II 

113TH CONGRESS 

1ST SESSION S. 1012 

To amend title XVIII of the Social Security Act to improve operations 

of recovery auditors under the Medicare integrity program, to increase 

transparency and accuracy in audits conducted by contractors, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 22, 2013 

Mr. BLUNT (for himself and Mr. PRYOR) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend title XVIII of the Social Security Act to improve 

operations of recovery auditors under the Medicare integrity program, to increase transparency and accuracy in 

audits conducted by contractors, 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; TABLE OF CONTENTS. 

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

5 ‘‘Medicare Audit Improvement Act of 2013’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 


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Sec. 2. Combined additional documentation request limit. 

Sec. 3. Improvement of recovery auditor operations. 

Sec. 4. Greater transparency of recovery auditor performance. 

Sec. 5. Accurate payment for rebilled claims. 

Sec. 6. Requirement for physician validation for medical necessity denials. 

Sec. 7. Assuring due process in application of guidelines for reopening and revision of determinations. 

1 SEC. 2. COMBINED ADDITIONAL DOCUMENTATION RE2 QUEST LIMIT. 

3 (a) ESTABLISHMENT OF LIMITS PER HOSPITAL.— 

4 The Secretary of Health and Human Services shall estab5 lish a process under which the number of additional docu6 mentation requests made to a hospital (as defined in sub7 section (c)(3)) by Medicare contractors (as defined in sub8 section (c)(1)) pursuant to prepayment and postpayment 

9 audits that require a hospital to submit a medical record 

10 for audit purposes, as required under chapter 3 of the 

11 Medicare Program Integrity Manual, or otherwise, shall 

12 be subject to a single, combined maximum limit of addi13 tional documentation requests per year for the Medicare 

14 contractors specified in subsection (c)(1). However, such 

15 maximum limit shall be applied incrementally as a limit 

16 for requests for additional documentation in 45-day peri17 ods during the year so that the maximum number of such 

18 requests in a 45-day period is 500 or, in the case of a 

19 hospital that receives less than $100,000,000 in Medicare 

20 inpatient hospital payments in the previous year, 350. 

21 (b) ESTABLISHMENT OF PERCENTAGE-BASED LIM22 ITS PER CLAIM TYPE.—In addition to the limit estabVerDate Mar 15 2010 18:40 May 29, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1012.IS S1012

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1 lished under subsection (a), the Secretary shall establish 

2 a distinct additional documentation request limit for each 

3 hospital claim type (as defined in subsection (c)(2)) for 

4 each hospital for a 45-day period in a year. For a hospital 

5 for each hospital claim type for a 45-day period in a cal6 endar year, the additional documentation request limit 

7 under this subsection for a claim type shall be 2 percent 

8 of the total number of hospital discharges for such hos9 pital for the previous calendar year divided by 8. 

10 (c) DEFINITIONS.—In this section: 

11 (1) MEDICARE CONTRACTOR.—The term 

12 ‘‘Medicare contractor’’ means any of the following: 

13 (A) A Medicare administrative contractor 

14 under section 1874A of the Social Security Act 

15 (42 U.S.C. 1395kk), including a fiscal inter16 mediary and a carrier under sections 1816 and 

17 1842, respectively. 

18 (B) A recovery audit contractor under sec19 tion 1893(h) of such Act (42 U.S.C. 

20 1395ddd(h)). 

21 (C) A Comprehensive Error Rate Testing 

22 (CERT) program contractor with a contract 

23 with the Secretary of Health and Human Serv24 ices to review error rates under title XVIII of 


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1 the Social Security Act (42 U.S.C. 1395 et 

2 seq.). 

3 (2) HOSPITAL CLAIM TYPE.—Each of the fol4 lowing shall be considered a separate ‘‘hospital claim 

5 type’’: 

6 (A) IPPS.—A claim for payment under 

7 section 1886(d) of the Social Security Act (42 

8 U.S.C. 1395ww(d)) made by a hospital for fur9 nishing inpatient hospital services. 

10 (B) OUTPATIENT HOSPITAL SERVICES.—A 

11 claim for payment under section 1833(t) of 

12 such Act (42 U.S.C. 1395l(t)) made by a hos13 pital for furnishing covered OPD services. 

14 (C) CAH SERVICES.—A claim for payment 

15 for inpatient or outpatient critical access hos16 pital services, whether under section 1814(l) of 

17 such Act (42 U.S.C. 1395f(l)) or under section 

18 1834(g) of such Act (42 U.S.C. 1395m(g)). 

19 (D) INPATIENT REHABILITATION SERV20 ICES.—A claim for payment under section 

21 1886(j) of such Act (42 U.S.C. 1395ww(j)) 

22 made by a hospital for furnishing inpatient re23 habilitation services. 

24 (E) OTHER INPATIENT SERVICES.—A 

25 claim for payment under any other provision of 


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1 section 1886 of such Act (42 U.S.C. 1395ww) 

2 made by a hospital for furnishing inpatient hos3 pital services, such as subsection (s) (relating to 

4 inpatient hospital services furnish by a psy5 chiatric hospital) or subsection (m) (relating to 

6 inpatient hospital services furnish by a long 

7 term care hospital). 

8 (F) SKILLED NURSING FACILITY SERV9 ICES.—A claim for payment under section 

10 1888(e) of such Act (42 U.S.C. 1395yy(e)) 

11 made by a hospital for furnishing covered 

12 skilled nursing facility services. 

13 (3) HOSPITAL.—The term ‘‘hospital’’ means 

14 the campus of a hospital (as defined in subsection 

15 (e) of section 1861 of the Social Security Act (42 

16 U.S.C. 1395x)) or of a psychiatric hospital (as de17 fined in subsection (f) of such section), a com18 prehensive outpatient rehabilitation facility (as de19 fined in subsection (cc)(2) of such section), a critical 

20 access hospital (as defined in subsection (mm) of 

21 such section), or a long-term care hospital (as de22 fined in subsection (ccc) of such section), as identi23 fied by the tax identification number of the hospital, 

24 and includes all inpatient hospital facilities under 


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1 such number located in the same area as such cam2 pus. 

3 (d) EFFECTIVE DATE.—This section takes effect on 

4 the date of the enactment of this Act and shall apply with 

5 respect to claims submitted for payment under title XVIII 

6 of the Social Security Act for items or services furnished 

7 by providers of services or suppliers on or after the first 

8 day of the first month beginning 60 days after the date 

9 of the enactment of this Act. 

10 SEC. 3. IMPROVEMENT OF RECOVERY AUDITOR OPER11 ATIONS. 

12 (a) RECOVERY AUDITORS.— 

13 (1) IN GENERAL.—Section 1893(h) of the So14 cial Security Act (42 U.S.C. 1395ddd(h)) is amend15 ed by adding at the end the following new para16 graph: 

17 ‘‘(10) MANDATORY TERMS AND CONDITIONS

18 UNDER CONTRACTS WITH RECOVERY AUDIT CON19 TRACTORS.—In addition to such other terms and 

20 conditions as the Secretary may require under con21 tracts with recovery audit contractors under this 

22 subsection with respect to a hospital, including a 

23 psychiatric hospital (as defined in section 1861(f)), 

24 the Secretary shall ensure each of the following re25 quirements are included under such contracts: 


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1 ‘‘(A) PENALTIES FOR CERTAIN COMPLI2 ANCE FAILURES.— 

3 ‘‘(i) IN GENERAL.—Each such con4 tract shall provide for the imposition of fi5 nancial penalties by the Secretary under 

6 such contract in the case of any recovery 

7 audit contractor with respect to which the 

8 Secretary determines there is a pattern of 

9 failure by such contractor to meet any pro10 gram requirement described in clause (ii). 

11 The Secretary shall establish the amount 

12 of financial penalties and the periodicity 

13 under which such penalties shall be im14 posed under this subparagraph, in no case 

15 less often than annually. 

16 ‘‘(ii) PROGRAM REQUIREMENT DE17 SCRIBED.—For purposes of this subpara18 graph, each of the following requirements 

19 under the statement of work for a recovery 

20 audit contractor constitutes a program re21 quirement with respect to which failure to 

22 meet such requirement shall result in the 

23 imposition of a financial penalty under 

24 clause (i): 


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1 ‘‘(I) AUDIT DEADLINE.—Com2 pleting a determination with respect 

3 to each audit of a hospital the recov4 ery audit contractor conducts within 

5 the timeframes applicable under 

6 guidelines of the Secretary. 

7 ‘‘(II) TIMELY COMMUNICA8 TION.—In the case of a denial of a 

9 claim of a hospital, furnishing the 

10 hospital the required notice of the 

11 pending denial in a timely fashion 

12 consistent with claims and appeals 

13 timeframes specified in guidelines of 

14 the Secretary. 

15 ‘‘(B) PENALTY FOR OVERTURNED AP16 PEALS.— 

17 ‘‘(i) IN GENERAL.—Each such con18 tract shall require a recovery audit con19 tractor to pay a fee to the prevailing party 

20 in the case of a claim denial that is over21 turned on appeal. 

22 ‘‘(ii) FEE AMOUNT.—The amount of 

23 the fee payable by a recovery audit con24 tractor to a prevailing party under clause 

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1 ule established by the Secretary for such 

2 purpose. The amount of such fee under 

3 such fee schedule shall reflect the cost in4 curred by a typical hospital in appealing a 

5 claim denied by a recovery audit con6 tractor. 

7 ‘‘(C) POSTPAYMENT AND PREPAYMENT AU8 DITS.— 

9 ‘‘(i) REQUIRING FOCUS ON WIDE10 SPREAD PAYMENT ERRORS.— 

11 ‘‘(I) IN GENERAL.—The Sec12 retary shall not approve the conduct 

13 of a postpayment or prepayment med14 ical necessity audit by a recovery 

15 audit contractor unless such review 

16 addresses a widespread payment error 

17 rate (as defined in clause (ii)). 

18 ‘‘(II) CESSATION OF AUDIT.—A 

19 recovery audit contractor that com20 mences an audit under subclause (I) 

21 shall cease such audit or any similar 

22 audits, if upon annual review, the ap23 plicable payment error rate is no 

24 longer a widespread payment error 

25 rate (as so defined). 


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1 ‘‘(ii) WIDESPREAD PAYMENT ERROR

2 RATE DEFINED.— 

3 ‘‘(I) IN GENERAL.—In this sub4 paragraph, the term ‘widespread pay5 ment error rate’ means, with respect 

6 to medical necessity reviews conducted 

7 by a recovery audit contractor, a pay8 ment error rate that exceeds the rate 

9 specified in subclause (II) for a par10 ticular medical necessity audit deter11 mined by the Secretary using a statis12 tically significant sampling of claims 

13 submitted by hospitals in the jurisdic14 tion of the recovery audit contractor 

15 and adjusted to take into account 

16 claim denials overturned on appeal. 

17 ‘‘(II) RATE SPECIFIED.—The 

18 rate specified in this subclause is 40 

19 percent, except that the Secretary 

20 shall annually evaluate such rate and 

21 reduce it as necessary to account for 

22 changes in payment error rates with 

23 the aim of continued, steady improve24 ment of billing practices. 


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1 ‘‘(D) GUIDELINES FOR PREPAYMENT RE2 VIEW.— 

3 ‘‘(i) IN GENERAL.—A recovery audit 

4 contractor may conduct prepayment review 

5 only in the manner provided under prepay6 ment review guidelines (described in clause 

7 (ii)) established by the Secretary. 

8 ‘‘(ii) CONSISTENT PREPAYMENT RE9 VIEW GUIDELINES.—For purposes of pre10 payment review activities authorized under 

11 this subsection and section 1874A(h) (re12 lating to prepayment review by medicare 

13 administrative contractors), the Secretary 

14 shall establish guidelines under which con15 sistent criteria for minimum payment error 

16 rates or improper billing practices occasion 

17 prepayment review by contractors under 

18 this subsection and section 1874A. Such 

19 guidelines shall include criteria and time20 frames for termination of prepayment re21 view.’’. 

22 (2) CONFORMING AMENDMENT TO APPLY FI23 NANCIAL PENALTIES IMPOSED ON RECOVERY CON24 TRACTORS TO THE TRUST FUNDS.—Section 

25 1893(h)(2) of the Social Security Act (42 U.S.C. 


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1 1395ddd(h)(2)) is amended by inserting ‘‘, and 

2 amounts collected by the Secretary under paragraph 

3 (10)(A)(i) (relating to financial penalties for con4 tractor compliance failures),’’ after ‘‘paragraph 

5 (1)(C)’’. 

6 (b) CONFORMING AMENDMENT FOR MEDICARE AD7 MINISTRATIVE CONTRACTORS.—Section 1874A of the So8 cial Security Act (42 U.S.C. 1395kk–1) is amended by 

9 adding at the end the following new subsection: 

10 ‘‘(h) MANDATORY TERMS AND CONDITIONS UNDER

11 CONTRACTS WITH MEDICARE ADMINISTRATIVE CON12 TRACTORS.—In addition to such other terms and condi13 tions as the Secretary may require under contracts with 

14 medicare administrative contractors under this section 

15 with respect to a hospital, including a psychiatric hospital 

16 (as defined in section 1861(f)), the Secretary shall ensure 

17 each of the following requirements are included under 

18 such contracts: 

19 ‘‘(1) POSTPAYMENT AND PREPAYMENT AU20 DITS.— 

21 ‘‘(A) REQUIRING FOCUS ON WIDESPREAD

22 PAYMENT ERRORS.— 

23 ‘‘(i) IN GENERAL.—The Secretary 

24 shall not approve the conduct of a 

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1 sity audit by a medicare administrative 

2 contractor unless such review addresses a 

3 widespread payment error rate (as defined 

4 in subparagraph (B)). 

5 ‘‘(ii) CESSATION OF AUDIT.—A medi6 care administrative contractor that com7 mences an audit under clause (i) shall 

8 cease such audit or any similar audits, if 

9 upon annual review, the applicable pay10 ment error rate is no longer a widespread 

11 payment error rate (as so defined). 

12 ‘‘(B) WIDESPREAD PAYMENT ERROR RATE

13 DEFINED.—In this paragraph, the term ‘wide14 spread payment error rate’ means, with respect 

15 to medical necessity reviews conducted by a 

16 medicare administrative contractor, a payment 

17 error rate of 40 percent or greater for a par18 ticular medical necessity audit determined by 

19 the Secretary using a statistically significant 

20 sampling of claims submitted by hospitals in 

21 the jurisdiction of the medicare administrative 

22 contractor and adjusted to take into account 

23 claim denials overturned on appeal. 

24 ‘‘(2) GUIDELINES FOR PREPAYMENT REVIEW.— 

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1 duct prepayment review in the manner provided 

2 under prepayment review guidelines established by 

3 the Secretary under section 1893(h)(10)(D)(ii).’’. 

4 (c) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to contracts entered into or re6 newed with recovery audit contractors under section 

7 1893(h) of the Social Security Act (42 U.S.C. 

8 1395ddd(h)) and medicare administrative contractors 

9 under section 1874A of the Social Security Act (42 U.S.C. 

10 1395kk–1) on or after the date of the enactment of this 

11 Act. 

12 SEC. 4. GREATER TRANSPARENCY OF RECOVERY AUDITOR 

13 PERFORMANCE. 

14 (a) ANNUAL PUBLICATION OF RELEVANT PERFORM15 ANCE INFORMATION.—Section 1893(h) of the Social Secu16 rity Act (42 U.S.C. 1395ddd(h)), as amended by section 

17 3(a), is further amended by adding at the end the fol18 lowing new paragraph: 

19 ‘‘(11) INFORMATION ON RECOVERY AUDIT CON20 TRACTOR PERFORMANCE.—With respect to each re21 covery audit contractor with a contract under this 

22 section for a contract year, the Secretary shall pub23 lish on the Internet website of the Centers for Medi24 care & Medicaid Services the following information 


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1 with respect to the performance of each such recov2 ery audit contractor: 

3 ‘‘(A) PUBLICLY AVAILABLE INFORMATION

4 ON AUDIT RATES, DENIALS, AND APPEALS OUT5 COMES.—With respect to the performance of 

6 each such recovery audit contractor during a 

7 contract year, the Secretary shall post on such 

8 Internet website the following information: 

9 ‘‘(i) AUDITS.—The aggregate number 

10 of claims audited by the recovery audit 

11 contractor during the contract year in12 volved, as well as the number of audits of 

13 each of the following audit types (each in 

14 this paragraph referred to as an ‘audit 

15 type’): 

16 ‘‘(I) Automated. 

17 ‘‘(II) Complex. 

18 ‘‘(III) Medical necessity review. 

19 ‘‘(IV) Part A claims. 

20 ‘‘(V) Part B claims. 

21 ‘‘(VI) Durable medical equipment 

22 claims. 

23 ‘‘(VII) Part A medical necessity. 

24 ‘‘(ii) ADR REQUESTS.—The aggregate 

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1 ferred to as additional documentation re2 quests, for each audit type during the con3 tract year involved. 

4 ‘‘(iii) DENIALS.—The aggregate num5 ber of denials for each audit type made by 

6 the recovery audit contractor during the 

7 contract year involved. 

8 ‘‘(iv) DENIAL RATES.—The denial 

9 rate of the recovery audit contractor dur10 ing the contract year involved for part A 

11 claims, part B claims, and durable medical 

12 equipment claims for each audit type dur13 ing the contract year involved. 

14 ‘‘(v) APPEALS.—The aggregate num15 ber of appeals filed by providers of services 

16 and suppliers with respect to denials for 

17 each audit type made by the recovery audit 

18 contractor during the contract year in19 volved. 

20 ‘‘(vi) APPEALS RATES.—The aggre21 gate rate of appeals filed by providers of 

22 services and suppliers with respect to deni23 als for each audit type made by the recov24 ery audit contractor during the contract 

25 year involved. 


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1 ‘‘(vii) APPEALS VOLUME AND OUT2 COMES AT EACH OF THE 5 STAGES OF AP3 PEAL.—For claims denied by a recovery 

4 audit contractor, the number of claims 

5 during the contract year that were ap6 pealed by the provider, the number of con7 cluded appeals that did not advance to a 

8 subsequent appeals stage, and the number 

9 and percentage of completed appeals that 

10 were decided in favor of the provider, for 

11 each level of appeal as follows: 

12 ‘‘(I) Reconsideration by the rel13 evant medicare contractor. 

14 ‘‘(II) Redetermination by a quali15 fied independent contractor. 

16 ‘‘(III) Administrative law judge 

17 hearing. 

18 ‘‘(IV) Medicare Appeals Council 

19 review. 

20 ‘‘(V) United States District 

21 Court judicial review. 

22 ‘‘(viii) NET DENIALS; NET DENIAL

23 RATES.—The net denials for each audit 

24 type, calculated as the number of denials 

25 for such audit type under clause (iii) 


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1 minus the number of such denials that are 

2 overturned on appeal and the net denial 

3 rate for each audit type, calculated in the 

4 same manner as denial rates under clause 

5 (iv) but subtracting from denials those de6 nials that are overturned on appeal. 

7 ‘‘(B) PUBLIC AVAILABILITY OF INDE8 PENDENT PERFORMANCE EVALUATION.—The 

9 Secretary shall make available on such Internet 

10 website the results of any performance evalua11 tion with respect to each recovery audit con12 tractor conducted by an independent entity se13 lected by the Secretary for such purpose. Each 

14 performance evaluation shall include in its re15 sults for posting on such Internet website a de16 termination of annual error rates of the recov17 ery audit contractor for each audit type and the 

18 net denials and net denial rates described in 

19 subparagraph (A)(viii).’’. 

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

21 subsection (a) shall apply to contracts entered into or re22 newed with recovery audit contractors under section 

23 1893(h) of the Social Security Act (42 U.S.C. 

24 1395ddd(h)) on or after the date of the enactment of this 

25 Act. 


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1 SEC. 5. ACCURATE PAYMENT FOR REBILLED CLAIMS. 

2 (a) REBILLING UNDER PART B INPATIENT CLAIMS

3 DENIED BASED ON SITE OF SERVICE WHERE SERVICES

4 FOUND MEDICALLY NECESSARY AT THE OUTPATIENT

5 LEVEL.— 

6 (1) RECOVERY AUDITORS.—Section 1893(h) of 

7 the Social Security Act (42 U.S.C. 1395ddd(h)), as 

8 amended by sections 3(a) and 4(a), is further 

9 amended by adding at the end the following new 

10 paragraph: 

11 ‘‘(12) TREATMENT OF RESUBMISSION OF SPEC12 IFIED CLAIMS AS ORIGINAL CLAIMS.— 

13 ‘‘(A) TREATMENT AS ORIGINAL CLAIM.— 

14 The resubmission of a specified claim (as de15 fined in subparagraph (C)) shall be deemed to 

16 be an original claim for purposes of— 

17 ‘‘(i) payment under part B; and 

18 ‘‘(ii) provisions under this title relat19 ing to— 

20 ‘‘(I) the authority of a hospital to 

21 resubmit a claim for payment under 

22 the appropriate section of this title; 

23 and 

24 ‘‘(II) requirements for the timely 

25 submission of claims, including under 


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1 sections 1814(a), 1842(b)(3), and 

2 1835(a). 

3 ‘‘(B) PAYMENT FOR ITEMS AND SERVICES

4 UNDER RESUBMITTED CLAIM.—Payment shall 

5 be made for a specified claim resubmitted under 

6 subparagraph (A) for all the items and services 

7 furnished for which payment may be made 

8 under part B. 

9 ‘‘(C) DEFINITIONS.—In this paragraph: 

10 ‘‘(i) SPECIFIED CLAIM.— 

11 ‘‘(I) IN GENERAL.—The term 

12 ‘specified claim’ means a claim sub13 mitted by a hospital for payment 

14 under part A for inpatient hospital 

15 services which a recovery audit con16 tractor (or entity adjudicating a pro17 vider appeal of a Medicare claim de18 nied payment by a recovery audit con19 tractor) determines, subject to sub20 clause (II), that the inpatient hospital 

21 services were not medically necessary 

22 and reasonable under section 

23 1862(a)(1)(A). 

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1 tractor or entity adjudicating such 

2 provider appeal shall, before com3 pleting a determination described in 

4 subclause (I), assess and make a spe5 cific finding as to whether the denied 

6 inpatient hospital services were medi7 cally necessary and reasonable in an 

8 outpatient setting of the hospital. 

9 ‘‘(ii) RESUBMISSION.—The term ‘re10 submission’ includes, with respect to a 

11 specified claim of a hospital, the submis12 sion by the hospital of a new claim or of 

13 an adjusted original claim.’’. 

14 (2) CONFORMING AMENDMENT FOR MEDICARE

15 ADMINISTRATIVE CONTRACTORS.—Subsection (h) of 

16 section 1874A of the Social Security Act (42 U.S.C. 

17 1395kk–1), as added by section 3(b), is further 

18 amended by adding at the end the following new 

19 paragraph: 

20 ‘‘(3) TREATMENT OF RESUBMISSION OF SPECI21 FIED CLAIMS AS ORIGINAL CLAIMS.— 

22 ‘‘(A) TREATMENT AS ORIGINAL CLAIM.— 

23 The resubmission of a specified claim (as de24 fined in subparagraph (C)) shall be deemed to 

25 be an original claim for purposes of— 


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1 ‘‘(i) payment under part B; and 

2 ‘‘(ii) provisions under this title relat3 ing to— 

4 ‘‘(I) the authority of a hospital to 

5 resubmit a claim for payment under 

6 the appropriate section of this title; 

7 and 

8 ‘‘(II) requirements for the timely 

9 submission of claims, including under 

10 sections 1814(a), 1842(b)(3), and 

11 1835(a). 

12 ‘‘(B) PAYMENT FOR ITEMS AND SERVICES

13 UNDER RESUBMITTED CLAIM.—Payment shall 

14 be made for a specified claim resubmitted under 

15 subparagraph (A) for all the items and services 

16 furnished for which payment may be made 

17 under part B. 

18 ‘‘(C) DEFINITIONS.—In this paragraph: 

19 ‘‘(i) SPECIFIED CLAIM.— 

20 ‘‘(I) IN GENERAL.—The term 

21 ‘specified claim’ means a claim sub22 mitted by a hospital for payment 

23 under part A for inpatient hospital 

24 services which a medicare administra25 tive contractor (or entity adjudicating 


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1 a hospital appeal of a Medicare claim 

2 denied payment by a medicare admin3 istrative contractor) determines, sub4 ject to subclause (II), that the inpa5 tient hospital services were not medi6 cally necessary and reasonable under 

7 section 1862(a)(1)(A). 

8 ‘‘(II) REQUIREMENTS FOR DE9 TERMINATION.—A medicare adminis10 trative contractor or entity adjudi11 cating such provider appeal shall, be12 fore completing a determination de13 scribed in subclause (I), assess and 

14 make a specific finding as to whether 

15 the denied inpatient hospital services 

16 were medically necessary and reason17 able in an outpatient setting of the 

18 hospital. 

19 ‘‘(ii) RESUBMISSION.—The term ‘re20 submission’ includes, with respect to a 

21 specified claim of a hospital, the submis22 sion by the hospital of a new claim or of 

23 an adjusted original claim.’’. 

24 (3) CONFORMING AMENDMENT FOR CERT CON25 TRACTORS.— 


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1 (A) TREATMENT OF RESUBMISSION OF

2 SPECIFIED CLAIMS AS ORIGINAL CLAIMS.—A 

3 Comprehensive Error Rate Testing (CERT) 

4 program contractor with a contract with the 

5 Secretary of Health and Human Services to re6 view error rates under title XVIII of the Social 

7 Security Act (42 U.S.C. 1395 et seq.) shall 

8 deem the resubmission of a specified claim (as 

9 defined in subparagraph (C)) as an original 

10 claim for purposes of— 

11 (i) payment under part B of such title 

12 XVII; and 

13 (ii) provisions under such title relating 

14 to— 

15 (I) the authority of a hospital to 

16 resubmit a claim for payment under 

17 the appropriate section of such title; 

18 and 

19 (II) requirements for the timely 

20 submission of claims, including under 

21 sections 1814(a), 1842(b)(3), and 

22 1835(a) of such Act (42 U.S.C. 

23 1395f(a), 1395u(b)(3), and 1395n(a), 

24 respectively). 


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1 (B) PAYMENT FOR ITEMS AND SERVICES

2 UNDER RESUBMITTED CLAIM.—Payment shall 

3 be made for a specified claim resubmitted under 

4 subparagraph (A) for all the items and services 

5 furnished for which payment may be made 

6 under part B of such title XVIII. 

7 (C) DEFINITIONS.—In this paragraph: 

8 (i) SPECIFIED CLAIM.— 

9 (I) IN GENERAL.—The term 

10 ‘‘specified claim’’ means a claim sub11 mitted by a hospital (as defined in 

12 section 1861(e) of such Act (42 

13 U.S.C. 1395x(e))) for payment under 

14 title XVIII of such Act for inpatient 

15 hospital services which a Comprehen16 sive Error Rate Testing (CERT) pro17 gram contractor (or entity adjudi18 cating a hospital appeal of a Medicare 

19 claim denied payment by a CERT 

20 program contractor) determines the 

21 inpatient hospital services were not 

22 medically necessary and reasonable 

23 under section 1862(a)(1)(A) of such 

24 Act (42 U.S.C. 1395y(a)(1)(A)). 


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1 (II) REQUIREMENTS FOR DETER2 MINATION.—A CERT program con3 tractor or entity adjudicating such 

4 provider appeal shall, before com5 pleting a determination described in 

6 subclause (I), assess and make a spe7 cific finding as to whether the denied 

8 inpatient hospital services were medi9 cally necessary and reasonable in an 

10 outpatient setting of the hospital. 

11 (ii) RESUBMISSION.—The term ‘‘re12 submission’’ includes, with respect to a 

13 specified claim of a hospital, the submis14 sion by the hospital of a new claim or of 

15 an adjusted original claim. 

16 (iii) EFFECTIVE DATE.—The amend17 ments made by paragraphs (1) and (2), 

18 and the provisions of paragraph (3), shall 

19 apply to contracts entered into or renewed 

20 with recovery audit contractors under sec21 tion 1893(h) of the Social Security Act (42 

22 U.S.C. 1395ddd(h)), medicare administra23 tive contractors under section 1874A of 

24 the Social Security Act (42 U.S.C. 

25 1395kk–1) and Comprehensive Error Rate 


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1 Testing (CERT) program contractors, re2 spectively, on or after the date of the en3 actment of this Act. 

4 (b) TREATMENT OF AUDITED CLAIMS AS RE5 OPENED.— 

6 (1) RECOVERY AUDITORS.—Section 1893(h)(4) 

7 of the Social Security Act (42 U.S.C. 

8 1395ddd(h)(4)) is amended by adding after and 

9 below subparagraph (B) the following: ‘‘For pur10 poses of the ability of a hospital to resubmit a claim 

11 for payment under the appropriate section of this 

12 title and for purposes of requirements for the timely 

13 submission of claims by hospitals, including under 

14 sections 1814(a), 1842(b)(3), and 1835(a), any 

15 claim that is the subject of an audit by a recovery 

16 audit contractor with a contract under this section 

17 shall be deemed to be a reopened claim. Such re18 opened claims are not subject to the timely filing 

19 limitations under such sections (and related regula20 tions) and shall be adjusted and paid without regard 

21 to such timely filing limitations.’’. 

22 (2) CONFORMING AMENDMENT FOR MEDICARE

23 ADMINISTRATIVE CONTRACTORS.—Section 1874A(h) 

24 of the Social Security Act (42 U.S.C. 1395kk–1(h)), 

25 as added by section 3(b) and as amended by subVerDate Mar 15 2010 18:40 May 29, 2013 Jkt 029200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S1012.IS S1012

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1 section (a)(2), is further amended by adding at the 

2 end the following new paragraph: 

3 ‘‘(4) TREATMENT OF AUDITED CLAIMS AS RE4 OPENED.—For purposes of the ability of a hospital 

5 to resubmit a claim for payment under the appro6 priate provisions of this title and for purposes of re7 quirements for the timely submission of claims by 

8 hospitals, including under sections 1814(a), 

9 1842(b)(3), and 1835(a), any claim that is the sub10 ject of an audit by a medicare administrative con11 tractor with a contract under this section shall be 

12 deemed to be a reopened claim. Such reopened 

13 claims are not subject to the timely filing limitations 

14 under such sections (and related regulations) and 

15 shall be adjusted and paid without regard to such 

16 timely filing limitations.’’. 

17 (3) CONFORMING AMENDMENT FOR CERT CON18 TRACTORS.— 

19 (A) TREATMENT OF AUDITED CLAIMS AS

20 REOPENED.—Any claim made for payment for 

21 services furnished by a hospital under title 

22 XVIII of the Social Security Act (42 U.S.C. 

23 1395 et seq.) that is the subject of an audit by 

24 a Comprehensive Error Rate Testing (CERT) 

25 program contractor with a contract with the 


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1 Secretary of Health and Human Services shall 

2 be deemed to be a reopened claim for purposes 

3 of the ability of such hospital to resubmit a 

4 claim for payment under the appropriate provi5 sions of such title XVIII and for purposes of re6 quirements for the timely submission of claims 

7 by hospitals under such title XVIII, including 

8 under sections 1814(a), 1842(b)(3), and 

9 1835(a) of the Social Security Act (42 U.S.C. 

10 1395f(a), 1395u(b)(3), and 1395n(a), respec11 tively). Such reopened claims are not subject to 

12 the timely filing limitations under such sections 

13 (and related regulations) and shall be adjusted 

14 and paid without regard to such timely filing 

15 limitations. 

16 (B) DEFINITION.—In this paragraph, the 

17 term ‘‘hospital’’ has the meaning given such 

18 term in subsection (e) of section 1861 of the 

19 Social Security Act (42 U.S.C. 1395x), and in20 cludes a psychiatric hospital as defined in sub21 section (f) of such section. 

22 (4) EFFECTIVE DATE.—The amendments made 

23 by paragraphs (1) and (2), and the provisions of 

24 paragraph (3), shall take effect on the date of the 


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•S 1012 IS

1 enactment of this Act and apply to claims subject to 

2 audit on or after September 1, 2010. 

3 SEC. 6. REQUIREMENT FOR PHYSICIAN VALIDATION FOR 

4 MEDICAL NECESSITY DENIALS. 

5 (a) RECOVERY AUDITORS.—Section 1893(h) of the 

6 Social Security Act (42 U.S.C. 1395ddd(h)), as amended 

7 by sections 3(a), 4(a), and 6(a)(1), is further amended by 

8 adding at the end the following new paragraph: 

9 ‘‘(13) PHYSICIAN VALIDATION OF MEDICAL NE10 CESSITY DENIALS MADE BY NON-PHYSICIAN REVIEW11 ERS.— 

12 ‘‘(A) IN GENERAL.—Each contract under 

13 this section for a recovery audit contractor shall 

14 require that a physician (as defined in section 

15 1861(r)(1)) review each denial of a claim for 

16 medical necessity when a medical necessity re17 view of such claim is performed and a denial is 

18 made by an employee of the contractor who is 

19 not a physician (as so defined). 

20 ‘‘(B) DETERMINATION; VALIDATION.—A 

21 physician reviewing a claim under subparagraph 

22 (A) shall— 

23 ‘‘(i) make a determination whether 

24 the denial of the claim under the medical 


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•S 1012 IS

1 necessity review by the non-physician em2 ployee is appropriate; 

3 ‘‘(ii) sign and certify such determina4 tion; and 

5 ‘‘(iii) append such signed and certified 

6 determination to the claim file. 

7 ‘‘(C) TREATMENT AS MEDICALLY NEC8 ESSARY.—A claim with respect to which a de9 nial has been made as described in subpara10 graph (A) for which the physician determines 

11 the denial is not appropriate under subpara12 graph (B) shall be deemed to be medically nec13 essary. 

14 ‘‘(D) MEDICAL NECESSITY REVIEW DE15 FINED.—In this paragraph, the term ‘medical 

16 necessity review’ means, with respect to an 

17 audit of a claim of a provider of services or sup18 plier, a review conducted by a recovery audit 

19 contractor for the purpose of determining 

20 whether an item or service furnished for which 

21 the claim is filed by such provider of services or 

22 supplier is reasonable and necessary for the di23 agnosis or treatment of illness or injury under 

24 section 1862(a)(1)(A).’’. 


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•S 1012 IS

1 (b) CONFORMING AMENDMENT TO MEDICARE AD2 MINISTRATIVE CONTRACTORS.—Subsection (h) of section 

3 1874A of the Social Security Act (42 U.S.C. 1395kk–1), 

4 as added by section 3(b) and as amended by subsections 

5 (a)(2) and (b)(2) of section 6, is further amended by add6 ing at the end the following new paragraph: 

7 ‘‘(5) PHYSICIAN VALIDATION OF MEDICAL NE8 CESSITY DENIALS MADE BY NON-PHYSICIAN REVIEW9 ERS.— 

10 ‘‘(A) IN GENERAL.—A physician (as de11 fined in section 1861(r)(1)) shall review each 

12 denial of a claim for medical necessity when a 

13 medical necessity review of such claim is per14 formed and a denial is made by an employee of 

15 the contractor who is not a physician (as so de16 fined). 

17 ‘‘(B) DETERMINATION; VALIDATION.—A 

18 physician reviewing a claim under subparagraph 

19 (A) shall— 

20 ‘‘(i) make a determination whether 

21 the denial of the claim under the medical 

22 necessity review by the non-physician em23 ployee is appropriate; 

24 ‘‘(ii) sign and certify such determina25 tion; and 


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•S 1012 IS

1 ‘‘(iii) append such signed and certified 

2 determination to the claim file. 

3 ‘‘(C) TREATMENT AS MEDICALLY NEC4 ESSARY.—A claim with respect to which a de5 nial has been made as described in subpara6 graph (A) for which the physician determines 

7 the denial is not appropriate under subpara8 graph (B) shall be deemed to be medically nec9 essary. 

10 ‘‘(D) MEDICAL NECESSITY REVIEW DE11 FINED.—In this paragraph, the term ‘medical 

12 necessity review’ means, with respect to an 

13 audit of a claim of a provider of services or sup14 plier, a review conducted by a medicare admin15 istrative contractor for the purpose of deter16 mining whether an item or service furnished for 

17 which the claim is filed by such provider of 

18 services or supplier is reasonable and necessary 

19 for the diagnosis or treatment of illness or in20 jury under section 1862(a)(1)(A).’’. 

21 (c) CONFORMING REQUIREMENT FOR CERT CON22 TRACTORS.— 

23 (1) CONTRACT REQUIREMENT FOR PHYSICIAN

24 VALIDATION OF MEDICAL NECESSITY DENIALS MADE

25 BY NON-PHYSICIAN REVIEWERS.—The Secretary of 


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1 Health and Human Services shall require under 

2 each contract with a Comprehensive Error Rate 

3 Testing (CERT) program contractor to review error 

4 rates under title XVIII of the Social Security Act 

5 (42 U.S.C. 1395 et seq.) that the CERT program 

6 contractor ensure that a physician (as defined in 

7 section 1861(r)(1) of such Act (42 U.S.C. 

8 1395x(r)(1))) reviews each denial of a claim for 

9 medical necessity when a medical necessity review of 

10 such claim is performed and a denial is made by an 

11 employee of the contractor who is not a physician 

12 (as so defined). 

13 (2) DETERMINATION; VALIDATION.—A physi14 cian reviewing a claim under paragraph (1) shall— 

15 (A) make a determination whether the de16 nial of the claim under the medical necessity re17 view by the non-physician employee is appro18 priate; 

19 (B) sign and certify such determination; 

20 and 

21 (C) append such signed and certified deter22 mination to the claim file. 

23 (3) TREATMENT AS MEDICALLY NECESSARY.— 

24 A claim with respect to which a denial has been 

25 made as described in paragraph (1) for which the 


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1 physician determines the denial is not appropriate 

2 under paragraph (2) shall be deemed to be medically 

3 necessary. 

4 (4) MEDICAL NECESSITY REVIEW DEFINED.— 

5 In this subsection, the term ‘‘medical necessity re6 view’’ means, with respect to an audit of a claim of 

7 a provider of services or supplier, a review conducted 

8 by a CERT program contractor for the purpose of 

9 determining whether an item or service furnished for 

10 which the claim is filed by such provider of services 

11 or supplier is reasonable and necessary for the diag12 nosis or treatment of illness or injury under section 

13 1862(a)(1)(A) of the Social Security Act (42 U.S.C. 

14 1395y(a)(1)(A)). 

15 (d) EFFECTIVE DATE.—The amendments made by 

16 subsections (a) and (b), and the provisions of subsection 

17 (c), shall apply to contracts entered into or renewed with 

18 recovery audit contractors under section 1893(h) of the 

19 Social Security Act (42 U.S.C. 1395ddd(h)), medicare ad20 ministrative contractors under section 1874A of the Social 

21 Security Act (42 U.S.C. 1395kk–1) and Comprehensive 

22 Error Rate Testing (CERT) program contractors, respec23 tively, on or after the date of the enactment of this Act. 


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1 SEC. 7. ASSURING DUE PROCESS IN APPLICATION OF 

2 GUIDELINES FOR REOPENING AND REVISION 

3 OF DETERMINATIONS. 

4 Section 1869(b)(1)(G) of the Social Security Act (42 

5 U.S.C. 1395ff(b)(1)(G)) is amended by adding at the end 

6 the following: ‘‘The Secretary’s compliance with such 

7 guidelines shall be subject to administrative and judicial 

8 review under this section.’’. 

Æ 


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