
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC1320c-2]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
   SUBCHAPTER XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
                             SIMPLIFICATION
 
 Part B--Peer Review of Utilization and Quality of Health Care Services
 
Sec. 1320c-2. Contracts with utilization and quality control 
        peer review organizations
        

(a) Establishment and consolidation of geographic areas

    (1) The Secretary shall establish throughout the United States 
geographic areas with respect to which contracts under this part will be 
made. In establishing such areas, the Secretary shall use the same areas 
as established under section 1320c-1 of this title as in effect 
immediately prior to September 3, 1982, but subject to the provisions of 
paragraph (2).
    (2) As soon as practicable after September 3, 1982, the Secretary 
shall consolidate such geographic areas, taking into account the 
following criteria:
        (A) Each State shall generally be designated as a geographic 
    area for purposes of paragraph (1).
        (B) The Secretary shall establish local or regional areas rather 
    than State areas only where the volume of review activity or other 
    relevant factors (as determined by the Secretary) warrant such an 
    establishment, and the Secretary determines that review activity can 
    be carried out with equal or greater efficiency by establishing such 
    local or regional areas. In applying this subparagraph the Secretary 
    shall take into account the number of hospital admissions within 
    each State for which payment may be made under subchapter XVIII of 
    this chapter or a State plan approved under subchapter XIX of this 
    chapter, with any State having fewer than 180,000 such admissions 
    annually being established as a single statewide area, and no local 
    or regional area being established which has fewer than 60,000 total 
    hospital admissions (including public and private pay patients) 
    under review annually, unless the Secretary determines that other 
    relevant factors warrant otherwise.
        (C) No local or regional area shall be designated which is not a 
    self-contained medical service area, having a full spectrum of 
    services, including medical specialists' services.

(b) Organizations entitled to contract with Secretary

    (1) The Secretary shall enter into a contract with a utilization and 
quality control peer review organization for each area established under 
subsection (a) of this section if a qualified organization is available 
in such area and such organization and the Secretary have negotiated a 
proposed contract which the Secretary determines will be carried out by 
such organization in a manner consistent with the efficient and 
effective administration of this part. If more than one such qualified 
organization meets the requirements of the preceding sentence, priority 
shall be given to any such organization which is described in section 
1320c-1(1)(A) of this title.
    (2)(A) Prior to November 15, 1984, the Secretary shall not enter 
into a contract under this part with any entity which is, or is 
affiliated with (through management, ownership, or common control), an 
entity (other than a self-insured employer) which directly or indirectly 
makes payments to any practitioner or provider whose health care 
services are reviewed by such entity or would be reviewed by such entity 
if it entered into a contract with the Secretary under this part. For 
purposes of this paragraph, an entity shall not be considered to be 
affiliated with another entity which makes payments (directly or 
indirectly) to any practitioner or provider, by reason of management, 
ownership, or common control, if the management, ownership, or common 
control consists only of members of the governing board being affiliated 
(through management, ownership, or common control) with a health 
maintenance organization or competitive medical plan which is an 
``eligible organization'' as defined in section 1395mm(b) of this title.
    (B) If, after November 14, 1984, the Secretary determines that there 
is no other entity available for an area with which the Secretary can 
enter into a contract under this part, the Secretary may then enter into 
a contract under this part with an entity described in subparagraph (A) 
for such area if such entity otherwise meets the requirements of this 
part.
    (3)(A) The Secretary shall not enter into a contract under this part 
with any entity which is, or is affiliated with (through management, 
ownership, or common control), a health care facility, or association of 
such facilities, within the area served by such entity or which would be 
served by such entity if it entered into a contract with the Secretary 
under this part.
    (B) For purposes of subparagraph (A), an entity shall not be 
considered to be affiliated with a health care facility or association 
of facilities by reason of management, ownership, or common control if 
the management, ownership, or common control consists only of not more 
than 20 percent of the members of the governing board of the entity 
being affiliated (through management, ownership, or common control) with 
one or more of such facilities or associations.

(c) Terms of contract

    Each contract with an organization under this section shall provide 
that--
        (1) the organization shall perform the functions set forth in 
    section 1320c-3(a) of this section, or may subcontract for the 
    performance of all or some of such functions (and for purposes of 
    paragraphs (2) and (3) of subsection (b) of this section, a 
    subcontract under this paragraph shall not constitute an affiliation 
    with the subcontractor);
        (2) the Secretary shall have the right to evaluate the quality 
    and effectiveness of the organization in carrying out the functions 
    specified in the contract;
        (3) the contract shall be for an initial term of three years and 
    shall be renewable on a triennial basis thereafter;
        (4) if the Secretary intends not to renew a contract, he shall 
    notify the organization of his decision at least 90 days prior to 
    the expiration of the contract term, and shall provide the 
    organization an opportunity to present data, interpretations of 
    data, and other information pertinent to its performance under the 
    contract, which shall be reviewed in a timely manner by the 
    Secretary;
        (5) the organization may terminate the contract upon 90 days 
    notice to the Secretary;
        (6) the Secretary may terminate the contract prior to the 
    expiration of the contract term upon 90 days notice to the 
    organization if the Secretary determines that--
            (A) the organization does not substantially meet the 
        requirements of section 1320c-1 of this title; or
            (B) the organization has failed substantially to carry out 
        the contract or is carrying out the contract in a manner 
        inconsistent with the efficient and effective administration of 
        this part, but only after such organization has had an 
        opportunity to submit data and have such data reviewed by the 
        panel established under subsection (d) of this section;

        (7) the Secretary shall include in the contract negotiated 
    objectives against which the organization's performance will be 
    judged, and negotiated specifications for use of regional norms, or 
    modifications thereof based on national norms, for performing review 
    functions under the contract; and
        (8) reimbursement shall be made to the organization on a monthly 
    basis, with payments for any month being made not later than 15 days 
    after the close of such month.

In evaluating the performance of utilization and quality control peer 
review organizations under contracts under this part, the Secretary 
shall place emphasis on the performance of such organizations in 
educating providers and practitioners (particularly those in rural 
areas) concerning the review process and criteria being applied by the 
organization.

(d) Review prior to termination of contract; modification and 
        termination; reviewing panel

    (1) Prior to making any termination under subsection (c)(6)(B) of 
this section, the Secretary must provide the organization with an 
opportunity to provide data, interpretations of data, and other 
information pertinent to its performance under the contract. Such data 
and other information shall be reviewed in a timely manner by a panel 
appointed by the Secretary, and the panel shall submit a report of its 
findings to the Secretary in a timely manner. The Secretary shall make a 
copy of the report available to the organization.
    (2) The Secretary may accept or not accept the findings of the 
panel. After the panel has submitted a report with respect to an 
organization, the Secretary may, with the concurrence of the 
organization, amend the contract to modify the scope of the functions to 
be carried out by the organization, or in any other manner. The 
Secretary may terminate a contract under the authority of subsection 
(c)(6)(B) of this section upon 90 days notice after the panel has 
submitted a report, or earlier if the organization so agrees.
    (3) A panel appointed by the Secretary under this subsection shall 
consist of not more than five individuals, each of whom shall be a 
member of a utilization and quality control peer review organization 
having a contract with the Secretary under this part. While serving on 
such panel individuals shall be paid at a per diem rate not to exceed 
the current per diem equivalent at the time that service on the panel is 
rendered for grade GS-18 under section 5332 of title 5. Appointments 
shall be made without regard to title 5.
    (4) During the period after the Secretary has given notice of intent 
to terminate a contract, and prior to the time that the Secretary enters 
into a contract with another utilization and quality control peer review 
organization, the Secretary may transfer review responsibilities of the 
organization under the contract being terminated to another utilization 
and quality control peer review organization, or to an intermediary or 
carrier having an agreement under section 1395h of this title or a 
contract under section 1395u of this title.

(e) Authority of Secretary

    (1) Except as provided in paragraph (2), contracting authority of 
the Secretary under this section may be carried out without regard to 
any provision of law relating to the making, performance, amendment, or 
modification of contracts of the United States as the Secretary may 
determine to be inconsistent with the purposes of this part. The 
Secretary may use different contracting methods with respect to 
different geographical areas.
    (2) If a peer review organization with a contract under this section 
is required to carry out a review function in addition to any function 
required to be carried out at the time the Secretary entered into or 
renewed the contract with the organization, the Secretary shall, before 
requiring such organization to carry out such additional function, 
negotiate the necessary contractual modifications, including 
modifications that provide for an appropriate adjustment (in light of 
the cost of such additional function) to the amount of reimbursement 
made to the organization.

(f) Termination not subject to judicial review

    Any determination by the Secretary to terminate or not to renew a 
contract under this section shall not be subject to judicial review.

(g) Timely provision of hospital data to peer review organizations

    The Secretary shall provide that fiscal intermediaries furnish to 
peer review organizations, each month on a timely basis, data necessary 
to initiate the review process under section 1320c-3(a) of this title on 
a timely basis. If the Secretary determines that a fiscal intermediary 
is unable to furnish such data on a timely basis, the Secretary shall 
require the hospital to do so.

(h) Publication of new policy or procedure and general criteria and 
        standards for evaluation; performance comparison report

    (1) The Secretary shall publish in the Federal Register any new 
policy or procedure adopted by the Secretary that affects substantially 
the performance of contract obligations under this section not less than 
30 days before the date on which such policy or procedure is to take 
effect. This paragraph shall not apply to the extent it is inconsistent 
with a statutory deadline.
    (2) The Secretary shall publish in the Federal Register the general 
criteria and standards used for evaluating the efficient and effective 
performance of contract obligations under this section and shall provide 
opportunity for public comment with respect to such criteria and 
standards.
    (3) The Secretary shall regularly furnish each peer review 
organization with a contract under this section with a report that 
documents the performance of the organization in relation to the 
performance of other such organizations.

(i) Preference in contracting with in-State organizations

    (1) Notwithstanding any other provision of this section, the 
Secretary shall not renew a contract with any organization that is not 
an in-State organization (as defined in paragraph (3)) unless the 
Secretary has first complied with the requirements of paragraph (2).
    (2)(A) Not later than six months before the date on which a contract 
period ends with respect to an organization that is not an in-State 
organization, the Secretary shall publish in the Federal Register--
        (i) the date on which such period ends; and
        (ii) the period of time in which an in-State organization may 
    submit a proposal for the contract ending on such date.

    (B) If one or more qualified in-State organizations submits a 
proposal within the period of time specified under subparagraph (A)(ii), 
the Secretary shall not automatically renew the current contract on a 
noncompetitive basis, but shall provide for competition for the contract 
in the same manner as a new contract under subsection (b) of this 
section.
    (3) For purposes of this subsection, an in-State organization is an 
organization that has its primary place of business in the State in 
which review will be conducted (or, which is owned by a parent 
corporation the headquarters of which is located in such State).

(Aug. 14, 1935, ch. 531, title XI, Sec. 1153, as added Pub. L. 97-248, 
title I, Sec. 143, Sept. 3, 1982, 96 Stat. 382; amended Pub. L. 97-448, 
title III, Sec. 309(b)(2), Jan. 12, 1983, 96 Stat. 2408; Pub. L. 98-21, 
title VI, Sec. 602(a), Apr. 20, 1983, 97 Stat. 163; Pub. L. 98-369, div. 
B, title III, Secs. 2334(a), (b), 2347(c), July 18, 1984, 98 Stat. 1090, 
1097; Pub. L. 99-272, title IX, Secs. 9402(b), 9404(a), 9406(a), Apr. 7, 
1986, 100 Stat. 200, 201; Pub. L. 99-509, title IX, Sec. 9352(a)(1), 
Oct. 21, 1986, 100 Stat. 2044; Pub. L. 100-203, title IV, 
Secs. 4091(a)(2)(A), (b)(1), (2), 4092(a), 4094(d)(1), Dec. 22, 1987, 
101 Stat. 1330-134, 1330-135, 1330-137.)


                            Prior Provisions

    A prior section 1320c-2, act Aug. 14, 1935, ch. 531, title XI, 
Sec. 1153, as added Oct. 30, 1972, Pub. L. 92-603, title II, 
Sec. 249F(b), 86 Stat. 1432, related to review pending designation of a 
Professional Standards Review Organization in a given area, prior to the 
general revision of this part by Pub. L. 97-248.


                               Amendments

    1987--Subsec. (c). Pub. L. 100-203, Sec. 4094(d)(1), inserted after 
and below par. (8) the following: ``In evaluating the performance of 
utilization and quality control peer review organizations under 
contracts under this part, the Secretary shall place emphasis on the 
performance of such organizations in educating providers and 
practitioners (particularly those in rural areas) concerning the review 
process and criteria being applied by the organization.''
    Subsec. (c)(3). Pub. L. 100-203, Sec. 4091(a)(2)(A), substituted 
``three'' for ``two'' and ``triennial'' for ``biennial''.
    Subsec. (e). Pub. L. 100-203, Sec. 4091(b)(2), designated existing 
provisions as par. (1), substituted ``Except as provided in paragraph 
(2), contracting'' for ``Contracting'', and added par. (2).
    Subsec. (h). Pub. L. 100-203, Sec. 4091(b)(1), added subsec. (h).
    Subsec. (i). Pub. L. 100-203, Sec. 4092(a), added subsec. (i).
    1986--Subsec. (b)(2)(A). Pub. L. 99-272, Sec. 9404(a), substituted 
``consists only of members of the governing board'' for ``consists only 
of one individual member of the governing board''.
    Subsec. (c)(8). Pub. L. 99-272, Sec. 9402(b), amended par. (8) 
generally. Prior to amendment, par. (8) read as follows: ``reimbursement 
shall be made to the organization in accordance with the terms of the 
contract.''
    Subsec. (d)(4). Pub. L. 99-272, Sec. 9406(a), added par. (4).
    Subsec. (g). Pub. L. 99-509 added subsec. (g).
    1984--Subsec. (b)(2)(A). Pub. L. 98-369, Sec. 2347(c)(1), 
substituted ``Prior to November 15, 1984'' for ``During the first twelve 
months in which the Secretary is entering into contracts under this 
section''.
    Pub. L. 98-369, Sec. 2334(b), inserted ``(other than a self-insured 
employer)'' and provision that for purposes of this paragraph an entity 
shall not be considered to be affiliated with another entity which makes 
payments (directly or indirectly) to any practitioner or provider, by 
reason of management, ownership, or common control, if the management, 
ownership, or common control consists only of one individual member of 
the governing board being affiliated (through management, ownership, or 
common control) with a health maintenance organization or competitive 
medical plan which is an ``eligible organization'' as defined in section 
1395mm(b) of this title.
    Subsec. (b)(2)(B). Pub. L. 98-369, Sec. 2347(c)(2), substituted 
``after November 14, 1984'' for ``after the expiration of the twelve-
month period referred to in subparagraph (A)''.
    Subsec. (b)(2)(C). Pub. L. 98-369, Sec. 2347(c)(3), struck out 
subpar. (C) which provided that the twelve-month period formerly 
referred to in subpar. (A) would be deemed to have begun not later than 
October 1983.
    Subsec. (b)(3). Pub. L. 98-369, Sec. 2334(a), designated existing 
provisions as subpar. (A) and added subpar. (B).
    1983--Subsec. (b)(2)(C). Pub. L. 98-21 added subpar. (C).
    Subsec. (d). Pub. L. 97-448 substituted reference to ``subsection 
(c)(6)(B)'' for ``subsection (c)(5)(B)'' and ``subsection (c)(5)(C)'' in 
pars. (1) and (2), respectively.


                    Effective Date of 1987 Amendment

    Section 4091(a)(2)(B) of Pub. L. 100-203 provided that: ``The 
amendment made by subparagraph (A) [amending this section] shall apply 
with respect to contracts entered into or renewed on or after the date 
of the enactment of this Act [Dec. 22, 1987].''
    Section 4091(b)(3) of Pub. L. 100-203 provided that: ``The amendment 
made by paragraphs (1) and (2) [amending this section] shall become 
effective on the date of enactment of this Act [Dec. 22, 1987].''
    Section 4092(b) of Pub. L. 100-203 provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply with respect 
to contracts scheduled to be renewed on or after the first day of the 
eighth month to begin after the date of enactment of this Act [Dec. 22, 
1987].''
    Section 4094(d)(2) of Pub. L. 100-203 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall apply to contracts 
under part B of title XI of the Social Security Act [this part] as of 
January 1, 1988.''


                    Effective Date of 1986 Amendments

    Section 9352(c)(1) of Pub. L. 99-509 provided that: ``The Secretary 
of Health and Human Services shall implement the amendment made by 
subsection (a) [amending this section and section 1395h of this title] 
not later than 6 months after the date of the enactment of this Act 
[Oct. 21, 1986].''
    Section 9402(c)(2) of Pub. L. 99-272 provided that: ``The amendment 
made by subsection (b) [amending this section] shall apply to contracts 
entered into or renewed on or after the date of the enactment of this 
Act [Apr. 7, 1986].''
    Section 9404(b) of Pub. L. 99-272 provided that: ``The amendment 
made by this section [amending this section] shall become effective on 
the date of the enactment of this Act [Apr. 7, 1986].''
    Section 9406(b) of Pub. L. 99-272 provided that: ``The amendment 
made by this section [amending this section] shall become effective on 
the date of the enactment of this Act [Apr. 7, 1986].''


                    Effective Date of 1984 Amendment

    Section 2334(c) of Pub. L. 98-369 provided that: ``The amendments 
made by this section [amending this section] shall become effective on 
the date of the enactment of this Act [July 18, 1984].''
    Section 2347(d) of Pub. L. 98-369 provided that: ``The provisions 
of, and amendments made by, this section [amending this section and 
section 1395cc of this title and enacting provisions set out as a note 
under section 1395cc of this title] shall become effective on the date 
of the enactment of this Act [July 18, 1984].''


                    Effective Date of 1983 Amendments

    Amendment by Pub. L. 98-21 applicable to items and services 
furnished by or under arrangement with a hospital beginning with its 
first cost reporting period that begins on or after Oct. 1, 1983, any 
change in a hospital's cost reporting period made after November 1982 to 
be recognized for such purposes only if the Secretary finds good cause 
therefor, see section 604(a)(1) of Pub. L. 98-21, set out as a note 
under section 1395ww of this title.
    Amendment by Pub. L. 97-448 effective as if originally included as a 
part of this section as this section was added by the Tax Equity and 
Fiscal Responsibility Act of 1982, Pub. L. 97-248, see section 309(c)(2) 
of Pub. L. 97-448, set out as a note under section 426-1 of this title.


         References in Other Laws to GS-16, 17, or 18 Pay Rates

    References in laws to the rates of pay for GS-16, 17, or 18, or to 
maximum rates of pay under the General Schedule, to be considered 
references to rates payable under specified sections of Title 5, 
Government Organization and Employees, see section 529 [title I, 
Sec. 101(c)(1)] of Pub. L. 101-509, set out in a note under section 5376 
of Title 5.


Extensions of Peer Review Contract Period; One-Time Extensions To Permit 
                     Staggering of Expiration Dates

    Section 4091(a)(1) of Pub. L. 100-203, as amended by Pub. L. 100-
360, title IV, Sec. 411(j)(1), July 1, 1988, 102 Stat. 790, provided 
that:
    ``(A) In general.--In order to permit the Secretary of Health and 
Human Services an adequate time to complete contract renewal 
negotiations with utilization and quality control peer review 
organizations under part B of title XI of the Social Security Act [this 
part] and to provide for a staggered period of contract expiration 
dates, notwithstanding section 1153(c) of such Act [subsec. (c) of this 
section], the Secretary may provide for extensions of existing 
contracts, but the total of such extensions may not exceed 24 months for 
any contract.
    ``(B) Effective date.--The amendment made by subparagraph (A) shall 
apply to contracts expiring on or after the date of the enactment of 
this Act [Dec. 22, 1987].''

                  Section Referred to in Other Sections

    This section is referred to in sections 1320c-1, 1320c-3, 1320c-6 of 
this title.
