I 

113TH CONGRESS 

1ST SESSION H. R. 1250 

To amend title XVIII of the Social Security Act to improve operations 

of recovery auditors under the Medicare integrity program, to increase 

transparency and accuracy in audits conducted by contractors, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 19, 2013 

Mr. GRAVES of Missouri (for himself, Mr. SCHIFF, Mr. HANNA, Mr. 

HUELSKAMP, Mr. LOEBSACK, Mr. OWENS, Mr. FARR, Mr. POMPEO, Mr. 

LONG, Mr. KING of Iowa, and Mr. KING of New York) 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 improve 

operations of recovery auditors under the Medicare integrity program, to increase transparency and accuracy in 

audits conducted by contractors, 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 ‘‘Medicare Audit Improvement Act of 2013’’. 


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

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Combined additional documentation request limit. 

Sec. 3. Improvement of recovery auditor operations. 

Sec. 4. Greater transparency of recovery auditor performance. 

Sec. 5. Accurate payment for rebilled claims. 

Sec. 6. Requirement for physician validation for medical necessity denials. 

Sec. 7. Assuring due process in application of guidelines for reopening and revision of determinations. 

3 SEC. 2. COMBINED ADDITIONAL DOCUMENTATION RE4 QUEST LIMIT. 

5 (a) ESTABLISHMENT OF LIMITS PER HOSPITAL.— 

6 The Secretary of Health and Human Services shall estab7 lish a process under which the number of additional docu8 mentation requests made to a hospital (as defined in sub9 section (c)(3)) by Medicare contractors (as defined in sub10 section (c)(1)) pursuant to prepayment and postpayment 

11 audits that require a hospital to submit a medical record 

12 for audit purposes, as required under chapter 3 of the 

13 Medicare Program Integrity Manual, or otherwise, shall 

14 be subject to a single, combined maximum limit of addi15 tional documentation requests per year for the Medicare 

16 contractors specified in subsection (c)(1). However, such 

17 maximum limit shall be applied incrementally as a limit 

18 for requests for additional documentation in 45-day peri19 ods during the year so that the maximum number of such 

20 requests in a 45-day period is 500 or, in the case of a 


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1 hospital that receives less than $100,000,000 in Medicare 

2 inpatient hospital payments in the previous year, 350. 

3 (b) ESTABLISHMENT OF PERCENTAGE-BASED LIM4 ITS PER CLAIM TYPE.—In addition to the limit estab5 lished under subsection (a), the Secretary shall establish 

6 a distinct additional documentation request limit for each 

7 hospital claim type (as defined in subsection (c)(2)) for 

8 each hospital for a 45-day period in a year. For a hospital 

9 for each hospital claim type for a 45-day period in a cal10 endar year, the additional documentation request limit 

11 under this subsection for a claim type shall be 2 percent 

12 of the total number of hospital discharges for such hos13 pital for the previous calendar year divided by 8. 

14 (c) DEFINITIONS.—In this section: 

15 (1) MEDICARE CONTRACTOR.—The term 

16 ‘‘Medicare contractor’’ means any of the following: 

17 (A) A Medicare administrative contractor 

18 under section 1874A of the Social Security Act 

19 (42 U.S.C. 1395kk), including a fiscal inter20 mediary and a carrier under sections 1816 and 

21 1842, respectively. 

22 (B) A recovery audit contractor under sec23 tion 1893(h) of such Act (42 U.S.C. 

24 1395ddd(h)). 


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1 (C) A Comprehensive Error Rate Testing 

2 (CERT) program contractor with a contract 

3 with the Secretary of Health and Human Serv4 ices to review error rates under title XVIII of 

5 the Social Security Act (42 U.S.C. 1395 et 

6 seq.). 

7 (2) HOSPITAL CLAIM TYPE.—Each of the fol8 lowing shall be considered a separate ‘‘hospital claim 

9 type’’: 

10 (A) IPPS.—A claim for payment under 

11 section 1886(d) of the Social Security Act (42 

12 U.S.C. 1395ww(d)) made by a hospital for fur13 nishing inpatient hospital services. 

14 (B) OUTPATIENT HOSPITAL SERVICES.—A 

15 claim for payment under section 1833(t) of 

16 such Act (42 U.S.C. 1395l(t)) made by a hos17 pital for furnishing covered OPD services. 

18 (C) CAH SERVICES.—A claim for payment 

19 for inpatient or outpatient critical access hos20 pital services, whether under section 1814(l) of 

21 such Act (42 U.S.C. 1395f(l)) or under section 

22 1834(g) of such Act (42 U.S.C. 1395m(g)). 

23 (D) INPATIENT REHABILITATION SERV24 ICES.—A claim for payment under section 

25 1886(j) of such Act (42 U.S.C. 1395ww(j)) 


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1 made by a hospital for furnishing inpatient re2 habilitation services. 

3 (E) OTHER INPATIENT SERVICES.—A 

4 claim for payment under any other provision of 

5 section 1886 of such Act (42 U.S.C. 1395ww) 

6 made by a hospital for furnishing inpatient hos7 pital services, such as subsection (s) (relating to 

8 inpatient hospital services furnish by a psy9 chiatric hospital) or subsection (m) (relating to 

10 inpatient hospital services furnish by a long 

11 term care hospital). 

12 (F) SKILLED NURSING FACILITY SERV13 ICES.—A claim for payment under section 

14 1888(e) of such Act (42 U.S.C. 1395yy(e)) 

15 made by a hospital for furnishing covered 

16 skilled nursing facility services. 

17 (3) HOSPITAL.—The term ‘‘hospital’’ means 

18 the campus of a hospital (as defined in subsection 

19 (e) of section 1861 of the Social Security Act (42 

20 U.S.C. 1395x)) or of a psychiatric hospital (as de21 fined in subsection (f) of such section), a com22 prehensive outpatient rehabilitation facility (as de23 fined in subsection (cc)(2) of such section), a critical 

24 access hospital (as defined in subsection (mm) of 

25 such section), or a long-term care hospital (as deVerDate Mar 15 2010 15:58 Mar 27, 2013 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1250.IH H1250

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1 fined in subsection (ccc) of such section), as identi2 fied by the tax identification number of the hospital, 

3 and includes all inpatient hospital facilities under 

4 such number located in the same area as such cam5 pus. 

6 (d) EFFECTIVE DATE.—This section takes effect on 

7 the date of the enactment of this Act and shall apply with 

8 respect to claims submitted for payment under title XVIII 

9 of the Social Security Act for items or services furnished 

10 by providers of services or suppliers on or after the first 

11 day of the first month beginning 60 days after the date 

12 of the enactment of this Act. 

13 SEC. 3. IMPROVEMENT OF RECOVERY AUDITOR OPER14 ATIONS. 

15 (a) RECOVERY AUDITORS.— 

16 (1) IN GENERAL.—Section 1893(h) of the So17 cial Security Act (42 U.S.C. 1395ddd(h)) is amend18 ed by adding at the end the following new para19 graph: 

20 ‘‘(10) MANDATORY TERMS AND CONDITIONS

21 UNDER CONTRACTS WITH RECOVERY AUDIT CON22 TRACTORS.—In addition to such other terms and 

23 conditions as the Secretary may require under con24 tracts with recovery audit contractors under this 

25 subsection with respect to a hospital, including a 


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1 psychiatric hospital (as defined in section 1861(f)), 

2 the Secretary shall ensure each of the following re3 quirements are included under such contracts: 

4 ‘‘(A) PENALTIES FOR CERTAIN COMPLI5 ANCE FAILURES.— 

6 ‘‘(i) IN GENERAL.—Each such con7 tract shall provide for the imposition of fi8 nancial penalties by the Secretary under 

9 such contract in the case of any recovery 

10 audit contractor with respect to which the 

11 Secretary determines there is a pattern of 

12 failure by such contractor to meet any pro13 gram requirement described in clause (ii). 

14 The Secretary shall establish the amount 

15 of financial penalties and the periodicity 

16 under which such penalties shall be im17 posed under this subparagraph, in no case 

18 less often than annually. 

19 ‘‘(ii) PROGRAM REQUIREMENT DE20 SCRIBED.—For purposes of this subpara21 graph, each of the following requirements 

22 under the statement of work for a recovery 

23 audit contractor constitutes a program re24 quirement with respect to which failure to 

25 meet such requirement shall result in the 


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1 imposition of a financial penalty under 

2 clause (i): 

3 ‘‘(I) AUDIT DEADLINE.—Com4 pleting a determination with respect 

5 to each audit of a hospital the recov6 ery audit contractor conducts within 

7 the timeframes applicable under 

8 guidelines of the Secretary. 

9 ‘‘(II) TIMELY COMMUNICA10 TION.—In the case of a denial of a 

11 claim of a hospital, furnishing the 

12 hospital the required notice of the 

13 pending denial in a timely fashion 

14 consistent with claims and appeals 

15 timeframes specified in guidelines of 

16 the Secretary. 

17 ‘‘(B) PENALTY FOR OVERTURNED AP18 PEALS.— 

19 ‘‘(i) IN GENERAL.—Each such con20 tract shall require a recovery audit con21 tractor to pay a fee to the prevailing party 

22 in the case of a claim denial that is over23 turned on appeal. 

24 ‘‘(ii) FEE AMOUNT.—The amount of 

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1 tractor to a prevailing party under clause 

2 (i) shall be determined under a fee sched3 ule established by the Secretary for such 

4 purpose. The amount of such fee under 

5 such fee schedule shall reflect the cost in6 curred by a typical hospital in appealing a 

7 claim denied by a recovery audit con8 tractor. 

9 ‘‘(C) POSTPAYMENT AND PREPAYMENT AU10 DITS.— 

11 ‘‘(i) REQUIRING FOCUS ON WIDE12 SPREAD PAYMENT ERRORS.— 

13 ‘‘(I) IN GENERAL.—The Sec14 retary shall not approve the conduct 

15 of a postpayment or prepayment med16 ical necessity audit by a recovery 

17 audit contractor unless such review 

18 addresses a widespread payment error 

19 rate (as defined in clause (ii)). 

20 ‘‘(II) CESSATION OF AUDIT.—A 

21 recovery audit contractor that com22 mences an audit under subclause (I) 

23 shall cease such audit or any similar 

24 audits, if upon annual review, the ap25 plicable payment error rate is no 


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1 longer a widespread payment error 

2 rate (as so defined). 

3 ‘‘(ii) WIDESPREAD PAYMENT ERROR

4 RATE DEFINED.— 

5 ‘‘(I) IN GENERAL.—In this sub6 paragraph, the term ‘widespread pay7 ment error rate’ means, with respect 

8 to medical necessity reviews conducted 

9 by a recovery audit contractor, a pay10 ment error rate that exceeds the rate 

11 specified in subclause (II) for a par12 ticular medical necessity audit deter13 mined by the Secretary using a statis14 tically significant sampling of claims 

15 submitted by hospitals in the jurisdic16 tion of the recovery audit contractor 

17 and adjusted to take into account 

18 claim denials overturned on appeal. 

19 ‘‘(II) RATE SPECIFIED.—The 

20 rate specified in this subclause is 40 

21 percent, except that the Secretary 

22 shall annually evaluate such rate and 

23 reduce it as necessary to account for 

24 changes in payment error rates with 


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1 the aim of continued, steady improve2 ment of billing practices. 

3 ‘‘(D) GUIDELINES FOR PREPAYMENT RE4 VIEW.— 

5 ‘‘(i) IN GENERAL.—A recovery audit 

6 contractor may conduct prepayment review 

7 only in the manner provided under prepay8 ment review guidelines (described in clause 

9 (ii)) established by the Secretary. 

10 ‘‘(ii) CONSISTENT PREPAYMENT RE11 VIEW GUIDELINES.—For purposes of pre12 payment review activities authorized under 

13 this subsection and section 1874A(h) (re14 lating to prepayment review by medicare 

15 administrative contractors), the Secretary 

16 shall establish guidelines under which con17 sistent criteria for minimum payment error 

18 rates or improper billing practices occasion 

19 prepayment review by contractors under 

20 this subsection and section 1874A. Such 

21 guidelines shall include criteria and time22 frames for termination of prepayment re23 view.’’. 

24 (2) CONFORMING AMENDMENT TO APPLY FI25 NANCIAL PENALTIES IMPOSED ON RECOVERY CONVerDate Mar 15 2010 20:18 Apr 02, 2013 Jkt 029200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1250.IH H1250

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1 TRACTORS TO THE TRUST FUNDS.—Section 

2 1893(h)(2) of the Social Security Act (42 U.S.C. 

3 1395ddd(h)(2)) is amended by inserting ‘‘, and 

4 amounts collected by the Secretary under paragraph 

5 (10)(A)(i) (relating to financial penalties for con6 tractor compliance failures),’’ after ‘‘paragraph 

7 (1)(C)’’. 

8 (b) CONFORMING AMENDMENT FOR MEDICARE AD9 MINISTRATIVE CONTRACTORS.—Section 1874A of the So10 cial Security Act (42 U.S.C. 1395kk–1) is amended by 

11 adding at the end the following new subsection: 

12 ‘‘(h) MANDATORY TERMS AND CONDITIONS UNDER

13 CONTRACTS WITH MEDICARE ADMINISTRATIVE CON14 TRACTORS.—In addition to such other terms and condi15 tions as the Secretary may require under contracts with 

16 medicare administrative contractors under this section 

17 with respect to a hospital, including a psychiatric hospital 

18 (as defined in section 1861(f)), the Secretary shall ensure 

19 each of the following requirements are included under 

20 such contracts: 

21 ‘‘(1) POSTPAYMENT AND PREPAYMENT AU22 DITS.— 

23 ‘‘(A) REQUIRING FOCUS ON WIDESPREAD

24 PAYMENT ERRORS.— 


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1 ‘‘(i) IN GENERAL.—The Secretary 

2 shall not approve the conduct of a 

3 postpayment or prepayment medical neces4 sity audit by a medicare administrative 

5 contractor unless such review addresses a 

6 widespread payment error rate (as defined 

7 in subparagraph (B)). 

8 ‘‘(ii) CESSATION OF AUDIT.—A medi9 care administrative contractor that com10 mences an audit under clause (i) shall 

11 cease such audit or any similar audits, if 

12 upon annual review, the applicable pay13 ment error rate is no longer a widespread 

14 payment error rate (as so defined). 

15 ‘‘(B) WIDESPREAD PAYMENT ERROR RATE

16 DEFINED.—In this paragraph, the term ‘wide17 spread payment error rate’ means, with respect 

18 to medical necessity reviews conducted by a 

19 medicare administrative contractor, a payment 

20 error rate of 40 percent or greater for a par21 ticular medical necessity audit determined by 

22 the Secretary using a statistically significant 

23 sampling of claims submitted by hospitals in 

24 the jurisdiction of the medicare administrative 


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1 contractor and adjusted to take into account 

2 claim denials overturned on appeal. 

3 ‘‘(2) GUIDELINES FOR PREPAYMENT REVIEW.— 

4 A medicare administrative contractor may only con5 duct prepayment review in the manner provided 

6 under prepayment review guidelines established by 

7 the Secretary under section 1893(h)(10)(D)(ii).’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to contracts entered into or re10 newed with recovery audit contractors under section 

11 1893(h) of the Social Security Act (42 U.S.C. 

12 1395ddd(h)) and medicare administrative contractors 

13 under section 1874A of the Social Security Act (42 U.S.C. 

14 1395kk–1) on or after the date of the enactment of this 

15 Act. 

16 SEC. 4. GREATER TRANSPARENCY OF RECOVERY AUDITOR 

17 PERFORMANCE. 

18 (a) ANNUAL PUBLICATION OF RELEVANT PERFORM19 ANCE INFORMATION.—Section 1893(h) of the Social Secu20 rity Act (42 U.S.C. 1395ddd(h)), as amended by section 

21 3(a), is further amended by adding at the end the fol22 lowing new paragraph: 

23 ‘‘(11) INFORMATION ON RECOVERY AUDIT CON24 TRACTOR PERFORMANCE.—With respect to each re25 covery audit contractor with a contract under this 


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1 section for a contract year, the Secretary shall pub2 lish on the Internet website of the Centers for Medi3 care & Medicaid Services the following information 

4 with respect to the performance of each such recov5 ery audit contractor: 

6 ‘‘(A) PUBLICLY AVAILABLE INFORMATION

7 ON AUDIT RATES, DENIALS, AND APPEALS OUT8 COMES.—With respect to the performance of 

9 each such recovery audit contractor during a 

10 contract year, the Secretary shall post on such 

11 Internet website the following information: 

12 ‘‘(i) AUDITS.—The aggregate number 

13 of claims audited by the recovery audit 

14 contractor during the contract year in15 volved, as well as the number of audits of 

16 each of the following audit types (each in 

17 this paragraph referred to as an ‘audit 

18 type’): 

19 ‘‘(I) Automated. 

20 ‘‘(II) Complex. 

21 ‘‘(III) Medical necessity review. 

22 ‘‘(IV) Part A claims. 

23 ‘‘(V) Part B claims. 

24 ‘‘(VI) Durable medical equipment 

25 claims. 


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1 ‘‘(VII) Part A medical necessity. 

2 ‘‘(ii) ADR REQUESTS.—The aggregate 

3 number of requests for medical records, re4 ferred to as additional documentation re5 quests, for each audit type during the con6 tract year involved. 

7 ‘‘(iii) DENIALS.—The aggregate num8 ber of denials for each audit type made by 

9 the recovery audit contractor during the 

10 contract year involved. 

11 ‘‘(iv) DENIAL RATES.—The denial 

12 rate of the recovery audit contractor dur13 ing the contract year involved for part A 

14 claims, part B claims, and durable medical 

15 equipment claims for each audit type dur16 ing the contract year involved. 

17 ‘‘(v) APPEALS.—The aggregate num18 ber of appeals filed by providers of services 

19 and suppliers with respect to denials for 

20 each audit type made by the recovery audit 

21 contractor during the contract year in22 volved. 

23 ‘‘(vi) APPEALS RATES.—The aggre24 gate rate of appeals filed by providers of 

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1 als for each audit type made by the recov2 ery audit contractor during the contract 

3 year involved. 

4 ‘‘(vii) APPEALS VOLUME AND OUT5 COMES AT EACH OF THE 5 STAGES OF AP6 PEAL.—For claims denied by a recovery 

7 audit contractor, the number of claims 

8 during the contract year that were ap9 pealed by the provider, the number of con10 cluded appeals that did not advance to a 

11 subsequent appeals stage, and the number 

12 and percentage of completed appeals that 

13 were decided in favor of the provider, for 

14 each level of appeal as follows: 

15 ‘‘(I) Reconsideration by the rel16 evant medicare contractor. 

17 ‘‘(II) Redetermination by a quali18 fied independent contractor. 

19 ‘‘(III) Administrative law judge 

20 hearing. 

21 ‘‘(IV) Medicare Appeals Council 

22 review. 

23 ‘‘(V) United States District 

24 Court judicial review. 


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1 ‘‘(viii) NET DENIALS; NET DENIAL

2 RATES.—The net denials for each audit 

3 type, calculated as the number of denials 

4 for such audit type under clause (iii) 

5 minus the number of such denials that are 

6 overturned on appeal and the net denial 

7 rate for each audit type, calculated in the 

8 same manner as denial rates under clause 

9 (iv) but subtracting from denials those de10 nials that are overturned on appeal 

11 ‘‘(B) PUBLIC AVAILABILITY OF INDE12 PENDENT PERFORMANCE EVALUATION.—The 

13 Secretary shall make available on such Internet 

14 website the results of any performance evalua15 tion with respect to each recovery audit con16 tractor conducted by an independent entity se17 lected by the Secretary for such purpose. Each 

18 performance evaluation shall include in its re19 sults for posting on such Internet website a de20 termination of annual error rates of the recov21 ery audit contractor for each audit type and the 

22 net denials and net denial rates described in 

23 subparagraph (A)(viii).’’. 

24 (b) EFFECTIVE DATE.—The amendment made by 

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1 newed with recovery audit contractors under section 

2 1893(h) of the Social Security Act (42 U.S.C. 

3 1395ddd(h)) on or after the date of the enactment of this 

4 Act. 

5 SEC. 5. ACCURATE PAYMENT FOR REBILLED CLAIMS. 

6 (a) REBILLING UNDER PART B INPATIENT CLAIMS

7 DENIED BASED ON SITE OF SERVICE WHERE SERVICES

8 FOUND MEDICALLY NECESSARY AT THE OUTPATIENT

9 LEVEL.— 

10 (1) RECOVERY AUDITORS.—Section 1893(h) of 

11 the Social Security Act (42 U.S.C. 1395ddd(h)), as 

12 amended by sections 3(a) and 4(a), is further 

13 amended by adding at the end the following new 

14 paragraph: 

15 ‘‘(12) TREATMENT OF RESUBMISSION OF SPEC16 IFIED CLAIMS AS ORIGINAL CLAIMS.— 

17 ‘‘(A) TREATMENT AS ORIGINAL CLAIM.— 

18 The resubmission of a specified claim (as de19 fined in subparagraph (C)) shall be deemed to 

20 be an original claim for purposes of— 

21 ‘‘(i) payment under part B; and 

22 ‘‘(ii) provisions under this title relat23 ing to— 

24 ‘‘(I) the authority of a hospital to 

25 resubmit a claim for payment under 


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1 the appropriate section of this title; 

2 and 

3 ‘‘(II) requirements for the timely 

4 submission of claims, including under 

5 sections 1814(a), 1842(b)(3), and 

6 1835(a). 

7 ‘‘(B) PAYMENT FOR ITEMS AND SERVICES

8 UNDER RESUBMITTED CLAIM.—Payment shall 

9 be made for a specified claim resubmitted under 

10 subparagraph (A) for all the items and services 

11 furnished for which payment may be made 

12 under part B. 

13 ‘‘(C) DEFINITIONS.—In this paragraph: 

14 ‘‘(i) SPECIFIED CLAIM.— 

15 ‘‘(I) IN GENERAL.—The term 

16 ‘specified claim’ means a claim sub17 mitted by a hospital for payment 

18 under part A for inpatient hospital 

19 services which a recovery audit con20 tractor (or entity adjudicating a pro21 vider appeal of a Medicare claim de22 nied payment by a recovery audit con23 tractor) determines, subject to sub24 clause (II), that the inpatient hospital 

25 services were not medically necessary 


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1 and reasonable under section 

2 1862(a)(1)(A). 

3 ‘‘(II) REQUIREMENTS FOR DE4 TERMINATION.—A recovery audit con5 tractor or entity adjudicating such 

6 provider appeal shall, before com7 pleting a determination described in 

8 subclause (I), assess and make a spe9 cific finding as to whether the denied 

10 inpatient hospital services were medi11 cally necessary and reasonable in an 

12 outpatient setting of the hospital. 

13 ‘‘(ii) RESUBMISSION.—The term ‘re14 submission’ includes, with respect to a 

15 specified claim of a hospital, the submis16 sion by the hospital of a new claim or of 

17 an adjusted original claim.’’. 

18 (2) CONFORMING AMENDMENT FOR MEDICARE

19 ADMINISTRATIVE CONTRACTORS.—Subsection (h) of 

20 section 1874A of the Social Security Act (42 U.S.C. 

21 1395kk–1), as added by section 3(b), is further 

22 amended by adding at the end the following new 

23 paragraph: 

24 ‘‘(3) TREATMENT OF RESUBMISSION OF SPECI25 FIED CLAIMS AS ORIGINAL CLAIMS.— 


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1 ‘‘(A) TREATMENT AS ORIGINAL CLAIM.— 

2 The resubmission of a specified claim (as de3 fined in subparagraph (C)) shall be deemed to 

4 be an original claim for purposes of— 

5 ‘‘(i) payment under part B; and 

6 ‘‘(ii) provisions under this title relat7 ing to— 

8 ‘‘(I) the authority of a hospital to 

9 resubmit a claim for payment under 

10 the appropriate section of this title; 

11 and 

12 ‘‘(II) requirements for the timely 

13 submission of claims, including under 

14 sections 1814(a), 1842(b)(3), and 

15 1835(a). 

16 ‘‘(B) PAYMENT FOR ITEMS AND SERVICES

17 UNDER RESUBMITTED CLAIM.—Payment shall 

18 be made for a specified claim resubmitted under 

19 subparagraph (A) for all the items and services 

20 furnished for which payment may be made 

21 under part B. 

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

23 ‘‘(i) SPECIFIED CLAIM.— 

24 ‘‘(I) IN GENERAL.—The term 

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1 mitted by a hospital for payment 

2 under part A for inpatient hospital 

3 services which a medicare administra4 tive contractor (or entity adjudicating 

5 a hospital appeal of a Medicare claim 

6 denied payment by a medicare admin7 istrative contractor) determines, sub8 ject to subclause (II), that the inpa9 tient hospital services were not medi10 cally necessary and reasonable under 

11 section 1862(a)(1)(A). 

12 ‘‘(II) REQUIREMENTS FOR DE13 TERMINATION.—A medicare adminis14 trative contractor or entity adjudi15 cating such provider appeal shall, be16 fore completing a determination de17 scribed in subclause (I), assess and 

18 make a specific finding as to whether 

19 the denied inpatient hospital services 

20 were medically necessary and reason21 able in an outpatient setting of the 

22 hospital. 

23 ‘‘(ii) RESUBMISSION.—The term ‘re24 submission’ includes, with respect to a 

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1 sion by the hospital of a new claim or of 

2 an adjusted original claim.’’. 

3 (3) CONFORMING AMENDMENT FOR CERT CON4 TRACTORS.— 

5 (A) TREATMENT OF RESUBMISSION OF

6 SPECIFIED CLAIMS AS ORIGINAL CLAIMS.—A 

7 Comprehensive Error Rate Testing (CERT) 

8 program contractor with a contract with the 

9 Secretary of Health and Human Services to re10 view error rates under title XVIII of the Social 

11 Security Act (42 U.S.C. 1395 et seq.) shall 

12 deem the resubmission of a specified claim (as 

13 defined in subparagraph (C)) as an original 

14 claim for purposes of— 

15 (i) payment under part B of such title 

16 XVII; and 

17 (ii) provisions under such title relating 

18 to— 

19 (I) the authority of a hospital to 

20 resubmit a claim for payment under 

21 the appropriate section of such title; 

22 and 

23 (II) requirements for the timely 

24 submission of claims, including under 

25 sections 1814(a), 1842(b)(3), and 


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1 1835(a) of such Act (42 U.S.C. 

2 1395f(a), 1395u(b)(3), and 1395n(a), 

3 respectively). 

4 (B) PAYMENT FOR ITEMS AND SERVICES

5 UNDER RESUBMITTED CLAIM.—Payment shall 

6 be made for a specified claim resubmitted under 

7 subparagraph (A) for all the items and services 

8 furnished for which payment may be made 

9 under part B of such title XVIII. 

10 (C) DEFINITIONS.—In this paragraph: 

11 (i) SPECIFIED CLAIM.— 

12 (I) IN GENERAL.—The term 

13 ‘‘specified claim’’ means a claim sub14 mitted by a hospital (as defined in 

15 section 1861(e) of such Act (42 

16 U.S.C. 1395x(e))) for payment under 

17 title XVIII of such Act for inpatient 

18 hospital services which a Comprehen19 sive Error Rate Testing (CERT) pro20 gram contractor (or entity adjudi21 cating a hospital appeal of a Medicare 

22 claim denied payment by a CERT 

23 program contractor) determines the 

24 inpatient hospital services were not 

25 medically necessary and reasonable 


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1 under section 1862(a)(1)(A) of such 

2 Act (42 U.S.C. 1395y(a)(1)(A)). 

3 (II) REQUIREMENTS FOR DETER4 MINATION.—A CERT program con5 tractor or entity adjudicating such 

6 provider appeal shall, before com7 pleting a determination described in 

8 subclause (I), assess and make a spe9 cific finding as to whether the denied 

10 inpatient hospital services were medi11 cally necessary and reasonable in an 

12 outpatient setting of the hospital. 

13 (ii) RESUBMISSION.—The term ‘‘re14 submission’’ includes, with respect to a 

15 specified claim of a hospital, the submis16 sion by the hospital of a new claim or of 

17 an adjusted original claim. 

18 (iii) EFFECTIVE DATE.—The amend19 ments made by paragraphs (1) and (2), 

20 and the provisions of paragraph (3), shall 

21 apply to contracts entered into or renewed 

22 with recovery audit contractors under sec23 tion 1893(h) of the Social Security Act (42 

24 U.S.C. 1395ddd(h)), medicare administra25 tive contractors under section 1874A of 


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1 the Social Security Act (42 U.S.C. 

2 1395kk–1) and Comprehensive Error Rate 

3 Testing (CERT) program contractors, re4 spectively, on or after the date of the en5 actment of this Act. 

6 (b) TREATMENT OF AUDITED CLAIMS AS RE7 OPENED.— 

8 (1) RECOVERY AUDITORS.—Section 1893(h)(4) 

9 of the Social Security Act (42 U.S.C. 

10 1395ddd(h)(4)) is amended by adding after and 

11 below subparagraph (B) the following: ‘‘For pur12 poses of the ability of a hospital to resubmit a claim 

13 for payment under the appropriate section of this 

14 title and for purposes of requirements for the timely 

15 submission of claims by hospitals, including under 

16 sections 1814(a), 1842(b)(3), and 1835(a), any 

17 claim that is the subject of an audit by a recovery 

18 audit contractor with a contract under this section 

19 shall be deemed to be a reopened claim. Such re20 opened claims are not subject to the timely filing 

21 limitations under such sections (and related regula22 tions) and shall be adjusted and paid without regard 

23 to such timely filing limitations.’’. 

24 (2) CONFORMING AMENDMENT FOR MEDICARE

25 ADMINISTRATIVE CONTRACTORS.—Section 1874A(h) 


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1 of the Social Security Act (42 U.S.C. 1395kk–1(h)), 

2 as added by section 3(b) and as amended by sub3 section (a)(2), is further amended by adding at the 

4 end the following new paragraph: 

5 ‘‘(4) TREATMENT OF AUDITED CLAIMS AS RE6 OPENED.—For purposes of the ability of a hospital 

7 to resubmit a claim for payment under the appro8 priate provisions of this title and for purposes of re9 quirements for the timely submission of claims by 

10 hospitals, including under sections 1814(a), 

11 1842(b)(3), and 1835(a), any claim that is the sub12 ject of an audit by a medicare administrative con13 tractor with a contract under this section shall be 

14 deemed to be a reopened claim. Such reopened 

15 claims are not subject to the timely filing limitations 

16 under such sections (and related regulations) and 

17 shall be adjusted and paid without regard to such 

18 timely filing limitations.’’. 

19 (3) CONFORMING AMENDMENT FOR CERT CON20 TRACTORS.— 

21 (A) TREATMENT OF AUDITED CLAIMS AS

22 REOPENED.—Any claim made for payment for 

23 services furnished by a hospital under title 

24 XVIII of the Social Security Act (42 U.S.C. 

25 1395 et seq.) that is the subject of an audit by 


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1 a Comprehensive Error Rate Testing (CERT) 

2 program contractor with a contract with the 

3 Secretary of Health and Human Services shall 

4 be deemed to be a reopened claim for purposes 

5 of the ability of such hospital to resubmit a 

6 claim for payment under the appropriate provi7 sions of such title XVIII and for purposes of re8 quirements for the timely submission of claims 

9 by hospitals under such title XVIII, including 

10 under sections 1814(a), 1842(b)(3), and 

11 1835(a) of the Social Security Act (42 U.S.C. 

12 1395f(a), 1395u(b)(3), and 1395n(a), respec13 tively). Such reopened claims are not subject to 

14 the timely filing limitations under such sections 

15 (and related regulations) and shall be adjusted 

16 and paid without regard to such timely filing 

17 limitations. 

18 (B) DEFINITION.—In this paragraph, the 

19 term ‘‘hospital’’ has the meaning given such 

20 term in subsection (e) of section 1861 of the 

21 Social Security Act (42 U.S.C. 1395x), and in22 cludes a psychiatric hospital as defined in sub23 section (f) of such section. 

24 (4) EFFECTIVE DATE.—The amendments made 

25 by paragraphs (1) and (2), and the provisions of 


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1 paragraph (3), shall take effect on the date of the 

2 enactment of this Act and apply to claims subject to 

3 audit on or after September 1, 2010. 

4 SEC. 6. REQUIREMENT FOR PHYSICIAN VALIDATION FOR 

5 MEDICAL NECESSITY DENIALS. 

6 (a) RECOVERY AUDITORS.—Section 1893(h) of the 

7 Social Security Act (42 U.S.C. 1395ddd(h)), as amended 

8 by sections 3(a), 4(a), and 6(a)(1), is further amended by 

9 adding at the end the following new paragraph: 

10 ‘‘(13) PHYSICIAN VALIDATION OF MEDICAL NE11 CESSITY DENIALS MADE BY NON-PHYSICIAN REVIEW12 ERS.— 

13 ‘‘(A) IN GENERAL.—Each contract under 

14 this section for a recovery audit contractor shall 

15 require that a physician (as defined in section 

16 1861(r)(1)) review each denial of a claim for 

17 medical necessity when a medical necessity re18 view of such claim is performed and a denial is 

19 made by an employee of the contractor who is 

20 not a physician (as so defined). 

21 ‘‘(B) DETERMINATION; VALIDATION.—A 

22 physician reviewing a claim under subparagraph 

23 (A) shall— 

24 ‘‘(i) make a determination whether 

25 the denial of the claim under the medical 


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1 necessity review by the non-physician em2 ployee is appropriate; 

3 ‘‘(ii) sign and certify such determina4 tion; and 

5 ‘‘(iii) append such signed and certified 

6 determination to the claim file. 

7 ‘‘(C) TREATMENT AS MEDICALLY NEC8 ESSARY.—A claim with respect to which a de9 nial has been made as described in subpara10 graph (A) for which the physician determines 

11 the denial is not appropriate under subpara12 graph (B) shall be deemed to be medically nec13 essary. 

14 ‘‘(D) MEDICAL NECESSITY REVIEW DE15 FINED.—In this paragraph, the term ‘medical 

16 necessity review’ means, with respect to an 

17 audit of a claim of a provider of services or sup18 plier, a review conducted by a recovery audit 

19 contractor for the purpose of determining 

20 whether an item or service furnished for which 

21 the claim is filed by such provider of services or 

22 supplier is reasonable and necessary for the di23 agnosis or treatment of illness or injury under 

24 section 1862(a)(1)(A).’’. 


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1 (b) CONFORMING AMENDMENT TO MEDICARE AD2 MINISTRATIVE CONTRACTORS.—Subsection (h) of section 

3 1874A of the Social Security Act (42 U.S.C. 1395kk–1), 

4 as added by section 3(b) and as amended by subsections 

5 (a)(2) and (b)(2) of section 6, is further amended by add6 ing at the end the following new paragraph: 

7 ‘‘(5) PHYSICIAN VALIDATION OF MEDICAL NE8 CESSITY DENIALS MADE BY NON-PHYSICIAN REVIEW9 ERS.— 

10 ‘‘(A) IN GENERAL.—A physician (as de11 fined in section 1861(r)(1)) shall review each 

12 denial of a claim for medical necessity when a 

13 medical necessity review of such claim is per14 formed and a denial is made by an employee of 

15 the contractor who is not a physician (as so de16 fined). 

17 ‘‘(B) DETERMINATION; VALIDATION.—A 

18 physician reviewing a claim under subparagraph 

19 (A) shall— 

20 ‘‘(i) make a determination whether 

21 the denial of the claim under the medical 

22 necessity review by the non-physician em23 ployee is appropriate; 

24 ‘‘(ii) sign and certify such determina25 tion; and 


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1 ‘‘(iii) append such signed and certified 

2 determination to the claim file. 

3 ‘‘(C) TREATMENT AS MEDICALLY NEC4 ESSARY.—A claim with respect to which a de5 nial has been made as described in subpara6 graph (A) for which the physician determines 

7 the denial is not appropriate under subpara8 graph (B) shall be deemed to be medically nec9 essary. 

10 ‘‘(D) MEDICAL NECESSITY REVIEW DE11 FINED.—In this paragraph, the term ‘medical 

12 necessity review’ means, with respect to an 

13 audit of a claim of a provider of services or sup14 plier, a review conducted by a medicare admin15 istrative contractor for the purpose of deter16 mining whether an item or service furnished for 

17 which the claim is filed by such provider of 

18 services or supplier is reasonable and necessary 

19 for the diagnosis or treatment of illness or in20 jury under section 1862(a)(1)(A).’’. 

21 (c) CONFORMING REQUIREMENT FOR CERT CON22 TRACTORS.— 

23 (1) CONTRACT REQUIREMENT FOR PHYSICIAN

24 VALIDATION OF MEDICAL NECESSITY DENIALS MADE

25 BY NON-PHYSICIAN REVIEWERS.—The Secretary of 


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1 Health and Human Services shall require under 

2 each contract with a Comprehensive Error Rate 

3 Testing (CERT) program contractor to review error 

4 rates under title XVIII of the Social Security Act 

5 (42 U.S.C. 1395 et seq.) that the CERT program 

6 contractor ensure that a physician (as defined in 

7 section 1861(r)(1) of such Act (42 U.S.C. 

8 1395x(r)(1))) reviews each denial of a claim for 

9 medical necessity when a medical necessity review of 

10 such claim is performed and a denial is made by an 

11 employee of the contractor who is not a physician 

12 (as so defined). 

13 (2) DETERMINATION; VALIDATION.—A physi14 cian reviewing a claim under paragraph (1) shall— 

15 (A) make a determination whether the de16 nial of the claim under the medical necessity re17 view by the non-physician employee is appro18 priate; 

19 (B) sign and certify such determination; 

20 and 

21 (C) append such signed and certified deter22 mination to the claim file. 

23 (3) TREATMENT AS MEDICALLY NECESSARY.— 

24 A claim with respect to which a denial has been 

25 made as described in paragraph (1) for which the 


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1 physician determines the denial is not appropriate 

2 under paragraph (2) shall be deemed to be medically 

3 necessary. 

4 (4) MEDICAL NECESSITY REVIEW DEFINED.— 

5 In this subsection, the term ‘‘medical necessity re6 view’’ means, with respect to an audit of a claim of 

7 a provider of services or supplier, a review conducted 

8 by a CERT program contractor for the purpose of 

9 determining whether an item or service furnished for 

10 which the claim is filed by such provider of services 

11 or supplier is reasonable and necessary for the diag12 nosis or treatment of illness or injury under section 

13 1862(a)(1)(A) of the Social Security Act (42 U.S.C. 

14 1395y(a)(1)(A)). 

15 (d) EFFECTIVE DATE.—The amendments made by 

16 subsections (a) and (b), and the provisions of subsection 

17 (c), shall apply to contracts entered into or renewed with 

18 recovery audit contractors under section 1893(h) of the 

19 Social Security Act (42 U.S.C. 1395ddd(h)), medicare ad20 ministrative contractors under section 1874A of the Social 

21 Security Act (42 U.S.C. 1395kk–1) and Comprehensive 

22 Error Rate Testing (CERT) program contractors, respec23 tively, on or after the date of the enactment of this Act. 


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1 SEC. 7. ASSURING DUE PROCESS IN APPLICATION OF 

2 GUIDELINES FOR REOPENING AND REVISION 

3 OF DETERMINATIONS. 

4 Section 1869(b)(1)(G) of the Social Security Act (42 

5 U.S.C. 1395ff(b)(1)(G)) is amended by adding at the end 

6 the following: ‘‘The Secretary’s compliance with such 

7 guidelines shall be subject to administrative and judicial 

8 review under this section.’’. 

Æ 


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