I 

113TH CONGRESS 

2D SESSION H. R. 5083 

To amend title XVIII of the Social Security Act to improve audit effectiveness 

and efficiency in paying for durable medical equipment, prosthetics, 

orthotics, and supplies (DMEPOS) under the Medicare program, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 11, 2014 

Mrs. ELLMERS (for herself, Mr. BARROW of Georgia, Mr. BRALEY of Iowa, 

Mr. DUNCAN of Tennessee, and Mr. THOMPSON of Pennsylvania) introduced the following bill; which was referred to the Committee on Energy 

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

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 

audit effectiveness and efficiency in paying for durable 

medical equipment, prosthetics, orthotics, and supplies 

(DMEPOS) 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 DMEPOS 

5 Audit Improvement and Reform (AIR) Act of 2014’’. 

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1 SEC. 2. IMPROVING MEDICARE AUDIT EFFECTIVENESS AND 

2 EFFICIENCY FOR DURABLE MEDICAL EQUIP3 MENT, PROSTHETICS, ORTHOTICS, AND SUP4 PLIES (DMEPOS). 

5 (a) MEDICARE ADMINISTRATIVE CONTRACTOR PAY6 MENT OUTREACH AND EDUCATION PROGRAM FOR

7 DMEPOS SUPPLIERS.— 

8 (1) IN GENERAL.—Section 1874A of the Social 

9 Security Act (42 U.S.C. 1395kk–1) is amended— 

10 (A) in subsection (a)(4)— 

11 (i) by redesignating subparagraph (G) 

12 as subparagraph (H); and 

13 (ii) by inserting after subparagraph 

14 (F) the following new subparagraph: 

15 ‘‘(G) PAYMENT OUTREACH AND EDU16 CATION PROGRAM FOR SUPPLIERS OF DURABLE

17 MEDICAL EQUIPMENT, PROSTHETICS, 

18 ORTHOTICS, AND SUPPLIES (DMEPOS).—Imple19 menting a payment outreach and education pro20 gram for DMEPOS suppliers under subsection 

21 (h).’’; and 

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

23 subsection: 

24 ‘‘(h) PAYMENT OUTREACH AND EDUCATION PRO25 GRAM FOR DMEPOS SUPPLIERS.— 

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1 ‘‘(1) IN GENERAL.—In order to reduce im2 proper payments under part B for durable medical 

3 equipment, prosthetics, orthotics, and supplies, each 

4 medicare administrative contractor that has respon5 sibility for payment under such part for durable 

6 medical equipment, prosthetics, orthotics, and sup7 plies furnished in an area (in this subsection re8 ferred to as a ‘Medicare DMEPOS contractor’) shall 

9 carry out a program (in this subsection referred to 

10 as the ‘DMEPOS payment outreach and education 

11 program’) under which the contractor, through out12 reach, education, training, and technical assistance 

13 activities conducted on a quarterly basis, provides 

14 DMEPOS suppliers, physicians and practitioners 

15 who prescribe DMEPOS, and discharge planners 

16 and case managers who coordinate DMEPOS for in17 dividuals in such area with the information described 

18 in paragraph (3) and with error reduction training 

19 under paragraph (4). 

20 ‘‘(2) FORMS OF ACTIVITIES.—The activities 

21 under a DMEPOS payment outreach and education 

22 program shall include the following: 

23 ‘‘(A) Emails and other electronic commu24 nications. 

25 ‘‘(B) Webinars. 

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1 ‘‘(C) Telephone calls. 

2 ‘‘(D) In-person training. 

3 ‘‘(E) Other forms of communications and 

4 assistance determined appropriate by the Sec5 retary. 

6 ‘‘(3) INFORMATION TO BE PROVIDED THROUGH

7 ACTIVITIES.—The information to be provided under 

8 a DMEPOS payment outreach and education pro9 gram, with respect to payment for DMEPOS under 

10 part B, shall include all of the following information: 

11 ‘‘(A) A list of suppliers’ most frequent pay12 ment errors and most expensive payment errors 

13 over the last quarter. 

14 ‘‘(B) Specific instructions regarding how to 

15 correct or avoid such errors in the future. 

16 ‘‘(C) A notice of all new topics that have 

17 been approved by the Secretary for audits con18 ducted by Medicare contractors in relation to 

19 payment for DMEPOS under part B. 

20 ‘‘(D) Specific instructions to prevent fu21 ture issues related to such new audits. 

22 ‘‘(E) Other information determined appro23 priate by the Secretary. 

24 ‘‘(4) ERROR RATE REDUCTION TRAINING.— 

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1 ‘‘(A) IN GENERAL.—The activities under a 

2 DMEPOS payment outreach and education pro3 gram shall include error rate reduction training. 

4 ‘‘(B) REQUIREMENTS.—Such training 

5 shall— 

6 ‘‘(i) be provided at least annually; and 

7 ‘‘(ii) focus on reducing improper 

8 Medicare payments for DMEPOS. 

9 ‘‘(C) INVITATION.—A Medicare DMEPOS 

10 contractor with responsibility for payment for 

11 DMEPOS in an area shall ensure that all 

12 DMEPOS suppliers, physicians and practi13 tioners who prescribe DMEPOS, and discharge 

14 planners and case managers who coordinate 

15 DMEPOS for individuals in the area are invited 

16 to attend the training described in subpara17 graph (A) either in person or online. 

18 ‘‘(5) PRIORITY.—A Medicare DMEPOS con19 tractor shall give priority to activities under the 

20 DMEPOS payment outreach and education program 

21 that will reduce improper Medicare payments based 

22 on technical errors, medical necessity, and fraud for 

23 DMEPOS that— 

24 ‘‘(A) have the highest rate of improper 

25 payment under part B; 

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1 ‘‘(B) have the greatest total dollar amount 

2 of such improper payments; 

3 ‘‘(C) are due to clear misapplication or 

4 misinterpretation of policies under this title; 

5 ‘‘(D) are clearly due to common and inad6 vertent clerical or administrative errors; or 

7 ‘‘(E) are due to other types of errors that 

8 the Secretary determines could be prevented 

9 through activities under the program. 

10 ‘‘(6) INFORMATION ON IMPROPER PAYMENTS

11 FROM MEDICARE CONTRACTORS.— 

12 ‘‘(A) IN GENERAL.—In order to assist 

13 Medicare DMEPOS contractors in carrying out 

14 DMEPOS payment outreach and education pro15 grams, the Secretary shall provide each such 

16 contractor with a complete list of improper pay17 ments for DMEPOS identified by recovery 

18 audit contractors (and other contractors per19 forming audit activities relating to payment for 

20 DMEPOS) with respect to suppliers located in 

21 the area being serviced by the Medicare 

22 DMEPOS contractor. Such list shall not in23 clude claims for payments that have been de24 nied and are being appealed by the supplier 

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1 under section 1869. Such information shall be 

2 provided on a quarterly basis. 

3 ‘‘(B) INFORMATION.—The information de4 scribed in subparagraph (A) shall include the 

5 following information: 

6 ‘‘(i) The suppliers of DMEPOS that 

7 have the highest rate of improper pay8 ments under part B for DMEPOS. 

9 ‘‘(ii) The suppliers of DMEPOS that 

10 have the greatest total dollar amounts of 

11 such improper payments. 

12 ‘‘(iii) The DMEPOS furnished in the 

13 area that has the highest rates of such im14 proper payments. 

15 ‘‘(iv) The DMEPOS furnished in the 

16 area that is responsible for the greatest 

17 total dollar amount of such improper pay18 ments. 

19 ‘‘(v) Other information the Secretary 

20 determines would assist Medicare 

21 DMEPOS contractors in carrying out the 

22 DMEPOS payment outreach and education 

23 program. 

24 ‘‘(C) FORMAT OF INFORMATION.—The in25 formation furnished to Medicare DMEPOS conmstockstill on DSK4VPTVN1PROD with BILLS

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1 tractors by the Secretary under this paragraph 

2 shall be transmitted in a manner that permits 

3 such contractors to easily identify the 

4 DMEPOS suppliers for which targeted out5 reach, education, training, and technical assist6 ance would be most effective. In carrying out 

7 the preceding sentence, the Secretary shall en8 sure that— 

9 ‘‘(i) the information with respect to 

10 improper payments made to such a sup11 plier clearly displays the NPI or other 

12 identifier of the supplier, the amount of 

13 the improper payment, and any other in14 formation the Secretary determines appro15 priate; and 

16 ‘‘(ii) the information is in an elec17 tronic, easily searchable database. 

18 ‘‘(7) COMMUNICATIONS.—All communications 

19 with a supplier under a DMEPOS payment outreach 

20 and education program are subject to the standards 

21 and requirements of subsection (g). 

22 ‘‘(8) ADVANCE NOTICE FOR POLICY CHANGES

23 AND CLARIFICATIONS.—The Secretary shall not im24 plement a policy change or clarification for 

25 DMEPOS audit requirements earlier than 6 months 

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1 after the date of publication of such change or clari2 fication in the Federal Register. 

3 ‘‘(9) FUNDING.—After application of paragraph 

4 (1)(C) of section 1893(h), the Secretary shall retain 

5 a portion of the amounts recovered by Medicare 

6 DMEPOS contractors under this title with respect 

7 to DMEPOS which shall be available to the Centers 

8 for Medicare & Medicaid Services Program Manage9 ment Account for purposes of carrying out this sub10 section and to implement corrective actions to help 

11 reduce the error rate of payments for DMEPOS 

12 under part B. The amount retained under the pre13 ceding sentence shall not exceed an amount equal to 

14 25 percent of the amounts recovered under section 

15 1893(h) with respect to DMEPOS. 

16 ‘‘(10) DURABLE MEDICAL EQUIPMENT, PROS17 THETICS, ORTHOTICS, AND SUPPLIES AND DMEPOS

18 DEFINED.—In this subsection, the terms ‘durable 

19 medical equipment, prosthetics, orthotics, and sup20 plies’ and ‘DMEPOS’ mean— 

21 ‘‘(A) durable medical equipment (as de22 fined in section 1861(n)) and supplies used 

23 with such equipment, other than implantable 

24 items for which payment may be made under 

25 section 1833(t); 

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1 ‘‘(B) prosthetic devices (as described in 

2 section 1861(s)(8)), including items described 

3 in section 1842(s)(2)(D); 

4 ‘‘(C) orthotics and prosthetics (as de5 scribed in section 1861(s)(9)); 

6 ‘‘(D) surgical dressings (as described in 

7 section 1861(s)(5)); 

8 ‘‘(E) home dialysis supplies and equipment 

9 (as described in section 1861(s)(2)(F)); and 

10 ‘‘(F) therapeutic shoes for diabetics (as de11 scribed in section 1861(s)(12)).’’. 

12 (2) FUNDING CONFORMING AMENDMENT.—Sec13 tion 1893(h)(2) of the Social Security Act (42 

14 U.S.C. 1395ddd(h)(2)) is amended by inserting ‘‘or 

15 section 1874A(h)(9)’’ after ‘‘paragraph (1)(C)’’. 

16 (3) TRANSPARENCY.—Section 1893(h)(8) of the 

17 Social Security Act (42 U.S.C. 1395ddd(h)(8)) is 

18 amended— 

19 (A) in the first sentence, by inserting be20 fore the period at the end the following: ‘‘, on 

21 the use of medicare administrative contractors 

22 in conducting audits with respect to durable 

23 medical equipment, prosthetics, orthotics, and 

24 supplies under section 1874A, and on the over25 turn rates for each level of appeal’’; 

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1 (B) by striking ‘‘REPORT.—The Sec2 retary’’ and inserting ‘‘REPORT.— 

3 ‘‘(A) IN GENERAL.—The Secretary’’; and 

4 (C) by adding at the end the following new 

5 subparagraph: 

6 ‘‘(B) INCLUSION OF CERTAIN INFORMA7 TION.— 

8 ‘‘(i) IN GENERAL.—For reports sub9 mitted under this paragraph for 2015 or a 

10 subsequent year, each such report shall in11 clude, with respect to each recovery audit 

12 contractor (and each medicare administra13 tive contractor) that is responsible for au14 dits relating to payment for durable med15 ical equipment, prosthetics, orthotics, and 

16 supplies, information on the result of all 

17 appeals relating to audits for durable med18 ical equipment, prosthetics, orthotics, and 

19 supplies for each individual level of appeals 

20 with respect to each of the categories of 

21 audits described in clause (ii) carried out 

22 by recovery audit contractors under this 

23 subsection or by medicare administrative 

24 contractors under section 1874A. For pur25 poses of such reports and public reporting 

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1 regarding such reports, such information 

2 relating to audits for orthotics and pros3 thetics shall be grouped separately from 

4 the information relating to audits for dura5 ble medical equipment and supplies. 

6 ‘‘(ii) CATEGORIES OF AUDITS.—For 

7 purposes of clause (i), each of the following 

8 is a separate category of audit: 

9 ‘‘(I) Automated. 

10 ‘‘(II) Complex. 

11 ‘‘(III) Medical necessity review. 

12 ‘‘(IV) Part B.’’. 

13 (b) ADJUSTMENT OF RECORD REQUEST MAXIMUM

14 BASED ON ERROR RATES.—Section 1893 of the Social 

15 Security Act (42 U.S.C. 1395ddd) is amended by adding 

16 at the end the following new subsection: 

17 ‘‘(j) ADJUSTMENT OF MAXIMUM RECORD REQUEST

18 THRESHOLD FOR AUDITS FOR PAYMENT FOR DURABLE

19 MEDICAL EQUIPMENT, PROSTHETICS, ORTHOTICS, AND

20 SUPPLIES (DMEPOS) BASED ON SUPPLIER ERROR

21 RATES.— 

22 ‘‘(1) IDENTIFICATION OF ERROR RATES.—The 

23 Secretary shall determine the audited claims error 

24 rates for payment for durable medical equipment, 

25 prosthetics, orthotics, and supplies and identify— 

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1 ‘‘(A) those DMEPOS suppliers with a rel2 atively high error rate with respect to claims for 

3 DMEPOS; and 

4 ‘‘(B) those DMEPOS suppliers with a rel5 atively low error rate with respect to such 

6 claims or with a steadily decreasing error rate 

7 for such claims. 

8 ‘‘(2) FACTORS IN IDENTIFICATION.— 

9 ‘‘(A) ANALYSIS.—For purposes of identi10 fying the groups of DMEPOS suppliers under 

11 paragraph (1), the Secretary shall analyze the 

12 following as they relate to the total number and 

13 amount of claims submitted by product cat14 egory and by each DMEPOS supplier: 

15 ‘‘(i) The improper payment rates of 

16 the supplier. 

17 ‘‘(ii) The amount of improper pay18 ments made to the supplier. 

19 ‘‘(iii) The frequency of errors made by 

20 the supplier over time. 

21 ‘‘(iv) Other information determined 

22 appropriate by the Secretary. 

23 In performing such analysis, the Secretary shall 

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1 nied and are being appealed by a DMEPOS 

2 supplier under section 1869. 

3 ‘‘(B) ASSIGNMENT BASED ON COMPOSITE

4 SCORE.—Using a statistically valid sample, the 

5 Secretary shall assign DMEPOS suppliers 

6 under paragraph (1) based on a composite score 

7 determined using the analysis under subpara8 graph (A) as follows: 

9 ‘‘(i) Suppliers with high, expensive, 

10 and frequent errors shall receive a high 

11 score and be identified as high error sup12 pliers under paragraph (1)(A). 

13 ‘‘(ii) Suppliers with few, inexpensive, 

14 and infrequent errors shall receive a low 

15 score and be identified as low error sup16 pliers under paragraph (1)(B). 

17 ‘‘(iii) Only a small proportion of the 

18 total suppliers in any area shall be as19 signed to either group identified under ei20 ther such paragraph. 

21 ‘‘(C) TIMEFRAME OF IDENTIFICATION.— 

22 ‘‘(i) IN GENERAL.—Any identification 

23 of a DMEPOS supplier under paragraph 

24 (1) shall be for a period of 12 months. 

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1 ‘‘(ii) REEVALUATION.—The Secretary 

2 shall reevaluate each such identification at 

3 the end of such period. 

4 ‘‘(iii) USE OF MOST CURRENT INFOR5 MATION.—In carrying out the reevaluation 

6 under clause (ii) with respect to a supplier, 

7 the Secretary shall— 

8 ‘‘(I) consider the most current in9 formation available with respect to the 

10 supplier under the analysis under sub11 paragraph (A); and 

12 ‘‘(II) take into account improve13 ment or regression of the supplier. 

14 ‘‘(3) ADJUSTMENT OF MAXIMUM RECORD RE15 QUESTS BASED ON ERROR RATE PERFORMANCE.— 

16 The Secretary shall establish procedures under 

17 which, for those DMEPOS suppliers that are identi18 fied— 

19 ‘‘(A) under paragraph (1)(A) (relating to a 

20 relatively high error rate), the Secretary shall 

21 increase the maximum record request made by 

22 Medicare DMEPOS contractors in auditing 

23 claims of such suppliers for DMEPOS; and 

24 ‘‘(B) under paragraph (1)(B) (relating to a 

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1 retary shall decrease the maximum record re2 quest made by Medicare DMEPOS contractors 

3 of such suppliers. 

4 ‘‘(4) BEST PERFORMING SUPPLIERS HAVE RE5 DUCED RANDOM AUDITS.—In the case of a 

6 DMEPOS supplier that the Secretary identifies 

7 under paragraph (1)(B) for a year as having an au8 dited claims error rate that is less than 15 percent 

9 for a category of DMEPOS, the Secretary shall not 

10 conduct more than 1 random audit of a claim per 

11 product category for the year for such category. 

12 ‘‘(5) RESTORATION OF CLINICAL INFERENCE

13 AND JUDGMENT.—With respect to the conduct of 

14 payment audits of DMEPOS suppliers respecting 

15 DMEPOS under part B, the Secretary shall use 

16 clinical inference and clinical judgment in the eval17 uation of medical records and orders when con18 ducting such audits in the same manner as the Sec19 retary interpreted and applied such clinical judg20 ment to claim reviews before 2009 pursuant to the 

21 Secretary’s instruction to contractors. 

22 ‘‘(6) TREATMENT OF CERTAIN DOCUMENTA23 TION CREATED BY ORTHOTISTS AND

24 PROSTHETISTS.—For purposes of determining under 

25 this title the reasonableness and medical necessity of 

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1 prosthetic devices and orthotics and prosthetics, doc2 umentation created by orthotists and prosthetists re3 lating to the need for such devices, orthotics, and 

4 prosthetics shall be considered part of the medical 

5 record. 

6 ‘‘(7) DEFINITIONS.—In this subsection: 

7 ‘‘(A) DURABLE MEDICAL EQUIPMENT, 

8 PROSTHETICS, ORTHOTICS, AND SUPPLIES AND

9 DMEPOS.—The terms ‘durable medical equip10 ment, prosthetics, orthotics, and supplies’ and 

11 ‘DMEPOS’ have the meaning given such terms 

12 in section 1874A(h)(10). 

13 ‘‘(B) DMEPOS SUPPLIER.—The term 

14 ‘DMEPOS supplier’ means an entity that fur15 nishes DMEPOS to individuals for which pay16 ment may be made under part B. 

17 ‘‘(C) MEDICARE DMEPOS CONTRACTOR.— 

18 The term ‘Medicare DMEPOS contractor’ 

19 means a recovery audit contractor and any 

20 other contractor (including a medicare adminis21 trative contractor) that performs pre-pay or 

22 post-pay audits with respect to claims for pay23 ment for DMEPOS under part B.’’. 

24 (c) APPLICATION OF TIMELY FILING LIMITS TO RE25 OCCURRING DMEPOS CLAIMS SUBJECT TO PAYMENT

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1 AUDITS.—Section 1842(b)(3)(B) of the Social Security 

2 Act (42 U.S.C. 1395u(b)(3)(B)) is amended by inserting 

3 before the semicolon at the end the following: ‘‘, except 

4 that the reopening of a claim by a Medicare DMEPOS 

5 contractor (as defined in section 1893(j)(7)) in a post-pay6 ment audit or a claim denial in a prepayment audit for 

7 DMEPOS (as defined in such section) shall toll the timely 

8 claim filing limits under this part such that the Secretary 

9 may not prohibit a DMEPOS supplier (as defined in such 

10 section) from taking an appeal from the determination of 

11 a claim in a pre- or post-payment audit, or the submission 

12 or resubmission for payment of any claims that follow se13 quentially from the audited claim on the basis that the 

14 timely claim filing limits have expired’’. 

15 (d) MAXIMUM AUDIT DOCUMENTATION REVIEW PE16 RIOD OF 3 YEARS FOR MEDICARE CONTRACTORS.— 

17 (1) RACS.—Section 1893(h)(4)(B) of the So18 cial Security Act (42 U.S.C. 1395ddd(h)(4)(B)) is 

19 amended by striking ‘‘4 fiscal years’’ and inserting 

20 ‘‘3 fiscal years’’. 

21 (2) IN OVERPAYMENT OF CLAIMS.—The last 

22 sentences of subsections (b) and (c) of section 1870 

23 of the Social Security Act (42 U.S.C. 1395gg) are 

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1 year’’ and inserting ‘‘third year’’ and ‘‘three-year’’, 

2 respectively. 

3 (3) LIMITATION ON AUDIT DOCUMENTATION

4 REVIEW PERIOD.—Section 1874A(a) of the Social 

5 Security Act (42 U.S.C. 1395kk–1(a)) is amended 

6 by adding at the end the following new paragraph: 

7 ‘‘(7) LIMITATION ON AUDIT DOCUMENTATION

8 REVIEW PERIOD.—The Secretary shall limit the 

9 audit documentation review period for medicare ad10 ministrative contractors to 3 years.’’. 

11 (4) EFFECTIVE DATE.—The amendments made 

12 by this subsection shall apply with respect to pay13 ments made for items and services furnished on or 

14 after the date of the enactment of this Act. 

Æ 

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