I 
112TH CONGRESS 
2D SESSION 
H. R. 6575 
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 
OCTOBER 16, 2012 
Mr. GRAVES of Missouri (for himself, Mr. SCHIFF, Mr. LONG, and Mr. AKIN) 
introduced the following bill; which was referred to the Committee on 
Ways and Means, and in addition to the Committee on Energy and Com-
merce, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to improve 
operations of recovery auditors under the Medicare integ-
rity program, to increase transparency and accuracy in 
audits conducted by contractors, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medicare Audit Improvement Act of 2012’’. 
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(b) TABLE OF CONTENTS.—The table of contents of 
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. Restoring due process rights under the AB rebilling demonstration. 
Sec. 6. Accurate payment for rebilled claims. 
Sec. 7. Requirement for physician validation for medical necessity denials. 
SEC. 2. COMBINED ADDITIONAL DOCUMENTATION RE-
QUEST LIMIT. 
(a) ESTABLISHMENT OF ANNUAL LIMITS.—The Sec-
retary of Health and Human Services shall establish a 
process under which the number of additional documenta-
tion requests made by a Medicare contractor (as defined 
in subsection (b)(1)) pursuant to a complex prepayment 
audit or complex postpayment audit under chapter 3 of 
the Medicare Program Integrity Manual, or otherwise, 
with respect to part A claims (as defined in subsection 
(b)(2)) of a hospital in a year may not exceed, across all 
such contractors with respect to such claims of such hos-
pital, the lesser of— 
(1) 2 percent of all such claims for such year; 
or 
(2) 500 additional documentation requests dur-
ing any 45-day period. 
(b) DEFINITIONS.—In this section: 
(1) 
MEDICARE
CONTRACTOR.—The 
term 
‘‘Medicare contractor’’ means any of the following: 
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(A) A Medicare administrative contractor 
under section 1874A of the Social Security Act 
(42 U.S.C. 1395kk), including a fiscal inter-
mediary and a carrier under sections 1816 and 
1842, respectively. 
(B) A recovery audit contractor, zone pro-
gram integrity contractor, and program safe-
guard or integrity contractor under section 
1893(h) of such Act (42 U.S.C. 1395ddd(h)). 
(C) A Comprehensive Error Rate Testing 
(CERT) program contractor with a contract 
with the Secretary of Health and Human Serv-
ices to review error rates under title XVIII of 
the Social Security Act (42 U.S.C. 1395 et 
seq.). 
(2) PART A CLAIM.—The term ‘‘part A claim’’ 
means a claim for payment under part A of title 
XVIII of the Social Security Act (42 U.S.C. 1395c 
et seq.) made by a hospital for furnishing inpatient 
hospital services to individuals entitled to have pay-
ment made on their behalf under such part A for the 
furnishing of such services. 
(3) HOSPITAL.—The term ‘‘hospital’’ has the 
meaning given such term under subsection (e) of 
section 1861 of the Social Security Act (42 U.S.C. 
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1395x), and includes a psychiatric hospital as de-
fined in subsection (f) of such section. In applying 
such definition for purposes of this section, such 
term means the campus of the hospital, as identified 
by the tax identification number of the hospital, and 
includes all inpatient hospital facilities under such 
number located in the same area. 
(c) EFFECTIVE DATE.—This section takes effect on 
the date of the enactment of this Act and shall apply with 
respect to claims submitted for payment under title XVIII 
of the Social Security Act for items or services furnished 
by providers of services or suppliers on or after January 
1, 2013. 
SEC. 3. IMPROVEMENT OF RECOVERY AUDITOR OPER-
ATIONS. 
(a) RECOVERY AUDITORS.— 
(1) IN GENERAL.—Section 1893(h) of the So-
cial Security Act (42 U.S.C. 1395ddd(h)) is amend-
ed by adding at the end the following new para-
graph: 
‘‘(10) MANDATORY
TERMS
AND
CONDITIONS 
UNDER
CONTRACTS
WITH
RECOVERY
AUDIT
CON-
TRACTORS.—In addition to such other terms and 
conditions as the Secretary may require under con-
tracts with recovery audit contractors under this 
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subsection with respect to a hospital, including a 
psychiatric hospital (as defined in section 1861(f)), 
the Secretary shall ensure each of the following re-
quirements are included under such contracts: 
‘‘(A) PENALTIES
FOR
CERTAIN
COMPLI-
ANCE FAILURES.— 
‘‘(i) IN
GENERAL.—Each such con-
tract shall provide for the imposition of fi-
nancial penalties by the Secretary under 
such contract in the case of any recovery 
audit contractor with respect to which the 
Secretary determines there is a pattern of 
failure by such contractor to meet any pro-
gram requirement described in clause (ii). 
The Secretary shall establish the amount 
of financial penalties and the periodicity 
under which such penalties shall be im-
posed under this subparagraph, in no case 
less often than annually. 
‘‘(ii) PROGRAM
REQUIREMENT
DE-
SCRIBED.—For purposes of this subpara-
graph, each of the following requirements 
under the statement of work for a recovery 
audit contractor constitutes a program re-
quirement with respect to which failure to 
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meet such requirement shall result in the 
imposition of a financial penalty under 
clause (i): 
‘‘(I) AUDIT
DEADLINE.—Com-
pleting a determination with respect 
to each audit of a hospital the recov-
ery audit contractor conducts within 
the 
timeframes 
applicable 
under 
guidelines of the Secretary. 
‘‘(II) 
TIMELY
COMMUNICA-
TION.—In the case of a denial of a 
claim of a hospital, furnishing the 
hospital a demand letter in a timely 
fashion under claims and appeals 
timeframes applicable under guide-
lines of the Secretary. 
‘‘(B) PENALTY
FOR
OVERTURNED
AP-
PEALS.— 
‘‘(i) IN
GENERAL.—Each such con-
tract shall require a recovery audit con-
tractor to pay a fee to the prevailing party 
in the case of a claim denial that is over-
turned on appeal. 
‘‘(ii) FEE AMOUNT.—The amount of 
the fee payable by a recovery audit con-
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tractor to a prevailing party under clause 
(i) shall be determined under a fee sched-
ule established by the Secretary for such 
purpose. 
‘‘(C) POSTPAYMENT AND PREPAYMENT AU-
DITS.— 
‘‘(i) REQUIRING
FOCUS
ON
WIDE-
SPREAD PAYMENT ERRORS.— 
‘‘(I) IN
GENERAL.—The Sec-
retary shall not approve the conduct 
of a postpayment or prepayment med-
ical necessity audit by a recovery 
audit contractor unless such review 
addresses a widespread payment error 
rate (as defined in clause (ii)). 
‘‘(II) CESSATION OF AUDIT.—A 
recovery audit contractor that com-
mences an audit under subclause (I) 
shall cease such audit or any similar 
audits, if upon annual review, the ap-
plicable payment error rate is no 
longer a widespread payment error 
rate (as so defined). 
‘‘(ii) WIDESPREAD
PAYMENT
ERROR 
RATE DEFINED.— 
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‘‘(I) IN GENERAL.—In this sub-
paragraph, the term ‘widespread pay-
ment error rate’ means, with respect 
to medical necessity reviews conducted 
by a recovery audit contractor, a pay-
ment error rate that exceeds the rate 
specified in subclause (II) for a par-
ticular medical necessity audit deter-
mined by the Secretary using a statis-
tically significant sampling of claims 
submitted by hospitals in the jurisdic-
tion of the recovery audit contractor 
and adjusted to take into account 
claim denials overturned on appeal. 
‘‘(II) 
RATE
SPECIFIED.—The 
rate specified in this subclause is 40 
percent, except that the Secretary 
shall annually evaluate such rate and 
reduce it as necessary to account for 
changes in payment error rates with 
the aim of continued, steady improve-
ment of billing practices. 
‘‘(D) GUIDELINES FOR PREPAYMENT RE-
VIEW.— 
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‘‘(i) IN GENERAL.—A recovery audit 
contractor may only conduct prepayment 
review in the manner provided under pre-
payment review guidelines (described in 
clause (ii)) established by the Secretary. 
‘‘(ii) CONSISTENT
PREPAYMENT
RE-
VIEW GUIDELINES.—For purposes of pre-
payment review activities authorized under 
this subsection and section 1874A(h) (re-
lating to prepayment review by medicare 
administrative contractors), the Secretary 
shall establish guidelines under which con-
sistent criteria for minimum payment error 
rates or improper billing practices occasion 
prepayment review by contractors under 
this subsection and section 1874A. Such 
guidelines shall include criteria for termi-
nation, including termination dates, of pre-
payment review.’’. 
(2) CONFORMING AMENDMENT TO APPLY FI-
NANCIAL PENALTIES IMPOSED ON RECOVERY CON-
TRACTORS
TO
THE
TRUST
FUNDS.—Section 
1893(h)(2) of the Social Security Act (42 U.S.C. 
1395ddd(h)(2)) is amended by inserting ‘‘, and 
amounts collected by the Secretary under paragraph 
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(10)(A)(i) (relating to financial penalties for con-
tractor compliance failures),’’ after ‘‘paragraph 
(1)(C)’’. 
(b) CONFORMING AMENDMENT FOR MEDICARE AD-
MINISTRATIVE CONTRACTORS.—Section 1874A of the So-
cial Security Act (42 U.S.C. 1395kk–1) is amended by 
adding at the end the following new subsection: 
‘‘(h) MANDATORY TERMS AND CONDITIONS UNDER 
CONTRACTS WITH MEDICARE ADMINISTRATIVE CON-
TRACTORS.—In addition to such other terms and condi-
tions as the Secretary may require under contracts with 
medicare administrative contractors under this section 
with respect to a hospital, including a psychiatric hospital 
(as defined in section 1861(f)), the Secretary shall ensure 
each of the following requirements are included under 
such contracts: 
‘‘(1) POSTPAYMENT
AND
PREPAYMENT
AU-
DITS.— 
‘‘(A) REQUIRING FOCUS ON WIDESPREAD 
PAYMENT ERRORS.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall not approve the conduct of a 
postpayment or prepayment medical neces-
sity audit by a medicare administrative 
contractor unless such review addresses a 
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widespread payment error rate (as defined 
in subparagraph (B)). 
‘‘(ii) CESSATION OF AUDIT.—A medi-
care administrative contractor that com-
mences an audit under clause (i) shall 
cease such audit or any similar audits, if 
upon annual review, the applicable pay-
ment error rate is no longer a widespread 
payment error rate (as so defined). 
‘‘(B) WIDESPREAD PAYMENT ERROR RATE 
DEFINED.—In this paragraph, the term ‘wide-
spread payment error rate’ means, with respect 
to medical necessity reviews conducted by a 
medicare administrative contractor, a payment 
error rate of 40 percent or greater for a par-
ticular medical necessity audit determined by 
the Secretary using a statistically significant 
sampling of claims submitted by hospitals in 
the jurisdiction of the medicare administrative 
contractor and adjusted to take into account 
claim denials overturned on appeal. 
‘‘(2) GUIDELINES FOR PREPAYMENT REVIEW.— 
A medicare administrative contractor may only con-
duct prepayment review in the manner provided 
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under prepayment review guidelines established by 
the Secretary under section 1893(h)(10)(D)(ii).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contracts entered into or re-
newed with recovery audit contractors under section 
1893(h) of the Social Security Act (42 U.S.C. 
1395ddd(h)) and medicare administrative contractors 
under section 1874A of the Social Security Act (42 U.S.C. 
1395kk–1) on or after the date of the enactment of this 
Act. 
SEC. 4. GREATER TRANSPARENCY OF RECOVERY AUDITOR 
PERFORMANCE. 
(a) ANNUAL PUBLICATION OF RELEVANT PERFORM-
ANCE INFORMATION.—Section 1893(h) of the Social Secu-
rity Act (42 U.S.C. 1395ddd(h)), as amended by section 
3(a), is further amended by adding at the end the fol-
lowing new paragraph: 
‘‘(11) INFORMATION ON RECOVERY AUDIT CON-
TRACTOR PERFORMANCE.—With respect to each re-
covery audit contractor with a contract under this 
section for a contract year, the Secretary shall pub-
lish on the Internet website of the Centers for Medi-
care & Medicaid Services the following information 
with respect to the performance of each such recov-
ery audit contractor: 
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‘‘(A) PUBLICLY AVAILABLE INFORMATION 
ON AUDIT RATES, DENIALS, AND APPEALS OUT-
COMES.—With respect to the performance of 
each such recovery audit contractor during a 
contract year, the Secretary shall post on such 
Internet website the following information: 
‘‘(i) AUDITS.—The aggregate number 
of audits conducted by the recovery audit 
contractor during the contract year in-
volved, as well as the number of audits of 
each of the following audit types (each in 
this paragraph referred to as an ‘audit 
type’): 
‘‘(I) Automated. 
‘‘(II) Complex. 
‘‘(III) Medical necessity review. 
‘‘(IV) Part A claims. 
‘‘(V) Part B claims. 
‘‘(VI) Durable medical equipment 
claims. 
‘‘(VII) Part A medical necessity. 
‘‘(ii) DENIALS.—The aggregate num-
ber of denials for each audit type made by 
the recovery audit contractor during the 
contract year involved. 
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‘‘(iii) DENIAL
RATES.—The denial 
rate of the recovery audit contractor dur-
ing the contract year involved for part A 
claims, part B claims, and durable medical 
equipment claims. 
‘‘(iv) APPEALS.—The aggregate num-
ber of appeals filed by providers of services 
and suppliers with respect to denials for 
each audit type made by the recovery audit 
contractor during the contract year in-
volved. 
‘‘(v) APPEALS RATES.—The aggregate 
rate of appeals filed by providers of serv-
ices and suppliers with respect to denials 
for each audit type made by the recovery 
audit contractor during the contract year 
involved. 
‘‘(vi) APPEALS
OUTCOMES
AT
EACH 
OF THE 5 STAGES OF APPEAL.—The out-
come of each appeal filed by a provider of 
services or supplier of a denial made by a 
recovery audit contractor at each level of 
appeal as follows: 
‘‘(I) Reconsideration by the rel-
evant medicare contractor. 
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‘‘(II) Redetermination by a quali-
fied independent contractor. 
‘‘(III) Administrative law judge 
hearing. 
‘‘(IV) Medicare Appeals Council 
review. 
‘‘(V) 
United 
States 
District 
Court judicial review. 
‘‘(vii) NET DENIALS.—The net denial 
for each audit type, calculated as the dif-
ference between the number of denials for 
such audit type under clause (ii) and the 
number of denials for such audit type over-
turned on appeal. 
‘‘(B) PUBLIC
AVAILABILITY
OF
INDE-
PENDENT
PERFORMANCE
EVALUATION.—The 
Secretary shall make available on such Internet 
website the results of any performance evalua-
tion with respect to each recovery audit con-
tractor conducted by an independent entity se-
lected by the Secretary for such purpose. Each 
performance evaluation shall include in its re-
sults for posting on such Internet website a de-
termination of annual error rates of the recov-
ery audit contractor for each audit type and the 
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net 
denials 
described 
in 
subparagraph 
(A)(vii).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to contracts entered into or re-
newed with recovery audit contractors under section 
1893(h) of the Social Security Act (42 U.S.C. 
1395ddd(h)) on or after the date of the enactment of this 
Act. 
SEC. 5. RESTORING DUE PROCESS RIGHTS UNDER THE AB 
REBILLING DEMONSTRATION. 
(a) CLARIFICATION OF AVAILABILITY OF ALL AP-
PEAL RIGHTS.—In conducting the AB Rebilling Dem-
onstration (as defined in subsection (b)), the Secretary of 
Health and Human Services may not prohibit any appeal 
from, or any form of appeal available to, a hospital with 
respect to the inpatient hospital services furnished for 
which payment may be made under part A of title XVIII 
of the Social Security Act for which the claim submitted 
by such hospital was denied as an inpatient admission by 
a recovery auditor with a contract under section 1893(h) 
of such Act (42 U.S.C. 1395ddd(h)) due to a finding by 
the contractor that the inpatient admission was not rea-
sonable and medically necessary. 
(b) AB REBILLING DEMONSTRATION DEFINED.—In 
this section, the term ‘‘AB Rebilling Demonstration’’ 
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means the Medicare Part A to Part B Rebilling (AB Re-
billing) Demonstration conducted during calendar years 
2012 through 2014 by the Secretary of Health and 
Human Services through the Administrator of the Centers 
for Medicare & Medicaid Services under which a hospital 
with a participation agreement under the Medicare pro-
gram may receive 90 percent of the allowable part B pay-
ment for part A short-stay claims that are denied on the 
basis that the inpatient admission was not reasonable and 
necessary. 
SEC. 6. ACCURATE PAYMENT FOR REBILLED CLAIMS. 
(a) REBILLING UNDER PART B INPATIENT CLAIMS 
DENIED BASED ON SITE OF SERVICE WHERE SERVICES 
FOUND MEDICALLY NECESSARY AT THE OUTPATIENT 
LEVEL.— 
(1) RECOVERY AUDITORS.—Section 1893(h) of 
the Social Security Act (42 U.S.C. 1395ddd(h)), as 
amended by sections 3(a) and 4(a), is further 
amended by adding at the end the following new 
paragraph: 
‘‘(12) TREATMENT OF RESUBMISSION OF SPEC-
IFIED CLAIMS AS ORIGINAL CLAIMS.— 
‘‘(A) TREATMENT AS ORIGINAL CLAIM.— 
The resubmission of a specified claim (as de-
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fined in subparagraph (C)) shall be deemed to 
be an original claim for purposes of— 
‘‘(i) payment under part B; and 
‘‘(ii) provisions under this title relat-
ing to— 
‘‘(I) the authority of a hospital to 
resubmit a claim for payment under 
the appropriate section of this title; 
and 
‘‘(II) requirements for the timely 
submission of claims, including under 
sections 1814(a), 1842(b)(3), and 
1835(a). 
‘‘(B) PAYMENT FOR ITEMS AND SERVICES 
UNDER RESUBMITTED CLAIM.—Payment shall 
be made for a specified claim resubmitted under 
subparagraph (A) for all the items and services 
furnished for which payment may be made 
under part B. 
‘‘(C) DEFINITIONS.—In this paragraph: 
‘‘(i) SPECIFIED
CLAIM.—The term 
‘specified claim’ means a claim submitted 
by a hospital for payment under part A for 
inpatient hospital services which a recovery 
audit contractor determines— 
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‘‘(I) the inpatient hospital serv-
ices were not medically necessary and 
reasonable 
under 
section 
1862(a)(1)(A) based on site of serv-
ice; and 
‘‘(II) the services furnished would 
be medically necessary and reasonable 
in an outpatient setting of the hos-
pital. 
‘‘(ii) RESUBMISSION.—The term ‘re-
submission’ includes, with respect to a 
specified claim of a hospital, the submis-
sion by the hospital of a new claim or of 
an adjusted original claim.’’. 
(2) CONFORMING AMENDMENT FOR MEDICARE 
ADMINISTRATIVE CONTRACTORS.—Subsection (h) of 
section 1874A of the Social Security Act (42 U.S.C. 
1395kk–1), as added by section 3(b), is further 
amended by adding at the end the following new 
paragraph: 
‘‘(3) TREATMENT OF RESUBMISSION OF SPECI-
FIED CLAIMS AS ORIGINAL CLAIMS.— 
‘‘(A) TREATMENT AS ORIGINAL CLAIM.— 
The resubmission of a specified claim (as de-
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fined in subparagraph (C)) shall be deemed to 
be an original claim for purposes of— 
‘‘(i) payment under part B; and 
‘‘(ii) provisions under this title relat-
ing to— 
‘‘(I) the authority of a hospital to 
resubmit a claim for payment under 
the appropriate section of this title; 
and 
‘‘(II) requirements for the timely 
submission of claims, including under 
sections 1814(a), 1842(b)(3), and 
1835(a). 
‘‘(B) PAYMENT FOR ITEMS AND SERVICES 
UNDER RESUBMITTED CLAIM.—Payment shall 
be made for a specified claim resubmitted under 
subparagraph (A) for all the items and services 
furnished for which payment may be made 
under part B. 
‘‘(C) DEFINITIONS.—In this paragraph: 
‘‘(i) SPECIFIED
CLAIM.—The term 
‘specified claim’ means a claim submitted 
by a hospital for payment under part A for 
inpatient hospital services which a medi-
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care 
administrative 
contractor 
deter-
mines— 
‘‘(I) the inpatient hospital serv-
ices were not medically necessary and 
reasonable 
under 
section 
1862(a)(1)(A) based on site of serv-
ice; and 
‘‘(II) the services furnished would 
be medically necessary and reasonable 
in an outpatient setting of the hos-
pital. 
‘‘(ii) RESUBMISSION.—The term ‘re-
submission’ includes, with respect to a 
specified claim of a hospital, the submis-
sion by the hospital of a new claim or of 
an adjusted original claim.’’. 
(3) CONFORMING
REQUIREMENT
FOR
CERT 
CONTRACTORS.— 
(A) TREATMENT
OF
RESUBMISSION
OF 
SPECIFIED
CLAIMS
AS
ORIGINAL
CLAIMS.—A 
Comprehensive Error Rate Testing (CERT) 
program contractor with a contract with the 
Secretary of Health and Human Services to re-
view error rates under title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.) shall 
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mstockstill on DSK4VPTVN1PROD with BILLS
deem the resubmission of a specified claim (as 
defined in subparagraph (C)) as an original 
claim for purposes of— 
(i) payment under part B of such title 
XVII; and 
(ii) provisions under such title relating 
to— 
(I) the authority of a hospital to 
resubmit a claim for payment under 
the appropriate section of such title; 
and 
(II) requirements for the timely 
submission of claims, including under 
sections 1814(a), 1842(b)(3), and 
1835(a) of such Act (42 U.S.C. 
1395f(a), 1395u(b)(3), and 1395n(a), 
respectively). 
(B) PAYMENT FOR ITEMS AND SERVICES 
UNDER RESUBMITTED CLAIM.—Payment shall 
be made for a specified claim resubmitted under 
subparagraph (A) for all the items and services 
furnished for which payment may be made 
under part B of such title XVIII. 
(C) DEFINITIONS.—In this paragraph: 
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(i) 
SPECIFIED
CLAIM.—The 
term 
‘‘specified claim’’ means a claim submitted 
by a hospital (as defined in section 1861(e) 
of such Act (42 U.S.C. 1395x(e))) for pay-
ment under title XVIII of such Act for in-
patient hospital services which a Com-
prehensive Error Rate Testing (CERT) 
program contractor determines— 
(I) the inpatient hospital services 
were not medically necessary and rea-
sonable under section 1862(a)(1)(A) 
of such Act based on site of service; 
and 
(II) the services furnished would 
be medically necessary and reasonable 
in an outpatient setting of the hos-
pital. 
(ii) RESUBMISSION.—The term ‘‘re-
submission’’ includes, with respect to a 
specified claim of a hospital, the submis-
sion by the hospital of a new claim or of 
an adjusted original claim. 
(4) EFFECTIVE DATE.—The amendments made 
by paragraphs (1) and (2), and the provisions of 
paragraph (3), shall apply to contracts entered into 
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or renewed with recovery audit contractors under 
section 1893(h) of the Social Security Act (42 
U.S.C. 1395ddd(h)), medicare administrative con-
tractors under section 1874A of the Social Security 
Act (42 U.S.C. 1395kk–1) and Comprehensive Error 
Rate Testing (CERT) program contractors, respec-
tively, on or after the date of the enactment of this 
Act. 
(b) TREATMENT
OF
AUDITED
CLAIMS
AS
RE-
OPENED.— 
(1) RECOVERY AUDITORS.—Section 1893(h)(4) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395ddd(h)(4)) is amended by adding after and 
below subparagraph (B) the following: 
‘‘For purposes of the ability of a hospital to resub-
mit a claim for payment under the appropriate sec-
tion of this title and for purposes of requirements 
for the timely submission of claims by hospitals, in-
cluding under sections 1814(a), 1842(b)(3), and 
1835(a), any claim that is the subject of an audit 
by a recovery audit contractor with a contract under 
this section shall be deemed to be a reopened 
claim.’’. 
(2) CONFORMING AMENDMENT FOR MEDICARE 
ADMINISTRATIVE CONTRACTORS.—Section 1874A(h) 
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mstockstill on DSK4VPTVN1PROD with BILLS
of the Social Security Act (42 U.S.C. 1395kk–1(h)), 
as added by section 3(b) and as amended by sub-
section (a)(2), is further amended by adding at the 
end the following new paragraph: 
‘‘(4) TREATMENT OF AUDITED CLAIMS AS RE-
OPENED.—For purposes of the ability of a hospital 
to resubmit a claim for payment under the appro-
priate provisions of this title and for purposes of re-
quirements for the timely submission of claims by 
hospitals, 
including 
under 
sections 
1814(a), 
1842(b)(3), and 1835(a), any claim that is the sub-
ject of an audit by a medicare administrative con-
tractor with a contract under this section shall be 
deemed to be a reopened claim.’’. 
(3) CONFORMING
REQUIREMENT
FOR
CERT 
CONTRACTORS.— 
(A) TREATMENT OF AUDITED CLAIMS AS 
REOPENED.—Any claim made for payment for 
services furnished by a hospital under title 
XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) that is the subject of an audit by 
a Comprehensive Error Rate Testing (CERT) 
program contractor with a contract with the 
Secretary of Health and Human Services shall 
be deemed to be a reopened claim for purposes 
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of the ability of such hospital to resubmit a 
claim for payment under the appropriate provi-
sions of such title XVIII and for purposes of re-
quirements for the timely submission of claims 
by hospitals under such title XVIII, including 
under 
sections 
1814(a), 
1842(b)(3), 
and 
1835(a) of the Social Security Act (42 U.S.C. 
1395f(a), 1395u(b)(3), and 1395n(a), respec-
tively). 
(B) DEFINITION.—In this paragraph, the 
term ‘‘hospital’’ has the meaning given such 
term in subsection (e) of section 1861 of the 
Social Security Act (42 U.S.C. 1395x), and in-
cludes a psychiatric hospital as defined in sub-
section (f) of such section. 
(4) EFFECTIVE DATE.—The amendments made 
by paragraphs (1) and (2), and the provisions of 
paragraph (3), shall take effect on the date of the 
enactment of this Act and apply to claims subject to 
audit on or after September 1, 2010. 
SEC. 7. REQUIREMENT FOR PHYSICIAN VALIDATION FOR 
MEDICAL NECESSITY DENIALS. 
(a) RECOVERY AUDITORS.—Section 1893(h) of the 
Social Security Act (42 U.S.C. 1395ddd(h)), as amended 
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by sections 3(a), 4(a), and 6(a)(1), is further amended by 
adding at the end the following new paragraph: 
‘‘(13) PHYSICIAN VALIDATION OF MEDICAL NE-
CESSITY DENIALS MADE BY NON-PHYSICIAN REVIEW-
ERS.— 
‘‘(A) IN GENERAL.—Each contract under 
this section for a recovery audit contractor shall 
require that a physician (as defined in section 
1861(r)(1)) review each denial of a claim for 
medical necessity when a medical necessity re-
view of such claim is performed and a denial is 
made by an employee of the contractor who is 
not a physician (as so defined). 
‘‘(B) DETERMINATION; 
VALIDATION.—A 
physician reviewing a claim under subparagraph 
(A) shall— 
‘‘(i) make a determination whether 
the denial of the claim under the medical 
necessity review by the non-physician em-
ployee is appropriate; 
‘‘(ii) sign and certify such determina-
tion; and 
‘‘(iii) append such signed and certified 
determination to the claim file. 
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‘‘(C) TREATMENT
AS
MEDICALLY
NEC-
ESSARY.—A claim with respect to which a de-
nial has been made as described in subpara-
graph (A) for which the physician determines 
the denial is not appropriate under subpara-
graph (B) shall be deemed to be medically nec-
essary. 
‘‘(D) MEDICAL
NECESSITY
REVIEW
DE-
FINED.—In this paragraph, the term ‘medical 
necessity review’ means, with respect to an 
audit of a claim of a provider of services or sup-
plier, a review conducted by a recovery audit 
contractor for the purpose of determining 
whether an item or service furnished for which 
the claim is filed by such provider of services or 
supplier is reasonable and necessary for the di-
agnosis or treatment of illness or injury under 
section 1862(a)(1)(A).’’. 
(b) CONFORMING AMENDMENT TO MEDICARE AD-
MINISTRATIVE CONTRACTORS.—Subsection (h) of section 
1874A of the Social Security Act (42 U.S.C. 1395kk–1), 
as added by section 3(b) and as amended by subsections 
(a)(2) and (b)(2) of section 6, is further amended by add-
ing at the end the following new paragraph: 
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‘‘(5) PHYSICIAN VALIDATION OF MEDICAL NE-
CESSITY DENIALS MADE BY NON-PHYSICIAN REVIEW-
ERS.— 
‘‘(A) IN GENERAL.—A physician (as de-
fined in section 1861(r)(1)) shall review each 
denial of a claim for medical necessity when a 
medical necessity review of such claim is per-
formed and a denial is made by an employee of 
the contractor who is not a physician (as so de-
fined). 
‘‘(B) DETERMINATION; 
VALIDATION.—A 
physician reviewing a claim under subparagraph 
(A) shall— 
‘‘(i) make a determination whether 
the denial of the claim under the medical 
necessity review by the non-physician em-
ployee is appropriate; 
‘‘(ii) sign and certify such determina-
tion; and 
‘‘(iii) append such signed and certified 
determination to the claim file. 
‘‘(C) TREATMENT
AS
MEDICALLY
NEC-
ESSARY.—A claim with respect to which a de-
nial has been made as described in subpara-
graph (A) for which the physician determines 
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the denial is not appropriate under subpara-
graph (B) shall be deemed to be medically nec-
essary. 
‘‘(D) MEDICAL
NECESSITY
REVIEW
DE-
FINED.—In this paragraph, the term ‘medical 
necessity review’ means, with respect to an 
audit of a claim of a provider of services or sup-
plier, a review conducted by a medicare admin-
istrative contractor for the purpose of deter-
mining whether an item or service furnished for 
which the claim is filed by such provider of 
services or supplier is reasonable and necessary 
for the diagnosis or treatment of illness or in-
jury under section 1862(a)(1)(A).’’. 
(c) CONFORMING REQUIREMENT FOR CERT CON-
TRACTORS.— 
(1) CONTRACT REQUIREMENT FOR PHYSICIAN 
VALIDATION OF MEDICAL NECESSITY DENIALS MADE 
BY NON-PHYSICIAN REVIEWERS.—The Secretary of 
Health and Human Services shall require under 
each contract with a Comprehensive Error Rate 
Testing (CERT) program contractor to review error 
rates under title XVIII of the Social Security Act 
(42 U.S.C. 1395 et seq.) that the CERT program 
contractor ensure that a physician (as defined in 
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mstockstill on DSK4VPTVN1PROD with BILLS
section 
1861(r)(1) 
of 
such 
Act 
(42 
U.S.C. 
1395x(r)(1))) reviews each denial of a claim for 
medical necessity when a medical necessity review of 
such claim is performed and a denial is made by an 
employee of the contractor who is not a physician 
(as so defined). 
(2) DETERMINATION; VALIDATION.—A physi-
cian reviewing a claim under paragraph (1) shall— 
(A) make a determination whether the de-
nial of the claim under the medical necessity re-
view by the non-physician employee is appro-
priate; 
(B) sign and certify such determination; 
and 
(C) append such signed and certified deter-
mination to the claim file. 
(3) TREATMENT AS MEDICALLY NECESSARY.— 
A claim with respect to which a denial has been 
made as described in paragraph (1) for which the 
physician determines the denial is not appropriate 
under paragraph (2) shall be deemed to be medically 
necessary. 
(4) MEDICAL NECESSITY REVIEW DEFINED.— 
In this subsection, the term ‘‘medical necessity re-
view’’ means, with respect to an audit of a claim of 
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a provider of services or supplier, a review conducted 
by a CERT program contractor for the purpose of 
determining whether an item or service furnished for 
which the claim is filed by such provider of services 
or supplier is reasonable and necessary for the diag-
nosis or treatment of illness or injury under section 
1862(a)(1)(A) of the Social Security Act (42 U.S.C. 
1395y(a)(1)(A)). 
(d) EFFECTIVE DATE.—The amendments made by 
subsections (a) and (b), and the provisions of subsection 
(c), shall apply to contracts entered into or renewed with 
recovery audit contractors under section 1893(h) of the 
Social Security Act (42 U.S.C. 1395ddd(h)), medicare ad-
ministrative contractors under section 1874A of the Social 
Security Act (42 U.S.C. 1395kk–1) and Comprehensive 
Error Rate Testing (CERT) program contractors, respec-
tively, on or after the date of the enactment of this Act. 
Æ 
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