‘‘(B) have the greatest total dollar amount 
of such improper payments; 
‘‘(C) are due to clear misapplication or 
misinterpretation of policies under this title; 
‘‘(D) are clearly due to common and inad-
vertent clerical or administrative errors; or 
‘‘(E) are due to other types of errors that 
the Secretary determines could be prevented 
through activities under the program. 
‘‘(6) INFORMATION
ON
IMPROPER
PAYMENTS 
FROM MEDICARE CONTRACTORS.— 
‘‘(A) IN
GENERAL.—In order to assist 
Medicare DMEPOS contractors in carrying out 
DMEPOS payment outreach and education pro-
grams, the Secretary shall provide each such 
contractor with a complete list of improper pay-
ments for DMEPOS identified by recovery 
audit contractors (and other contractors per-
forming audit activities relating to payment for 
DMEPOS) with respect to suppliers located in 
the area being serviced by the Medicare 
DMEPOS contractor. Such list shall not in-
clude claims for payments that have been de-
nied and are being appealed by the supplier 
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under section 1869. Such information shall be 
provided on a quarterly basis. 
‘‘(B) INFORMATION.—The information de-
scribed in subparagraph (A) shall include the 
following information: 
‘‘(i) The suppliers of DMEPOS that 
have the highest rate of improper pay-
ments under part B for DMEPOS. 
‘‘(ii) The suppliers of DMEPOS that 
have the greatest total dollar amounts of 
such improper payments. 
‘‘(iii) The DMEPOS furnished in the 
area that has the highest rates of such im-
proper payments. 
‘‘(iv) The DMEPOS furnished in the 
area that is responsible for the greatest 
total dollar amount of such improper pay-
ments. 
‘‘(v) Other information the Secretary 
determines 
would 
assist 
Medicare 
DMEPOS contractors in carrying out the 
DMEPOS payment outreach and education 
program. 
‘‘(C) FORMAT OF INFORMATION.—The in-
formation furnished to Medicare DMEPOS con-
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tractors by the Secretary under this paragraph 
shall be transmitted in a manner that permits 
such 
contractors 
to 
easily 
identify 
the 
DMEPOS suppliers for which targeted out-
reach, education, training, and technical assist-
ance would be most effective. In carrying out 
the preceding sentence, the Secretary shall en-
sure that— 
‘‘(i) the information with respect to 
improper payments made to such a sup-
plier clearly displays the NPI or other 
identifier of the supplier, the amount of 
the improper payment, and any other in-
formation the Secretary determines appro-
priate; and 
‘‘(ii) the information is in an elec-
tronic, easily searchable database. 
‘‘(7) COMMUNICATIONS.—All communications 
with a supplier under a DMEPOS payment outreach 
and education program are subject to the standards 
and requirements of subsection (g). 
‘‘(8) ADVANCE NOTICE FOR POLICY CHANGES 
AND CLARIFICATIONS.—The Secretary shall not im-
plement a policy change or clarification for 
DMEPOS audit requirements earlier than 6 months 
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after the date of publication of such change or clari-
fication in the Federal Register. 
‘‘(9) FUNDING.—After application of paragraph 
(1)(C) of section 1893(h), the Secretary shall retain 
a portion of the amounts recovered by Medicare 
DMEPOS contractors under this title with respect 
to DMEPOS which shall be available to the Centers 
for Medicare & Medicaid Services Program Manage-
ment Account for purposes of carrying out this sub-
section and to implement corrective actions to help 
reduce the error rate of payments for DMEPOS 
under part B. The amount retained under the pre-
ceding sentence shall not exceed an amount equal to 
25 percent of the amounts recovered under section 
1893(h) with respect to DMEPOS. 
‘‘(10) DURABLE MEDICAL EQUIPMENT, PROS-
THETICS, ORTHOTICS, AND SUPPLIES AND DMEPOS 
DEFINED.—In this subsection, the terms ‘durable 
medical equipment, prosthetics, orthotics, and sup-
plies’ and ‘DMEPOS’ mean— 
‘‘(A) durable medical equipment (as de-
fined in section 1861(n)) and supplies used 
with such equipment, other than implantable 
items for which payment may be made under 
section 1833(t); 
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‘‘(B) prosthetic devices (as described in 
section 1861(s)(8)), including items described 
in section 1842(s)(2)(D); 
‘‘(C) orthotics and prosthetics (as de-
scribed in section 1861(s)(9)); 
‘‘(D) surgical dressings (as described in 
section 1861(s)(5)); 
‘‘(E) home dialysis supplies and equipment 
(as described in section 1861(s)(2)(F)); and 
‘‘(F) therapeutic shoes for diabetics (as de-
scribed in section 1861(s)(12)).’’. 
(2) FUNDING CONFORMING AMENDMENT.—Sec-
tion 1893(h)(2) of the Social Security Act (42 
U.S.C. 1395ddd(h)(2)) is amended by inserting ‘‘or 
section 1874A(h)(9)’’ after ‘‘paragraph (1)(C)’’. 
(3) TRANSPARENCY.—Section 1893(h)(8) of the 
Social Security Act (42 U.S.C. 1395ddd(h)(8)) is 
amended— 
(A) in the first sentence, by inserting be-
fore the period at the end the following: ‘‘, on 
the use of medicare administrative contractors 
in conducting audits with respect to durable 
medical equipment, prosthetics, orthotics, and 
supplies under section 1874A, and on the over-
turn rates for each level of appeal’’; 
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(B) by striking ‘‘REPORT.—The Sec-
retary’’ and inserting ‘‘REPORT.— 
‘‘(A) IN GENERAL.—The Secretary’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(B) INCLUSION
OF
CERTAIN
INFORMA-
TION.— 
‘‘(i) IN GENERAL.—For reports sub-
mitted under this paragraph for 2015 or a 
subsequent year, each such report shall in-
clude, with respect to each recovery audit 
contractor (and each medicare administra-
tive contractor) that is responsible for au-
dits relating to payment for durable med-
ical equipment, prosthetics, orthotics, and 
supplies, information on the result of all 
appeals relating to audits for durable med-
ical equipment, prosthetics, orthotics, and 
supplies for each individual level of appeals 
with respect to each of the categories of 
audits described in clause (ii) carried out 
by recovery audit contractors under this 
subsection or by medicare administrative 
contractors under section 1874A. For pur-
poses of such reports and public reporting 
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regarding such reports, such information 
relating to audits for orthotics and pros-
thetics shall be grouped separately from 
the information relating to audits for dura-
ble medical equipment and supplies. 
‘‘(ii) CATEGORIES
OF
AUDITS.—For 
purposes of clause (i), each of the following 
is a separate category of audit: 
‘‘(I) Automated. 
‘‘(II) Complex. 
‘‘(III) Medical necessity review. 
‘‘(IV) Part B.’’. 
(b) ADJUSTMENT OF RECORD REQUEST MAXIMUM 
BASED ON ERROR RATES.—Section 1893 of the Social 
Security Act (42 U.S.C. 1395ddd) is amended by adding 
at the end the following new subsection: 
‘‘(j) ADJUSTMENT OF MAXIMUM RECORD REQUEST 
THRESHOLD FOR AUDITS FOR PAYMENT FOR DURABLE 
MEDICAL EQUIPMENT, PROSTHETICS, ORTHOTICS, AND 
SUPPLIES (DMEPOS) BASED
ON SUPPLIER ERROR 
RATES.— 
‘‘(1) IDENTIFICATION OF ERROR RATES.—The 
Secretary shall determine the audited claims error 
rates for payment for durable medical equipment, 
prosthetics, orthotics, and supplies and identify— 
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‘‘(A) those DMEPOS suppliers with a rel-
atively high error rate with respect to claims for 
DMEPOS; and 
‘‘(B) those DMEPOS suppliers with a rel-
atively low error rate with respect to such 
claims or with a steadily decreasing error rate 
for such claims. 
‘‘(2) FACTORS IN IDENTIFICATION.— 
‘‘(A) ANALYSIS.—For purposes of identi-
fying the groups of DMEPOS suppliers under 
paragraph (1), the Secretary shall analyze the 
following as they relate to the total number and 
amount of claims submitted by product cat-
egory and by each DMEPOS supplier: 
‘‘(i) The improper payment rates of 
the supplier. 
‘‘(ii) The amount of improper pay-
ments made to the supplier. 
‘‘(iii) The frequency of errors made by 
the supplier over time. 
‘‘(iv) Other information determined 
appropriate by the Secretary. 
In performing such analysis, the Secretary shall 
exclude claims for payment that have been de-
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nied and are being appealed by a DMEPOS 
supplier under section 1869. 
‘‘(B) ASSIGNMENT BASED ON COMPOSITE 
SCORE.—Using a statistically valid sample, the 
Secretary shall assign DMEPOS suppliers 
under paragraph (1) based on a composite score 
determined using the analysis under subpara-
graph (A) as follows: 
‘‘(i) Suppliers with high, expensive, 
and frequent errors shall receive a high 
score and be identified as high error sup-
pliers under paragraph (1)(A). 
‘‘(ii) Suppliers with few, inexpensive, 
and infrequent errors shall receive a low 
score and be identified as low error sup-
pliers under paragraph (1)(B). 
‘‘(iii) Only a small proportion of the 
total suppliers in any area shall be as-
signed to either group identified under ei-
ther such paragraph. 
‘‘(C) TIMEFRAME OF IDENTIFICATION.— 
‘‘(i) IN GENERAL.—Any identification 
of a DMEPOS supplier under paragraph 
(1) shall be for a period of 12 months. 
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‘‘(ii) REEVALUATION.—The Secretary 
shall reevaluate each such identification at 
the end of such period. 
‘‘(iii) USE OF MOST CURRENT INFOR-
MATION.—In carrying out the reevaluation 
under clause (ii) with respect to a supplier, 
the Secretary shall— 
‘‘(I) consider the most current in-
formation available with respect to the 
supplier under the analysis under sub-
paragraph (A); and 
‘‘(II) take into account improve-
ment or regression of the supplier. 
‘‘(3) ADJUSTMENT OF MAXIMUM RECORD RE-
QUESTS BASED ON ERROR RATE PERFORMANCE.— 
The Secretary shall establish procedures under 
which, for those DMEPOS suppliers that are identi-
fied— 
‘‘(A) under paragraph (1)(A) (relating to a 
relatively high error rate), the Secretary shall 
increase the maximum record request made by 
Medicare DMEPOS contractors in auditing 
claims of such suppliers for DMEPOS; and 
‘‘(B) under paragraph (1)(B) (relating to a 
relatively low or decreasing error rate), the Sec-
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retary shall decrease the maximum record re-
quest made by Medicare DMEPOS contractors 
of such suppliers. 
‘‘(4) BEST PERFORMING SUPPLIERS HAVE RE-
DUCED
RANDOM
AUDITS.—In the case of a 
DMEPOS supplier that the Secretary identifies 
under paragraph (1)(B) for a year as having an au-
dited claims error rate that is less than 15 percent 
for a category of DMEPOS, the Secretary shall not 
conduct more than 1 random audit of a claim per 
product category for the year for such category. 
‘‘(5) RESTORATION
OF
CLINICAL
INFERENCE 
AND JUDGMENT.—With respect to the conduct of 
payment audits of DMEPOS suppliers respecting 
DMEPOS under part B, the Secretary shall use 
clinical inference and clinical judgment in the eval-
uation of medical records and orders when con-
ducting such audits in the same manner as the Sec-
retary interpreted and applied such clinical judg-
ment to claim reviews before 2009 pursuant to the 
Secretary’s instruction to contractors. 
‘‘(6) TREATMENT
OF
CERTAIN
DOCUMENTA-
TION
CREATED
BY
ORTHOTISTS
AND 
PROSTHETISTS.—For purposes of determining under 
this title the reasonableness and medical necessity of 
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prosthetic devices and orthotics and prosthetics, doc-
umentation created by orthotists and prosthetists re-
lating to the need for such devices, orthotics, and 
prosthetics shall be considered part of the medical 
record. 
‘‘(7) DEFINITIONS.—In this subsection: 
‘‘(A) 
DURABLE
MEDICAL
EQUIPMENT, 
PROSTHETICS, ORTHOTICS, AND SUPPLIES AND 
DMEPOS.—The terms ‘durable medical equip-
ment, prosthetics, orthotics, and supplies’ and 
‘DMEPOS’ have the meaning given such terms 
in section 1874A(h)(10). 
‘‘(B) DMEPOS 
SUPPLIER.—The term 
‘DMEPOS supplier’ means an entity that fur-
nishes DMEPOS to individuals for which pay-
ment may be made under part B. 
‘‘(C) MEDICARE DMEPOS CONTRACTOR.— 
The term ‘Medicare DMEPOS contractor’ 
means a recovery audit contractor and any 
other contractor (including a medicare adminis-
trative contractor) that performs pre-pay or 
post-pay audits with respect to claims for pay-
ment for DMEPOS under part B.’’. 
(c) APPLICATION OF TIMELY FILING LIMITS TO RE-
OCCURRING DMEPOS CLAIMS SUBJECT TO PAYMENT 
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AUDITS.—Section 1842(b)(3)(B) of the Social Security 
Act (42 U.S.C. 1395u(b)(3)(B)) is amended by inserting 
before the semicolon at the end the following: ‘‘, except 
that the reopening of a claim by a Medicare DMEPOS 
contractor (as defined in section 1893(j)(7)) in a post-pay-
ment audit or a claim denial in a prepayment audit for 
DMEPOS (as defined in such section) shall toll the timely 
claim filing limits under this part such that the Secretary 
may not prohibit a DMEPOS supplier (as defined in such 
section) from taking an appeal from the determination of 
a claim in a pre- or post-payment audit, or the submission 
or resubmission for payment of any claims that follow se-
quentially from the audited claim on the basis that the 
timely claim filing limits have expired’’. 
(d) MAXIMUM AUDIT DOCUMENTATION REVIEW PE-
RIOD OF 3 YEARS FOR MEDICARE CONTRACTORS.— 
(1) RACS.—Section 1893(h)(4)(B) of the So-
cial Security Act (42 U.S.C. 1395ddd(h)(4)(B)) is 
amended by striking ‘‘4 fiscal years’’ and inserting 
‘‘3 fiscal years’’. 
(2) IN
OVERPAYMENT
OF
CLAIMS.—The last 
sentences of subsections (b) and (c) of section 1870 
of the Social Security Act (42 U.S.C. 1395gg) are 
each amended by striking ‘‘fifth year’’ and ‘‘five- 
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year’’ and inserting ‘‘third year’’ and ‘‘three-year’’, 
respectively. 
(3) LIMITATION
ON
AUDIT
DOCUMENTATION 
REVIEW PERIOD.—Section 1874A(a) of the Social 
Security Act (42 U.S.C. 1395kk–1(a)) is amended 
by adding at the end the following new paragraph: 
‘‘(7) LIMITATION ON AUDIT DOCUMENTATION 
REVIEW
PERIOD.—The Secretary shall limit the 
audit documentation review period for medicare ad-
ministrative contractors to 3 years.’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply with respect to pay-
ments made for items and services furnished on or 
after the date of the enactment of this Act. 
Æ 
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