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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 2128 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 2128

To provide for the establishment of the Office of Deputy Secretary for 
                     Health Care Fraud Prevention.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 29, 2009

  Mr. LeMieux introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL

 
To provide for the establishment of the Office of Deputy Secretary for 
                     Health Care Fraud Prevention.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prevent Health Care Fraud Act of 
2009''.

SEC. 2. ESTABLISHMENT OF OFFICE OF DEPUTY SECRETARY FOR HEALTH CARE 
              FRAUD PREVENTION IN THE DEPARTMENT OF HEALTH AND HUMAN 
              SERVICES; APPOINTMENT AND POWERS OF DEPUTY SECRETARY.

    (a) In General.--There is hereby established in the Department of 
Health and Human Services the Office of the Deputy Secretary for Health 
Care Fraud Prevention (referred to in this section as the ``Office'').
    (b) Duties of the Office.--The Office shall--
            (1) direct the appropriate implementation within the 
        Department of Health and Human Services of health care fraud 
        prevention and detection recommendations made by Federal 
        Government and private sector antifraud and oversight entities;
            (2) routinely consult with the Office of the Inspector 
        General for the Department of Health and Human Services, the 
        Attorney General, and private sector health care antifraud 
        entities to identify emerging health care fraud issues 
        requiring immediate action by the Office;
            (3) through a contract entered into with an entity that has 
        experience in designing and implementing antifraud systems in 
        the financial sector, provide for the design, development, and 
        operation of a predictive model antifraud system (in accordance 
        with subsection (d)) to analyze health care claims data in 
        real-time to identify high risk claims activity, develop 
        appropriate rules, processes, and procedures and investigative 
        research approaches, in coordination with the Office of the 
        Inspector General for the Department of Health and Human 
        Services, based on the risk level assigned to claims activity, 
        and develop a comprehensive antifraud database for health care 
        activities carried out or managed by Federal health agencies;
            (4) promulgate and enforce regulations relating to the 
        reporting of data claims to the health care antifraud system 
        developed under paragraph (3) by all Federal health agencies;
            (5) establish thresholds, in consultation with the Office 
        of the Inspector General of the Department of Health and Human 
        Services and the Department of Justice--
                    (A) for the amount and extent of claims verified 
                and designated as fraudulent, wasteful, or abusive 
                through the fraud prevention system developed under 
                paragraph (3) for excluding providers or suppliers from 
                participation in Federal health programs; and
                    (B) for the referral of claims identified through 
                the health care fraud prevention system developed under 
                paragraph (3) to law enforcement entities (such as the 
                Office of the Inspector General, Medicaid Fraud Control 
                Units, and the Department of Justice); and
            (6) share antifraud information and best practices with 
        Federal health agencies, health insurance issuers, health care 
        providers, antifraud organizations, antifraud databases, and 
        Federal, State, and local law enforcement and regulatory 
        agencies.
    (c) Deputy Secretary for Health Care Fraud Prevention.--
            (1) Establishment.--There is established within the 
        Department of Health and Human Services the position of Deputy 
        Secretary for Health Care Fraud Prevention (referred to in this 
        section as the ``Deputy Secretary''). The Deputy Secretary 
        shall serve as the head of the Office, shall act as the chief 
        health care fraud prevention and detection officer of the 
        United States, and shall consider and direct the appropriate 
        implementation of recommendations to prevent and detect health 
        care fraud, waste, and abuse activities and initiatives within 
        the Department.
            (2) Appointment.--The Deputy Secretary shall be appointed 
        by the President, by and with the advice and consent of the 
        Senate, and serve for a term of 5 years, unless removed prior 
        to the end of such term for cause by the President.
            (3) Powers.--Subject to oversight by the Secretary, the 
        Deputy Secretary shall exercise all powers necessary to carry 
        out this section, including the hiring of staff, entering into 
        contracts, and the delegation of responsibilities to any 
        employee of the Department of Health and Human Services or the 
        Office appropriately designated for such responsibility.
            (4) Duties.--
                    (A) In general.--The Deputy Secretary shall--
                            (i) establish and manage the operation of 
                        the predictive modeling system developed under 
                        subsection (b)(3) to analyze Federal health 
                        claims in real-time to identify high risk 
                        claims activity and refer risky claims for 
                        appropriate verification and investigative 
                        research;
                            (ii) consider and order the appropriate 
                        implementation of fraud prevention and 
                        detection activities, such as those recommended 
                        by the Office of the Inspector General of the 
                        Department of Health and Human Services, the 
                        Government Accountability Office, MedPac, and 
                        private sector health care antifraud entities;
                            (iii) not later than 6 months after the 
                        date on which he or she is initially appointed, 
                        submit to Congress an implementation plan for 
                        the health care fraud prevention systems under 
                        subsection (d); and
                            (iv) submit annual performance reports to 
                        the Secretary and Congress that, at minimum, 
                        shall provide an estimate of the return on 
                        investment with respect to the system, for all 
                        recommendations made to the Deputy Secretary 
                        under this section, a description of whether 
                        such recommendations are implemented or not 
                        implemented, and contain other relevant 
                        performance metrics.
                    (B) Analysis and recommendations.--The Deputy 
                Secretary shall provide required strategies and 
                treatments for claims identified as high risk 
                (including a system of designations for claims, such as 
                ``approve'', ``decline'', ``research'', and ``educate 
                and pay'') to the Centers for Medicare & Medicaid 
                Services, other Federal and State entities responsible 
                for verifying whether claims identified as high risk 
                are payable, should be automatically denied, or require 
                further research and investigation.
                    (C) Limitation.--The Deputy Secretary shall not 
                have any criminal or civil enforcement authority 
                otherwise delegated to the Office of Inspector General 
                of the Department of Health and Human Services or the 
                Attorney General.
            (5) Regulations.--The Deputy Secretary shall promulgate and 
        enforce such rules, regulations, orders, and interpretations as 
        the Deputy Secretary determines to be necessary to carry out 
        the purposes of this section. Such authority shall be exercised 
        as provided under section 553 of title 5, United States Code.
    (d) Health Care Fraud Prevention System.--
            (1) In general.--The fraud prevention system established 
        under subsection (b)(3) shall be designed as follows:
                    (A) In general.--The fraud prevention system 
                shall--
                            (i) be holistic;
                            (ii) be able to view all provider and 
                        patient activities across all Federal health 
                        program payers;
                            (iii) be able to integrate into the 
                        existing health care claims flow with minimal 
                        effort, time, and cost;
                            (iv) be modeled after systems used in the 
                        Financial Services industry; and
                            (v) utilize integrated real-time 
                        transaction risk scoring and referral strategy 
                        capabilities to identify claims that are 
                        statistically unusual.
                    (B) Modularized architecture.--The fraud prevention 
                system shall be designed from an end-to-end modularized 
                perspective to allow for ease of integration into 
                multiple points along a health care claim flow (pre- or 
                post-adjudication), which shall--
                            (i) utilize a single entity to host, 
                        support, manage, and maintain software-based 
                        services, predictive models, and solutions from 
                        a central location for the customers who access 
                        the fraud prevention system;
                            (ii) allow access through a secure private 
                        data connection rather than the installation of 
                        software in multiple information technology 
                        infrastructures (and data facilities);
                            (iii) provide access to the best and latest 
                        software without the need for upgrades, data 
                        security, and costly installations;
                            (iv) permit modifications to the software 
                        and system edits in a rapid and timely manner;
                            (v) ensure that all technology and decision 
                        components reside within the module; and
                            (vi) ensure that the third party host of 
                        the modular solution is not a party, payer, or 
                        stakeholder that reports claims data, accesses 
                        the results of the fraud prevention systems 
                        analysis, or is otherwise required under this 
                        section to verify, research, or investigate the 
                        risk of claims.
                    (C) Processing, scoring, and storage.--The platform 
                of the fraud prevention system shall be a high volume, 
                rapid, real-time information technology solution, which 
                includes data pooling, data storage, and scoring 
                capabilities to quickly and accurately capture and 
                evaluate data from millions of claims per day. Such 
                platform shall be secure and have (at a minimum) data 
                centers that comply with Federal and State privacy 
                laws.
                    (D) Data consortium.--The fraud prevention system 
                shall provide for the establishment of a centralized 
                data file (referred to as a ``consortium'') that 
                accumulates data from all government health insurance 
                claims data sources. Notwithstanding any other 
                provision of law, Federal health care payers shall 
                provide to the consortium existing claims data, such as 
                Medicare's ``Common Working File'' and Medicaid claims 
                data, for the purpose of fraud and abuse prevention. 
                Such accumulated data shall be transmitted and stored 
                in an industry standard secure data environment that 
                complies with applicable Federal privacy laws for use 
                in building medical waste, fraud, and abuse prevention 
                predictive models that have a comprehensive view of 
                provider activity across all payers (and markets).
                    (E) Market view.--The fraud prevention system shall 
                ensure that claims data from Federal health programs 
                and all markets flows through a central source so the 
                waste, fraud, and abuse system can look across all 
                markets and geographies in health care to identify 
                fraud and abuse in Medicare, Medicaid, the State 
                Children's Health Program, TRICARE, the Department of 
                Veterans Affairs, and private payers holistically. Such 
                cross-market visibility shall identify unusual provider 
                and patient behavior patterns and fraud and abuse 
                schemes that may not be identified by looking 
                independently at one Federal payer's transactions.
                    (F) Behavior engine.--The fraud prevention system 
                shall ensure that the technology used provides real-
                time ability to identify high-risk behavior patterns 
                across markets, geographies, and specialty group 
                providers to detect waste, fraud, and abuse, and to 
                identify providers that exhibit unusual behavior 
                patterns. Behavior pattern technology that provides the 
                capability to compare a provider's current behavior to 
                their own past behavior and to compare a provider's 
                current behavior to that of other providers in the same 
                specialty group and geographic location shall be used 
                in order to provide a comprehensive waste, fraud, and 
                abuse prevention solution.
                    (G) Predictive model.--The fraud prevention system 
                shall involve the implementation of a statistically 
                sound, empirically derived predictive modeling 
                technology that is designed to prevent (versus post-
                payment detect) waste, fraud, and abuse. Such 
                prevention system shall utilize historical transaction 
                data, from across all Federal health programs and 
                markets, to build and re-develop scoring models, have 
                the capability to incorporate external data and 
                external models from other sources into the health care 
                predictive waste, fraud, and abuse model, and provide 
                for a feedback loop to provide outcome information on 
                verified claims so future system enhancements can be 
                developed based on previous claims experience.
                    (H) Change control.--The fraud prevention system 
                platform shall have the infrastructure to implement new 
                models and attributes in a test environment prior to 
                moving into a production environment. Capabilities 
                shall be developed to quickly make changes to models, 
                attributes, or strategies to react to changing patterns 
                in waste, fraud, and abuse.
                    (I) Scoring engine.--The fraud prevention system 
                shall identify high-risk claims by scoring all such 
                claims on a real-time capacity prior to payment. Such 
                scores shall then be communicated to the fraud 
                management system provided for under subparagraph (J).
                    (J) Fraud management system.--The fraud prevention 
                system shall utilize a fraud management system, that 
                contains workflow management and workstation tools to 
                provide the ability to systematically present scores, 
                reason codes, and treatment actions for high-risk 
                scored transactions. The fraud prevention system shall 
                ensure that analysts who review claims have the 
                capability to access, review, and research claims 
                efficiently, as well as decline or approve claims 
                (payments) in an automated manner. Workflow management 
                under this subparagraph shall be combined with the 
                ability to utilize principles of experimental design to 
                compare and measure prevention and detection rates 
                between test and control strategies. Such strategy 
                testing shall allow for continuous improvement and 
                maximum effectiveness in keeping up with ever changing 
                fraud and abuse patterns. Such system shall provide the 
                capability to test different treatments or actions 
                randomly (typically through use of random digit 
                assignments).
                    (K) Decision technology.--The fraud prevention 
                system shall have the capability to monitor consumer 
                transactions in real-time and monitor provider behavior 
                at different stages within the transaction flow based 
                upon provider, transaction and consumer trends. The 
                fraud prevention system shall provide for the 
                identification of provider and claims excessive usage 
                patterns and trends that differ from similar peer 
                groups, have the capability to trigger on multiple 
                criteria, such as predictive model scores or custom 
                attributes, and be able to segment transaction waste, 
                fraud, and abuse into multiple types for health care 
                categories and business types.
                    (L) Feedback loop.--The fraud prevention system 
                shall have a feedback loop where all Federal health 
                payers provide pre-payment and post-payment information 
                about the eventual status of a claim designated as 
                ``Normal'', ``Waste'', ``Fraud'', ``Abuse'', or 
                ``Education Required''. Such feedback loop shall enable 
                Federal health agencies to measure the actual amount of 
                waste, fraud, and abuse as well as the savings in the 
                system and provide the ability to retrain future, 
                enhanced models. Such feedback loop shall be an 
                industry file that contains information on previous 
                fraud and abuse claims as well as abuse perpetrated by 
                consumers, providers, and fraud rings, to be used to 
                alert other payers, as well as for subsequent fraud and 
                abuse solution development.
                    (M) Tracking and reporting.--The fraud prevention 
                system shall ensure that the infrastructure exists to 
                ascertain system, strategy, and predictive model return 
                on investment. Dynamic model validation and strategy 
                validation analysis and reporting shall be made 
                available to ensure a strategy or predictive model has 
                not degraded over time or is no longer effective. Queue 
                reporting shall be established and made available for 
                population estimates of what claims were flagged, what 
                claims received treatment, and ultimately what results 
                occurred. The capability shall exist to complete 
                tracking and reporting for prevention strategies and 
                actions residing farther upstream in the health care 
                payment flow. The fraud prevention system shall 
                establish a reliable metric to measure the dollars that 
                are never paid due to identification of fraud and 
                abuse, as well as a capability to effectively test and 
                estimate the impact from different actions and 
                treatments utilized to detect and prevent fraud and 
                abuse for legitimate claims. Measuring results shall 
                include waste and abuse.
                    (N) Operating tenet.--The fraud prevention system 
                shall not be designed to deny health care services or 
                to negatively impact prompt-pay laws because 
                assessments are late. The database shall be designed to 
                speed up the payment process. The fraud prevention 
                system shall require the implementation of constant and 
                consistent test and control strategies by stakeholders, 
                with results shared with Federal health program 
                leadership on a quarterly basis to validate improving 
                progress in identifying and preventing waste, fraud, 
                and abuse. Under such implementation, Federal health 
                care payers shall use standard industry waste, fraud, 
                and abuse measures of success.
            (2) Coordination.--The Deputy Secretary shall coordinate 
        the operation of the fraud prevention system with the 
        Department of Justice and other related Federal fraud 
        prevention systems.
            (3) Operation.--The Deputy Secretary shall phase-in the 
        implementation of the system under this subsection beginning 
        not later than 18 months after the date of enactment of this 
        Act, through the analysis of a limited number of Federal health 
        program claims. Not later than 5 years after such date of 
        enactment, the Deputy Secretary shall ensure that such system 
        is fully phased-in and applicable to all Federal health program 
        claims.
            (4) Non-payment of claims.--The Deputy Secretary shall 
        promulgate regulations to prohibit the payment of any health 
        care claim that has been identified as potentially 
        ``fraudulent'', ``wasteful'', or ``abusive'' until such time as 
        the claim has been verified as valid.
            (5) Application.--The system under this section shall apply 
        to all Federal health programs, including programs established 
        after the date of enactment of this Act.
            (6) Regulations.--The Deputy Secretary shall promulgate 
        regulations providing the maximum appropriate protection of 
        personal privacy consistent with carrying out the Office's 
        responsibilities under this section.
    (e) Protecting Participation in Health Care Antifraud Programs.--
            (1) In general.--Notwithstanding any other provision of 
        law, no person providing information to the Secretary under 
        this section shall be held, by reason of having provided such 
        information, to have violated any criminal law, or to be 
        civilly liable under any law of the United States or of any 
        State (or political subdivision thereof) unless such 
        information is false and the person providing it knew, or had 
        reason to believe, that such information was false.
            (2) Confidentiality.--The Office shall, through the 
        promulgation of regulations, establish standards for--
                    (A) the protection of confidential information 
                submitted or obtained with regard to suspected or 
                actual health care fraud;
                    (B) the protection of the ability of 
                representatives the Office to testify in private civil 
                actions concerning any such information; and
                    (C) the sharing by the Office of any such 
                information related to the medical antifraud programs 
                established under this section.
    (f) Protecting Legitimate Providers and Suppliers.--
            (1) Initial implementation.--Not later than 2 years after 
        the date of enactment of this Act, the Secretary shall 
        establish procedures for the implementation of fraud and abuse 
        detection methods under all Federal health programs (including 
        the programs under titles XVIII, XIX, and XXI of the Social 
        Security Act) with respect to items and services furnished by 
        providers of services and suppliers that includes the 
        following:
                    (A) In the case of a new applicant to be such a 
                provider or supplier, a background check, and in the 
                case of a supplier a site visit prior to approval of 
                participation in the program and random unannounced 
                site visits after such approval.
                    (B) Not less than 5 years after the date of 
                enactment of this Act, in the case of a provider or 
                supplier who is not a new applicant, re-enrollment 
                under the program, including a new background check 
                and, in the case of a supplier, a site-visit as part of 
                the application process for such re-enrollment, and 
                random unannounced site visits after such re-
                enrollment.
            (2) Requirement for participation.--In no case may a 
        provider of services or supplier who does not meet the 
        requirements under paragraph (1) participate in any Federal 
        health program.
            (3) Background checks.--The Secretary shall determine the 
        extent of the background check conducted under paragraph (1), 
        including whether--
                    (A) a fingerprint check is necessary;
                    (B) a background check shall be conducted with 
                respect to additional employees, board members, 
                contractors or other interested parties of the provider 
                or supplier; and
                    (C) any additional national background checks 
                regarding exclusion from participation in Federal 
                health programs (such as the program under titles 
                XVIII, XIX, or XXI of the Social Security Act), 
                including conviction of any felony, crime that involves 
                an act of fraud or false statement, adverse actions 
                taken by State licensing boards, bankruptcies, 
                outstanding taxes, or other indications identified by 
                the Inspector General of the Department of Health and 
                Human Services are necessary.
            (4) Limitation.--No payment may be made to a provider of 
        services or supplier under any Federal health program if such 
        provider or supplier fails to obtain a satisfactory background 
        check under this subsection.
            (5) Federal health program.--In this subsection, the term 
        ``Federal health program'' means any program that provides 
        Federal payments or reimbursements to providers of health-
        related items or services, or suppliers of such items, for the 
        provision of such items or services to an individual patient.
    (g) Definition.--The term ``Federal health agency'' means the 
Department of Health and Human Services, the Department of Veterans 
Affairs, and any Federal agency with oversight or authority regarding 
the provision of any medical benefit, item, or service for which 
payment may be made under a Federal health care plan or contract.
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