Order Code RL31203
CRS Report for Congress
Received through the CRS Web
Summary of the Medicare Regulatory and
Contracting Reform Act of 2001 (H.R. 3391)
December 3, 2001
Sibyl L. Tilson
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜
The Library of Congress
Summary of the Medicare Regulatory and
Contracting Reform Act of 2001 (H.R. 3391)
Summary
For some time, observers have expressed concern over the way in which
Medicare has been administered, particularly with respect to its complexity and
regulatory demands that burden providers and confuse beneficiaries. One of the
central issues driving the debate is the perception that the enforcement of Medicare’s
payment rules imposes too great a burden on health care providers and confuses
Medicare beneficiaries. Essentially, complaints about unreasonable demands for
claims documentation, contradictory billing instructions, excessive paperwork, and
the sense that providers and physicians are being unfairly investigated, if not
prosecuted, over purportedly innocent billing errors have prompted efforts to provide
regulatory relief. Other core issues seen to confound effective program administration
are the statutory limits on which entities may process Medicare claims and the terms
of such contracts.
The Medicare Regulatory and Contracting Reform Act of 2001 (H.R. 2768)
would modify how Medicare regulations and guidance are communicated and
enforced; would modify the procedures used to resolve payment disputes; and would
establish various provider appeal processes, particularly for those who face
termination of Medicare participation or denial of their application to participate in
the program. As well as attempting to minimize Medicare’s administrative burden,
the bill would provide for the transfer of the administrative law judge function (ALJ)
from the Social Security Administration (SSA) to the Department of Health and
Human Services (HHS); change Medicare’s authority to contract for claims
administration services, establish that these contracts be competitively bid at least
every 5 years, and place new requirements on the Medicare administrative
contractors, including an increased emphasis on provider education. Other program
changes, demonstration projects, and mandated studies are also included in the
legislation.
The House Ways and Means Committee and the House Energy and Commerce
Committee reported out different versions of Medicare regulatory relief legislation
(H.R. 2768 on October 11, 2001 and H. R. 3046 on October 31, 2001 respectively).
H.R. 3391, a combination of those bills, is expected to go the House floor the week
of December 3rd. The provisions of H.R. 3391 are described in this report. The cost
of the combined bill has not yet been estimated by the Congressional Budget Office
(CBO). However, H.R. 2768 reported out by the House Ways and Means Committee
was estimated to cost $41 million in 2001 and $548 million over the 2002-2006
period. CBO acknowledged that many of those provisions would codify or
standardize existing practices but estimated that others would increase or decrease
spending for covered services. CBO attributed a significant portion of the bill’s cost
to contracting reform ($336 million over 2002-2006) and reform of appeals and
claims payment procedures ($46 million over 2002-2006).
The Senate Finance Committee has not yet taken action on regulatory reform,
but a bipartisan bill, S. 1728, containing elements of the different House bills was
introduced on November 28, 2001.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sections 1, 2, and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Title I – Regulatory Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 101. Issuance of Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 102. Compliance with Changes in Regulations and Policies. . . . . . 5
Title II – Contracting Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 201. Increased Flexibility in Medicare Administration. . . . . . . . . . 6
Section 202. Requirements for Information Security. . . . . . . . . . . . . . . . 10
Title III – Education and Outreach Improvements . . . . . . . . . . . . . . . . . . . . . . 10
Section 301. Provider Education and Technical Assistance. . . . . . . . . . . . 10
Section 302. Small Provider Technical Assistance
Demonstration Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 303. Medicare Provider Ombudsman; Medicare
Beneficiary Ombudsman. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 304. Beneficiary Outreach Demonstration Program. . . . . . . . . . . 14
Title IV – Appeals and Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 401. Transfer of Responsibility for Medicare Appeals. . . . . . . . . 15
Section 402. Process for Expedited Access to Review. . . . . . . . . . . . . . . 15
Section 403. Revisions to Medicare Appeals Process. . . . . . . . . . . . . . . . 17
Section 404. Prepayment Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 405. Recovery of Overpayments. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 406. Provider Enrollment Process; Right of Appeal. . . . . . . . . . . 21
Section 407. Process for Correction of Minor Errors and Omissions on
Claims Without Pursuing Appeals Process. . . . . . . . . . . . . . . . . . . . . 22
Section 408. Prior Determination Process for Certain Items and
Services; Advance Beneficiary Notices. . . . . . . . . . . . . . . . . . . . . . . 22
Title V – Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 501. Policy Development Regarding Evaluation and
Management (E&M) Documentation Guidelines. . . . . . . . . . . . . . . . 23
Section 503. Improvement in Oversight of Technology and Coverage. . . 24
Section 503. Treatment of Hospitals for Certain Services Under the
Medicare Secondary Payor (MSP) Provisions. . . . . . . . . . . . . . . . . . 26
Section 504. EMTALA Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 505. Emergency Medical Treatment and Active Labor
(EMTALA) Task Force. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 506. Authorizing Use of Arrangements with Other Hospice
Programs to Provide the Core Hospice Services in
Certain Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 507. Application of OSHA Bloodborne Pathogens Standard to
Certain Hospitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 508. One-Year Delay in Lock-in Procedures for
Medicare+Choice Plans; Change in Medicare+Choice Reporting
Deadlines and Annual, Coordinated Election Period for 2002. . . . . . 28
Section 509. BIPA-Related Technical Amendments and Corrections. . . . 29
Section 510. Conforming Authority to Waive a Program Exclusion. . . . . 29
Section 511. Treatment of Certain Dental Claims. . . . . . . . . . . . . . . . . . . 30
Section 512. Miscellaneous Reports, Studies and Publication
Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Summary of the Medicare Regulatory and
Contracting Reform Act of 2001 (H.R. 3391)
Introduction
For some time, observers have expressed concern over the way in which
Medicare has been administered. Some feel that the Centers for Medicare and
Medicaid (CMS, formerly the Health Care Financing Administration or HCFA) has
not been provided with sufficient resources, both staff and funding, or management
flexibility to enable it to carry out its ever increasing responsibilities. Others feel that
organizational shortcomings are exacerbated by a bureaucratic approach emphasizing
regulatory controls that adversely affect program administration. The General
Accounting Office (GAO) describes the agency as a lightening rod attracting the
criticism from those discontented with program policies because of the number and
diverse interests of its stakeholders (which run the gamut from providers, including
general and specialty physicians; hospitals; practitioners; and medical suppliers, to
beneficiaries and taxpayers), its responsibility to ensure fiscal prudence, Medicare’s
market dominance, and its very nature as a public program. Moreover, Medicare,
because of its sheer size and fragmented, decentralized operations, is seen as highly
vulnerable to fraud, waste, and abuse.1
One of the central issues driving the debate over the effectiveness of Medicare’s
administration is the perception that the enforcement of Medicare’s payment rules
imposes too great a burden on health care providers and confuses Medicare
beneficiaries. Essentially, complaints about unreasonable demands for claims
documentation, contradictory billing instructions, excessive paperwork, and the sense
that providers and physicians are being unfairly investigated, if not prosecuted, over
purportedly innocent billing errors have prompted efforts to provide regulatory relief.
The Medicare Regulatory and Contracting Reform Act of 2001 (H.R. 3391)
would modify how Medicare regulations and guidance are communicated and
enforced; would modify the procedures used to resolve payment disputes; and would
establish various provider appeal processes, particularly for those who face
termination of Medicare participation or denial of their application to participate in
the program. As well as attempting to minimize Medicare’s administrative burden,
the bill would provide for the transfer of the administrative law judge functions (ALJ)
from the Social Security Administration (SSA) to the Department of Health and
Human Services (HHS). The precursor of this legislation, the Medicare Education
and Regulatory Fairness Act (MERFA or H.R. 868), was criticized by Office of the
1 See
Medicare: Successful Reform Requires Meeting Key Management Challenges,
(7/25/2001, GAO-01-1006) and
Regulatory Issues for Medicare Providers (6/11/2001,
GAO-01-802R) for additional information.
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Inspector General (OIG) in HHS as potentially encouraging fraud, in part, because
it would have granted physicians immunity if they voluntarily returned overpayments
under certain circumstances. That provision has been dropped from H.R. 3391, which
also incorporates changes suggested by the OIG, GAO and the Department of Justice
to ensure that the government’s ability to address Medicare fraud, waste, and abuse
will not be significantly weakened.
H.R. 3391 combines regulatory relief with provisions to change Medicare’s
authority to contract for claims processing services, another central issue seen to
confound effective program administration. Presently there are statutory limits on
which entities may process Medicare claims and the terms of such contracts.
Generally, fiscal intermediaries process claims from institutional providers and carriers
process Part B claims, including those submitted by physicians, durable medical
equipment suppliers, laboratories and other practitioners. The Medicare statute’s
provider nomination provision allows professional associations of hospitals and
certain other providers to choose claims processing intermediaries on behalf of their
members; the statute requires that CMS choose health insurance companies as
carriers. Medicare regulations coupled with long-standing agency practices have
limited the way that contracts for claims administration services can be established.
Specifically, the contracts are awarded without full and open competition; generally
must cover the range of claims processing and related activities; cannot be terminated
without cause and without the opportunity for a public hearing; and incorporate cost-
based, not performance-based, reimbursement methods with no incentive bonuses.
H.R. 3391 would generally allow for greater flexibility in contracting for Medicare
claims processing functions by permitting the Secretary to enter into contracts with
any entity for any or all functions of a Medicare claims processing contractor.2
The House Ways and Means Committee and the House Energy and Commerce
Committee reported out different versions of Medicare regulatory relief legislation
(H.R. 2768 on October 11, 2001 and H. R. 3046 on October 31, 2001 respectively).
A combined version of these bills, H.R. 3391, is expected to go the House floor the
week of December 3rd. The cost of the combined bill has not yet been estimated by
the Congressional Budget Office (CBO). However, H.R. 2768 reported out by the
House Ways and Means Committee was estimated to cost $41 million in 2001 and
$548 million over the 2002-2006 period. CBO acknowledged that many of those
provisions would codify or standardize existing practices but estimated that others
would increase or decrease spending for covered services. CBO attributed a
significant portion of the bill’s cost to contracting reform ($14 million in 2002 and
$336 million over 2002-2006) and reform of appeals and claims payment procedures
($9 million in 2002 and $46 million over 2002-2006).3
2For additional information, see
Medicare Contracting Reform: Opportunities and
Challenges in Contracting for Claims Administration Services, (6/28/2001, GAO-01-918T)
and
Medicare: Comments on HHS’ Claims Administration Contracting Reform Proposal
(8/17/2001 GAO-01-1046R). OIG testimony on the need for contractor reform can be found
at [http://oig.hhs.gov/testimony/2001/062801mm.pdf].
3See [http://www.cbo.gov/showdoc.cfm?index=3102&sequence=0&from=6] for CBO’s cost
estimate of H.R. 2768 reported out by the Committee of Ways and Means on 10/11/2001.
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The Senate Finance Committee has not yet taken action on regulatory reform,
but a bipartisan bill, the Medicare Appeals, Regulatory, and Contracting Improvement
Act (S. 1728), containing elements of the different House bills was introduced on
November 28, 2001.
The remainder of this report addresses the specific provisions contained in H.R.
3391, the combined regulatory relief legislation. Current law descriptions are
included where they exist.
Sections 1, 2, and 3
Explanation of Provisions. Except as otherwise specified, the provisions would
amend or repeal a section or other provisions of the Social Security Act (the Act).
None of the provisions would be construed to (1) compromise existing remedies
for addressing Medicare fraud or abuse with respect to criminal prosecution, civil
enforcement, or administrative remedies, including those established by the False
Claims Act or (2) prevent HHS from its ongoing efforts to eliminate waste, fraud, and
abuse in Medicare. Also, consolidation of Medicare’s administrative contracting
provided for in this bill would not consolidate the Federal Hospital Insurance Trust
Fund which pays for Part A services and the Federal Supplementary Medical
Insurance Trust Fund which pays for Part B services. The bill notes that this
administrative consolidation does not reflect any position on that issue.
The bill defines a “supplier” as a physician, practitioner, facility or other
nonprovider entity that furnishes Medicare items or services unless otherwise
indicated, and “Secretary” as the Secretary of Health and Human Services (the
Secretary).
Title I – Regulatory Reform
Section 101. Issuance of Regulations.
(a) Consolidation of Promulgation to Once a Month.
Current Law. The Secretary is required to prescribe regulations that are
necessary to administer Parts A and B of the Medicare program. No rule,
requirement or policy statement (other than a national coverage determination) that
establishes or changes a substantive legal standard that determines Medicare’s scope
of benefits, level of payment, or eligibility of individuals, entities or organizations to
receive benefits or furnish services can take effect unless it is promulgated by
regulation. The Secretary must publish a proposed regulation in the
Federal Register,
with at least 60 days to solicit public comment, before issuing the final regulation with
the following exceptions: (1) the statute permits the regulation to be issued in interim
final form or provides for a shorter public comment period; (2) the statutory deadline
for implementation of a provision is less than 150 days after the date of enactment of
the statute containing the provision; (3) under the good cause exception contained in
the rule-making provision of Title 5 of the United States Code, notice and public
comment procedures are deemed impracticable, unnecessary or contrary to the public
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interest. The Secretary must publish in the
Federal Register no less frequently than
every 3 months a list of all manual instructions, interpretative rules, statements of
policy, and guidelines which are promulgated to carry out Medicare’s law.
Explanation of Provisions. The Secretary would be required to issue proposed
or final regulations (including interim final regulations) on only one business day of
every month, unless the Secretary finds that publication on other dates is required to
comply with Medicare law or that this restriction is contrary to the public interest.
In such instances, the Secretary would be required to include an explanation of such
a finding when the regulations are issued. For the issuance of new regulations relating
to a category of provider or supplier, the Secretary would be required to undertake
an analysis of the collective impact of the regulatory changes on such category. No
later than 3 years after enactment, GAO would be required to report to Congress on
the feasibility of issuing regulations only on one day in each calendar quarter. The
provisions would apply to regulations issued 30 days after enactment.
(b) Regular Timeline for Publication of Final Rules.
Current Law. See above. The Secretary must publish in the
Federal Register
no less frequently than every 3 months, a list of all manual instructions, interpretative
rules, statements of policy, and guidelines which are promulgated to carry out
Medicare’s law.
Explanation of Provisions. The Secretary, in consultation with the Director of
the Office of Management and Budget, would establish and publish a regular timeline
for the publication of final regulations based on the previous publication of a proposed
regulation or an interim final regulation. The timeline may vary by regulation due to
complexity, number and scope of comments received and other factors, but would not
be longer than 3 years unless there are exceptional circumstances. If the Secretary
intends to vary a regulation’s timeline, a notice of the different timeline would be
required to be published in the
Federal Register. This notice would include a brief
explanation of the justification for such variation. If the timeline established for an
interim final regulation expires without promulgation of a final regulation (including
the public comment period), the interim final regulation would not remain in effect
unless the Secretary publishes a notice of continuation that includes an explanation for
not complying with the deadlines. This provision applies to the regular timelines and
any subsequent 1-year extension to the timeline. If a notice of continuation is
published, the regular timeline or the timeline as previously extended would be
extended for 1 additional year. The Secretary would be required to submit a report
to Congress that describes and explains the instances where the final regulation was
not published within the applicable timeline. The Secretary would be required to
provide for a transition period for previously published interim final regulations.
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(c) Limitation on New Matter in Final Regulations.
Explanation of Provisions. A provision in a final regulation that is not a logical
outgrowth of the proposed regulation (including an interim final regulation) would be
treated as a proposed regulation and would not take effect without a separate public
comment period followed by its publication as a final regulation. This provision
would apply to final regulations published on or after enactment.
Section 102. Compliance with Changes in Regulations and
Policies.
(a) No Retroactive Application of Substantive Changes.
Explanation of Provisions. A substantive change in a regulatory or a
subregulatory issuance would not be applied retroactively to items or services, unless
the Secretary determines that retroactive application (1) would be necessary to
comply with statutory requirements; or (2) would be beneficial to the public interest.
This provision would apply to substantive changes issued on or after enactment.
(b) Timeline for Compliance with Substantive Changes After Notice.
Explanation of Provisions. A substantive change would not become effective
before 30 days after the date the change is issued or published. The Secretary would
be able to waive the 30-day period to comply with statutory requirements or if such
waiver is in the public interest. If an earlier date is established, the Secretary would
be required to include a brief explanation of such finding in the issuance or publication
of the substantive change. No compliance action against a provider or supplier for
goods and services furnished before the effective date of the substantive change would
be permitted. This provision would apply to compliance actions undertaken on or
after enactment.
(c) Reliance on Guidance.
Explanation of Provisions. If (1) a provider or supplier follows written guidance
(which may be transmitted electronically) provided by the Secretary or a Medicare
contractor when furnishing an item or service and submitting a claim; (2) the
Secretary finds that the circumstances relating to the furnished items and services have
been accurately presented in writing to the contractor and (3) the guidance is
inaccurate, then the provider or supplier who reasonably relied on the guidance would
not be subject to any sanction or penalty, including repayment. This provision would
not be construed to prevent recoupment or repayment (without additional penalty) if
the overpayment was solely the result of a clerical or technical operational error. This
provision would be effective upon enactment, but would not apply to sanctions where
notice was provided on or before enactment.
Section 103. Reports and Studies Relating to Regulatory Reform.
Explanation of Provisions. GAO would be required to conduct a study to
determine the appropriateness and feasibility of providing the authority to the
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Secretary to issue legally binding advisory opinions on the interpretation and
application of Medicare regulations. The study would examine the appropriate time
frame for issuing the opinions as well as the need for additional staff and funding.
GAO would submit the study to Congress by January 1, 2003.
The Secretary would be required to report to Congress on the administration of
the Medicare program and inconsistencies among existing Medicare statutory or
regulatory provisions. The report would include (1) information from beneficiaries,
providers, suppliers, Medicare Beneficiary and Provider Ombudsmen (established in
Section 303 of this legislation), and Medicare contractors; (2) descriptions of efforts
to reduce inconsistencies; and (3) recommendations from the Secretary for
appropriate legislation or administrative actions. The report would be due no later
than 2 years after enactment and every 2 years thereafter.
Title II – Contracting Reform
Section 201. Increased Flexibility in Medicare Administration.
(a) Consolidation and Flexibility in Medicare Administration.
Current Law. Section 1816 of the Act authorizes the Secretary to establish
agreements with fiscal intermediaries nominated by different provider associations to
make Medicare payments for health care services furnished by institutional providers.
Section 1842 of the Act authorizes the Secretary to enter into contracts with health
insurers (or carriers) to make Medicare payments to physicians, practitioners and
other health care suppliers. Section 1834(a)(12) of the Act authorizes separate
regional carriers for the payment of durable medical equipment (DME) claims.
Section 1893 authorizes the Secretary to contract for certain program safeguard
activities under the Medicare Integrity Program (MIP).
Certain terms and conditions of the contracting agreements for fiscal
intermediaries and carriers are specified in the Medicare statute. Medicare regulations
coupled with long-standing agency practices have further limited the way that
contracts for claims administration services can be established. Specifically, the
contracts are awarded without full and open competition; generally must cover the
range of claims processing and related activities; cannot be terminated without cause
and without the opportunity for a public hearing; and incorporate cost-based, not
performance-based, reimbursement methods with no incentive bonuses.
Certain functions and responsibilities of the fiscal intermediaries and carriers are
specified in the statute as well. The Secretary may not require that carriers or
intermediaries match data obtained in its other activities with Medicare data in order
to identify beneficiaries who have other insurance coverage as part of the Medicare
Secondary Payer (MSP) program. With the exception of prior authorization of DME
claims, an entity may not perform activities (or receive related payments) under a
claims processing contract to the extent that the activities are carried out pursuant to
a MIP contract. Performance standards with respect to the timeliness of reviews, fair
hearings, reconsiderations and exemption decisions are established as well.
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A Medicare contract with an intermediary or carrier may require any of its
employees certifying or making payments to give surety bond to the United States in
an amount established by the Secretary. Neither the contractor nor the contractor’s
employee who certifies the amount of Medicare payments is liable for erroneous
payments in the absence of gross negligence or intent to defraud the United States.
Neither the contractor nor the contractor’s employee who disburses payments is liable
for erroneous payments in the absence of gross negligence or intent to defraud the
United States, if such payments are based upon a voucher signed by the certifying
employee.
Explanation of Provisions. The legislation would add Section 1874A to the Act
which would permit the Secretary to enter into contracts with any eligible entity to
serve as a Medicare administrative contractor. These contractors would perform or
secure the performance (through subcontracting) of some or all of the following tasks:
determine payment amounts; make payments; educate and assist beneficiaries; provide
consultative services; communicate with providers and suppliers; educate and offer
technical assistance to providers; and perform additional functions as necessary. An
entity eligible to enter into a contract with respect to the performance of a particular
function would (1) have demonstrated capability to carry out such function; (2)
comply with conflict of interest standards that are generally applicable to Federal
acquisition and procurement; (3) have sufficient assets to financially support the
performance of such functions; and (4) meet other requirements imposed by the
Secretary. The claims processing jurisdiction of Medicare administrative contractor
would be determined by the scope of the contract awarded to the entity. Specifically,
the Medicare administrative contractor that would perform a particular function is the
entity that has the contract to perform that function for any given beneficiary, any
given provider or supplier, or class of same.
The Federal Acquisition Regulations (FAR) would apply to Medicare
administration contracts except to the extent inconsistent with a specific Medicare
requirement. The Secretary would be required to use competitive procedures when
entering into a Medicare administrative contract and would take into account
performance quality, price, and other factors. The Secretary would be able to renew
a contract for up to 5 years without regard to statutory requirements concerning
competitive contracting if the entity has met or exceeded specified performance
standards. The Secretary would be able to transfer functions among contractors
consistent with these provisions. The Secretary would be required to (1) ensure that
performance quality is considered in such transfers and (2) provide notice of such
transfer (in the
Federal Register or otherwise) that describes the transferred functions
and the affected providers and suppliers and also includes contractor contact
information.
The Secretary would be required to (1) provide incentives for the Medicare
administrative contractors to provide efficient, high-quality services; and (2) develop
performance standards with respect to each of the payment, provider service, and
beneficiary service functions required of the contractors. In developing the
performance standards, the Secretary would be able to consult with providers and
suppliers, organizations representing Medicare beneficiaries, and Medicare
contractors. The Secretary would be required to contract only with those entities that
(1) perform efficiently and effectively; (2) meet standards for financial responsibility,
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legal authority and service quality among other pertinent matters; (3) agree to furnish
timely and necessary data; and (4) maintain and provide access to necessary records.
The performance requirements would be (1) set forth in the contract between the
Secretary and the appropriate Medicare contractor; (2) used to evaluate contractor
performance; and (3) consistent with the contract’s written statement of work. A
Medicare administrative contract would contain provisions deemed necessary by the
Secretary and may provide for advances of Medicare funds for the purposes of
making payments to providers and suppliers. In developing contract performance
requirements for Medicare administrative contractors, the Secretary would be
required to consider the existing timeliness standards for reconsiderations,
applications for exemption, initial determinations and fair hearing decisions.
The existing MSP provision would apply: the Secretary would not be able to
require contractors to match their data with Medicare data for the purposes of
identifying beneficiaries with other insurance coverage. The Secretary would assure
that the activities of the Medicare administrative contractors do not duplicate the
Medicare Integrity Program (MIP) functions except with respect to the prior
authorization of durable medical equipment. An entity with a MIP contract would not
be treated as a Medicare administrative contractor, solely by reason of the MIP
contract.
A Medicare administrative contractor and any of its employees certifying or
disbursing payments may be required to give surety bond to the United States in an
amount established by the Secretary. The contractor’s employee who certifies
payments will be liable for erroneous payments in the absence of of gross negligence
or intent to defraud the United States. The contractor’s employee who disburses
payments would not be liable for erroneous payments in the absence, if such payments
are based upon an authorization from the certifying employee and the authorization
meets the internal control standards established by GAO. The contractor would not
be liable for payments made by certifying or disbursing officers unless grossly
negligent when supervising or selecting these officers.
The Secretary would be able to indemnify a Medicare administrative contractor,
subcontractor, or employee who is made a party to any judicial or administrative
proceeding arising from the claims administration process to an appropriate extent as
determined by the Secretary and specified in the contract. Indemnification in this case
may include payment of judgments, certain settlements, awards and costs (including
reasonable legal expenses). Settlement proposals would not be negotiated or
compromised without prior written approval by the Secretary. The Secretary would
not be able to provide any indemnification if the liability arises directly from conduct
that is determined in the judicial proceeding or by the Secretary to be criminal in
nature, fraudulent, or grossly negligent; if such indemnification is provided before this
determination, the contractor would reimburse the Secretary for the costs. The
provisions would not change common law immunity available to the Medicare
contractor or other party or permit the payment of costs not otherwise allowable,
reasonable or allocable under FAR.
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(b) Conforming Amendments to Section 1816 (Relating to Fiscal
Intermediaries).
Current Law. Section 1816 of the Act establishes the provider nomination
process, the contracting specifications, and performance standards for fiscal
intermediaries that currently contract with Medicare to process claims and perform
other related administrative activities for institutional providers.
Explanation of Provisions. The provisions would establish that the existing
administrative activities of fiscal intermediaries would be conducted through contracts
with Medicare administrative contractors set forth previously. The provider
nomination process and contracting specifications would be repealed. Certain
performance standards with respect to the processing of clean claims would be
retained. Certain annual reporting requirements concerning the contractor’s
overpayment recovery efforts would be retained.
(c) Conforming Amendments to Section 1842 (Relating to Carriers).
Current Law. Section 1842 of the Act establishes that carriers will be used to
administer certain Medicare benefits as well as the contracting requirements and
certain performance standards for those activities.
Explanation of Provisions. The provisions would establish that the existing
administrative activities of carriers would be conducted through contracts with
Medicare administrative contractors set forth previously. Certain instructions
including those pertaining to nursing facilities payments, claims assignment, physician
participation, overpayment recoveries and billing by suppliers would be retained.
Certain performance standards with respect to the processing of clean claims would
be retained. Contracting specifications and other conforming changes would be
established. The Secretary, not the contractor, would be responsible for taking
necessary actions to assure that reasonable payments are made, for those made on
both a cost and charge basis. The Secretary, not the contractor, would be responsible
for maintaining a toll-free telephone number for beneficiaries to obtain information on
participating suppliers. The requirements for carrier fair hearings would be eliminated
to conform with existing law. Certain annual reporting requirements concerning the
contractor’s overpayment recovery efforts would be retained.
(d) Effective Date; Transition Rule.
Explanation of Provisions. Except as otherwise provided in this subsection, the
provisions in this section would be effective October 1, 2003. The Secretary would
be authorized to take necessary actions prior to that date in order to implement these
amendments on a timely basis, to transition from the contracts established under
sections 1816 and 1842 of the Act to those established under the new section 1874A
created by this legislation. The transition would be consistent with the requirement
that the administrative contracts be competitively bid by October 1, 2008. The MIP
contracts be awarded on a competitive basis would continue to apply and would not
be affected by the provisions in this section. Any reference to a contract in the
existing MIP contracting exceptions would be deemed to include a contract under the
new 1874A that continues such MIP activities.
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(e) References.
Explanation of Provisions. After this section becomes effective, any reference
to fiscal intermediary or carrier would be considered a reference to the appropriate
Medicare administrative contractor.
(f) Reports on Implementation.
Explanation of Provisions. The Secretary would submit an implementation plan
to Congress and GAO no later than October 1, 2002. GAO would evaluate the plan
and include appropriate recommendations no later than 6 months after the plan is
received. No later than October 1, 2006, the Secretary would be required to submit
a status report to Congress including (1) the number of contracts that have been
competitively bid; (2) the distribution of functions among contracts and contractors;
(3) a timeline for complete transition to full competition; and (4) a detailed description
of changes to contractor oversight and management.
Section 202. Requirements for Information Security.
Explanation of Provisions. Medicare administrative contractors that determine
and make payments would be required to implement a contractor-wide information
security program that meets the requirements imposed on Federal agencies to ensure
the security, integrity, confidentiality, authenticity, and availability of operational data
and systems supporting operations. An annual audit of the information security at
each Medicare administrative contractor: (1) would be performed by an independent
entity that meets the independence requirements specified by the OIG in HHS; and (2)
would test the effectiveness of the information security techniques for an appropriate
subset of the contractor’s systems. An audit of new contractors (those that have not
been fiscal intermediaries or carriers) would be required prior to the start of their
performing Medicare payment functions. An audit of existing contractors (those that
are now fiscal intermediaries and carriers) would be required to be completed within
1 year from enactment. The results of the audits would be reported promptly to the
OIG which will submit a report annually to Congress. These provisions would be
equally applicable to fiscal intermediaries and carriers as to Medicare administrative
contractors.
Title III – Education and Outreach Improvements
Section 301. Provider Education and Technical Assistance.
(a) Coordination of Education Funding.
Current Law. Medicare’s provider education activities are funded through the
program management appropriation and through the Education and Training
component of the Medicare Integrity Program (MIP). Both claims processing
contractors (fiscal intermediaries and carriers) and MIP contractors may undertake
provider education activities.
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Explanation of Provisions. The provision would add Section 1889 to the Act
which would require the Secretary (1) to coordinate the educational activities
provided through the Medicare administrative and MIP contractors; and (2) to submit
an evaluation to Congress, no later than October 1, 2002, on actions taken to
coordinate the funding of provider education.
(b) Incentives to Improve Contractor Performance.
Current Law. No specific statutory provision. Since FY1996, as part of the
audit required by the Chief Financial Officers Act, an estimate of improper payments
in Medicare fee-for-service has been made annually. As a recent initiative, CMS is
implementing a comprehensive error rate testing program to produce national,
contractor specific, benefit category specific and provider specific paid claim error
rates.
Explanation of Provisions. The Secretary would be required to develop and
implement a methodology to measure the specific claims payment error rates at each
Medicare administrative contractor. This methodology would apply to existing fiscal
intermediaries and carriers in the same manner as it applies to Medicare administrative
contractors. No later than October 1, 2002, GAO would submit to Congress and to
the Secretary a report on the adequacy of the methodology, including
recommendations as appropriate. No later than October 1, 2002, the Secretary would
be required to report to Congress on (1) the use of the claims error rate methodology
in assessing the effectiveness of contractors’ provider education and outreach
programs; and (2) whether such methodology should be used as a basis of
contractors’ performance bonuses.
(c) Provision of Access to and Prompt Responses from Medicare
Administrative Contractors.
Current Law. No specific statutory provision. Statutory provisions generally
instruct carriers to assist providers and others who furnish services in developing
procedures relating to utilization practices and to serve as a channel of communication
relating information on program administration. Fiscal intermediaries are generally
instructed to (1) provide consultative services to institutions and other agencies to
enable them to establish and maintain fiscal records necessary for program
participation and payment; and (2) serve as a center for any information as well as a
channel for communication with providers.
Explanation of Provisions. By October 1, 2002, the Secretary would be
required to develop a communication strategy with beneficiaries, providers and
suppliers. Each Medicare administrative contractor would be required to (1) provide
general written responses (which may be through electronic transmission) in a clear,
concise and accurate manner to written inquiries from beneficiaries, providers and
suppliers within 45 business days; (2) provide a toll-free telephone number where
these interested parties may obtain billing, coding, claims, coverage and other
appropriate Medicare information; (3) maintain a system for identifying which
employee provided both the written and oral information; and (4) monitor the
accuracy, consistency, and timeliness of the information provided. The Secretary
would be required to establish and make public the standards used to monitor the
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accuracy, consistency, and timeliness of information provided in response to written
and telephone inquiries. The standards would be developed in consultation with
provider, supplier, and beneficiary organizations and would be consistent with the
contractors’ performance requirements. The Secretary would be able to directly
monitor the quality of the information so provided. These provisions would also
apply to existing fiscal intermediaries and carriers.
(d) Improved Provider Education and Training.
Current Law. In FY2000, $54.8 million was spent on provider education and
training activities: about $43 million came from the program management
appropriation and about $12 million came from the Provider Education and Training
component of MIP. In FY2001, about $57.3 million was budgeted for these
activities.
Explanation of Provisions. The provisions would authorize $25 million in
Medicare appropriations in FY2003 and FY2004 and such funds as necessary in
subsequent years to increase provider education and training and to improve the
accuracy and quality of contractor responses. Starting on October 1, 2002, the
contractors’ training activities would be tailored to the special needs of small
providers and suppliers. The provisions defines a small provider as an institution with
fewer than 25 full-time equivalents employees (FTEs) and a small supplier as one with
fewer than 10 FTEs.
(e) Requirement to Maintain Internet Sites.
Explanation of Provisions. By October 1, 2002, the Secretary and each
contractor would be required to maintain an Internet site that provides answers to
frequently asked questions in an easily accessible format as well as other materials
published by the contractor.
(f) Additional Provider Education Provisions.
Explanation of Provisions. A Medicare contractor would not be able to use
attendance records at educational programs or information gathered during these
programs to select or track candidates for audit or prepayment review. Nothing in
the proposed legislation would require Medicare administrative contractors to
disclose information that would compromise pending law enforcement activities or
reveal findings of law enforcement-related audits.
Section 302. Small Provider Technical Assistance
Demonstration Program.
Explanation of Provision. The Secretary would be required to establish a
demonstration program and contract with qualified entities to offer technical
assistance, when requested and on a voluntary basis, to small providers or suppliers.
Small providers and suppliers would be those institutional providers with less than 25
FTEs or suppliers with less than 10 FTEs. Technical assistance would include direct,
in-person examination of billing systems and internal controls by qualified entities such
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as peer review organizations or other entities. In awarding these contracts, the
Secretary would be required to consider any prior investigations of the entity’s work
by the OIG in HHS or GAO. Participating providers and suppliers would be required
to pay an amount estimated and disclosed in advance that would equal 25% of the
cost of the technical assistance they received. Absent indications of fraud, errors
found in the review would not be subject to recovery if the problem is corrected
within 30 days of the on-site visit and remains corrected for an appropriate period.
However, this protection would only apply to claims filed as part of the demonstration
project, would last only for the duration of the project and only as long as the
provider or supplier was participating in the project. GAO, in consultation with the
OIG, would be required to evaluate and recommend continuation of the
demonstration project no later than 2 years after its implementation. The evaluation
would include a determination of whether claims error rates were reduced for
providers and suppliers who participated in the program. The demonstration project
would be authorized at $1 million in FY2003 and $6 million in FY2004 of
appropriations from the Medicare Trust Funds.
Section 303. Medicare Provider Ombudsman; Medicare
Beneficiary Ombudsman.
(a) Medicare Provider Ombudsman.
Explanation of Provision. One year after enactment, the Secretary would be
required to appoint a Medicare Provider Ombudsman within HHS to (1) to resolve
unclear guidance and provide confidential assistance to providers and suppliers
regarding complaints or questions about the Medicare program including peer review
and administrative requirements; and (2) recommend changes to improve program
administration. The ombudsman would not advocate any increases in payments or
expanded coverage, but would identify issues and problems in current payment and
coverage policies.
(b) Medicare Beneficiary Ombudsman.
Explanation of Provisions. One year after enactment, the Secretary would be
required to appoint a Medicare Beneficiary Ombudsman within HHS from individuals
with health care expertise, advocacy, and education of Medicare beneficiaries. The
ombudsman would (1) receive complaints, grievances, and requests for information
from Medicare beneficiaries; (2) provide assistance with respect to those complaints,
grievances and requests, including assistance to beneficiaries who appeal claims
determinations or those affected by the decisions of Medicare+Choice (M+C)
organizations to leave Medicare; and (3) submit an annual report to Congress and the
Secretary describing activities and recommending changes to improve program
administration. The ombudsman would not advocate any increases in payments or
expanded coverage, but would identify issues and problems in current payment and
coverage policies.. To the extent possible, the Beneficiary Ombudsman would work
with the Health Insurance Counseling Programs, authorized under Section 4360 of
Omnibus Reconciliation Act of 1990, to facilitate the provision of information to
Medicare beneficiaries regarding M+C plans and any changes related to those plans.
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Nothing in this subsection would preclude further collaboration between the Medicare
Beneficiary Ombudsman and these programs.
(c) Deadline for Appointment.
Explanation of Provisions. The Secretary would be required to appoint the
Medicare Provider Ombudsman and the Medicare Beneficiary Ombudsman by no later
than 1 year after enactment.
(d) Funding.
Explanation of Provisions. The provision would authorize appropriations of
necessary sums in FY2002 and subsequently from the appropriate Medicare Trust
Funds for the ombudsman programs.
(e) Use of Central Toll Free Number (1-800 MEDICARE).
Current Law. The Secretary is required to prepare and distribute an annual
notice explaining Medicare benefits and limitations to coverage to Medicare
beneficiaries. The Secretary is also required to provide information via a toll-free
telephone number.
Explanation of Provisions. The Secretary would be required to establish a toll-
free number (1-800-MEDICARE) which will transfer individuals with questions or
seeking help to the appropriate entities. The transfer would occur with no charge.
This toll-free number would be the general information and assistance number listed
on the annual notice provided to beneficiaries. GAO would be required to (1)
monitor the adequacy, accuracy, and consistency of the information provided to
Medicare beneficiaries through the toll-free 1-800 MEDICARE number; and (2)
examine the education and training of those providing the information through the
toll-free number. GAO would be required to submit a report to Congress no later
than 1 year from enactment.
Section 304. Beneficiary Outreach Demonstration Program.
Explanation of Provision. The Secretary would be required to establish a 3-year
demonstration project where Medicare specialists who are HHS employees are placed
in at least six SSA offices to advise and assist Medicare beneficiaries. The SSA
offices would be those with a high-volume of visits by Medicare beneficiaries; at least
two of which would be in rural areas. In the rural SSA offices, the Secretary would
provide for the Medicare specialists to travel among local offices on a scheduled basis.
The Secretary would be required to (1) evaluate the project with respect to
beneficiary utilization, beneficiary satisfaction, and cost-effectiveness; and (2)
recommend whether the demonstration should be established on a permanent basis.
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Title IV – Appeals and Recovery
Section 401. Transfer of Responsibility for Medicare Appeals.
Current Law. Medicare beneficiaries and, in certain circumstances, providers
and suppliers of health care services may appeal claims that are denied or payments
that are reduced. Section 1869 of the Act, which covers the Medicare claims appeals
process, was amended by the Medicare Medicaid and SCHIP Benefits Improvement
and Protection Act of 2000 (BIPA) in its entirety, but the BIPA provisions are not yet
effective. Generally, parties who have been denied coverage of an item or service
have the right to appeal that decision through a series of administrative appeals and
then to a federal district court if the amounts of disputed claims in question meet
certain thresholds at each step of the appeals process. A hearing by an ALJ in the
SSA and a review by the Department Appeals Board (DAB) are components of the
administrative appeals process.
Explanation of Provisions. By October 1, 2002, the Commissioner of SSA and
the Secretary would develop a plan to transfer the functions of the ALJs who are
responsible for hearing Medicare and Medicare related cases from SSA to HHS. The
plan would be transmitted to Congress and GAO no later than October 1, 2002.
GAO would evaluate the plan and submit a report to Congress by April 1, 2003. The
Secretary and the Commissioner of SSA would implement the transition plan and
transfer the ALJ functions no earlier than July 1, 2003 and no later than October 1,
2003. The Secretary would (1) assure the independence of the ALJs performing the
ALJ function from the Centers of Medicare and Medicaid Services (CMS) and its
contractors; and (2) locate the ALJs with an appropriate geographic distribution to
ensure access. Subject to appropriations, the Secretary would be permitted to hire
ALJs and support staff with priority given to ALJs with experience in handling
Medicare appeals. Amounts previously paid to SSA for the ALJs performing the ALJ
functions would be payable to the Secretary for the transferred functions. The
Secretary would be permitted to enter into arrangements with SSA to share office
space, support staff, and other resources with appropriate reimbursement from the
Medicare trust funds. Increased appropriations would be permitted to increase the
number of ALJs and support staff; improve education and training for ALJs and their
staff; and increase DAB staff.
Section 402. Process for Expedited Access to Review.
(a) Expedited Access to Judicial Review.
Current Law. Section 521 of BIPA (which is not yet implemented) amends
Section 1869 to establish deadlines for filing appeals and for making decisions in the
Medicare appeals process. Generally, an initial determination is to be completed no
later than 45 days from the date a claim for benefits is received; an individual
dissatisfied with an initial determination is entitled to a redetermination by a carrier
or fiscal intermediary if requested within 120 days of the determination date. The
redetermination is to be completed no later than 30 days from the request date. The
Secretary may reopen or revise any initial determination or reconsidered
determination under guidelines established by regulation.
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An individual dissatisfied with the redetermination is entitled to a reconsideration
by a qualified independent contractor (QIC) if the request is initiated within 180 days
of the notice of the adverse redetermination. With certain exceptions, a QIC
reconsideration decision is to be completed within 30 days from the date a timely
request has been filed. After a QIC’s reconsideration, if the remaining contested
amount is greater than $100, an individual is entitled to a hearing by an administrative
law judge and then a review by the DAB. Both the ALJ hearing and the DAB review
are to be completed within 90 days of a timely filed request for such an action.
If the dispute is not satisfactorily resolved and the contested amounts are greater
than $1,000, the individual is entitled to judicial review of the decision. Under certain
circumstances, a beneficiary is entitled to an expedited determination with accelerated
deadlines. BIPA also provides for an expedited hearing under Section 1869, where
the moving party alleges that no material issues of fact are in dispute; the Secretary
makes an expedited determination as to whether any such facts are in dispute and, if
not, renders a decision expeditiously.
Explanation of Provisions. The Secretary would establish an appeals process
for a provider, supplier, or beneficiary which permits access to judicial review when
a review panel determines that no entity in the administrative appeals process has
authority to decide the question of law or regulation in controversy and where
material facts are not in dispute. The appellant would be able to make such request
only once with respect to a question of law or regulation for a specific dispute. If the
appellant requests this determination and submits appropriate supporting
documentation, the review panel would make this determination in writing no later
than 60 days after the receiving the request. A review panel would consist of a panel
of three members who are ALJs, members of the DAB, or qualified individuals
associated with a QIC or other independent entity designated by the Secretary to
make these determinations. The determination by the review panel would be
considered a final decision and not subject to review by the Secretary. Given such a
determination or a failure to make the determination within the 60-day deadline, the
appellant would be able to request judicial review before a civil court. The filing
deadline for this civil action would be within 60 days of the determination or within
60 days of the end of the deadline to make such determination. The venue for judicial
review would be the U.S. District Court where the appellant is located, or where the
greatest number of appellants are located, or in the district court for the District of
Columbia. The amount in controversy would be subject to annual interest beginning
on the first day of the first month beginning after the 60-day deadline for filing.
Interest would be equal to the rate of interest on obligations issued for purchase by
the Medicare trust funds effective for the month that the civil action is authorized to
commence. The interest payments would not be deemed to be Medicare
reimbursement.
(b) Application to Provider Agreement Determinations.
Current Law. Section 1866(h) of the Act provides for a hearing and for judicial
review for any institution or agency dissatisfied with a determination that it is not a
provider (or that it can no longer be a provider).
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Explanation of Provisions. An agency or institution’s appeal concerning
program participation under Section 1866 would have access to expedited judicial
review under Section 1869 provisions. This provision would not be construed to
affect remedies applied to assure quality of care in skilled nursing facilities (under
Section 1819) while such appeals are pending.
(c) Effective Date.
Explanation of Provision. Amendments in the section would apply to appeals
filed on or after October 1, 2002.
(d) Expedited Review of Certain Provider Agreement
Determinations.
Explanation of Provisions. The Secretary would develop and implement a
process under 1866(h) to expedite provider agreement determinations including those
instances where participation is terminated or other sanctions (including denials of
new admissions or the immediate appointment of temporary management) against
skilled nursing facilities have been imposed. Priority would be given to termination
of provider agreements. Increased appropriations from the Medicare trust funds in
FY2003 and subsequently would be authorized in order to (1) reduce the average
time for administrative determinations on provider participation appeals by 50%; (2)
increase the number of ALJs and their staff as well as appellate level staff at the
DAB; and (3) educate such judges and their staff on long-term care issues.
Section 403. Revisions to Medicare Appeals Process.
(a) Requiring Full and Early Presentation of Evidence.
Explanation of Provision. Starting no later than October 1, 2002, a provider
or supplier would not be able to introduce evidence that was not presented at
reconsideration conducted by the QIC unless a good cause precluded its introduction
at or before that reconsideration.
(b) Use of Patients’ Medical Records.
Current Law. BIPA established QIC reconsiderations as part of the Medicare’s
administrative review process. To reconsider whether a service is reasonable and
necessary, a QIC will employ panel of physicians or other appropriate health care
professionals to review the facts and the circumstances of the initial determination.
The QIC reconsideration is to be based on applicable information, including clinical
experience, and medical, technical, and scientific evidence.
Explanation of Provisions. Medical records of the individual involved in the
appeal would be included as part of the applicable information used by QICs in their
reconsideration process.
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(c) Notice Requirements for Medicare Appeals.
Current Law. Section 521 of BIPA (which is not yet implemented) amends
Section 1869 appeals process in its entirety, but did not establish specific notice
requirements for each part of the Medicare appeals process.
Explanation of Provisions. The provisions would establish that a written notice
of an initial determination associated with a claims denial be provided. The notice
would include: (1) the reason for the denial and, upon request, the policy, manual or
regulation used to make the decision; (2) the procedures for obtaining additional
information concerning the determination; and (3) the notification of appeal rights and
associated instructions.
The provisions would amend the existing requirement that a reconsideration
decision be written and would establish that the decision be provided in printed form
and written in a manner that could be understood by the beneficiary; the notice would
include: as appropriate, a summary of the clinical or scientific evidence used to make
the decision; upon request, the policy manual or regulation used to make the decision;
and a detailed explanation of the decision to the extent appropriate. The requirement
that the reconsideration decision include a notice of appeal rights and relevant
instructions would also be established.
Comparable requirements would be extended to ALJ decisions. These decisions
would have to be written in an understandable manner and include the specific reasons
for the decision, an appropriate summary of the evidence, the procedures for
obtaining additional information about the decision, and a notification of appeal rights
and instructions.
The current requirements that a QIC prepare documentation and an explanation
of the issues for an appeal to an ALJ would be modified: a QIC would be required to
submit the information required in an appeal of a Medicare contractor’s decision to
the ALJ.
(d) Qualified Independent Contractors.
Current Law. BIPA established QIC reconsiderations as part of Medicare’s
administrative review process. A QIC is an entity or organization that is independent
of any organization under contract with the Secretary, that makes initial
determinations and that meets the established requirements for sufficient training and
expertise in medical science and legal matters to make such reconsiderations. QIC
reviews include consideration of the facts and circumstances by a panel of physicians
or appropriate health professionals. No physician or health care professional
employed by a QIC may review determinations regarding services provided to a
patient, if directly responsible for furnishing the services to that patient. Review of
home health care services is also prohibited by physicians and other professionals who
have a significant direct or indirect financial interest in the agency or institution
providing the care. This prohibition extends to physicians and professionals who have
family members with such significant financial interests.
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Explanation of Provisions. To qualify as a QIC, an entity would be required to
have sufficient medical, legal and other expertise, including knowledge of the
Medicare program as well as sufficient professional qualifications, independence and
staffing to make reconsideration decisions. A QIC would be required to assure that
reviewers meet qualification and compensation requirements. If a reconsideration
request indicates that the treatment was furnished or the item or service was provided
by a physician, each reviewing professional should be a physician.
Entities and their professional reviewers would have to meet independence
requirements and may not (1) be a related party; (2) have a material familial, financial,
or professional relationship with a related party; or (3) have a conflict of interest with
respect to a related party. QIC’s compensation would not be contingent on any
decision by the QIC or by any reviewing professional. A reviewer’s compensation
would not be contingent on any decision rendered by the reviewer. In this context,
a related party to a Medicare case involving an individual beneficiary would be (1) the
Secretary, the Medicare administrative contractor involved, any fiduciary, officer,
director or employee of HHS or such Medicare contractor; (2) the individual or
authorized representative; (3) the health professional, institution or entity that
provides or manufactures the item or service involved in the case; and (4) any other
party with substantial interest in the case, as defined by regulation. An individual
affiliated with a fiscal intermediary, carrier or other contractor would be able to act
as a QIC reviewer if (1) the individual is not involved with the provision of the item
or service of the case; (2) the individual is not an employee of the Medicare contractor
and does not provide services exclusively or primarily to or on behalf of the
contractor; and (3) the fact of the relationship is disclosed to the Secretary and the
Medicare beneficiary or authorized representative who do not object. An individual
with staff privileges at the institution where treatment occurs would be able to serve
as a reviewer if the affiliation is disclosed without objection.
Each reviewing professional would be required to be (1) an allopathic or
osteopathic physician or health care professional who is appropriately credentialed or
licensed in one or more states to deliver health care services and has medical expertise
in the field of practice appropriate for the case; or (2) a health care professional who
is legally authorized in one or more states (in accordance with state law or according
to the appropriate state regulatory mechanism) to furnish the health care items or
service and has medical expertise in the field of practice appropriate for the case
Section 404. Prepayment Review.
Explanation of Provisions. Medicare administrative contractors would be able
to conduct random prepayment reviews in order to develop contractor-wide or
program-wide claims payment error rates or under additional circumstances as
established by regulations that are developed in consultation with providers and
suppliers. Medicare administrative contractors would be permitted to conduct
random prepayment reviews in accordance with a standard protocol developed by the
Secretary. The Secretary would not be able to initiate a non-random prepayment
review based on the initial identification by a provider or supplier of an improper
billing practice unless there is a likelihood of sustained or high level of payment error.
The Secretary would be required to issue regulations relating to the termination of
such non-random prepayment reviews which could incorporate differences in the
circumstances that triggered such a review that may affect its duration. No provision
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would prevent the denial of payment for claims actually reviewed under random
prepayment review. These provisions would be applied to fiscal intermediaries and
carriers. The provisions would be effective no later than 1 year from enactment. The
Secretary would be required to issue regulations before that deadline; the random
prepayment review protocols would apply to reviews after a date specified by the
Secretary (but no later than 1 year from enactment.)
Section 405. Recovery of Overpayments.
Current Law. No provision with respect to repayment plans. Section 1833(j)
of the Act provides that interest accrues on underpayments or overpayments starting
within 30 days of the date of the final determination of the accurate payment amount.
Explanation of Provisions. Subject to certain qualifications, in circumstances
where refund of an overpayment within 30 days would constitute a hardship,
providers and suppliers on request would be allowed to repay the overpayment
amount (by offset or otherwise) over a period of at least 6 months and up to 3 years
when their obligation exceeds a 10% threshold of their annual payments from
Medicare. The Secretary would be able to establish a repayment period of up to 5
years in cases of extreme hardship. Interest would accrue on the balance through the
repayment period. The Secretary would be required to establish a process under
which newly-participating providers and suppliers could qualify for a repayment plan
under this hardship provision. Previous overpayment amounts already included in an
ongoing repayment plan would not be included in the calculation of the hardship
threshold. The Secretary would be allowed to seek immediate collection if payments
are not made as scheduled. Exceptions to this provision would be permitted in cases
where bankruptcy may be declared, where Medicare participation may be
discontinued, or where fraud or abuse against Medicare is indicated. This provision
would not affect the application of existing no-fault provisions which preclude
recovery under circumstances where incorrect payment has been made to an
individual who is without fault or where the recovery would decrease payments to
another person who is without fault.
Upon enactment, the Secretary would not be able to initiate any recovery action
if the provider or supplier has sought a reconsideration of the Medicare overpayment
by a QIC until the date of the reconsideration decision. If QIC’s are not yet in place,
the recovery would not be initiated until the date of a redetermination decision by a
fiscal intermediary or a carrier. If monies have been offset or repaid, the Secretary
would return those amounts plus applicable interest if the original overpayment
determination is reversed. If such an overpayment determination is upheld, interest
would accrue beginning on the date of the original overpayment notice; the interest
amount would be the rate otherwise applicable for Medicare overpayments.
Not later than 1 year after enactment, a Medicare contractor would not be able
to use extrapolation to determine overpayment amounts for statistically valid random
samples initiated after the date of enactment, unless, as determined by the Secretary,
a sustained or high level of payment error exists or a documented educational
intervention did not correct the payment error. Where providers and suppliers have
previously been overpaid, Medicare contractors would be able to require periodic
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production of records or supporting documentation for a limited sample of submitted
claims to ensure that a previous practice has been discontinued.
The Secretary would be able to use a consent settlement to resolve a projected
overpayment. Before entering into any consent settlements after the date of
enactment, the Secretary would be required to communicate to a provider or supplier
that based on a preliminary evaluation of a medical records review, an overpayment
may exist; the nature of the identified problems; and the necessary steps to address the
problem.. The Secretary would provide 45 days where additional information may
be submitted concerning the claims for which the medical records have been reviewed.
After considering the additional information, the Secretary would provide notice and
explanation of any remaining overpayment determination and would offer the
opportunity for a statistically valid random sample (which would not waive appeal
rights) or a consent settlement (based on a smaller sample with a waiver of appeal
rights) to resolve the overpayment amounts.
Not later than 1 year after enactment, the Secretary would be required to
establish, in consultation with health care associations, a process where classes of
providers and suppliers are notified that their Medicare contractor has identified
specific billing codes that may be over-utilized.
For audits initiated after enactment, Medicare contractors would be required to
provide a written notice (which may be in electronic form) of the intent to conduct a
post-payment audit to those selected as audit candidates. Medicare contractors would
be required to provide those who have been audited a full review and understandable
explanation of the findings that: (1) permits the development of an appropriate
corrective action plan; (2) provides information on appeal rights as well as consent
settlements (which are at the discretion of the Secretary); and (3) provides for an
opportunity to supply additional information to the contractor. Medicare contractors
would be required to take into account the information provided, on a timely basis.
The provisions requiring notice of audit and findings would not apply if pending law
enforcement activities would be compromised or findings of law enforcement-related
audits would be revealed.
Not later than 1 year after enactment, the Secretary would be required to
establish a standard methodology for Medicare contractors to use in selecting a claims
sample for a review of abnormal billing patterns. These provisions would apply to
Medicare administrative contractors including fiscal intermediaries and carriers as well
as those eligible entities with MIP contracts.
Section 406. Provider Enrollment Process; Right of Appeal.
Current Law. Providers and, to some extent suppliers, have access to certain
appeal mechanisms if their application to participate in Medicare is denied or
terminated. Section 1866(h) of the Act provides for a hearing and for judicial review
of that hearing for any institution or agency dissatisfied with a determination that it
is not a provider (or that it can no longer be a provider). There is no statutory
provision extending such judicial appeal rights to suppliers. Sections 1128(a) and (b)
of the Act provide for the exclusion of certain individuals or entities because of the
conviction of crimes related to their participation in Medicare; Section 1128(f)
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provides for hearing and judicial review for exclusions. In 1999, HCFA– now CMS
– published a proposed regulation that would revise existing Medicare Part B
administrative appeals procedures and extend them to all suppliers not currently
covered.
Explanation of Provision. The Secretary would be required to (1) establish by
regulation an enrollment process for providers and suppliers which would include
deadlines for actions on enrollment applications within 6 months of enactment; (2)
monitor the performance of Medicare administrative contractors in meeting the
deadlines; and (3) consult with providers and suppliers in making changes to the
enrollment forms made on or after January 1, 2002.
Providers and suppliers whose application to enroll or reenroll has been denied
and who are dissatisfied with the determination would be entitled to a hearing and
judicial review of the determination under the procedures that currently apply to
providers. This provision would apply to denials after a date specified by the
Secretary which could not be later than 1 year from enactment.
Section 407. Process for Correction of Minor Errors and
Omissions on Claims Without Pursuing Appeals Process.
Explanation of Provision. The Secretary would be required to develop, in
consultation with appropriate Medicare contractors and health care associations, a
process where minor claims errors and omissions can be corrected and resubmitted
without appealing the claims denial.
Section 408. Prior Determination Process for Certain Items
and Services; Advance Beneficiary Notices.
Current Law. Medicare law prohibits payment for items and services that are not
medically reasonable and necessary for the diagnosis or treatment of an illness or an
injury. Under certain circumstances, however, Medicare will pay for noncovered
services that have been provided if both the beneficiary and the provider of the
services did not know and could not have reasonably been expected to know that
Medicare payment would not be made for these services.
A provider may be held liable for providing uncovered services, if, for example,
specific requirements are published by the Medicare contractor or the provider has
received a denial or reduction of payment on the same or similar service. In cases
where the provider believes that the service may not be covered as reasonable and
necessary, the provider may limit his liability by providing an acceptable advance
notice of Medicare’s possible denial of payment to the patient The notice must be
given in writing, in advance of providing the service; include the patient’s name, date
and description of service as well as reasons why the service would not be covered;
and must be signed and dated by the patient to indicate that the beneficiary will
assume financial liability for the service if Medicare payment is denied or reduced.
Explanation of Provisions. The Secretary would be required to establish a
process through regulation where physicians and beneficiaries can establish whether
Medicare covers certain items and services before such services are provided. An
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eligible requestor would be either a physician, but only with respect to eligible items
and services for which the physician may be paid directly or a Medicare beneficiary
who receives an advance beneficiary notice (ABN) from the physician who may be
paid directly for the service in question.
The Secretary would establish by regulation reasonable limits on the categories
of eligible items and services for which a prior determination may be requested. The
Secretary would be able to require that the request be accompanied by a description
of the item or service and other supporting documentation including a copy of the
ABN if the beneficiary is requesting the prior determination.
The contractor would be required to provide the eligible requester with a written
notice stating whether the item or service is covered or not covered or whether the
information is not sufficient to make a decision. This notice would be subject to
existing deadlines applying to initial determinations and would include a brief
explanation of the basis for the decision and the right to redetermination. If a
physician’s request for a prior determination was unsuccessful, the beneficiary would
be informed of that decision. These prior determinations would be binding on the
Medicare contractor, absent fraud or misrepresentation of facts. If unsuccessful, the
requestor would have the right to request a redetermination. Contractors’ prior
determinations (and redeterminations) would not be subject to further administrative
or judicial review. However, an individual would retain existing rights to
administrative or judicial review after receiving the service or receiving a
determination that a service would not be covered. No prior determinations would
be rendered after services are rendered or items are provided.
The Secretary would be required to (1) establish the process to allow for the
processing of such requests beginning 18 months after enactment; (2) collect data on
the advance determinations; and (3) establish a beneficiary and provider outreach and
education program. GAO would be required to report on the use of the advance
beneficiary notice and prior determination process no later than 18 months of its
implementation.
Title V – Miscellaneous Provisions
Section 501. Policy Development Regarding Evaluation and
Management (E&M) Documentation Guidelines.
Explanation of Provision. The Secretary would not be permitted to implement
any new documentation guidelines on or after enactment for evaluation and
management (E&M) physician services unless the guidelines (1) are developed in
collaboration with practicing physicians (both generalists and specialists) after
assessment by the physician community; (2) based on a plan with deadlines for
improving use of E&M codes; (3) are developed after completion of the pilot projects
to test modifications to the codes; (4) are found to meet the desired objectives; and
(5) are preceded by establishment of appropriate outreach and education of the
physician community. The Secretary would make changes to existing E&M
guidelines to reduce paperwork burdens on physicians. The Secretary would be
required to modify E&M guidelines to (1) identify clinically relevant documentation:
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(2) decrease non-clinically pertinent documentation; (3) increase the reviewers’
accuracy; and (4) educate the physicians and the reviewers.
The provisions would establish different pilot projects in specified settings that
would be (1) conducted on a voluntary basis in consultation with practicing physicians
(both generalists and specialists); (2) be of sufficient length to educate physicians and
contractors on E&M guidelines and (3) allow for an assessment of E&M guidelines
and their use. A range of different projects would be established and include at least
one project that (1) uses a physician peer review method; (2) uses an alternative
method based on face-to-face encounter time with the patient; (3) is in a rural area;
(4) is outside a rural area; and (5) involves physicians billing in a teaching setting and
nonteaching setting. The projects would examine the effect of modified E&M
guidelines on different types of physician practices in terms of the cost of compliance.
Data collected under these projects would not be the basis for overpayment demands
or post-payment audits. This protection would apply to claims filed as part of the
project, would last the duration of the project, and would last for as long as the
provider participated in the project. The Secretary, in consultation with practicing
physicians including those in groups practices as well as generalists and specialists,
would be required to evaluate the development of alternative E&M documentation
systems with respect to administrative simplification requirements and report results
of the study to Congress by October 1, 2003. The Medicare Payment Advisory
Commission would conduct an analysis of the results of this study and submit a report
to Congress.
The Secretary would be required to conduct a study of the appropriate coding
of extended office visits where no diagnosis is made and submit a report with
recommendations to Congress no later than October 1, 2003.
Section 503. Improvement in Oversight of Technology and
Coverage.
(a) Improved Coordination Between FDA and CMS on Coverage of
Breakthrough Medical Devices.
Explanation of Provision. Upon request and to the extent feasible, the Secretary
would be required to ensure that appropriate information from the review for
application for premarket approval of class III medical devices conducted by the
Federal Drug Administration (FDA) is shared for the purposes of making Medicare
coverage decisions. Within 6 months of enactment, the Secretary would be required
to submit a report to the appropriate congressional committees on the implementation
plan to shorten the delay between FDA’s premarket approval and Medicare’s coding
and coverage decisions. This provision would not change Medicare’s coverage nor
FDA’s premarket approval criteria. Nothing in this subsection would be construed to
increase the premarket approval application requirements under the Federal Food,
Drug, and Cosmetic Act.
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(b) Council for Technology and Innovation.
Explanation of Provision. The Secretary is required to establish a Council for
Technology and Innovation within CMS. The council would be composed of senior
CMS staff with an executive coordinator, who is designated or appointed by the
Secretary and reports to the CMS administrator. The chairperson would serve as a
single point of contact for outside groups and entities regarding Medicare coverage,
coding, and payment processes. The Council would coordinate Medicare’s coverage,
coding, and payment processes as well as information exchange with other entities
with respect to new technologies and procedures, including drug therapies.
(c) GAO Study on Improvements in External Data Collection for Use
in the Medicare Inpatient Payment System.
Explanation of Provision. GAO would be required to conduct a study analyzing
which external data can be collected by CMS for use in computing Medicare’s
inpatient hospital payments. The study may include an evaluation of the feasibility and
appropriateness of using quarterly samples or special surveys among other methods.
The study would include an analysis of whether other agencies, such as the Bureau
of Labor Statistics in the Department of Commerce (sic), are best suited to collect this
information. The report would be submitted to Congress no later than October 1,
2002
(d) IOM Study on Local Coverage Determinations.
Explanation of Provision. The Secretary would be required to arrange for a
study by the Institute of Medicine (IOM) that would examine Medicare’s local
coverage determinations. The study would examine (1) the consistency of definitions
used in the determinations; (2) the types of evidence that are the basis of the
determinations; (3) the advantages and disadvantages of local coverage
decisionmaking and of maintaining local Medicare contractor advisory committees;
and (4) the manner in which local coverage decisions are used to develop data to
support national coverage determinations. The IOM study would be due to the
Secretary no later than 3 years after enactment when it would be promptly transmitted
to Congress.
(e) Methods for Determining Payment Basis for New Lab Tests.
Current Law. Outpatient clinical diagnostic laboratory tests are paid on the basis
of areawide fee schedules. The law establishes a cap on the payment amounts which
is currently set at 74% of the median for all fee schedules for that test. The cap is set
at 100% of the median for tests performed after January 1,2001 that the Secretary
determines are new tests for which no limitation amount has previously been
established.
Explanation of Provisions. The Secretary would be required to establish
procedures (by regulation) for determining the basis and amount of payments for new
or substantially revised clinical diagnostic laboratory tests assigned a Health Care
Procedure Coding System (HCPCS) code on or after January 1, 2003. A code would
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be considered as substantially revised if there is a substantive change to the definition
of a test or procedure to which the HCPCS code applies.
The Secretary, as part of this procedure, would be required to (1) provide a list
(on an Internet site or other appropriate venue) of tests for which payments are being
established in that year; (2) publish a notice of a meeting in the
Federal Register on
the day the list becomes available; (3) hold the public meeting no earlier than 30 days
after the notice to receive public comments and recommendations; (4) take into
account the comments, recommendations and accompanying data in both proposed
and final payment determinations. The Secretary would set forth the criteria for
making these determinations; make public the available data considered in making
such determinations; and could convene other public meetings as necessary.
Section 503. Treatment of Hospitals for Certain Services
Under the Medicare Secondary Payor (MSP) Provisions.
Current Law. In certain instances when a beneficiary has other insurance
coverage, Medicare becomes the secondary insurance. Medicare Secondary Payor
is the Medicare program’s coordination of benefits with other insurers. Section
1862(b)(6) of the Act requires an entity furnishing a Part B service to obtain
information from the beneficiary on whether other insurance coverage is available.
Explanation of Provision. The Secretary would not require a hospital or a
critical access hospital to ask questions or obtain information relating to the Medicare
secondary payor provisions in the case of reference laboratory services if the same
requirements are not imposed upon those provided by an independent laboratory.
Reference laboratory services would be those clinical laboratory diagnostic tests and
interpretations of same that are furnished without a face-to-face encounter between
the beneficiary and the hospital where the hospital submits a claim for the services.
Section 504. EMTALA Improvements.
Current Law. Medicare requires participating hospitals that operate an
emergency room to provide necessary screening and stabilization services to a patient
in order to determine whether an emergency medical situation exists before asking
about insurance status of the patient. Hospitals that are found to be in violation of the
Emergency Medical Treatment and Labor Act (EMTALA) requirements may face
civil monetary penalties and termination of their provider agreement. After a state
investigation of an EMTALA complaint, the CMS Regional Office may ask its local
peer review organization (PRO) to perform a 5-day review to obtain additional
medical expertise. However, prior to imposing a civil monetary penalty, the Secretary
is required to request that a PRO assess whether the involved beneficiary had an
emergency condition which had not been stabilized and provide a report on its
findings. Except in the case where a delay would jeopardize the health or safety of
individuals, the Secretary provides 60-day period for the requested PRO review.
Explanation of Provisions. Emergency room services provided to screen and
stabilize a Medicare beneficiary furnished after January 1, 2002, would be evaluated
as reasonable and necessary on the basis of the patient’s presenting symptoms or
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complaint available to the treating physician or practitioner at the time the services
were ordered and not the patient’s principal diagnosis. The Secretary would not be
able to consider the frequency with which the item or service was provided to the
patient before or after the time of admission or visit. The Secretary would be required
to establish a procedure to notify hospitals and physicians when an EMTALA
investigation is closed.
Except in the case where a delay would jeopardize the health and safety of
individuals, the Secretary would be required to request a PRO review before making
a compliance determination that would terminate a hospital’s Medicare participation
because of EMTALA violation. The period of 5 business days would apply to such
a PRO review. The Secretary would be required to provide a copy of the report to
the hospital or physician, consistent with existing confidentiality requirements. This
provision would apply to terminations initiated on or after enactment.
Section 505. Emergency Medical Treatment and Active Labor
(EMTALA) Task Force.
Explanation of Provision. The Secretary would be required to establish a 19-
member technical advisory group under specified requirements to review issues
related to EMTALA. The advisory group would be comprised of: the CMS
administrator; the OIG; four hospital representatives who have EMTALA experience
(including one person from a public hospital and at least two of whom have not
experienced EMTALA violations), seven practicing physicians with EMTALA
experience; two patient representatives; two regional CMS staff involved in
EMTALA investigations; one representative from a state survey organization and one
representative from a PRO. The Secretary would (1) consider qualified individuals
who are nominated by organizations representing providers and patients in selecting
the task force; and (2) establish the advisory group without regard to any limits on the
number of such group that may be established (within HHS or otherwise).
The advisory group would be required to (1) elect a member as chairperson; (2)
schedule its first meeting at the direction of the Secretary and meet at least twice a
year subsequently; and (3) terminate 30 months after the date of its first meeting. The
advisory group would review EMTALA regulations; provide advice and
recommendations to the Secretary; solicit public comments from interested parties;
and disseminate information on the application of the EMTALA regulations.
Section 506. Authorizing Use of Arrangements with Other
Hospice Programs to Provide the Core Hospice Services in
Certain Circumstances.
Current Law. A hospice is a public agency or private organization which is
primarily engaged in providing and making available certain care to a terminally ill
Medicare beneficiary under a written plan. A hospice must ensure that substantially
all its core services are routinely provided directly by hospice employees (including
volunteers) or, during peak patient loads or under extraordinary circumstances, by
contract staff. Certain hospices in nonurbanized areas can receive waivers to this
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requirement. Other non-core services may be provided under arrangement, subject
to certain conditions.
Explanation of Provision. Hospice programs may enter into arrangements with
another certified hospice program to provide services. The services that could be
provided under these arrangements would be limited to extraordinary or non-routine
circumstances, such as unanticipated periods of staffing shortages. The originating
hospice program would continue to be responsible for billing and maintaining quality
of care.
Section 507. Application of OSHA Bloodborne Pathogens
Standard to Certain Hospitals.
Current Law. Section 1866 establishes certain conditions of participation that
providers must meet in order to participate in Medicare.
Explanation of Provision. As of July 1, 2002, public hospitals that are not
otherwise subject to the Occupational Safety and Health Act of 1970 would be
required to comply with the Bloodborne Pathogens standard under section 1910.1030
of Title 29 of the Code of Federal Regulations. A hospital that fails to comply with
the requirement would be subject to a civil monetary penalty, but would not be
terminated from participating in Medicare.
Section 508. One-Year Delay in Lock-in Procedures for
Medicare+Choice Plans; Change in Medicare+Choice
Reporting Deadlines and Annual, Coordinated Election Period
for 2002.
(a) One-Year Delay in Lock-in Procedures for Medicare+Choice
Plans.
Current Law. Under the provisions in the Balanced Budget Act of 1997,
Medicare beneficiaries are able to enroll in a M+C plan, change plans, or return to
traditional fee-for-service Medicare at any point in the calendar year through 2001.
After a transition period, a beneficiary will be permitted to make and change health
plan elections only during an annual coordinated election period. Beneficiaries are
also provided a 3-month period after making an election when they can change their
election. Additional election periods called “special election periods” will apply for
newly eligible Medicare beneficiaries and beneficiaries who experience certain events.
Limited exceptions are provided. The lock-in provision (which limits beneficiaries’
ability to enroll and disenroll in Medicare managed care plans) will be fully
implemented in FY2002.
Explanation of Provisions. The full implementation of the M+C lock-in
provision would be delayed from FY2002 to FY2003.
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(b) Change in Medicare+Choice Reporting Deadlines and Annual,
Coordinated Election Period for 2002.
Current Law. M+C plans are required to include all Medicare covered services
(except hospice services) and may offer additional benefits. The adjusted community
rate (ACR) mechanism is the procedure that determines the minimum amount of
additional benefits health plans are required to provide and the related cost-sharing
amounts, if any. No later than July 1 of each year, each M+C organization is required
to submit its ACR to HHS.
Explanation of Provisions. This provision would move the filing date for the
ACR for 2002 from July 1, 2002 to the third Monday in September, 2002 and change
the current open enrollment period in 2003 to a period beginning on November 15,
2002 ending on December 31, 2002. GAO would be required to study the enrollment
process that occurred in 2001 and submit a report to Congress by May 31, 2002. The
report would include an examination of the impact of moving the ACR date on (1)
M+C participation and benefits offered, and (2) timeliness and adequacy of the plan-
specific information provided to beneficiaries. The report would also include results
from surveying beneficiaries and M+C organizations as well as any appropriate
recommendations.
Section 509. BIPA-Related Technical Amendments and
Corrections.
Current Law. BIPA established an advisory committee structure, the Medicare
Coverage Advisory Committee, to assist the Secretary in making national coverage
determinations by citing Section 1114 of the Act.
Explanation of Provision. The provisions would incorporate Section 1114 of the
Act which relates to the appointment of advisory councils and other advisory groups
into Section 1862 of the Act which relates to exclusions from Medicare coverage.
Other terms established by BIPA would be changed–from “policy” to
“determinations.”
Section 510. Conforming Authority to Waive a Program
Exclusion.
Current Law. The Secretary is required to exclude individuals and entities from
participation in federal health programs who are (1) convicted of a criminal offense
related to health care delivery under Medicare or under state health programs; (2)
convicted of a criminal offense related to patient abuse or neglect under federal or
state law; (3) convicted of a felony relating to fraud, theft, or financial misconduct
relating to a health care program financed or operated by the federal, state or local
government; or (4) convicted of a felony related to a controlled substance. At the
request of a state, the Secretary is permitted to waive a program exclusion with
respect to Medicare or Medicaid, but only for exclusions described in (1) above.
Explanation of Provisions. The Administrator of a federal health program
would be permitted to request a waiver of a program exclusion if the exclusion of a
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sole community physician or source of specialized services in a community would
impose a hardship. This conforming change would extend the same waiver authority
currently in Medicare and Medicaid to federal health programs. In addition, waivers
could be requested for Medicare, Medicaid, and federal health programs with respect
to all exclusions except those related to patient abuse or neglect.
Section 511. Treatment of Certain Dental Claims.
Explanation of Provisions. Starting 60 days after enactment, a group health plan
providing supplemental or secondary coverage to Medicare beneficiaries would not
be able to require dentists to obtain documentation from Medicare that categorically
excluded dental services are not covered prior to paying the claim.
Section 512. Miscellaneous Reports, Studies and Publication
Requirements.
(a) GAO Reports on Physician Compensation.
Explanation of Provisions. No later than 6 months from enactment, GAO would
be required to report to Congress on the appropriateness of the updates in the
conversion factor including the appropriateness of the sustainable growth rate (SGR)
formula for 2002 and subsequent years. The report would examine the stability and
predictability of the updates and rate as well as the alternatives for use of the SGR in
the updates. No later than 12 months from enactment, GAO would be required to
report to Congress on all aspects of physician compensation for Medicare services.
The report would review alternative physician payment structures, and provide
recommendations to make the current system more stable and less complex.
(b) Submission of Overdue Reports on Payment and Utilization of
Outpatient Therapy Services.
Current Law. Congress required the Secretary to submit a report by January 1,
2001 on the establishment of a mechanism for assuring appropriate utilization of
outpatient therapy services. The Secretary was also required to conduct a study on
the utilization of therapy services by June 30, 2001. The imposition of annual
outpatient therapy caps by the Balanced Budget Act of 1997 has been delayed until
October 1, 2002.
Explanation of Provision. The Secretary is urged to submit the mandated
reports to Congress immediately.
(c) Annual Publication of List on National Coverage Determinations.
Explanation of Provisions. The Secretary would be required to provide, in an
annual report that will be publicly available, a list of Medicare’s national coverage
determinations made in the previous year and include information on how to learn
more about such determinations.