I 
114TH CONGRESS 
1ST SESSION H. R. 2568 
To amend title XVIII of the Social Security Act to improve the process 
of audits by recovery audit contractors and the recovery of overpayments 
under the Medicare program. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 22, 2015 
Mr. HOLDING (for himself and Mr. NUNES) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Energy and Commerce, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of 
such provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to improve 
the process of audits by recovery audit contractors and 
the recovery of overpayments under the Medicare pro-
gram. 
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 
‘‘Fair Medical Audits Act of 2015’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
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Sec. 1. Short title; table of contents. 
Sec. 2. Transparency of audit process and audit report. 
Sec. 3. Qualifications of auditors. 
Sec. 4. Recoupments. 
Sec. 5. Extrapolation. 
Sec. 6. Payment for the provision of supporting documentation. 
Sec. 7. Notice of over-utilization of codes. 
Sec. 8. Change in look back period. 
Sec. 9. General effective date. 
SEC. 2. TRANSPARENCY OF AUDIT PROCESS AND AUDIT RE-
PORT. 
Section 1893(h)(1) of the Social Security Act (42 
U.S.C. 1395ddd(h)(1)) is amended— 
(1) by redesignating subparagraphs (B) and 
(C) as subparagraphs (C) and (D), respectively; and 
(2) by inserting after subparagraph (A) the fol-
lowing new subparagraph: 
‘‘(B) contractors shall be required to pro-
vide healthcare providers with— 
‘‘(i) the names and contact informa-
tion for the auditors; 
‘‘(ii) the legal authority under which 
the audit is conducted; 
‘‘(iii) a clear designation of the 
records to be reviewed under the audit; 
‘‘(iv) the dates by which records shall 
be submitted; 
‘‘(v) the address to which the records 
shall be sent; 
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‘‘(vi) identification of any errors dis-
covered in the audit, including specification 
of all medical and reimbursement policies 
used in the audit findings; 
‘‘(vii) identification of any underpay-
ments discovered in the audit; and 
‘‘(viii) a description of how any re-
quested overpayment amount was cal-
culated, including, in cases in which ex-
trapolation was used, the extrapolation for-
mula and a description of how the random 
sample was developed;’’. 
SEC. 3. QUALIFICATIONS OF AUDITORS. 
Section 1893(h)(6) of the Social Security Act (42 
U.S.C. 1395ddd)(h)(6)) is amended— 
(1) in subparagraph (A), by inserting before the 
period at the end the following: ‘‘, including knowl-
edge and experience in applicable ICD, CPT, and 
HCPCS codes, the format and contents of medical 
records and claims forms, and (for those individuals 
conducting medical necessity reviews) licensure in a 
clinical discipline providing necessary expertise to 
determine whether clinical tests and procedures were 
medically necessary without the benefit of examining 
the patient, specifically including, for medical neces-
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sity reviews of physician records, a doctor of medi-
cine or osteopathy of the same specialty and sub-
specialty and with knowledge of the coverage rules 
being applied for the same area as the physician 
under review’’; and 
(2) by adding at the end the following new sub-
paragraphs: 
‘‘(D) LIABILITY
FOR
EXCESSIVE
OVER-
TURNED
DETERMINATIONS.—Contractors that 
have a certain percentage (as determined by the 
Secretary in regulations) of overpayment deter-
minations overturned by an Administrative Law 
Judge at the Office of Medicare Hearings and 
Appeals shall be subject to administrative pen-
alty established by the Secretary in such regula-
tions. 
‘‘(E) PROVIDER COMPENSATION FOR CER-
TAIN CONTRACTOR ERRORS.—A contractor shall 
be liable for payment to providers of service and 
suppliers for reasonable attorneys’ fees when 
the contractor’s overpayment determination is 
equal to or more than double the final overpay-
ment amount determined by an Administrative 
Law Judge at the Office of Medicare Hearings 
and Appeals. 
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‘‘(F) INCENTIVE PAYMENTS FOR PROVIDER 
EDUCATION.—Administrative penalties collected 
under subparagraph (D) shall be available to 
the Secretary without appropriation to provide 
incentive payments to Medicare administrative 
contractors under section 1874A to carry out 
improper payment outreach and education pro-
grams under subsection (h) of such section.’’. 
SEC. 4. RECOUPMENTS. 
(a) IN GENERAL.—Section 1893(f)(2)(A) of the So-
cial Security Act (42 U.S.C. 1395ddd(f)(2)(A)) is amend-
ed— 
(1) by striking ‘‘until the date the decision on 
the reconsideration has been rendered.’’ and insert-
ing the following: ‘‘until the date a decision has been 
rendered at the third level of appeal by an Adminis-
trative Law Judge at the Office of Medicare Hear-
ings and Appeals.’’; and 
(2) by adding at the end the following: ‘‘Any 
recoupments made under this subparagraph based 
on a decision that is subsequently reversed on appeal 
shall be returned to the provider of services or sup-
plier involved not later than 30 business days after 
the date of the decision of reversal on appeal.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to recoupments occurring after 
the date of the enactment of this Act. 
SEC. 5. EXTRAPOLATION. 
(a) IN GENERAL.—Section 1893(f)(3) of the Social 
Security Act (42 U.S.C. 1395ddd(f)(3)) is amended— 
(1) by striking the last sentence; and 
(2) by adding after and below subparagraph 
(B) the following: 
‘‘Extrapolation may only be used if it is based on a 
statistically valid, stratified random sample, with all 
zero paid claims and outliers removed. When ex-
trapolation is used, the median amount shall be used 
as the central data point for calculating overpay-
ments unless the data are normally distributed, ap-
proximately normally distributed, or symmetrical.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to determinations made after 
the date of the enactment of this Act. 
SEC. 6. PAYMENT FOR THE PROVISION OF SUPPORTING 
DOCUMENTATION. 
Section 1893(f)(4) of the Social Security Act (42 
U.S.C. 1395ddd(f)(4)) is amended by adding at the end 
the following: ‘‘The Secretary shall require that contrac-
tors reimburse providers of services or suppliers for the 
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