II 111th CONGRESS 1st Session S. 975 IN THE SENATE OF THE UNITED STATES May 5, 2009 Mr. Martinez (for himself, Mr. Cornyn, Ms. Collins, Mr. Nelson of Florida, Mr. Alexander, Mr. Graham, Mr. Vitter, Mr. DeMint, and Mr. Corker) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to reduce fraud under the Medicare program.

1.

Short title

This Act may be cited as the Seniors and Taxpayers Obligation Protection Act of 2009.

2.

Requiring the Secretary of Health and Human Services to change the Medicare beneficiary identifier used to identify Medicare beneficiaries under the Medicare program

(a)

Procedures

(1)

In general

Not later than 1 year after the date of enactment of this Act, in order to protect beneficiaries from identity theft, the Secretary of Health and Human Services (in this section referred to as the Secretary) shall establish and implement procedures to change the Medicare beneficiary identifier used to identify individuals entitled to benefits under part A of title XVIII of the Social Security Act or enrolled under part B of such title so that such an individual’s social security account number is not used. (2)

Maintaining existing HICN structure

In order to minimize the impact of the change under paragraph (1) on systems that communicate with Medicare beneficiary eligibility systems, the procedures under paragraph (1) shall provide that the new Medicare beneficiary identifier maintain the existing Health Insurance Claim Number structure. (3)

Protection against fraud

The procedures under paragraph (1) shall provide for a process for changing the Medicare beneficiary identifier for an individual to a different identifier in the case of the discovery of fraud, including identity theft. (4)

Phase-in authority

(A)

In general

Subject to subparagraphs (B) and (C), the Secretary may phase in the change under paragraph (1) in such manner as the Secretary determines appropriate. (B)

Limit

The phase-in period under subparagraph (A) shall not exceed 10 years. (C)

Newly entitled and enrolled individuals

The Secretary shall ensure that the change under paragraph (1) is implemented not later than January 1, 2010, with respect to any individual who first becomes entitled to benefits under part A of title XVIII of the Social Security Act or enrolled under part B of such title on or after such date. (b)

Education and outreach

The Secretary shall establish a program of education and outreach for individuals entitled to, or enrolled for, benefits under part A of title XVIII of the Social Security Act or enrolled under part B of such title, providers of services (as defined in subsection (u) of section 1861 of such Act (42 U.S.C. 1395x)), and suppliers (as defined in subsection (d) of such section) on the change under paragraph (1). (c)

Data matching

(1)

Access to certain information

Section 205(r) of the Social Security Act (42 U.S.C. 405(r)) is amended by adding at the end the following new paragraph: (9)(A)The Commissioner of Social Security shall, upon the request of the Secretary— (i)enter into an agreement with the Secretary for the purpose of matching data in the system of records of the Commissioner with data in the system of records of the Secretary, so long as the requirements of subparagraphs (A) and (B) of paragraph (3) are met, in order to determine— (I)whether a beneficiary under the program under title XVIII, XIX, or XXI is dead, imprisoned, or otherwise not eligible for benefits under such program; and (II)whether a provider of services or a supplier under the program under title XVIII, XIX, or XXI is dead, imprisoned, or otherwise not eligible to furnish or receive payment for furnishing items and services under such program; and (ii)include in such agreement safeguards to assure the maintenance of the confidentiality of any information disclosed and procedures to permit the Secretary to use such information for the purpose described in clause (i). (B)Information provided pursuant to an agreement under this paragraph shall be provided at such time, in such place, and in such manner as the Commissioner determines appropriate. (C)Information provided pursuant to an agreement under this paragraph shall include information regarding whether— (i)the name (including the first name and any family name or surname), the date of birth (including the month, day, and year), and social security number of an individual provided to the Commissioner match the information contained in the Commissioner's records, and (ii)such individual is shown on the records of the Commissioner as being deceased. . (2)

Investigation based on certain information

Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is amended by inserting after section 1128F the following new section:

1128G.

Access to certain data and investigation of claims involving individuals who are not eligible for benefits or are not eligible providers of services or suppliers

(a)

Data agreement

The Secretary shall enter into an agreement with the Commissioner of Social Security pursuant to section 205(r)(9). (b)

Investigation of claims involving certain individuals who are not eligible for benefits or are not eligible providers of services or suppliers

(1)

In general

The Secretary shall, in the case where a provider of services or a supplier under the program under title XVIII, XIX, or XXI submits a claim for payment for items or services furnished to an individual who the Secretary determines, as a result of information provided pursuant to such agreement, is not eligible for benefits under such program, or where the Secretary determines, as a result of such information, that such provider of services or supplier is not eligible to furnish or receive payment for furnishing such items or services, conduct an investigation with respect to the provider of services or supplier. If the Secretary determines further action is appropriate, the Secretary shall refer the investigation to the Inspector General of the Department of Health and Human Services. (2)

Assessment of implementation and effectiveness by the OIG

The Inspector General of the Department of Health and Human Services shall test the implementation of the provisions of this section (including the implementation of the agreement under section 205(r)(9)) and conduct such period assessments of such implementation as the Inspector General determines necessary to determine the effectiveness of such implementation.

. (d)

Authorization of Appropriations

There are authorized to be appropriated such sums as may be necessary to carry out this section.

3.

Monthly verification of accuracy of claims for payment for physicians' services

(a)

In general

Section 1893 of the Social Security Act (42 U.S.C. 1395ddd) is amended— (1)in subsection (b), by adding at the end the following new paragraph: (7)The monthly verification of the accuracy of claims for payment for physicians' services under the system under subsection (i). ; and (2)by adding at the end the following new subsection: (i)

Monthly verification of accuracy of claims for payment for physicians' services

(1)

System

(A)

In general

Not later than 1 year after the date of the enactment of this subsection, the Secretary shall establish and implement a system to verify (electronically or otherwise, taking into consideration the administrative burden of such verification on physicians and group practices) on a monthly basis that the claims for payment under part B for physicians' services furnished in high risk areas are— (i)for physicians' services actually furnished by the physician or the physician's group practice; and (ii)otherwise accurate. (B)

No determination of medical necessity

In no case shall any verification conducted under the system established under subparagraph (A) include a determination of the medical necessity of the physicians' service. (2)

Verification

Under the system, the Secretary, at the end of each month, shall provide the physician or the group practice with a detailed list of such claims for payment that were submitted during the month in order for the physician or the group practice to review and verify the list. In providing the detailed list, the Secretary shall use the provider number of the physician or the group practice. (3)

Audits

The Secretary shall conduct audits of the review and verification by physicians and group practices of the detailed list provided under paragraph (2). Such audits shall assess whether the physician or group practice conducted such review and verification in a fraudulent manner. In the case where the Secretary determines such review and verification was conducted in a fraudulent manner, the Secretary shall recoup any payments resulting from the fraudulent review and verification and impose a civil money penalty in an amount determined appropriate by the Secretary on the physician or group practice who conducted the fraudulent review and verification. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). (4)

High risk areas defined

In this subsection, the term high risk area means a county designated as a high risk area under subsection (j)(1). (5)

Report by the Secretary

Not later than 1 year after implementation of the system established under paragraph (1), the Secretary shall submit a report to Congress on the progress of such implementation. Such report shall include recommendations— (A)on how to improve such implementation, including whether the system should be expanded to include verification of claims for payment under part B for physicians' services furnished in additional areas; and (B)for such legislation and administrative action as the Secretary determines appropriate. . (b)

Authorization of appropriations

To carry out the amendments made by this section, there are authorized to be appropriated such sums as may be necessary for each of fiscal years 2010 through 2014.

4.

Detection of medicare fraud and abuse

(a)

In general

Section 1893 of the Social Security Act (42 U.S.C. 1395ddd), as amended by section 3, is amended— (1)in subsection (b), by adding at the end the following new paragraph: (8)Implementation of fraud and abuse detection methods under subsection (j). ; (2)in subsection (c), by adding at the end of the flush matter following paragraph (4), the following new sentence In the case of an activity described in subsection (b)(8), an entity shall only be eligible to enter into a contract under the Program to carry out the activity if the entity is selected through a competitive bidding process in accordance with subsection (j)(3).; and (3)by adding at the end the following new subsection: (j)

Detection of medicare fraud and abuse

(1)

Establishment of system to identify counties most vulnerable to fraud

Not later than 6 months after the date of enactment of this subsection, the Secretary shall establish a system to identify the 50 counties most vulnerable to fraud with respect to items and services furnished by providers of services (other than hospitals and critical access hospitals) and suppliers based on the degree of county-specific reimbursement and analysis of payment trends under this title. The Secretary shall designate the counties identified under the preceding sentence as high risk areas. (2)

Fraud and abuse detection

(A)

Initial implementation

The Secretary shall establish procedures for the implementation of fraud and abuse detection methods under this title with respect to items and services furnished by such providers of services and suppliers in high risk areas designated under paragraph (1) (and, beginning not later than 18 months after the date of enactment of this subsection, with respect to items and services furnished by such providers of services and suppliers in areas not so designated) including the following: (i)In the case of a new applicant to be a supplier, a background check, a pre-enrollment site visit, and random unannounced site visits after enrollment. (ii)Not less than 5 years after the date of enactment of this subsection, in the case of a supplier who is not a new applicant, re-enrollment under this title, including a background check and a site-visit as part of the application process for such re-enrollment, and random unannounced site visits after such re-enrollment. (iii)Data analysis to establish prepayment claim edits designed to target the claims for payment under this title for such items and services that are most likely to be fraudulent. (iv)Prepayment benefit integrity reviews for claims for payment under this title for such items and services that are suspended as a result of such edits. (B)

Requirement for participation

In no case may a provider of services or supplier who does not meet the requirements under subparagraph (A) (including, in the case of a supplier, the requirement of a background check) participate in the program under this title. (C)

Background checks

The Secretary shall determine the extent of the background check conducted under subparagraph (A), including whether— (i)a fingerprint check is necessary; (ii)a background check shall be conducted with respect to additional employees, board members, contractors or other interested parties of the supplier; and (iii)any additional national background checks regarding exclusion from participation in Federal programs (such as the program under this title, title XIX, or title XXI), adverse actions taken by State licensing boards, bankruptcies, outstanding taxes, or other indications identified by the Inspector General of the Department of Health and Human Services are necessary. (D)

Expanded implementation

Not later than 24 months after the date of enactment of this subsection, the Secretary shall establish procedures for the implementation of such fraud and abuse detection methods under this title with respect to items and services furnished by all providers of services and suppliers, including those not in high risk areas designated under paragraph (1). (3)

Competitive bidding

In selecting entities to carry out this subsection, the Secretary shall use a competitive bidding process. (4)

Report to Congress

The Secretary shall submit to Congress an annual report on the effectiveness of activities conducted under this subsection, including a description of any savings to the program under this title as a result of such activities and the overall administrative cost of such activities and a determination as to the amount of funding needed to carry out this subsection for subsequent fiscal years, together with recommendations for such legislation and administrative action as the Secretary determines appropriate. . (b)

Authorization of appropriations

To carry out the amendments made by this section, there are authorized to be appropriated— (1)such sums as may be necessary, not to exceed $50,000,000, for each of fiscal years 2010 through 2014; and (2)such sums as may be necessary, not to exceed an amount the Secretary determines appropriate in the most recent report submitted to Congress under section 1893(j)(4) of the Social Security Act, as added by subsection (a), for each subsequent fiscal year.

5.

Use of technology for real-time data review

Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is amended by adding at the end the following new section:

1899.

Use of technology for real-time data review

(a)

In general

The Secretary of Health and Human Services shall establish procedures for the use of technology (similar to that used with respect to the analysis of credit card charging patterns) to provide real-time data analysis of claims for payment under the Medicare program under title XVIII of the Social Security Act to identify and investigate unusual billing or order practices under the Medicare program that could indicate fraud or abuse. (b)

Competitive bidding

The procedures established under subsection (a) shall ensure that the implementation of such technology is conducted through a competitive bidding process.

.

6.

Edits on 855S Medicare enrollment application

Section 1834(a) of the Social Security Act (42 U.S.C. 1395m(a)) is amended by adding at the end the following new paragraph: (22)

Confirmation with National Supplier Clearinghouse prior to payment

(A)

In general

Not later than 1 year after the date of enactment of this paragraph, the Secretary shall establish procedures to require carriers, prior to paying a claim for payment for durable medical equipment, prosthetics, orthotics, and supplies under this title, to confirm with the National Supplier Clearinghouse— (i)that the National Provider Identifier of the physician or practitioner prescribing or ordering the item or service is valid and active; (ii)that the Medicare identification number of the supplier is valid and active; and (iii)that the item or service for which the claim for payment is submitted was properly identified on the CMS–855S Medicare enrollment application. (B)

Online database for implementation

Not later than 18 months after the date of enactment of this paragraph, the Secretary shall establish an online database similar to that used for the National Provider Identifier to enable providers of services, accreditors, carriers, and the National Supplier Clearinghouse to view information on specialties and the types of items and services each supplier has indicated on the CMS–855S Medicare enrollment application submitted by the supplier. (C)

Notification of claim denial and resubmission

In the case where a claim for payment for durable medical equipment, prosthetics, orthotics, and supplies under this title is denied because the item or service furnished does not correctly match up with the information on file with the National Supplier Clearinghouse— (i)the National Supplier Clearinghouse shall— (I)provide the supplier written notification of the reason for such denial; and (II)allow the supplier 60 days to provide the National Supplier Clearinghouse with appropriate certification, licensing, or accreditation; and (ii)the Secretary shall waive applicable requirements relating to the time frame for the submission of claims for payment under this title in order to permit the resubmission of such claim if payment of such claim would otherwise be allowed under this title. .

7.

Strategic plan for the development of a serial number tracking system for durable medical equipment

Section 1834(a) of the Social Security Act (42 U.S.C. 1395m(a)), as amended by section 6(a), is amended by adding at the end the following new paragraph: (23)

Strategic plan for the development of a serial number tracking system for durable medical equipment

(A)

In general

Not later than 1 year after the date of enactment of this paragraph, the Secretary shall develop a strategic plan for the development and implementation of a serial number tracking system for durable medical equipment. (B)

Serial number tracking system for durable medical equipment

The plan developed under subparagraph (A) shall include mechanisms to ensure that an item of durable medical equipment which has not been issued a unique identifier under the unique device identification system established under section 519(f) of the Federal Food, Drug, and Cosmetic Act bears a unique identifier, unless the Secretary already requires an alternative placement or provides an exception for a particular item or type of durable medical equipment under such section 519(f). (C)

Provision of unique identifier to the secretary

The plan developed under subparagraph (A) shall include appropriate mechanisms for manufacturers of items of durable medical equipment to submit to the Secretary unique identifiers issued under subparagraph (B) or such section 519(f) with respect to such items. The plan shall include mechanisms for the Secretary to provide for the storage of such unique identifier in accordance with subparagraph (F)(i). (D)

Requirements for manufacturers and wholesalers

The plan developed under subparagraph (A) shall include mechanisms for manufacturers of items of durable medical equipment, or, in the case where a wholesaler provides an item of durable medical equipment to suppliers, wholesalers, to— (i)upon issuing an item to a supplier, develop a product description for the item which includes— (I)the unique identifier of the item; (II)the specific Healthcare Common Procedure Coding System (HCPCS) code for the item; (III)the name of the supplier the item was shipped to; and (IV)the supplier's Medicare identification number; and (ii)submit the product description developed under clause (i) to the Secretary for storage in the unique identifier database in accordance with subparagraph (F)(i). (E)

Requirements for suppliers

The plan developed under subparagraph (A) shall include mechanisms to ensure that suppliers of items of durable medical equipment— (i)upon issuing the item to a beneficiary, note the unique identifier of such item on— (I)the claim form submitted for such item; and (II)when appropriate or otherwise required, the detailed product description of the item; (ii)in the case where the item is issued to a beneficiary on a rental basis, designate the unique identifier with an R after the number to indicate that the item was rented, and not purchased, by the beneficiary; and (iii)upon return of the item to the supplier, notify the Secretary— (I)before reissuing that item and resubmitting that number on such a claim form; or (II)upon resubmitting that number on such a claim form. (F)

Responsibilities for the secretary

(i)

Maintenance of database of serial numbers

The plan developed under subparagraph (A) shall include the responsibility of the Secretary to establish and maintain a database containing the unique identifiers submitted by manufacturers of items of durable medical equipment under subparagraph (C). (ii)

Payment

(I)

Limitation

Subject to subclause (II), the plan developed under subparagraph (A) shall include mechanisms to ensure that payment may only be made for an item of durable medical equipment if the unique identifier on the claim form submitted for such item matches the unique identifier submitted by the manufacturer of such item under subparagraph (C). (II)

Exception to limitation after verification of receipt

The plan developed under subparagraph (A) shall include mechanisms to ensure that in the case where the unique identifier is not on the claim form submitted for such item or does not match the unique identifier submitted by the manufacturer of such item under subparagraph (C), no payment shall be made under this part for the item of durable medical equipment until the Secretary has verified that the beneficiary has received such item in accordance with subclause (IV). (III)

Duplicative unique identifiers

The plan developed under subparagraph (A) shall include mechanisms to ensure that in the case where a unique identifier is submitted on more than 1 claim form submitted for such an item and there is no indication from the supplier that the item of durable medical equipment has been returned by 1 beneficiary and is now being used by another beneficiary, no payment shall be made under this part for such item of durable medical equipment unless the Secretary has verified that the beneficiary has received such item in accordance with subclause (IV). (IV)

Verification

The plan developed under subparagraph (A) shall include provisions for the Secretary to conduct any verification required under subclause (II) or (III) within 30 days after receipt by the Secretary of the relevant claim form. In the case where such verification is not completed within such time period, the Secretary shall pay such claim, complete the verification, and, in the case where the Secretary has entered into a contract with an entity for the conduct of such verification, recover any payments that would not have been made if the verification had been completed within such time period from such entity. (iii)

Quality control audits

The plan developed under subparagraph (A) shall include a requirement that the Secretary conduct quality control audits to identify unusual billing patterns with respect to items of durable medical equipment for which payment is made under this part and may provide that the Secretary conduct unannounced site visits or commission other agencies to conduct such site visits as part of such quality control audits. (iv)

No use as a precertification mechanism

The plan developed under subparagraph (A) shall include mechanisms to ensure that in no case shall a unique identifier issued under subparagraph (B) or section 519(f) of the Federal Food, Drug, and Cosmetic Act be used as a precertification mechanism for the supply of an item of durable medical equipment or the payment of a claim for such an item under this part. .

8.

GAO study and report on effectiveness of surety bond requirements for suppliers of durable medical equipment in combating fraud

(a)

Study

The Comptroller General of the United States shall conduct a study on the effectiveness of the surety bond requirement under section 1834(a)(16) of the Social Security Act (42 U.S.C. 1395m(a)(16)) in combating fraud. (b)

Report

Not later than 18 months after the date of enactment of this Act, the Comptroller General shall submit to Congress a report containing the results of the study conducted under subsection (a), together with recommendations for such legislation and administrative action as the Comptroller General determines appropriate.