II 

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. 

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. 

4 This Act may be cited as the ‘‘Prevent Health Care 

5 Fraud Act of 2009’’. 


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1 SEC. 2. ESTABLISHMENT OF OFFICE OF DEPUTY SEC2 RETARY FOR HEALTH CARE FRAUD PREVEN3 TION IN THE DEPARTMENT OF HEALTH AND 

4 HUMAN SERVICES; APPOINTMENT AND POW5 ERS OF DEPUTY SECRETARY. 

6 (a) IN GENERAL.—There is hereby established in the 

7 Department of Health and Human Services the Office of 

8 the Deputy Secretary for Health Care Fraud Prevention 

9 (referred to in this section as the ‘‘Office’’). 

10 (b) DUTIES OF THE OFFICE.—The Office shall— 

11 (1) direct the appropriate implementation with12 in the Department of Health and Human Services of 

13 health care fraud prevention and detection rec14 ommendations made by Federal Government and 

15 private sector antifraud and oversight entities; 

16 (2) routinely consult with the Office of the In17 spector General for the Department of Health and 

18 Human Services, the Attorney General, and private 

19 sector health care antifraud entities to identify 

20 emerging health care fraud issues requiring imme21 diate action by the Office; 

22 (3) through a contract entered into with an en23 tity that has experience in designing and imple24 menting antifraud systems in the financial sector, 

25 provide for the design, development, and operation 

26 of a predictive model antifraud system (in accordVerDate Nov 24 2008 03:12 Oct 31, 2009 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2128.IS S2128

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1 ance with subsection (d)) to analyze health care 

2 claims data in real-time to identify high risk claims 

3 activity, develop appropriate rules, processes, and 

4 procedures and investigative research approaches, in 

5 coordination with the Office of the Inspector General 

6 for the Department of Health and Human Services, 

7 based on the risk level assigned to claims activity, 

8 and develop a comprehensive antifraud database for 

9 health care activities carried out or managed by 

10 Federal health agencies; 

11 (4) promulgate and enforce regulations relating 

12 to the reporting of data claims to the health care 

13 antifraud system developed under paragraph (3) by 

14 all Federal health agencies; 

15 (5) establish thresholds, in consultation with 

16 the Office of the Inspector General of the Depart17 ment of Health and Human Services and the De18 partment of Justice— 

19 (A) for the amount and extent of claims 

20 verified and designated as fraudulent, wasteful, 

21 or abusive through the fraud prevention system 

22 developed under paragraph (3) for excluding 

23 providers or suppliers from participation in 

24 Federal health programs; and 


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1 (B) for the referral of claims identified 

2 through the health care fraud prevention sys3 tem developed under paragraph (3) to law en4 forcement entities (such as the Office of the In5 spector General, Medicaid Fraud Control Units, 

6 and the Department of Justice); and 

7 (6) share antifraud information and best prac8 tices with Federal health agencies, health insurance 

9 issuers, health care providers, antifraud organiza10 tions, antifraud databases, and Federal, State, and 

11 local law enforcement and regulatory agencies. 

12 (c) DEPUTY SECRETARY FOR HEALTH CARE FRAUD

13 PREVENTION.— 

14 (1) ESTABLISHMENT.—There is established 

15 within the Department of Health and Human Serv16 ices the position of Deputy Secretary for Health 

17 Care Fraud Prevention (referred to in this section as 

18 the ‘‘Deputy Secretary’’). The Deputy Secretary 

19 shall serve as the head of the Office, shall act as the 

20 chief health care fraud prevention and detection offi21 cer of the United States, and shall consider and di22 rect the appropriate implementation of recommenda23 tions to prevent and detect health care fraud, waste, 

24 and abuse activities and initiatives within the De25 partment. 


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1 (2) APPOINTMENT.—The Deputy Secretary 

2 shall be appointed by the President, by and with the 

3 advice and consent of the Senate, and serve for a 

4 term of 5 years, unless removed prior to the end of 

5 such term for cause by the President. 

6 (3) POWERS.—Subject to oversight by the Sec7 retary, the Deputy Secretary shall exercise all pow8 ers necessary to carry out this section, including the 

9 hiring of staff, entering into contracts, and the dele10 gation of responsibilities to any employee of the De11 partment of Health and Human Services or the Of12 fice appropriately designated for such responsibility. 

13 (4) DUTIES.— 

14 (A) IN GENERAL.—The Deputy Secretary 

15 shall— 

16 (i) establish and manage the operation 

17 of the predictive modeling system devel18 oped under subsection (b)(3) to analyze 

19 Federal health claims in real-time to iden20 tify high risk claims activity and refer 

21 risky claims for appropriate verification 

22 and investigative research; 

23 (ii) consider and order the appropriate 

24 implementation of fraud prevention and 

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1 ommended by the Office of the Inspector 

2 General of the Department of Health and 

3 Human Services, the Government Account4 ability Office, MedPac, and private sector 

5 health care antifraud entities; 

6 (iii) not later than 6 months after the 

7 date on which he or she is initially ap8 pointed, submit to Congress an implemen9 tation plan for the health care fraud pre10 vention systems under subsection (d); and 

11 (iv) submit annual performance re12 ports to the Secretary and Congress that, 

13 at minimum, shall provide an estimate of 

14 the return on investment with respect to 

15 the system, for all recommendations made 

16 to the Deputy Secretary under this section, 

17 a description of whether such recommenda18 tions are implemented or not implemented, 

19 and contain other relevant performance 

20 metrics. 

21 (B) ANALYSIS AND RECOMMENDATIONS.— 

22 The Deputy Secretary shall provide required 

23 strategies and treatments for claims identified 

24 as high risk (including a system of designations 

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1 search’’, and ‘‘educate and pay’’) to the Centers 

2 for Medicare & Medicaid Services, other Fed3 eral and State entities responsible for verifying 

4 whether claims identified as high risk are pay5 able, should be automatically denied, or require 

6 further research and investigation. 

7 (C) LIMITATION.—The Deputy Secretary 

8 shall not have any criminal or civil enforcement 

9 authority otherwise delegated to the Office of 

10 Inspector General of the Department of Health 

11 and Human Services or the Attorney General. 

12 (5) REGULATIONS.—The Deputy Secretary 

13 shall promulgate and enforce such rules, regulations, 

14 orders, and interpretations as the Deputy Secretary 

15 determines to be necessary to carry out the purposes 

16 of this section. Such authority shall be exercised as 

17 provided under section 553 of title 5, United States 

18 Code. 

19 (d) HEALTH CARE FRAUD PREVENTION SYSTEM.— 

20 (1) IN GENERAL.—The fraud prevention system 

21 established under subsection (b)(3) shall be designed 

22 as follows: 

23 (A) IN GENERAL.—The fraud prevention 

24 system shall— 

25 (i) be holistic; 


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1 (ii) be able to view all provider and 

2 patient activities across all Federal health 

3 program payers; 

4 (iii) be able to integrate into the exist5 ing health care claims flow with minimal 

6 effort, time, and cost; 

7 (iv) be modeled after systems used in 

8 the Financial Services industry; and 

9 (v) utilize integrated real-time trans10 action risk scoring and referral strategy 

11 capabilities to identify claims that are sta12 tistically unusual. 

13 (B) MODULARIZED ARCHITECTURE.—The 

14 fraud prevention system shall be designed from 

15 an end-to-end modularized perspective to allow 

16 for ease of integration into multiple points 

17 along a health care claim flow (pre- or post-ad18 judication), which shall— 

19 (i) utilize a single entity to host, sup20 port, manage, and maintain software-based 

21 services, predictive models, and solutions 

22 from a central location for the customers 

23 who access the fraud prevention system; 

24 (ii) allow access through a secure pri25 vate data connection rather than the inVerDate Nov 24 2008 03:12 Oct 31, 2009 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2128.IS S2128

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1 stallation of software in multiple informa2 tion technology infrastructures (and data 

3 facilities); 

4 (iii) provide access to the best and lat5 est software without the need for upgrades, 

6 data security, and costly installations; 

7 (iv) permit modifications to the soft8 ware and system edits in a rapid and time9 ly manner; 

10 (v) ensure that all technology and de11 cision components reside within the mod12 ule; and 

13 (vi) ensure that the third party host 

14 of the modular solution is not a party, 

15 payer, or stakeholder that reports claims 

16 data, accesses the results of the fraud pre17 vention systems analysis, or is otherwise 

18 required under this section to verify, re19 search, or investigate the risk of claims. 

20 (C) PROCESSING, SCORING, AND STOR21 AGE.—The platform of the fraud prevention 

22 system shall be a high volume, rapid, real-time 

23 information technology solution, which includes 

24 data pooling, data storage, and scoring capabili25 ties to quickly and accurately capture and 


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1 evaluate data from millions of claims per day. 

2 Such platform shall be secure and have (at a 

3 minimum) data centers that comply with Fed4 eral and State privacy laws. 

5 (D) DATA CONSORTIUM.—The fraud pre6 vention system shall provide for the establish7 ment of a centralized data file (referred to as 

8 a ‘‘consortium’’) that accumulates data from all 

9 government health insurance claims data 

10 sources. Notwithstanding any other provision of 

11 law, Federal health care payers shall provide to 

12 the consortium existing claims data, such as 

13 Medicare’s ‘‘Common Working File’’ and Med14 icaid claims data, for the purpose of fraud and 

15 abuse prevention. Such accumulated data shall 

16 be transmitted and stored in an industry stand17 ard secure data environment that complies with 

18 applicable Federal privacy laws for use in build19 ing medical waste, fraud, and abuse prevention 

20 predictive models that have a comprehensive 

21 view of provider activity across all payers (and 

22 markets). 

23 (E) MARKET VIEW.—The fraud prevention 

24 system shall ensure that claims data from Fed25 eral health programs and all markets flows 


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1 through a central source so the waste, fraud, 

2 and abuse system can look across all markets 

3 and geographies in health care to identify fraud 

4 and abuse in Medicare, Medicaid, the State 

5 Children’s Health Program, TRICARE, the De6 partment of Veterans Affairs, and private pay7 ers holistically. Such cross-market visibility 

8 shall identify unusual provider and patient be9 havior patterns and fraud and abuse schemes 

10 that may not be identified by looking independ11 ently at one Federal payer’s transactions. 

12 (F) BEHAVIOR ENGINE.—The fraud pre13 vention system shall ensure that the technology 

14 used provides real-time ability to identify high15 risk behavior patterns across markets, geog16 raphies, and specialty group providers to detect 

17 waste, fraud, and abuse, and to identify pro18 viders that exhibit unusual behavior patterns. 

19 Behavior pattern technology that provides the 

20 capability to compare a provider’s current be21 havior to their own past behavior and to com22 pare a provider’s current behavior to that of 

23 other providers in the same specialty group and 

24 geographic location shall be used in order to 


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1 provide a comprehensive waste, fraud, and 

2 abuse prevention solution. 

3 (G) PREDICTIVE MODEL.—The fraud pre4 vention system shall involve the implementation 

5 of a statistically sound, empirically derived pre6 dictive modeling technology that is designed to 

7 prevent (versus post-payment detect) waste, 

8 fraud, and abuse. Such prevention system shall 

9 utilize historical transaction data, from across 

10 all Federal health programs and markets, to 

11 build and re-develop scoring models, have the 

12 capability to incorporate external data and ex13 ternal models from other sources into the health 

14 care predictive waste, fraud, and abuse model, 

15 and provide for a feedback loop to provide out16 come information on verified claims so future 

17 system enhancements can be developed based 

18 on previous claims experience. 

19 (H) CHANGE CONTROL.—The fraud pre20 vention system platform shall have the infra21 structure to implement new models and at22 tributes in a test environment prior to moving 

23 into a production environment. Capabilities 

24 shall be developed to quickly make changes to 


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1 models, attributes, or strategies to react to 

2 changing patterns in waste, fraud, and abuse. 

3 (I) SCORING ENGINE.—The fraud preven4 tion system shall identify high-risk claims by 

5 scoring all such claims on a real-time capacity 

6 prior to payment. Such scores shall then be 

7 communicated to the fraud management system 

8 provided for under subparagraph (J). 

9 (J) FRAUD MANAGEMENT SYSTEM.—The 

10 fraud prevention system shall utilize a fraud 

11 management system, that contains workflow 

12 management and workstation tools to provide 

13 the ability to systematically present scores, rea14 son codes, and treatment actions for high-risk 

15 scored transactions. The fraud prevention sys16 tem shall ensure that analysts who review 

17 claims have the capability to access, review, and 

18 research claims efficiently, as well as decline or 

19 approve claims (payments) in an automated 

20 manner. Workflow management under this sub21 paragraph shall be combined with the ability to 

22 utilize principles of experimental design to com23 pare and measure prevention and detection 

24 rates between test and control strategies. Such 

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1 provement and maximum effectiveness in keep2 ing up with ever changing fraud and abuse pat3 terns. Such system shall provide the capability 

4 to test different treatments or actions randomly 

5 (typically through use of random digit assign6 ments). 

7 (K) DECISION TECHNOLOGY.—The fraud 

8 prevention system shall have the capability to 

9 monitor consumer transactions in real-time and 

10 monitor provider behavior at different stages 

11 within the transaction flow based upon pro12 vider, transaction and consumer trends. The 

13 fraud prevention system shall provide for the 

14 identification of provider and claims excessive 

15 usage patterns and trends that differ from simi16 lar peer groups, have the capability to trigger 

17 on multiple criteria, such as predictive model 

18 scores or custom attributes, and be able to seg19 ment transaction waste, fraud, and abuse into 

20 multiple types for health care categories and 

21 business types. 

22 (L) FEEDBACK LOOP.—The fraud preven23 tion system shall have a feedback loop where all 

24 Federal health payers provide pre-payment and 

25 post-payment information about the eventual 


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1 status of a claim designated as ‘‘Normal’’, 

2 ‘‘Waste’’, ‘‘Fraud’’, ‘‘Abuse’’, or ‘‘Education 

3 Required’’. Such feedback loop shall enable 

4 Federal health agencies to measure the actual 

5 amount of waste, fraud, and abuse as well as 

6 the savings in the system and provide the abil7 ity to retrain future, enhanced models. Such 

8 feedback loop shall be an industry file that con9 tains information on previous fraud and abuse 

10 claims as well as abuse perpetrated by con11 sumers, providers, and fraud rings, to be used 

12 to alert other payers, as well as for subsequent 

13 fraud and abuse solution development. 

14 (M) TRACKING AND REPORTING.—The 

15 fraud prevention system shall ensure that the 

16 infrastructure exists to ascertain system, strat17 egy, and predictive model return on investment. 

18 Dynamic model validation and strategy valida19 tion analysis and reporting shall be made avail20 able to ensure a strategy or predictive model 

21 has not degraded over time or is no longer ef22 fective. Queue reporting shall be established 

23 and made available for population estimates of 

24 what claims were flagged, what claims received 

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1 curred. The capability shall exist to complete 

2 tracking and reporting for prevention strategies 

3 and actions residing farther upstream in the 

4 health care payment flow. The fraud prevention 

5 system shall establish a reliable metric to meas6 ure the dollars that are never paid due to iden7 tification of fraud and abuse, as well as a capa8 bility to effectively test and estimate the impact 

9 from different actions and treatments utilized 

10 to detect and prevent fraud and abuse for legiti11 mate claims. Measuring results shall include 

12 waste and abuse. 

13 (N) OPERATING TENET.—The fraud pre14 vention system shall not be designed to deny 

15 health care services or to negatively impact 

16 prompt-pay laws because assessments are late. 

17 The database shall be designed to speed up the 

18 payment process. The fraud prevention system 

19 shall require the implementation of constant 

20 and consistent test and control strategies by 

21 stakeholders, with results shared with Federal 

22 health program leadership on a quarterly basis 

23 to validate improving progress in identifying 

24 and preventing waste, fraud, and abuse. Under 

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1 ers shall use standard industry waste, fraud, 

2 and abuse measures of success. 

3 (2) COORDINATION.—The Deputy Secretary 

4 shall coordinate the operation of the fraud preven5 tion system with the Department of Justice and 

6 other related Federal fraud prevention systems. 

7 (3) OPERATION.—The Deputy Secretary shall 

8 phase-in the implementation of the system under 

9 this subsection beginning not later than 18 months 

10 after the date of enactment of this Act, through the 

11 analysis of a limited number of Federal health pro12 gram claims. Not later than 5 years after such date 

13 of enactment, the Deputy Secretary shall ensure 

14 that such system is fully phased-in and applicable to 

15 all Federal health program claims. 

16 (4) NON-PAYMENT OF CLAIMS.—The Deputy 

17 Secretary shall promulgate regulations to prohibit 

18 the payment of any health care claim that has been 

19 identified as potentially ‘‘fraudulent’’, ‘‘wasteful’’, or 

20 ‘‘abusive’’ until such time as the claim has been 

21 verified as valid. 

22 (5) APPLICATION.—The system under this sec23 tion shall apply to all Federal health programs, in24 cluding programs established after the date of enact25 ment of this Act. 


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1 (6) REGULATIONS.—The Deputy Secretary 

2 shall promulgate regulations providing the maximum 

3 appropriate protection of personal privacy consistent 

4 with carrying out the Office’s responsibilities under 

5 this section. 

6 (e) PROTECTING PARTICIPATION IN HEALTH CARE

7 ANTIFRAUD PROGRAMS.— 

8 (1) IN GENERAL.—Notwithstanding any other 

9 provision of law, no person providing information to 

10 the Secretary under this section shall be held, by 

11 reason of having provided such information, to have 

12 violated any criminal law, or to be civilly liable under 

13 any law of the United States or of any State (or po14 litical subdivision thereof) unless such information is 

15 false and the person providing it knew, or had rea16 son to believe, that such information was false. 

17 (2) CONFIDENTIALITY.—The Office shall, 

18 through the promulgation of regulations, establish 

19 standards for— 

20 (A) the protection of confidential informa21 tion submitted or obtained with regard to sus22 pected or actual health care fraud; 

23 (B) the protection of the ability of rep24 resentatives the Office to testify in private civil 

25 actions concerning any such information; and 


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1 (C) the sharing by the Office of any such 

2 information related to the medical antifraud 

3 programs established under this section. 

4 (f) PROTECTING LEGITIMATE PROVIDERS AND SUP5 PLIERS.— 

6 (1) INITIAL IMPLEMENTATION.—Not later than 

7 2 years after the date of enactment of this Act, the 

8 Secretary shall establish procedures for the imple9 mentation of fraud and abuse detection methods 

10 under all Federal health programs (including the 

11 programs under titles XVIII, XIX, and XXI of the 

12 Social Security Act) with respect to items and serv13 ices furnished by providers of services and suppliers 

14 that includes the following: 

15 (A) In the case of a new applicant to be 

16 such a provider or supplier, a background 

17 check, and in the case of a supplier a site visit 

18 prior to approval of participation in the pro19 gram and random unannounced site visits after 

20 such approval. 

21 (B) Not less than 5 years after the date of 

22 enactment of this Act, in the case of a provider 

23 or supplier who is not a new applicant, re-en24 rollment under the program, including a new 

25 background check and, in the case of a supplier, 


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1 a site-visit as part of the application process for 

2 such re-enrollment, and random unannounced 

3 site visits after such re-enrollment. 

4 (2) REQUIREMENT FOR PARTICIPATION.—In no 

5 case may a provider of services or supplier who does 

6 not meet the requirements under paragraph (1) par7 ticipate in any Federal health program. 

8 (3) BACKGROUND CHECKS.—The Secretary 

9 shall determine the extent of the background check 

10 conducted under paragraph (1), including whether— 

11 (A) a fingerprint check is necessary; 

12 (B) a background check shall be conducted 

13 with respect to additional employees, board 

14 members, contractors or other interested parties 

15 of the provider or supplier; and 

16 (C) any additional national background 

17 checks regarding exclusion from participation in 

18 Federal health programs (such as the program 

19 under titles XVIII, XIX, or XXI of the Social 

20 Security Act), including conviction of any fel21 ony, crime that involves an act of fraud or false 

22 statement, adverse actions taken by State li23 censing boards, bankruptcies, outstanding 

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1 spector General of the Department of Health 

2 and Human Services are necessary. 

3 (4) LIMITATION.—No payment may be made to 

4 a provider of services or supplier under any Federal 

5 health program if such provider or supplier fails to 

6 obtain a satisfactory background check under this 

7 subsection. 

8 (5) FEDERAL HEALTH PROGRAM.—In this sub9 section, the term ‘‘Federal health program’’ means 

10 any program that provides Federal payments or re11 imbursements to providers of health-related items or 

12 services, or suppliers of such items, for the provision 

13 of such items or services to an individual patient. 

14 (g) DEFINITION.—The term ‘‘Federal health agency’’ 

15 means the Department of Health and Human Services, 

16 the Department of Veterans Affairs, and any Federal 

17 agency with oversight or authority regarding the provision 

18 of any medical benefit, item, or service for which payment 

19 may be made under a Federal health care plan or contract. 

Æ 


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