[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2845 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2845

    To amend title XIX of the Social Security Act to require asset 
     verification through access to information held by financial 
institutions, to reduce fraud and abuse in State Medicaid programs, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 10, 2008

 Mr. Martinez introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To amend title XIX of the Social Security Act to require asset 
     verification through access to information held by financial 
institutions, to reduce fraud and abuse in State Medicaid programs, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicaid Fraud Reduction Act of 
2008''.

SEC. 2. ASSET VERIFICATION THROUGH ACCESS TO INFORMATION HELD BY 
              FINANCIAL INSTITUTIONS.

    (a) Addition of Authority.--Title XIX of the Social Security Act is 
amended by inserting after section 1939 the following new section:

 ``asset verification through access to information held by financial 
                              institutions

    ``Sec. 1940.  (a) Implementation.--
            ``(1) In general.--Subject to the provisions of this 
        section, each State shall implement an asset verification 
        program described in subsection (b), for purposes of 
        determining or redetermining the eligibility of an individual 
        for medical assistance under the State plan under this title.
            ``(2) Plan submittal.--In order to meet the requirement of 
        paragraph (1), each State shall--
                    ``(A) submit not later than January 1, 2009, a 
                State plan amendment under this title that describes 
                how the State intends to implement the asset 
                verification program; and
                    ``(B) provide for implementation of such program 
                for eligibility determinations and redeterminations 
                made on or after July 1, 2009.
    ``(b) Asset Verification Program.--
            ``(1) In general.--For purposes of this section, an asset 
        verification program means a program described in paragraph (2) 
        under which a State--
                    ``(A) requires each applicant for, or recipient of, 
                medical assistance under the State plan under this 
                title to provide authorization by such applicant or 
                recipient (and any other person whose income or 
                resources are material to the determination of the 
                eligibility of the applicant or recipient for such 
                assistance) for the State to obtain (subject to the 
                cost reimbursement requirements of section 1115(a) of 
                the Right to Financial Privacy Act) from any financial 
                institution (within the meaning of section 1101(1) of 
                such Act) any financial record (within the meaning of 
                section 1101(2) of such Act) held by the institution 
                with respect to the applicant or recipient (and such 
                other person, as applicable), to permit the State to 
                obtain such record whenever the State determines the 
                record is needed in connection with a determination 
                with respect to such eligibility for (or the amount or 
                extent of) such medical assistance; and
                    ``(B) uses the authorization provided under 
                subparagraph (A) to verify the financial resources of 
                such applicant or recipient (and such other person, as 
                applicable), in order to determine or redetermine the 
                eligibility of such applicant or recipient for medical 
                assistance under the State plan.
            ``(2) Program described.--A program described in this 
        paragraph is a program for verifying individual assets in a 
        manner consistent with the approach used by the Commissioner of 
        Social Security under section 1631(e)(1)(B)(ii).
    ``(c) Duration of Authorization.--Notwithstanding section 
1104(a)(1) of the Right to Financial Privacy Act, an authorization 
provided to a State under subsection (b)(1) shall remain effective 
until the earliest of--
            ``(1) the rendering of a final adverse decision on the 
        applicant's application for medical assistance under the 
        State's plan under this title;
            ``(2) the cessation of the recipient's eligibility for such 
        medical assistance; or
            ``(3) the express revocation by the applicant or recipient 
        (or such other person described in subsection (b)(1), as 
        applicable) of the authorization, in a written notification to 
        the State.
    ``(d) Treatment of Right to Financial Privacy Act Requirements.--
            ``(1) An authorization obtained by the State under 
        subsection (b)(1) shall be considered to meet the requirements 
        of the Right to Financial Privacy Act for purposes of section 
        1103(a) of such Act, and need not be furnished to the financial 
        institution, notwithstanding section 1104(a) of such Act.
            ``(2) The certification requirements of section 1103(b) of 
        the Right to Financial Privacy Act shall not apply to requests 
        by the State pursuant to an authorization provided under 
        subsection (b)(1).
            ``(3) A request by the State pursuant to an authorization 
        provided under subsection (b)(1) is deemed to meet the 
        requirements of section 1104(a)(3) of the Right to Financial 
        Privacy Act and of section 1102 of such Act, relating to a 
        reasonable description of financial records.
    ``(e) Required Disclosure.--The State shall inform any person who 
provides authorization pursuant to subsection (b)(1)(A) of the duration 
and scope of the authorization.
    ``(f) Refusal or Revocation of Authorization.--If an applicant for, 
or recipient of, medical assistance under the State plan under this 
title (or such other person described in subsection (b)(1), as 
applicable) refuses to provide, or revokes, any authorization made by 
the applicant or recipient (or such other person, as applicable) for 
the State to obtain from any financial institution any financial 
record, the State shall, on that basis, determine that the applicant or 
recipient is ineligible for medical assistance.
    ``(g) Use of Contractor.--For purposes of implementing an asset 
verification program under this section, a State may select and enter 
into a contract with a public or private entity meeting such criteria 
and qualifications as the State determines appropriate.
    ``(h) Technical Assistance.--The Secretary shall provide States 
with technical assistance to aid in implementation of an asset 
verification program under this section.
    ``(i) Reports.--A State implementing an asset verification program 
under this section shall furnish to the Secretary such reports 
concerning the program, at such times, in such format, and containing 
such information as the Secretary determines appropriate.
    ``(j) Payment Adjustment.--
            ``(1) In general.--In the case of a State that submits the 
        State plan amendment required under subsection (a)(2)(A) by 
        January 1, 2009, in addition to any other amounts payable to 
        the State under this title (and notwithstanding the limitations 
        of subsections (f) and (g) of section 1108), there shall be 
        paid to the State under section 1903(a) for the calendar 
        quarter beginning on such date, the amount of $1,000,000.
            ``(2) Recovery of payments for programs not implemented by 
        july 1, 2009.--In the case of a State that received an 
        additional payment under paragraph (1) and fails to implement 
        the asset verification program by July 1, 2009, the amount paid 
        to the State under such paragraph shall be subject to 
        disallowance and recovery.
    ``(k) Treatment of Program Expenses.--Notwithstanding any other 
provision of law, reasonable expenses of States in carrying out the 
program under this section shall be treated, for purposes of section 
1903(a), in the same manner as State expenditures specified in 
paragraph (7) of such section.''.
    (b) State Plan Requirements.--Section 1902(a) of such Act (42 
U.S.C. 1396a(a)) is amended--
            (1) in paragraph (69) by striking ``and'' at the end;
            (2) in paragraph (70) by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after paragraph (70), as so amended, the 
        following new paragraph:
            ``(71) provide that the State will implement an asset 
        verification program under section 1940.''.
    (c) Withholding of Federal Matching Payments for Noncompliant 
States.--Section 1903(i) of such Act (42 U.S.C. 1396b(i)) is amended--
            (1) in paragraph (22) by striking ``or'' at the end;
            (2) in paragraph (23) by striking the period at the end and 
        inserting ``; or''; and
            (3) by adding after paragraph (23) the following new 
        paragraph:
            ``(24) if a State fails to implement an asset verification 
        program in accordance with the requirements of section 1940, 
        with respect to amounts expended by such State for medical 
        assistance for individuals subject to asset verification under 
        such section, unless--
                    ``(A) the State demonstrates to the Secretary's 
                satisfaction that the State made a good faith effort to 
                comply;
                    ``(B) not later than 60 days after the date of a 
                finding of that the State is in noncompliance, the 
                State submits to the Secretary (and the Secretary 
                approves) a corrective action plan to remedy such 
                noncompliance; and
                    ``(C) not later than 12 months after the date of 
                such submission (and approval), the State fulfills the 
                terms of such corrective action plan.''.
    (d) Repeal.--Section 4 of Public Law 110-90 is repealed.

SEC. 3. FUNDS FOR STATES TO REDUCE MEDICAID FRAUD.

    Section 1903 of the Social Security Act (42 U.S.C. 1396b) is 
amended by adding at the end the following new subsection:
    ``(aa) Payments To Reduce Fraud.--
            ``(1) Payments.--In addition to the payments otherwise 
        provided under subsection (a), subject to paragraph (2), the 
        Secretary shall provide for payments to eligible States under 
        such subsection to establish and carry out practices to reduce 
        fraud under the State Medicaid program under this title.
            ``(2) Limitation.--The total amount of payments under this 
        subsection shall not exceed $250,000,000, and shall be 
        available to the Secretary for payments under this subsection 
        during fiscal years 2009 and 2010 and during subsequent fiscal 
        years in the case described in paragraph (6)(B). This 
        subsection constitutes budget authority in advance of 
        appropriations Acts and represents the obligation of the 
        Secretary to provide for the payment of amounts provided under 
        this subsection.
            ``(3) Eligibility.--The Secretary shall provide for a 
        payment to a State under paragraph (1) if such State--
                    ``(A) demonstrates to the satisfaction of the 
                Secretary a need for assistance to reduce fraud under 
                the State Medicaid program;
                    ``(B) provides an effective proposal to reduce such 
                fraud; and
                    ``(C) satisfies any other criteria specified by the 
                Secretary.
            ``(4) Form and manner of payment.--Payment to a State under 
        this subsection shall be made only upon the submission to the 
        Secretary of such application in such form and in such manner 
        as the Secretary shall specify. Payment to a State under this 
        subsection shall be made in the same manner as other payments 
        under subsection (a). There is no requirement for State 
        matching funds to receive payments under this subsection.
            ``(5) Notification.--The Secretary shall provide for States 
        to be notified of the opportunity to receive payments under 
        this subsection as soon as feasible after the date of the 
        enactment of this subsection, but not later than April 1, 2009.
            ``(6) Availability of payments to states.--
                    ``(A) In general.--Payment to a State under this 
                subsection shall be available to the State during the 
                period provided in the approved proposal of the State 
                provided under paragraph (3).
                    ``(B) Recovery and reuse of misspent funds.--
                Amounts paid to a State under this subsection that are 
                expended in a manner inconsistent with the approved 
                proposal of the State under paragraph (3) are subject 
                to disallowance and recovery. Insofar as such amounts 
                are so disallowed and recovered such amounts shall be 
                made available to other States under this subsection.
            ``(7) Reports.--Each State receiving payment under this 
        subsection shall submit to the Secretary a reports on the 
        impact of the practices carried out with such payment on the 
        reduction of fraud under the State Medicaid program, as 
        specified by the Secretary.''.

SEC. 4. FUNDS TO REDUCE MEDICAID FRAUD AND ABUSE.

    (a) In General.--For purposes of reducing fraud and abuse in the 
Medicaid program under title XIX of the Social Security Act, there is 
appropriated to the Secretary of Health and Human Services, out of any 
money in the Treasury not otherwise appropriated, $25,000,000, for 
fiscal year 2009 and each subsequent fiscal year, to be equally divided 
between the Office of the Inspector General of the Department of Health 
and Human Services and the Center for Medicaid and State Operations of 
the Centers for Medicare & Medicaid Services. Amounts appropriated 
under this section shall remain available for expenditure until 
expended and shall be in addition to any other amounts appropriated or 
made available to the Office of Inspector General or the Center for 
Medicaid and State Operations for activities of such Office or Center, 
respectively, with respect to the Medicaid program.
    (b) Annual Report.--Not later than September 30 of 2009 and of each 
subsequent year, the Secretary of Health and Human Services shall 
submit to the Committee on Energy and Commerce of the House of 
Representatives and the Committee on Finance of the Senate a report on 
the activities (and the results of such activities) funded under 
subsection (a) to reduce fraud and abuse in the Medicaid program under 
title XIX of the Social Security Act during the previous 12-month 
period, including the amount of funds appropriated under such 
subsection (a) for each such activity and an estimate of the savings to 
the Medicaid program resulting from each such activity.

SEC. 5. ELECTRONIC VERIFICATION OF PROPERTY TRANSFERS.

    (a) Report.--Not later than July 1, 2009, the Secretary of Health 
and Human Services shall submit to the Committee on Energy and Commerce 
of the House of Representatives and the Committee on Finance of the 
Senate a report that--
            (1) examines the feasibility of implementing a system under 
        which transfers of assets, particularly real property, of 
        applicants and recipients of medical assistance under State 
        plans under title XIX of the Social Security Act are verified 
        electronically for purposes of carrying out section 1917(c) of 
        such Act (42 U.S.C. 1396p(c)); and
            (2) estimates the potential savings to the Medicaid program 
        under such title from requiring States to implement such a 
        system.
    (b) Authorized Implementation.--If the Secretary of Health and 
Human Services determines, based on the report under subsection (a), 
that it would be feasible and cost-effective to implement a system 
described in paragraph (1) of such subsection, the Secretary is 
authorized to require States in their State plans under title XIX of 
the Social Security Act to implement such a system. For purposes of 
meeting such requirement, a State may select and enter into a contract 
with a public or private entity.

SEC. 6. DISALLOWANCE OF EXPENSES ASSOCIATED WITH CERTAIN CONSULTANTS.

    (a) Withholding of Federal Matching Payments for Noncompliant 
States.--Section 1903(i) of the Social Security Act (42 U.S.C. 
1396b(i)), as amended by section 2(c) of this Act, is amended--
            (1) in paragraph (23) by striking ``or'' at the end;
            (2) in paragraph (24) by striking the period at the end and 
        inserting ``; or''; and
            (3) by adding after paragraph (24) the following new 
        paragraph:
            ``(25) with respect to amounts expended by such State--
                    ``(A) other than for compensation of a State 
                employee or payment to an entity that is part of a 
                State government, for the purpose of increasing the 
                amount of payments made to the State under this title; 
                and
                    ``(B) for some or all (as determined by the 
                Secretary) of any additional amounts of Federal 
                payments to the State that the Secretary determines are 
                attributable to expenditures described in subparagraph 
                (A).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to expenditures described in subparagraph (A) of 
section 1903(i)(25) of the Social Security Act, as added by subsection 
(a), made on or after October 1, 2008, regardless of whether such 
expenditures were pursuant to contracts or arrangements entered into 
before, on, or after such date.

SEC. 7. STATE INTERNET-BASED TRANSPARENCY PROGRAMS UNDER MEDICAID.

    Title XIX of the Social Security Act, as amended by section 2(a) is 
further amended by inserting after section 1940 the following new 
section:

``SEC. 1941. STATE INTERNET-BASED TRANSPARENCY PROGRAMS.

    ``(a) In General.--Not later than July 1, 2009, subject to 
subsection (h), each of the 50 States and the District of Columbia 
shall submit a State plan amendment described in subsection (b) to 
create an Internet-based transparency program for purposes of improving 
public disclosure of information relating to payments made under the 
State plan under this title.
    ``(b) Eligible State Plan Amendment.--A State plan amendment 
described in this subsection is a State plan amendment that provides 
for the following:
            ``(1) Program described.--A program under which the State 
        discloses through a publicly accessible Internet site the 
        following information:
                    ``(A) The name of each hospital, nursing facility, 
                outpatient surgery center, intermediate care facility 
                for the mentally retarded, institution for mental 
                diseases, that receives payment under this title for 
                the provision of health care items and services, and, 
                at the option of the State, such other health care 
                provider (such as a physician) that receives payment 
                under this title for the provision of health care items 
                and services.
                    ``(B) The total amount of payments made under this 
                title to each entity described in subparagraph (A).
                    ``(C) The amount of dollars paid per patient to 
                each such entity.
            ``(2) Implementation date.--The implementation of such a 
        program described in paragraph (1) by January 1, 2010.
    ``(c) Use of Contractor.--For purposes of implementing an Internet-
based transparency program, a State or the District of Columbia may 
select and enter into a contract with a public or private entity 
meeting such criteria and qualifications as the State determines 
appropriate.
    ``(d) Bonus Payment for Timely Submission of State Plan 
Amendments.--
            ``(1) In general.--In the case of a State that submits the 
        State plan amendment under subsection (a) by July 1, 2009, in 
        addition to any other amounts payable to the State under this 
        title there shall be paid to the State under section 1903(a) 
        for the calendar quarter beginning on such date the amount of 
        $1,000,000.
            ``(2) Recovery of payments for programs not implemented by 
        january 1, 2010.--In the case of a State that received an 
        additional payment under paragraph (1) and that fails to 
        implement an Internet-based transparency program by January 1, 
        2010, the amount paid to the State under such paragraph shall 
        be subject to disallowance and recovery.
    ``(e) Incentives for Implementation.--If the Secretary determines 
that one of the 50 State or the District of Columbia has not 
implemented an Internet-based transparency program for any day after 
January 1, 2010, the Secretary shall reduce the amount paid to the 
State or the District of Columbia, respectively, under section 1903(a) 
by $25,000 for each such day. Such reduction shall be made unless--
            ``(1) the State or the District of Columbia, respectively, 
        demonstrates to the Secretary's satisfaction that the State 
        made a good faith effort to have such a program implemented;
            ``(2) not later than 60 days after the date of a finding 
        that the State or the District of Columbia, respectively, has 
        not implemented such a program, the State or the District of 
        Columbia, respectively, submits to the Secretary (and the 
        Secretary approves) a corrective action plan to implement such 
        a program; and
            ``(3) not later than 12 months after the date of such 
        submission (and approval), the State or the District of 
        Columbia, respectively, fulfills the terms of such corrective 
        action plan.
    ``(f) Technical Assistance.--The Secretary shall provide States 
with technical assistance to aid in implementation of an Internet-based 
transparency program.
    ``(g) Reports.--A State implementing an Internet-based transparency 
program under this section shall furnish to the Secretary such reports 
concerning the program, at such times, in such format, and containing 
such information as the Secretary determines appropriate.
    ``(h) Treatment of Commonwealths and Territories.--A commonwealth 
or territory may, but is not required to, submit a State plan amendment 
described in subsection (b) to create an Internet-based transparency 
program under this section. Payment under subsection (e) shall not be 
counted against payment limitations imposed under subsection (f) and 
(g) of section 1108.
    ``(i) Internet-Based Transparency Program Defined.--For purposes of 
this section, the term `Internet-based transparency program' means the 
program described in subsection (b)(1).''.

SEC. 8. PERMITTING LIMITATIONS, RESTRICTIONS, AND SUSPENSIONS OF 
              MEDICAID ELIGIBILITY IN CASES OF FRAUD.

    (a) In General.--Section 1128B(a) of the Social Security Act (42 
U.S.C. 1320a-7b(a)) is amended by adding at the end the following 
sentence: ``In addition, in any case where an individual who is 
otherwise eligible for medical assistance under a State Medicaid 
program under title XIX is convicted of an offense of fraud or abuse, 
relating to such program, under State law or is the subject of a 
Federal or State civil court judgment or administrative agency decision 
based on fraud or abuse relating to such program, the Director of the 
State Medicaid program may at the option of the Director 
(notwithstanding any other provision of such program) limit, restrict, 
or suspend the eligibility of that individual, with respect to such 
program, for such period (not exceeding 10 years) as the Director deems 
appropriate and the Administrator of the Centers of Medicare & Medicaid 
Services may at the option of the Administrator (notwithstanding any 
other provision of such program) deny payment under section 1903(a) for 
any amounts expended as medical assistance with respect to such 
individual for such period (not exceeding 10 years) as the 
Administrator deems appropriate; but the imposition of a limitation, 
restriction, suspension, or denial with respect to the eligibility of 
any individual under this sentence shall not affect the eligibility of 
any other person for assistance under the program, regardless of the 
relationship between that individual and such other person.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to convictions, judgments, and decisions occurring on or after 
the date of the enactment of this Act.

SEC. 9. EXTENDED PERIOD TO RECOVER MEDICAID OVERPAYMENTS IN CASES OF 
              FRAUD AND ABUSE.

    (a) In General.--Section 1903(d)(2)(C) of the Social Security Act 
(42 U.S.C. 1396b(d)(2)(C)) is amended by adding at the end the 
following new sentence: ``Notwithstanding the previous provisions of 
this subparagraph, the Secretary may extend the period of recovery and 
payment adjustment from 60 days to a period of 1 year in the case of an 
overpayment that was the result of fraud or abuse.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to overpayments discovered on or after the date of the enactment 
of this Act.
                                 <all>