I 
114TH CONGRESS 
1ST SESSION H. R. 2156 
To amend title XVIII of the Social Security Act to reform the practices 
of recovery audit contractors under the Medicare program, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 30, 2015 
Mr. GRAVES of Missouri (for himself, Mr. SCHIFF, Mr. BOST, Mrs. WAGNER, 
and Mr. CRAWFORD) introduced the following bill; which was referred to 
the Committee on Ways and Means, and in addition to the Committee 
on Energy and Commerce, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to reform 
the practices of recovery audit contractors under the 
Medicare program, 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. 
This Act may be cited as the ‘‘Medicare Audit Im-
provement Act of 2015’’. 
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SEC. 2. REFORMING THE PRACTICES OF RECOVERY AUDIT 
CONTRACTORS UNDER THE MEDICARE PRO-
GRAM. 
(a) ELIMINATION OF CONTINGENCY FEE PAYMENT 
SYSTEM.—Section 1893(h) of the Social Security Act (42 
U.S.C. 1395ddd(h)) is amended— 
(1) in paragraph (1), by inserting ‘‘, for recov-
ery activities conducted during a fiscal year before 
fiscal year 2015’’ after ‘‘Under the contracts’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(11) PAYMENT
FOR
RECOVERY
ACTIVITIES 
PERFORMED AFTER FISCAL YEAR 2014.— 
‘‘(A) IN GENERAL.—Under the contracts, 
subject to paragraphs (B) and (C), payment 
shall be made to recovery audit contractors for 
recovery activities conducted during fiscal year 
2015 and each fiscal year thereafter in the 
same manner, and from the same amounts, as 
payment is made to eligible entities under con-
tracts entered into for recovery activities con-
ducted during fiscal year 2014 under subsection 
(a). 
‘‘(B) PROHIBITION
ON
INCENTIVE
PAY-
MENTS.—Under the contracts, payment made 
to a recovery audit contractor for recovery ac-
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tivities conducted during fiscal year 2015 or 
any fiscal year thereafter may not include any 
incentive payments. 
‘‘(C) PERFORMANCE ACCOUNTABILITY.— 
‘‘(i) IN
GENERAL.—Under the con-
tracts, payment made to a recovery audit 
contractor for recovery activities conducted 
during fiscal year 2015 or any fiscal year 
thereafter shall, in the case that the con-
tractor has a complex audit denial overturn 
rate at the end of such fiscal year (as cal-
culated under the methodology described in 
clause (iv)) that is .1 or greater, be re-
duced in an amount determined in accord-
ance with clause (ii). 
‘‘(ii) PAYMENT REDUCTIONS.— 
‘‘(I) SLIDING SCALE OF AMOUNT 
OF
REDUCTIONS.—The 
Secretary 
shall establish, for purposes of deter-
mining the amount of a reduction in 
payment to a recovery audit con-
tractor under clause (i) for recovery 
activities conducted during fiscal year, 
a linear sliding scale of payment re-
ductions for recovery audit contrac-
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tors for such fiscal year. Under such 
linear sliding scale, the amount of 
such a reduction in payment to a re-
covery audit contractor for a fiscal 
year shall be calculated in a manner 
that provides for such reduction to be 
greater than the reduction for such 
fiscal year for recovery audit contrac-
tors that have complex audit denial 
overturn rates at the end of such fis-
cal year (as calculated under the 
methodology described in clause (iv)) 
that are lower than the complex audit 
denial overturn rate of the contractor 
at the end of such fiscal year (as so 
calculated). 
‘‘(II) MANNER
OF
COLLECTING 
REDUCTION.—The Secretary may as-
sess and collect the reductions in pay-
ment to recovery audit contractors 
under clause (i) in such manner as 
the Secretary may specify (such as by 
reducing the amount paid to the con-
tractor for recovery activities con-
ducted during a fiscal year or by as-
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sessing the reduction as a separate 
penalty payment to be paid to the 
Secretary by the contractor with re-
spect to each complex audit denial 
issued by the contractor that is over-
turned on appeal). 
‘‘(iii) TIMING OF DETERMINATIONS OF 
PAYMENT
REDUCTIONS.—The Secretary 
shall, with respect to a recovery audit con-
tractor, determine not later than six 
months after the end of a fiscal year— 
‘‘(I) whether to reduce payment 
to the recovery audit contractor under 
clause (i) for recovery activities con-
ducted during such fiscal year; and 
‘‘(II) in the case that the Sec-
retary determines to so reduce pay-
ment to the contractor, the amount of 
such payment reduction. 
‘‘(iv) METHODOLOGY
FOR
CALCULA-
TION
OF
OVERTURNED
COMPLEX
AUDIT 
DENIAL OVERTURN RATE.— 
‘‘(I) CALCULATION OF OVERTURN 
RATE.—The Secretary shall calculate 
a complex audit denial overturn rate 
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‘‘(III) ACCOUNTING FOR SUBSE-
QUENTLY
OVERTURNED
APPEALS.— 
The Secretary shall calculate the per-
centage described in subclause (I) in a 
manner that accounts for the likeli-
hood that complex audit denials 
issued by the contractor for such fis-
cal year will be overturned on appeal 
in a subsequent fiscal year. 
‘‘(IV) COMPLEX
AUDIT
DENIAL 
DEFINED.—In this subparagraph, the 
term ‘complex audit denial’ means a 
denial by a recovery audit contractor 
of a claim for payment under this title 
submitted by a hospital, psychiatric 
hospital, or critical access hospital 
that is so denied by the contractor 
after the contractor has— 
‘‘(aa) requested that the 
hospital, psychiatric hospital, or 
critical access hospital, in order 
to support such claim for pay-
ment, provide supporting medical 
records to the contractor; and 
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‘‘(bb) reviewed such medical 
records in order to determine 
whether an improper payment 
has been made to the hospital, 
psychiatric hospital, or critical 
access hospital for such claim. 
‘‘(V) OVERTURNED
ON
APPEAL 
DEFINED.—In this subparagraph, the 
term ‘overturned on appeal’ means, 
with respect to a complex audit de-
nial, a denial that is overturned on 
appeal at the reconsideration level, the 
redetermination level, or the adminis-
trative law judge hearing level. 
‘‘(D) APPLICATION
TO
EXISTING
CON-
TRACTS.—Not later than 60 days after the date 
of the enactment of this paragraph, the Sec-
retary shall modify, as necessary, each contract 
under paragraph (1) that the Secretary entered 
into prior to such date of enactment in order to 
ensure that payment with respect to recovery 
activities conducted under such contract is 
made in accordance with the requirements de-
scribed in this paragraph.’’. 
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(b) ELIMINATION
OF ONE-YEAR TIMELY FILING 
LIMIT TO REBILL PART B CLAIMS.— 
(1) IN GENERAL.—Section 1842(b) of the So-
cial Security Act (42 U.S.C. 1395u(b)) is amended 
by adding at the end the following new paragraph: 
‘‘(20) EXCEPTION TO THE ONE-YEAR TIMELY 
FILING LIMIT FOR CERTAIN REBILLED CLAIMS.— 
‘‘(A) IN GENERAL.—In the case of a claim 
submitted under this part by a hospital (as de-
fined in subparagraph (B)(i)) for hospital serv-
ices with respect to which there was a previous 
claim submitted under part A as inpatient hos-
pital services or inpatient critical access hos-
pital services that was denied by a Medicare 
contractor (as defined in subparagraph (B)(ii)) 
because of a determination that the inpatient 
admission was not medically reasonable and 
necessary under section 1862(a)(1)(A), the 
deadline described in this paragraph is 180 
days from the date of the final denial of such 
claim under part A. 
‘‘(B) DEFINITIONS.—In this paragraph: 
‘‘(i) HOSPITAL.—The term ‘hospital’ 
has the meaning given such term in section 
1861(e), and includes a psychiatric hos-
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pital (as defined in section 1861(f)) and a 
critical access hospital (as defined in sec-
tion 1861(mm)(1)). 
‘‘(ii) MEDICARE
CONTRACTOR.—The 
term ‘Medicare contractor’ has the mean-
ing given such term under section 1889(g), 
and includes a recovery audit contractor 
with a contract under section 1893(h). 
‘‘(iii) FINAL DENIAL.—The term ‘final 
denial’ means— 
‘‘(I) in the case that a hospital 
elects not to appeal a denial described 
in subparagraph (A) by a Medicare 
contractor, the date of such denial; or 
‘‘(II) in the case that a hospital 
elects to appeal a such a denial, the 
date on which such appeal is ex-
hausted.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1835(a)(1) of the Social Secu-
rity Act (42 U.S.C. 1395n(a)(1)) is amended by 
inserting ‘‘or, in the case of a claim described 
in section 1842(b)(20), the no later than the 
deadline described in such paragraph’’ after 
‘‘the date of service’’. 
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(B) Section 1842(b)(3)(B) of the Social 
Security Act (42 U.S.C. 1395u(b)(3)(B)) is 
amended in the flush language following clause 
(ii) by inserting ‘‘or, in the case of a claim de-
scribed in section 1842(b)(20), the no later 
than the deadline described in such paragraph’’ 
after ‘‘the date of service’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the date of the 
enactment of this Act and shall apply to claims sub-
mitted under part B of title XVIII of the Social Se-
curity Act for hospital services for which there was 
a previous claim submitted under part A as inpa-
tient hospital services or inpatient critical access 
hospital services that was subject to a final denial 
(as defined in paragraph (20)(B)(iii) of section 
1842(b) of such Act (42 U.S.C. 1395u(b)) on or 
after such date of enactment. 
(c) MEDICAL DOCUMENTATION CONSIDERED
FOR 
MEDICAL NECESSITY REVIEWS OF CLAIMS FOR INPA-
TIENT HOSPITAL SERVICES.—Section 1862(a) of the So-
cial Security Act (42 U.S.C. 1395y(a)) is amended by add-
ing at the end the following new sentence: ‘‘A determina-
tion under paragraph (1) of whether inpatient hospital 
services or inpatient critical access hospital services fur-
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nished to an individual on or after the date of the enact-
ment of this sentence are reasonable and necessary shall 
be based solely upon information available to the admit-
ting physician at the time of the inpatient admission of 
the individual for such inpatient services, as documented 
in the medical record.’’ 
Æ 
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