For other versions of this document, see http://wikileaks.org/wiki/CRS-RL31901 ------------------------------------------------------------------------------ Order Code RL31901 CRS Report for Congress Received through the CRS Web Regulatory Reform Provisions of S. 1, as Passed by the Senate, and H.R. 1, as Passed by the House Updated July 23, 2003 Jennifer Boulanger and Sibyl Tilson Specialists in Social Legislation Domestic Social Policy Division Congressional Research Service ~ The Library of Congress Regulatory Reform Provisions of S. 1, as Passed by the Senate, and H.R. 1, as Passed by the House Summary On June 27, 2003, the Senate passed the Prescription Drug and Medicare Improvement Act of 2003 by a vote of 76-21. Later that same evening, the House passed the Medicare modernization and Prescription Drug Act of 2003 by a recorded vote of 216-215 with one voting present. Each of the bills contain numerous provisions regarding the Medicare prescription drug benefit, the new MedicareAdvantage program, Medicare payment and benefit changes, Medicare program administration, and regulatory reform, appeals and contracting reform. This report provides a detailed side-by-side comparison of the regulatory reform, appeals, and contracting reform provisions of both S. 1 and H.R. 1. Title V of S. 1 and Title IX of H.R. 1 would modify how Medicare regulations and guidance are communicated; 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 bills address appeals issues; change Medicare's authority to contract for claims processing services; establish that these contracts be competitively bid at least every 5 years in H.R. 1 and every 6 years in S. 1; and place new requirements on the Medicare claims processing contractors, including an increased emphasis on provider education. Other program changes, demonstration projects, and mandated studies are also included in these titles. Many of the provisions of these titles codify initiatives underway within the Centers for Medicare and Medicaid Services (CMS), the agency that administers Medicare, under its current authority. The proposed legislation authorizes increased funding but action by the appropriations committees would be required for CMS to receive additional money. The Congressional Budget Office (CBO) has estimated that the added administrative costs to the government in implementing the regulatory reform provisions of S. 1 and H.R. 1 would be $4 billion over the FY2004 through FY2013 period. However, these are administrative costs that are subject to the appropriations process rather than mandatory benefit spending. As a result, the appropriations committees have discretion to determine the actual level at which any of the new requirements would actually be funded. CBO also estimates that mandatory benefit spending would be increased in S. 1 by almost $1 billion over the FY2004 through FY2013 period (due to the change in procedures for appealing local coverage determinations and the inclusion of additional funding in the mandatory Medicare Integrity Program funding for provider education). Those provisions are not in H.R. 1 and CBO estimated that there was no increase in direct funding in that bill. This report will be updated as events warrant. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Side-by-Side Comparison of S. 1 and H.R. 1 Regulatory Reform Provisions . . . . 4 Subtitle A. Regulatory Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Subtitle B. Appeals Process Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Subtitle C. Contracting Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Subtitle D. Education and Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Subtitle E. Review, Recovery, and Enforcement Review . . . . . . . . . . . . . . 16 Subtitle F. Other Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Regulatory Reform Provisions of S. 1, as Passed by the Senate, and H.R. 1, as Passed by the House Introduction Overview For some time, observers have expressed concern over the way in which Medicare has been administered. Some believe that the Centers for Medicare and Medicaid Services (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 believe 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 lightning 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. Title V of S. 1 and Title IX H.R. 1 would modify how Medicare regulations and guidance are communicated; 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 address appeals issues and would provide for 1 U.S. General Accounting Office, Medicare: Successful Reform Requires Meeting Key Management Challenges, GAO-01-1006, July 25, 2001 and Regulatory Issues for Medicare Providers, GAO-01-802R, June 11, 2001 for additional information. CRS-2 more competition in the way Medicare claims processing contractors are chosen. Many of the provisions of the bill codify initiatives underway within the Centers for Medicare and Medicaid Services (CMS), the agency that administers Medicare, under its current authority. The regulatory reform titles in these bills came from S. 3018 introduced at the close of the 107th Congress and H.R. 810 which was reported out of the House Committee on Ways and Means and the Committee on Energy and Commerce. The provisions of both those bills comprise Title V in S. 1 and Title IX of H.R. 1. A number of bills were developed in the 107th Congress. The precursor of all the legislation was the Medicare Education and Regulatory Fairness Act (MERFA or H.R. 868). MERFA was criticized by the Office of the Inspector General (OIG) in HHS as potentially encouraging fraud, in part, because it would have granted physicians immunity if they voluntarily returned overpayments when potentially facing investigation. That provision was dropped in later legislation that passed the House December 4, 2001, the Medicare Regulatory and Contracting Reform Act of 2001(H.R. 3391), which also incorporated 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 would not be significantly weakened. Selected provisions of H.R. 3391 were also incorporated into the Medicare Modernization and Prescription Drug Act of 2002 (H.R. 4954) which passed the House on June 28, 2002. Similar legislation was introduced in the Senate: S. 452, the Medicare Education and Regulatory Fairness Act of 2001 which was very similar to the original House bill; S. 1738, the Medicare Appeals, Regulatory, and Contracting Improvement Act of 2001 which incorporated similar concerns regarding the government's ability to address Medicare program integrity issues; and S. 3018, the Beneficiary Access to Care and Medicare Equity Act of 2002 which contained selected provisions from S. 1738. None of these bills came to a vote by the Senate. H.R. 810 was introduced during the beginning of the 108th Congress and was based on H.R. 4954. The House Energy and Commerce Committee and the House Ways and Means Committee reported out slightly different versions of Medicare regulatory relief legislation on March 26, 2003 and on April 11, 2003, respectively. A major feature of both S. 1 and H.R. 1 (and one ardently supported by the Secretary of HHS) is contracting reform. The contracting reform provisions would change Medicare's authority to contract for claims processing services, another central issue seen to complicate effective program administration. Presently there are statutory limits on which entities may process Medicare claims. 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 only 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. For example, the contracts are cost-based and lack incentives for quality performance. Both bills would generally allow for greater flexibility in contracting for Medicare claims processing functions by permitting the Secretary to enter into contracts with CRS-3 any qualified entity for any or all functions of a Medicare claims processing contractor.2 The Congressional Budget Office (CBO) has estimated that the added administrative costs to the government in implementing the regulatory reform provisions of S. 1 and H.R. 1 would be $4 billion over the FY2004 through FY2013 period. However, these are administrative costs that are subject to the appropriations process rather than mandatory benefit spending. As a result, the appropriations committees have discretion to determine the actual level at which any of the new requirements would actually be funded. CBO also estimates that mandatory benefit spending would be increased in S. 1 by almost $1 billion over the FY2004 through FY2013 period (due to the change in procedures for appealing local coverage determinations and the inclusion of additional funding in the mandatory Medicare Integrity Program funding for provider education). Those provisions are not in H.R. 1 and CBO estimated that there was no increase in direct funding in that bill. This report provides a detailed side-by-side comparison of the regulatory reform, appeals, education, and contracting reform provisions of both bills. It will be updated as events warrant. 2 For additional information, see U.S. General Accounting Office, Medicare Contracting Reform: Opportunities and Challenges in Contracting for Claims Administration Services, GAO-01-918, June 28, 2001 and Medicare: Comments on HHS' Claims Administration Contracting Reform Proposal, GAO-01-1046, Aug. 17, 2001. OIG testimony on the need for contractor reform can be found at [http://oig.hhs.gov/testimony/2001/062801mm.pdf]. CRS-4 Side-by-Side Comparison of S. 1 and H.R. 1 Regulatory Reform Provisions Subtitle A. Regulatory Reform Provisions Current Law S. 1 H.R. 1 Construction; Section 1861 of the Social Security Act contains No provision. Section 901. Would clarify that "supplier" definition of supplier definitions of services, institutions, and so forth means a physician or other practitioner, a under Medicare. Supplier is not explicitly defined. facility or other entity (other than a provider of services) furnishing items or services under Medicare. Publication of a final The Secretary is required to prescribe regulations Section 501. The Secretary would be required to Section 902. Would require the Secretary regulation based on the that are necessary to administer the Medicare publish a final regulation within 12 months of the to establish and publish a timeline for the previous publication of program. The Secretary must publish proposed publication of the interim final regulation or the publication of final regulations based on the an interim final regulations in the Federal Register, with at least 30 interim final regulation would no longer be publication of a proposed or interim final regulation days to solicit public comment before issuing the effective. Subject to appropriate notice, the regulation. The timeline for publishing the final regulation except in the following Secretary could extend this deadline for up to 12 final regulation would be allowed to vary circumstances: (1) the statute permits the additional months. but could not exceed 3 years except for regulation to be issued in interim final form or exceptional circumstances. Any variation provides for a shorter public comment period; (2) of the timeline would have to be explained the statutory deadline for implementing a provision by the Secretary in the Federal Register. is less than 150 days after the date of enactment of Within 6 months of enactment, the Secretary would Has similar requirement to S. 1 regarding the statute containing the provision; (3) under the be required to publish a notice in the Federal publishing a final regulation after an interim good cause exception contained in the rule-making Register that provides the status of each interim final regulation. provision of Title 5 of the United States Code, final regulation published before enactment for notice and public comment procedures are deemed which no final regulation has been issued as well as impracticable, unnecessary or contrary to the the date by which the Secretary plans to publish the public interest. final regulation. Also would require that the Secretary report to Congress annually describing instances in which a final regulation was not published within the applicable regular time line and the reasons the time frame was not met. Any provision in a final regulation that was not a logical outgrowth of a previously published notice of proposed rule making or interim final rule would be required to be treated as a proposed regulation and would CRS-5 Provisions Current Law S. 1 H.R. 1 not take effect until there is opportunity for public comment and the provision is published again as a final rule. Compliance with No explicit statutory instruction. As a result of Section 502. Would bar retroactive application of Section 903. Same provisions. changes in regulations case law, there is a strong presumption against any substantive changes in regulation, manual and policies retroactive rulemaking. In Bowen v. Georgetown instructions, interpretative rules, statements of University Hospital, the Supreme Court ruled that policy, or guidelines unless the Secretary there must be explicit statutory authority to engage determines retroactive application is needed to in retroactive rulemaking. comply with the statute or is in the public interest. Any substantive changes would not be able to take effect until 30 days after the issuance of the substantive change unless needed to comply with statutory requirements or the 30-day period is contrary to the public interest. Report on legal and No provision. Section 503. The Secretary would be required to Section 904. Same provision but regulatory report to Congress every 2 years on the additionally would require the Comptroller inconsistencies administration of Title XVIII and areas of General to determine the feasibility and inconsistency or conflict among various provisions appropriateness of giving the Secretary the under law and regulation and recommendations for authority to provide legally binding legislation or administrative action that the advisory opinions on interpretation and Secretary determined appropriate to further reduce application of Medicare regulations. such inconsistency or conflicts. Streamlining and No provision. Section 504. The Secretary would be required to No provision. simplification of analyze Medicare regulations for the purposes of Medicare regulations determining how to streamline the regulations and reduce the number of words in the regulations by two-thirds by October 1, 2004. If the Secretary determines that the two-thirds reduction is infeasible, he would be required to inform Congress in writing by July 1, 2004 of the reasons and then establish a feasible reduction to be achieved by January 1, 2005. CRS-6 Subtitle B. Appeals Process Reform Provisions Current Law S. 1 H.R. 1 Transfer of Denials of claims for Medicare payment may be Section 511. The Secretary and Commissioner of Section 931. Similar provision regarding responsibility for appealed by beneficiaries (or providers who are Social Security would be required to develop and plan submission, but also would transfer the Medicare appeals representing the beneficiary) or in certain transmit to Congress a plan for transferring the ALJ function from SSA to HHS within a circumstances, providers or suppliers directly. The functions of administrative law judges (ALJs) prescribed timeframe. The Commissioner of third level of appeal is to an administrative law responsible for hearing cases under Title XVIII SSA and the Secretary would be required to judge (ALJ). The ALJs that hear Medicare cases from the Social Security Administration to HHS no develop a plan to transfer the functions of the are employed by the Social Security later than April 1, 2004. The plan would include ALJs who are responsible for hearing Administration -- a legacy from the inception of information on: workload, cost projections and Medicare cases from SSA to HHS. This plan the Medicare program when Medicare was part of financing, transition timetable, regulations, would be due to Congress not later than Social Security. development of a case tracking system, feasibility October 1, 2004. A GAO evaluation of the of precedential authority, feasibility of electronic plan would be due within 6 months of the appeals filings and teleconference, steps needed to plan's submission. ALJ functions would be ensure the independence of ALJs (including transferred no earlier than July 1, 2005 and ensuring the ALJs are in an office functionally and no later than October 1, 2005. operationally separate from the Centers for Medicare & Medicaid Services and the Center for The Secretary would be required to place the Medicare Choices), geographic distribution of ALJs in an administrative office that is ALJs, hiring of ALJs, performance standards of organizationally and functionally separate ALJs, sharing resources with Social Security from the Centers for Medicare & Medicaid regarding ALJs, training and recommendations for Services. Would further require that the further Congressional action. The GAO would be ALJs report to, and be supervised by, the required to evaluate the Secretary's and Secretary or Deputy Secretary and no other Commissioner's plan. Further, the Secretary and official within the Department. Commissioner could not implement the plan to transfer the ALJ function until at least 6 months Would authorize to be appropriated such after the GAO report sums as are necessary for FY2005 and each subsequent fiscal year to increase the number of ALJs, improve education and training of ALJs and to increase the staff of the Departmental Appeals Board (the final level of appeal). CRS-7 Provisions Current Law S. 1 H.R. 1 Expedited access to In general, administrative appeals must be Section 512. The Secretary would be required to Section 932. Same provision except review judicial review exhausted prior to judicial review. establish a process where a provider, supplier, or a entity would be defined as a 3-member panel beneficiary may obtain access to judicial review consisting of ALJs, members of the when a review entity (of up to three qualified Departmental Appeals Board (DAB), or reviewers drawn from appeals levels other than the qualified individuals associated with a redetermination level) determines, within 60 days qualified independent contractor. of a complete written request, that it does not have the authority to decide the question of law or regulation and where material facts are not in dispute. The decision would not be subject to review by the Secretary. Interest would be assessed on any amount in controversy and would be awarded by the reviewing court in favor of the prevailing party. This expedited access to judicial review would be permitted for cases where the Secretary did not enter into or renew provider agreements. GAO would be required to report to Congress on No provision regarding Illinois Council case. the access of Medicare beneficiaries and health care providers to judicial review of actions of the Secretary and HHS after February 29, 2000 (the date of the decision of Shalala v. Illinois Council on Long Term Care, Inc. (529 U.S. 1 (2000)). Expedited review of No provision. Section 513. The Secretary would be required to Section 932(d). Substantially similar certain provider develop and implement a process to expedite provision although drafted differently; agreement review for certain remedies imposed against skilled however, this provision would not include determinations nursing facilities (SNFs) including termination of suspension of nurse aide training programs. participation, immediate denial of payments, immediate imposition of temporary management, and suspension of nurse aide training programs. CRS-8 Provisions Current Law S. 1 H.R. 1 The appropriation of such sums as needed for FY2005 and subsequent years to reduce by 50% the average time for administrative determinations, to increase the number of ALJs and appellate staff at the DAB, and to educate these judges and their staffs on long-term care issues would be authorized. Process for The statute prohibits approval of nurse aide No provision. Section 932(e). The Secretary would be reinstatement of training programs in skilled nursing facilities that required to develop a process for reinstating approval of nurse aide have been subject to extended survey (that is, approval of nurse aide training programs that training programs found to provide substandard care), have had have been terminated (before the end of the serious sanctions imposed such as large civil mandatory 2-year disapproval period) if the money penalties, or have waivers for required facility has come into compliance with the licensed nurse staffing. The statute mandates a 2- applicable requirements. This provision year loss of nurse aide training program in the case would apply only if the basis for the loss of of any of the above violations. training was the assessment of a civil money penalty of $5,000 or more. Revisions to Medicare Section 514(a). A 90-day timeframe for No provision. appeals process: completing the record in a hearing before an ALJ or the DAB (with extensions for good cause) would be established. -- completing the record CRS-9 Provisions Current Law S. 1 H.R. 1 -- use of medical Section 514(b). Beneficiaries' medical records Section 933(b). Same provision. records would be able to be used in qualified independent contractors (QIC) reconsiderations. -- notice requirements Section 514(c). Notice of and decisions from Section 933(c). Substantially the same for Medicare appeals determinations, redeterminations, reconsiderations, provision, with minor differences in process ALJ appeals, and DAB appeals would be required and requirements, although there are drafting to be written in a manner understandable to a differences. beneficiary and that includes, as appropriate, reasons for the determination or decision, for a redetermination an explanation of the medical or scientific rationale for the decision, and the process for further appeal. -- eligibility Section 514(d). Eligibility requirements would be Section 933(d). Substantially the same requirements of QICs clarified for qualified independent contractors and provision, although there are drafting their reviewer employees including medical and differences. The provision would not change legal expertise, independence requirements, the eligibility requirements of QICs to prohibition on compensation being linked to explicitly permit peer review organizations to decisions rendered. Peer review organizations serve. would be explicitly permitted to be QICs. Would reduce the required number of QICs from 12 to four. -- implementation of Section 514(e). The effective date of certain No provision. certain Benefits appeals provisions would be delayed until Improvement and December 1, 2004. Expedited determinations Protection Act of 2000 would be delayed until October 1, 2003. Peer (BIPA) reforms review organizations (now called quality improvement organizations by the Secretary) would, on a transitional basis, conduct expedited determinations until the QICs are operational. -- requiring full and New evidence can be presented at any stage of the No provision. Section 933(a). A provider or supplier early presentation of appeals process. would be prohibited from presenting any evidence evidence in appeals that was not presented at the qualified independent contractor level, unless there was good cause for not presenting the evidence. CRS-10 Provisions Current Law S. 1 H.R. 1 -- effective dates Section 514(g). Section 514 provisions are Section 933(d)(4). QIC eligibility effective as if enacted in BIPA. requirements and reviewer eligibility requirements would be effective as if enacted in BIPA Hearing rights related Under administrative authorities, CMS has Section 515. The Secretary would be required to Section 936. Same provision, although there to decisions by the established provider enrollment processes in develop a timeline for action on Medicare are drafting differences. Secretary to deny or instructions to the contractors. A provider denied enrollment applications and a process for providers not renew a Medicare a provider agreement is entitled to a hearing by the to appeal denials or non-renewals of enrollment enrollment agreement; Secretary. applications. The Secretary would be required to consultation before consult with providers and suppliers before changing provider changing the provider enrollment forms. enrollment agreement Appeals by providers No provision. Section 516. Would require the Secretary to No provision. when there is no other permit a provider or supplier to appeal in the case party available where a beneficiary dies before assigning appeal rights. Provider access to Only beneficiaries have standing to appeal local Section 517. The parties that have standing to No provision. review of local coverage decisions by Medicare contractors. appeal local coverage decisions would be expanded coverage to include providers or suppliers adversely affected determinations by the determination. The Secretary would be required to establish a process whereby a provider or supplier may request a local coverage determination under certain circumstances. The provision would authorize to be appropriated such sums as necessary to carry out the provisions above. Also the Secretary would be required to study and report to Congress on the feasibility and advisability of requiring Medicare contractors to track the subject and status of claims denials that are appealed and final determinations. CRS-11 Provisions Current Law S. 1 H.R. 1 Revisions to appeals BIPA revised the time frames for Medicare Section 518. This provision would add 30 days to No provision. time frames appeals. For the first level of appeal, the the time frame for deciding an appeal at each of the "redetermination" level, the time frame for four levels of appeal. decisions was reduced from 90 days for a part A appeal and 45 days for a part B appeal to 30 days; for the second level, the "reconsideration" level, the time frame was reduced from 120 days for a part B appeal to 30 days (this is a new level of appeal for part A appeals); for the third level, appeals before administrative law judges, the time frame was reduced from no time limit to 90 days; and the fourth level, appeals before the Department Appeals Board, the time frame was reduced from no time limit to 90 days. BIPA also provided that a beneficiary could "escalate" his or her appeal to the next level if the appeal was not decided in a timely fashion. Elimination of BIPA Section 522 requires that appeals of local Section 519. The statutory language that requires No provision. requirement to use coverage determinations be heard by ALJs of the SSA ALJs be used to hear appeals of local Social Security Social Security Administration (SSA). As a result, coverage determinations would be eliminated. The Administration if the ALJ function were moved from SSA to HHS, requirement that these appeals be heard by ALJs administrative law these local coverage determination appeals would would be retained. judges still need to be heard by SSA ALJs. Elimination of BIPA Section 521 requires that the Departmental Section 520. The DAB would be required to No provision. requirement for de Appeals Board, the fourth level of appeal, review conduct a review of the decision and make a novo review by the appeals cases de novo. Prior to BIPA, the DAB decision or remand the appeal to the ALJ within Departmental Appeals reviewed appeals based on the record established the 90-day period. Board during the previous three levels of appeal. CRS-12 Subtitle C. Contracting Reform Provisions Current Law S. 1 H.R. 1 Increased flexibility in The Secretary is required to contract with health Section 521. Adds Section 1874A to the Social Section 911. Same provisions, except Medicare insurance companies to process and pay Medicare Security Act permitting the Secretary to contracts must be recompeted at least once administration Part B claims and may accept the nomination of competitively contract with any eligible entity to every 5 years. Competitive bidding for the hospitals for entities to process and pay their serve as a Medicare contractor (called "Medicare MACs must begin for annual contract periods Medicare claims. Administrative Contractors" (MACs)) and that begin on or after October 1, 2010. eliminates the distinction between Part A contractors and Part B contractors. The Secretary may renew these contracts annually for up to 6 years. All contracts must be recompeted at least every 6 years. Federal Acquisition Regulations (FAR) would apply to these contracts except to the extent any provisions are inconsistent with a specific Medicare requirement, including incentive contracts. Competitive bidding for the MACs must begin for annual contract periods that begin on or after October 1, 2011. Certain terms and conditions of the contracting Liability of certifying and disbursing officers and agreements for fiscal intermediaries (FIs) and the Medicare Administrative Contractors would be carriers are specified in the Medicare statute. limited except in cases of reckless disregard or the Medicare regulations coupled with long-standing intent to defraud the United States. This limitation agency practices have further limited the way that on liability does not limit liability under the False contracts for claims administration services can be Claims Act. established. The certifying and disbursing officers Circumstances where contractors and their of contractors and the contractors, as entities, are employees would be indemnified would be protected from liability for payments, except in the established, both in the contract and as the case of gross negligence or intent to defraud the Secretary determines appropriate. United States. Information security No provision. No provision. Section 912. Medicare contractors would be requirements for required to implement an information Medicare security program that meets the same administrative requirements as those imposed on federal contractors. agencies. CRS-13 Subtitle D. Education and Outreach Provisions Current Law S. 1 H.R. 1 Provider education and Medicare's provider education activities are funded Section 531(a). The Secretary would be required Section 921 (a). Same provision except it technical assistance through the program management appropriation to coordinate the educational activities through the also would require the Secretary to submit a and through Education and Training component of Medicare contractors to maximize the effectiveness report to Congress by October 1, 2004 the Medicare Integrity Program (MIP). The statute of education efforts for providers and suppliers. describing and evaluating the steps taken to requires toll-free lines that beneficiaries can call coordinate the funding of provider education. -- coordination of with questions or to report suspicious bills. Under education funding administrative authority, CMS requires the contractors to have internet sites and to respond to written inquiries. -- incentives to Section 531(b). The Secretary would be required Section 921(b). Same provision. improve contractor to use specific claims payment error rates (or performance similar methodology) to provide incentives for contractors to implement effective education and outreach programs for providers and suppliers. The GAO would study the adequacy of the methodology and make recommendations to the Secretary. The Secretary would be required to report to the Congress on how he intends to use the methodology in improving education and outreach and whether the methodology is a basis for performance bonuses. improved provider Section 531(c). Increased funding would be Section 921(d). Would authorize to be education and training provided for the Medicare Integrity Program of appropriated $25 million for fiscal years $35 million beginning with FY2004 for increased 2005 and 2006 and such sums as necessary provider and supplier education. Also would for succeeding fiscal years to increase require Medicare contractors to take into education and training of providers and consideration the special needs of small providers suppliers. Funds would also be able to be or suppliers when conducting education and used to improve the accuracy, consistency, training activities and permits provision of and timeliness of contractor responses. technical assistance. Medicare contractors would be required to tailor education and training activities to meet the needs of small providers or suppliers. CRS-14 Provisions Current Law S. 1 H.R. 1 additional provider Section 531(d). Medicare contractors would be Section 921(f). Same provision. education provisions prohibited from using a record of attendance (or non-attendance) at educational activities to select or track providers or suppliers in conducting any type of audit or prepayment review. Access to and prompt No specific statutory provision. The Medicare Section 532. The Secretary would be required to Section 921(c). Same provision. responses from statute generally requires that the Medicare develop a process for Medicare contractors to Medicare contractors contractors communicate information about communicate with beneficiaries and with providers Medicare administration. and suppliers. Also requires a clear, concise written response to inquiries within 45 business days. The Secretary would ensure that Medicare contractors provide a toll-free number where beneficiaries, providers and suppliers can obtain billing, coding, claims, coverage and other information. The Medicare contractors would be required to maintain a system for identifying the staff person who provided information and monitoring the accuracy, consistency and timeliness of information provided. The Secretary would establish standards regarding accuracy, consistency, and timeliness and would evaluate the Medicare contractors on these standards. Would authorize to be appropriated such sums as necessary. Reliance on guidance As a general principle of law, that has been Section 533. If a provider or supplier follows Section 903(c). Same provision. sustained by the Supreme Court, a Federal written guidance provided by the Secretary or a government agent cannot undo Federal Medicare contractor when furnishing items or government statutory or regulatory law. services or submitting a claim and the guidance was inaccurate, the provider or supplier would not be required to repay the overpayment (unless the inaccurate information was due to a clerical or technical operational error). CRS-15 Provisions Current Law S. 1 H.R. 1 Medicare provider No provision. Section 534. The Secretary would be directed to Section 923. Substantially similar provision, ombudsman create a Medicare Provider Ombudsman within the although would not require staff to be Department of Health and Human Services and to provided. Also would establish a Beneficiary provide staff to the Ombudsman. The Ombudsman Ombudsman to provide confidential would provide assistance to providers on a assistance to Medicare beneficiaries. Section confidential basis. Authorizes such sums as 1 would establish a Beneficiary Ombudsman necessary be appropriated for FY2004 and in Section 301. subsequent years. Beneficiary outreach No explicit statutory instruction for demonstration. Section 535. The Secretary would be required to Section 924. Same provision. demonstration program Assistance is currently available to beneficiaries establish a demonstration program where Medicare through 1-800-Medicare and through the State specialists provided assistance to beneficiaries in at Health Insurance Counseling Programs which are least six local Social Security offices (two of which mandated by the statute. would be located in rural areas). Prior determination of Medicare law prohibits payment for items and Section 535 (b). A demonstration project would Section 938. The Secretary would be coverage services that are not medically reasonable and be established by the Secretary to test the required to establish a process where necessary for the diagnosis or treatment of an administrative feasibility of providing a process for physicians and beneficiaries can establish if illness or an injury. Under certain circumstances, beneficiaries and providers to request and receive Medicare covers certain items and services however, Medicare will pay for noncovered a determination as to whether the item or service is before the services are provided. A GAO services that have been provided if both the covered under Medicare by reasons of medical report would be required within 18 months of beneficiary and the provider of the services did not necessity, before the item or service involved is program implementation. know and could not have reasonably been expected furnished to the beneficiary. to know that Medicare payment would not be made for these services. CRS-16 Provisions Current Law S. 1 H.R. 1 Small provider No provision. No provision. Section 922. A demonstration program technical assistance would be established for the contractors to demonstration program provide technical assistance to small providers and suppliers, when requested, to improve compliance with Medicare requirements. If errors were found, the contractors would be barred from recovering any overpayments if certain requirements are met and barring evidence of fraud. A GAO study would be required not later than 2 years after the demonstration program begins. Would authorize $1 million in FY2005 and $6 million in FY2006 to conduct the demonstration. Subtitle E. Review, Recovery, and Enforcement Review Provisions Current Law S. 1 H.R. 1 Prepayment review No explicit statutory instruction. Under Section 541. The conduct of random prepayment Section 934. The use of random prepayment administrative authorities, CMS has instructed the review would be limited to only those done in reviews by Medicare contractors would be contractors to use random prepayment reviews to accordance with standard protocol developed by limited to only developing a contractor-wide develop contractor-wide and program-wide error the Secretary. Non-random reviews would be or program-wide error rate or under such rates. Non-random payment reviews are permitted prohibited unless there is a likelihood of sustained additional circumstances provided under in certain circumstances laid out in instructions to or high level of payment error (as defined by the regulation and in accordance with standard the contractors. Secretary) and would require the Secretary to protocol developed by the Secretary. establish protocols for terminating the non-random Nonrandom payment reviews would be reviews. permitted only under certain circumstances. Recovery of No explicit statutory instruction. Under Section 542. Would add new subsection to 1874A Section 935. Would add new subsection to overpayments administrative authorities, CMS negotiates that: (h)(1) Would require establishment of at least 1893 that: (f)(1) Similar provision. Would -- extended repayment extended repayment plans with providers that need a 1-year repayment plan -- but not longer than 3 require that, in cases of hardship, extended plans additional time to repay Medicare overpayments. years -- when a provider requests a repayment repayment plans be given ranging from 6 plan, unless the Secretary believes the provider months and up to 5 years. In cases of may declare bankruptcy. If a provider or supplier extreme hardship, 6-year repayment plans fails to make a scheduled payment, the Secretary would be permitted. If the provider or may immediately offset or recover the outstanding supplier had previous repayment plans, those CRS-17 Provisions Current Law S. 1 H.R. 1 balance. The Secretary would be required to could not to be considered in determining develop standards for the recovery of hardship. overpayments. -- limitation on (h)(2) The Secretary would be prohibited from (f)(2) Similar provision. Would provide for recoupment recouping any overpayments until a redetermination by a Medicare contractor in reconsideration-level appeal is decided (if one was the event that qualified independent requested). Interest would be paid to the provider contractors have not been established. if the appeal is successful (beginning from the time the overpayment is recouped) or that interest shall be paid to the Secretary if the appeal is unsuccessful (and if the overpayment is not paid to the Secretary). -- payment audits (h)(3) If post-payment audits were conducted, the (f)(7) Similar provision. Also would require Medicare contractor would be required to provide the Medicare contractor to consider the the provider or supplier with written notice of the information provided by the provider or intent to conduct the audit. The contractor would supplier. further be required to give the provider or supplier a full and understandable explanation of the findings of the audit and permit the development of an appropriate corrective action plan, inform the provider or supplier of appeal rights and consent settlement options, and give the provider or supplier the opportunity to provide additional information to the contractor, unless notice or findings would compromise any law enforcement activities. -- notice of over- (h)(4) The Secretary would be required to (f)(6) Same provision. utilization of codes establish a process to provide notice to certain providers and suppliers in cases where billing codes are over-utilized by members of that class in certain areas, in consultation with organizations that represent the affected provider or supplier class. CRS-18 Provisions Current Law S. 1 H.R. 1 -- standard (h)(5) The Secretary would be required to (f)(8) Same provision. methodology for probe establish a standard methodology for Medicare sampling contractors to use in selecting a sample of claims for review in cases of abnormal billing patterns. -- consent settlement (h)(6) Would permit the Secretary to use a consent (f)(5) Substantially similar provision (minor reforms settlement process to settle projected overpayments differences). under certain specified conditions. -- extrapolation No provision. (f)(3) The use of extrapolation would be limited unless there was a high level of payment error or documented educational intervention had failed to correct the payment error. Process for correction No explicit statutory instruction. Administratively, Section 543. The Secretary would be required to Section 937. Same provision relating to of minor errors and the Medicare contractors send a claims denial establish a process so providers and suppliers can correcting minor errors. Contains additional omissions when a claim has been submitted lacking required correct minor errors in claims that have been provision that would require the Secretary to information. Amendments to cost reports are not submitted for payment. permit hospitals to correct wage data errors allowed once a cost report is settled. that affect geographic reclassification even if the cost report has been settled. For FY2004 alone, the resubmittal of the application for geographic reclassification would be permitted. Authority to waive The Secretary has the authority to waive exclusion Section 544. The Secretary would be permitted to Section 949. Same provision. program exclusion from participation in any federal health program waive a program exclusion at the request of an when the provider is the sole source of care in a administrator of a federal health care program community, at the request of a state. (which includes state health care programs). CRS-19 Subtitle F. Other Improvements Provisions Current Law S. 1 H.R. 1 Inclusion of additional Although the statute requires that beneficiaries Section 551. Beneficiary notices for those Section 925. Similar provision. Would information in notices receive a statement listing the items and services beneficiaries in SNFs and hospital would be require information for beneficiaries in a SNF to beneficiaries about for which payment has been made, there is no required to include information about the number stay only. skilled nursing facility explicit statutory instruction that requires the notice of days of coverage remaining under the SNF (SNF) and hospital to include information about the number of days of benefit and the spell of illness involved. benefits coverage remaining in either the hospital or SNF benefit. Information on The hospital discharge planning process requires Section 552. The Secretary would be required to Section 926. Same provision. Medicare-certified SNF evaluation of a patient's likely need for post- make information publicly available regarding in hospital discharge hospital services including hospice and home care. whether SNFs were participating in the Medicare plans program. Hospital discharge planning would be required to include evaluating a patient's need for SNF care. Physician evaluation Initial E&M guidelines were issued in 1995 with Section 553. The Secretary would be required to Section 941. Would bar the Secretary from and management revisions issued in 1997 and both remain in force ensure, before making changes in documentation implementing new E and M documentation (E&M) documentation today. Approximately 40% of Medicare payments guidelines for, or clinical examples of, or codes to guidelines unless the Secretary followed the guidelines for physician services are for services which are report E and M physician services, that the criteria laid out in the provision. classified as evaluation and management services process used in developing the guidelines, (i.e., physician visits). The Secretary announced examples, or codes was widely consultative that HHS was stopping work on the current re- among physicians, reflects a broad consensus draft of E and M codes in order to reassess the among specialties, and would allow verification entire effort. of reported and furnished services. Improvement in (a) No explicit statutory provision on the Council. Section 554. Would require the Secretary to Section 942. Same provision on the Council. oversight of technology Under administrative authorities, CMS announced establish a Council for Technology and Also would require the Secretary to establish and coverage in March 2003 the establishment of a technology Innovation composed of senior CMS staff and procedures for determining the basis for and council charged with improving Medicare clinicians to coordinate coverage, coding, and amount of payment for a new clinical coverage, coding and payment for emerging payment processes under Title XVIII and the diagnostic laboratory test that has been technologies. Council membership includes senior exchange of information on new technologies assigned a new (or substantially revised) CMS staff. The Health Care Procedure Coding between CMS and other entities that make similar Health Care Procedure Coding System System (HCPCS) is the procedure coding system decisions. (HCPCS) code after January 1, 2005. Would used for Part B items and services. No statutory require a GAO study analyzing which external provision regarding the GAO study. The Secretary data could be collected in a shorter time frame is required to rely on recommendations of the than that currently used in computing inpatient National Committee on Vital and Health Statistics hospital payments. Would permit the Secretary (NCVHS) in adopting standards under HIPAA. to adopt the International Classification of CRS-20 Provisions Current Law S. 1 H.R. 1 th The current standard for diagnosis codes is the Diseases, 10 Revision, Procedure Coding International Classification of Diseases, 9th System (ICD-10-PCS) and the ICD-10- Revision, Clinical Modification (ICD-9-CM). ICD- Clinical Modification (CM) without receiving 9-CM is the basis of the Medicare inpatient a recommendation from the National hospital PPS payment system.) The NCVHS has Committee on Vital and Health Statistics not made a recommendation to the Secretary about (NCVHS). ICD-10-PCS (the 10th revision, procedure coding system) or ICD-10-CM. Dental claims The statute does not authorize dental benefits in Section 555. Starting 60 days after enactment, a Section 950. Same provision. Medicare. Apparently, some insurers may require group health plan providing supplemental or a claim denial from Medicare before accepting the secondary coverage to Medicare beneficiaries claim for payment review, even if the service is not would not be able to require dentists to obtain a covered by Medicare. claim denial from Medicare for noncovered dental services prior to paying the claim. Medicare secondary In certain instances when a beneficiary has other No provision. Section 943. The Secretary would not be able payor insurance coverage, Medicare becomes the to require that a hospital obtain information on secondary insurance. An entity furnishing a Part B other insurance coverage for reference service is required to obtain information from the laboratory services, if the Secretary does not beneficiary on whether other insurance coverage is impose such requirements in the case of available. services furnished by independent laboratories. Emergency Medical Medicare participating hospitals that operate an No provision. Section 944. For EMTALA-required services Treatment and Active emergency room are required to provide necessary provided to a Medicare beneficiary, Labor Act (EMTALA) screening and stabilization services to any patient determinations about medical necessity would improvements who comes to an emergency department requesting be required to be made on the basis of the examination or treatment for a medical condition, information available to the treating physician in order to determine whether an emergency or practitioner at the time the item or service medical situation exists. Hospitals found in was ordered or furnished and not on the violation of EMTALA may face civil money patient's principal diagnosis. The Secretary penalties and termination of their provider would be required to establish a procedure to agreement. notify hospitals and physicians when an EMTALA investigation is closed. CRS-21 Provisions Current Law S. 1 H.R. 1 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. The requirement for a hospital to conduct an appropriate medical screening examination for a patient presenting in the emergency department would not include cases where an individual comes to an emergency department and the individual (or another person on the individual's behalf) does not specifically request an examination or treatment for an emergency medical condition. EMTALA technical No explicit statutory instruction. No provision. Section 945. The Secretary would be required advisory group to establish a technical advisory group comprised of the CMS Administrator, the Inspector General of HHS, hospital, physician and patient representatives, CMS staff investigating EMTALA cases and a state survey office representative to review issues related to EMTALA. CRS-22 Provisions Current Law S. 1 H.R. 1 Core hospice services A hospice must ensure that substantially all its core Section 406. A hospice would be permitted to Section 946. Same provision. services are routinely provided directly by hospice enter into arrangements with another hospice employees (including volunteers) or, during peak program to provide core service in extraordinary patient loads or under extraordinary circumstances, circumstances, such as unanticipated high patient by contract staff. Certain hospices in non- loads, staffing shortages due to illness or urbanized areas can receive waivers to this temporary travel by a patient outside the hospice's requirement. service area; and bill and be paid for the hospice care provided under these arrangements. OSHA bloodborne Section 1866 establishes certain conditions of No provision. Section 947. As of July 1, 2004, public pathogens standards participation that hospitals must meet in order to hospitals that are not otherwise subject to the participate in Medicare. 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. BIPA-related technical BIPA Section 522 contained several technical No provision. Section 948. Technical corrections would be amendments and errors. made to BIPA Section 522. corrections Revisions to Under certain circumstances, a person or entity Section 434. Entities, as defined by the Section 952. Same provision. Reassignment other than the individual providing the service may Secretary, could receive Medicare payments for Provisions receive Medicare payments. services provided by a physician or other person if the service was provided under a contractual arrangement and if the arrangement includes joint and "several liability" (liability for several parties) for overpayment and the entities' meet program integrity specifications determined by the Secretary. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL31901