69–010 

1 In this report, the term ‘‘background check’’ refers to comprehensive pre-employment screening of long-term care workers using a combination of State-based registries, state-based criminal 

history checks (name-based, fingerprint-based, or both), and FBI criminal history checks (fingerprint-based). 

Calendar No. 1035 

110TH CONGRESS REPORT " ! SENATE 2d Session 110–474 

PATIENT SAFETY AND ABUSE PREVENTION ACT 

SEPTEMBER 22 (legislative day, SEPTEMBER 17), 2008.—Ordered to be printed 

Mr. BAUCUS, from the Committee on Finance, 

submitted the following 

R E P O R T 

[To accompany S. 1577] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Finance, to which was referred the bill (S. 

1577) to amend titles XVIII and XIX of the Social Security Act to 

require screening, including national criminal history background 

checks, of direct patient access employees of skilled nursing facilities, nursing facilities, and other long-term care facilities and providers, and to provide for nationwide expansion of the pilot program for national and State background checks on direct patient 

access employees of long-term care facilities or providers, reports 

favorably thereon with an amendment in the nature of a substitute 

and recommends the bill, as amended, do pass. 

I. BACKGROUND 

Background checks 1 for job applicants have long been used as an 

important tool to help reduce the rates of abuse among vulnerable 

populations. During the 1990s, the National Child Protection Act 

was enacted to allow states to conduct background checks and suitability reviews of employees or volunteers of entities that provide 

services to children, the elderly and disabled persons. At the State 

level, many states routinely require individuals seeking to work 

with children to undergo background checks as part of the pre-employment process. 


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2Payne, Brian and Gainey, Randy. ‘‘The Criminal Justice Response to Elder Abuse in Nursing 

Homes: A Routine Activities Perspective.’’ Western Criminology Review. 7(3). 67–81 (2006). 3 Ibid. 

4Goldberg, Lee. ‘‘Everything You Wanted to Know About Long Term Care . . . But Were 

Afraid to Ask.’’ Presentation to the National Academy of Social Insurance. July 22, 2008. 5Shishkin, Philip. ‘‘Cases of Abuse by Home Aides Draw Scrutiny.’’ The Wall Street Journal. 

15 July 2008. 6 U.S. Government Accountability Office, ‘‘Nursing Homes: More Can Be Done to Protect Residents from Abuse.’’ GAO–02–312. March 2002. 

MILLIONS OF ELDERLY AND DISABLED INDIVIDUALS ARE NOT

ADEQUATELY PROTECTED

Although national surveys often exclude institutional settings 

such as nursing homes and adult day care centers, evidence shows 

that abuse in institutions is ‘‘extensive and alarming.’’ 2 A recent 

analysis of Medicaid Fraud Control Unit cases of elder abuse concluded that among 801 cases of nursing home abuse analyzed, 

about two-thirds were due to physical abuse.3 Elder abuse can take 

the form of physical abuse (battery, assault and rape), neglect 

(withholding or failure to provide adequate food, shelter and health 

care) and financial exploitation (theft, predatory lending and other 

illegal misuse or taking of funds, property or assets). 

In addition, because the demand for home-based care is expected 

to grow rapidly in the coming decades, policy to prevent and address elder abuse in home-based care settings is needed.4 A recent 

investigation published in the Wall Street Journal examined cases 

of abuse and neglect by home health aides, noting that ‘‘in tiny 

Lake County, California [population <66,000 in 2006], 80 percent 

of the 74 prosecutions of elder abuse in the past year involved 

home health aides.’’ 5

Most States now have significant gaps and loopholes in the procedures they use to check applicants. For example, registries and 

databases established for different sectors of the workforce are 

often poorly coordinated, causing lengthy clearance times. While 

nursing homes are required under Federal law to conduct registry 

checks on all Certified Nurse Aides (CNAs), they may not conduct 

State and Federal criminal history checks on all employees who 

have direct access to residents. And in many states, requirements 

for pre-employment checks do not extend to workers in other longterm care settings. This allows individuals with a history of substantiated abuse or a serious criminal history to avoid detection, 

frequently by crossing State lines. 

A 2002 Government Accountability Office (GAO) report requested 

by members of the Senate Special Committee on Aging (Committee) recommended that individuals applying to work in all longterm care settings also undergo background checks because the elderly, like children, are a highly vulnerable population.6 The Department of Health and Human Services Office of Inspector General has made similar recommendations in several reports. 

To date, without broad-based Federal requirements and funding, 

only a few States have moved to incorporate these efficiency-improving system changes. Instead, many states continue to use slower, less accurate paper-based systems that can result in long processing times for providers. In turn, slow processing times increase 

the risk of abuse by allowing employees with disqualifying crimes 

to work for several months before background checks are completed. In turn, this contributes to a practice of ‘‘job-hopping,’’ in 


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7 U.S. Department of Justice. ‘‘The Attorney General’s Report on Criminal History Background 

Checks.’’ June 2006. 8 Colello, Kirsten. ‘‘Background on Elder Abuse Legislation and Issues.’’ Congressional Research Service. 25 January 2007. 

which workers switch jobs frequently, before their criminal history 

checks can be processed. 

SCREENING OF LONG-TERM CARE WORKFORCE INVOLVES MULTIPLE

TYPES OF CHECKS

Three different types of databases are typically used to conduct 

background checks: • Registry checks cross-reference an individual’s name with 

public databases, such as the National Sex Offender Registry, 

or with lists of workers found to have a record of substantiated 

abuse in a particular field, such as the state CNA registries; • State name-based and fingerprint criminal checks are 

searches of state police records using a person’s name and 

other identifying information, or their fingerprints; • Federal criminal history checks are conducted by the FBI 

through its all-state biometric repository, the Integrated Automated Fingerprint Identification System (IAFIS), which uses 

fingerprints to identify whether an individual has been arrested or convicted. 

Because no single database is complete, a comprehensive background check process that uses many different databases promises 

to be most effective. 

Recent technological improvements are helping to streamline the 

different types and levels of background check processes. For example, ‘‘Livescan’’ fingerprint technology, which records an electronic 

copy of a fingerprint, is less prone to error and is faster to process 

than paper-based inked fingerprints. Another innovation is the 

‘‘rap-back’’ system, which ensures that any new disqualifying 

crimes an individual commits after an initial clearance are flagged 

in a state’s database and can be reported back to the current employer—so that the individual can be terminated. The FBI is now 

working to create a parallel federal rap-back capability as part of 

the agency’s ‘‘Next Generation Identification’’ (NGI) System initiative.7 Rap-back systems also have the potential to reduce costs by 

avoiding the need for duplicative checks. 

Absent focused state initiatives to refine, improve and expand existing background check procedures and implementation of other 

innovations, such as abuse prevention training and related measures to prevent and detect elder abuse, experts warn that mistreatment and exploitation of frail elders will rise further during the 

first half of the 21st century as the number of older adults grows. 

Today, conservative estimates are that elder abuse affects hundreds of thousands of seniors each year.8

To address this, for States electing to participate, the Patient 

Safety and Abuse Prevention Act will: 

• Provide the opportunity to improve their existing background 

check infrastructure for employees who work one-on-one with frail 

elders and individuals with disabilities in long-term care facilities 

and other settings. To accomplish this, the bill makes available up 

to $3 million in grant funding to each participating state, provided 

over three years, contingent on a 25 percent state match. 


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9P.L. 95–478. 

• Enable recipient states to create a comprehensive background 

check system for long-term care job applicants by making needed 

investments in their databases, creating workforce background 

check units, updating applicable laws and regulations, and offering 

additional training to long-term care providers. • Establish mechanisms for workers who are denied employment 

to dispute the results through an independent external process, 

and develop procedures aimed at reducing unnecessary repeat fingerprint checks for workers who change jobs frequently. • Significantly improve the ability of states across the country to 

design cost-effective and efficient background check systems that 

would reduce the risk of elder abuse in the thousands of facilities 

and other settings where many of the frailest Americans receive 

health and long-term care. 

II. LEGISLATIVE HISTORY 

One of the first major congressional actions taken to combat 

elder abuse was the creation of the Long-Term Care Ombudsman 

Program (LTCOP) in order to investigate and resolve complaints in 

nursing homes and other residential care settings. This program 

was created in 1972 as a Public Health Service demonstration 

project in five states. As a result of the pilot program’s success, the 

LTCOP was expanded to all states and included as an amendment 

to the Older Americans Act (OAA) in 1978.9 In 1992, the program 

become incorporated into a new title VII of the OAA that authorized elder rights protection activities and required the Administration on Aging (AoA) to create a permanent National Ombudsman 

Resource Center. 

Other federal resources aimed at preventing elder abuse include 

the Social Services Block Grant (SSBG) program authorized by title 

XX of the Social Security Act, which includes Adult Protective 

Services (APS), and some programs of the Violence Against Women 

Act. 

Although Congress has passed several laws that address child 

abuse and domestic violence, less attention has been paid to combating elder abuse at the Federal level. However, in addition to the 

Elder Justice Act, there have been several legislative proposals introduced in the Senate during the last several Congresses to combat elder abuse. 

During the 105th Congress, Senator Herb Kohl (D–WI) introduced the Patient Abuse Prevention Act, S. 1122, on July 31, 1997, 

and the Long-Term Care Patient Protection Act of 1998, S. 2570, 

on October 7, 1998. Both bills were referred to the Senate Finance 

Committee. 

Senator Kohl introduced the Patient Abuse Prevention Act, S. 

1445, again on July 27, 1999, in the 106th Congress, and the bill 

was referred to the Senate Finance Committee. 

Also during the 106th Congress, Senator Charles E. Grassley (R– 

IA) introduced the Home Health Integrity Preservation Act, S. 255, 

on January 20, 1999, and Senator John Ashcroft (R–MO) introduced the Senior Care Safety Act of 2000, S. 3066, on September 

19, 2000. Both bills were referred to the Senate Finance Committee. 


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Senator Kohl introduced the Patient Abuse Prevention Act, S. 

3091, again on October 10, 2002, in the 107th Congress, and the 

bill was referred to the Senate Finance Committee. 

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, H.R. 1, was introduced by Representative Dennis 

Hastert (R–IL) on June 25, 2003, during the 108th Congress. The 

bill became Public Law 108–173 on December 8, 2003. This law established a pilot program for national and state background checks 

on direct patient access employees of long-term care (LTC) facilities 

and providers. The Secretary of Health and Human Services, in 

consultation with the Attorney General, was required to establish 

the pilot program in no more than 10 states. The purpose of the 

pilot program was to identify efficient, effective, and economical 

procedures for these background checks. 

Also in the 108th Congress, on April 30, 2003, Senator Kohl introduced the Patient Abuse Prevention Act, S. 958, and the bill was 

referred to the Senate Finance Committee. 

During the 110th Congress, Senator Kohl introduced the Patient 

Safety and Abuse Prevention Act of 2007, S. 1577, on June 7, 2007, 

and the bill was referred to the Senate Finance Committee. Under 

the leadership of Chairman Max Baucus (D–MT), the Senate Finance Committee considered the bill in Executive Session on September 10, 2008, after postponement of an Executive Session 

scheduled for August 1, 2008. On September 10, 2008, the Senate 

Finance Committee unanimously reported the bill as an amendment in the nature of a substitute. 

III. SECTION-BY-SECTION ANALYSIS 

SHORT TITLE (SECTION 1 OF THE COMMITTEE BILL)

Present law 

No provision. 

Committee bill 

The Committee Bill sets forth the title of the Act as the Patient 

Safety and Abuse Prevention Act of 2008. 

FINDINGS (SECTION 2(a) OF THE COMMITTEE BILL)

Present law 

No provision. 

Committee bill 

The Committee Bill describes the following findings of Congress: 

(1) Frail elders are a highly vulnerable population who often lack 

the ability to give consent or defend themselves. Since the best predictor of future behavior is past behavior, individuals with histories 

of abuse pose a definite risk to patients and residents of long-term 

care facilities. 

(2) Every month, there are stories in the media of health care 

employees who commit criminal misconduct on the job and are 

later found, through a background check conducted after the fact, 

to have a history of convictions for similar crimes. 

(3) A 2006 study conducted by the Department of Health and 

Human Services determined that— 


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(A) criminal background checks are a valuable tool for employers during the hiring process; 

(B) the use of criminal background checks during the hiring 

process does not limit the pool of potential job applicants; 

(C) ‘‘a correlation exists between criminal history and 

incidences of abuse’’; and 

(D) the long-term care industry supports the practice of conducting background checks on potential employees in order to 

reduce the likelihood of hiring someone who has potential to 

harm residents. 

(4) In 2004, the staffs of State Adult Protective Services agencies 

received more than 500,000 reports of elder and vulnerable adult 

abuse, and an ombudsman report concluded that more than 15,000 

nursing home complaints involved abuse, including nearly 4,000 

complaints of physical abuse, more than 800 complaints of sexual 

abuse, and nearly 1,000 complaints of financial exploitation. 

(5) The Department of Health and Human Services has determined that while 41 States now require criminal background 

checks on certified nurse aides prior to employment, only half of 

those (22) require criminal background checks at the Federal level. 

PURPOSES (SECTION 2(b) OF THE COMMITTEE BILL)

Present law 

No provision. 

Committee bill 

The Committee Bill defines the purposes of the Patient Safety 

and Abuse Prevention Act, as follows: 

(1) to lay the foundation for a coordinated, nationwide system of State criminal background checks that would greatly 

enhance the chances of identifying individuals with problematic backgrounds who move across State lines; 

(2) to stop individuals who have a record of substantiated 

abuse, or a serious criminal record, from preying on helpless 

elders and individuals with disabilities; and 

(3) to provide assurance to long-term care employers and the 

residents they care for that potentially abusive workers will 

not be hired into positions of providing services to the extremely vulnerable residents of our Nation’s long-term care facilities. 

NATIONWIDE PROGRAM FOR NATIONAL AND STATE BACKGROUND

CHECKS ON DIRECT PATIENT ACCESS EMPLOYEES OF LONG-TERM

CARE FACILITIES AND PROVIDERS (SECTION 3 OF THE COMMITTEE

BILL)

Present law 

Background Checks of FBI Records for Nursing Homes and 

Home Health Agencies. The Omnibus Consolidated and Emergency 

Supplemental Appropriations Act of 1999 (P.L. 105–277) allowed 

nursing homes and home health agencies to request, through their 

State agencies, that the Federal Bureau of Investigation (FBI) 

search its all-state national data bank of arrests and convictions for 

the criminal histories of job applicants who would provide direct 

patient care, as long as states establish mechanisms for processing 


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these requests. Most states have enacted laws that require or allow 

nursing homes and home health agencies to conduct these criminal 

background checks for certain categories of potential employees. 

The Attorney General may charge nursing homes and home health 

agencies fees no greater than $50 per request. 

To conduct a criminal background check of FBI records, nursing 

homes and home health agencies must provide a copy of applicants’ 

fingerprints, a statement signed by the applicant authorizing the 

search, and other information to the appropriate state agency. Such 

information must be provided no later than 7 days after its acquisition by the nursing home or home health agency. Nursing facilities 

or home health care agencies that deny employment based on reasonable reliance on information from the Attorney General are exempt from liability for any action brought by the applicant. The information received from either the state or Attorney General may 

be used only for the purpose of determining the suitability of the 

applicant for employment by the agency in a position involved in 

direct patient care. 

Healthcare Integrity and Protection Data Bank/Health Care 

Fraud and Abuse Data Collection Program. The U.S. Department 

of Health and Human Services (HHS) maintains a national health 

care fraud and abuse data base, the Healthcare Integrity and Protection Data Bank (HIPDB), for the reporting of final adverse actions, including health care related civil judgments and criminal 

convictions of health care practitioners, providers and suppliers. 

This information is currently available for self-query by government agencies, health plans, health care providers, suppliers and 

practitioners. All states also maintain their own registries of persons who have completed nurse aide training and competency evaluation programs and other persons whom the state determines 

meet the requirements to work as a nurse aide. Included in these 

registries are data describing state findings of resident neglect, 

abuse and/or the misappropriation of resident property. 

Long-Term Care Background Check Pilot Program. The Medicare 

Modernization Act of 2003 (MMA, P.L. 108–173) established a pilot 

program for national and state background checks on direct patient 

access employees of long-term care (LTC) facilities and providers. 

Specifically, the Secretary of HHS, in consultation with the Attorney General, was required to establish the pilot program in no 

more than 10 states. 

The purpose of the pilot program was to identify efficient, effective, and economical procedures for these background checks. LTC 

facilities or providers are defined as certain facilities or providers 

that receive Medicare and/or Medicaid payment, including nursing 

homes, home health agencies, hospices, LTC hospitals, providers of 

personal care services, certain residential care providers, and intermediate care facilities for the mentally retarded (ICF/MRs). States 

in the pilot project may choose to require other LTC providers to 

also conduct background checks; however, providers paid through 

self-directed arrangements, or in arrangements in which patients 

employ the provider of services directly, are not included. 

States that agreed to participate in the pilot project were responsible for (1) monitoring compliance, (2) establishing procedures for 

workers to appeal or dispute the findings of the background checks, 

(3) agreeing to review the results of State or national criminal 


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background checks to determine whether the employee was convicted of a relevant crime, (4) reporting the results of the review 

to the provider, and (5) reporting any employees with relevant convictions to the HIPDB database. The Secretary established criteria 

for selecting those states seeking to participate to ensure geographic diversity, the inclusion of a variety of LTC providers, the 

evaluation of a variety of payment mechanisms, and the evaluation 

of enforcement penalties. In addition, the Secretary was required 

to select at least one state that permits providers to hire provisional employees; at least one state that does not permit hiring of 

provisional employees; at least one state that establishes procedures for contracting with an employment agency to conduct background checks; and at least one state that includes training for 

managers and employees to prevent patient abuse. 

Procedures established in the participating states were designed 

to: (1) give notice to prospective employees about the background 

check requirement, (2) require the employee to produce a written 

statement disclosing any conviction for a relevant crime or finding 

of patient or resident abuse, (3) require the employee to authorize 

a criminal background check in writing, (4) require the employee 

to provide the facility with a rolled set of finger prints, (5) require 

any other information specified by the state, (6) require the provider to conduct checks of available registries that would be likely 

to contain disqualifying information about convictions for relevant 

crimes or findings of abuse, and (7) permit the provider to obtain 

criminal histories on prospective employees using a 10-fingerprint 

check from state criminal records and the Integrated Automated 

Fingerprint Identification system of the Federal Bureau of Investigation. Disqualifying information for employment included any 

federal or state conviction for program-related crimes (those related 

to the delivery of an item or service under Medicare or under any 

other state health care program), a Federal or State conviction for 

patient or resident abuse, a federal or state felony conviction related to health care fraud or a controlled substance, or an act of 

patient or resident abuse or neglect or misappropriation of patient 

or resident property, or other acts specified by states. 

Under this pilot program, states were permitted to establish procedures for facilitating background checks through employment 

agencies. States could also impose penalties to enforce the requirements of the pilot program conducted in that state. 

LTC providers were not permitted to knowingly employ any direct patient access employee who has any disqualifying information; however, participating states could permit providers to provisionally employ workers pending completion of the national and 

state criminal history background checks subject to supervisory requirements established by the state. These supervisory requirements were designed to take into account the cost or other burdens 

associated with small rural providers as well as the nature of care 

delivered by home health or hospice providers. Further, the information obtained from the check could only be used for the purpose 

of determining the suitability of the applicant for employment. 

States were required to ensure that providers were protected from 

liability for denying employment based on reasonable reliance on 

information from the background checks. 


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The Secretary, in consultation with the Attorney General, was 

required to conduct an evaluation of this pilot program. The evaluation should (1) review and identify those state procedures that 

are most efficient, effective, and economical; (2) assess the costs of 

conducting the checks; (3) consider the benefits and problems associated with requiring employees or provider to pay the costs of conducting background checks; (4) consider whether the costs should 

be allocated between the Medicare and Medicaid programs and how 

to do so; (5) determine the extent to which the background checks 

may lead to unintended consequences, including a reduction in the 

available workforce; (6) review forms used by participating States 

to conduct a model form for background checks; (7) determine the 

effectiveness of background checks conducted by employment agencies; and (8) recommend appropriate procedures and payment 

mechanisms for implementing a national criminal background 

check program. 

The Secretary was required to pay participating states out of 

funds in the Treasury for the costs of conducting the pilot program 

(reserving 4 percent of the payments for the program’s evaluation). 

For fiscal years 2004 through 2007, $25 million was appropriated 

from funds not otherwise appropriated. 

Seven states were selected by the Secretary to participate in the 

pilot. They are Alaska, Idaho, Illinois, Michigan, Nevada, New 

Mexico and Wisconsin. All but Illinois and Wisconsin extended the 

program Statewide. Pilots in each of these states concluded on September 30, 2007. The final evaluation of a three-year pilot has not 

yet been released by CMS. 

Committee bill 

The Secretary would be required to expand the pilot program authorized under Section 307 of MMA. The program prohibited providers from knowingly employing any direct patient access employees with any disqualifying information as revealed by the background checks, and authorized participating states to impose penalties, as they deemed appropriate, to enforce the program’s requirements. 

State Agreements with the Secretary. States that are not already 

in the pilot would have the option to enter into agreements with 

the Secretary of Health and Human Services (HHS) to conduct 

background checks under the program on a statewide basis and to 

submit an application to the Secretary according to the Secretary’s 

guidelines. 

The Secretary would be required to enter into agreements with 

each state that participated in the pilot program that: (1) did not 

conduct background checks on a statewide basis; (2) agrees to conduct background checks under the new terms of the program on a 

statewide basis; and (3) submits an application to the Secretary 

containing such information and at such time as the Secretary may 

specify. 

Section 307 of the MMA is modified per the following: 

Required Fingerprint Check. Prior to employing a direct patient 

access employee that is first hired on or after the commencement 

date of the nationwide program, providers (or their designated 

agents) would be required to obtain state and national criminal history background checks on prospective employees using a search of 


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state-based abuse and neglect registries and databases. These 

searches would include state-based abuse and neglect registries 

and databases of states in which a prospective employee previously 

resided; state criminal history records; records of proceedings in the 

state that might contain disqualifying information (such as those 

of professional licensing and disciplinary boards and Medicaid 

Fraud Control Units); and Federal criminal history records, including fingerprint checks using the FBI’s Integrated Automated Fingerprint Identification System. 

Additionally, a ‘‘rap back’’ capability by the State would also be 

required to be developed such that, if a direct patient access employee is convicted of a crime after the initial background check is 

conducted and the employee’s fingerprints match the prints on file 

with the state law enforcement department, the department would 

immediately inform the state and the state would immediately inform the provider of the conviction. 

State Requirements. States participating in the program would 

be required to monitor compliance with the requirements of the nationwide program and have procedures to: (1) conduct screening 

and criminal history background checks under the nationwide program; (2) monitor the compliance of LTC facilities and providers; 

(3) provide, as appropriate, for a provisional period (not to exceed 

30 days) of employment of a direct patient access employee—pending completion of the required criminal background checks, or completion of an employee’s appeal process regarding the results of the 

background check—during which the employee will be directly supervised on-site according to procedures established by the state; 

and (4) provide an independent appeals process by which provisional or other employees may dispute the accuracy of the information obtained in the background check, including specified criteria 

(which would be required to include consideration of the passage of 

time, extenuating circumstances, demonstration of rehabilitation, 

and relevancy of the particular disqualifying information with respect to the current employment of the individual) for appeals by 

employees found to have disqualifying information. 

Further, states would be required to have procedures in place to 

designate a single state agency responsible for: (1) overseeing the 

coordination of state and national criminal history background 

checks requested by LTC facilities or providers (or their designated 

agents) using a search of state and federal criminal history records, 

including a fingerprint check of such records; (2) overseeing the design of privacy and security safeguards for use in the review of 

background check results regarding a prospective direct patient access employee to determine whether the employee has any conviction for a relevant crime; (3) immediately reporting the results of 

the background check reviews to the LTC facility or provider; and 

(4) reporting the existence of an employee’s conviction for a relevant crime to the Health Care Fraud and Abuse Data Collection 

Program. 

States would also need written procedures for determining which 

individuals are direct patient access employees; specifying offenses, 

including convictions for violent crimes, for purposes of the nationwide program; and developing and implementing the above-defined 

‘‘rap back’’ capability such that the state agency will immediately 

inform the facility or provider when an employee is found to have 


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a criminal conviction, and will provide, or require the provider to 

supply, the employee with a copy of the results of the criminal history background check at no charge should the employee request 

such a copy. 

Payments. As a condition of receiving the Federal matching payment, newly participating states and previously participating 

states would be required to guarantee, as part of their application, 

that the state would make available (directly or through donations 

from public or private entities) a particular amount of non-Federal 

contributions for costs incurred by the state in carrying out the nationwide program. The Secretary would agree to provide Federal 

matching payments for newly participating states that would be 

three times the guaranteed state amount, not to exceed $3 million 

to each state. In addition, the Secretary would agree to provide 

Federal matching payments for previously participating states that 

would be three times the guaranteed state amount, not to exceed 

$1.5 million to each state. 

Evaluation and Report. The Inspector General of the Department 

of Health and Human Services (HHS) would be required to conduct 

an evaluation and/or audit of the nationwide program and to submit a report to Congress with results of the evaluation and/or audit 

no later than 180 days after completion of the nationwide program. 

Funding. The Secretary of HHS would be required to notify the 

Secretary of the Treasury of the amount necessary to carry out the 

nationwide program for fiscal years (FYs) 2009 through 2011, except that in no case would such amount exceed $160 million. Out 

of any Treasury funds not otherwise appropriated, the Secretary of 

the Treasury would be required to provide for the transfer to the 

Secretary of the amount specified as necessary to carry out the nationwide program. 

MANDATORY STATE USE OF NATIONAL CORRECT CODING INITIATIVE

(SECTION 4 OF THE COMMITTEE BILL)

Present law 

The Federal Government pays a share of every State’s spending 

on Medicaid services and program administration. The federal 

match for administrative expenditures does not vary by state and 

is generally 50 percent, but certain functions receive a higher 

amount. Section 1903(a)(3) of the Social Security Act authorizes a 

90 percent match for expenditures attributable to the design, development, or installation of mechanized claims processing and information retrieval systems—referred to as Medicaid Management Information Systems (MMISs)—and a 75 percent match for the operation of MMISs that are approved by the Secretary of Health and 

Human Services (HHS). A 50 percent match is available for nonapproved MMISs under section 1903(a)(7). In order to receive payments under section 1903(a) for the use of automated data systems 

in the administration of their Medicaid programs, states are required under section 1903(r) to have an MMIS that meets specified 

requirements and that the Secretary has found (among other 

things) is compatible with the claims processing and information 

retrieval systems used in the administration of the Medicare program. 


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The National Correct Coding Initiative (NCCI) is an editing system developed for the Medicare program by the Centers for Medicare and Medicaid Services within HHS to promote national correct 

coding methodologies and to prevent improper payment when incorrect code combinations are reported in Medicare Part B claims. 

It is based on coding conventions defined in the American Medical 

Association’s CPT manual, national and local policies and edits, 

coding guidelines developed by national societies, analysis of standard medical and surgical practices, and a review of current coding 

practices. Although the use of NCCI edits is mandatory in Medicare, state Medicaid agencies are not required to use these edits in 

processing their claims. In 2004, the HHS Office of Inspector General released a report indicating that most states do not use the 

Medicare NCCI edits and that 39 states paid $54 million in 2001 

for services that would have been denied based on those edits. 

Committee bill 

The Committee Bill would amend section 1903(r) of the Social 

Security Act to require states to have an MMIS that, effective for 

claims filed on or after October 1, 2009, incorporates compatible 

elements of the NCCI (or any successor initiative) and such other 

elements of that Initiative (or such other national correct coding 

methodologies) as the Secretary identifies in accordance with specified requirements. Not later than September 1, 2009, the Secretary 

would be required to: 

—identify those methodologies of the NCCI (or any successor 

initiative to promote correct coding and to control improper 

coding leading to inappropriate payment) which are compatible 

to claims filed under Medicaid; 

—identify those methodologies of such Initiative (or such 

other national correct coding methodologies) that should be incorporated into claims filed under Medicaid with respect to 

items and services for which no national correct coding methodologies have been established under such Initiative with respect to Medicare; 

—notify States of the elements identified (and of any other 

national correct coding methodologies identified) and how 

states are to incorporate such elements (and methodologies) 

into claims filed under Medicaid; 

—submit a report to Congress that includes the notice to 

states and an analysis supporting the identification of the elements (or methodologies). 

If the Secretary determines that state legislation is required in 

order for a Medicaid state plan to meet the additional requirements 

imposed by the provision, the state plan would not be regarded as 

failing to comply before the first day of the first calendar quarter 

beginning after the close of the first regular session of the state 

legislature that begins after the date of enactment. In the case of 

a state that has a 2-year legislative session, each year of the session would be considered a separate regular session of the state 

legislature. 


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FUNDING FOR THE MEDICARE IMPROVEMENT FUND (SECTION 5 OF THE

COMMITTEE BILL)

Present law 

The Secretary will establish a Medicare Improvement Fund that 

will be available to the Secretary to make improvements under the 

original fee-for-service program under parts A and B for Medicare 

beneficiaries. The Medicare Improvements for Patients and Providers Act of 2008 (P.L. 110–275, MIPPA), together with a provision in the Supplemental Appropriations Act, 2008 (P.L. 110–252), 

makes $2.22 billion from the part A and B Trust Funds available 

for services furnished during FY2014 and an additional $19.9 billion available for fiscal years 2014 through 2017. 

For purposes of carrying out the provisions of, and amendments 

made by MIPPA in addition to any other amounts provided in such 

provisions and amendments, additional funds will be made available to CMS. For fiscal years 2009 through 2013, the Secretary of 

Health and Human Services will transfer $140 million from the 

Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund to the CMS Program Management Account. The amounts drawn from the funds will be in 

the same proportion as for Medicare managed care payments 

(Medicare Advantage), that is, in a proportion that reflects the relative weight that benefits under part A and under part B represent 

of the actuarial value of the total benefits. 

Committee bill 

The Committee Bill would continue to make $2.22 billion available to the Fund for expenditures from the Fund for services furnished during FY 2014, but would increase the amount of funds 

available for FYs 2014 through 2017 by $300 million, from $19.9 

billion to $20.2 billion. The $300 million is unspent savings from 

the offset identified in section 4 of the Committee Bill. 

IV. REGULATORY IMPACT AND OTHER MATTERS 

A. REGULATORY IMPACT

Pursuant to paragraph 11(b) of rule XXVI of the Standing Rules 

of the Senate, the Committee makes the following statement concerning the regulatory impact that might be incurred in carrying 

out the provisions of the bill as amended. 

Impact on individuals and businesses 

The provisions of the bill are not expected to impose additional 

administrative requirements or regulatory burdens on individuals 

or businesses. 

Impact on personal privacy and paperwork 

The provisions of the bill do not reduce personal privacy. 

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (P.L. 104–4). 

The Committee has determined that the provisions of the bill 

contain no Federal private sector mandates. 


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The Committee has determined that the provisions of the bill do 

not impose a Federal intergovernmental mandate on State, local, or 

tribal governments. 

V. COST ESTIMATE 

SEPTEMBER 17, 2008. 

Hon. MAX BAUCUS, 

Chairman, Committee on Finance, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 1577, the Patient Safety and 

Abuse Prevention Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Mindy Cohen. 

Sincerely, 

PETER R. ORSZAG. 

Enclosure. 

S. 1577—Patient Safety and Abuse Prevention Act 

Summary: S. 1577 would direct the Secretary of Health and 

Human Services (HHS) to provide funding to States that participate in a program to enforce a requirement that long-term care facilities and providers conduct criminal background checks on employees who have direct access to patients. The bill also would require that state Medicaid programs adopt systems to identify, and 

deny payment for, claims for inappropriate services and claims that 

are incorrectly coded. In addition, S. 1577 would provide funding 

for the Secretary to make improvements in Medicare part A and 

part B benefits during fiscal years 2014 through 2017. 

In total, CBO estimates that the net impact on direct spending 

of enacting S. 1577 would be negligible over both the 2009–2013 

and 2009–2018 periods. Enacting the bill would not affect federal 

revenues or spending subject to appropriation. 

S. 1577 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). 

The bill would place new requirements on state Medicaid programs 

that would reduce state spending for the program by about $80 

million over the 2009–2013 period. 

The estimated budgetary impact of S. 1577 is shown in the following table. The costs of this legislation fall within budget functions 550 (health) and 570 (Medicare). 


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Outlays, by fiscal year, in millions of dollars— 

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009– 2013 

CHANGES IN DIRECT SPENDING 

Background Checks on Employees of Long-Term Care Facilities: 

Estimated Budget Authority .............................................................................................................. 0 50 45 5 0 0 0 0 0 0 10Estimated Outlays ............................................................................................................................. 0 50 45 5 0 0 0 0 0 0 10

National Correct Coding Initiative: 

Estimated Budget Authority .............................................................................................................. 0 ¥10 ¥20 ¥30 ¥40 ¥50 ¥60 ¥75 ¥85 ¥90 ¥10

Estimated Outlays ............................................................................................................................. 0 ¥10 ¥20 ¥30 ¥40 ¥50 ¥60 ¥75 ¥85 ¥90 ¥10

Medicare Improvement Fund: 

Estimated Budget Authority .............................................................................................................. 0 0 0 0 0 90 90 90 90 0 Estimated Outlays ............................................................................................................................. 0 0 0 0 0 90 90 90 90 0 

Total Changes: 

Estimated Budget Authority .............................................................................................................. 0 40 25 ¥25 ¥40 40 30 15 5 ¥90 

Estimated Outlays ............................................................................................................................. 0 40 25 ¥25 ¥40 40 30 15 5 ¥90 


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Basis of estimate: The bill contains provisions that would both 

increase and decrease direct spending. CBO estimates the net 

budgetary impact of the legislation would be negligible over both 

the 2009–2013 and 2009–2018 periods. 

Background checks on employees of long-term care facilities 

S. 1577 would expand a pilot program created by the Medicare 

Prescription Drug, Improvement and Modernization Act of 2003 

(Public Law 108–173) for background checks on certain employees 

of long-term care facilities or providers. The expanded pilot program would be available to any state that did not implement a 

Statewide program under the previous authority. In the states that 

decide to participate under the expanded pilot program, long-term 

care providers that participate in Medicare or Medicaid would be 

required to obtain state and national criminal histories on all prospective employees. Participating states also would be required to 

monitor compliance with these requirements. Newly participating 

states would be eligible to receive up to $3 million for these activities; previously participating states would be eligible to receive $1.5 

million. S. 1577 would appropriate the amount necessary to operate 

this program during fiscal years 2009 through 2011, up to a limit 

of $160 million over those three years. Based on spending under 

the original pilot program, CBO estimates that provision would increase direct spending by $100 million over the 2009–2013 and 

2009–2018 periods. 

National Correct Coding Initiative 

The National Correct Coding Initiative (NCCI) consists of automated procedures to identify Medicare claims that are inaccurately 

coded or seek payment for inappropriate services. Although the use 

of NCCI procedures to check claims is mandatory in the Medicare 

program, State Medicaid agencies are not required to use those 

edits in processing Medicaid claims. S. 1577 would require that 

state Medicaid programs adopt certain NCCI procedures by October 1, 2009. CBO estimates that use of the NCCI checks would lead 

to the denial of certain Medicaid claims and therefore save Medicaid $100 million over the 2009–2013 period and $460 million over 

the 2009–2018 period. 

Medicare Improvement Fund 

The Medicare Improvement Fund was created by the Medicare 

Improvements for Patients and Providers Act of 2008 (Public Law 

110–275). The fund is available to the Secretary of HHS to make 

improvements in Part A and Part B benefits. S. 1577 would increase the amounts available in the fund for the 2014–2017 period. 

CBO estimates that those changes in funding would increase outlays by $360 million over that period. 

Estimated impact on state, local, and tribal governments: S. 1577 

contains no intergovernmental mandates as defined in UMRA. To 

reduce inappropriate payments in the Medicaid program, the bill 

would require states to incorporate the National Correct Coding 

Initiative when processing provider claims. The requirement to 

comply with the initiative, however, would not impose an intergovernmental mandate as defined in UMRA because the Medicaid program provides states with significant flexibility to make proVerDate Aug 31 2005 03:56 Sep 27, 2008 Jkt 069010 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\SR474.XXX SR474

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grammatic adjustments to accommodate the changes. Incorporating 

the initiative would ultimately reduce state spending in the program by about $80 million over the 2009–2013 period. States also 

would benefit from funding provided by the bill for background 

checks of prospective employees of long-term care facilities or providers. Any costs states incur, including matching funds, would be 

incurred voluntarily. 

Estimated impact on the private sector: S. 1577 contains no private-sector mandates as defined in UMRA. 

Estimate prepared by: Federal Costs: Mindy Cohen and Rob 

Stewart; Impact on State, Local and Tribal Governments: Lisa Ramirez-Branum; Impact on the Private Sector: Patrick Bernhardt. 

Estimate approved by: Keith J. Fontenot, Deputy Assistant Director for Health and Human Resources, Budget Analysis Division. 

VI. VOTE OF THE COMMITTEE 

In compliance with paragraph 7(b) of rule XXVI of the Standing 

Rules of the Senate, the following statements are made concerning 

the vote in the Committee’s consideration of the bill. 

Motion to report the bill 

The bill was ordered favorably reported by a unanimous voice 

vote on September 10, 2008. A quorum was present. No amendments were voted upon. 

VII. CHANGES IN EXISTING LAW 

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows (existing law proposed to be omitted 

is enclosed in black brackets, new matter is printed in italic, existing law in which no change is proposed is shown in roman): 

SOCIAL SECURITY ACT 

* * * * * * * 

TITLE XVIII—HEALTH INSURANCE FOR THE 

AGED AND DISABLED 

* * * * * * * 

PART E—MISCELLANEOUS PROVISIONS 

* * * * * * * 

MEDICARE IMPROVEMENT FUND

SEC. 1898. (a) ESTABLISHMENT.—The Secretary shall establish 

under this title a Medicare Improvement Fund (in this section referred to as the ‘‘Fund’’) which shall be available to the Secretary 

to make improvements under the original fee-for-service program 

under parts A and B for individuals entitled to, or enrolled for, benefits under part A or enrolled under part B. 

(b) FUNDING.— 


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ø(1) IN GENERAL.—There shall be available to the Fund, for 

expenditures from the Fund for services furnished during fiscal 

year 2014, $2,220,000,000 and, in addition for services furnished during fiscal years 2014 through 2017, 

$19,900,000,000.¿ 

(1) IN GENERAL.—There shall be available to the Fund, for expenditures from the Fund for services furnished during— (A) fiscal year 2014, $2,220,000,000; and 

(B) fiscal years 2014 through 2017, $20,200,000,000. 

* * * * * * * 

TITLE XIX—GRANTS TO STATES FOR MEDICAL 

ASSISTANCE PROGRAMS 

* * * * * * * 

PAYMENT TO STATES

SEC. 1903. (a) From the sums appropriated therefor, the Secretary (except as otherwise provided in this section) shall pay to 

each State which has a plan approved under this title, for each 

quarter, beginning with the quarter commencing January 1, 1966— 

* * * * * * * 

(r)(1) In order to receive payments under subsection (a) for use 

of automated data systems in administration of the State plan 

under this title, a State must have in operation mechanized claims 

processing and information retrieval systems that meet the requirements of this subsection and that the Secretary has found— 

(A) are adequate to provide efficient, economical, and effective administration of such State plan; 

(B) are compatible with the claims processing and information retrieval systems used in the administration of title XVIII, 

and for this purpose— 

(i) have a uniform identification coding system for providers, other payees, and beneficiaries under this title or 

title XVIII; 

(ii) provide liaison between States and carriers and 

intermediaries with agreements under title XVIII to facilitate timely exchange of appropriate data; øand¿ 

(iii) provide for exchange of data between the States and 

the Secretary with respect to persons sanctioned under 

this title or title XVIII; and 

(iv) effective for claims filed on or after October 1, 2009, 

incorporate compatible methodologies of the National Correct Coding Initiative administered by the Secretary (or any 

successor initiative to promote correct coding and to control 

improper coding leading to inappropriate payment) and 

such other methodologies of that Initiative (or such other 

national correct coding methodologies) as the Secretary 

identifies in accordance with paragraph (3); 

* * * * * * * 

(3) Not later than September 1, 2009, the Secretary shall do the 

following: 


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(A) Identify those methodologies of the National Correct Coding Initiative administered by the Secretary (or any successor 

initiative to promote correct coding and to control improper coding leading to inappropriate payment) which are compatible to 

claims filed under this title. 

(B) Identify those methodologies of such Initiative (or such 

other national correct coding methodologies) that should be incorporated into claims filed under this title with respect to 

items or services for which States provide medical assistance 

under this title and no national correct coding methodologies 

have been established under such Initiative with respect to title 

XVIII. 

(C) Notify States of— 

(i) the methodologies identified under subparagraphs (A) 

and (B) (and of any other national correct coding methodologies identified under subparagraph (B)); and 

(ii) how States are to incorporate such methodologies into 

claims filed under this title. 

(D) Submit a report to Congress that includes the notice to 

States under subparagraph (C) and an analysis supporting the 

identification of the methodologies made under subparagraphs 

(A) and (B). 

* * * * * * * 

Æ 


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