```

[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1123 Introduced in Senate (IS)]

113th CONGRESS
  1st Session
                                S. 1123

To amend titles XVIII and XIX of the Social Security Act to curb waste, 
        fraud, and abuse in the Medicare and Medicaid programs.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 10, 2013

    Mr. Carper (for himself, Mr. Coburn, Mr. Bennet, Mr. Coons, Ms. 
 Klobuchar, Ms. Landrieu, Mrs. McCaskill, Mr. Warner, Ms. Ayotte, Mr. 
Enzi, Mr. Isakson, and Mr. Corker) introduced the following bill; which 
        was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend titles XVIII and XIX of the Social Security Act to curb waste, 
        fraud, and abuse in the Medicare and Medicaid programs.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Preventing and 
Reducing Improper Medicare and Medicaid Expenditures Act of 2013'' or 
the ``PRIME Act of 2013''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                   TITLE I--CURBING IMPROPER PAYMENTS

Sec. 101. Requiring valid prescriber National Provider Identifiers on 
                            pharmacy claims.
Sec. 102. Reforming how CMS tracks and corrects the vulnerabilities 
                            identified by Recovery Audit Contractors.
Sec. 103. Improving Senior Medicare Patrol and fraud reporting rewards.
Sec. 104. Strengthening Medicaid Program integrity through flexibility.
Sec. 105. Establishing Medicare administrative contractor error 
                            reduction incentives.
Sec. 106. Strengthening penalties for the illegal distribution of a 
                            Medicare, Medicaid, or CHIP beneficiary 
                            identification or billing privileges.
                    TITLE II--IMPROVING DATA SHARING

Sec. 201. Access to the National Directory of New Hires.
Sec. 202. Improving the sharing of data between the Federal Government 
                            and State Medicaid programs.
Sec. 203. Improving claims processing and detection of fraud within the 
                            Medicaid and CHIP programs.
                  TITLE III--REPORT ON IMPLEMENTATION

Sec. 301. Report on implementation.

                   TITLE I--CURBING IMPROPER PAYMENTS

SEC. 101. REQUIRING VALID PRESCRIBER NATIONAL PROVIDER IDENTIFIERS ON 
              PHARMACY CLAIMS.

    Section 1860D-4(c) of the Social Security Act (42 U.S.C. 1395w-
104(c)) is amended by adding at the end the following new paragraph:
            ``(4) Requiring valid prescriber national provider 
        identifiers on pharmacy claims.--
                    ``(A) In general.--For plan year 2015 and 
                subsequent plan years, subject to subparagraph (B), the 
                Secretary shall prohibit PDP sponsors of prescription 
                drug plans from paying claims for prescription drugs 
                under this part that do not include a valid prescriber 
                National Provider Identifier.
                    ``(B) Procedures.--The Secretary shall establish--
                            ``(i) procedures for determining the 
                        validity of prescriber National Provider 
                        Identifiers under subparagraph (A); and
                            ``(ii) procedures for transferring to the 
                        Inspector General of the Department of Health 
                        and Human Services and appropriate law 
                        enforcement agencies and other oversight 
                        entities information on those National Provider 
                        Identifiers and pharmacy claims, including 
                        records related to such claims, that the 
                        Secretary determines are invalid under clause 
                        (i).
                    ``(C) Report.--Not later than January 1, 2017, the 
                Inspector General of the Department of Health and Human 
                Services shall submit to Congress a report on the 
                effectiveness of the procedures established under 
                subparagraph (B).''.

SEC. 102. REFORMING HOW CMS TRACKS AND CORRECTS THE VULNERABILITIES 
              IDENTIFIED BY RECOVERY AUDIT CONTRACTORS.

    (a) In General.--Section 1893(h) of the Social Security Act (42 
U.S.C. 1395ddd(h)) is amended--
            (1) in paragraph (8)--
                    (A) by striking ``report.--The Secretary'' and 
                inserting ``report.--
                    ``(A) In general.--Subject to subparagraph (C), the 
                Secretary''; and
                    (B) by adding after subparagraph (A), as inserted 
                by subparagraph (A), the following new subparagraphs:
                    ``(B) Inclusion of improper payment vulnerabilities 
                identified.--Each report submitted under subparagraph 
                (A) shall, subject to subparagraph (C), include--
                            ``(i) a description of--
                                    ``(I) the types and financial cost 
                                to the program under this title of 
                                improper payment vulnerabilities 
                                identified by recovery audit 
                                contractors under this subsection; and
                                    ``(II) how the Secretary is 
                                addressing such improper payment 
                                vulnerabilities; and
                            ``(ii) an assessment of the effectiveness 
                        of changes made to payment policies and 
                        procedures under this title in order to address 
                        the vulnerabilities so identified.
                    ``(C) Limitation.--The Secretary shall ensure that 
                each report submitted under subparagraph (A) does not 
                include information that the Secretary determines would 
                be sensitive or would otherwise negatively impact 
                program integrity.''; and
            (2) by adding at the end the following new paragraph:
            ``(10) Addressing improper payment vulnerabilities.--The 
        Secretary shall address improper payment vulnerabilities 
        identified by recovery audit contractors under this subsection 
        in a timely manner, prioritized based on the risk to the 
        program under this title.''.
    (b) Use of Medicare and Medicaid Recovery Audit Contractor 
Recoveries for Provider Education and To Prevent Improper Payments and 
Fraud.--
            (1) Medicare rac program.--Section 1893(h)(1)(C) of the 
        Social Security Act (42 U.S.C. 1395ddd(h)(1)(C)) is amended--
                    (A) by striking ``the Secretary shall retain'' and 
                inserting ``the Secretary--
                            ``(i) shall retain'';
                    (B) in clause (i), as added by subparagraph (A)--
                            (i) by inserting ``, in addition to any 
                        other funds that may be available,'' after 
                        ``available'';
                            (ii) by inserting ``until expended'' after 
                        ``Services''; and
                            (iii) by striking the period at the end and 
                        inserting a semicolon; and
                    (C) by adding at the end the following new clauses:
                            ``(ii) may retain an additional portion of 
                        the amounts recovered (not to exceed 25 percent 
                        of such amounts recovered) which shall be 
                        available, in addition to any other funds that 
                        may be available, to such program management 
                        account until expended for purposes of 
                        activities to address problems that contribute 
                        to improper payments and fraud under this 
                        title; and
                            ``(iii) shall retain an additional 5 
                        percent of such amounts recovered to be made 
                        available, in addition to any other funds that 
                        may be available, to the Inspector General of 
                        the Department of Health and Human Services 
                        until expended for the Inspector General to 
                        carry out activities of the Inspector General 
                        relating to investigating improper payments or 
                        auditing internal controls associated with 
                        payments under this title.''.
            (2) Medicaid rac program.--Section 1936 of the Social 
        Security Act (42 U.S.C. 1396u-6) is amended by adding at the 
        end the following new subsection:
    ``(f) Amounts Recovered Through Recovery Audit Contractors.--
Notwithstanding any other provision of law, the Secretary--
            ``(1) may retain a portion of the amounts recovered 
        pursuant to the program established under section 
        1902(a)(42)(B) (not to exceed 25 percent of the Federal share 
        of such amounts recovered) which shall be available, in 
        addition to any other funds that may be available, to the 
        program management account of the Centers for Medicare & 
        Medicaid Services for purposes of activities to address 
        problems that contribute to improper payments and fraud under 
        this title; and
            ``(2) shall retain an additional 5 percent of the Federal 
        share of such amounts recovered to be made available, in 
        addition to any other funds that may be available, to the 
        Inspector General of the Department of Health and Human 
        Services until expended for the Inspector General to carry out 
        activities of the Inspector General relating to investigating 
        improper payments or auditing internal controls associated with 
        payments under this title.''.
            (3) Effective date.--The amendments made by this section 
        shall take effect on January 1, 2014.

SEC. 103. IMPROVING SENIOR MEDICARE PATROL AND FRAUD REPORTING REWARDS.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall develop a plan to 
revise the incentive program under section 203(b) of the Health 
Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1395b-
5(b)) to encourage greater participation by individuals to report fraud 
and abuse in the Medicare program. Such plan shall include 
recommendations for--
            (1) ways to enhance rewards for individuals reporting under 
        the incentive program, including rewards based on information 
        that leads to an administrative action; and
            (2) extending the incentive program to the Medicaid 
        program.
    (b) Public Awareness and Education Campaign.--The plan developed 
under subsection (a) shall also include recommendations for the use of 
the Senior Medicare Patrols authorized under section 411 of the Older 
Americans Act of 1965 (42 U.S.C. 3032) to conduct a public awareness 
and education campaign to encourage participation in the revised 
incentive program under subsection (a).
    (c) Submission of Plan.--Not later than 180 days after the date of 
enactment of this Act, the Secretary shall submit to Congress the plan 
developed under subsection (a).

SEC. 104. STRENGTHENING MEDICAID PROGRAM INTEGRITY THROUGH FLEXIBILITY.

    Section 1936 of the Social Security Act (42 U.S.C. 1396u-6) is 
amended--
            (1) in subsection (a), by inserting ``, or otherwise,'' 
        after ``entities''; and
            (2) in subsection (e)--
                    (A) in paragraph (1), in the matter preceding 
                subparagraph (A), by inserting ``(including the costs 
                of equipment, salaries and benefits, and travel and 
                training)'' after ``Program under this section''; and
                    (B) in paragraph (3), by striking ``by 100'' and 
                inserting ``by 100, or such number as determined 
                necessary by the Secretary to carry out the Program,''.

SEC. 105. ESTABLISHING MEDICARE ADMINISTRATIVE CONTRACTOR ERROR 
              REDUCTION INCENTIVES.

    (a) In General.--Section 1874A(b)(1)(D) of the Social Security Act 
(42 U.S.C. 1395kk(b)(1)(D)) is amended--
            (1) by striking ``quality.--The Secretary'' and inserting 
        ``quality.--
                            ``(i) In general.--Subject to clauses (ii) 
                        and (iii), the Secretary''; and
            (2) by inserting after clause (i), as added by paragraph 
        (1), the following new clauses:
                            ``(ii) Improper payment error rate 
                        reduction incentives.--The Secretary shall 
                        provide incentives for medicare administrative 
                        contractors to reduce the improper payment 
                        error rates in their jurisdictions.
                            ``(iii) Incentives.--The incentives 
                        provided for under clause (ii)--
                                    ``(I) may include a sliding scale 
                                of bonus payments and additional 
                                incentives to medicare administrative 
                                contractors that reduce the improper 
                                payment error rates in their 
                                jurisdictions to certain benchmark 
                                levels, as determined by the Secretary; 
                                and
                                    ``(II) shall include substantial 
                                reductions in award fee payments under 
                                award fee contracts, for any medicare 
                                administrative contractor that reaches 
                                an upper end error threshold or other 
                                threshold as determined by the 
                                Secretary.''.
    (b) Effective Date.--
            (1) In general.--The amendments made by subsection (a) 
        shall apply to contracts entered into or renewed on or after 
        the date that is 12 months after the date of enactment of this 
        Act.
            (2) Contracts entered into or renewed prior to effective 
        date.--In the case of contracts in existence on or after the 
        date of the enactment of this Act and that are not subject to 
        the effective date under paragraph (1), the Secretary of Health 
        and Human Services shall, when appropriate and practicable, 
        seek to apply the incentives provided for in the amendments 
        made by subsection (a) through contract modifications.

SEC. 106. STRENGTHENING PENALTIES FOR THE ILLEGAL DISTRIBUTION OF A 
              MEDICARE, MEDICAID, OR CHIP BENEFICIARY IDENTIFICATION OR 
              BILLING PRIVILEGES.

    Section 1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b)) 
is amended by adding at the end the following:
            ``(4) Whoever knowingly, intentionally, and with the intent 
        to defraud purchases, sells or distributes, or arranges for the 
        purchase, sale, or distribution of a Medicare, Medicaid, or 
        CHIP beneficiary identification number or billing privileges 
        under title XVIII, title XIX, or title XXI shall be imprisoned 
        for not more than 10 years or fined not more than $500,000 
        ($1,000,000 in the case of a corporation), or both.''.

                    TITLE II--IMPROVING DATA SHARING

SEC. 201. ACCESS TO THE NATIONAL DIRECTORY OF NEW HIRES.

    Section 453(j) of the Social Security Act (42 U.S.C. 653 (j)) is 
amended by adding at the end of the following new paragraph:
            ``(12) Information comparisons and disclosures to assist in 
        administration of the medicare program and state health subsidy 
        programs.--
                    ``(A) Disclosure to the administrator of the 
                centers for medicare & medicaid services.--The 
                Administrator of the Centers for Medicare & Medicaid 
                shall have access to the information in the National 
                Directory of New Hires for purposes of determining the 
                eligibility of an applicant for, or enrollee in, the 
                Medicare program under title XVIII or an applicable 
                State health subsidy program (as defined in section 
                1413(e) of the Patient Protection and Affordable Care 
                Act (42 U.S.C. 18083(e))).
                    ``(B) Disclosure to the inspector general of the 
                department of health and human services.--
                            ``(i) In general.--If the Inspector General 
                        of the Department of Health and Human Services 
                        transmits to the Secretary the names and social 
                        security account numbers of individuals, the 
                        Secretary shall disclose to the Inspector 
                        General information on such individuals and 
                        their employers maintained in the National 
                        Directory of New Hires.
                            ``(ii) Use of information.--The Inspector 
                        General of the Department of Health and Human 
                        Services may use information provided under 
                        clause (i) only for purposes of--
                                    ``(I) determining the eligibility 
                                of an applicant for, or enrollee in, 
                                the Medicare program under title XVIII 
                                or an applicable State health subsidy 
                                program (as defined in section 1413(e) 
                                of the Patient Protection and 
                                Affordable Care Act (42 U.S.C. 
                                18083(e))); or
                                    ``(II) evaluating the integrity of 
                                the Medicare program or an applicable 
                                State health subsidy program (as so 
                                defined).
                    ``(C) Disclosure to state agencies.--
                            ``(i) In general.--If, for purposes of 
                        administering an applicable State health 
                        subsidy program (as defined in section 1413(e) 
                        of the Patient Protection and Affordable Care 
                        Act (42 U.S.C. 18083(e))), a State agency 
                        responsible for administering such program 
                        transmits to the Secretary the names and social 
                        security account numbers of individuals, the 
                        Secretary shall disclose to such State agency 
                        information on such individuals and their 
                        employers maintained in the National Directory 
                        of New Hires, subject to this subparagraph.
                            ``(ii) Condition on disclosure by the 
                        secretary.--The Secretary shall make a 
                        disclosure under clause (i) only to the extent 
                        that the Secretary determines that the 
                        disclosure would not interfere with the 
                        effective operation of the program under this 
                        part.
                            ``(iii) Use and disclosure of information 
                        by state agencies.--
                                    ``(I) In general.--A State agency 
                                may not use or disclose information 
                                provided under clause (i) except for 
                                purposes of administering a program 
                                referred to in clause (i).
                                    ``(II) Information security.--The 
                                State agency shall have in effect data 
                                security and control policies that the 
                                Secretary finds adequate to ensure the 
                                security of information obtained under 
                                clause (i) and to ensure that access to 
                                such information is restricted to 
                                authorized persons for purposes of 
                                authorized uses and disclosures.
                                    ``(III) Penalty for misuse of 
                                information.--An officer or employee of 
                                the State agency who fails to comply 
                                with this clause shall be subject to 
                                the sanctions under subsection (l)(2) 
                                to the same extent as if such officer 
                                or employee were an officer or employee 
                                of the United States.
                            ``(iv) Procedural requirements.--State 
                        agencies requesting information under clause 
                        (i) shall adhere to uniform procedures 
                        established by the Secretary governing 
                        information requests and data matching under 
                        this paragraph.
                            ``(v) Reimbursement of costs.--The State 
                        agency shall reimburse the Secretary, in 
                        accordance with subsection (k)(3), for the 
                        costs incurred by the Secretary in furnishing 
                        the information requested under this 
                        subparagraph.''.

SEC. 202. IMPROVING THE SHARING OF DATA BETWEEN THE FEDERAL GOVERNMENT 
              AND STATE MEDICAID PROGRAMS.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall establish a plan 
to encourage and facilitate the participation of States in the 
Medicare-Medicaid Data Match Program (commonly referred to as the 
``Medi-Medi Program'') under section 1893(g) of the Social Security Act 
(42 U.S.C. 1395ddd(g)).
    (b) Program Revisions To Improve Medi-Medi Data Match Program 
Participation by States.--Section 1893(g)(1)(A) of the Social Security 
Act (42 U.S.C. 1395ddd(g)(1)(A)) is amended--
            (1) in the matter preceding clause (i), by inserting ``or 
        otherwise'' after ``eligible entities'';
            (2) in clause (i)--
                    (A) by inserting ``to review claims data'' after 
                ``algorithms''; and
                    (B) by striking ``service, time, or patient'' and 
                inserting ``provider, service, time, or patient'';
            (3) in clause (ii)--
                    (A) by inserting ``to investigate and recover 
                amounts with respect to suspect claims'' after 
                ``appropriate actions''; and
                    (B) by striking ``; and'' and inserting a 
                semicolon;
            (4) in clause (iii), by striking the period and inserting 
        ``; and''; and
            (5) by adding at end the following new clause:
                            ``(iv) furthering the Secretary's design, 
                        development, installation, or enhancement of an 
                        automated data system architecture--
                                    ``(I) to collect, integrate, and 
                                assess data for purposes of program 
                                integrity, program oversight, and 
                                administration, including the Medi-Medi 
                                Program; and
                                    ``(II) that improves the 
                                coordination of requests for data from 
                                States.''.
    (c) Providing States With Data on Improper Payments Made for Items 
or Services Provided to Dual Eligible Individuals.--
            (1) In general.--The Secretary shall develop and implement 
        a plan that allows each State agency responsible for 
        administering a State plan for medical assistance under title 
        XIX of the Social Security Act access to relevant data on 
        improper or fraudulent payments made under the Medicare program 
        under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
        seq.) for health care items or services provided to dual 
        eligible individuals.
            (2) Dual eligible individual defined.--In this section, the 
        term ``dual eligible individual'' means an individual who is 
        entitled to, or enrolled for, benefits under part A of title 
        XVIII of the Social Security Act (42 U.S.C. 1395c et seq.), or 
        enrolled for benefits under part B of title XVIII of such Act 
        (42 U.S.C. 1395j et seq.), and is eligible for medical 
        assistance under a State plan under title XIX of such Act (42 
        U.S.C. 1396 et seq.) or under a waiver of such plan.

SEC. 203. IMPROVING CLAIMS PROCESSING AND DETECTION OF FRAUD WITHIN THE 
              MEDICAID AND CHIP PROGRAMS.

    (a) Medicaid.--Section 1903(i) of the Social Security Act (42 
U.S.C. 1396b(i)), as amended by section 2001(a)(2)(B) of the Patient 
Protection and Affordable Care Act (Public Law 111-148), is amended--
            (1) in paragraph (25), by striking ``or'' at the end;
            (2) in paragraph (26), by striking the period and inserting 
        ``; or''; and
            (3) by adding after paragraph (26), the following new 
        paragraph:
            ``(27) with respect to amounts expended for an item or 
        service for which medical assistance is provided under the 
        State plan or under a waiver of such plan unless the claim for 
        payment for such item or service contains a valid beneficiary 
        identification number that, for purposes of the individual who 
        received such item or service, has been determined by the State 
        agency to correspond to an individual who is eligible to 
        receive benefits under the State plan or waiver.''.
    (b) CHIP.--Section 2107(e)(1)(I) of the Social Security Act (42 
U.S.C. 1397gg(e)(1)(I)) is amended by striking ``and (17)'' and 
inserting ``(17), and (27)''.

                  TITLE III--REPORT ON IMPLEMENTATION

SEC. 301. REPORT ON IMPLEMENTATION.

    Not later than 270 days after the date of the enactment of this 
Act, the Secretary of Health and Human Services shall submit to 
Congress a report on the implementation of the provisions of, and the 
amendments made by, this Act.
                                 <all>
```