I 
113TH CONGRESS 
1ST SESSION H. R. 2305 
To amend titles XVIII and XIX of the Social Security Act to curb waste, 
fraud, and abuse in the Medicare and Medicaid programs. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 10, 2013 
Mr. ROSKAM (for himself, Mr. CARNEY, Mr. HULTGREN, Mr. BARBER, Mr. 
SCHRADER, and Mr. REED) introduced the following bill; which was re-
ferred to the Committee on Energy and Commerce, and in addition to 
the Committee on Ways and Means, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To amend titles XVIII and XIX of the Social Security Act 
to curb waste, fraud, and abuse in 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; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Preventing and Reducing Improper Medicare and Med-
icaid Expenditures Act of 2013’’ or the ‘‘PRIME Act of 
2013’’. 
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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. 
TITLE I—CURBING IMPROPER PAYMENTS 
Sec. 101. Requiring valid prescriber National Provider Identifiers on pharmacy 
claims. 
Sec. 102. Reforming how CMS tracks and corrects the vulnerabilities identified 
by Recovery Audit Contractors. 
Sec. 103. Improving Senior Medicare Patrol and fraud reporting rewards. 
Sec. 104. Strengthening Medicaid Program integrity through flexibility. 
Sec. 105. Establishing Medicare administrative contractor error reduction in-
centives. 
Sec. 106. Strengthening penalties for the illegal distribution of a Medicare, 
Medicaid, or CHIP beneficiary identification or billing privi-
leges. 
TITLE II—IMPROVING DATA SHARING 
Sec. 201. Access to the National Directory of New Hires. 
Sec. 202. Improving the sharing of data between the Federal Government and 
State Medicaid programs. 
Sec. 203. Improving claims processing and detection of fraud within the Med-
icaid and CHIP programs. 
TITLE III—REPORT ON IMPLEMENTATION 
Sec. 301. Report on implementation. 
TITLE I—CURBING IMPROPER 
PAYMENTS 
SEC. 101. REQUIRING VALID PRESCRIBER NATIONAL PRO-
VIDER IDENTIFIERS ON PHARMACY CLAIMS. 
Section 1860D–4(c) of the Social Security Act (42 
U.S.C. 1395w–104(c)) is amended by adding at the end 
the following new paragraph: 
‘‘(4) REQUIRING VALID PRESCRIBER NATIONAL 
PROVIDER IDENTIFIERS ON PHARMACY CLAIMS.— 
‘‘(A) IN GENERAL.—For plan year 2015 
and subsequent plan years, subject to subpara-
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graph (B), the Secretary shall prohibit PDP 
sponsors of prescription drug plans from paying 
claims for prescription drugs under this part 
that do not include a valid prescriber National 
Provider Identifier. 
‘‘(B) PROCEDURES.—The Secretary shall 
establish— 
‘‘(i) procedures for determining the 
validity of prescriber National Provider 
Identifiers under subparagraph (A); and 
‘‘(ii) procedures for transferring to 
the Inspector General of the Department 
of Health and Human Services and appro-
priate law enforcement agencies and other 
oversight entities information on those Na-
tional Provider Identifiers and pharmacy 
claims, including records related to such 
claims, that the Secretary determines are 
invalid under clause (i). 
‘‘(C) REPORT.—Not later than January 1, 
2017, the Inspector General of the Department 
of Health and Human Services shall submit to 
Congress a report on the effectiveness of the 
procedures established under subparagraph 
(B).’’. 
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SEC. 102. REFORMING HOW CMS TRACKS AND CORRECTS 
THE VULNERABILITIES IDENTIFIED BY RE-
COVERY AUDIT CONTRACTORS. 
(a) IN GENERAL.—Section 1893(h) of the Social Se-
curity Act (42 U.S.C. 1395ddd(h)) is amended— 
(1) in paragraph (8)— 
(A) by striking ‘‘REPORT.—The Secretary’’ 
and inserting ‘‘REPORT.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), the Secretary’’; and 
(B) by adding after subparagraph (A), as 
inserted by subparagraph (A), the following new 
subparagraphs: 
‘‘(B) INCLUSION OF IMPROPER PAYMENT 
VULNERABILITIES
IDENTIFIED.—Each report 
submitted under subparagraph (A) shall, sub-
ject to subparagraph (C), include— 
‘‘(i) a description of— 
‘‘(I) the types and financial cost 
to the program under this title of im-
proper payment vulnerabilities identi-
fied by recovery audit contractors 
under this subsection; and 
‘‘(II) how the Secretary is ad-
dressing 
such 
improper 
payment 
vulnerabilities; and 
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‘‘(ii) an assessment of the effective-
ness of changes made to payment policies 
and procedures under this title in order to 
address the vulnerabilities so identified. 
‘‘(C) LIMITATION.—The Secretary shall 
ensure that each report submitted under sub-
paragraph (A) does not include information 
that the Secretary determines would be sen-
sitive or would otherwise negatively impact pro-
gram integrity.’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(10) 
ADDRESSING
IMPROPER
PAYMENT 
VULNERABILITIES.—The Secretary shall address im-
proper payment vulnerabilities identified by recovery 
audit contractors under this subsection in a timely 
manner, prioritized based on the risk to the program 
under this title.’’. 
(b) USE OF MEDICARE AND MEDICAID RECOVERY 
AUDIT CONTRACTOR RECOVERIES FOR PROVIDER EDU-
CATION AND TO PREVENT IMPROPER PAYMENTS AND 
FRAUD.— 
(1) 
MEDICARE
RAC
PROGRAM.—Section 
1893(h)(1)(C) of the Social Security Act (42 U.S.C. 
1395ddd(h)(1)(C)) is amended— 
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(A) by striking ‘‘the Secretary shall re-
tain’’ and inserting ‘‘the Secretary— 
‘‘(i) shall retain’’; 
(B) in clause (i), as added by subpara-
graph (A)— 
(i) by inserting ‘‘, in addition to any 
other funds that may be available,’’ after 
‘‘available’’; 
(ii) by inserting ‘‘until expended’’ 
after ‘‘Services’’; and 
(iii) by striking the period at the end 
and inserting a semicolon; and 
(C) by adding at the end the following new 
clauses: 
‘‘(ii) may retain an additional portion 
of the amounts recovered (not to exceed 25 
percent of such amounts recovered) which 
shall be available, in addition to any other 
funds that may be available, to such pro-
gram management account until expended 
for purposes of activities to address prob-
lems that contribute to improper payments 
and fraud under this title; and 
‘‘(iii) shall retain an additional 5 per-
cent of such amounts recovered to be made 
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available, in addition to any other funds 
that may be available, to the Inspector 
General of the Department of Health and 
Human Services until expended for the In-
spector General to carry out activities of 
the Inspector General relating to inves-
tigating improper payments or auditing in-
ternal controls associated with payments 
under this title.’’. 
(2) MEDICAID RAC PROGRAM.—Section 1936 of 
the Social Security Act (42 U.S.C. 1396u–6) is 
amended by adding at the end the following new 
subsection: 
‘‘(f) AMOUNTS RECOVERED THROUGH RECOVERY 
AUDIT CONTRACTORS.—Notwithstanding any other provi-
sion of law, the Secretary— 
‘‘(1) may retain a portion of the amounts recov-
ered pursuant to the program established under sec-
tion 1902(a)(42)(B) (not to exceed 25 percent of the 
Federal share of such amounts recovered) which 
shall be available, in addition to any other funds 
that may be available, to the program management 
account of the Centers for Medicare & Medicaid 
Services for purposes of activities to address prob-
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lems that contribute to improper payments and 
fraud under this title; and 
‘‘(2) shall retain an additional 5 percent of the 
Federal share of such amounts recovered to be made 
available, in addition to any other funds that may be 
available, to the Inspector General of the Depart-
ment of Health and Human Services until expended 
for the Inspector General to carry out activities of 
the Inspector General relating to investigating im-
proper payments or auditing internal controls associ-
ated with payments under this title.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this section shall take effect on January 1, 2014. 
SEC. 103. IMPROVING SENIOR MEDICARE PATROL AND 
FRAUD REPORTING REWARDS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall develop a plan to revise the incentive pro-
gram under section 203(b) of the Health Insurance Port-
ability and Accountability Act of 1996 (42 U.S.C. 1395b– 
5(b)) to encourage greater participation by individuals to 
report fraud and abuse in the Medicare program. Such 
plan shall include recommendations for— 
(1) ways to enhance rewards for individuals re-
porting under the incentive program, including re-
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wards based on information that leads to an admin-
istrative action; and 
(2) extending the incentive program to the 
Medicaid program. 
(b) PUBLIC AWARENESS
AND EDUCATION CAM-
PAIGN.—The plan developed under subsection (a) shall 
also include recommendations for the use of the Senior 
Medicare Patrols authorized under section 411 of the 
Older Americans Act of 1965 (42 U.S.C. 3032) to conduct 
a public awareness and education campaign to encourage 
participation in the revised incentive program under sub-
section (a). 
(c) SUBMISSION OF PLAN.—Not later than 180 days 
after the date of enactment of this Act, the Secretary shall 
submit to Congress the plan developed under subsection 
(a). 
SEC. 104. STRENGTHENING MEDICAID PROGRAM INTEG-
RITY THROUGH FLEXIBILITY. 
Section 1936 of the Social Security Act (42 U.S.C. 
1396u–6) is amended— 
(1) in subsection (a), by inserting ‘‘, or other-
wise,’’ after ‘‘entities’’; and 
(2) in subsection (e)— 
(A) in paragraph (1), in the matter pre-
ceding subparagraph (A), by inserting ‘‘(includ-
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ing the costs of equipment, salaries and bene-
fits, and travel and training)’’ after ‘‘Program 
under this section’’; and 
(B) in paragraph (3), by striking ‘‘by 100’’ 
and inserting ‘‘by 100, or such number as de-
termined necessary by the Secretary to carry 
out the Program,’’. 
SEC. 105. ESTABLISHING MEDICARE ADMINISTRATIVE CON-
TRACTOR ERROR REDUCTION INCENTIVES. 
(a) IN GENERAL.—Section 1874A(b)(1)(D) of the 
Social Security Act (42 U.S.C. 1395kk(b)(1)(D)) is 
amended— 
(1) by striking ‘‘QUALITY.—The Secretary’’ and 
inserting ‘‘QUALITY.— 
‘‘(i) IN GENERAL.—Subject to clauses 
(ii) and (iii), the Secretary’’; and 
(2) by inserting after clause (i), as added by 
paragraph (1), the following new clauses: 
‘‘(ii) 
IMPROPER
PAYMENT
ERROR 
RATE REDUCTION INCENTIVES.—The Sec-
retary shall provide incentives for medicare 
administrative contractors to reduce the 
improper payment error rates in their ju-
risdictions. 
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‘‘(iii) INCENTIVES.—The incentives 
provided for under clause (ii)— 
‘‘(I) may include a sliding scale 
of bonus payments and additional in-
centives to medicare administrative 
contractors that reduce the improper 
payment error rates in their jurisdic-
tions to certain benchmark levels, as 
determined by the Secretary; and 
‘‘(II) shall include substantial re-
ductions in award fee payments under 
award fee contracts, for any medicare 
administrative contractor that reaches 
an upper end error threshold or other 
threshold as determined by the Sec-
retary.’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
subsection (a) shall apply to contracts entered into 
or renewed on or after the date that is 12 months 
after the date of enactment of this Act. 
(2) CONTRACTS ENTERED INTO OR RENEWED 
PRIOR TO EFFECTIVE DATE.—In the case of con-
tracts in existence on or after the date of the enact-
ment of this Act and that are not subject to the ef-
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fective date under paragraph (1), the Secretary of 
Health and Human Services shall, when appropriate 
and practicable, seek to apply the incentives pro-
vided for in the amendments made by subsection (a) 
through contract modifications. 
SEC. 106. STRENGTHENING PENALTIES FOR THE ILLEGAL 
DISTRIBUTION OF A MEDICARE, MEDICAID, 
OR CHIP BENEFICIARY IDENTIFICATION OR 
BILLING PRIVILEGES. 
Section 1128B(b) of the Social Security Act (42 
U.S.C. 1320a–7b(b)) is amended by adding at the end the 
following: 
‘‘(4) Whoever knowingly, intentionally, and with 
the intent to defraud purchases, sells or distributes, 
or arranges for the purchase, sale, or distribution of 
a Medicare, Medicaid, or CHIP beneficiary identi-
fication number or billing privileges under title 
XVIII, title XIX, or title XXI shall be imprisoned 
for not more than 10 years or fined not more than 
$500,000 ($1,000,000 in the case of a corporation), 
or both.’’. 
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TITLE II—IMPROVING DATA 
SHARING 
SEC. 201. ACCESS TO THE NATIONAL DIRECTORY OF NEW 
HIRES. 
Section 453(j) of the Social Security Act (42 U.S.C. 
653 (j)) is amended by adding at the end of the following 
new paragraph: 
‘‘(12) INFORMATION
COMPARISONS
AND
DIS-
CLOSURES TO ASSIST IN ADMINISTRATION OF THE 
MEDICARE PROGRAM AND STATE HEALTH SUBSIDY 
PROGRAMS.— 
‘‘(A) 
DISCLOSURE
TO
THE
ADMINIS-
TRATOR
OF
THE
CENTERS
FOR
MEDICARE
& 
MEDICAID
SERVICES.—The Administrator of 
the Centers for Medicare & Medicaid shall have 
access to the information in the National Direc-
tory of New Hires for purposes of determining 
the eligibility of an applicant for, or enrollee in, 
the Medicare program under title XVIII or an 
applicable State health subsidy program (as de-
fined in section 1413(e) of the Patient Protec-
tion and Affordable Care Act (42 U.S.C. 
18083(e))). 
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‘‘(B) DISCLOSURE
TO
THE
INSPECTOR 
GENERAL
OF
THE
DEPARTMENT
OF
HEALTH 
AND HUMAN SERVICES.— 
‘‘(i) IN
GENERAL.—If the Inspector 
General of the Department of Health and 
Human Services transmits to the Secretary 
the names and social security account 
numbers of individuals, the Secretary shall 
disclose to the Inspector General informa-
tion on such individuals and their employ-
ers maintained in the National Directory 
of New Hires. 
‘‘(ii) USE OF INFORMATION.—The In-
spector General of the Department of 
Health and Human Services may use in-
formation provided under clause (i) only 
for purposes of— 
‘‘(I) determining the eligibility of 
an applicant for, or enrollee in, the 
Medicare program under title XVIII 
or an applicable State health subsidy 
program 
(as 
defined 
in 
section 
1413(e) of the Patient Protection and 
Affordable Care Act (42 U.S.C. 
18083(e))); or 
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‘‘(II) evaluating the integrity of 
the Medicare program or an applica-
ble State health subsidy program (as 
so defined). 
‘‘(C) DISCLOSURE TO STATE AGENCIES.— 
‘‘(i) IN GENERAL.—If, for purposes of 
administering an applicable State health 
subsidy program (as defined in section 
1413(e) of the Patient Protection and Af-
fordable Care Act (42 U.S.C. 18083(e))), a 
State agency responsible for administering 
such program transmits to the Secretary 
the names and social security account 
numbers of individuals, the Secretary shall 
disclose to such State agency information 
on such individuals and their employers 
maintained in the National Directory of 
New Hires, subject to this subparagraph. 
‘‘(ii) CONDITION ON DISCLOSURE BY 
THE
SECRETARY.—The Secretary shall 
make a disclosure under clause (i) only to 
the extent that the Secretary determines 
that the disclosure would not interfere with 
the effective operation of the program 
under this part. 
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‘‘(iii) USE AND DISCLOSURE OF IN-
FORMATION BY STATE AGENCIES.— 
‘‘(I) 
IN
GENERAL.—A 
State 
agency may not use or disclose infor-
mation provided under clause (i) ex-
cept for purposes of administering a 
program referred to in clause (i). 
‘‘(II) INFORMATION SECURITY.— 
The State agency shall have in effect 
data security and control policies that 
the Secretary finds adequate to ensure 
the security of information obtained 
under clause (i) and to ensure that 
access to such information is re-
stricted to authorized persons for pur-
poses of authorized uses and disclo-
sures. 
‘‘(III) PENALTY FOR MISUSE OF 
INFORMATION.—An officer or em-
ployee of the State agency who fails to 
comply with this clause shall be sub-
ject to the sanctions under subsection 
(l)(2) to the same extent as if such of-
ficer or employee were an officer or 
employee of the United States. 
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‘‘(iv) PROCEDURAL REQUIREMENTS.— 
State 
agencies 
requesting 
information 
under clause (i) shall adhere to uniform 
procedures established by the Secretary 
governing information requests and data 
matching under this paragraph. 
‘‘(v) REIMBURSEMENT
OF
COSTS.— 
The State agency shall reimburse the Sec-
retary, in accordance with subsection 
(k)(3), for the costs incurred by the Sec-
retary in furnishing the information re-
quested under this subparagraph.’’. 
SEC. 202. IMPROVING THE SHARING OF DATA BETWEEN 
THE FEDERAL GOVERNMENT AND STATE 
MEDICAID PROGRAMS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish a plan to encourage and facilitate 
the participation of States in the Medicare-Medicaid Data 
Match Program (commonly referred to as the ‘‘Medi-Medi 
Program’’) under section 1893(g) of the Social Security 
Act (42 U.S.C. 1395ddd(g)). 
(b) PROGRAM REVISIONS TO IMPROVE MEDI-MEDI 
DATA MATCH PROGRAM PARTICIPATION BY STATES.— 
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Section 1893(g)(1)(A) of the Social Security Act (42 
U.S.C. 1395ddd(g)(1)(A)) is amended— 
(1) in the matter preceding clause (i), by insert-
ing ‘‘or otherwise’’ after ‘‘eligible entities’’; 
(2) in clause (i)— 
(A) by inserting ‘‘to review claims data’’ 
after ‘‘algorithms’’; and 
(B) by striking ‘‘service, time, or patient’’ 
and inserting ‘‘provider, service, time, or pa-
tient’’; 
(3) in clause (ii)— 
(A) by inserting ‘‘to investigate and re-
cover amounts with respect to suspect claims’’ 
after ‘‘appropriate actions’’; and 
(B) by striking ‘‘; and’’ and inserting a 
semicolon; 
(4) in clause (iii), by striking the period and in-
serting ‘‘; and’’; and 
(5) by adding at end the following new clause: 
‘‘(iv) furthering the Secretary’s de-
sign, development, installation, or enhance-
ment of an automated data system archi-
tecture— 
‘‘(I) to collect, integrate, and as-
sess data for purposes of program in-
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tegrity, program oversight, and ad-
ministration, including the Medi-Medi 
Program; and 
‘‘(II) that improves the coordina-
tion 
of 
requests 
for 
data 
from 
States.’’. 
(c) PROVIDING STATES WITH DATA ON IMPROPER 
PAYMENTS MADE FOR ITEMS OR SERVICES PROVIDED TO 
DUAL ELIGIBLE INDIVIDUALS.— 
(1) IN GENERAL.—The Secretary shall develop 
and implement a plan that allows each State agency 
responsible for administering a State plan for med-
ical assistance under title XIX of the Social Security 
Act access to relevant data on improper or fraudu-
lent payments made under the Medicare program 
under title XVIII of the Social Security Act (42 
U.S.C. 1395 et seq.) for health care items or serv-
ices provided to dual eligible individuals. 
(2) DUAL ELIGIBLE INDIVIDUAL DEFINED.—In 
this section, the term ‘‘dual eligible individual’’ 
means an individual who is entitled to, or enrolled 
for, benefits under part A of title XVIII of the So-
cial Security Act (42 U.S.C. 1395c et seq.), or en-
rolled for benefits under part B of title XVIII of 
such Act (42 U.S.C. 1395j et seq.), and is eligible 
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for medical assistance under a State plan under title 
XIX of such Act (42 U.S.C. 1396 et seq.) or under 
a waiver of such plan. 
SEC. 203. IMPROVING CLAIMS PROCESSING AND DETEC-
TION OF FRAUD WITHIN THE MEDICAID AND 
CHIP PROGRAMS. 
(a) MEDICAID.—Section 1903(i) of the Social Secu-
rity Act (42 U.S.C. 1396b(i)), as amended by section 
2001(a)(2)(B) of the Patient Protection and Affordable 
Care Act (Public Law 111–148), is amended— 
(1) in paragraph (25), by striking ‘‘or’’ at the 
end; 
(2) in paragraph (26), by striking the period 
and inserting ‘‘; or’’; and 
(3) by adding after paragraph (26), the fol-
lowing new paragraph: 
‘‘(27) with respect to amounts expended for an 
item or service for which medical assistance is pro-
vided under the State plan or under a waiver of such 
plan unless the claim for payment for such item or 
service contains a valid beneficiary identification 
number that, for purposes of the individual who re-
ceived such item or service, has been determined by 
the State agency to correspond to an individual who 
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is eligible to receive benefits under the State plan or 
waiver.’’. 
(b) CHIP.—Section 2107(e)(1)(I) of the Social Secu-
rity Act (42 U.S.C. 1397gg(e)(1)(I)) is amended by strik-
ing ‘‘and (17)’’ and inserting ‘‘(17), and (27)’’. 
TITLE III—REPORT ON 
IMPLEMENTATION 
SEC. 301. REPORT ON IMPLEMENTATION. 
Not later than 270 days after the date of the enact-
ment of this Act, the Secretary of Health and Human 
Services shall submit to Congress a report on the imple-
mentation of the provisions of, and the amendments made 
by, this Act. 
Æ 
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