I

104TH CONGRESS

1ST SESSION H. R. 2280

To improve payment integrity in the medicare and medicaid programs, and

for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 7, 1995

Mr. DINGELL (for himself, Mr. WAXMAN, Mr. BONIOR, Mr. BRYANT of Texas,

Ms. DANNER, Mr. KLECZKA, Mrs. LOWEY, and Mr. STUPAK) introduced

the following bill; which was referred to the Committee on Commerce,

and in addition to the Committees on the Budget, and Ways and Means,

for a period to be subsequently determined by the Speaker, in each case

for consideration of such provisions as fall within the jurisdiction of the

committee concerned

A BILL

To improve payment integrity in the medicare and medicaid

programs, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND REFERENCES IN ACT.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Medicare and Medicaid Payment Integrity Act of 1995’’.

6 (b) REFERENCES IN ACT.—The amendments in this

7 Act apply to the Social Security Act unless otherwise spe8 cifically stated.
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1 SEC. 2. FINDING AND STATEMENT OF PURPOSES.

2 (a) FINDING.—The Congress finds that the cost of

3 fraud and abuse of health care services is a significant

4 part of every dollar spent on those services.

5 (b) PURPOSES.—It is the purpose of this Act to direct

6 the Secretary of Health and Human Services to move ag7 gressively and broadly against these drains on Federal and

8 State health care resources, and to provide a new, cost9 effective source of funding for the benefit quality assur10 ance program.

11 SEC. 3. FRAUD AND ABUSE CONTROL FUND.

12 (a) IN GENERAL.—Part A of title XI is amended by

13 adding at the end the following:

14 ‘‘FRAUD AND ABUSE CONTROL FUND

15 ‘‘SEC. 1145. (a) The Secretary shall, directly or

16 through contractual or other arrangements and with ap17 propriate coordination with the States, take all steps nec18 essary to assure the accuracy of payments from the trust

19 funds established under title XVIII (referred to herein as

20 the ‘Medicare Trust Funds’) and the appropriation for

21 payments to States to carry out title XIX (referred to

22 herein as the ‘Medicaid appropriation’) and otherwise as23 sure the appropriateness of expenditures from such Funds

24 and such appropriation. To carry out this responsibility,

25 the Secretary shall place particular emphasis on the devel26 opment of and experimentation with innovative or rigorous
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1 techniques and approaches to identifying, investigating,

2 and eliminating fraudulent or abusive practices that bur3 den the Medicare Trust Funds or the Medicaid appropria4 tion.

5 ‘‘(b) To provide a reliable source of funding to sup6 port the Secretary’s activities under subsection (a) and en7 courage cost-effective innovation, there is established in

8 the Treasury of the United States a fund to be known

9 as the ‘HHS Fraud and Abuse Control Fund’ (referred

10 to herein as the ‘Fund’).

11 ‘‘(c) There shall be deposited in the Fund—

12 ‘‘(1) that portion of amounts recovered in rela13 tion to section 1128A arising out of a claim under

14 title XIX or title XVIII as remains after application

15 of subsection (f)(1) (pertaining to reimbursement of

16 a State’s share of recoveries relating to title XIX) or

17 subsection (f)(2) (relating to repayment of the Medi18 care Trust Funds) of that section, as may be appli19 cable,

20 ‘‘(2) payments made pursuant to a court or ad21 ministrative order or voluntary settlement agreement

22 to reimburse for all or part of the costs of investiga23 tions, audits, and monitoring of compliance plans,

24 conducted by the Department of Health and Human
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1 Services that relate to the programs under title

2 XVIII or XIX, and

3 ‘‘(3) penalties and damages imposed (other

4 than funds awarded to a relator or for restitution)

5 under sections 3729 through 3732 of title 31, Unit6 ed States Code (pertaining to false claims) in cases

7 involving claims relating to programs under title

8 XVIII or XIX (to the extent the amounts deposited

9 in the Fund under paragraphs (1) and (2) in a fiscal

10 year are less than $2,000,000).

11 ‘‘(d) Amounts deposited in the Fund shall be avail12 able to the Secretary (without the necessity for any provi13 sion therefor in appropriations Acts) until expended for

14 payment of expenses incurred in carrying out subsection

15 (a).

16 ‘‘(e) No more than $2,000,000 may be deposited in

17 the Fund in any fiscal year.’’.

18 (b) INITIAL DEPOSIT IN HHS FRAUD AND ABUSE

19 CONTROL FUND.—There is authorized to be appropriated

20 for fiscal year 1996 an amount (to be deposited in the

21 HHS Fraud and Abuse Control Fund established by sec22 tion 1145(b) of the Social Security Act) for the initial im23 plementation of activities under section 1145(a) of that

24 Act (subject to section 1145(e) of that Act).
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1 (c) CONFORMING AMENDMENT.—Section 1128A(f)

2 (42 U.S.C. 1320a–7a(f)) is amended—

3 (1) by renumbering paragraph (3) as paragraph

4 (4), and

5 (2) by inserting after paragraph (2) the follow6 ing:

7 ‘‘(3) Additional amounts (subject to section 1145(e))

8 shall be deposited in the HHS Fraud and Abuse Control

9 Fund established by section 1145(b).’’.

10 (d) EFFECTIVE DATE.—Sections 1145(c) and

11 1128A(f)(3) of the Social Security Act (as enacted and

12 amended by subsections (a) and (c) of this section) apply

13 to amounts recovered, payments made, and penalties and

14 damages imposed, after fiscal year 1995.

15 SEC. 4. MEDICARE BENEFIT QUALITY ASSURANCE PRO16 GRAM.

17 (a) IN GENERAL.—Part C of title XVIII is amended

18 by inserting after section 1888 the following new section:

19 ‘‘BENEFIT QUALITY ASSURANCE PROGRAM

20 ‘‘SEC. 1889. (a)(1) In order to improve the effective21 ness of benefit quality assurance activities relating to pro22 grams under this title, and to enhance the Secretary’s ca23 pability to carry out program safeguard functions and re24 lated education activities to avoid the improper expendi25 ture of assets of the Federal Hospital Insurance Trust

26 Fund and the Federal Supplementary Medical Insurance
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1 Trust Fund, the Secretary shall enter into contracts with

2 organizations or other entities having demonstrated capa3 bility to carry out one or more of the functions specified

4 in subsection (e). The provisions of sections 1816 and

5 1842 shall be inapplicable to contracts under this section.

6 The requirements of sections 1816 and 1842 relating to

7 activities to be carried out instead through a contract

8 under this section shall be deemed to have been met by

9 such contract.

10 ‘‘(2) The Secretary shall determine the number of

11 separate contracts which are necessary to achieve, with the

12 maximum degree of efficiency and cost effectiveness, the

13 objectives of this section. The Secretary may enter into

14 contracts under this section at such time or times as are

15 appropriate so long as not later than the fiscal year begin16 ning October 1, 1998, and for each fiscal year thereafter,

17 there are in effect contracts that, considered collectively,

18 provide for benefit quality assurance activities with respect

19 to all payments under this title.

20 ‘‘(b) A benefit quality assurance contract required

21 under subsection (a) must provide for one or more benefit

22 quality assurance program activities. Each such contract

23 shall include an agreement by the contractor to cooperate

24 with the Inspector General of the Department of Health

25 and Human Services, and the Attorney General of the
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1 United States, and other law enforcement agencies, as ap2 propriate, in the investigation and deterrence of fraud and

3 abuse in relation to this title and in other cases arising

4 out of the activities described in subsection (e), and shall

5 contain such other provisions as the Secretary finds nec6 essary or appropriate to achieve the purposes of this part.

7 The provisions of section 1153(e)(1) shall apply to con8 tracts and contracting authority under this section, except

9 that competitive procedures must be used when entering

10 into new contracts under this section, or at any other time

11 when it is in the best interests of the Government. A con12 tract under this section may be renewed from term to term

13 without regard to any provision of law requiring competi14 tion if the contractor has met or exceeded the performance

15 requirements established in the current contract.

16 ‘‘(c)(1) In carrying out this section, the Secretary

17 may not enter into a contract with an organization or

18 other entity if the Secretary determines that such organi19 zation’s or entity’s financial holdings, interests, or rela20 tionships would interfere with its ability to perform the

21 functions to be required by the contract in an effective

22 and impartial manner.

23 ‘‘(2) The Secretary shall by regulation provide for the

24 limitation of a contractor’s liability for actions taken to

25 carry out a contract under this section, and such regula-
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1 tion shall, to the extent the Secretary finds appropriate,

2 employ the same or comparable standards and other sub3 stantive and procedural provisions as are contained in sec4 tion 1157.

5 ‘‘(d) Obligations incurred for benefit quality assur6 ance program activities shall be paid from amounts avail7 able for expenditure in the Federal Hospital Insurance

8 Trust Fund and the Federal Supplementary Medical In9 surance Trust Fund, in such amounts as the Secretary

10 shall deem fair and equitable after taking into consider11 ation the expenses attributable to each of the programs

12 under this title, but such obligations shall not exceed, in

13 the aggregate, $396,000,000 for each of the fiscal years

14 1996, 1997, and 1998, $408,000,000 for fiscal year 1999,

15 and $426,000,000 for fiscal year 2000. The Secretary

16 shall make such transfers of moneys between those funds

17 as may be appropriate to settle accounts between them

18 in cases where expenses properly payable from one fund

19 have been paid from the other fund.

20 ‘‘(e) For purposes of this section, benefit quality as21 surance program activities consist of the following:

22 ‘‘(1) Review of activities of providers of services

23 or other persons in connection with this title, includ24 ing medical and utilization review and fraud review.

25 ‘‘(2) Audit of cost reports.
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1 ‘‘(3) Determinations as to whether payment

2 should not be, or should not have been, made under

3 this title by reason of section 1862(b), and recovery

4 of payments that should not have been made.

5 ‘‘(4) Education of providers of services, bene6 ficiaries, and other persons with respect to payment

7 integrity and benefit quality assurance issues.’’.

8 (b) EFFECTIVE DATE.—The amendment made by

9 subsection (a) applies to obligations incurred after fiscal

10 year 1995.

11 SEC. 5. REDUCTION IN DISCRETIONARY SPENDING LIMITS.

12 Section 601(a)(2)(F) of the Congressional Budget

13 Act of 1974 is amended by inserting before the semicolon

14 the following: ‘‘, and reduced by $398,000,000 in new

15 budget authority and $366,160,000 in outlays with re16 spect to fiscal year 1996, by $398,000,000 in new budget

17 authority and $384,181,000 in outlays with respect to fis18 cal year 1997, and by $398,000,000 in new budget au19 thority and $392,003,000 in outlays with respect to fiscal

20 year 1998’’.

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