable notification requirements with respect
to Indian tribes during the development of the proposal
in accordance with paragraph (1).
``(3) The Secretary shall return to a State without action
any proposal for a medicaid waiver, SCHIP waiver, or an
amendment to a previously approved medicaid waiver or SCHIP
waiver that fails to satisfy the requirements of paragraphs (1)
and (2).
``(4) With respect to all proposals for medicaid waivers,
SCHIP waivers, or amendments to a previously approved medicaid
waiver or SCHIP waiver received by the Secretary the following
shall apply:
``(A) Each month the Secretary shall publish a
notice in the Federal Register identifying all of the
proposals for such waivers or amendments that were
received by the Secretary during the preceding month.
``(B) The notice required under subparagraph (A)
shall provide information regarding the method by which
comments on the proposals will be received from the
public.
``(C) Not later than 7 days after receipt of a
proposal for a medicaid waiver, SCHIP waiver, or an
amendment to a previously approved medicaid waiver or
SCHIP waiver, the Secretary shall--
``(i) provide notice (which may be
accomplished by electronic mail) to any
individual or organization that has requested
such notification;
``(ii) publish on the Internet website of
the Centers for Medicare & Medicaid Services a
copy of the proposal, including any appendices
or modifications of the proposal; and
``(iii) ensure that the information posted
on the website is updated to accurately reflect
the proposal.
``(D) The Secretary shall provide for a period of
not less than 30 days from the later of the date of
publication of the notice required under subparagraph
(A) that first identifies receipt of the proposal or
the date on which an Internet website containing the
information required under subparagraph (C)(ii) with
respect to the proposal is first published, in which
written comments on the proposal may be submitted from
all interested parties.
``(E) After the completion of the public comment
period required under subparagraph (D), if the
Secretary intends to approve the proposal, as
originally submitted or revised, the Secretary shall--
``(i) publish and post on the Internet
website for the Centers for Medicare & Medicaid
Services the proposed terms and conditions for
such approval and updated versions of the
statements required to be published by the
State under clauses (ii) and (iii) of paragraph
(1)(B);
``(ii) provide at least a 15-day period for
the submission of written comments on such
proposed terms and conditions and such
statements; and
``(iii) retain, and make available upon
request, all comments received concerning the
proposal, the terms and conditions for approval
of the proposal, or such statements.
``(F) In no event may the Secretary approve or deny
a proposal for a medicaid waiver, SCHIP waiver, or an
amendment to a previously approved medicaid waiver or
SCHIP waiver until the Secretary--
``(i) reviews and considers all comments
submitted in response to the notices required
under this paragraph; and
``(ii) considers the nature and impact of
the proposal; and
``(iii) determines that the proposal--
``(I) is based on a reasonable
hypothesis which the proposal is
designed to test in a methodologically
sound manner; and
``(II) will be evaluated on a
yearly basis utilizing a sound
methodology to determine whether the
proposal has resulted in a change in
access to health care or in health
outcomes for any beneficiaries of
medical assistance, child health
assistance, or other health benefits
coverage whose assistance or coverage
would be altered as a result of the
proposal.
``(G) Not later than 3 days after the approval of
any proposal for a medicaid waiver, SCHIP waiver, or
amendment to a previously approved medicaid waiver or
SCHIP waiver, the Secretary shall post on the Internet
website for the Centers for Medicare & Medicaid
Services the following:
``(i) The text of the approved medicaid
waiver, SCHIP waiver, or amendment to a
previously approved medicaid waiver or SCHIP
waiver.
``(ii) A list identifying each provision of
title XIX or XXI, and each regulation relating
to either such title, for which compliance is
waived under the approved waiver or amendment
or for which costs that would otherwise not be
permitted under the provision will be allowed.
``(iii) The terms and conditions for
approval of the waiver or amendment.
``(v) The approval letter.
``(vi) The protocol for the waiver or
amendment.
``(vii) The evaluation design for the
waiver or amendment.
``(viii) The results of the evaluation of
the waiver or amendment.
Any item required to be posted under this subparagraph
that is not available within 3 days of the approval of
the waiver or amendment shall be posted as soon as the
item becomes available.
``(H) Each month the Secretary shall publish a
notice in the Federal Register that identifies any
proposals for medicaid waivers, SCHIP waivers, or
amendments to a previously approved medicaid waiver or
SCHIP waiver that were approved, denied, or returned to
the State without action during the preceding month.
``(5) Any provision under title XIX or XXI, or under any
regulation in effect that relates to either such title, that is
not explicitly waived by the Secretary when the medicaid
waiver, SCHIP waiver, or amendment is approved and identified
in the list required under paragraph (4)(G)(ii), is not waived
and a State shall continue to comply with any such
requirement.''.
(b) Clarification of Limitations of Waiver Authority.--
(1) Section 1115 waivers.--Paragraphs (1) and (2) of
section 1115(a) (42 U.S.C. 1315(a)) are each amended by
inserting ``and only to the extent that waiving such
requirements is likely to assist in promoting the objectives of
the title in which such section is located,'' after ``as the
case may be,''.
(2) EPSDT.--Section 1902(e) (42 U.S.C. 1396a(e)) is amended
by adding at the end the following:
``(13) Notwithstanding section 1115(a), with respect to any waiver,
experimental, pilot, or demonstration project that involves the use of
funds made available under this title, or an amendment to such a
project that has been approved as of the date of enactment of this
paragraph, the Secretary may not waive compliance with the requirements
of subsection (a)(43) (relating to early and periodic screening,
diagnostic, and treatment services as described in section 1905(r)).''.
(3) Use of schip funds.--
(A) In general.--Section 2107 (42 U.S.C. 1397gg) is
amended by adding at the end the following:
``(f) Limitation of Waiver Authority.--Notwithstanding subsection
(e)(2)(A) and section 1115(a), the Secretary may not approve a waiver,
experimental, pilot, or demonstration project, or an amendment to such
a project that has been approved as of the date of enactment of this
subsection, that would allow funds made available under this title to
be used to provide child health assistance or other health benefits
coverage to childless adults. For purposes of the preceding sentence, a
caretaker relative (as such term is defined for purposes of carrying
out section 1931) shall not be considered a childless adult.''.
(B) Conforming Amendment.--Section 2105(c)(1) (42
U.S.C. 1397ee(c)(1)) is amended by inserting before the
period the following: ``and may not include coverage of
childless adults. For purposes of the preceding
sentence, a caretaker relative (as such term is defined
for purposes of carrying out section 1931) shall not be
considered a childless adult.''.
(c) Rule of Construction.--Nothing in this section or the
amendments made by this section shall be construed to--
(1) authorize the waiver of any provision of title XIX or
XXI of the Social Security Act (42 U.S.C. 1396 et seq., 1397aa
et seq.) that is not otherwise authorized to be waived under
such titles or under title XI of such Act (42 U.S.C. 1301 et
seq.) as of the date of enactment of this Act; or
(2) imply congressional approval of any waiver,
experimental, pilot, or demonstration project affecting the
medicaid program under title XIX of the Social Security Act or
the State children's health insurance program under title XXI
of such Act that has been approved as of such date of
enactment.
(d) Effective Date.--This section and the amendments made by this
section take effect on the date of enactment of this Act and apply to
proposals to conduct a waiver, experimental, pilot, or demonstration
project affecting the medicaid program under title XIX of the Social
Security Act or the State children's health insurance program under
title XXI of such Act, and to any proposals to amend such projects,
that are approved or extended on or after such date of enactment.
SEC. 707. TEMPORARY STATE FISCAL RELIEF.
(a) Temporary Increase of Medicaid FMAP.--
(1) Permitting maintenance of fiscal year 2002 fmap for
fiscal year 2003.--Notwithstanding any other provision of law,
but subject to paragraphs (4) and (6), if the FMAP determined
without regard to this subsection for a State for fiscal year
2003 is less than the FMAP as so determined for fiscal year
2002, the FMAP for the State for fiscal year 2002 shall be
substituted for the State's FMAP for fiscal year 2003, before
the application of this subsection.
(2) General 1.3 percentage points increase for fiscal year
2003.--Notwithstanding any other provision of law, but subject
to paragraphs (4), (5), and (6), for each State for fiscal year
2003, the FMAP (taking into account the application of
paragraph (1)) shall be increased by 1.3 percentage points.
(3) Increase in cap on medicaid payments to territories.--
(A) In general.--Notwithstanding any other
provision of law, but subject to paragraph (5) and
subparagraph (B), with respect to fiscal year 2003, the
amounts otherwise determined for Puerto Rico, the
Virgin Islands, Guam, the Northern Mariana Islands, and
American Samoa under subsections (f) and (g) of section
1108 of the Social Security Act (42 U.S.C. 1308) shall
each be increased by an amount equal to 2.6 percent of
such amounts.
(B) No application after fiscal year 2003.--The
amounts determined for Puerto Rico, the Virgin Islands,
Guam, the Northern Mariana Islands, and American Samoa
under subsections (f) and (g) of section 1108 of the
Social Security Act (42 U.S.C. 1308) for fiscal year
2004 and each fiscal year thereafter shall be
determined without regard to the increase under
subparagraph (A) in such amounts for fiscal year 2003.
(4) Scope of application.--The increases in the FMAP for a
State under this subsection shall apply only for purposes of
title XIX of the Social Security Act and shall not apply with
respect to--
(A) disproportionate share hospital payments
described in section 1923 of such Act (42 U.S.C. 1396r-
4); or
(B) payments under title IV or XXI of such Act (42
U.S.C. 601 et seq. and 1397aa et seq.).
(5) State eligibility.--
(A) In general.--Subject to subparagraph (B), a
State is eligible for an increase in its FMAP under
paragraph (2) or an increase in a cap amount under
paragraph (3) only if the eligibility under its State
plan under title XIX of the Social Security Act
(including any waiver under such title or under section
1115 of such Act (42 U.S.C. 1315)) is no more
restrictive than the eligibility under such plan (or
waiver) as in effect on January 1, 2002.
(B) State reinstatement of eligibility permitted.--
A State that has restricted eligibility under its State
plan under title XIX of the Social Security Act
(including any waiver under such title or under section
1115 of such Act (42 U.S.C. 1315)) after January 1,
2002, but prior to the date of enactment of this Act is
eligible for an increase in its FMAP under paragraph
(2) or an increase in a cap amount under paragraph (3)
in the first calendar quarter (and subsequent calendar
quarters) in which the State has reinstated eligibility
that is no more restrictive than the eligibility under
such plan (or waiver) as in effect on January 1, 2002.
(C) Rule of construction.--Nothing in subparagraph
(A) or (B) shall be construed as affecting a State's
flexibility with respect to benefits offered under the
State medicaid program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) (including any
waiver under such title or under section 1115 of such
Act (42 U.S.C. 1315)).
(6) Limitation.--Notwithstanding paragraphs (1) and (2),
the FMAP determined for a State under this section for fiscal
year 2003 may not exceed 100 percent.
(7) Definitions.--In this subsection:
(A) FMAP.--The term ``FMAP'' means the Federal
medical assistance percentage, as defined in section
1905(b) of the Social Security Act (42 U.S.C.
1396d(b)).
(B) State.--The term ``State'' has the meaning
given such term for purposes of title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.).
(8) Repeal.--Effective as of October 1, 2003, this
subsection is repealed.
(b) Additional Temporary State Fiscal Relief.--
(1) In general.--Title XX of the Social Security Act (42
U.S.C. 1397-1397f) is amended by adding at the end the
following:
``SEC. 2008. ADDITIONAL TEMPORARY GRANTS FOR STATE FISCAL RELIEF.
``(a) In General.--For the purpose of providing State fiscal relief
allotments to States under this section, there are hereby appropriated,
out of any funds in the Treasury not otherwise appropriated,
$1,000,000,000. Such funds shall be available for obligation by the
State through June 30, 2003, and for expenditure by the State through
September 30, 2003. This section constitutes budget authority in
advance of appropriations Acts and represents the obligation of the
Federal Government to provide for the payment to States of amounts
provided under this section.
``(b) Allotment.--Funds appropriated under subsection (a) shall be
allotted by the Secretary among the States in accordance with the
following table:
------------------------------------------------------------------------
``State Allotment (in dollars)
------------------------------------------------------------------------
Alabama $11,154,135
Alaska $2,840,803
Amer. Samoa $29,438
Arizona $16,220,383
Arkansas $9,163,338
California $100,833,576
Colorado $9,331,095
Connecticut $13,994,165
Delaware $2,767,146
District of Columbia $4,059,080
Florida $44,008,674
Georgia $21,937,652
Guam $45,247
Hawaii $3,373,790
Idaho $3,471,124
Illinois $34,733,333
Indiana $17,207,622
Iowa $8,513,126
Kansas $6,919,819
Kentucky $14,548,137
Louisiana $17,118,506
Maine $5,979,575
Maryland $14,684,167
Massachusetts $34,248,540
Michigan $29,836,794
Minnesota $19,370,869
Mississippi $12,153,821
Missouri $20,314,882
Montana $2,838,819
Nebraska $5,613,219
Nevada $3,808,574
New Hampshire $3,550,440
New Jersey $29,327,902
New Mexico $7,255,647
New York $157,469,433
North Carolina $26,223,106
North Dakota $1,874,707
N. Mariana Islands $16,630
Ohio $39,106,122
Oklahoma $10,452,381
Oregon $11,647,633
Pennsylvania $53,862,604
Puerto Rico $1,308,459
Rhode Island $5,492,778
South Carolina $12,652,401
South Dakota $1,994,912
Tennessee $27,222,837
Texas $54,043,284
Utah $4,254,036
Vermont $2,655,179
Virgin Islands $42,210
Virginia $14,289,158
Washington $20,884,225
West Virginia $6,542,196
Wisconsin $15,441,057
Wyoming $1,271,214
------------------------------------------------------------------------
Total $1,000,000,000
------------------------------------------------------------------------
``(c) Use of Funds.--Funds appropriated under this section may be
used by a State for services directed at the goals set forth in section
2001, subject to the requirements of this title.
``(d) Payment to States.--Not later than 30 days after amounts are
appropriated under subsection (a), in addition to any payment made
under section 2002 or 2007, the Secretary shall make a lump sum payment
to a State of the total amount of the allotment for the State as
specified in subsection (b).
``(e) Definition.--For purposes of this section, the term `State'
means the 50 States, the District of Columbia, and the territories
contained in the list under subsection (b).''.
(2) Repeal.--Effective as of January 1, 2004, section 2008
of the Social Security Act, as added by paragraph (1), is
repealed.
TITLE VIII--OTHER PROVISIONS
SEC. 801. INCREASE IN APPROPRIATIONS FOR SPECIAL DIABETES PROGRAMS FOR
TYPE I DIABETES AND INDIANS.
(a) Special Diabetes Programs for Type I Diabetes.--Section
330B(b)(2) of the Public Health Service Act (42 U.S.C. 254c-2(b)(2)) is
amended--
(1) in subparagraph (A), by striking ``and'' at the end;
(2) in subparagraph (B), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(C) $150,000,000 for each of fiscal years 2004,
2005, and 2006.''.
(b) Special Diabetes Programs for Indians.--Section 330C(c)(2) of
the Public Health Service Act (42 U.S.C. 254c-3(c)(2)) is amended--
(1) in subparagraph (A), by striking ``and'' at the end;
(2) in subparagraph (B), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(C) $150,000,000 for each of fiscal years 2004,
2005, and 2006.''.
(c) Extension of Final Report on Grant Programs.--Section
4923(b)(2) of the Balanced Budget Act of 1997 (Public Law 105-33; 111
Stat. 251), as amended by section 931(c) of BIPA (114 Stat. 2763A-585),
is amended by striking ``2003'' and inserting ``2005''.
SEC. 802. DISREGARD OF CERTAIN PAYMENTS UNDER THE EMERGENCY
SUPPLEMENTAL ACT, 2000 IN THE ADMINISTRATION OF FEDERAL
PROGRAMS AND FEDERALLY ASSISTED PROGRAMS.
(a) In General.--Chapter 2 of title II of the Emergency
Supplemental Act, 2000 (Public Law 106-246; 114 Stat. 547) is amended
by adding at the end the following new section:
``Sec. 2205. Certain Payments Disregarded in the Administration of
Federal Programs and Federally Assisted Programs.--Any payment under
this chapter with respect to west coast groundfish fishery shall not be
taken into account as income or resources for purposes of determining
the eligibility of such individual or any other individual for benefits
or assistance, or the amount or extent of benefits or assistance, under
any Federal program or under any State or local program financed in
whole or in part with Federal funds.''.
(b) Effective Date.--The amendment made by this section shall take
effect as if included in the enactment of the Emergency Supplemental
Act, 2000.
SEC. 803. SAFETY NET ORGANIZATIONS AND PATIENT ADVISORY COMMISSION.
(a) In General.--Title XI (42 U.S.C. 1320 et seq.) is amended by
adding at the end the following new part:
``Part D--Safety Net Organizations and Patient Advisory Commission
``safety net organizations and patient advisory commission
``Sec. 1181. (a) Establishment.--There is hereby established the
Safety Net Organizations and Patient Advisory Commission (in this
section referred to as the `Commission').
``(b) Review of Health Care Safety Net Programs and Reporting
Requirements.--
``(1) Review.--The Commission shall conduct an ongoing
review of the health care safety net programs (as described in
paragraph (3)(C)) by--
``(A) monitoring each health care safety net
program to document and analyze the effects of changes
in these programs on the core health care safety net;
``(B) evaluating the impact of the Emergency
Medical Treatment and Labor Act, the Health Insurance
Portability and Accountability Act of 1996, the
Balanced Budget Act of 1997, the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act of 1999, the
Medicare, Medicaid, and SCHIP Benefits Protection and
Improvement Act of 2000, the Beneficiary Access to Care
and Medicare Equity Act of 2002, and other forces on
the capacity of the core health care safety net to
continue their roles in the core health care safety net
system to care for uninsured individuals, medicaid
beneficiaries, and other vulnerable populations;
``(C) monitoring existing data sets to assess the
status of the core health care safety net and health
outcomes for vulnerable populations;
``(D) wherever possible, linking and integrating
existing data systems to enhance the ability of the
core health care safety net to track changes in the
status of the core health care safety net and health
outcomes for vulnerable populations;
``(E) supporting the development of new data
systems where existing data are insufficient or
inadequate;
``(F) developing criteria and indicators of
impending core health care safety net failure;
``(G) establishing an early-warning system to
identify impending failures of core health care safety
net systems and providers;
``(H) providing accurate and timely information to
Federal, State, and local policymakers on the
indicators that may lead to the failure of the core
health care safety net and an estimate of the projected
consequences of such failures and the impact of such a
failure on the community;
``(I) monitoring and providing oversight for the
transition of individuals receiving supplemental
security income benefits, medical assistance under
title XIX, or child health assistance under title XXI
who enroll with a managed care entity (as defined in
section 1932(a)(1)(B)), including the review of--
``(i) the degree to which health plans have
the capacity (including case management and
management information system infrastructure)
to provide quality managed care services to
such an individual;
``(ii) the degree to which these plans may
be overburdened by adverse selection; and
``(iii) the degree to which emergency
departments are used by enrollees of these
plans; and
``(J) identifying and disseminating the best
practices for more effective application of the lessons
that have been learned.
``(2) Reports.--
``(A) Annual reports.--Not later than June 1 of
each year (beginning with 2004), the Commission shall,
based on the review conducted under paragraph (1),
submit to the appropriate committees of Congress a
report on--
``(i) the health care needs of the
uninsured; and
``(ii) the financial and infrastructure
stability of the Nation's core health care
safety net.
``(B) Agenda and additional reviews.--
``(i) Agenda.--The Chair of the Commission
shall consult periodically with the
Chairpersons and Ranking Minority Members of
the appropriate committees of Congress
regarding the Commission's agenda and progress
toward achieving the agenda.
``(ii) Additional reviews.--The Commission
shall conduct additional reviews and submit
additional reports to the appropriate
committees of Congress on topics relating to
the health care safety net programs under the
following circumstances:
``(I) If requested by the
Chairpersons or Ranking Minority
Members of such committees.
``(II) If the Commission deems such
additional reviews and reports
appropriate.
``(C) Availability of reports.--The Commission
shall transmit to the Comptroller General and the
Secretary a copy of each report submitted under this
subsection and shall make such reports available to the
public.
``(3) Definitions.--In this section:
``(A) Appropriate committees of congress.--The term
`appropriate committees of Congress' means the
Committees on Ways and Means and Energy and Commerce of
the House of Representatives and the Committees on
Finance and Health, Education, Labor, and Pensions of
the Senate.
``(B) Core health care safety net.--The term `core
health care safety net' means any health care provider
that--
``(i) by legal mandate or explicitly
adopted mission, offers access to health care
services to patients, regardless of the ability
of the patient to pay for such services; and
``(ii) has a case mix that is substantially
comprised of patients who are uninsured,
covered under the medicaid program, covered
under any other public health care program, or
are otherwise vulnerable populations.
Such term includes disproportionate share hospitals,
Federally qualified health centers, other Federal,
State, and locally supported clinics, rural health
clinics, local health departments, and providers
covered under the Emergency Medical Treatment and Labor
Act.
``(C) Health care safety net programs.--The term
`health care safety net programs' includes the
following:
``(i) Medicaid.--The medicaid program under
title XIX.
``(ii) SCHIP.--The State children's health
insurance program under title XXI.
``(iii) Maternal and child health services
block grant program.--The maternal and child
health services block grant program under title
V.
``(iv) FQHC programs.--Each federally
funded program under which a health center (as
defined in section 330(1) of the Public Health
Service Act), a Federally qualified health
center (as defined in section 1861(aa)(4)), or
a Federally-qualified health center (as defined
in section 1905(l)(2)(B)) receives funds.
``(v) RHC programs.--Each federally funded
program under which a rural health clinic (as
defined in section 1861(aa)(4) or 1905(l)(1))
receives funds.
``(vi) DSH payment programs.--Each
federally funded program under which a
disproportionate share hospital receives funds.
``(vii) Emergency medical treatment and
active labor act.--All care provided under
section 1867 for the uninsured, underinsured,
beneficiaries under title XIX, and other
vulnerable individuals.
``(viii) Other health care safety net
programs.--Such term also includes any other
health care program that the Commission
determines to be appropriate.
``(D) Vulnerable populations.--The term `vulnerable
populations' includes uninsured and underinsured
individuals, low-income individuals, farm workers,
homeless individuals, individuals with disabilities,
individuals with HIV or AIDS, and such other
individuals as the Commission may designate.
``(c) Membership.--
``(1) Number and appointment.--The Commission shall be
composed of 13 members appointed by the Comptroller General of
the United States (in this section referred to as the
`Comptroller General'), in consultation with the appropriate
committees of Congress.
``(2) Qualifications.--
``(A) In general.--The membership of the Commission
shall include individuals with national recognition for
their expertise in health finance and economics, health
care safety net research and program management,
actuarial science, health facility management, health
plans and integrated delivery systems, reimbursement of
health facilities, allopathic and osteopathic medicine
(including emergency medicine), and other providers of
health services, and other related fields, who provide
a mix of different professionals, broad geographic
representation, and a balance between urban and rural
representatives.
``(B) Inclusion.--The membership of the Commission
shall include health professionals, employers, third-
party payers, individuals skilled in the conduct and
interpretation of biomedical, health services, and
health economics research and expertise in outcomes and
effectiveness research and technology assessment. Such
membership shall also include recipients of care from
core health care safety net and individuals who provide
and manage the delivery of care by the core health care
safety net.
``(C) Majority nonproviders.--Individuals who are
directly involved in the provision, or management of
the delivery, of items and services covered under the
health care safety net programs shall not constitute a
majority of the membership of the Commission.
``(D) Ethical disclosure.--The Comptroller General
shall establish a system for public disclosure by
members of the Commission of financial and other
potential conflicts of interest relating to such
members.
``(3) Terms.--
``(A) In general.--The terms of members of the
Commission shall be for 3 years except that of the
members first appointed, the Comptroller General shall
designate--
``(i) four to serve a term of 1 year;
``(ii) four to serve a term of 2 years; and
``(iii) five to serve a term of 3 years.
``(B) Vacancies.--
``(i) In general.--A vacancy in the
Commission shall be filled in the same manner
in which the original appointment was made.
``(ii) Appointment.--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.
``(iii) Terms.--A member may serve after
the expiration of that member's term until a
successor has taken office.
``(4) Compensation.--
``(A) Members.--While serving on the business of
the Commission (including travel time), a member of the
Commission--
``(i) shall be entitled to compensation at
the per diem equivalent of the rate provided
for level IV of the Executive Schedule under
section 5315 of title 5, United States Code;
and
``(ii) while so serving away from home and
the member's regular place of business, may be
allowed travel expenses, as authorized by the
Commission.
``(B) Treatment.--For purposes of pay (other than
pay of members of the Commission) and employment
benefits, rights, and privileges, all personnel of the
Commission shall be treated as if they were employees
of the United States Senate.
``(5) Chair; vice chair.--The Comptroller General shall
designate a member of the Commission, at the time of
appointment of the member as Chair and a member as Vice Chair
for that term of appointment, except that in the case of
vacancy of the Chair or Vice Chair, the Comptroller General may
designate another member for the remainder of that member's
term.
``(6) Meetings.--The Commission shall meet at the call of
the Chair or upon the written request of a majority of its
members.
``(d) Director and Staff; Experts and Consultants.--Subject to such
review as the Comptroller General determines necessary to ensure the
efficient administration of the Commission, the Commission may--
``(1) employ and fix the compensation of an Executive
Director (subject to the approval of the Comptroller General)
and such other personnel as may be necessary to carry out the
duties of the Commission under this section (without regard to
the provisions of title 5, United States Code, governing
appointments in the competitive service);
``(2) seek such assistance and support as may be required
in the performance of the duties of the Commission under this
section from appropriate Federal departments and agencies;
``(3) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Commission
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
``(4) make advance, progress, and other payments which
relate to the work of the Commission;
``(5) provide transportation and subsistence for persons
serving without compensation; and
``(6) prescribe such rules and regulations as it deems
necessary with respect to the internal organization and
operation of the Commission.
``(e) Powers.--
``(1) Obtaining official data.--
``(A) In general.--The Commission may secure
directly from any department or agency of the United
States information necessary for the Commission to
carry the duties under this section.
``(B) Request of chair.--Upon request of the Chair,
the head of that department or agency shall furnish
that information to the Commission on an agreed upon
schedule.
``(2) Data collection.--In order to carry out the duties of
the Commission under this section, the Commission shall--
``(A) use existing information, both published and
unpublished, where possible, collected and assessed
either by the staff of the Commission or under other
arrangements made in accordance with this section;
``(B) carry out, or award grants or contracts for,
original research and experimentation, where existing
information is inadequate; and
``(C) adopt procedures allowing any interested
party to submit information for the Commission's use in
making reports and recommendations.
``(3) Access of gao to information.--The Comptroller
General shall have unrestricted access to all deliberations,
records, and nonproprietary data that pertains to the work of
the Commission, immediately upon request. The expense of
providing such information shall be borne by the General
Accounting Office.
``(4) Periodic audit.--The Commission shall be subject to
periodic audit by the Comptroller General.
``(f) Application of FACA.--Section 14 of the Federal Advisory
Committee Act (5 U.S.C. App.) does not apply to the Commission.
``(g) Authorization of Appropriations.--
``(1) Request for appropriations.--The Commission shall
submit requests for appropriations in the same manner as the
Comptroller General submits requests for appropriations, but
amounts appropriated for the Commission shall be separate from
amounts appropriated for the Comptroller General.
``(2) Authorization.--There are authorized to be
appropriated such sums as may be necessary to carry out the
provisions of this section.''.
(b) Effective Date.--The Comptroller General of the United States
shall appoint the initial members of the Safety Net Organizations and
Patient Advisory Commission established under subsection (a) not later
than June 1, 2003.
SEC. 804. 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 (42 U.S.C. 2000d et seq.) against
national origin discrimination as it affects persons with limited
English proficiency with respect to access to health care services
under the medicare program under title XVIII of the Social Security
Act, the medicaid program under title XIX of such Act, and the SCHIP
program under title XXI of such Act.
SEC. 805. FEDERAL REIMBURSEMENT OF EMERGENCY HEALTH SERVICES FURNISHED
TO UNDOCUMENTED ALIENS.
Section 4723 of the Balanced Budget Act of 1997 (8 U.S.C. 1611
note) is amended to read as follows:
``SEC. 4723. FEDERAL REIMBURSEMENT OF EMERGENCY HEALTH SERVICES
FURNISHED TO UNDOCUMENTED ALIENS.
``(a) Total Amount Available for Allotment.--There is appropriated,
out of any funds in the Treasury not otherwise appropriated,
$48,000,000 for each of fiscal years 2003 and 2004, for the purpose of
making allotments under this section to States described in paragraph
(1) or (2) of subsection (b).
``(b) State Allotments.--
``(1) Based on highest number of undocumented aliens.--
``(A) Determination of allotments.--
``(i) In general.--Out of the amount
appropriated under subsection (a) for a fiscal
year, the Secretary shall use $32,000,000 of
such amount to compute an allotment for each
such fiscal year for each of the 17 States with
the highest number of undocumented aliens.
``(ii) Formula.--The amount of such
allotment for each such State for a fiscal year
shall bear the same ratio to the total amount
available for allotments under this paragraph
for the fiscal year as the ratio of the number
of undocumented aliens in the State in the
fiscal year bears to the total of such numbers
for all such States for such fiscal year.
``(iii) Availability of funds.--The amount
of an allotment provided to a State under this
paragraph for a fiscal year that is not paid
out under subsection (c) shall be available for
payment during the subsequent fiscal year.
``(B) Data.--For purposes of subparagraph (A), the
number of undocumented aliens in a State shall be
determined based on estimates of the resident
undocumented alien population residing in each State
prepared by the Statistics Division of the Immigration
and Naturalization Service as of October 1992 (or as of
such later date if such date is at least 1 year before
the beginning of the fiscal year involved).
``(2) Based on number of undocumented alien apprehension
states.--
``(A) In general.--Out of the amount appropriated
under subsection (a) for a fiscal year, the Secretary
shall use $16,000,000 of such amount to compute an
allotment for each such fiscal year for each of the 6
States with the highest number of undocumented alien
apprehensions for such fiscal year.
``(B) Determination of allotments.--The amount of
such allotment for each such State for a fiscal year
shall bear the same ratio to the total amount available
for allotments under this paragraph for the fiscal year
as the ratio of the number of undocumented alien
apprehensions in the State in the fiscal year bears to
the total of such numbers for all such States for such
fiscal year.
``(C) Data.--For purposes of this paragraph, the
highest number of undocumented alien apprehensions for
a fiscal year shall be based on the 4 most recent
quarterly apprehension rates for undocumented aliens in
such States, as reported by the Immigration and
Naturalization Service.
``(D) Availability of funds.--The amount of an
allotment provided to a State under this paragraph for
a fiscal year that is not paid out under subsection (c)
shall be available for payment during the subsequent
fiscal year.
``(3) Rule of construction.--Nothing in this section shall
be construed as prohibiting a State that is described in both
of paragraphs (1) and (2) from receiving an allotment under
both such paragraphs for a fiscal year.
``(c) Use of Funds.--The Secretary shall pay, from the allotments
made for a State under paragraphs (1) and, if applicable, (2) of
subsection (b) for a fiscal year, to each State and directly to local
governments, hospitals, or other providers located in the State
(including providers of services received through an Indian Health
Service facility whether operated by the Indian Health Service or by an
Indian tribe or tribal organization (as defined in section 4 of the
Indian Health Care Improvement Act)) that provide uncompensated
emergency health services furnished to undocumented aliens during that
fiscal year, such amounts (subject to the total amount available from
such allotments) as the State, local governments, hospitals, or
providers demonstrate were incurred for the provision of such services
during that fiscal year.
``(d) Definitions.--In this section:
``(1) Hospital.--The term `hospital' has the meaning given
such term in section 1861(e) of the Social Security Act (42
U.S.C. 1395x(e)).
``(2) Provider.--The term `provider' includes a physician,
any other health care professional licensed under State law,
and any other entity that furnishes emergency health services,
including ambulance services.
``(3) Secretary.--The term `Secretary' means the Secretary
of Health and Human Services.
``(4) State.--The term `State' means the 50 States and the
District of Columbia.
``(e) Entitlement.--This section constitutes budget authority in
advance of appropriations Acts and represents the obligation of the
Federal Government to provide for the payment of amounts provided under
this section.''.
SEC. 806. EXTENSION OF MEDICARE MUNICIPAL HEALTH SERVICES DEMONSTRATION
PROJECTS.
Section 9215(a) of the Consolidated Omnibus Budget Reconciliation
Act of 1985 (42 U.S.C. 1395b-1 note), as amended by section 6135 of the
Omnibus Budget Reconciliation Act of 1989, section 13557 of the Omnibus
Budget Reconciliation Act of 1993, section 4017 of the Balance Budget
Act of 1997 (111 Stat. 345, section 534 of the Medicare, Medicaid, and
SCHIP Balanced Budget Refinement Act of 1999 (113 Stat. 1501A-390), and
section 633 of BIPA (114 Stat. 2763A-568), is amended by striking
``December 31, 2004'' and inserting ``December 31, 2005''.
SEC. 807. DELAYED IMPLEMENTATION OF CERTAIN PROVISIONS.
(a) Authority To Delay Implementation of Certain Fee-For-Service
Payment Changes.--
(1) In general.--If the Secretary determines that it is not
administratively feasible to implement a covered payment change
on the date otherwise applicable, notwithstanding any other
provision of this Act and in order to comply with Congressional
intent, the Secretary may delay the implementation of such
change in accordance with subsection (b).
(2) Covered payment change defined.--For purposes of this
section, the term ``covered payment change'' means a provision
contained in titles I through IV of this Act that--
(A) changes the amount of payment made for an item
or service furnished under the medicare program; and
(B) has an effective date during the period
beginning on October 1, 2002, and ending on March 31,
2003.
(b) Rules for Delayed Implementation.--
(1) Period of delay.--In the case of a covered payment
change in which medicare payment rates change on a--
(A) fiscal year basis (or a cost reporting period
basis that relates to a fiscal year), the Secretary may
delay the implementation of the change until such time
as the Secretary determines to be appropriate, but in
no case later than April 1, 2003; or
(B) calendar year basis (or a cost reporting period
basis that relates to a calendar year), the Secretary
may delay the implementation of the change until such
time as the Secretary determines to be appropriate, but
in no case later than July 1, 2003.
(2) Temporary adjustment for remainder of fiscal year or
calendar year 2003 to effect full rate change.--If the
Secretary delays implementation of a covered payment change
under paragraph (1), the Secretary shall make such adjustment
to the amount of payments affected by such change, for the
portion of fiscal year 2003 (or, in the case of a delay under
paragraph (1)(B), calendar year 2003) after the date of the
delayed implementation, in such manner as the Secretary
estimates will ensure that the total payments so affected (for
a type of service) with respect to such fiscal or calendar
year, respectively, is the same as would have been made if this
section had not been enacted.
(3) No effect on payments for subsequent payment periods.--
The application of paragraphs (1) and (2) shall not affect
payment rates and shall not be taken into account in
calculating payment amounts for services furnished for periods
after September 30, 2003 (or, in the case of a delay under
paragraph (1)(B), December 31, 2003).
(c) Implementation of Medicare+Choice Provisions.--
(1) Transition to revised medicare+choice payment rates.--
In order to comply with Congressional intent, the provisions of
section 604 of BIPA (114 Stat. 2763A-555) shall apply to the
provisions of title V of this Act for 2003 in the same manner
as the provisions of such section applied to the provisions of
BIPA for 2001.
(2) Special rule for medicare+choice payment rates in
2003.--
(A) January and february.--Notwithstanding the
amendments made by sections 501 and 506, for purposes
of making payments under section 1853 of the Social
Security Act (42 U.S.C. 1395w-23) for January and
February 2003, the annual Medicare+Choice capitation
rate for a Medicare+Choice payment area shall be
calculated, the new entry bonus amount under section
1853(i) under such Act (42 U.S.C. 1395w-23(i)) shall be
determined, and the excess amount under section
1854(f)(1)(B) of such Act (42 U.S.C. 1395w-24(f)(1)(B))
shall be determined, as if such amendments had not been
enacted.
(B) March through december.--Notwithstanding the
amendments made by sections 501 and 506, for purposes
of making payments under section 1853 of the Social
Security Act (42 U.S.C. 1395w-23) for March through
February 2003, the annual Medicare+Choice capitation
rate for a Medicare+Choice payment area shall be
calculated, the new entry bonus amount under section
1853(i) under such Act (42 U.S.C. 1395w-23(i)) shall be
determined, and the excess amount under section
1854(f)(1)(B) of such Act (42 U.S.C. 1395w-24(f)(1)(B))
shall be determined, in such manner as the Secretary
estimates will ensure that the total of such payments
with respect to 2003 is the same as the amounts that
would have been if subparagraph (A) had not been
enacted.
(C) Construction.--Subparagraph (A) shall not be
taken into account in computing such capitation rate
for 2004 and subsequent years.
(3) Plans required to provide notice of changes in plan
benefits.--If a Medicare+Choice organization offering a
Medicare+Choice plan revises its submission of the information
described in section 1854(a)(1)(B) of the Social Security Act
(42 U.S.C. 1395w-23(a)(1)(B)) for a plan pursuant to the
application of paragraph (1), and such revision results in
reduced beneficiary premiums, reduced beneficiary cost-sharing,
or enhanced benefits under the plan, then by not later than the
date that is 3 weeks after the Secretary approves such
submission, the Medicare+Choice organization offering the plan
shall provide each beneficiary enrolled in the plan with
written notice of such changes.
(d) Administration of Provisions.--
(1) No rulemaking or notice required.--The Secretary may
carry out the authority under this section by program
memorandum or otherwise and is not required to prescribe
regulations or to provide notice in the Federal Register in
order to carry out such authority.
(2) Limitation on review.--There shall be no administrative
or judicial review under section 1869 or 1878 of the Social
Security Act, or otherwise of any determination made by the
Secretary under this section or the application of the payment
rates determined under this section.
Calendar No. 627
107th CONGRESS
2d Session
S. 3018
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to enhance beneficiary
access to quality health care services under the medicare program, and
for other purposes.
_______________________________________________________________________
October 2, 2002
Read the second time and placed on the calendar
Introduced in Senate
Sponsor introductory remarks on measure. (CR S9715-9717)
Introduced in the Senate. Read the first time. Placed on Senate Legislative Calendar under Read the First Time.
Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 627.
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