[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3474 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 3474

  To amend titles XI and XVIII of the Social Security Act to prevent 
  fraud and abuse under the Medicare program and to require National 
Provider Identifiers for reimbursement of prescriptions under part D of 
             the Medicare program, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 18, 2011

 Mr. Stearns introduced the following bill; which was referred to the 
 Committee on Energy and Commerce, and in addition to the Committee on 
   Ways and Means, for a period to be subsequently 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 titles XI and XVIII of the Social Security Act to prevent 
  fraud and abuse under the Medicare program and to require National 
Provider Identifiers for reimbursement of prescriptions under part D of 
             the Medicare program, 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 ``Promoting Responsibility in Medical 
Expenditures Act of 2011'' or the ``PRIME Act of 2011''.

SEC. 2. INCREASED CIVIL AND CRIMINAL PENALTIES.

    (a) Increased Civil Money Penalties and Criminal Fines for Federal 
Health Care Program Fraud and Abuse.--
            (1) Increased civil money penalties.--Section 1128A of the 
        Social Security Act (42 U.S.C. 1320a-7a) is amended--
                    (A) in subsection (a), in the matter following 
                paragraph (10)--
                            (i) by striking ``$10,000'' and inserting 
                        ``$20,000'' each place it appears;
                            (ii) by striking ``$15,000'' and inserting 
                        ``$30,000''; and
                            (iii) by striking ``$50,000'' and inserting 
                        ``$100,000'' each place it appears; and
                    (B) in subsection (b)--
                            (i) in paragraph (1), in the flush text 
                        following subparagraph (B), by striking 
                        ``$2,000'' and inserting ``$4,000'';
                            (ii) in paragraph (2), by striking 
                        ``$2,000'' and inserting ``$4,000''; and
                            (iii) in paragraph (3)(A)(i), by striking 
                        ``$5,000'' and inserting ``$10,000''.
            (2) Increased criminal fines.--Section 1128B of such Act 
        (42 U.S.C. 1320a-7b) is amended--
                    (A) in subsection (a), in the matter following 
                paragraph (6)--
                            (i) by striking ``$25,000'' and inserting 
                        ``$100,000''; and
                            (ii) by striking ``$10,000'' and inserting 
                        ``$20,000'';
                    (B) in subsection (b)--
                            (i) in paragraph (1), in the flush text 
                        following subparagraph (B), by striking 
                        ``$25,000'' and inserting ``$100,000''; and
                            (ii) in paragraph (2), in the flush text 
                        following subparagraph (B), by striking 
                        ``$25,000'' and inserting ``$100,000'';
                    (C) in subsection (c), by striking ``$25,000'' and 
                inserting ``$100,000'';
                    (D) in subsection (d), in the flush text following 
                paragraph (2), by striking ``$25,000'' and inserting 
                ``$100,000''; and
                    (E) in subsection (e), by striking ``$2,000'' and 
                inserting ``$4,000''.
    (b) Increased Sentences for Felonies Involving Federal Health Care 
Program Fraud and Abuse.--
            (1) False statements and representations.--Section 1128B(a) 
        of the Social Security Act (42 U.S.C. 1320a-7b(a)) is amended, 
        in the matter following paragraph (6), by striking ``not more 
        than five years or both, or (ii)'' and inserting ``not more 
        than 10 years or both, or (ii)''.
            (2) Antikickback.--Section 1128B(b) of such Act (42 U.S.C. 
        1320a-7b(b)) is amended--
                    (A) in paragraph (1), in the flush text following 
                subparagraph (B), by striking ``not more than five 
                years'' and inserting ``not more than 10 years''; and
                    (B) in paragraph (2), in the flush text following 
                subparagraph (B), by striking ``not more than five 
                years'' and inserting ``not more than 10 years''.
            (3) False statement or representation with respect to 
        conditions or operations of facilities.--Section 1128B(c) of 
        such Act (42 U.S.C. 1320a-7b(c)) is amended by striking ``not 
        more than five years'' and inserting ``not more than 10 
        years''.
            (4) Excess charges.--Section 1128B(d) of such Act (42 
        U.S.C. 1320a-7b(d)) is amended, in the flush text following 
        paragraph (2), by striking ``not more than five years'' and 
        inserting ``not more than 10 years''.
    (c) Effective Date.--The amendments made by this section shall 
apply to acts committed after the date of the enactment of this Act.

SEC. 3. ANNUAL MEDICARE, MEDICAID, AND CHIP FRAUD REPORTS.

    (a) In General.--By not later than July 1, 2012, and each 
subsequent year, the Secretary of Health and Human Services shall 
submit to the Committees on Ways and Means and Energy and Commerce of 
the House of Representatives and the Committee on Finance of the Senate 
a report that contains the following:
            (1) Amount of fraud.--The amount, as estimated by the 
        Secretary--
                    (A) of total suspected fraud committed against the 
                Medicare program under title XVIII of the Social 
                Security Act, the Medicaid program under title XIX of 
                such Act, and the Children's Health Insurance Program 
                under title XXI of such Act; and
                    (B) the amount of such suspected fraud that is 
                committed by employees of the Department of Health and 
                Human Services who have access to data from any of the 
                programs under subparagraph (A).
            (2) Data access implementation.--Information on 
        implementation of the data access requirement under section 
        1128J(a)(2) of the Social Security Act (42 U.S.C. 1320a-
        7k(a)(2)).
    (b) Use of Audits.--
            (1) Estimate based on audited claims.--The Secretary shall 
        base the estimate of suspected fraud under subsection (a)(1)(A) 
        on an audit of a random sample of at least 10,000 claims for 
        payment made under the programs under title XVIII, XIX, or XXI 
        of the Social Security Act.
            (2) Authority of the secretary.--For purposes of conducting 
        the audits under paragraph (1), the Secretary may--
                    (A) request that a health care provider or supplier 
                submit documentation relating to the claim being 
                audited and review such documentation;
                    (B) conduct unannounced onsite visits; and
                    (C) interview patients.
            (3) Submission of information.--Not later than 30 days 
        after receiving a request for documentation under paragraph 
        (2)(A), the health care provider or supplier shall provide to 
        the Secretary all requested documentation related to such 
        claim.
            (4) Internal audit.--The Secretary shall base the estimate 
        of suspected fraud committed by employees of the Department of 
        Health and Human Services under subsection (a)(1)(B) on an 
        internal audit.
    (c) Fraud Defined.--In this section, the term ``fraud'' has the 
meaning given such term in section 455.2 of title 42, Code of Federal 
Regulations.

SEC. 4. PROTECTING PREDICTIVE ANALYTICS TECHNOLOGIES FROM COMPELLED 
              DISCLOSURE UNDER THE FREEDOM OF INFORMATION ACT.

    Section 4241 of the Small Business Jobs Act of 2010 (42 U.S.C. 
1320a-7m) is amended by adding at the end the following:
    ``(j) Exemption From FOIA.--The algorithms used in predictive 
modeling and other analytics technologies under this section are exempt 
from disclosure under section 552(b)(3) of title 5, United States Code.
    ``(k) Audit and Review.--The Inspector General of the Department of 
Health and Human Services and the Comptroller General of the United 
States shall, beginning on January 1, 2013, and annually thereafter, 
complete an audit and review of the implementation of this section, 
including the effectiveness of the algorithms used in predictive 
modeling and other analytics technologies under this section.''.

SEC. 5. REQUIRING VALID NATIONAL PROVIDER IDENTIFIERS FOR PRESCRIBERS 
              ON PHARMACY CLAIMS AND LIMITING ACCESS TO THE NATIONAL 
              PROVIDER IDENTIFIER REGISTRY.

    (a) Requiring Valid National Provider Identifiers of Prescribers on 
Pharmacy Claims.--
            (1) In general.--Section 1860D-2(e)(2) of the Social 
        Security Act (42 U.S.C. 1395w-102(e)(2)) is amended by adding 
        at the end the following new subparagraph:
                    ``(C) Drugs prescribed by nonvalid prescribers.--
                For plan years that begin on or after January 1, 2013, 
                such term does not include a drug prescribed by an 
                individual who does not have a valid National Provider 
                Identifier, as determined through procedures 
                established by the Secretary.''.
            (2) Identifying and reporting invalid prescribers.--
                    (A) Transfer of information to the inspector 
                general.--In the case that the procedures established 
                by the Secretary of Health and Human Services under 
                section 1860D-2(e)(2) of the Social Security Act result 
                in a PDP sponsor identifying a claim for reimbursement 
                under a prescription drug plan under part D of title 
                XVIII of such Act as being for a drug that was 
                prescribed by an individual who did not have a valid 
                National Provider Identifier, the PDP sponsor shall 
                submit to the Inspector General of the Department of 
                Health and Human Services any information on such 
                invalid prescribers on pharmacy claims, including any 
                invalid national provider identifiers being used to 
                submit such claims and any records related to such 
                claims.
                    (B) Responsibility of the inspector general.--The 
                Inspector General of the Department of Health and Human 
                Services shall provide to the appropriate law 
                enforcement agencies information submitted under 
                subparagraph (A).
                    (C) Report to congress.--Not later than January 1, 
                2014, 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 
                section 1860D-2(e)(2)(C) of the Social Security Act.
    (b) Limiting Access to National Provider Identifier Registry.--
            (1) In general.--The Secretary of Health and Human 
        Services, in consultation with the Attorney General, the 
        Inspector General of the Department of Health and Human 
        Services, the Chairman of the Federal Trade Commission, and 
        affected parties (including prescription drug plans under part 
        D of title XVIII of the Social Security Act (42 U.S.C. 1395w-
        101 et seq.), MA-PD plans under part C of title XVIII of the 
        Social Security Act (42 U.S.C. 1395w-21 et seq.), pharmacies, 
        physicians, and pharmacy computer vendors), shall establish 
        procedures and rules to restrict access to the National 
        Provider Identifier Registry in order to deter the fraudulent 
        use of National Provider Identifiers for purposes of making 
        claims under titles XVIII and XIX of the Social Security Act.
            (2) Access.--
                    (A) In general.--The procedures established under 
                paragraph (1) shall provide governmental and 
                nongovernmental entities with appropriate (as 
                determined by the Secretary) access to the National 
                Provider Identifier Registry.
                    (B) Data use agreements.--In order to receive such 
                access, each such governmental and nongovernmental 
                entity shall enter into a data use agreement with the 
                Secretary and agree to use the data in such registry in 
                accordance with rules established by the Secretary 
                pursuant such paragraph.

SEC. 6. ENCOURAGING THE ESTABLISHMENT OF STATE PRESCRIPTION DRUG 
              MONITORING PROGRAMS.

    (a) In General.--Section 1905 of the Social Security Act is amended 
by adding at the end the following:
    ``(ee) Incentives for States To Identify Fraud Through State 
Prescription Drug Monitoring Programs.--
            ``(1) In general.--With respect to a calendar quarter, the 
        Federal medical assistance percentage for the amounts under 
        clauses (i) and (II) of subparagraph (C) shall be decreased by 
        10 percent for such quarter, if--
                    ``(A) a State is receiving a grant for a State 
                controlled substance monitoring program under section 
                399O of the Public Health Service Act (or the Secretary 
                determines that the State meets the requirements for 
                such a grant);
                    ``(B) through such program, the State identifies 
                fraud, waste, or abuse in connection the provision of 
                prescription drug coverage under the State plan; and
                    ``(C) the State or a political subdivision of the 
                State--
                            ``(i) is reimbursed an amount by a third 
                        party (pursuant to the provisions of the State 
                        plan in compliance with section 1902(a)(25)) 
                        for expenditures related to such fraud, waste, 
                        or abuse; or
                            ``(ii) recovered (as such term is used 
                        under section 1903(d)(3)(A)) an amount.
            ``(2) Use of funds.--A State may use the amounts received 
        as a result of the increased Federal medical assistance 
        percentage under paragraph (1) to support the State controlled 
        substance monitoring program established by the State.''.
    (b) Conforming Amendments.--Section 1905(b) of the Social Security 
Act is amended by striking ``Subject to subsections (y), (z), and 
(aa)'' and inserting ``Subject to subsections (y), (z), (aa), and 
(ee)''.
    (c) Effective Date.--The amendments made by this subsection shall 
apply to calendar quarters beginning on or after the end of the 30-day 
period after the date of the enactment of this Act.

SEC. 7. PROHIBITING THE DISPLAY OF SOCIAL SECURITY ACCOUNT NUMBERS ON 
              NEWLY ISSUED MEDICARE IDENTIFICATION CARDS AND 
              COMMUNICATIONS PROVIDED TO MEDICARE BENEFICIARIES.

    (a) In General.--Not later than 2 years after the date of enactment 
of this Act, the Secretary of Health and Human Services (referred to in 
this section as the ``Secretary''), acting in consultation with the 
Commissioner of Social Security, shall establish and implement 
procedures to eliminate the unnecessary collection, use, and display of 
Social Security account numbers of Medicare beneficiaries under the 
Medicare program under title XVIII of the Social Security Act (42 
U.S.C. 1395 et seq.).
    (b) Newly Issued Medicare Cards and Communications Provided to 
Beneficiaries.--Not later than 4 years after the date of the enactment 
of this Act, the Secretary shall do the following:
            (1) Newly issued cards.--Acting in consultation with the 
        Commissioner of Social Security, ensure that each newly issued 
        Medicare identification card does not display or electronically 
        store, in an unencrypted format, a Medicare beneficiary's 
        Social Security account number, except--
                    (A) if the health insurance claim number of a 
                beneficiary is the Social Security number of the 
                beneficiary, the beneficiary's spouse, or another 
                individual, the Secretary may use such number on such 
                card; and
                    (B) if the Secretary determines that the risk of 
                fraudulent use of such numbers is not unacceptably 
                high, the Secretary may use a partial Social Security 
                account number on a Medicare identification card.
            (2) Communications provided to beneficiaries.--Prohibit the 
        display of a Medicare beneficiary's Social Security account 
        number in any written or electronic communication provided to 
        the beneficiary unless the Secretary, in consultation with the 
        Commissioner of Social Security, determines that inclusion of 
        Social Security account numbers in such communications is 
        essential for the operation of the Medicare program.
    (c) Medicare Beneficiary Defined.--In this section, the term 
``Medicare beneficiary'' means an individual who is 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.
    (d) Conforming Amendments.--
            (1) Reference in the social security act.--Section 
        205(c)(2)(C) of the Social Security Act (42 U.S.C. 
        405(c)(2)(C)) is amended--
                    (A) by moving clause (x), as added by section 
                1414(a)(2) of the Patient Protection and Affordable 
                Care Act (Public Law 111-148), 6 ems to the left;
                    (B) by redesignating clause (x), as added by 
                section 2(a)(1) of the Social Security Number 
                Protection Act of 2010 (42 U.S.C. 1305 note), as clause 
                (xii); and
                    (C) by adding after clause (xii), as redesignated 
                by subparagraph (B), the following new clause:
    ``(xiii) Subject to section 7 of the Promoting Responsibility in 
Medical Expenditures Act of 2011, social security account numbers shall 
not be displayed on Medicare identification cards or on communications 
provided to Medicare beneficiaries.''.
            (2) Access to information.--Section 205(r) of the Social 
        Security Act (405 U.S.C. 405(r)) is amended by adding at the 
        end the following new paragraph:
    ``(10)(A) To prevent and identify fraudulent activity--
            ``(i) the Attorney General or the Secretary of Health and 
        Human Services may submit to the Commissioner a request that 
        the Commissioner enter into an agreement under this paragraph; 
        and
            ``(ii) subject to the requirements of subparagraphs (A) and 
        (B) of paragraph (3), upon receiving a request under 
        subparagraph (A), the Commissioner shall enter into a 
        reimbursable agreement with the individual making such request 
        to provide to such individual the information collected under 
        paragraph (1).
    ``(B) The agreement under subparagraph (A)(ii) shall contain 
appropriate provisions (as determined by the Commissioner) to protect 
the confidentiality of information provided by the Commissioner under 
such agreement.''.
    (e) Pilot Program.--
            (1) Establishment.--Not later than 1 year after the date of 
        the enactment of this Act, the Secretary shall establish a 
        pilot program utilizing smart card technology to evaluate--
                    (A) the applicability of smart card technology to 
                the Medicare program under title XVIII of the Social 
                Security Act (42 U.S.C. 1395 et seq.); and
                    (B) whether such cards would be effective in 
                preventing fraud under the Medicare program.
            (2) Scope and duration.--The Secretary shall conduct the 
        pilot program--
                    (A) in not less than 2 States; and
                    (B) for a period of not less than 180 days and not 
                more than 2 years.
            (3) Report.--Not later than 12 months after the completion 
        of the pilot program under this subsection, the Secretary shall 
        submit to the appropriate committees of Congress and make 
        available to the public a report that includes the following:
                    (A) A summary of the pilot program and findings 
                resulting from such program, including--
                            (i) any costs or savings to the Medicare 
                        program as a result of the implementation of 
                        the pilot program;
                            (ii) whether the use of smart card 
                        technology resulted in improvements in the 
                        quality of care provided to Medicare 
                        beneficiaries under the pilot program; and
                            (iii) whether such technology was useful in 
                        preventing or detecting fraud, waste, and abuse 
                        in the Medicare program.
                    (B) Recommendations regarding whether the use of 
                smart card technology should be expanded under the 
                Medicare program.
            (4) Definitions.--In this subsection:
                    (A) Medicare beneficiary.--The term ``Medicare 
                beneficiary'' means an individual entitled to, or 
                enrolled for, benefits under part A of title XVIII of 
                the Social Security Act (42 U.S.C. 1395c et seq.) or 
                enrolled for benefits under part B of such title (42 
                U.S.C. 1395j et seq.).
                    (B) Medicare provider.--The term ``Medicare 
                provider'' means--
                            (i) a provider of services (as defined in 
                        section 1861(u) of the Social Security Act (42 
                        U.S.C. 1395x(u))); or
                            (ii) a supplier (as defined in section 
                        1861(d) of such Act (42 U.S.C. 1395x(d))).
                    (C) Smart card.--The term ``smart card'' means an 
                identification card used by a Medicare beneficiary or a 
                Medicare provider that includes antifraud attributes. 
                Such a card--
                            (i) may rely on existing commercial data 
                        transfer networks or on a network of 
                        proprietary card readers or databases; and
                            (ii) may include--
                                    (I) cards using technology adapted 
                                from the financial services industry;
                                    (II) cards containing individual 
                                biometric identification, provided that 
                                such identification is encrypted and 
                                not contained in any central database;
                                    (III) cards adapting technology and 
                                processes utilized in the TRICARE 
                                program under chapter 55 of title 10, 
                                United States Code, or by the Veterans 
                                Administration; or
                                    (IV) such other technology as the 
                                Secretary determines appropriate.

SEC. 8. IMPROVING CLAIMS PROCESSING AND DETECTION OF FRAUD WITHIN THE 
              MEDICAID AND CHIP PROGRAMS.

    (a) Medicaid.--Section 1903(i) of the Social Security Act (42 
U.S.C. 1396b(i)) 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 inserting after paragraph (26) the following 
        paragraph:
            ``(27) with respect to any amount expended for an item or 
        service unless the claim for payment for such item or service 
        contains--
                    ``(A) a valid beneficiary identification number for 
                the individual to whom such item or service was 
                furnished, and the State has determined that such 
                number corresponds to an individual who is enrolled 
                under the State plan or an applicable waiver of a 
                requirement of such plan; and
                    ``(B) a valid provider identifier for the provider 
                who furnished such item or service, and the State has 
                determined that such identifier corresponds to a 
                provider that is eligible to receive payment for 
                furnishing such item or service under the State plan or 
                an applicable waiver of a requirement of such plan.''.
    (b) Chip.--Section 2107(e)(1)(I) of the Social Security Act (42 
U.S.C. 1397gg(e)(1)(I)) is amended by striking ``and (17)'' and 
inserting ``(17), and (27)''.

SEC. 9. GAO REPORT.

    Not later than January 1, 2013, the Comptroller General of the 
United States shall submit to the Congress a report that contains 
recommendations on methods that the Secretary of Health and Human 
Services could use to make Medicare claims data available to the public 
for the purpose of improving transparency within the Medicare program 
while protecting the privacy of individual Medicare beneficiaries, 
providers of services, and suppliers.
                                 <all>