[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5083 Introduced in House (IH)]

113th CONGRESS
  2d Session
                                H. R. 5083

   To amend title XVIII of the Social Security Act to improve audit 
 effectiveness and efficiency in paying for durable medical equipment, 
   prosthetics, orthotics, and supplies (DMEPOS) under the Medicare 
                    program, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 11, 2014

 Mrs. Ellmers (for herself, Mr. Barrow of Georgia, Mr. Braley of Iowa, 
 Mr. Duncan of Tennessee, and Mr. Thompson of Pennsylvania) 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 title XVIII of the Social Security Act to improve audit 
 effectiveness and efficiency in paying for durable medical equipment, 
   prosthetics, orthotics, and supplies (DMEPOS) under 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 ``Medicare DMEPOS Audit Improvement 
and Reform (AIR) Act of 2014''.

SEC. 2. IMPROVING MEDICARE AUDIT EFFECTIVENESS AND EFFICIENCY FOR 
              DURABLE MEDICAL EQUIPMENT, PROSTHETICS, ORTHOTICS, AND 
              SUPPLIES (DMEPOS).

    (a) Medicare Administrative Contractor Payment Outreach and 
Education Program for DMEPOS Suppliers.--
            (1) In general.--Section 1874A of the Social Security Act 
        (42 U.S.C. 1395kk-1) is amended--
                    (A) in subsection (a)(4)--
                            (i) by redesignating subparagraph (G) as 
                        subparagraph (H); and
                            (ii) by inserting after subparagraph (F) 
                        the following new subparagraph:
                    ``(G) Payment outreach and education program for 
                suppliers of durable medical equipment, prosthetics, 
                orthotics, and supplies (dmepos).--Implementing a 
                payment outreach and education program for DMEPOS 
                suppliers under subsection (h).''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(h) Payment Outreach and Education Program for DMEPOS 
Suppliers.--
            ``(1) In general.--In order to reduce improper payments 
        under part B for durable medical equipment, prosthetics, 
        orthotics, and supplies, each medicare administrative 
        contractor that has responsibility for payment under such part 
        for durable medical equipment, prosthetics, orthotics, and 
        supplies furnished in an area (in this subsection referred to 
        as a `Medicare DMEPOS contractor') shall carry out a program 
        (in this subsection referred to as the `DMEPOS payment outreach 
        and education program') under which the contractor, through 
        outreach, education, training, and technical assistance 
        activities conducted on a quarterly basis, provides DMEPOS 
        suppliers, physicians and practitioners who prescribe DMEPOS, 
        and discharge planners and case managers who coordinate DMEPOS 
        for individuals in such area with the information described in 
        paragraph (3) and with error reduction training under paragraph 
        (4).
            ``(2) Forms of activities.--The activities under a DMEPOS 
        payment outreach and education program shall include the 
        following:
                    ``(A) Emails and other electronic communications.
                    ``(B) Webinars.
                    ``(C) Telephone calls.
                    ``(D) In-person training.
                    ``(E) Other forms of communications and assistance 
                determined appropriate by the Secretary.
            ``(3) Information to be provided through activities.--The 
        information to be provided under a DMEPOS payment outreach and 
        education program, with respect to payment for DMEPOS under 
        part B, shall include all of the following information:
                    ``(A) A list of suppliers' most frequent payment 
                errors and most expensive payment errors over the last 
                quarter.
                    ``(B) Specific instructions regarding how to 
                correct or avoid such errors in the future.
                    ``(C) A notice of all new topics that have been 
                approved by the Secretary for audits conducted by 
                Medicare contractors in relation to payment for DMEPOS 
                under part B.
                    ``(D) Specific instructions to prevent future 
                issues related to such new audits.
                    ``(E) Other information determined appropriate by 
                the Secretary.
            ``(4) Error rate reduction training.--
                    ``(A) In general.--The activities under a DMEPOS 
                payment outreach and education program shall include 
                error rate reduction training.
                    ``(B) Requirements.--Such training shall--
                            ``(i) be provided at least annually; and
                            ``(ii) focus on reducing improper Medicare 
                        payments for DMEPOS.
                    ``(C) Invitation.--A Medicare DMEPOS contractor 
                with responsibility for payment for DMEPOS in an area 
                shall ensure that all DMEPOS suppliers, physicians and 
                practitioners who prescribe DMEPOS, and discharge 
                planners and case managers who coordinate DMEPOS for 
                individuals in the area are invited to attend the 
                training described in subparagraph (A) either in person 
                or online.
            ``(5) Priority.--A Medicare DMEPOS contractor shall give 
        priority to activities under the DMEPOS payment outreach and 
        education program that will reduce improper Medicare payments 
        based on technical errors, medical necessity, and fraud for 
        DMEPOS that--
                    ``(A) have the highest rate of improper payment 
                under part B;
                    ``(B) have the greatest total dollar amount of such 
                improper payments;
                    ``(C) are due to clear misapplication or 
                misinterpretation of policies under this title;
                    ``(D) are clearly due to common and inadvertent 
                clerical or administrative errors; or
                    ``(E) are due to other types of errors that the 
                Secretary determines could be prevented through 
                activities under the program.
            ``(6) Information on improper payments from medicare 
        contractors.--
                    ``(A) In general.--In order to assist Medicare 
                DMEPOS contractors in carrying out DMEPOS payment 
                outreach and education programs, the Secretary shall 
                provide each such contractor with a complete list of 
                improper payments for DMEPOS identified by recovery 
                audit contractors (and other contractors performing 
                audit activities relating to payment for DMEPOS) with 
                respect to suppliers located in the area being serviced 
                by the Medicare DMEPOS contractor. Such list shall not 
                include claims for payments that have been denied and 
                are being appealed by the supplier under section 1869. 
                Such information shall be provided on a quarterly 
                basis.
                    ``(B) Information.--The information described in 
                subparagraph (A) shall include the following 
                information:
                            ``(i) The suppliers of DMEPOS that have the 
                        highest rate of improper payments under part B 
                        for DMEPOS.
                            ``(ii) The suppliers of DMEPOS that have 
                        the greatest total dollar amounts of such 
                        improper payments.
                            ``(iii) The DMEPOS furnished in the area 
                        that has the highest rates of such improper 
                        payments.
                            ``(iv) The DMEPOS furnished in the area 
                        that is responsible for the greatest total 
                        dollar amount of such improper payments.
                            ``(v) Other information the Secretary 
                        determines would assist Medicare DMEPOS 
                        contractors in carrying out the DMEPOS payment 
                        outreach and education program.
                    ``(C) Format of information.--The information 
                furnished to Medicare DMEPOS contractors by the 
                Secretary under this paragraph shall be transmitted in 
                a manner that permits such contractors to easily 
                identify the DMEPOS suppliers for which targeted 
                outreach, education, training, and technical assistance 
                would be most effective. In carrying out the preceding 
                sentence, the Secretary shall ensure that--
                            ``(i) the information with respect to 
                        improper payments made to such a supplier 
                        clearly displays the NPI or other identifier of 
                        the supplier, the amount of the improper 
                        payment, and any other information the 
                        Secretary determines appropriate; and
                            ``(ii) the information is in an electronic, 
                        easily searchable database.
            ``(7) Communications.--All communications with a supplier 
        under a DMEPOS payment outreach and education program are 
        subject to the standards and requirements of subsection (g).
            ``(8) Advance notice for policy changes and 
        clarifications.--The Secretary shall not implement a policy 
        change or clarification for DMEPOS audit requirements earlier 
        than 6 months after the date of publication of such change or 
        clarification in the Federal Register.
            ``(9) Funding.--After application of paragraph (1)(C) of 
        section 1893(h), the Secretary shall retain a portion of the 
        amounts recovered by Medicare DMEPOS contractors under this 
        title with respect to DMEPOS which shall be available to the 
        Centers for Medicare & Medicaid Services Program Management 
        Account for purposes of carrying out this subsection and to 
        implement corrective actions to help reduce the error rate of 
        payments for DMEPOS under part B. The amount retained under the 
        preceding sentence shall not exceed an amount equal to 25 
        percent of the amounts recovered under section 1893(h) with 
        respect to DMEPOS.
            ``(10) Durable medical equipment, prosthetics, orthotics, 
        and supplies and dmepos defined.--In this subsection, the terms 
        `durable medical equipment, prosthetics, orthotics, and 
        supplies' and `DMEPOS' mean--
                    ``(A) durable medical equipment (as defined in 
                section 1861(n)) and supplies used with such equipment, 
                other than implantable items for which payment may be 
                made under section 1833(t);
                    ``(B) prosthetic devices (as described in section 
                1861(s)(8)), including items described in section 
                1842(s)(2)(D);
                    ``(C) orthotics and prosthetics (as described in 
                section 1861(s)(9));
                    ``(D) surgical dressings (as described in section 
                1861(s)(5));
                    ``(E) home dialysis supplies and equipment (as 
                described in section 1861(s)(2)(F)); and
                    ``(F) therapeutic shoes for diabetics (as described 
                in section 1861(s)(12)).''.
            (2) Funding conforming amendment.--Section 1893(h)(2) of 
        the Social Security Act (42 U.S.C. 1395ddd(h)(2)) is amended by 
        inserting ``or section 1874A(h)(9)'' after ``paragraph 
        (1)(C)''.
            (3) Transparency.--Section 1893(h)(8) of the Social 
        Security Act (42 U.S.C. 1395ddd(h)(8)) is amended--
                    (A) in the first sentence, by inserting before the 
                period at the end the following: ``, on the use of 
                medicare administrative contractors in conducting 
                audits with respect to durable medical equipment, 
                prosthetics, orthotics, and supplies under section 
                1874A, and on the overturn rates for each level of 
                appeal'';
                    (B) by striking ``Report.--The Secretary'' and 
                inserting ``Report.--
                    ``(A) In general.--The Secretary''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(B) Inclusion of certain information.--
                            ``(i) In general.--For reports submitted 
                        under this paragraph for 2015 or a subsequent 
                        year, each such report shall include, with 
                        respect to each recovery audit contractor (and 
                        each medicare administrative contractor) that 
                        is responsible for audits relating to payment 
                        for durable medical equipment, prosthetics, 
                        orthotics, and supplies, information on the 
                        result of all appeals relating to audits for 
                        durable medical equipment, prosthetics, 
                        orthotics, and supplies for each individual 
                        level of appeals with respect to each of the 
                        categories of audits described in clause (ii) 
                        carried out by recovery audit contractors under 
                        this subsection or by medicare administrative 
                        contractors under section 1874A. For purposes 
                        of such reports and public reporting regarding 
                        such reports, such information relating to 
                        audits for orthotics and prosthetics shall be 
                        grouped separately from the information 
                        relating to audits for durable medical 
                        equipment and supplies.
                            ``(ii) Categories of audits.--For purposes 
                        of clause (i), each of the following is a 
                        separate category of audit:
                                    ``(I) Automated.
                                    ``(II) Complex.
                                    ``(III) Medical necessity review.
                                    ``(IV) Part B.''.
    (b) Adjustment of Record Request Maximum Based on Error Rates.--
Section 1893 of the Social Security Act (42 U.S.C. 1395ddd) is amended 
by adding at the end the following new subsection:
    ``(j) Adjustment of Maximum Record Request Threshold for Audits for 
Payment for Durable Medical Equipment, Prosthetics, Orthotics, and 
Supplies (DMEPOS) Based on Supplier Error Rates.--
            ``(1) Identification of error rates.--The Secretary shall 
        determine the audited claims error rates for payment for 
        durable medical equipment, prosthetics, orthotics, and supplies 
        and identify--
                    ``(A) those DMEPOS suppliers with a relatively high 
                error rate with respect to claims for DMEPOS; and
                    ``(B) those DMEPOS suppliers with a relatively low 
                error rate with respect to such claims or with a 
                steadily decreasing error rate for such claims.
            ``(2) Factors in identification.--
                    ``(A) Analysis.--For purposes of identifying the 
                groups of DMEPOS suppliers under paragraph (1), the 
                Secretary shall analyze the following as they relate to 
                the total number and amount of claims submitted by 
                product category and by each DMEPOS supplier:
                            ``(i) The improper payment rates of the 
                        supplier.
                            ``(ii) The amount of improper payments made 
                        to the supplier.
                            ``(iii) The frequency of errors made by the 
                        supplier over time.
                            ``(iv) Other information determined 
                        appropriate by the Secretary.
                In performing such analysis, the Secretary shall 
                exclude claims for payment that have been denied and 
                are being appealed by a DMEPOS supplier under section 
                1869.
                    ``(B) Assignment based on composite score.--Using a 
                statistically valid sample, the Secretary shall assign 
                DMEPOS suppliers under paragraph (1) based on a 
                composite score determined using the analysis under 
                subparagraph (A) as follows:
                            ``(i) Suppliers with high, expensive, and 
                        frequent errors shall receive a high score and 
                        be identified as high error suppliers under 
                        paragraph (1)(A).
                            ``(ii) Suppliers with few, inexpensive, and 
                        infrequent errors shall receive a low score and 
                        be identified as low error suppliers under 
                        paragraph (1)(B).
                            ``(iii) Only a small proportion of the 
                        total suppliers in any area shall be assigned 
                        to either group identified under either such 
                        paragraph.
                    ``(C) Timeframe of identification.--
                            ``(i) In general.--Any identification of a 
                        DMEPOS supplier under paragraph (1) shall be 
                        for a period of 12 months.
                            ``(ii) Reevaluation.--The Secretary shall 
                        reevaluate each such identification at the end 
                        of such period.
                            ``(iii) Use of most current information.--
                        In carrying out the reevaluation under clause 
                        (ii) with respect to a supplier, the Secretary 
                        shall--
                                    ``(I) consider the most current 
                                information available with respect to 
                                the supplier under the analysis under 
                                subparagraph (A); and
                                    ``(II) take into account 
                                improvement or regression of the 
                                supplier.
            ``(3) Adjustment of maximum record requests based on error 
        rate performance.--The Secretary shall establish procedures 
        under which, for those DMEPOS suppliers that are identified--
                    ``(A) under paragraph (1)(A) (relating to a 
                relatively high error rate), the Secretary shall 
                increase the maximum record request made by Medicare 
                DMEPOS contractors in auditing claims of such suppliers 
                for DMEPOS; and
                    ``(B) under paragraph (1)(B) (relating to a 
                relatively low or decreasing error rate), the Secretary 
                shall decrease the maximum record request made by 
                Medicare DMEPOS contractors of such suppliers.
            ``(4) Best performing suppliers have reduced random 
        audits.--In the case of a DMEPOS supplier that the Secretary 
        identifies under paragraph (1)(B) for a year as having an 
        audited claims error rate that is less than 15 percent for a 
        category of DMEPOS, the Secretary shall not conduct more than 1 
        random audit of a claim per product category for the year for 
        such category.
            ``(5) Restoration of clinical inference and judgment.--With 
        respect to the conduct of payment audits of DMEPOS suppliers 
        respecting DMEPOS under part B, the Secretary shall use 
        clinical inference and clinical judgment in the evaluation of 
        medical records and orders when conducting such audits in the 
        same manner as the Secretary interpreted and applied such 
        clinical judgment to claim reviews before 2009 pursuant to the 
        Secretary's instruction to contractors.
            ``(6) Treatment of certain documentation created by 
        orthotists and prosthetists.--For purposes of determining under 
        this title the reasonableness and medical necessity of 
        prosthetic devices and orthotics and prosthetics, documentation 
        created by orthotists and prosthetists relating to the need for 
        such devices, orthotics, and prosthetics shall be considered 
        part of the medical record.
            ``(7) Definitions.--In this subsection:
                    ``(A) Durable medical equipment, prosthetics, 
                orthotics, and supplies and dmepos.--The terms `durable 
                medical equipment, prosthetics, orthotics, and 
                supplies' and `DMEPOS' have the meaning given such 
                terms in section 1874A(h)(10).
                    ``(B) DMEPOS supplier.--The term `DMEPOS supplier' 
                means an entity that furnishes DMEPOS to individuals 
                for which payment may be made under part B.
                    ``(C) Medicare dmepos contractor.--The term 
                `Medicare DMEPOS contractor' means a recovery audit 
                contractor and any other contractor (including a 
                medicare administrative contractor) that performs pre-
                pay or post-pay audits with respect to claims for 
                payment for DMEPOS under part B.''.
    (c) Application of Timely Filing Limits to Reoccurring DMEPOS 
Claims Subject to Payment Audits.--Section 1842(b)(3)(B) of the Social 
Security Act (42 U.S.C. 1395u(b)(3)(B)) is amended by inserting before 
the semicolon at the end the following: ``, except that the reopening 
of a claim by a Medicare DMEPOS contractor (as defined in section 
1893(j)(7)) in a post-payment audit or a claim denial in a prepayment 
audit for DMEPOS (as defined in such section) shall toll the timely 
claim filing limits under this part such that the Secretary may not 
prohibit a DMEPOS supplier (as defined in such section) from taking an 
appeal from the determination of a claim in a pre- or post-payment 
audit, or the submission or resubmission for payment of any claims that 
follow sequentially from the audited claim on the basis that the timely 
claim filing limits have expired''.
    (d) Maximum Audit Documentation Review Period of 3 Years for 
Medicare Contractors.--
            (1) RACs.--Section 1893(h)(4)(B) of the Social Security Act 
        (42 U.S.C. 1395ddd(h)(4)(B)) is amended by striking ``4 fiscal 
        years'' and inserting ``3 fiscal years''.
            (2) In overpayment of claims.--The last sentences of 
        subsections (b) and (c) of section 1870 of the Social Security 
        Act (42 U.S.C. 1395gg) are each amended by striking ``fifth 
        year'' and ``five-year'' and inserting ``third year'' and 
        ``three-year'', respectively.
            (3) Limitation on audit documentation review period.--
        Section 1874A(a) of the Social Security Act (42 U.S.C. 1395kk-
        1(a)) is amended by adding at the end the following new 
        paragraph:
            ``(7) Limitation on audit documentation review period.--The 
        Secretary shall limit the audit documentation review period for 
        medicare administrative contractors to 3 years.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply with respect to payments made for items and 
        services furnished on or after the date of the enactment of 
        this Act.
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