I 

114TH CONGRESS 

1ST SESSION H. R. 2156 

To amend title XVIII of the Social Security Act to reform the practices 

of recovery audit contractors under the Medicare program, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 30, 2015 

Mr. GRAVES of Missouri (for himself, Mr. SCHIFF, Mr. BOST, Mrs. WAGNER, 

and Mr. CRAWFORD) introduced the following bill; which was referred to 

the Committee on Ways and Means, and in addition to the Committee 

on Energy and Commerce, for a period to be subsequently determined by 

the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend title XVIII of the Social Security Act to reform 

the practices of recovery audit contractors under the 

Medicare program, 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. 

4 This Act may be cited as the ‘‘Medicare Audit Im5 provement Act of 2015’’. 


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1 SEC. 2. REFORMING THE PRACTICES OF RECOVERY AUDIT 

2 CONTRACTORS UNDER THE MEDICARE PRO3 GRAM. 

4 (a) ELIMINATION OF CONTINGENCY FEE PAYMENT

5 SYSTEM.—Section 1893(h) of the Social Security Act (42 

6 U.S.C. 1395ddd(h)) is amended— 

7 (1) in paragraph (1), by inserting ‘‘, for recov8 ery activities conducted during a fiscal year before 

9 fiscal year 2015’’ after ‘‘Under the contracts’’; and 

10 (2) by adding at the end the following new 

11 paragraph: 

12 ‘‘(11) PAYMENT FOR RECOVERY ACTIVITIES

13 PERFORMED AFTER FISCAL YEAR 2014.— 

14 ‘‘(A) IN GENERAL.—Under the contracts, 

15 subject to paragraphs (B) and (C), payment 

16 shall be made to recovery audit contractors for 

17 recovery activities conducted during fiscal year 

18 2015 and each fiscal year thereafter in the 

19 same manner, and from the same amounts, as 

20 payment is made to eligible entities under con21 tracts entered into for recovery activities con22 ducted during fiscal year 2014 under subsection 

23 (a). 

24 ‘‘(B) PROHIBITION ON INCENTIVE PAY25 MENTS.—Under the contracts, payment made 

26 to a recovery audit contractor for recovery acVerDate Sep 11 2014 01:10 May 12, 2015 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2156.IH H2156

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1 tivities conducted during fiscal year 2015 or 

2 any fiscal year thereafter may not include any 

3 incentive payments. 

4 ‘‘(C) PERFORMANCE ACCOUNTABILITY.— 

5 ‘‘(i) IN GENERAL.—Under the con6 tracts, payment made to a recovery audit 

7 contractor for recovery activities conducted 

8 during fiscal year 2015 or any fiscal year 

9 thereafter shall, in the case that the con10 tractor has a complex audit denial overturn 

11 rate at the end of such fiscal year (as cal12 culated under the methodology described in 

13 clause (iv)) that is .1 or greater, be re14 duced in an amount determined in accord15 ance with clause (ii). 

16 ‘‘(ii) PAYMENT REDUCTIONS.— 

17 ‘‘(I) SLIDING SCALE OF AMOUNT

18 OF REDUCTIONS.—The Secretary 

19 shall establish, for purposes of deter20 mining the amount of a reduction in 

21 payment to a recovery audit con22 tractor under clause (i) for recovery 

23 activities conducted during fiscal year, 

24 a linear sliding scale of payment re25 ductions for recovery audit contracVerDate Sep 11 2014 01:10 May 12, 2015 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2156.IH H2156

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1 tors for such fiscal year. Under such 

2 linear sliding scale, the amount of 

3 such a reduction in payment to a re4 covery audit contractor for a fiscal 

5 year shall be calculated in a manner 

6 that provides for such reduction to be 

7 greater than the reduction for such 

8 fiscal year for recovery audit contrac9 tors that have complex audit denial 

10 overturn rates at the end of such fis11 cal year (as calculated under the 

12 methodology described in clause (iv)) 

13 that are lower than the complex audit 

14 denial overturn rate of the contractor 

15 at the end of such fiscal year (as so 

16 calculated). 

17 ‘‘(II) MANNER OF COLLECTING

18 REDUCTION.—The Secretary may as19 sess and collect the reductions in pay20 ment to recovery audit contractors 

21 under clause (i) in such manner as 

22 the Secretary may specify (such as by 

23 reducing the amount paid to the con24 tractor for recovery activities con25 ducted during a fiscal year or by asVerDate Sep 11 2014 01:10 May 12, 2015 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2156.IH H2156

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1 sessing the reduction as a separate 

2 penalty payment to be paid to the 

3 Secretary by the contractor with re4 spect to each complex audit denial 

5 issued by the contractor that is over6 turned on appeal). 

7 ‘‘(iii) TIMING OF DETERMINATIONS OF

8 PAYMENT REDUCTIONS.—The Secretary 

9 shall, with respect to a recovery audit con10 tractor, determine not later than six 

11 months after the end of a fiscal year— 

12 ‘‘(I) whether to reduce payment 

13 to the recovery audit contractor under 

14 clause (i) for recovery activities con15 ducted during such fiscal year; and 

16 ‘‘(II) in the case that the Sec17 retary determines to so reduce pay18 ment to the contractor, the amount of 

19 such payment reduction. 

20 ‘‘(iv) METHODOLOGY FOR CALCULA21 TION OF OVERTURNED COMPLEX AUDIT

22 DENIAL OVERTURN RATE.— 

23 ‘‘(I) CALCULATION OF OVERTURN

24 RATE.—The Secretary shall calculate 

25 a complex audit denial overturn rate 


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1 for a recovery audit contractor for a 

2 fiscal year by— 

3 ‘‘(aa) determining, with re4 spect to the contract entered into 

5 under paragraph (1) by the con6 tractor, the number of complex 

7 audit denials issued by the con8 tractor under the contract (in9 cluding denials issued before such 

10 fiscal year and during such fiscal 

11 year) that are overturned on ap12 peal; and 

13 ‘‘(bb) dividing the number 

14 determined under item (aa) by 

15 the number of complex audit de16 nials issued by the contractor 

17 under such contract (including 

18 denials issued before such fiscal 

19 year and during such fiscal year). 

20 ‘‘(II) FAIRNESS AND TRANS21 PARENCY.—The Secretary shall cal22 culate the percentage described in 

23 subclause (I) in a fair and trans24 parent manner. 


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1 ‘‘(III) ACCOUNTING FOR SUBSE2 QUENTLY OVERTURNED APPEALS.— 

3 The Secretary shall calculate the per4 centage described in subclause (I) in a 

5 manner that accounts for the likeli6 hood that complex audit denials 

7 issued by the contractor for such fis8 cal year will be overturned on appeal 

9 in a subsequent fiscal year. 

10 ‘‘(IV) COMPLEX AUDIT DENIAL

11 DEFINED.—In this subparagraph, the 

12 term ‘complex audit denial’ means a 

13 denial by a recovery audit contractor 

14 of a claim for payment under this title 

15 submitted by a hospital, psychiatric 

16 hospital, or critical access hospital 

17 that is so denied by the contractor 

18 after the contractor has— 

19 ‘‘(aa) requested that the 

20 hospital, psychiatric hospital, or 

21 critical access hospital, in order 

22 to support such claim for pay23 ment, provide supporting medical 

24 records to the contractor; and 


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1 ‘‘(bb) reviewed such medical 

2 records in order to determine 

3 whether an improper payment 

4 has been made to the hospital, 

5 psychiatric hospital, or critical 

6 access hospital for such claim. 

7 ‘‘(V) OVERTURNED ON APPEAL

8 DEFINED.—In this subparagraph, the 

9 term ‘overturned on appeal’ means, 

10 with respect to a complex audit de11 nial, a denial that is overturned on 

12 appeal at the reconsideration level, the 

13 redetermination level, or the adminis14 trative law judge hearing level. 

15 ‘‘(D) APPLICATION TO EXISTING CON16 TRACTS.—Not later than 60 days after the date 

17 of the enactment of this paragraph, the Sec18 retary shall modify, as necessary, each contract 

19 under paragraph (1) that the Secretary entered 

20 into prior to such date of enactment in order to 

21 ensure that payment with respect to recovery 

22 activities conducted under such contract is 

23 made in accordance with the requirements de24 scribed in this paragraph.’’. 


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1 (b) ELIMINATION OF ONE-YEAR TIMELY FILING

2 LIMIT TO REBILL PART B CLAIMS.— 

3 (1) IN GENERAL.—Section 1842(b) of the So4 cial Security Act (42 U.S.C. 1395u(b)) is amended 

5 by adding at the end the following new paragraph: 

6 ‘‘(20) EXCEPTION TO THE ONE-YEAR TIMELY

7 FILING LIMIT FOR CERTAIN REBILLED CLAIMS.— 

8 ‘‘(A) IN GENERAL.—In the case of a claim 

9 submitted under this part by a hospital (as de10 fined in subparagraph (B)(i)) for hospital serv11 ices with respect to which there was a previous 

12 claim submitted under part A as inpatient hos13 pital services or inpatient critical access hos14 pital services that was denied by a Medicare 

15 contractor (as defined in subparagraph (B)(ii)) 

16 because of a determination that the inpatient 

17 admission was not medically reasonable and 

18 necessary under section 1862(a)(1)(A), the 

19 deadline described in this paragraph is 180 

20 days from the date of the final denial of such 

21 claim under part A. 

22 ‘‘(B) DEFINITIONS.—In this paragraph: 

23 ‘‘(i) HOSPITAL.—The term ‘hospital’ 

24 has the meaning given such term in section 

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1 pital (as defined in section 1861(f)) and a 

2 critical access hospital (as defined in sec3 tion 1861(mm)(1)). 

4 ‘‘(ii) MEDICARE CONTRACTOR.—The 

5 term ‘Medicare contractor’ has the mean6 ing given such term under section 1889(g), 

7 and includes a recovery audit contractor 

8 with a contract under section 1893(h). 

9 ‘‘(iii) FINAL DENIAL.—The term ‘final 

10 denial’ means— 

11 ‘‘(I) in the case that a hospital 

12 elects not to appeal a denial described 

13 in subparagraph (A) by a Medicare 

14 contractor, the date of such denial; or 

15 ‘‘(II) in the case that a hospital 

16 elects to appeal a such a denial, the 

17 date on which such appeal is ex18 hausted.’’. 

19 (2) CONFORMING AMENDMENTS.— 

20 (A) Section 1835(a)(1) of the Social Secu21 rity Act (42 U.S.C. 1395n(a)(1)) is amended by 

22 inserting ‘‘or, in the case of a claim described 

23 in section 1842(b)(20), the no later than the 

24 deadline described in such paragraph’’ after 

25 ‘‘the date of service’’. 


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1 (B) Section 1842(b)(3)(B) of the Social 

2 Security Act (42 U.S.C. 1395u(b)(3)(B)) is 

3 amended in the flush language following clause 

4 (ii) by inserting ‘‘or, in the case of a claim de5 scribed in section 1842(b)(20), the no later 

6 than the deadline described in such paragraph’’ 

7 after ‘‘the date of service’’. 

8 (3) EFFECTIVE DATE.—The amendments made 

9 by this subsection shall take effect on the date of the 

10 enactment of this Act and shall apply to claims sub11 mitted under part B of title XVIII of the Social Se12 curity Act for hospital services for which there was 

13 a previous claim submitted under part A as inpa14 tient hospital services or inpatient critical access 

15 hospital services that was subject to a final denial 

16 (as defined in paragraph (20)(B)(iii) of section 

17 1842(b) of such Act (42 U.S.C. 1395u(b)) on or 

18 after such date of enactment. 

19 (c) MEDICAL DOCUMENTATION CONSIDERED FOR

20 MEDICAL NECESSITY REVIEWS OF CLAIMS FOR INPA21 TIENT HOSPITAL SERVICES.—Section 1862(a) of the So22 cial Security Act (42 U.S.C. 1395y(a)) is amended by add23 ing at the end the following new sentence: ‘‘A determina24 tion under paragraph (1) of whether inpatient hospital 

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1 nished to an individual on or after the date of the enact2 ment of this sentence are reasonable and necessary shall 

3 be based solely upon information available to the admit4 ting physician at the time of the inpatient admission of 

5 the individual for such inpatient services, as documented 

6 in the medical record.’’ 

Æ 


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