Medicare Audit Improvement Act of 2015

Summary: Medicare Audit Improvement Act of 2015 This bill amends title XVIII (Medicare) of the Social Security Act (SSAct) with respect to the practices of recovery audit contractors (RACs) under the Medicare program fin identifying underpayments and overpayments and recouping overpayments.   Incentive payments to a RAC for recovery activities are prohibited for FY2015 and subsequent fiscal years. Payments for recovery activities shall be reduced, according to a sliding scale established by the Secretary of Health and Human Services, to any RAC with a complex audit denial rate at the end of a fiscal year, determined pursuant to a specified formula, that is .1% or greater. The one-year timely filing limit for certain rebilled SSAct title XVIII part B (Supplementary Medical Insurance) claims is eliminated, extending the deadline for the rebill to 180 days after final denial of the claim. A determination of whether inpatient hospital services or inpatient critical access hospital services furnished to an individual are reasonable and necessary shall now be based solely on information available to the admitting physician at the time of the inpatient admission of the individual for such services, as documented in the medical record.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Audit Improvement Act of 
2015''.

SEC. 2. REFORMING THE PRACTICES OF RECOVERY AUDIT CONTRACTORS UNDER THE 
              MEDICARE PROGRAM.

    (a) Elimination of Contingency Fee Payment System.--Section 1893(h) 
of the Social Security Act (42 U.S.C. 1395ddd(h)) is amended--
            (1) in paragraph (1), by inserting ``, for recovery 
        activities conducted during a fiscal year before fiscal year 
        2015'' after ``Under the contracts''; and
            (2) by adding at the end the following new paragraph:
            ``(11) Payment for recovery activities performed after 
        fiscal year 2014.--
                    ``(A) In general.--Under the contracts, subject to 
                paragraphs (B) and (C), payment shall be made to 
                recovery audit contractors for recovery activities 
                conducted during fiscal year 2015 and each fiscal year 
                thereafter in the same manner, and from the same 
                amounts, as payment is made to eligible entities under 
                contracts entered into for recovery activities 
                conducted during fiscal year 2014 under subsection (a).
                    ``(B) Prohibition on incentive payments.--Under the 
                contracts, payment made to a recovery audit contractor 
                for recovery activities conducted during fiscal year 
                2015 or any fiscal year thereafter may not include any 
                incentive payments.
                    ``(C) Performance accountability.--
                            ``(i) In general.--Under the contracts, 
                        payment made to a recovery audit contractor for 
                        recovery activities conducted during fiscal 
                        year 2015 or any fiscal year thereafter shall, 
                        in the case that the contractor has a complex 
                        audit denial overturn rate at the end of such 
                        fiscal year (as calculated under the 
                        methodology described in clause (iv)) that is 
                        .1 or greater, be reduced in an amount 
                        determined in accordance with clause (ii).
                            ``(ii) Payment reductions.--
                                    ``(I) Sliding scale of amount of 
                                reductions.--The Secretary shall 
                                establish, for purposes of determining 
                                the amount of a reduction in payment to 
                                a recovery audit contractor under 
                                clause (i) for recovery activities 
                                conducted during fiscal year, a linear 
                                sliding scale of payment reductions for 
                                recovery audit contractors for such 
                                fiscal year. Under such linear sliding 
                                scale, the amount of such a reduction 
                                in payment to a recovery audit 
                                contractor for a fiscal year shall be 
                                calculated in a manner that provides 
                                for such reduction to be greater than 
                                the reduction for such fiscal year for 
                                recovery audit contractors that have 
                                complex audit denial overturn rates at 
                                the end of such fiscal year (as 
                                calculated under the methodology 
                                described in clause (iv)) that are 
                                lower than the complex audit denial 
                                overturn rate of the contractor at the 
                                end of such fiscal year (as so 
                                calculated).
                                    ``(II) Manner of collecting 
                                reduction.--The Secretary may assess 
                                and collect the reductions in payment 
                                to recovery audit contractors under 
                                clause (i) in such manner as the 
                                Secretary may specify (such as by 
                                reducing the amount paid to the 
                                contractor for recovery activities 
                                conducted during a fiscal year or by 
                                assessing the reduction as a separate 
                                penalty payment to be paid to the 
                                Secretary by the contractor with 
                                respect to each complex audit denial 
                                issued by the contractor that is 
                                overturned on appeal).
                            ``(iii) Timing of determinations of payment 
                        reductions.--The Secretary shall, with respect 
                        to a recovery audit contractor, determine not 
                        later than six months after the end of a fiscal 
                        year--
                                    ``(I) whether to reduce payment to 
                                the recovery audit contractor under 
                                clause (i) for recovery activities 
                                conducted during such fiscal year; and
                                    ``(II) in the case that the 
                                Secretary determines to so reduce 
                                payment to the contractor, the amount 
                                of such payment reduction.
                            ``(iv) Methodology for calculation of 
                        overturned complex audit denial overturn 
                        rate.--
                                    ``(I) Calculation of overturn 
                                rate.--The Secretary shall calculate a 
                                complex audit denial overturn rate for 
                                a recovery audit contractor for a 
                                fiscal year by--
                                            ``(aa) determining, with 
                                        respect to the contract entered 
                                        into under paragraph (1) by the 
                                        contractor, the number of 
                                        complex audit denials issued by 
                                        the contractor under the 
                                        contract (including denials 
                                        issued before such fiscal year 
                                        and during such fiscal year) 
                                        that are overturned on appeal; 
                                        and
                                            ``(bb) dividing the number 
                                        determined under item (aa) by 
                                        the number of complex audit 
                                        denials issued by the 
                                        contractor under such contract 
                                        (including denials issued 
                                        before such fiscal year and 
                                        during such fiscal year).
                                    ``(II) Fairness and transparency.--
                                The Secretary shall calculate the 
                                percentage described in subclause (I) 
                                in a fair and transparent manner.
                                    ``(III) Accounting for subsequently 
                                overturned appeals.--The Secretary 
                                shall calculate the percentage 
                                described in subclause (I) in a manner 
                                that accounts for the likelihood that 
                                complex audit denials issued by the 
                                contractor for such fiscal year will be 
                                overturned on appeal in a subsequent 
                                fiscal year.
                                    ``(IV) Complex audit denial 
                                defined.--In this subparagraph, the 
                                term `complex audit denial' means a 
                                denial by a recovery audit contractor 
                                of a claim for payment under this title 
                                submitted by a hospital, psychiatric 
                                hospital, or critical access hospital 
                                that is so denied by the contractor 
                                after the contractor has--
                                            ``(aa) requested that the 
                                        hospital, psychiatric hospital, 
                                        or critical access hospital, in 
                                        order to support such claim for 
                                        payment, provide supporting 
                                        medical records to the 
                                        contractor; and
                                            ``(bb) reviewed such 
                                        medical records in order to 
                                        determine whether an improper 
                                        payment has been made to the 
                                        hospital, psychiatric hospital, 
                                        or critical access hospital for 
                                        such claim.
                                    ``(V) Overturned on appeal 
                                defined.--In this subparagraph, the 
                                term `overturned on appeal' means, with 
                                respect to a complex audit denial, a 
                                denial that is overturned on appeal at 
                                the reconsideration level, the 
                                redetermination level, or the 
                                administrative law judge hearing level.
                    ``(D) Application to existing contracts.--Not later 
                than 60 days after the date of the enactment of this 
                paragraph, the Secretary shall modify, as necessary, 
                each contract under paragraph (1) that the Secretary 
                entered into prior to such date of enactment in order 
                to ensure that payment with respect to recovery 
                activities conducted under such contract is made in 
                accordance with the requirements described in this 
                paragraph.''.
    (b) Elimination of One-Year Timely Filing Limit To Rebill Part B 
Claims.--
            (1) In general.--Section 1842(b) of the Social Security Act 
        (42 U.S.C. 1395u(b)) is amended by adding at the end the 
        following new paragraph:
            ``(20) Exception to the one-year timely filing limit for 
        certain rebilled claims.--
                    ``(A) In general.--In the case of a claim submitted 
                under this part by a hospital (as defined in 
                subparagraph (B)(i)) for hospital services with respect 
                to which there was a previous claim submitted under 
                part A as inpatient hospital services or inpatient 
                critical access hospital services that was denied by a 
                Medicare contractor (as defined in subparagraph 
                (B)(ii)) because of a determination that the inpatient 
                admission was not medically reasonable and necessary 
                under section 1862(a)(1)(A), the deadline described in 
                this paragraph is 180 days from the date of the final 
                denial of such claim under part A.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Hospital.--The term `hospital' has 
                        the meaning given such term in section 1861(e), 
                        and includes a psychiatric hospital (as defined 
                        in section 1861(f)) and a critical access 
                        hospital (as defined in section 1861(mm)(1)).
                            ``(ii) Medicare contractor.--The term 
                        `Medicare contractor' has the meaning given 
                        such term under section 1889(g), and includes a 
                        recovery audit contractor with a contract under 
                        section 1893(h).
                            ``(iii) Final denial.--The term `final 
                        denial' means--
                                    ``(I) in the case that a hospital 
                                elects not to appeal a denial described 
                                in subparagraph (A) by a Medicare 
                                contractor, the date of such denial; or
                                    ``(II) in the case that a hospital 
                                elects to appeal a such a denial, the 
                                date on which such appeal is 
                                exhausted.''.
            (2) Conforming amendments.--
                    (A) Section 1835(a)(1) of the Social Security Act 
                (42 U.S.C. 1395n(a)(1)) is amended by inserting ``or, 
                in the case of a claim described in section 
                1842(b)(20), the no later than the deadline described 
                in such paragraph'' after ``the date of service''.
                    (B) Section 1842(b)(3)(B) of the Social Security 
                Act (42 U.S.C. 1395u(b)(3)(B)) is amended in the flush 
                language following clause (ii) by inserting ``or, in 
                the case of a claim described in section 1842(b)(20), 
                the no later than the deadline described in such 
                paragraph'' after ``the date of service''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act and 
        shall apply to claims submitted under part B of title XVIII of 
        the Social Security Act for hospital services for which there 
        was a previous claim submitted under part A as inpatient 
        hospital services or inpatient critical access hospital 
        services that was subject to a final denial (as defined in 
        paragraph (20)(B)(iii) of section 1842(b) of such Act (42 
        U.S.C. 1395u(b)) on or after such date of enactment.
    (c) Medical Documentation Considered for Medical Necessity Reviews 
of Claims for Inpatient Hospital Services.--Section 1862(a) of the 
Social Security Act (42 U.S.C. 1395y(a)) is amended by adding at the 
end the following new sentence: ``A determination under paragraph (1) 
of whether inpatient hospital services or inpatient critical access 
hospital services furnished to an individual on or after the date of 
the enactment of this sentence are reasonable and necessary shall be 
based solely upon information available to the admitting physician at 
the time of the inpatient admission of the individual for such 
inpatient services, as documented in the medical record.''