I 112th CONGRESS 1st Session H. R. 3474 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.

1.

Short title

This Act may be cited as the Promoting Responsibility in Medical Expenditures Act of 2011 or the PRIME Act of 2011.

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.

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.

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. .

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.

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.

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.

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).

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.