II 114th CONGRESS 2d Session S. 2701 IN THE SENATE OF THE UNITED STATES March 17, 2016 Mr. Heinrich (for himself and Mr. Udall ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To require consideration of the impact on beneficiary access to care and to enhance due process protections in procedures for suspending payments to Medicaid providers.

1. Short title This Act may be cited as the Medicaid Program Integrity Enhancement Act of 2016 . 2. Revision of regulations (a) In general Not later than 180 days after the date of enactment of this section, the Secretary shall revise part 455 of title 42, Code of Federal Regulations relating Medicaid program integrity as follows: (1) Section 455.2 relating to the definition of credible allegation of fraud to comply with the requirements described in subsection (b). (2) Section 455.23 relating to the suspension of Medicaid payments to a provider by a State Medicaid agency to comply with the requirements described in subsection (c). (b) Requirement To consider impact on beneficiary access to care in determining a credible allegation of fraud The revised section 455.2 shall provide that an allegation shall be considered to be a credible allegation of fraud only if— (1) the allegation has indicia of reliability; (2) the State Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis; and (3) the State Medicaid agency has taken into consideration the potential impact a payment suspension may have on beneficiary access to care. (c) Due process requirements for payment suspension based on credible allegation of fraud (1) Process required before suspension A State Medicaid agency that has received an allegation of fraud against a provider shall not suspend payments to such provider until the agency takes the following actions: (A) The State Medicaid agency consults with the Medicaid fraud control unit for the State or, if the State has no Medicaid fraud control unit, the State attorney general, before suspending payments and receives a written verification from the Medicaid fraud control unit or attorney general, in such form as the Secretary may require, confirming that such consultation took place. (B) The State Medicaid agency certifies to the Secretary that it has considered whether— (i) beneficiary access to items or services would be jeopardized by a payment suspension; (ii) a good cause not to suspend payments exists under section 455.23(e) of title 42, Code of Federal Regulations (as revised after the application of this Act); and (iii) a good cause to suspend payments only in part exists under section 455.23(f) of such title of such Code (as so revised). (C) The State Medicaid agency furnishes the provider with the agency's reasons for finding that there is no good cause to refrain from suspending payments in whole or part. (2) Process required after suspension After a State Medicaid agency suspends payments (in whole or part) to a provider on the basis that the agency has determined that there is a credible allegation of fraud against a provider for which an investigation is pending under the Medicaid program, the agency shall take the following actions: (A) At the beginning of each fiscal quarter that begins after payments to the provider have been suspended, the State Medicaid agency shall— (i) certify to the Secretary that it has considered whether the suspension of payments should be terminated or modified because— (I) a good cause not to suspend payments exists under section 455.23(e) of title 42, Code of Federal Regulations (as revised after the application of this Act); or (II) a good cause to suspend payments only in part exists under section 455.23(f) of such title (as so revised); and (ii) if the agency finds that there is no good cause to terminate or modify the suspension of payments, furnish to the provider the agency's reasons for such finding. (B) If the investigation is not resolved in a reasonable amount of time (as determined by the Secretary), the State Medicaid agency shall disclose to the provider the specific allegations of fraud that formed the basis for the agency's determination that there is a credible allegation of fraud against the provider. (C) Every 180 days after the initiation of a suspension of payments based on credible allegations of fraud, a State Medicaid Agency shall— (i) evaluate whether there is good cause to not continue such suspension; and (ii) request a certification from the Medicaid fraud control unit for the State or, if the State has no Medicaid fraud control unit, the State attorney general, or other law enforcement agency that the matter continues to be under investigation warranting continuation of the suspension. (D) Good cause not to continue to suspend payments to an individual or entity against which there are credible allegations of fraud shall be deemed to exist if a payment suspension has been in effect for 18 months and there has not been a resolution of the investigation, except a State Medicaid Agency may extend a payment suspension beyond such period if — (i) the case has been referred to, and is being considered by, the Medicaid fraud control unit for the State or, if the State has no Medicaid fraud control unit, the State attorney general, for administrative action or such administrative action is pending; or (ii) the Medicaid fraud control unit for the State or, if the State has no Medicaid fraud control unit, the State attorney general, submits a written request to the State Medicaid Agency that the suspension of payments be continued based on the ongoing investigation and anticipated filing of criminal or civil action or both or based on a pending criminal or civil action or both. At a minimum, the request shall include the following: (I) Identification of the entity under suspension. (II) The amount of time needed for continued suspension in order to conclude the criminal or civil proceeding or both. (III) A statement of why or how criminal or civil action or both may be affected if the requested extension is not granted. (d) Definitions For purposes of this section: (1) The term Medicaid fraud control unit means a State Medicaid fraud control unit as defined in section 1903(q) of the Social Security Act ( 42 U.S.C. 1396b(q) ). (2) The term Secretary means the Secretary of Health and Human Services. (3) The term State Medicaid agency means the agency responsible for administering a State plan under title XIX of the Social Security Act ( 42 U.S.C. 1396 et seq. ). 3. Appeals process (a) In general Section 1902(a)(39) of the Social Security Act ( 42 U.S.C. 1396a(a)(39) ) is amended— (1) by striking shall exclude and inserting “shall— (A) exclude ; (2) by adding and after the semicolon at the end; and (3) by adding at the end the following new subparagraph: (B) establish and codify a process whereby a provider to whom payments have been suspended, in whole or part, on the basis of credible allegations of fraud against such provider may appeal any decision (including a decision not to terminate or modify a payment suspension that is already in place) by the State agency that no good cause exists under the regulations of the Secretary to terminate, modify, or refrain from imposing such suspension of payment; . (b) Effective date (1) In general Subject to paragraph (2), the amendments made by this section shall take effect on the date that is 1 year after the date of the enactment of this Act. (2) Delay permitted if State legislation required In the case of a State plan approved under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirements imposed by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of the failure of the plan to meet such additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that ends after the 1-year period beginning with the date of the enactment of this section. For purposes of the preceding sentence, in the case of a State that has a 2-year legislative session, each year of the session is deemed to be a separate regular session of the State legislature.