Medicaid Integrity Act of 2012 - Amends title XIX (Medicaid) of the Social Security Act with respect to a state's option to use Medicaid managed care organizations and primary care case managers.
Requires a state, acting through the state medical assistance agency or another state entity, in order to receive federal medical assistance percentage (FMAP) payments for expenditures under a contract with a managed care entity, to contract with an independent auditor to conduct biannual financial and performance-compliance audits of the entity.
Directs the Secretary of Health and Human Services (HHS) to set uniform audit standards according to specified requirements.
Requires the state to document for the Secretary its response to deficiencies reported in such audits.
Requires contracts between the state and managed care entities to require the managed care entity to give the independent auditor access to all necessary information.
Establishes sanctions for misrepresentation or falsification of information.
Prescribes requirements a state must meet to be allowed to enter into an agreement with an actuary with respect to the state's administration of a contract with a managed care entity.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6498 Introduced in House (IH)]
112th CONGRESS
2d Session
H. R. 6498
To amend section 1932 of the Social Security Act to require independent
audits and actuarial services under Medicaid managed care programs, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 21, 2012
Mrs. Bachmann introduced the following bill; which was referred to the
Committee on Energy and Commerce
_______________________________________________________________________
A BILL
To amend section 1932 of the Social Security Act to require independent
audits and actuarial services under Medicaid managed care programs, 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 ``Medicaid Integrity Act of 2012''.
SEC. 2. INDEPENDENT AUDIT AND ACTUARY REQUIREMENTS FOR STATE MEDICAID
MANAGED CARE PROGRAMS.
(a) In General.--Section 1932 of the Social Security Act (42 U.S.C.
1396u-2) is amended by adding at the end the following:
``(i) Independent Audit Requirements.--
``(1) In general.--As a condition of receiving a payment
under section 1903(a) with respect to expenditures under a
contract with a managed care entity under section 1903(m), a
State, acting through the State agency under the State plan or
another State entity, shall, in accordance with this
subsection, enter into a contract with an independent auditor
to--
``(A) conduct audits of such managed care entity
under such contract; and
``(B) report the results of such audits under
paragraph (7).
``(2) Independent auditor defined.--In this subsection,
subject to subparagraph (B), the term `independent auditor'
means, with respect to the audit of a managed care entity in a
State for a period of time, an auditing entity that--
``(A) had no financial relationship with the
managed care entity or an affiliate of such managed
care entity for activities occurring during the period
for which the audit is conducted;
``(B) has no such financial relationship with the
managed care entity or affiliate for the period during
which the audit is being conducted; and
``(C) with respect to the initial audits under
paragraph (4) of a managed care entity, has not had
such a financial relationship with the managed care
entity or affiliate during the 2-year period ending on
the date the auditing entity and State enter into a
contract under paragraph (1).
``(3) Standards for audits.--
``(A) In general.--The Secretary shall set uniform
standards for the audits required under paragraph (4).
``(B) Requirements for standards.--The standards
under subparagraph (A) shall--
``(i) be consistent with Federal Government
auditing standards issued by the Comptroller
General of the United States;
``(ii) specify a uniform reporting format
for the reporting of such audits under
paragraph (7); and
``(iii) require that any report for an
audit required under paragraph (7) include a
certification by a certified public accountant.
``(4) Types of audits and information required.--
``(A) In general.--The independent auditor
contracting with a State under paragraph (1) shall
conduct and complete, for each managed care entity with
a contract under section 1903(m) in such State the
following:
``(i) A biannual financial audit described
in paragraph (5).
``(ii) A biannual performance-compliance
audit described in paragraph (6).
``(B) Timing of audits.--
``(i) Initial, staggered audits.--For the
purpose of establishing baseline data, with
respect to each managed care entity with a
contract under section 1903(m) with a State,
the State shall complete--
``(I) an initial audit under
subparagraph (A)(i) not later than 6
months after the date of enactment of
the Medicaid Integrity Act of 2012; and
``(II) an initial audit under
subparagraph (A)(ii) not later than 18
months after such date.
The initial audit of an entity under
subparagraph (A)(ii) shall be completed
approximately 1 year after the initial audit of
the entity under subparagraph (A)(i).
``(ii) Subsequent, staggered audits.--
Subsequent audits under each such subparagraph
shall be completed every two years.
``(C) Period covered by audit.--
``(i) In general.--Each audit under this
paragraph shall cover a 2-calendar-year period.
``(ii) Initial financial audit.--The first
biennial financial audit under subparagraph
(A)(i) shall cover the 2-calendar-year period
that ends on the last day of the calendar year
that ends 6 months before the deadline for
completion of such initial audit under
(B)(i)(I).
``(iii) Initial performance-compliance
audit.--The first biennial performance-
compliance audit under subparagraph (A)(ii)
shall cover the 2-calendar-year period that
ends on the last day of the calendar year that
ends 6 months before the deadline for
completion of such initial audit under
(B)(i)(II).
``(5) Biannual financial audit.--A biannual financial audit
under paragraph (4)(A)(i), with respect to a managed care
entity with a contract under section 1903(m) in a State, is an
audit of the finances of the managed care entity relating to
such contract. Each such audit shall include an audit of at
least the following information:
``(A) Expenses and revenues.--With respect to
services provided under such contract, the managed care
entity's--
``(i) administrative expenses;
``(ii) revenues, including investment
income; and
``(iii) payments made by the managed care
entity for nonadministrative services.
``(B) Claims and encounter data.--Subject to
paragraph (7)(C)--
``(i) claims data related to services
provided by such managed care entity under such
contract; and
``(ii) encounter data that relate to such
services and support such claims.
``(C) Expenditures on patient services.--With
respect to services provided under such contract, the
managed care entity's payments to health care
providers, that have been issued a national provider
identifier under title XI, for items and services
furnished on behalf of beneficiaries based on the
claims and encounter data described in subparagraph
(B).
``(D) Provider payment ratio.--
``(i) In general.--The ratio of the
payments to health care providers described in
subparagraph (C) to the aggregate payments to
the managed care entity under the contract.
``(ii) Construction.--The ratio under
clause (i) is not a medical loss ratio and is
not comparable to a medical loss ratio.
``(E) Provider payment rates and methodologies.--
Subject to paragraph (7)(C)(ii), the managed care
entity's payment rates and payment methodology for
health care services under such contract, by provider
type or service category, including a description of--
``(i) alternative payment arrangements
between the managed care entity and providers;
and
``(ii) payments made by the managed care
entity to providers that are separate from
claims for services provided.
``(F) Identification of administrative vendors.--
With respect to services provided under such contract,
identification of providers and vendors for
administrative services under contract with the managed
care entity.
``(G) Reserve fund contributions.--Contributions
that the managed care entity has made to its reserve
fund under such contract.
``(H) Reinsurance.--Data on the amount of
reinsurance or transfer of risk that the managed care
entity has obtained with respect to the risk assumed by
such entity under such contract.
``(I) Charitable contributions and donations.--
Contributions and donations that the managed care
entity has made to government or non-profit entities,
the identity of such government or non-profit entities,
and the amount of the contributions and donations made
to each such entity.
``(6) Biannual performance-compliance audit.--A biannual
audit under this paragraph (4)(A)(ii), with respect to a
managed care entity with a contract under section 1903(m) in a
State, is an audit of the performance of such managed care
entity under such contract (including with respect to the
performance of risk assessment under the contract) and the
compliance of such managed care entity, during the period
covered by the audit, with--
``(A) the terms of the contract; and
``(B) applicable State and Federal laws,
regulations, and guidance, including provisions of such
laws, regulations, and guidance related to allowable
costs under such contracts.
``(7) Reporting and public availability of audit results.--
``(A) Notice and opportunity for comment.--
``(i) In general.--With respect to an audit
of a managed care entity conducted by an
independent auditor under this subsection, such
auditor shall--
``(I) submit a report on the
results of the audit to the managed
care entity; and
``(II) provide the managed care
entity with the opportunity to submit
comments on such audit to the auditor
during a 30-day period.
``(ii) Review of comments and revision of
report.--The independent auditor shall review
the comments submitted under clause (i)(II) and
may revise such report based on such comments.
``(B) Public report.--
``(i) In general.--Not later than 45 days
after the end of the 30-day comment period
provided under subparagraph (A)(i)(II), the
independent auditor shall submit to the
Secretary, the State, and the managed care
entity a report containing the results of such
audit (including, in the case of an annual
financial audit under paragraph (4)(A)(i), the
information described in paragraph (5)(D)), any
comments received under subparagraph
(A)(i)(II), and an executive summary of the
audit report. The Secretary for good cause may
extend by not more than 30 days the deadline
for submitting a report under the previous
sentence.
``(ii) Posting on public web site.--Subject
to subparagraph (C), not later than 30 days
after the date that the State receives a report
under clause (i), the State shall post such
report (including the executive summary of the
report) on a Web site maintained by the State
in connection with administration of this title
and available to the public.
``(C) Privacy and confidentiality protection.--
``(i) Patient protections.--Nothing in this
subsection shall be construed as modifying the
application of the HIPAA privacy regulations
(as defined in section 1180(b)(3)).
``(ii) Protection of certain proprietary
information.--Nothing in this subsection shall
be construed as authorizing the public
disclosure of the payment rates that a managed
care entity uses to pay any health care
provider or the methodology that the managed
care entity uses to develop such rates.
``(iii) Protection of encounter data.--
Subject to clause (i), an independent auditor,
when submitting a report under subparagraph
(A), may submit encounter data to a State. An
independent auditor, or a State, shall not
submit to the Federal Government any encounter
data that are collected for purposes of the
audits under this subsection.
``(D) Withholding of payment for failure to
report.--
``(i) In general.--If a report required
under this paragraph is not submitted to the
Secretary as required under subparagraph (B)(i)
by an independent auditor with respect to a
managed care entity in a State, the Secretary
shall withhold, by the withholding percentage
under clause (ii), the payment to the State
under section 1903(a) for expenditures under a
contract under section 1903(m) for the managed
care entity for the period during which the
report is due but not submitted.
``(ii) Withholding percentage.--The
withholding percentage specified in this clause
is--
``(I) 5 percentage points; plus
``(II) if the failure to report
continued beyond 30 days after the date
on which such report was due under
subparagraph (B)(i), 5 additional
percentage points for each subsequent
30-day period until such report is
submitted.
``(iii) Restoration of payment.--Any
amounts withheld under this subparagraph due to
the failure to submit a report shall be paid to
a State not later than 10 days after the date
such report is submitted.
``(8) Response to deficiencies.--
``(A) Report.--If a report submitted under
paragraph (7) indicates a deficiency with respect to
the financial reporting, performance, or compliance (as
applicable) with respect to a managed care entity with
a contract under section 1903(m) with a State, not
later than 30 days after the date of submission of such
report the State shall submit to the Secretary (and
post on the Web site referred to in paragraph
(7)(B)(ii)) documentation of any action that the State
has taken or intends to take in response to a reported
deficiency. Such documentation shall include
documentation of any of the following:
``(i) Adjustments to the terms of new or
renewed contracts with such managed care
entity.
``(ii) A corrective action plan entered
into by the managed care entity with such
State.
``(iii) Any intermediate sanction under
subsection (e) against the managed care entity.
``(iv) Termination of the contract with the
managed care entity.
``(B) OIG report to congress.--The Secretary,
acting through the Inspector General in the Department
of Health and Human Services, shall annually submit to
Congress and make available to the public a report on
the audits conducted under this subsection and the
responses of States to reports of deficiencies in such
audits. Such report shall contain such recommendations
for changes in law or regulation as may be appropriate
to ensure the prudent expenditure of funds for items
and services furnished through managed care entities.
``(9) Access to information required under contract;
sanctions for misrepresentation or falsification of records.--
``(A) Access.--If a State enters into or renews a
contract under section 1903(m) after the date of the
enactment of the Medicaid Integrity Act of 2012, such
contract shall provide that the managed care entity, as
a condition of receiving payment under such contract,
shall provide the independent auditor with access to
all information necessary for purposes of the audits
under paragraph (4).
``(B) Sanctions for misrepresentation or
falsification.--The misrepresentation or falsification
of information that is furnished for purposes of such
an audit shall be subject to a civil monetary penalty
under subparagraph (B)(i) of section 1903(m)(5) in the
same manner as a misrepresentation or falsification
described in subparagraph (A)(iv)(I) of such section.
``(10) Application to waiver states.--In the case of any
State which is providing medical assistance to its residents
under a waiver granted under section 1115, the Secretary shall
require the State to meet the requirements of this subsection
and subsection (j) in the same manner as the State would be
required to meet such requirement if the State had in effect a
plan approved under this title.
``(11) Reducing duplicate audits.--Notwithstanding any
other provision of this title, insofar as the Secretary
determines that the performance of an audit under this
subsection duplicates the performance of an audit required
under another provision of this title, the completion of the
audit under this subsection shall satisfy such requirement.
``(12) Reservation of state powers.--Nothing in this
subsection shall be construed to limit the power of a State,
including the power of a State to pursue civil and criminal
penalties under State law against any individual or entity that
misuses, or engages in fraud or abuse related to, the funds
provided to a State under this title.
``(13) Construction.--Nothing in this subsection shall be
construed to prevent the Secretary from taking any action,
including disallowances of payment, with respect to violations
of this title related to a contract with a managed care entity.
``(14) Definitions.--
``(A) Affiliate of the managed care entity.--For
purposes of this subsection and subsection (j), the
term `affiliate of the managed care entity' means an
entity that, to a significant extent, is associated or
affiliated with, or has control of or is controlled by,
the managed care entity or that is related to such
managed care entity by common ownership. For purposes
of this definition--
``(i) common ownership exists if an
individual or individuals possess significant
ownership or equity in the managed care entity
and the affiliate of the managed care entity;
and
``(ii) control exists if an entity has the
power, directly or indirectly, to significantly
influence or direct the actions or policies of
another entity.
``(B) Contract year.--For purposes of this
subsection, the term `contract year' means, with
respect to a managed care entity and a State, the 12-
month period that begins on the effective date of a
contract under section 1903(m) between the managed care
entity and the State, and each subsequent 12-month
period while such contract is effective.''.
(b) Independent Actuary.--Section 1932 of the Social Security Act
(42 U.S.C. 1396u-2), as amended by section 2, is further amended by
adding at the end the following:
``(j) Independent Actuary.--As a condition of receiving a payment
under section 1903(a) with respect to expenditures under a contract
between a State and a managed care entity under section 1903(m), a
State may not enter into an agreement with an entity (referred to in
this subsection as an `actuary') to provide actuarial services related
to the State's administration of such contract unless the following
requirements are met:
``(1) No actuarial services or financial relationship for
contract period.--The actuary has not provided actuarial
services to the managed care entity for, or otherwise had any
financial relationship with the managed care entity during, any
period of the contract (between such managed care entity and
the State) with respect to which the actuarial services under
the agreement (between the actuary and the State) are to be
provided.
``(2) No financial relationship during term of agreement
with state.--The actuary agrees not to have such a financial
relationship with the managed care entity or affiliate during
any part of the period of the agreement (between the State and
the actuary).
``(3) Special rule for first contract year.--For the first
contract year in which this subsection applies, the actuary has
not had such a financial relationship with the managed care
entity or affiliate during the 2-year period ending on the date
the actuary and State enter into an agreement subject to this
subsection.''.
(c) Transitional Financial Incentives to States.--Section
1903(a)(3) of the Social Security Act (42 U.S.C. 1396b(a)(3)) is
amended by inserting after subparagraph (F) the following:
``(G) 75 percent of so much of the sums expended as
are attributable to expenditures for the first 3
biannual financial audits conducted under section
1932(i)(4)(A)(i) after the date of enactment of the
Medicaid Integrity Act of 2012, and for the first 2
biannual performance-compliance audits conducted under
section 1932(i)(4)(A)(ii) after such date; plus''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Energy and Commerce.
Referred to the Subcommittee on Health.
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