II 

114TH CONGRESS 

1ST SESSION S. 861 

To amend titles XVIII and XIX of the Social Security Act to curb waste, 

fraud, and abuse in the Medicare and Medicaid programs. 

IN THE SENATE OF THE UNITED STATES 

MARCH 25, 2015 

Mr. CARPER (for himself, Mr. ENZI, Mr. WHITEHOUSE, Mr. JOHNSON, Mr. 

COONS, Mr. PORTMAN, Ms. KLOBUCHAR, Mr. COTTON, Mrs. MCCASKILL, 

Mr. BARRASSO, Mr. MANCHIN, Ms. AYOTTE, Mr. THUNE, and Mrs. SHAHEEN) 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 curb waste, fraud, and abuse in the Medicare and 

Medicaid programs. 

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 ‘‘Preventing and Reducing Improper Medicare and Med6 icaid Expenditures Act of 2015’’ or the ‘‘PRIME Act of 

7 2015’’. 


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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. 

TITLE I—CURBING IMPROPER PAYMENTS 

Sec. 101. Requiring valid prescriber National Provider Identifiers on pharmacy 

claims. 

Sec. 102. Reforming how CMS tracks and corrects the vulnerabilities identified 

by Recovery Audit Contractors. 

Sec. 103. Improving Senior Medicare Patrol and fraud reporting rewards. 

Sec. 104. Strengthening Medicaid Program integrity through flexibility. 

Sec. 105. Establishing Medicare administrative contractor error reduction incentives. 

Sec. 106. Strengthening penalties for the illegal distribution of a Medicare, 

Medicaid, or CHIP beneficiary identification or billing privileges. 

TITLE II—IMPROVING DATA SHARING 

Sec. 201. Access to the National Directory of New Hires. 

Sec. 202. Improving the sharing of data between the Federal Government and 

State Medicaid programs. 

Sec. 203. Improving claims processing and detection of fraud within the Medicaid and CHIP programs. 

TITLE III—REPORT ON IMPLEMENTATION 

Sec. 301. Report on implementation. 

3 TITLE I—CURBING IMPROPER 

4 PAYMENTS 

5 SEC. 101. REQUIRING VALID PRESCRIBER NATIONAL PRO6 VIDER IDENTIFIERS ON PHARMACY CLAIMS. 

7 Section 1860D–4(c) of the Social Security Act (42 

8 U.S.C. 1395w–104(c)) is amended by adding at the end 

9 the following new paragraph: 

10 ‘‘(4) REQUIRING VALID PRESCRIBER NATIONAL

11 PROVIDER IDENTIFIERS ON PHARMACY CLAIMS.— 

12 ‘‘(A) IN GENERAL.—For plan year 2016 

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1 graph (B), the Secretary shall prohibit PDP 

2 sponsors of prescription drug plans from paying 

3 claims for prescription drugs under this part 

4 that do not include a valid prescriber National 

5 Provider Identifier. 

6 ‘‘(B) PROCEDURES.—The Secretary shall 

7 establish— 

8 ‘‘(i) procedures for determining the 

9 validity of prescriber National Provider 

10 Identifiers under subparagraph (A); and 

11 ‘‘(ii) procedures for transferring to 

12 the Inspector General of the Department 

13 of Health and Human Services and appro14 priate law enforcement agencies and other 

15 oversight entities information on those Na16 tional Provider Identifiers and pharmacy 

17 claims, including records related to such 

18 claims, that the Secretary determines are 

19 invalid under clause (i). 

20 ‘‘(C) REPORT.—Not later than January 1, 

21 2018, the Inspector General of the Department 

22 of Health and Human Services shall submit to 

23 Congress a report on the effectiveness of the 

24 procedures established under subparagraph 

25 (B).’’. 


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1 SEC. 102. REFORMING HOW CMS TRACKS AND CORRECTS 

2 THE VULNERABILITIES IDENTIFIED BY RE3 COVERY AUDIT CONTRACTORS. 

4 (a) IN GENERAL.—Section 1893(h) of the Social Se5 curity Act (42 U.S.C. 1395ddd(h)) is amended— 

6 (1) in paragraph (8)— 

7 (A) by striking ‘‘REPORT.—The Secretary’’ 

8 and inserting ‘‘REPORT.— 

9 ‘‘(A) IN GENERAL.—Subject to subpara10 graph (C), the Secretary’’; and 

11 (B) by adding after subparagraph (A), as 

12 inserted by subparagraph (A), the following new 

13 subparagraphs: 

14 ‘‘(B) INCLUSION OF IMPROPER PAYMENT

15 VULNERABILITIES IDENTIFIED.—Each report 

16 submitted under subparagraph (A) shall, sub17 ject to subparagraph (C), include— 

18 ‘‘(i) a description of— 

19 ‘‘(I) the types and financial cost 

20 to the program under this title of im21 proper payment vulnerabilities identi22 fied by recovery audit contractors 

23 under this subsection; and 

24 ‘‘(II) how the Secretary is ad25 dressing such improper payment 

26 vulnerabilities; and 


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1 ‘‘(ii) an assessment of the effective2 ness of changes made to payment policies 

3 and procedures under this title in order to 

4 address the vulnerabilities so identified. 

5 ‘‘(C) LIMITATION.—The Secretary shall 

6 ensure that each report submitted under sub7 paragraph (A) does not include information 

8 that the Secretary determines would be sen9 sitive or would otherwise negatively impact pro10 gram integrity.’’; and 

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

12 paragraph: 

13 ‘‘(10) ADDRESSING IMPROPER PAYMENT

14 VULNERABILITIES.—The Secretary shall address im15 proper payment vulnerabilities identified by recovery 

16 audit contractors under this subsection in a timely 

17 manner, prioritized based on the risk to the program 

18 under this title.’’. 

19 (b) USE OF MEDICARE AND MEDICAID RECOVERY

20 AUDIT CONTRACTOR RECOVERIES FOR PROVIDER EDU21 CATION AND TO PREVENT IMPROPER PAYMENTS AND

22 FRAUD.— 

23 (1) MEDICARE RAC PROGRAM.—Section 

24 1893(h)(1)(C) of the Social Security Act (42 U.S.C. 

25 1395ddd(h)(1)(C)) is amended— 


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1 (A) by striking ‘‘the Secretary shall re2 tain’’ and inserting ‘‘the Secretary— 

3 ‘‘(i) shall retain’’; 

4 (B) in clause (i), as added by subpara5 graph (A)— 

6 (i) by inserting ‘‘, in addition to any 

7 other funds that may be available,’’ after 

8 ‘‘available’’; 

9 (ii) by inserting ‘‘until expended’’ 

10 after ‘‘Services’’; and 

11 (iii) by striking the period at the end 

12 and inserting a semicolon; and 

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

14 clauses: 

15 ‘‘(ii) may retain an additional portion 

16 of the amounts recovered (not to exceed 25 

17 percent of such amounts recovered) which 

18 shall be available, in addition to any other 

19 funds that may be available, to such pro20 gram management account until expended 

21 for purposes of activities to address prob22 lems that contribute to improper payments 

23 and fraud under this title; and 

24 ‘‘(iii) shall retain an additional 5 per25 cent of such amounts recovered to be made 


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1 available, in addition to any other funds 

2 that may be available, to the Inspector 

3 General of the Department of Health and 

4 Human Services until expended for the In5 spector General to carry out activities of 

6 the Inspector General relating to inves7 tigating improper payments or auditing in8 ternal controls associated with payments 

9 under this title.’’. 

10 (2) MEDICAID RAC PROGRAM.—Section 1936 of 

11 the Social Security Act (42 U.S.C. 1396u–6) is 

12 amended by adding at the end the following new 

13 subsection: 

14 ‘‘(f) AMOUNTS RECOVERED THROUGH RECOVERY

15 AUDIT CONTRACTORS.—Notwithstanding any other provi16 sion of law, the Secretary— 

17 ‘‘(1) may retain a portion of the amounts recov18 ered pursuant to the program established under sec19 tion 1902(a)(42)(B) (not to exceed 25 percent of the 

20 Federal share of such amounts recovered) which 

21 shall be available, in addition to any other funds 

22 that may be available, to the program management 

23 account of the Centers for Medicare & Medicaid 

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1 lems that contribute to improper payments and 

2 fraud under this title; and 

3 ‘‘(2) shall retain an additional 5 percent of the 

4 Federal share of such amounts recovered to be made 

5 available, in addition to any other funds that may be 

6 available, to the Inspector General of the Depart7 ment of Health and Human Services until expended 

8 for the Inspector General to carry out activities of 

9 the Inspector General relating to investigating im10 proper payments or auditing internal controls associ11 ated with payments under this title.’’. 

12 (3) EFFECTIVE DATE.—The amendments made 

13 by this section shall take effect on the date that is 

14 1 year after the date of enactment of this Act. 

15 SEC. 103. IMPROVING SENIOR MEDICARE PATROL AND 

16 FRAUD REPORTING REWARDS. 

17 (a) IN GENERAL.—The Secretary of Health and 

18 Human Services (in this section referred to as the ‘‘Sec19 retary’’) shall develop a plan to revise the incentive pro20 gram under section 203(b) of the Health Insurance Port21 ability and Accountability Act of 1996 (42 U.S.C. 1395b– 

22 5(b)) to encourage greater participation by individuals to 

23 report fraud and abuse in the Medicare program. Such 

24 plan shall include recommendations for— 


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1 (1) ways to enhance rewards for individuals re2 porting under the incentive program, including re3 wards based on information that leads to an admin4 istrative action; and 

5 (2) extending the incentive program to the 

6 Medicaid program. 

7 (b) PUBLIC AWARENESS AND EDUCATION CAM8 PAIGN.—The plan developed under subsection (a) shall 

9 also include recommendations for the use of the Senior 

10 Medicare Patrols authorized under section 411 of the 

11 Older Americans Act of 1965 (42 U.S.C. 3032) to conduct 

12 a public awareness and education campaign to encourage 

13 participation in the revised incentive program under sub14 section (a). 

15 (c) SUBMISSION OF PLAN.—Not later than 180 days 

16 after the date of enactment of this Act, the Secretary shall 

17 submit to Congress the plan developed under subsection 

18 (a). 

19 SEC. 104. STRENGTHENING MEDICAID PROGRAM INTEG20 RITY THROUGH FLEXIBILITY. 

21 Section 1936 of the Social Security Act (42 U.S.C. 

22 1396u–6) is amended— 

23 (1) in subsection (a), by inserting ‘‘, or other24 wise,’’ after ‘‘entities’’; and 

25 (2) in subsection (e)— 


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1 (A) in paragraph (1), in the matter pre2 ceding subparagraph (A), by inserting ‘‘(includ3 ing the costs of equipment, salaries and bene4 fits, and travel and training)’’ after ‘‘Program 

5 under this section’’; and 

6 (B) in paragraph (3), by striking ‘‘by 100’’ 

7 and inserting ‘‘by 100, or such number as de8 termined necessary by the Secretary to carry 

9 out the Program,’’. 

10 SEC. 105. ESTABLISHING MEDICARE ADMINISTRATIVE CON11 TRACTOR ERROR REDUCTION INCENTIVES. 

12 (a) IN GENERAL.—Section 1874A(b)(1)(D) of the 

13 Social Security Act (42 U.S.C. 1395kk–1(b)(1)(D)) is 

14 amended— 

15 (1) by striking ‘‘QUALITY.—The Secretary’’ and 

16 inserting ‘‘QUALITY.— 

17 ‘‘(i) IN GENERAL.—Subject to clauses 

18 (ii) and (iii), the Secretary’’; and 

19 (2) by inserting after clause (i), as added by 

20 paragraph (1), the following new clauses: 

21 ‘‘(ii) IMPROPER PAYMENT ERROR

22 RATE REDUCTION INCENTIVES.—The Sec23 retary shall provide incentives for medicare 

24 administrative contractors to reduce the 


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1 improper payment error rates in their ju2 risdictions. 

3 ‘‘(iii) INCENTIVES.—The incentives 

4 provided for under clause (ii)— 

5 ‘‘(I) may include a sliding scale 

6 of bonus payments and additional in7 centives to medicare administrative 

8 contractors that reduce the improper 

9 payment error rates in their jurisdic10 tions to certain benchmark levels, as 

11 determined by the Secretary; and 

12 ‘‘(II) shall include substantial re13 ductions in award fee payments under 

14 award fee contracts, for any medicare 

15 administrative contractor that reaches 

16 an upper end error threshold or other 

17 threshold as determined by the Sec18 retary.’’. 

19 (b) EFFECTIVE DATE.— 

20 (1) IN GENERAL.—The amendments made by 

21 subsection (a) shall apply to contracts entered into 

22 or renewed on or after the date that is 12 months 

23 after the date of enactment of this Act. 

24 (2) CONTRACTS ENTERED INTO OR RENEWED

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1 tracts in existence on or after the date of the enact2 ment of this Act and that are not subject to the ef3 fective date under paragraph (1), the Secretary of 

4 Health and Human Services shall, when appropriate 

5 and practicable, seek to apply the incentives pro6 vided for in the amendments made by subsection (a) 

7 through contract modifications. 

8 SEC. 106. STRENGTHENING PENALTIES FOR THE ILLEGAL 

9 DISTRIBUTION OF A MEDICARE, MEDICAID, 

10 OR CHIP BENEFICIARY IDENTIFICATION OR 

11 BILLING PRIVILEGES. 

12 Section 1128B(b) of the Social Security Act (42 

13 U.S.C. 1320a–7b(b)) is amended by adding at the end the 

14 following: 

15 ‘‘(4) Whoever knowingly, intentionally, and with 

16 the intent to defraud purchases, sells or distributes, 

17 or arranges for the purchase, sale, or distribution of 

18 a Medicare, Medicaid, or CHIP beneficiary identi19 fication number or billing privileges under title 

20 XVIII, title XIX, or title XXI shall be imprisoned 

21 for not more than 10 years or fined not more than 

22 $500,000 ($1,000,000 in the case of a corporation), 

23 or both.’’. 


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1 TITLE II—IMPROVING DATA 

2 SHARING 

3 SEC. 201. ACCESS TO THE NATIONAL DIRECTORY OF NEW 

4 HIRES. 

5 Section 453(j) of the Social Security Act (42 U.S.C. 

6 653(j)) is amended by adding at the end of the following 

7 new paragraph: 

8 ‘‘(12) INFORMATION COMPARISONS AND DIS9 CLOSURES TO ASSIST IN ADMINISTRATION OF THE

10 MEDICARE PROGRAM AND STATE HEALTH SUBSIDY

11 PROGRAMS.— 

12 ‘‘(A) DISCLOSURE TO THE ADMINIS13 TRATOR OF THE CENTERS FOR MEDICARE &

14 MEDICAID SERVICES.—The Administrator of 

15 the Centers for Medicare & Medicaid Services 

16 shall have access to the information in the Na17 tional Directory of New Hires for purposes of 

18 determining the eligibility of an applicant for, 

19 or enrollee in, the Medicare program under title 

20 XVIII or an applicable State health subsidy 

21 program (as defined in section 1413(e) of the 

22 Patient Protection and Affordable Care Act (42 

23 U.S.C. 18083(e))). 


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1 ‘‘(B) DISCLOSURE TO THE INSPECTOR

2 GENERAL OF THE DEPARTMENT OF HEALTH

3 AND HUMAN SERVICES.— 

4 ‘‘(i) IN GENERAL.—If the Inspector 

5 General of the Department of Health and 

6 Human Services transmits to the Secretary 

7 the names and social security account 

8 numbers of individuals, the Secretary shall 

9 disclose to the Inspector General informa10 tion on such individuals and their employ11 ers maintained in the National Directory 

12 of New Hires. 

13 ‘‘(ii) USE OF INFORMATION.—The In14 spector General of the Department of 

15 Health and Human Services may use in16 formation provided under clause (i) only 

17 for purposes of— 

18 ‘‘(I) determining the eligibility of 

19 an applicant for, or enrollee in, the 

20 Medicare program under title XVIII 

21 or an applicable State health subsidy 

22 program (as defined in section 

23 1413(e) of the Patient Protection and 

24 Affordable Care Act (42 U.S.C. 

25 18083(e))); or 


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1 ‘‘(II) evaluating the integrity of 

2 the Medicare program or an applica3 ble State health subsidy program (as 

4 so defined). 

5 ‘‘(C) DISCLOSURE TO STATE AGENCIES.— 

6 ‘‘(i) IN GENERAL.—If, for purposes of 

7 administering an applicable State health 

8 subsidy program (as defined in section 

9 1413(e) of the Patient Protection and Af10 fordable Care Act (42 U.S.C. 18083(e))), a 

11 State agency responsible for administering 

12 such program transmits to the Secretary 

13 the names and social security account 

14 numbers of individuals, the Secretary shall 

15 disclose to such State agency information 

16 on such individuals and their employers 

17 maintained in the National Directory of 

18 New Hires, subject to this subparagraph. 

19 ‘‘(ii) CONDITION ON DISCLOSURE BY

20 THE SECRETARY.—The Secretary shall 

21 make a disclosure under clause (i) only to 

22 the extent that the Secretary determines 

23 that the disclosure would not interfere with 

24 the effective operation of the program 

25 under this part. 


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1 ‘‘(iii) USE AND DISCLOSURE OF IN2 FORMATION BY STATE AGENCIES.— 

3 ‘‘(I) IN GENERAL.—A State 

4 agency may not use or disclose infor5 mation provided under clause (i) ex6 cept for purposes of administering a 

7 program referred to in clause (i). 

8 ‘‘(II) INFORMATION SECURITY.— 

9 The State agency shall have in effect 

10 data security and control policies that 

11 the Secretary finds adequate to ensure 

12 the security of information obtained 

13 under clause (i) and to ensure that 

14 access to such information is re15 stricted to authorized persons for pur16 poses of authorized uses and disclo17 sures. 

18 ‘‘(III) PENALTY FOR MISUSE OF

19 INFORMATION.—An officer or em20 ployee of the State agency who fails to 

21 comply with this clause shall be sub22 ject to the sanctions under subsection 

23 (l)(2) to the same extent as if such of24 ficer or employee were an officer or 

25 employee of the United States. 


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1 ‘‘(iv) PROCEDURAL REQUIREMENTS.— 

2 State agencies requesting information 

3 under clause (i) shall adhere to uniform 

4 procedures established by the Secretary 

5 governing information requests and data 

6 matching under this paragraph. 

7 ‘‘(v) REIMBURSEMENT OF COSTS.— 

8 The State agency shall reimburse the Sec9 retary, in accordance with subsection 

10 (k)(3), for the costs incurred by the Sec11 retary in furnishing the information re12 quested under this subparagraph.’’. 

13 SEC. 202. IMPROVING THE SHARING OF DATA BETWEEN 

14 THE FEDERAL GOVERNMENT AND STATE 

15 MEDICAID PROGRAMS. 

16 (a) IN GENERAL.—The Secretary of Health and 

17 Human Services (in this section referred to as the ‘‘Sec18 retary’’) shall establish a plan to encourage and facilitate 

19 the participation of States in the Medicare-Medicaid Data 

20 Match Program (commonly referred to as the ‘‘Medi-Medi 

21 Program’’) under section 1893(g) of the Social Security 

22 Act (42 U.S.C. 1395ddd(g)). 

23 (b) PROGRAM REVISIONS TO IMPROVE MEDI-MEDI

24 DATA MATCH PROGRAM PARTICIPATION BY STATES.— 


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1 Section 1893(g)(1)(A) of the Social Security Act (42 

2 U.S.C. 1395ddd(g)(1)(A)) is amended— 

3 (1) in the matter preceding clause (i), by insert4 ing ‘‘or otherwise’’ after ‘‘eligible entities’’; 

5 (2) in clause (i)— 

6 (A) by inserting ‘‘to review claims data’’ 

7 after ‘‘algorithms’’; and 

8 (B) by striking ‘‘service, time, or patient’’ 

9 and inserting ‘‘provider, service, time, or pa10 tient’’; 

11 (3) in clause (ii)— 

12 (A) by inserting ‘‘to investigate and re13 cover amounts with respect to suspect claims’’ 

14 after ‘‘appropriate actions’’; and 

15 (B) by striking ‘‘; and’’ and inserting a 

16 semicolon; 

17 (4) in clause (iii), by striking the period and in18 serting ‘‘; and’’; and 

19 (5) by adding at the end the following new 

20 clause: 

21 ‘‘(iv) furthering the Secretary’s de22 sign, development, installation, or enhance23 ment of an automated data system archi24 tecture— 


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1 ‘‘(I) to collect, integrate, and as2 sess data for purposes of program in3 tegrity, program oversight, and ad4 ministration, including the Medi-Medi 

5 Program; and 

6 ‘‘(II) that improves the coordina7 tion of requests for data from 

8 States.’’. 

9 (c) PROVIDING STATES WITH DATA ON IMPROPER

10 PAYMENTS MADE FOR ITEMS OR SERVICES PROVIDED TO

11 DUAL ELIGIBLE INDIVIDUALS.— 

12 (1) IN GENERAL.—The Secretary shall develop 

13 and implement a plan that allows each State agency 

14 responsible for administering a State plan for med15 ical assistance under title XIX of the Social Security 

16 Act access to relevant data on improper or fraudu17 lent payments made under the Medicare program 

18 under title XVIII of the Social Security Act (42 

19 U.S.C. 1395 et seq.) for health care items or serv20 ices provided to dual eligible individuals. 

21 (2) DUAL ELIGIBLE INDIVIDUAL DEFINED.—In 

22 this section, the term ‘‘dual eligible individual’’ 

23 means an individual who is entitled to, or enrolled 

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1 rolled for benefits under part B of title XVIII of 

2 such Act (42 U.S.C. 1395j et seq.), and is eligible 

3 for medical assistance under a State plan under title 

4 XIX of such Act (42 U.S.C. 1396 et seq.) or under 

5 a waiver of such plan. 

6 SEC. 203. IMPROVING CLAIMS PROCESSING AND DETEC7 TION OF FRAUD WITHIN THE MEDICAID AND 

8 CHIP PROGRAMS. 

9 (a) MEDICAID.—Section 1903(i) of the Social Secu10 rity Act (42 U.S.C. 1396b(i)) is amended (after the appli11 cation of the amendments made by subsection (c) of this 

12 section)— 

13 (1) in paragraph (25), by striking ‘‘or’’ at the 

14 end; 

15 (2) in paragraph (26), by striking the period 

16 and inserting ‘‘; or’’; and 

17 (3) by inserting after paragraph (26), the fol18 lowing new paragraph: 

19 ‘‘(27) with respect to amounts expended for an 

20 item or service for which medical assistance is pro21 vided under the State plan or under a waiver of such 

22 plan unless the claim for payment for such item or 

23 service contains a valid beneficiary identification 

24 number that, for purposes of the individual who re25 ceived such item or service, has been determined by 


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1 the State agency to correspond to an individual who 

2 is eligible to receive benefits under the State plan or 

3 waiver.’’. 

4 (b) CHIP.—Section 2107(e)(1)(I) of the Social Secu5 rity Act (42 U.S.C. 1397gg(e)(1)(I)) is amended by strik6 ing ‘‘and (17)’’ and inserting ‘‘(17), and (27)’’. 

7 (c) TECHNICAL CORRECTIONS.—Effective as if in8 cluded in the enactment of Public Law 111–148, the fol9 lowing sections of such Act are amended as follows: 

10 (1) Section 6402(c)(3) is amended by striking 

11 ‘‘by adding at the end’’ and inserting ‘‘by inserting 

12 after paragraph (24)’’. 

13 (2) Section 2001(a)(2)(B)(iii) is amended by 

14 striking ‘‘by adding at the end’’ and inserting ‘‘by 

15 inserting after paragraph (25)’’. 

16 TITLE III—REPORT ON 

17 IMPLEMENTATION 

18 SEC. 301. REPORT ON IMPLEMENTATION. 

19 Not later than 270 days after the date of the enact20 ment of this Act, the Secretary of Health and Human 

21 Services shall submit to Congress a report on the imple22 mentation of the provisions of, and the amendments made 

23 by, this Act. 

Æ 


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