II 

112TH CONGRESS 

1ST SESSION S. 454 

To amend titles XVIII and XIX of the Social Security Act to prevent fraud, 

waste, and abuse under Medicare, Medicaid, and CHIP, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 2, 2011 

Mr. GRASSLEY 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 prevent fraud, waste, and abuse under Medicare, Medicaid, and CHIP, 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 ‘‘Strengthening Program Integrity and Accountability in 

6 Health Care Act of 2011’’. 

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

8 this title is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Enhanced Medicare and Medicaid program integrity provisions. 


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Sec. 3. Requirements for the transmission of management implication reports 

by the HHS OIG. 

Sec. 4. Medical ID theft information sharing program and clearinghouse. 

Sec. 5. Permissive exclusion from Federal health care programs expanded to individuals and entities affiliated with sanctioned entities. 

Sec. 6. Public availability of Medicare claims data. 

Sec. 7. Medicaid exclusion from participation relating to certain ownership, control, and management affiliations. 

Sec. 8. Payment for illegal unapproved drugs. 

Sec. 9. Requiring individuals or entities that participate in or conduct activities 

under Federal health care programs to comply with certain 

Congressional requests. 

1 SEC. 2. ENHANCED MEDICARE AND MEDICAID PROGRAM 

2 INTEGRITY PROVISIONS. 

3 (a) MANDATORY SUSPENSION OF MEDICARE AND

4 MEDICAID PAYMENTS PENDING INVESTIGATION OF

5 CREDIBLE ALLEGATIONS OF FRAUD.—Section 1862(o)(1) 

6 of the Social Security Act (42 U.S.C. 1395y(o)(1)) is 

7 amended by striking ‘‘may’’ and inserting ‘‘shall’’. 

8 (b) EXTENSION OF NUMBER OF DAYS IN WHICH

9 MEDICARE CLAIMS ARE REQUIRED TO BE PAID IN

10 ORDER TO PREVENT OR COMBAT FRAUD, WASTE, OR

11 ABUSE.— 

12 (1) PART A CLAIMS.—Section 1816(c)(2) of the 

13 Social Security Act (42 U.S.C. 1395h(c)(2)) is 

14 amended— 

15 (A) in subparagraph (B)(ii)(V), by striking 

16 ‘‘with respect’’ and inserting ‘‘subject to sub17 paragraph (D), with respect’’; and 

18 (B) by adding at the end the following new 

19 subparagraph: 


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1 ‘‘(D)(i) Upon a determination by the Sec2 retary that there is a likelihood of fraud, waste, 

3 or abuse involving a particular category of pro4 viders of services or suppliers, categories of pro5 viders of services or suppliers in a certain geo6 graphic area, or individual providers of services 

7 or suppliers, the Secretary shall extend the 

8 number of calendar days described in subpara9 graph (B)(ii)(V) to— 

10 ‘‘(I) up to 365 calendar days with re11 spect to claims submitted by— 

12 ‘‘(aa) categories of providers of 

13 services or suppliers; or 

14 ‘‘(bb) categories of providers of 

15 services or suppliers in a certain geo16 graphic area; or 

17 ‘‘(II) such time that the Secretary de18 termines is necessary to ensure that the 

19 claims with respect to individual providers 

20 of services or suppliers are clean claims. 

21 ‘‘(ii) During the extended period of time 

22 under subclauses (I) and (II) of clause (ii), the 

23 Secretary shall engage in heightened scrutiny of 

24 claims, such as prepayment review and other 


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1 methods the Secretary determines to be appro2 priate. 

3 ‘‘(iii) Not later than 90 days after the date 

4 of enactment of this subparagraph and not less 

5 than annually thereafter, the Inspector General 

6 of the Department of Health and Human Serv7 ices shall submit to the Secretary a report con8 taining recommendations with respect to the 

9 application of this subparagraph and section 

10 1842(c)(2)(D). Not later than 60 days after re11 ceiving such a report, the Secretary shall sub12 mit to the Inspector General a written response 

13 to the recommendations contained in the report. 

14 ‘‘(iv) There shall be no administrative or 

15 judicial review under section 1869, section 

16 1878, or otherwise of the implementation of 

17 this subparagraph by the Secretary.’’. 

18 (2) PART B CLAIMS.—Section 1842(c)(2) of the 

19 Social Security Act (42 U.S.C. 1395u(c)(2)) is 

20 amended— 

21 (A) in subparagraph (B)(ii)(V), by striking 

22 ‘‘with respect’’ and inserting ‘‘subject to sub23 paragraph (D), with respect’’; and 

24 (B) by adding at the end the following new 

25 subparagraph: 


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1 ‘‘(D)(i) Upon a determination by the Sec2 retary that there is a likelihood of fraud, waste, 

3 or abuse involving a particular category of pro4 viders of services or suppliers, categories of pro5 viders of services or suppliers in a certain geo6 graphic area, or individual providers of services 

7 or suppliers, the Secretary shall extend the 

8 number of calendar days described in subpara9 graph (B)(ii)(V) to— 

10 ‘‘(I) up to 365 calendar days with re11 spect to claims submitted by— 

12 ‘‘(aa) categories of providers of 

13 services or suppliers; or 

14 ‘‘(bb) categories of providers of 

15 services or suppliers in a certain geo16 graphic area; or 

17 ‘‘(II) such time that the Secretary de18 termines is necessary to ensure that the 

19 claims with respect to individual providers 

20 of services or suppliers are clean claims. 

21 ‘‘(ii) During the extended period of time 

22 under subclauses (I) and (II) of clause (ii), the 

23 Secretary shall engage in heightened scrutiny of 

24 claims, such as prepayment review and other 


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1 methods the Secretary determines to be appro2 priate. 

3 ‘‘(iii) There shall be no administrative or 

4 judicial review under section 1869, section 

5 1878, or otherwise of the implementation of 

6 this subparagraph by the Secretary.’’. 

7 (3) EFFECTIVE DATE.— 

8 (A) IN GENERAL.—The amendments made 

9 by this subsection shall take effect on the date 

10 that is 6 months after the date of the enact11 ment of this Act. 

12 (B) EXPEDITING IMPLEMENTATION.—The 

13 Secretary shall promulgate regulations to carry 

14 out the amendments made by this subsection 

15 which may be effective and final immediately on 

16 an interim basis as of the date of publication of 

17 the interim final regulation. If the Secretary 

18 provides for an interim final regulation, the 

19 Secretary shall provide for a period of public 

20 comment on such regulation after the date of 

21 publication. The Secretary may change or revise 

22 such regulation after completion of the period 

23 of public comment. 


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1 SEC. 3. REQUIREMENTS FOR THE TRANSMISSION OF MAN2 AGEMENT IMPLICATION REPORTS BY THE 

3 HHS OIG. 

4 Section 1128J of the Social Security Act (42 U.S.C. 

5 1320a–7k) is amended by adding at the end the following 

6 new subsection: 

7 ‘‘(f) TRANSMISSION OF MANAGEMENT IMPLICATION

8 REPORTS BY THE HHS OIG.— 

9 ‘‘(1) CONGRESSIONAL NOTIFICATION.—Not 

10 later than 30 days after the transmission by the In11 spector General of the Department of Health and 

12 Human Services to another agency of the Depart13 ment of Health and Human Services of a manage14 ment implication report, the Inspector General shall 

15 notify the relevant committees of Congress of such 

16 transmission. 

17 ‘‘(2) SECRETARIAL RESPONSE.—The Secretary 

18 shall respond to a management implication report 

19 transmitted under paragraph (1) not later than 90 

20 days after such transmission. 

21 ‘‘(3) RELEVANT COMMITTEES OF CONGRESS

22 DEFINED.—In this subsection, the term ‘relevant 

23 committees of Congress’ means the Committees on 

24 Ways and Means and Energy and Commerce of the 

25 House of Representatives and the Committee on Fi26 nance of the Senate.’’. 


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1 SEC. 4. MEDICAL ID THEFT INFORMATION SHARING PRO2 GRAM AND CLEARINGHOUSE. 

3 (a) ESTABLISHMENT.—Not later than 24 months 

4 after the date of enactment of this Act, the Secretary of 

5 Health and Human Services (in this section referred to 

6 as the ‘‘Secretary’’), acting through the Administrator of 

7 the Centers for Medicare & Medicaid Services and in co8 ordination with the Chairman of the Federal Trade Com9 mission, shall establish an information sharing program 

10 regarding beneficiary medical ID theft under the pro11 grams under titles XVIII, XIX, and XXI of the Social Se12 curity Act (in this section referred to as the ‘‘program’’). 

13 (b) CONTENTS OF PROGRAM.—The program shall in14 clude— 

15 (1) the establishment of methods to identify 

16 and detect relevant warning signs of medical ID 

17 theft; 

18 (2) the establishment of appropriate responses 

19 to such warning signs that would mitigate and pre20 vent beneficiary medical ID theft; and 

21 (3) the development of a detailed plan to up22 date the program as appropriate, taking into consid23 eration such warning signs and appropriate re24 sponses. 

25 (c) ESTABLISHMENT OF CLEARINGHOUSE.—The 

26 Secretary, in coordination with the Chairman of the FedVerDate Mar 15 2010 05:32 Mar 03, 2011 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S454.IS S454

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1 eral Trade Commission, shall establish a clearinghouse at 

2 the Centers for Medicare & Medicaid Services that collects 

3 reports of ID theft against beneficiaries under the pro4 grams under titles XVIII, XIX, and XXI of the Social Se5 curity Act from the Federal Trade Commission and other 

6 sources determined appropriate by the Secretary. Such 

7 clearinghouse shall be used to fight medical ID theft 

8 against beneficiaries and to prevent the improper payment 

9 of claims under such programs. 

10 SEC. 5. PERMISSIVE EXCLUSION FROM FEDERAL HEALTH 

11 CARE PROGRAMS EXPANDED TO INDIVID12 UALS AND ENTITIES AFFILIATED WITH SANC13 TIONED ENTITIES. 

14 Section 1128(b)(15) of the Social Security Act (42 

15 U.S.C. 1320a–7(b)(15)) is amended to read as follows: 

16 ‘‘(15) INDIVIDUALS OR ENTITIES AFFILIATED

17 WITH A SANCTIONED ENTITY.—(A) Any of the fol18 lowing: 

19 ‘‘(i) Any individual who— 

20 ‘‘(I) is a person with an ownership or 

21 control interest (as defined in section 

22 1124(a)(3)) in a sanctioned entity or an 

23 affiliated entity of such sanctioned entity 

24 (or was a person with such an interest at 

25 the time of any of the conduct that formed 


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1 a basis for the conviction or exclusion de2 scribed in subparagraph (B)); and 

3 ‘‘(II) knows or should know (as de4 fined in section 1128A(i)(7)) (or knew or 

5 should have known) of such conduct. 

6 ‘‘(ii) Any individual who is an officer or 

7 managing employee (as defined in section 

8 1126(b)) of a sanctioned entity or affiliated en9 tity of such sanctioned entity (or was such an 

10 officer or managing employee at the time of any 

11 of the conduct that formed a basis for the con12 viction or exclusion described in subparagraph 

13 (B)). 

14 ‘‘(iii) Any affiliated entity of a sanctioned 

15 entity. 

16 ‘‘(B) For purposes of this paragraph, the term 

17 ‘sanctioned entity’ means an entity— 

18 ‘‘(i) that has been convicted of any offense 

19 described in subsection (a) or in paragraph (1), 

20 (2), or (3) of this subsection; or 

21 ‘‘(ii) that has been excluded from partici22 pation under a program under title XVIII or 

23 under a State health care program. 


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1 ‘‘(C)(i) For purposes of this paragraph, the 

2 term ‘affiliated entity’ means, with respect to a 

3 sanctioned entity— 

4 ‘‘(I) an entity affiliated with such sanc5 tioned entity; and 

6 ‘‘(II) an entity that was so affiliated at the 

7 time of any of the conduct that formed the 

8 basis for the conviction or exclusion described 

9 in subparagraph (B). 

10 ‘‘(ii) For purposes of clause (i), an entity 

11 shall be treated as affiliated with another entity 

12 if— 

13 ‘‘(I) one of the entities is a person 

14 with an ownership or control interest (as 

15 defined in section 1124(a)(3)) in the other 

16 entity (or had such an interest at the time 

17 of any of the conduct that formed a basis 

18 for the conviction or exclusion described in 

19 subparagraph (B)); 

20 ‘‘(II) there is a person with an owner21 ship or control interest (as defined in sec22 tion 1124(a)(3)) in both entities (or had 

23 such an interest at the time of any of the 

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1 tion or exclusion described in subpara2 graph (B)); or 

3 ‘‘(III) there is a person who is an offi4 cer or managing employee (as defined in 

5 section 1126(b)) of both entities (or was 

6 such an officer or managing employee at 

7 the time of any of the conduct that formed 

8 a basis for the conviction or exclusion de9 scribed in subparagraph (B)).’’. 

10 SEC. 6. PUBLIC AVAILABILITY OF MEDICARE CLAIMS DATA. 

11 Section 1128J of the Social Security Act (42 U.S.C. 

12 1320a–7k), as amended by section 3, is amended by add13 ing at the end the following new subsection: 

14 ‘‘(g) PUBLIC AVAILABILITY OF MEDICARE CLAIMS

15 DATA.— 

16 ‘‘(1) IN GENERAL.—The Secretary shall, to the 

17 extent consistent with applicable information, pri18 vacy, security, and disclosure laws, including the 

19 regulations promulgated under the Health Insurance 

20 Portability and Accountability Act of 1996 and sec21 tion 552a of title 5, United States Code, make avail22 able to the public claims and payment data of the 

23 Department of Health and Human Services related 

24 to title XVIII, including data on payments made to 

25 any provider of services or supplier under such title. 


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1 ‘‘(2) IMPLEMENTATION.—Not later than De2 cember 31, 2012, the Secretary shall promulgate 

3 regulations to carry out this subsection.’’. 

4 SEC. 7. MEDICAID EXCLUSION FROM PARTICIPATION RE5 LATING TO CERTAIN OWNERSHIP, CONTROL, 

6 AND MANAGEMENT AFFILIATIONS. 

7 Section 1902(a) of the Social Security Act (42 U.S.C. 

8 1396a(a)) is amended— 

9 (1) by striking ‘‘and’’ at the end of paragraph 

10 (82); 

11 (2) by striking the period at the end of para12 graph (83) and inserting ‘‘; and’’; and 

13 (3) by inserting after paragraph (83) the fol14 lowing new paragraph: 

15 ‘‘(84) provide that the State agency described 

16 in paragraph (9) exclude, with respect to a period, 

17 any individual or entity from participation in the 

18 program under the State plan if such individual or 

19 entity owns, controls, or manages an entity that (or 

20 if such entity is owned, controlled, or managed by an 

21 individual or entity that)— 

22 ‘‘(A) has unpaid overpayments (as defined 

23 by the Secretary) under this title during such 

24 period determined by the Secretary or the State 

25 agency to be delinquent; 


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1 ‘‘(B) is suspended or excluded from par2 ticipation under or whose participation is termi3 nated under this title during such period; or 

4 ‘‘(C) is affiliated with an individual or enti5 ty that has been suspended or excluded from 

6 participation under this title or whose participa7 tion is terminated under this title during such 

8 period.’’. 

9 SEC. 8. PAYMENT FOR ILLEGAL UNAPPROVED DRUGS. 

10 (a) FINDINGS.—Congress finds that each year, the 

11 Medicaid program under title XIX of the Social Security 

12 Act (42 U.S.C. 1396 et seq.) pays millions of dollars in 

13 reimbursement for covered outpatient drugs that are not 

14 approved by the Food and Drug Administration under a 

15 new drug application under section 505(b) of the Federal 

16 Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)) or an 

17 abbreviated new drug application under section 505(j) of 

18 such Act, or that such drug is not subject to such section 

19 or section 512 due to the application of section 201(p) 

20 of such Act (21 U.S.C. 321(p)). 

21 (b) LISTING OF DRUGS AND DEVICES.—Section 510 

22 of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 

23 360) is amended— 

24 (1) in subsection (j)(1)(B)— 


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1 (A) in clause (i), by inserting ‘‘in the case 

2 of a drug, the authority under this Act that 

3 does not require such drug to be subject to sec4 tion 505 and section 512,’’ after ‘‘labeling for 

5 such drug or device,’’; and 

6 (B) in clause (ii), by inserting ‘‘, in the 

7 case of a drug, the authority under this Act 

8 that does not require such drug to be subject to 

9 section 505 and section 512,’’ after ‘‘the label 

10 and package insert for such drug or device’’; 

11 and 

12 (2) in subsection (f)— 

13 (A) by striking ‘‘(f) The Secretary’’ and in14 serting the following: 

15 ‘‘(f) INSPECTION BY PUBLIC OF REGISTRATION.— 

16 ‘‘(1) IN GENERAL.—The Secretary’’; and 

17 (B) by adding at the end the following new 

18 paragraph: 

19 ‘‘(2) LIST OF DRUGS THAT ARE NOT APPROVED

20 UNDER SECTION 505 OR 512.—Not later than Janu21 ary 1, 2012, the Secretary shall make available to 

22 the public on the Internet Web site of the Food and 

23 Drug Administration a list that includes, for each 

24 drug described in subsection (j)(1)(B)— 

25 ‘‘(A) the drug; 


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1 ‘‘(B) the person who listed such drug; and 

2 ‘‘(C) the authority under this Act that 

3 does not require such drug to be subject to sec4 tion 505 and section 512, as provided by such 

5 person in such list.’’. 

6 (c) PAYMENT FOR COVERED OUTPATIENT DRUGS.— 

7 Section 1927 of the Social Security Act (42 U.S.C. 1396r– 

8 8) is amended by inserting at the end the following new 

9 subsection: 

10 ‘‘(l) CONDITION.—Beginning January 1, 2012, no 

11 State shall make any payment under this section for any 

12 covered outpatient drug unless such State first verifies 

13 with the Food and Drug Administration that such covered 

14 outpatient drug has been approved by the Food and Drug 

15 Administration under a new drug application under sec16 tion 505(b) of the Federal Food, Drug, and Cosmetic Act 

17 (21 U.S.C. 355(b)) or an abbreviated new drug application 

18 under section 505(j) of such Act, or that such drug is not 

19 subject to such section or section 512 due to the applica20 tion of section 201(p) of such Act (21 U.S.C. 321(p)). The 

21 Secretary shall have the authority to proscribe regulations 

22 to create an information sharing protocol to allow States 

23 to verify that a covered outpatient drug has been approved 

24 by the Food and Drug Administration.’’. 


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1 SEC. 9. REQUIRING INDIVIDUALS OR ENTITIES THAT PAR2 TICIPATE IN OR CONDUCT ACTIVITIES 

3 UNDER FEDERAL HEALTH CARE PROGRAMS 

4 TO COMPLY WITH CERTAIN CONGRESSIONAL 

5 REQUESTS. 

6 (a) IN GENERAL.—Section 1128J of the Social Secu7 rity Act (42 U.S.C. 1320a–7k), as amended by section 6, 

8 is amended by adding at the end the following new sub9 section: 

10 ‘‘(h) COMPLIANCE WITH CERTAIN REQUESTS BY IN11 DIVIDUALS AND ENTITIES THAT PARTICIPATE IN OR

12 CONDUCT ACTIVITIES UNDER FEDERAL HEALTH CARE

13 PROGRAMS.— 

14 ‘‘(1) IN GENERAL.—Any individual or entity 

15 that participates in or conducts activities under a 

16 Federal health care program (as defined in section 

17 1128B(f)) shall, as a condition of such participation 

18 or such conduct, comply (at a time and in a manner 

19 specified by the Chairman or ranking member) with 

20 any request submitted by the Chairman or the rank21 ing member of a relevant committee of Congress to 

22 the individual or entity for the following: 

23 ‘‘(A) Documents. 

24 ‘‘(B) Information. 

25 ‘‘(C) Interviews. 


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1 ‘‘(2) RELEVANT COMMITTEE OF CONGRESS DE2 FINED.—In this subsection, the term ‘relevant com3 mittee of Congress’ means the Committees on Ways 

4 and Means and Energy and Commerce of the House 

5 of Representatives and the Committee on Finance of 

6 the Senate.’’. 

7 (b) EFFECTIVE DATE.—The amendments made by 

8 this section shall take effect on the date that is 2 years 

9 after the date of enactment of this Act. 

Æ 


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