I
105TH CONGRESS
1ST SESSION
H. R. 2543
To amend titles XVIII and XIX of the Social Security Act to require hos-
pitals, skilled nursing facilities, home health agencies, hospice programs,
clinical laboratories, and ambulance services to fund annual financial
and compliance audits as a condition of participation under the Medicare
and Medicaid programs.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 24, 1997
Mr. STARK (for himself, Mr. DELLUMS, and Mr. MILLER of California) intro-
duced the following bill; which was referred to the Committee on Com-
merce, and in addition to the Committee on Ways and Means, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the commit-
tee concerned
A BILL
To amend titles XVIII and XIX of the Social Security Act
to require hospitals, skilled nursing facilities, home
health agencies, hospice programs, clinical laboratories,
and ambulance services to fund annual financial and
compliance audits as a condition of participation under
the Medicare and Medicaid programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Medicare and Medicaid
Provider Review Act of 1997’’.
SEC. 2. REQUIRING CERTAIN PROVIDERS TO FUND ANNUAL
FINANCIAL AND COMPLIANCE AUDITS AS A
CONDITION OF PARTICIPATION UNDER THE
MEDICARE AND MEDICAID PROGRAMS.
(a) ESTABLISHMENT OF ANNUAL FINANCIAL AND
COMPLIANCE AUDIT FEE SCHEDULE.—Title XI of the
Social Security Act, as amended by sections 4321(c) of
the Balanced Budget Act of 1997 (Public Law 105–33),
is amended by inserting after section 1146 the following
new section:
‘‘COMPLIANCE AND FINANCIAL AUDIT FEE SCHEDULE
‘‘SEC. 1147. (a) ESTABLISHMENT.—
‘‘(1) IN GENERAL.—Subject to subsection (c),
the Secretary shall—
‘‘(A) establish a schedule of hourly rates
for the conduct of annual financial and compli-
ance audits during each fiscal year for all
health care providers described in subsection (b)
that receive payment under title XVIII or XIX
during the year; and
‘‘(B) provide for the conduct, in a separate
office within the Department of Health and
Human Services, of such audits by specially
trained and qualified personnel of each provid-
er’s substantial compliance with the require-
ments for payment to such provider under title
XVIII, title XIX, or both (whichever is applica-
ble), including requirements relating to medical
necessity and appropriate coding and docu-
mentation for services and supplies provided.
‘‘(2) SCOPE OF AUDITS.—An audit of a pro-
vider under paragraph (1)(B) shall include, as ap-
propriate, audits of related entities (including busi-
nesses owned, in whole or in part, by the provider).
‘‘(b) COVERED PROVIDERS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
each of the following is a health care provider de-
scribed in this subsection:
‘‘(A) A hospital.
‘‘(B) A skilled nursing facility or nursing
facility.
‘‘(C) A home health agency.
‘‘(D) A hospice program.
‘‘(E) A provider of clinical laboratory serv-
ices.
‘‘(F) A provider of ambulance services.
‘‘(2) LOW
VOLUME
PROVIDER
EXEMPTION.—
The Secretary may exclude a particular health care
provider described in paragraph (1) if the Secretary
finds that the provider receives a small amount of
revenues from titles XVIII and XIX.
‘‘(c) REQUIRING MAINTENANCE OF APPROPRIATION
LEVEL.—No rates shall be collected under subsection (a)
and no audits conducted under such subsection for a fiscal
year if the amount appropriated and available for the con-
duct of audits of the type described in subsection
(a)(1)(B) for the fiscal year is less than the amount so
appropriated for fiscal year 1998 or for the fiscal year pre-
ceding the fiscal year involved, whichever is greater.
‘‘(d) USE OF FUNDS EXCLUSIVELY FOR FINANCIAL
AND COMPLIANCE AUDITS.—Annual payments made to
the Secretary under sections 1866(a)(1)(T), 1862(a)(22),
and 1903(i)(19) in the amounts specified under subsection
(a) are hereby appropriated to the Secretary for the sole
purpose of conducting audits described in subsection (a).’’.
(b) APPLICATION UNDER MEDICARE PROGRAM.—
(1) PAYMENT REQUIREMENT FOR HOSPITALS,
SKILLED
NURSING
FACILITIES, 
HOME
HEALTH
AGENCIES, 
AND
HOSPICE
PROGRAMS.—Section
1866(a)(1) of the Social Security Act, as amended
by section 4321(b) of the Balanced Budget Act of
1997 (42 U.S.C. 1395cc), is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (R),
(B) by striking the period at the end of
subparagraph (S), and
(C) by inserting after subparagraph (S)
the following new subparagraph:
‘‘(T) in the case of a hospital, skilled nursing
facility, home health agency, or hospice program,
subject to section 1147(c), to provide for annual
payment to the Secretary of the appropriate amount
specified under section 1147(a) as necessary for the
conduct of an annual financial and compliance audit
of the hospital, facility, agency, or program under
such section.’’.
(2) REQUIREMENT FOR AMBULANCE SERVICES
AND CLINICAL LABORATORIES.—Section 1862(a) of
the Social Security Act (42 U.S.C. 1395y(a)), as
amended 
by 
sections 
4319(b), 
4432(b),
4507(a)(2)(B), 4541(b), and 4603(c)(2)(C) of the
Balanced Budget Act of 1997, is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (20),
(B) by striking the period at the end of
paragraph (21) and inserting ‘‘; or’’, and