Medicaid Program Integrity Enhancement Act of 2016

Summary: Medicaid Program Integrity Enhancement Act of 2016 This bill amends title XIX (Medicaid) of the Social Security Act to require a state&nbsp;Medicaid agency&nbsp;to establish a process by which a provider may appeal a decision by the agency to suspend payment to the provider on the basis of credible fraud allegations. The Centers for Medicare &amp; Medicaid Services (CMS) must revise specified regulations&nbsp;related to such suspensions in order to&nbsp;comply with due process requirements established by the bill.  Specifically, a state Medicaid agency may not suspend payment until the agency: (1) consults with the state's Medicaid fraud control unit or, if the state has no such unit, with the state's attorney general; (2) certifies that it has considered whether the suspension will jeopardize beneficiary access and&nbsp;whether there is good cause not to suspend payment; and (3) furnishes the provider with the agency's reasons for finding no such good cause.  Furthermore, the agency must periodically evaluate whether there is good cause&nbsp;to discontinue&nbsp;a suspension for which an investigation is pending. With specified exceptions,&nbsp;such good cause&nbsp;shall be deemed to exist if the investigation remains unresolved after a suspension has been in effect for 18 months. CMS must also revise specified regulations to provide that an allegation of fraud shall be considered credible only if the allegation has indications of reliability and&nbsp;the state Medicaid agency: (1)&nbsp;has reviewed all allegations, facts, and evidence carefully; (2) acts judiciously on a case-by-case basis; and (3) has considered the potential impact a payment suspension may have on beneficiary access to care.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicaid Program Integrity 
Enhancement Act of 2016''.

SEC. 2. REVISION OF REGULATIONS.

    (a) In General.--Not later than 180 days after the date of 
enactment of this section, the Secretary shall revise part 455 of title 
42, Code of Federal Regulations, relating to Medicaid program integrity 
as follows:
            (1) Section 455.2, relating to the definition of credible 
        allegation of fraud, to comply with the requirements described 
        in subsection (b).
            (2) Section 455.23, relating to the suspension of Medicaid 
        payments to a provider by a State Medicaid agency, to comply 
        with the requirements described in subsection (c).
    (b) Requirement To Consider Impact on Beneficiary Access to Care in 
Determining a Credible Allegation of Fraud.--The revised section 455.2 
shall provide that an allegation shall be considered to be a credible 
allegation of fraud only if--
            (1) the allegation has indicia of reliability;
            (2) the State Medicaid agency has reviewed all allegations, 
        facts, and evidence carefully and acts judiciously on a case-
        by-case basis; and
            (3) the State Medicaid agency has taken into consideration 
        the potential impact a payment suspension may have on 
        beneficiary access to care.
    (c) Due Process Requirements for Payment Suspension Based on 
Credible Allegation of Fraud.--
            (1) Process required before suspension.--A State Medicaid 
        agency that has received an allegation of fraud against a 
        provider shall not suspend payments to such provider until the 
        agency takes the following actions:
                    (A) The State Medicaid agency consults with the 
                Medicaid fraud control unit for the State or, if the 
                State has no Medicaid fraud control unit, the State 
                attorney general, before suspending payments and 
                receives a written verification from the Medicaid fraud 
                control unit or attorney general, in such form as the 
                Secretary may require, confirming that such 
                consultation took place.
                    (B) The State Medicaid agency certifies to the 
                Secretary that it has considered whether--
                            (i) beneficiary access to items or services 
                        would be jeopardized by a payment suspension;
                            (ii) a good cause not to suspend payments 
                        exists under section 455.23(e) of title 42, 
                        Code of Federal Regulations (as revised after 
                        the application of this Act); and
                            (iii) a good cause to suspend payments only 
                        in part exists under section 455.23(f) of such 
                        title of such Code (as so revised).
                    (C) The State Medicaid agency furnishes the 
                provider with the agency's reasons for finding that 
                there is no good cause to refrain from suspending 
                payments in whole or part.
            (2) Process required after suspension.--After a State 
        Medicaid agency suspends payments (in whole or part) to a 
        provider on the basis that the agency has determined that there 
        is a credible allegation of fraud against a provider for which 
        an investigation is pending under the Medicaid program, the 
        agency shall take the following actions:
                    (A) At the beginning of each fiscal quarter that 
                begins after payments to the provider have been 
                suspended, the State Medicaid agency shall--
                            (i) certify to the Secretary that it has 
                        considered whether the suspension of payments 
                        should be terminated or modified because--
                                    (I) a good cause not to suspend 
                                payments exists under section 455.23(e) 
                                of title 42, Code of Federal 
                                Regulations (as revised after the 
                                application of this Act); or
                                    (II) a good cause to suspend 
                                payments only in part exists under 
                                section 455.23(f) of such title (as so 
                                revised); and
                            (ii) if the agency finds that there is no 
                        good cause to terminate or modify the 
                        suspension of payments, furnish to the provider 
                        the agency's reasons for such finding.
                    (B) If the investigation is not resolved in a 
                reasonable amount of time (as determined by the 
                Secretary), the State Medicaid agency shall disclose to 
                the provider the specific allegations of fraud that 
                formed the basis for the agency's determination that 
                there is a credible allegation of fraud against the 
                provider.
                    (C) Every 180 days after the initiation of a 
                suspension of payments based on credible allegations of 
                fraud, a State Medicaid Agency shall--
                            (i) evaluate whether there is good cause to 
                        not continue such suspension; and
                            (ii) request a certification from the 
                        Medicaid fraud control unit for the State or, 
                        if the State has no Medicaid fraud control 
                        unit, the State attorney general, or other law 
                        enforcement agency that the matter continues to 
                        be under investigation warranting continuation 
                        of the suspension.
                    (D) Good cause not to continue to suspend payments 
                to an individual or entity against which there are 
                credible allegations of fraud shall be deemed to exist 
                if a payment suspension has been in effect for 18 
                months and there has not been a resolution of the 
                investigation, except a State Medicaid Agency may 
                extend a payment suspension beyond such period if--
                            (i) the case has been referred to, and is 
                        being considered by, the Medicaid fraud control 
                        unit for the State or, if the State has no 
                        Medicaid fraud control unit, the State attorney 
                        general, for administrative action or such 
                        administrative action is pending; or
                            (ii) the Medicaid fraud control unit for 
                        the State or, if the State has no Medicaid 
                        fraud control unit, the State attorney general, 
                        submits a written request to the State Medicaid 
                        Agency that the suspension of payments be 
                        continued based on the ongoing investigation 
                        and anticipated filing of criminal or civil 
                        action or both or based on a pending criminal 
                        or civil action or both. At a minimum, the 
                        request shall include the following:
                                    (I) Identification of the entity 
                                under suspension.
                                    (II) The amount of time needed for 
                                continued suspension in order to 
                                conclude the criminal or civil 
                                proceeding or both.
                                    (III) A statement of why or how 
                                criminal or civil action or both may be 
                                affected if the requested extension is 
                                not granted.
    (d) Definitions.--For purposes of this section:
            (1) The term ``Medicaid fraud control unit'' means a State 
        Medicaid fraud control unit as defined in section 1903(q) of 
        the Social Security Act (42 U.S.C. 1396b(q)).
            (2) The term ``Secretary'' means the Secretary of Health 
        and Human Services.
            (3) The term ``State Medicaid agency'' means the agency 
        responsible for administering a State plan under title XIX of 
        the Social Security Act (42 U.S.C. 1396 et seq.).

SEC. 3. APPEALS PROCESS.

    (a) In General.--Section 1902(a)(39) of the Social Security Act (42 
U.S.C. 1396a(a)(39)) is amended--
            (1) by striking ``shall exclude'' and inserting ``shall--
                    ``(A) exclude'';
            (2) by adding ``and'' after the semicolon at the end; and
            (3) by adding at the end the following new subparagraph:
                    ``(B) establish and codify a process whereby a 
                provider to whom payments have been suspended, in whole 
                or part, on the basis of credible allegations of fraud 
                against such provider may appeal any decision 
                (including a decision not to terminate or modify a 
                payment suspension that is already in place) by the 
                State agency that no good cause exists under the 
                regulations of the Secretary to terminate, modify, or 
                refrain from imposing such suspension of payment;''.
    (b) Effective Date.--
            (1) In general.--Subject to paragraph (2), the amendments 
        made by this section shall take effect on the date that is 1 
        year after the date of the enactment of this Act.
            (2) Delay permitted if state legislation required.--In the 
        case of a State plan approved under title XIX of the Social 
        Security Act which the Secretary of Health and Human Services 
        determines requires State legislation (other than legislation 
        appropriating funds) in order for the plan to meet the 
        additional requirements imposed by this section, the State plan 
        shall not be regarded as failing to comply with the 
        requirements of such title solely on the basis of the failure 
        of the plan to meet such additional requirements before the 1st 
        day of the 1st calendar quarter beginning after the close of 
        the 1st regular session of the State legislature that ends 
        after the 1-year period beginning with the date of the 
        enactment of this section. For purposes of the preceding 
        sentence, in the case of a State that has a 2-year legislative 
        session, each year of the session is deemed to be a separate 
        regular session of the State legislature.