Sec. 2. Reforming the practices of recovery audit contractors under the Medicare program
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Section 1893(h) of the Social Security Act ( 42 U.S.C. 1395ddd(h) ) is amended— in paragraph (1), by inserting , for recovery activities conducted during a fiscal year before fiscal year 2015 after Under the contracts ; and by adding at the end the following new paragraph: Under the contracts, subject to paragraphs
(B)and (C), payment shall be made to recovery audit contractors for recovery activities conducted during fiscal year 2015 and each fiscal year thereafter in the same manner, and from the same amounts, as payment is made to eligible entities under contracts entered into for recovery activities conducted during fiscal year 2014 under subsection (a). Under the contracts, payment made to a recovery audit contractor for recovery activities conducted during fiscal year 2015 or any fiscal year thereafter may not include any incentive payments. Under the contracts, payment made to a recovery audit contractor for recovery activities conducted during fiscal year 2015 or any fiscal year thereafter shall, in the case that the contractor has a complex audit denial overturn rate at the end of such fiscal year (as calculated under the methodology described in clause (iv)) that is .1 or greater, be reduced in an amount determined in accordance with clause (ii). The Secretary shall establish, for purposes of determining the amount of a reduction in payment to a recovery audit contractor under clause
(i)for recovery activities conducted during fiscal year, a linear sliding scale of payment reductions for recovery audit contractors for such fiscal year. Under such linear sliding scale, the amount of such a reduction in payment to a recovery audit contractor for a fiscal year shall be calculated in a manner that provides for such reduction to be greater than the reduction for such fiscal year for recovery audit contractors that have complex audit denial overturn rates at the end of such fiscal year (as calculated under the methodology described in clause (iv)) that are lower than the complex audit denial overturn rate of the contractor at the end of such fiscal year (as so calculated). The Secretary may assess and collect the reductions in payment to recovery audit contractors under clause
(i)in such manner as the Secretary may specify (such as by reducing the amount paid to the contractor for recovery activities conducted during a fiscal year or by assessing the reduction as a separate penalty payment to be paid to the Secretary by the contractor with respect to each complex audit denial issued by the contractor that is overturned on appeal). The Secretary shall, with respect to a recovery audit contractor, determine not later than six months after the end of a fiscal year— whether to reduce payment to the recovery audit contractor under clause
(i)for recovery activities conducted during such fiscal year; and in the case that the Secretary determines to so reduce payment to the contractor, the amount of such payment reduction. The Secretary shall calculate a complex audit denial overturn rate for a recovery audit contractor for a fiscal year by— determining, with respect to the contract entered into under paragraph
(1)by the contractor, the number of complex audit denials issued by the contractor under the contract (including denials issued before such fiscal year and during such fiscal year) that are overturned on appeal; and dividing the number determined under item
(aa)by the number of complex audit denials issued by the contractor under such contract (including denials issued before such fiscal year and during such fiscal year). The Secretary shall calculate the percentage described in subclause
(I)in a fair and transparent manner. The Secretary shall calculate the percentage described in subclause
(I)in a manner that accounts for the likelihood that complex audit denials issued by the contractor for such fiscal year will be overturned on appeal in a subsequent fiscal year. In this subparagraph, the term complex audit denial means a denial by a recovery audit contractor of a claim for payment under this title submitted by a hospital, psychiatric hospital, or critical access hospital that is so denied by the contractor after the contractor has— requested that the hospital, psychiatric hospital, or critical access hospital, in order to support such claim for payment, provide supporting medical records to the contractor; and reviewed such medical records in order to determine whether an improper payment has been made to the hospital, psychiatric hospital, or critical access hospital for such claim. In this subparagraph, the term overturned on appeal means, with respect to a complex audit denial, a denial that is overturned on appeal at the reconsideration level, the redetermination level, or the administrative law judge hearing level. Not later than 60 days after the date of the enactment of this paragraph, the Secretary shall modify, as necessary, each contract under paragraph
(1)that the Secretary entered into prior to such date of enactment in order to ensure that payment with respect to recovery activities conducted under such contract is made in accordance with the requirements described in this paragraph. . Section 1842(b) of the Social Security Act ( 42 U.S.C. 1395u(b) ) is amended by adding at the end the following new paragraph: In the case of a claim submitted under this part by a hospital (as defined in subparagraph (B)(i)) for hospital services with respect to which there was a previous claim submitted under part A as inpatient hospital services or inpatient critical access hospital services that was denied by a Medicare contractor (as defined in subparagraph (B)(ii)) because of a determination that the inpatient admission was not medically reasonable and necessary under section 1862(a)(1)(A), the deadline described in this paragraph is 180 days from the date of the final denial of such claim under part A. In this paragraph: The term hospital has the meaning given such term in section 1861(e), and includes a psychiatric hospital (as defined in section 1861(f)) and a critical access hospital (as defined in section 1861(mm)(1)). The term Medicare contractor has the meaning given such term under section 1889(g), and includes a recovery audit contractor with a contract under section 1893(h). The term final denial means— in the case that a hospital elects not to appeal a denial described in subparagraph
(A)by a Medicare contractor, the date of such denial; or in the case that a hospital elects to appeal a such a denial, the date on which such appeal is exhausted. . Section 1835(a)(1) of the Social Security Act ( 42 U.S.C. 1395n(a)(1) ) is amended by inserting or, in the case of a claim described in section 1842(b)(20), the no later than the deadline described in such paragraph after the date of service . Section 1842(b)(3)(B) of the Social Security Act ( 42 U.S.C. 1395u(b)(3)(B) ) is amended in the flush language following clause
(ii)by inserting or, in the case of a claim described in section 1842(b)(20), the no later than the deadline described in such paragraph after the date of service . The amendments made by this subsection shall take effect on the date of the enactment of this Act and shall apply to claims submitted under part B of title XVIII of the Social Security Act for hospital services for which there was a previous claim submitted under part A as inpatient hospital services or inpatient critical access hospital services that was subject to a final denial (as defined in paragraph (20)(B)(iii) of section 1842(b) of such Act ( 42 U.S.C. 1395u(b) ) on or after such date of enactment. Section 1862(a) of the Social Security Act ( 42 U.S.C. 1395y(a) ) is amended by adding at the end the following new sentence: A determination under paragraph
(1)of whether inpatient hospital services or inpatient critical access hospital services furnished to an individual on or after the date of the enactment of this sentence are reasonable and necessary shall be based solely upon information available to the admitting physician at the time of the inpatient admission of the individual for such inpatient services, as documented in the medical record.
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Sec. 2
Reforming the practices of recovery audit contractors under the Medicare program
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