Fair Medical Audits Act of 2015

Summary: Fair Medical Audits Act of 2015 This bill amends title XVIII (Medicare) of the Social Security Act to modify requirements related to the identification and recovery of overpayments under Medicare. A contract between the the Centers for Medicare &amp; Medicaid Services (CMS) and a recovery audit contractor must require the contractor to provide a health care provider with: (1) specified identifying, legal, and logistical information; (2) an identification of any errors or underpayments discovered in the audit; and (3) a description of how any requested overpayment amount was calculated. Standards for extrapolation when used to determine overpayment amounts are established. CMS must require a contractor to give a provider at least 90 days' notice of identified code over-utilization and to reimburse a provider for the cost of producing certain documentation. The retrospective audit period is limited to two (rather than four) years.  Recovery audit contractors must have staff with knowledge and experience related to clinical licensure and medical records, claims, and codes. A contractor that has excessive overturned determinations shall be subject to administrative penalty and, under specified circumstances, liable for attorneys' fees.  In the case of a provider seeking reconsideration of an overpayment determination, CMS may not recoup the overpayment until a decision has been rendered at the third level of appeal by an Administrative Law Judge. A recoupment based on a decision that is reversed on appeal must be returned to the provider within 30 days.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Fair Medical 
Audits Act of 2015''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Transparency of audit process and audit report.
Sec. 3. Qualifications of auditors.
Sec. 4. Recoupments.
Sec. 5. Extrapolation.
Sec. 6. Payment for the provision of supporting documentation.
Sec. 7. Notice of over-utilization of codes.
Sec. 8. Change in look back period.
Sec. 9. General effective date.

SEC. 2. TRANSPARENCY OF AUDIT PROCESS AND AUDIT REPORT.

    Section 1893(h)(1) of the Social Security Act (42 U.S.C. 
1395ddd(h)(1)) is amended--
            (1) by redesignating subparagraphs (B) and (C) as 
        subparagraphs (C) and (D), respectively; and
            (2) by inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) contractors shall be required to provide 
                healthcare providers with--
                            ``(i) the names and contact information for 
                        the auditors;
                            ``(ii) the legal authority under which the 
                        audit is conducted;
                            ``(iii) a clear designation of the records 
                        to be reviewed under the audit;
                            ``(iv) the dates by which records shall be 
                        submitted;
                            ``(v) the address to which the records 
                        shall be sent;
                            ``(vi) identification of any errors 
                        discovered in the audit, including 
                        specification of all medical and reimbursement 
                        policies used in the audit findings;
                            ``(vii) identification of any underpayments 
                        discovered in the audit; and
                            ``(viii) a description of how any requested 
                        overpayment amount was calculated, including, 
                        in cases in which extrapolation was used, the 
                        extrapolation formula and a description of how 
                        the random sample was developed;''.

SEC. 3. QUALIFICATIONS OF AUDITORS.

    Section 1893(h)(6) of the Social Security Act (42 U.S.C. 
1395ddd)(h)(6)) is amended--
            (1) in subparagraph (A), by inserting before the period at 
        the end the following: ``, including knowledge and experience 
        in applicable ICD, CPT, and HCPCS codes, the format and 
        contents of medical records and claims forms, and (for those 
        individuals conducting medical necessity reviews) licensure in 
        a clinical discipline providing necessary expertise to 
        determine whether clinical tests and procedures were medically 
        necessary without the benefit of examining the patient, 
        specifically including, for medical necessity reviews of 
        physician records, a doctor of medicine or osteopathy of the 
        same specialty and subspecialty and with knowledge of the 
        coverage rules being applied for the same area as the physician 
        under review''; and
            (2) by adding at the end the following new subparagraphs:
                    ``(D) Liability for excessive overturned 
                determinations.--Contractors that have a certain 
                percentage (as determined by the Secretary in 
                regulations) of overpayment determinations overturned 
                by an Administrative Law Judge at the Office of 
                Medicare Hearings and Appeals shall be subject to 
                administrative penalty established by the Secretary in 
                such regulations.
                    ``(E) Provider compensation for certain contractor 
                errors.--A contractor shall be liable for payment to 
                providers of service and suppliers for reasonable 
                attorneys' fees when the contractor's overpayment 
                determination is equal to or more than double the final 
                overpayment amount determined by an Administrative Law 
                Judge at the Office of Medicare Hearings and Appeals.
                    ``(F) Incentive payments for provider education.--
                Administrative penalties collected under subparagraph 
                (D) shall be available to the Secretary without 
                appropriation to provide incentive payments to Medicare 
                administrative contractors under section 1874A to carry 
                out improper payment outreach and education programs 
                under subsection (h) of such section.''.

SEC. 4. RECOUPMENTS.

    (a) In General.--Section 1893(f)(2)(A) of the Social Security Act 
(42 U.S.C. 1395ddd(f)(2)(A)) is amended--
            (1) by striking ``until the date the decision on the 
        reconsideration has been rendered.'' and inserting the 
        following: ``until the date a decision has been rendered at the 
        third level of appeal by an Administrative Law Judge at the 
        Office of Medicare Hearings and Appeals.''; and
            (2) by adding at the end the following: ``Any recoupments 
        made under this subparagraph based on a decision that is 
        subsequently reversed on appeal shall be returned to the 
        provider of services or supplier involved not later than 30 
        business days after the date of the decision of reversal on 
        appeal.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to recoupments occurring after the date of the enactment of this 
Act.

SEC. 5. EXTRAPOLATION.

    (a) In General.--Section 1893(f)(3) of the Social Security Act (42 
U.S.C. 1395ddd(f)(3)) is amended--
            (1) by striking the last sentence; and
            (2) by adding after and below subparagraph (B) the 
        following:
        ``Extrapolation may only be used if it is based on a 
        statistically valid, stratified random sample, with all zero 
        paid claims and outliers removed. When extrapolation is used, 
        the median amount shall be used as the central data point for 
        calculating overpayments unless the data are normally 
        distributed, approximately normally distributed, or 
        symmetrical.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to determinations made after the date of the enactment of this 
Act.

SEC. 6. PAYMENT FOR THE PROVISION OF SUPPORTING DOCUMENTATION.

    Section 1893(f)(4) of the Social Security Act (42 U.S.C. 
1395ddd(f)(4)) is amended by adding at the end the following: ``The 
Secretary shall require that contractors reimburse providers of 
services or suppliers for the cost of such production at rates 
established by the Secretary.''.

SEC. 7. NOTICE OF OVER-UTILIZATION OF CODES.

    Section 1893(f)(6) of the Social Security Act (42 U.S.C. 
1395ddd(f)(6)) is amended by adding at the end the following: ``The 
Secretary shall require that contractors provide such notice of over-
utilization of codes at least 90 days before the date of initiating an 
audit, documentation request, or recoupment with respect to the 
identified over-utilized codes against any member of the class of 
providers of services or suppliers identified by the contractor as 
over-utilizing codes.''.

SEC. 8. CHANGE IN LOOK BACK PERIOD.

    Section 1893(h)(4)(B) of the Social Security Act (42 U.S.C. 
1395ddd(h)(4)(B)) is amended by striking ``4 fiscal years'' and 
inserting ``2 fiscal years''.

SEC. 9. GENERAL EFFECTIVE DATE.

    Except as otherwise provided, the amendments made by this Act shall 
apply with respect to contracts entered into, or renewed, after the 
date of the enactment of this Act.