Medicare Regulatory and Contracting Reform Act of 2001 Section-by-Section Analysis
(a) Short Title.
(b) Amendments to Social Security Act.
(c) Table of Contents.
(d) Construction. No existing legal authority for addressing fraud or abuse, whether it be criminal prosecution, civil enforcement action, or administrative remedies will be compromised or affected by any provision of the legislation. This would include the Federal False Claims Act. No provision included in this legislation shall in any way prevent the Department of Health and Human Services from its ongoing efforts to eliminate waste, fraud, and abuse in the Medicare program.
Section 2. Issuance of Regulations
(a) Consolidation of Promulgation to Once a Month. Release of new interim final and final regulations would be done on a specific and regular time frame to ensure that interested parties know when changes are pending. New regulations could be issued on the first business day of every month. A compendium of all new program guidance will be released every four months. In three years, the Secretary will report to Congress whether he believes it would be feasible to move to a quarterly release of new regulations.
(b) Regular Timeline for Publication of Final Rules. The Director of the Office of Management and Budget, in consultation with the Secretary of Health and Human Services, must establish a regular time line for the progression from proposed rules to interim final rules (as appropriate) to final rules. If final regulations are not issued within this time frame, HCFA must reissue the interim final regulation
along with an explanation of why the regulation is not being finalized on time.
(c) Limitations on New Matter in Final Regulations. Final rules must be a logical outgrowth of the relevant notice of proposed rulemaking. If a provision of the final rule fails to meet this logical outgrowth standard, that portion of the rule may not be finalized but instead shall be subject to an additional comment period (and will not be in effect during that time).
Section 3. Compliance with Changes in Regulations and Policies
(a) No Retroactive Application of Substantive Changes; Timeline for Compliance with Substantive Changes After Notice. New policy guidance impacting providers and beneficiaries shall not be applied retroactively to services provided before the date the new policy was issued, unless the Secretary determines that such retroactive application would have a positive impact on beneficiaries or providers, or unless such retroactivity would be necessary to comply with statutory directives.
Providers will have 30 days after the receipt of direct notification from contractors of policy changes to comply with those changes, unless HCFA explicitly notifies providers of an altered timeline for implementation.
(b) Reliance on Guidance. If providers follow written contractor guidance, and if the Secretary determines that they have accurately presented their circumstances to the contractor in writing, then if the contractor changes its policy and there ultimately proves to be a problem with the claims, providers are protected from extrapolation against those claims retroactively. They still must fix the problem prospectively.
Section 4. Increased Flexibility in Medicare Administration
(a) Consolidation and Flexibility in Medicare Administration. The Secretary has authority to enter into contracts with medicare administrative contractors with respect to any or all of the following functions: the determination of payment amounts, making payments, beneficiary education and assistance, provider consultative services, communication with providers, provider education and technical assistance, and other functions as necessary.
(b) Contracting Requirements. The Secretary will use competitive procedures for contracting with the medicare administrative contractors. The contracts can be renewed from term to term, except the contracts must be competed at least once every four years. Functions can be transferred among the medicare administrative contractors without competition but the Secretary must ensure that performance quality is considered. The Secretary shall provide incentives for quality service, efficiency and to maintain program integrity in the contract. The contractor must furnish to the Secretary information on a timely basis and maintain records to assure the correctness of that information. Finally, the contract can require the medicare administrative contractor and any of its officers or employees to give surety bonds to the United States.
(c) Terms and Conditions. A contract can contain the terms and conditions the Secretary finds necessary. The Secretary may provide for advances of funds to the contractor for the making of payment to providers. The medicare administrative contractor cannot be required to match data obtained from other non-Medicare activities for the purposes of Medicare Secondary Payor and other activities.
(d) Limitation on Liability of Medicare Administrative Contractors and Certain Officers. The existing statutory limitations on liability for contractors is retained. The limitation is clarified to establish that the medicare administrative contractor is liable to the United States if, in connection with a payment, an individual such as a disbursing officer under the contract acted with negligence or intent to defraud the United States.
(e) Effective Date. The Secretary shall take such steps as necessary to provide for an appropriate transition from the carriers and intermediary contracts.
(f) References. References to a fiscal intermediary or carrier in the statute, regulation, manual instruction, interpretive rules, statement of policies shall be deemed to be a reference to an appropriate medicare administrative contractor.
(g) Secretarial Submission of Legislative Proposal. Not later than 6 months, the Secretary shall submit to Congress a legislative proposal providing for such technical and conforming amendments in the law.
Section 5. Provider Education and Technical Assistance
(a) Coordination of Education Funding. Provider education funded through the Medicare Integrity Program and through funds appropriated to the contractors shall be coordinated to maximize the effectiveness of federal provider education spending.
(b) Incentive to Improve Contractor Performance in Provider Education and Outreach. To give contractors an incentive to implement effective provider education and outreach, the Secretary would establish by a date certain (October 1, 2002) specific claims payment error rates for contractors processing or reviewing claims on behalf of the Secretary. By October 1, 2003, the Secretary shall report to Congress on how he intends to use those error rates when assessing performance of individual contractors, including whether or not such rates should form the basis of performance bonuses. In addition, the Secretary shall identify best practices developed by individual contractors for educating providers, and report to Congress on how these best practices will be highlighted and encouraged for contractor use nationwide.
(c) Provision of Access To and Prompt Responses From Medicare Contractors. Contractors shall provide providers with clear, concise and accurate answers to their specific billing and cost reporting questions, and will provide unique identifying information upon request to establish accountability for service. In addition, the Administrator shall develop, in consultation with provider groups, standards for timely and accurate responses to questions from providers to be included in contracts with carriers and intermediaries. Contractors will be required to post frequently asked questions and their answers on the contractors’ websites.
HCFA shall require contractors to monitor their toll free lines for the accuracy, consistency and timeliness of information provided. Results from this monitoring will be factored into evaluations of individual contractor performance.
(d) Improved Provider Education and Training. Contractors shall conduct education and training regarding billing, coding, and other appropriate items for providers. Additional resources shall be provided for these activities - $10 million will be authorized for each of 2003 and 2004.
Contractors shall conduct outreach to institutional providers with fewer than 25 employees and physicians, practitioners and suppliers with fewer than 10 employees to implement education programs tailored to the special needs of small businesses. Additional resources shall be provided for these activities.
(e) Requirement to Maintain Internet Sites. Frequently-asked provider questions and HCFA’s answers to those questions should be made publicly available to all providers over the internet in an easily accessible format. However, HCFA retains the ability to determine whether those general responses apply to the particular circumstances of individual claims.
(f) Additional Provider Education Provisions. Contractors may not use the record of attendance or information gathered during an education program to select or track providers for the purpose of conducting any type of audit or prepayment review.
Section 6. Small Provider Technical Assistance Program
(a) Establishment. A new technical assistance option will be made available on a voluntary, demonstration-basis to small providers, as defined by the Secretary for purposes of the demonstration. This demonstration will be available to providers across the country, but will be limited in scope by the dollar value of the contract awarded by the Secretary for the implementation of the demonstration.
(b) Qualification of Contractors. The Secretary may award the technical assistance contract(s) at his discretion, but he should consider applications from groups including but not limited to Peer Review Organizations that demonstrate expertise with billing systems of the full range of health care providers as well as from Medicare’s approved list of program safeguard contractors. In awarding contracts, the Secretary should take into consideration any prior investigations of the bidders’ work that may have been conducted by either the Office of the Inspector General or the General Accounting Office.
(c) Description of Technical Assistance. The chosen contractor(s) will offer technical experts to visit providers and work with them to evaluate billing systems to determine program compliance and to suggest more efficient or more effective means of fulfilling program obligations. This technical assistance program will examine provider internal controls and systems to establish whether their compliance programs can lead to accurate Medicare payments.
(d) Avoidance of Recovery Actions for Problems Identified as Corrected. At the discretion of the Secretary, absent reliable evidence of fraud, any errors found on compliance reviews would not be subject to recovery action if the technical assistance team determines that the underlying problem has been corrected to their satisfaction within 30 days and remains corrected through subsequent follow up monitoring visits as appropriate. If the technical assistance team discovers a consistent pattern of undercoding, then the Medicare program would have to compensate the provider.
(e) GAO Evaluation. After two years, the General Accounting Office, consulting with the Office of Inspector General, will conduct a thorough evaluation of the demonstration program, and will determine whether claims error rates are lower for those contractors participating in the demonstration compared to those outside the demonstration. The results of this evaluation will be used to determine whether this technical assistance structure should be maintained.
(f) Financial Participation by Providers. Providers would be responsible for 25% of the cost of providing the technical assistance. Additional resources shall be provided for these activities.
(g) Authorization of Appropriations. To carry out the demonstration, $1 million is authorized for 2003 and $6 million is authorized for 2004.
Section 7. Provider Ombudsman
(a) In General. The Secretary shall establish a provider ombudsman program to help providers resolve conflicting guidance from HHS, its regions, or its contractors. In addition, the ombudsman shall:
* make recommendations to the Secretary to respond to patterns of confusion in the program;
* make recommendations to the Secretary regarding the treatment of self-identified overpayments.
(b) Authorization of Appropriations. To carry out the provisions of this section, $8 million is authorized for 2003 and $17 million for 2004.
Section 8. Provider Appeals
(a) Medicare Administrative Law Judges. Increase financial support for the Social Security Administrative Law Judges - targeted specifically at increasing the number of Medicare-only ALJs and improving education and training opportunities for these Medicare ALJs and their staffs. For 2003, $5 million is authorized for this purpose. In addition, the Secretary of HHS and the Social Security Commissioner are instructed to develop and implement a transition plan to move Medicare ALJ responsibilities out of the Social Security Administration and into the Department of Health and Human Services by 2003.
(b) Process for Expedited Access to Judicial Review. Expedited Judicial Review of Secretarial Determinations. Creating a parallel structure to the Provider Reimbursement Review Board, providers have a right to obtain judicial review of any action of the contractor which involves a question of law or regulations relevant to the matters in controversy whenever a review panel designated by the Secretary determines that the standard appeals process is without the authority to decide the question. This review panel must certify that no material issues of fact are in dispute, or if they are, must render a decision expeditiously.
(c) Requiring Full and Early Presentation of Evidence. Providers shall be required to present full evidence at the first external level of appeal. Additional information may not be introduced at subsequent appeals, absent good cause.
(d) Provider appeals on Behalf of Deceased Beneficiaries. Providers may appeal determinations of the Secretary on behalf of deceased beneficiaries.
Section 9. Recovery of Overpayments and Prepayment Review; Enrollment of Providers
(a) Recovery of Overpayments and Prepayment Review.
(1) Use of Repayment Plans. Providers shall have up to 3 years to offset or repay overpayments if the amount exceeds 10% of Medicare revenues for: (i) the most recently submitted cost reporting period for providers that file cost reports, and (ii) the previous calendar year for physicians, suppliers and other that don't file a cost report. Interest shall accrue on the balance throughout the duration of the repayment plan. The Secretary retains the authority to make exceptions to the 3 year time frame when the Department has reason to suspect the provider may file for bankruptcy or otherwise cease to be in business.
(2) Limitation on Recoupment until Reconsideration Exercised. If a provider chooses to appeal, neither the Secretary nor contractors may recoup an overpayment until the first level of appeal is exercised. If the ruling is against the provider, then the overpayment may be collected with interest. If at a later level of appeal the ruling is ultimately reversed, the government must repay the provider, with the same interest rates as would apply against the provider.
(3) Standardization of Random Prepayment Audits. Contractors may conduct random prepayment reviews only to develop contractor-wide or program-wide prepayment claims payment error rates.
(4) Limitation on Use of Extrapolation. Contractors may not recoup or offset payment amounts based on extrapolation unless a sustained or high level of payment error (as defined by HCFA) has been identified, or unless documented educational intervention has failed to correct the payment error (again as determined by HCFA).
(5) Provision of Supporting Documentation. Contractors are authorized to periodically request supporting documentation for a limited sample of submitted claims to ensure that underlying billing mistakes which led to the overpayment are not continuing.
(6) Consent Settlement Reforms. The decision to offer a consent settlement is entirely within HCFA’s discretion and is not a provider entitlement. If HCFA decides to offer a provider a consent settlement, after a preliminary program integrity investigation indicates a potential problem in Medicare billing, the provider in question will be contacted by HCFA or its contractors and informed of the perceived problem. If the provider chooses to opt for a consent settlement, the provider will then have 45 days to submit to HCFA or its contractors any relevant information related to the claims in question; alternatively, the provider may choose to forego the consent settlement option and immediately begin the appeals process. Once that 45 day period lapses and HCFA or its contractors receive all relevant information, if HCFA or its contractors still believe there is a problem, providers will be informed that they have two options - they may agree to a consent settlement or they may pursue appeals and participate in a statistically valid random sample of their claims.
(7) Limitations on Non-Random Prepayment Review. The Secretary shall issue regulations establishing a concrete endpoint for prepayment review.
(8) Payment Audits.
(A) Written Notice for Post-Payment Audits. If a contractor decides to conduct a post-payment audit of a provider, the contractorshall send written notice to the provider alerting them of the audit. This written notice requirement will be waived if it would compromise a pending law enforcement activity.
(B) Explanation of Findings for All Audits. Full review and explanation of the findings of audits should be made available to providers by HCFA and its auditors to make sure providers understand the findings and develop an appropriate corrective action plan. At this post-audit review, providers should have an opportunity to provide additional information. They must also be fully informed of their appeal rights. This requirement does not apply to findings of law enforcement-related audits.
Notice of Over-Utilization of Codes. Providers will be notified by the contractor when a particular code is being over-utilized. Contractors do not have to reveal screens for identifying claims that will be subject to medical review.
(b) Provider Enrollment Process; Right of Appeal. The Secretary shall by regulation establish a process for enrollment of providers in the Medicare program, building on existing practice. The process shall provide for appeal by providers of a decision by the Secretary to deny the enrollment of a provider. This process must include aggressive timelines for the consideration of provider appeals. This provision will take effect 6 months after enactment - relevant regulations must be completed by then, consistent with the regulatory timelines set forth above. If, in developing this enrollment process, the Secretary also sets forth a renewal requirement, the same appeals process will apply to decisions not to renew the enrollment of a provider.
(c) Process for Correction of Minor Errors and Omissions of Claims Without Pursuing Appeals Process. The Secretary shall consult with contractors to develop a process for the correction of minor errors and omissions on claims without requiring providers to go through the appeals process. This process may include the ability to resubmit corrected claims.
Section 10. Beneficiary Outreach Demonstration Program
(a) In General. The Secretary shall establish a demonstration program under which Medicare specialists provide advance and assistance to Medicare beneficiaries at selected Social Security offices.
(b) Locations. The demonstration shall be conducted in at least six offices, at least two of which must be rural.
(c) Duration. The demonstration shall be conducted over a three-year period.
(d) Evaluation and Report. The demonstration will be evaluated to study the both the utilization and the cost-effectiveness of the program.
Section 11. Policy Development Regarding Evaluation and Management Documentation Guidelines
(a) In General. The Secretary may not implement documentation guidelines for evaluation and management physician services after enactment unless the Secretary has developed the guidelines in collaboration with practicing physicians and conducted appropriate pilot projects.
(b) Pilot Projects to Test Evaluation and Management Documentation Guidelines. Pilots must be of sufficient length to permit education and analysis and must be developed with physicians. Pilots shall test use of guidelines in rural and non-rural, and teaching and non-teaching settings.
(c) Objectives for Evaluation and Management Guidelines. Modified guidelines shall enhance clinically relevant documentation and decrease the level of non-clinically pertinent documentation in the physician’s medical record.
(d) Study of Simpler, Alternative Systems of Documentation for Physician Claims. The Secretary shall work with practicing physicians to study simpler, alternative systems of requirements for documentation accompanying claims for evaluation and management services and shall consider systems other than current coding and documentation requirements.
