SECTION 1. SHORT TITLE AND REFERENCES IN ACT.

    (a) Short Title.--This Act may be cited as the ``Medicare and 
Medicaid Payment Integrity Act of 1995''.
    (b) References in Act.--The amendments in this Act apply to the 
Social Security Act unless otherwise specifically stated.

SEC. 2. FINDING AND STATEMENT OF PURPOSES.

    (a) Finding.--The Congress finds that the cost of fraud and abuse 
of health care services is a significant part of every dollar spent on 
those services.
    (b) Purposes.--It is the purpose of this Act to direct the 
Secretary of Health and Human Services to move aggressively and broadly 
against these drains on Federal and State health care resources, and to 
provide a new, cost-effective source of funding for the benefit quality 
assurance program.

SEC. 3. FRAUD AND ABUSE CONTROL FUND.

    (a) In General.--Part A of title XI is amended by adding at the end 
the following:

                     ``fraud and abuse control fund

    ``Sec. 1145. (a) The Secretary shall, directly or through 
contractual or other arrangements and with appropriate coordination 
with the States, take all steps necessary to assure the accuracy of 
payments from the trust funds established under title XVIII (referred 
to herein as the `Medicare Trust Funds') and the appropriation for 
payments to States to carry out title XIX (referred to herein as the 
`Medicaid appropriation') and otherwise assure the appropriateness of 
expenditures from such Funds and such appropriation. To carry out this 
responsibility, the Secretary shall place particular emphasis on the 
development of and experimentation with innovative or rigorous 
techniques and approaches to identifying, investigating, and 
eliminating fraudulent or abusive practices that burden the Medicare 
Trust Funds or the Medicaid appropriation.
    ``(b) To provide a reliable source of funding to support the 
Secretary's activities under subsection (a) and encourage cost-
effective innovation, there is established in the Treasury of the 
United States a fund to be known as the `HHS Fraud and Abuse Control 
Fund' (referred to herein as the `Fund').
    ``(c) There shall be deposited in the Fund--
            ``(1) that portion of amounts recovered in relation to 
        section 1128A arising out of a claim under title XIX or title 
        XVIII as remains after application of subsection (f)(1) 
        (pertaining to reimbursement of a State's share of recoveries 
        relating to title XIX) or subsection (f)(2) (relating to 
        repayment of the Medicare Trust Funds) of that section, as may 
        be applicable,
            ``(2) payments made pursuant to a court or administrative 
        order or voluntary settlement agreement to reimburse for all or 
        part of the costs of investigations, audits, and monitoring of 
        compliance plans, conducted by the Department of Health and 
        Human Services that relate to the programs under title XVIII or 
        XIX, and
            ``(3) penalties and damages imposed (other than funds 
        awarded to a relator or for restitution) under sections 3729 
        through 3732 of title 31, United States Code (pertaining to 
        false claims) in cases involving claims relating to programs 
        under title XVIII or XIX (to the extent the amounts deposited 
        in the Fund under paragraphs (1) and (2) in a fiscal year are 
        less than $2,000,000).
    ``(d) Amounts deposited in the Fund shall be available to the 
Secretary (without the necessity for any provision therefor in 
appropriations Acts) until expended for payment of expenses incurred in 
carrying out subsection (a).
    ``(e) No more than $2,000,000 may be deposited in the Fund in any 
fiscal year.''.
    (b) Initial Deposit in HHS Fraud and Abuse Control Fund.--There is 
authorized to be appropriated for fiscal year 1996 an amount (to be 
deposited in the HHS Fraud and Abuse Control Fund established by 
section 1145(b) of the Social Security Act) for the initial 
implementation of activities under section 1145(a) of that Act (subject 
to section 1145(e) of that Act).
    (c) Conforming Amendment.--Section 1128A(f) (42 U.S.C. 1320a-7a(f)) 
is amended--
            (1) by renumbering paragraph (3) as paragraph (4), and
            (2) by inserting after paragraph (2) the following:
    ``(3) Additional amounts (subject to section 1145(e)) shall be 
deposited in the HHS Fraud and Abuse Control Fund established by 
section 1145(b).''.
    (d) Effective Date.--Sections 1145(c) and 1128A(f)(3) of the Social 
Security Act (as enacted and amended by subsections (a) and (c) of this 
section) apply to amounts recovered, payments made, and penalties and 
damages imposed, after fiscal year 1995.

SEC. 4. MEDICARE BENEFIT QUALITY ASSURANCE PROGRAM.

    (a) In General.--Part C of title XVIII is amended by inserting 
after section 1888 the following new section:

                  ``benefit quality assurance program

    ``Sec. 1889. (a)(1) In order to improve the effectiveness of 
benefit quality assurance activities relating to programs under this 
title, and to enhance the Secretary's capability to carry out program 
safeguard functions and related education activities to avoid the 
improper expenditure of assets of the Federal Hospital Insurance Trust 
Fund and the Federal Supplementary Medical Insurance Trust Fund, the 
Secretary shall enter into contracts with organizations or other 
entities having demonstrated capability to carry out one or more of the 
functions specified in subsection (e). The provisions of sections 1816 
and 1842 shall be inapplicable to contracts under this section. The 
requirements of sections 1816 and 1842 relating to activities to be 
carried out instead through a contract under this section shall be 
deemed to have been met by such contract.
    ``(2) The Secretary shall determine the number of separate 
contracts which are necessary to achieve, with the maximum degree of 
efficiency and cost effectiveness, the objectives of this section. The 
Secretary may enter into contracts under this section at such time or 
times as are appropriate so long as not later than the fiscal year 
beginning October 1, 1998, and for each fiscal year thereafter, there 
are in effect contracts that, considered collectively, provide for 
benefit quality assurance activities with respect to all payments under 
this title.
    ``(b) A benefit quality assurance contract required under 
subsection (a) must provide for one or more benefit quality assurance 
program activities. Each such contract shall include an agreement by 
the contractor to cooperate with the Inspector General of the 
Department of Health and Human Services, and the Attorney General of 
the United States, and other law enforcement agencies, as appropriate, 
in the investigation and deterrence of fraud and abuse in relation to 
this title and in other cases arising out of the activities described 
in subsection (e), and shall contain such other provisions as the 
Secretary finds necessary or appropriate to achieve the purposes of 
this part. The provisions of section 1153(e)(1) shall apply to 
contracts and contracting authority under this section, except that 
competitive procedures must be used when entering into new contracts 
under this section, or at any other time when it is in the best 
interests of the Government. A contract under this section may be 
renewed from term to term without regard to any provision of law 
requiring competition if the contractor has met or exceeded the 
performance requirements established in the current contract.
    ``(c)(1) In carrying out this section, the Secretary may not enter 
into a contract with an organization or other entity if the Secretary 
determines that such organization's or entity's financial holdings, 
interests, or relationships would interfere with its ability to perform 
the functions to be required by the contract in an effective and 
impartial manner.
    ``(2) The Secretary shall by regulation provide for the limitation 
of a contractor's liability for actions taken to carry out a contract 
under this section, and such regulation shall, to the extent the 
Secretary finds appropriate, employ the same or comparable standards 
and other substantive and procedural provisions as are contained in 
section 1157.
    ``(d) Obligations incurred for benefit quality assurance program 
activities shall be paid from amounts available for expenditure in the 
Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund, in such amounts as the Secretary shall 
deem fair and equitable after taking into consideration the expenses 
attributable to each of the programs under this title, but such 
obligations shall not exceed, in the aggregate, $396,000,000 for each 
of the fiscal years 1996, 1997, and 1998, $408,000,000 for fiscal year 
1999, and $426,000,000 for fiscal year 2000. The Secretary shall make 
such transfers of moneys between those funds as may be appropriate to 
settle accounts between them in cases where expenses properly payable 
from one fund have been paid from the other fund.
    ``(e) For purposes of this section, benefit quality assurance 
program activities consist of the following:
            ``(1) Review of activities of providers of services or 
        other persons in connection with this title, including medical 
        and utilization review and fraud review.
            ``(2) Audit of cost reports.
            ``(3) Determinations as to whether payment should not be, 
        or should not have been, made under this title by reason of 
        section 1862(b), and recovery of payments that should not have 
        been made.
            ``(4) Education of providers of services, beneficiaries, 
        and other persons with respect to payment integrity and benefit 
        quality assurance issues.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to obligations incurred after fiscal year 1995.

SEC. 5. REDUCTION IN DISCRETIONARY SPENDING LIMITS.

    Section 601(a)(2)(F) of the Congressional Budget Act of 1974 is 
amended by inserting before the semicolon the following: ``, and 
reduced by $398,000,000 in new budget authority and $366,160,000 in 
outlays with respect to fiscal year 1996, by $398,000,000 in new budget 
authority and $384,181,000 in outlays with respect to fiscal year 1997, 
and by $398,000,000 in new budget authority and $392,003,000 in outlays 
with respect to fiscal year 1998''.
Medicare and Medicaid Payment Integrity Act of 1995 - Amends part A of title XI of the Social Security Act to establish in the Treasury the HHS Fraud and Abuse Control Fund containing various specified penalties and damages imposed under Federal law, as well as certain other amounts, to combat fraud and abuse under the Medicare and Medicaid programs under titles XVIII and XIX of the Social Security Act.  Authorizes appropriations. 
Provides for a benefit quality assurance program under the Medicare program for reviewing the activities of service providers and others, auditing cost reports, and other specified activities. 
Amends the Congressional Budget Act of 1974 to provide for various specified reductions in discretionary spending limits over a three year period.
Medicare and Medicaid Payment Integrity Act of 1995