42 U.S.C. § 1395ddd — Medicare Integrity Program

(a) Establishment of Program. The Secretary must promote the integrity of Medicare through the Medicare Integrity Program (the “Program”). The Secretary must do this by entering into contracts under this section with eligible entities, or by other means, to perform the activities in subsection (b). (b) Activities described. The Program covers these activities: (1) Reviewing the activities of providers and other people or entities that furnish items or services for which this subchapter may pay, including skilled nursing facilities and home health agencies. The review may include medical review, use review, and fraud review. It must use standards, processes, and technology similar to those used by private health plans, including equipment and software that exceed the capability of the equipment and technology used to review claims under this subchapter on August 21, 1996. (2) Auditing cost reports. (3) Deciding whether this subchapter should not pay, or should not have paid, because of section 1395y(b), and recovering payments that should not have been made. (4) Educating providers, beneficiaries, and other people about payment integrity and the quality of benefits. (5) Developing and periodically updating the list of durable medical equipment that is subject to prior authorization under section 1395m(a)(15). (6) Carrying out the Medicare-Medicaid Data Match Program under subsection (g). (c) Eligibility of entities. An entity may contract under the Program to perform an activity in subsection (b) only if it: (1) has shown that it can perform the activity; (2) agrees to cooperate, as appropriate, with the Inspector General of the Department of Health and Human Services, the Attorney General, and other law-enforcement agencies in investigating and deterring fraud and abuse related to this subchapter and in other cases arising from the activity; (3) follows conflict-of-interest standards generally used for Federal acquisition and procurement; (4) agrees to give the Secretary and the Inspector General performance statistics they request, including the number and amount of recovered overpayments, the number of fraud referrals, and the entity’s return on investment; and (5) meets other requirements the Secretary sets. An entity is considered eligible for the activity in subsection (b)(5) if it is a carrier with a contract in effect under section 1395u. (d) Process for entering into contracts. The Secretary must enter into Program contracts under procedures established by regulation. The procedures must include: (1) procedures for identifying, evaluating, and resolving organizational conflicts of interest generally applicable to Federal acquisition and procurement; (2) competitive procedures when the Secretary enters into a new contract under this section; enters into a contract that may eliminate responsibilities of a fiscal intermediary or carrier under section 202(b) of the Health Insurance Portability and Accountability Act of 1996; or otherwise decides competition is appropriate. The Secretary may continue contracting with entities performing these activities under agreements under section 1395h or contracts under section 1395u that were in effect on August 21, 1996; and (3) procedures allowing renewal without competition when the contractor has met or exceeded the performance requirements in its current contract. The Secretary may enter into these contracts before final rules have been issued. (e) Limitation on contractor liability. By regulation, the Secretary must limit a contractor’s liability for actions taken to perform a Program contract. To the extent the Secretary finds appropriate, the regulation must use the same or comparable standards and other substantive and procedural rules found in section 1320c-6. (f) Recovery of overpayments. (1) Use of repayment plans. (A) General rule. If repaying an overpayment within 30 days would be a hardship described in subparagraph (B), the Secretary must, at the provider’s or supplier’s request, make a plan for repayment through offsets or other means. The plan must last at least 6 months and no more than 3 years, or no more than 5 years in an extreme hardship case decided by the Secretary. Interest accrues during repayment, and the plan must contain terms the Secretary considers appropriate. (B) Hardship. Repayment within 30 days is treated as a hardship when, for a provider that files cost reports, the total overpayments exceed 10 percent of the amount paid under this subchapter for the cost-reporting period in the most recently filed cost report. For any other provider or supplier, the total overpayments must exceed 10 percent of the amount paid under this subchapter during the previous calendar year. The Secretary must make rules for providers and suppliers that received no payment in the previous year or received payment for only part of that year. If a provider or supplier has a plan for a particular overpayment, that amount is not counted when deciding whether a later overpayment meets the 10-percent test. (C) Exceptions. The repayment-plan rule does not apply if the Secretary has reason to suspect that the provider or supplier may file bankruptcy, stop doing business, or stop participating in this program, or if there is an indication of fraud or abuse against the program. (D) Immediate collection after a violation. If a provider or supplier misses a payment required by the plan, the Secretary may immediately offset or otherwise recover the entire unpaid balance, including interest. (E) No-fault rule. This paragraph does not change section 1395gg(c), which concerns cases where no adjustment is made for certain overpayments. (2) Limitation on recoupment. (A) General rule. If a provider or supplier is found to have received an overpayment and asks a qualified independent contractor to reconsider that finding under section 1395ff(b)(1), the Secretary and anyone acting for the Secretary, including a Medicare contractor, may not recoup the overpayment until the reconsideration decision is issued. If that reconsideration process is not in effect, references to it mean a redetermination by the involved fiscal intermediary or carrier. (B) Collection with interest. If the appeal decision goes against the provider or supplier, interest accrues on the overpayment from the date of the original overpayment notice. If that decision is later reversed, the Secretary must repay the amount recouped plus interest at the same rate for the time the amount was held. (C) Definition. “Medicare contractor” has the meaning in section 1395zz(g). (3) Limitation on extrapolation. A Medicare contractor may not use extrapolation to calculate an overpayment to recover by recoupment, offset, or another method unless the Secretary finds either that payment errors are sustained or at a high level, or that documented education failed to correct the error. The Secretary’s finding of a sustained or high level of payment errors cannot be reviewed administratively or judicially under section 1395ff, section 1395oo, or any other provision. (4) Supporting documentation. If a provider or supplier was previously overpaid, a Medicare contractor may periodically request records or supporting documents for a limited sample of claims to check whether the earlier practice continues. (5) Consent-settlement reforms. (A) The Secretary may use a consent settlement to resolve a projected overpayment. (B) Before making an offer, the Secretary must tell the provider or supplier that a preliminary review of requested medical records indicates an overpayment, describe the problems found, and state what steps should be taken. The Secretary must also allow 45 days for additional information about the medical records for the reviewed claims. (C) The Secretary must review the additional information. If an overpayment still appears likely, the Secretary must notify the provider or supplier and explain why. To resolve it, the Secretary may offer either a statistically valid random sample or a consent settlement. Being offered a random sample does not waive appeal rights concerning the alleged overpayment. (D) “Consent settlement” means an agreement in which the Secretary and the provider or supplier settle a projected overpayment based on fewer than a statistically valid sample of claims, and the provider or supplier agrees not to appeal the claims involved. (6) Notice of overuse of codes. In consultation with organizations representing providers and suppliers, the Secretary must establish a process for notifying the classes of providers and suppliers served by a contractor when the contractor finds that a billing code may be overused by that class under this subchapter or related provisions of subchapter XI. (7) Payment audits. (A) Written notice. Unless subparagraph (C) applies, a Medicare contractor that decides to conduct a post-payment audit must give the provider or supplier written notice, which may be electronic, of the intent to audit. (B) Findings for all audits. Unless subparagraph (C) applies, the contractor must give a full, understandable review and explanation of its findings that allows an appropriate corrective-action plan; explain appeal rights and available consent-settlement options; allow additional information to be supplied; and timely consider information supplied. (C) Exception. Subparagraphs (A) and (B) do not apply when notice or findings would compromise pending civil or criminal law-enforcement activity or reveal findings from a law-enforcement-related audit. (8) Standard probe-sampling method. The Secretary must establish a standard method for contractors to select claims for review when billing patterns are abnormal. (g) Medicare-Medicaid Data Match Program. (1) Expansion. (A) Beginning in 2006, the Secretary must use contracts with eligible entities or other means to conduct the Medicare-Medicaid Data Match Program, also called the “Medi-Medi Program,” for both Medicare under this subchapter and State Medicaid programs under subchapter XIX. The purposes are to identify vulnerabilities by using computer algorithms to find payment anomalies, including suspect or implausible billing or billing patterns associated with a provider, service, time, or patient; work with States, the Attorney General, and the Inspector General to investigate suspect claims and recover amounts while protecting both Federal and State Medicaid shares and Medicare; make both programs more effective and efficient through avoided costs, savings, and recovery of fraudulent, wasteful, or abusive spending; and further the Secretary’s design, development, installation, or improvement of automated data architecture that collects, combines, and evaluates data for program integrity, oversight, and administration, including Medi-Medi, and improves coordination of State data requests. (B) The Secretary must timely provide collected Medi-Medi data and statistics to the Attorney General, FBI Director, HHS Inspector General, and States, including a Medicaid fraud-and-abuse control unit under section 1396b(q). The information must be distributed at least quarterly. (2) Limited waiver. The Secretary may waive only requirements of this section and subchapters XI and XIX that are necessary to carry out paragraph (1). (3) State incentives. The Secretary must study and may, when appropriate, set incentives for States to work with the Secretary for the purpose in paragraph (1)(A)(ii). This may include using the waiver authority in paragraph (2). (h) Recovery audit contractors. (1) General rule. The Secretary must contract with recovery audit contractors to identify underpayments and overpayments and recover overpayments for all services paid under this subchapter. Contractors may be paid only from recovered amounts. Payment for collecting overpayments must be contingent on recovery; the Secretary may set payment for finding underpayments. The Secretary must retain part of recovered amounts for the CMS program-management account to conduct the recovery-audit program. (2) Other recoveries. Recovered amounts not paid to the contractor or retained by the Secretary under paragraph (1)(C) or paragraph (10) must reduce spending under this subchapter. (3) Nationwide work. Contracts must provide activity in every State by January 1, 2010, or, for contracts concerning Part C or D payments, by December 31, 2010. (4) Periods audited. A contract may cover payments made during the fiscal year of the audit and payments made during no more than the preceding 4 fiscal years. (5) Waiver. The Secretary must waive provisions needed to pay recovery audit contractors as this subsection requires. (6) Contractor qualifications. The Secretary may not contract with a recovery audit contractor unless it has staff with suitable clinical knowledge and experience with this subchapter’s payment rules, or has or will contract with another entity that has such staff. The contractor may not be a fiscal intermediary, carrier, or Medicare administrative contractor. When awarding contracts, the Secretary must prefer risk entities with more than 3 years of direct management experience and demonstrated skill in cost control or recovery audits for private insurers, providers, health plans, Medicaid, or Medicare. (7) Fraud investigations. Recovery of an overpayment does not prevent the Secretary or Attorney General from investigating or prosecuting fraud or abuse connected with that overpayment. (8) Annual report. Each year the Secretary must report to Congress on recovery-audit contractors, including their performance in identifying underpayments and overpayments and recovering overpayments, comparisons among contractors, and savings to Medicare. (9) Parts C and D. Contracts must require contractors to ensure that every Part C MA plan and every Part D prescription drug plan has an anti-fraud plan and to review its effectiveness; examine reinsurance claims under section 1395w-115(b) to determine whether a drug plan’s costs exceed allowed reinsurance costs; and review private plans’ estimates of enrollment of high-cost beneficiaries and compare those estimates with actual enrollment. “High-cost beneficiary” is defined by the Secretary. (10) Use of recovered funds. (A) After the retention in paragraph (1)(C), the Secretary must retain part of each year’s recovery for the CMS program-management account. Subject to subparagraph (B), it may be used for sections 1395l(z), 1395m(l)(16), and 1395kk-1(a)(4)(G), section 514(b) of the Medicare Access and CHIP Reauthorization Act of 2015, and strategies such as claims-processing edits that reduce payment errors. The retained amount may not exceed 15 percent of amounts recovered under this subsection and remains available until spent. (B) Except for claims processing, including edits, or system functions for detecting fraud, retained amounts may not pay for technology infrastructure, capital investments, or information systems. (C) This paragraph may not reduce the amounts available to pay recovery audit contractors. (i) Evaluations and annual report. (1) The Secretary must evaluate each eligible entity contracted with under the Program at least every 3 years. (2) Within 180 days after each fiscal year, beginning with fiscal year 2011, the Secretary must report to Congress the use of funds for this section, including transfers from the Federal Hospital Insurance Trust Fund and Federal Supplementary Medical Insurance Trust Fund, and how effective that use was. (j) Expanding Medicare drug-integrity contractor activities. (1) Under contracts with Medicare drug-integrity contractors, including successors, the Secretary must authorize them to directly receive prescriptions and necessary medical records from pharmacies, prescription drug plans, MA-PD plans, physicians, and similar entities about an individual. They may use the information to help decide whether the individual is an at-risk beneficiary for prescription-drug abuse, as defined in section 1395w-104(c)(5)(C). (2) If a prescription-drug-plan sponsor or MA organization refers information for that decision, the contractor must acknowledge receipt. If the sponsor or organization asks for the decision, the contractor must provide it within 15 days after the request. (3) For this subsection, the Secretary must authorize MEDICs to answer information requests from prescription-drug-plan sponsors, MA organizations, State prescription-drug-monitoring programs, and other entities those sponsors or organizations delegate, using available programs and systems to prevent fraud, waste, and abuse. A MEDIC may disclose information only when disclosure is permitted by the Federal regulations implementing the privacy provisions of HIPAA.