Inpatient Hospital Services

Sets the hospital update factor at the market basket percentage increase minus 0.25 percentage points for all hospitals, except sole community hospitals which receive an update factor of the full market basket.

Increases the level of adjustment for indirect costs of medical education in FY 2003, FY 2004 and FY 2005.

Makes changes to the hospital payment mechanism to recognize the costs of new medical services or technologies.

Provides for a phase-in through FY2007 of the federal rate for discharges from hospitals in Puerto Rico.

Provides for a temporary adjustment for FY 2003 through 2005 for non-teaching hospitals in certain rural and urban areas where operating costs exceed operating payments.

Directs the Comptroller General to conduct a study for a report to Congress on the improvements that can be made in the measurement of regional differences in hospital wages reflected in the hospital wage index.

Skilled Nursing Facilities

Extends for two years temporary increase in nursing component of PPS federal rate for Skilled Nursing Facility services.

Increases by 128 percent the resource utilization group payment for a SNF resident with acquired immune deficiency syndrome (AIDS).

Directs the Centers for Medicare and Medicaid Services to review the adequacy of Medicaid funding for nursing facility care.

Hospice Care

Provides for coverage of consultation services for certain terminally ill individuals.

Increases by ten percent the payment rates for hospice care furnished in a frontier area between January 1, 2003 and January 1, 2008.

Directs the Secretary to conduct, and to report to Congress on, a demonstration project for the delivery of hospice care to Medicare beneficiaries in rural areas.

Physicians' Services

Revises updates for physicians' services for 2003 through 2005, making the update to the single conversion factor for 2003 two percent and providing for special rules for determining the update adjustment factors for 2004 and 2005, while providing for the use of a ten-year rolling average gross domestic product in setting updates.

Directs the Comptroller General to conduct a study for a report to Congress examining the access of Medicare beneficiaries to physicians' services under the Medicare program.

Requires MedPAC report to Congress on the effect of refinements to the practice expense component of payments for physicians' services.

Extends for one year separate billing and payment for the technical component of pathology services furnished by an independent laboratory.

Sets floor for work geographic index for physicians at 0.985, subject to GAO evaluation and report to Congress.

Requires the Comptroller General to conduct a study for a report to Congress on differences in payment amounts under the physician fee schedule for physicians' services in different geographic areas.

Requires policy development regarding E&M documentation guidelines.

Preventive Benefits

Provides for coverage of a free initial preventive physical examination for new beneficiaries within one year of enrollment in Medicare.

Excludes payment for screening mammography and unilateral and bilateral diagnostic mammography under the system for hospital outpatient services.

Provides coverage of cholesterol and other blood lipid screening tests.

Home Health Services

Eliminates the 15 percent reduction in payment rates under the prospective payment system.

Extends through December 31, 2004, the ten percent additional payment for home health care furnished to beneficiaries residing in rural areas.

Modifies update provisions, changing to a calendar year update and increasing payments by two percent for 2003, by 1.1 percent for 2004, and by 2.7 percent for 2005.

Limits the total amount of outlier payments or payment adjustments for home health care in a fiscal year to no more than three percent of total projected payments, beginning in 2003.

Directs the Secretary to establish and appoint the OASIS Task Force to examine the data collection and reporting requirements under the Outcome and Assessment Information Set (OASIS) required by BBA.

Directs MedPAC to conduct a study for a report to Congress on payment margins of home health agencies under the prospective payment system.

Medicare+Choice Program

Revises calculation of the adjusted average per capita cost (AAPCC), the blend payment, and Medicare+Choice payment rates, including in such payment rates the costs of Department of Defense and Department of Veterans Affairs military facility services to Medicare-eligible beneficiaries.

Directs the Medicare Payment Advisory Commission (MEDPAC) to conduct a study for a report to Congress on the method used for determining the AAPCC; and directs the Secretary to submit to Congress a report on the impact of additional financing on the availability of M+C plans in different areas and its impact on lowering premiums and increasing benefits under such plans.

Allows specialized M+C plans for special needs beneficiaries to be any type of coordinated care plan.

Permits extension of reasonable cost contracts and Social Health Maintenance Organizations (SHMOs).

Laboratory Fee Schedule

Increases payments for diagnostic tests for cervical cancer from July 2003 through July 2005.

Renal Dialysis

Increases the composite rate by 1.2 percent for renal dialysis services furnished in 2004.

Military Retiree Access to Medicare

Waives the Medicare part B late enrollment penalty, beginning in January 2003, for certain military retirees who demonstrate to the Secretary before December 31, 2003, that they are covered beneficiaries.

Provides for creation of a special enrollment period through the end of 2003 to allow such covered beneficiaries to enroll under Medicare Part B.

Outpatient Therapy Services

Extends the moratorium on application of outpatient therapy caps for an additional two years, through FY 2004.

Directs the Secretary to: (1) submit to Congress overdue reports required under the Balanced Budget Act of 1997 relating to alternatives to a single annual dollar cap on outpatient therapy and under the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 relating to utilization patterns for outpatient therapy; and (2) request the Institute of Medicine of the National Academy of Sciences to identify conditions or diseases that should justify conducting an assessment of the need to waive therapy caps.

Requires the Comptroller General to conduct a study for a report to Congress on access to physical therapist services in States authorizing such services without a physician referral and in States that require such a physician referral.

Ambulance Services

Substitutes a new phase-in methodology for the ambulance fee schedule amount portion of the phase-in and lengthens the phase-in schedule, including in such methodology adjustment in payment for certain long trips.

Immunosuppressive Drug Coverage

Covers drugs used in immunosuppressive therapy for beneficiaries with a transplant, regardless of whether the transplants were paid for by Medicare.

Regulatory Reduction and Contracting Reform

Requires the Social Security Administration and the Department of Health and Human Services to develop a plan under which the functions of Administrative Law Judges for hearing Medicare cases will be transferred from SSA to HHS.

Requires HHS to create a Medicare specialist position. The Medicare specialist will provide advice and assistance to Medicare beneficiaries at local Social Security offices. These specialists will be located in at least six offices or areas. This demonstration project will last three years.

Prohibits the retroactive application of a substantive change in regulations, manual instructions, interpretative rules, statements of policy, or guidelines of general applicability under Medicare to items and services furnished before the change's effective date, unless the Secretary determines that retroactive application is necessary to comply with statutory requirements or failure to apply the change retroactively would be contrary to the public interest. Prohibits a substantive change from becoming effective until after the Secretary has issued or published it, with limited exceptions.

Requires the Secretary to coordinate the educational activities provided through Medicare administrative contractors to maximize the effectiveness of Federal education efforts for service providers and suppliers; develop and implement a methodology to measure the specific claims payment error rates of such contractors in the processing or reviewing of Medicare claims, in order to give them an incentive to implement effective education and outreach programs for service providers and suppliers; develop a strategy for communications with Medicare beneficiaries and providers and suppliers; and establish standards to monitor the accuracy, consistency, and timeliness of the information provided in response to inquiries of service providers, suppliers, and beneficiaries.

Directs the Secretary to establish a demonstration program under which technical assistance is made available upon request to small service providers or suppliers to improve compliance with applicable Medicare requirements.

Directs the Secretary to appoint within HHS a Medicare Provider Ombudsman and a Medicare Beneficiary Ombudsman to handle and provide assistance in resolving complaints and requests for information.

Requires the Secretary to develop a process whereby, in the case of minor errors or omissions that are detected in the submission of claims under the programs under Medicare, a service provider or supplier is given an opportunity to correct such an error or omission without the need to initiate an appeal.

Directs the Secretary to provide, in an appropriate annual publication to the public, a list of national Medicare coverage determinations made in the previous year, and information on how to get more information about them.

Miscellaneous Provisions

Applies OSHA bloodborne pathogens standard to public hospitals.

Makes changes to MedPAC, requiring it to examine the budget consequences of its recommendations prior to issuing such recommendations; review the factors affecting expenditures for the efficient provision of services in different sectors; conduct a study, and submit a report to Congress, on the need for current data, and sources of current data available, to determine the solvency and financial circumstances of hospitals and other Medicare providers of services; and submit to Congress a report on investments and capital financing of hospitals participating under the Medicare program and related functions and access to capital financing for private and for not-for-profit hospitals.

Directs the Secretary to conduct a demonstration project to demonstrate the impact on costs and health outcomes of applying disease management to Hispanic Medicare beneficiaries with diagnosed diabetes; and establish within HHS a working group consisting of HHS employees to oversee the project.

Requires the Secretary to establish a demonstration project under which the Secretary shall permit a home health agency to provide medical adult day care services as a substitute for a portion of home health services that would otherwise be provided in the beneficiary's home.

Prohibits the charging of incidental fees or purchase of non-covered services as a condition of receiving Medicare covered services.

Directs the Secretary to issue final written guidance concerning the application of the prohibition in title VI of the Civil Rights Act of 1964 against national origin discrimination as it affects persons with limited English proficiency with respect to access to health care services under Medicare.