Summary of the Medicare Regulatory and Contracting Reform Act of 2001 (H.R. 3391)

Publication Date: December 2001

Publisher: Library of Congress. Congressional Research Service

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Research Area: Health

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Abstract:

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.