article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Medicare and Medicaid Provider Review Act of 1997''. SEC. 2. REQUIRING CERTAIN PROVIDERS TO FUND ANNUAL FINANCIAL AND COMPLIANCE AUDITS AS A CONDITION OF PARTICIPATION UNDER THE MEDICARE AND MEDICAID PROGRAMS. (a) Establishment of Annual Financial and Compliance Audit Fee Schedule.--Title XI of the Social Security Act, as amended by sections 4321(c) of the Balanced Budget Act of 1997 (Public Law 105-33), is amended by inserting after section 1146 the following new section: ``compliance and financial audit fee schedule ``Sec. 1147. (a) Establishment.-- ``(1) In general.--Subject to subsection (c), the Secretary shall-- ``(A) establish a schedule of hourly rates for the conduct of annual financial and compliance audits during each fiscal year for all health care providers described in subsection (b) that receive payment under title XVIII or XIX during the year; and ``(B) provide for the conduct, in a separate office within the Department of Health and Human Services, of such audits by specially trained and qualified personnel of each provider's substantial compliance with the requirements for payment to such provider under title XVIII, title XIX, or both (whichever is applicable), including requirements relating to medical necessity and appropriate coding and documentation for services and supplies provided. ``(2) Scope of audits.--An audit of a provider under paragraph (1)(B) shall include, as appropriate, audits of related entities (including businesses owned, in whole or in part, by the provider). ``(b) Covered Providers.-- ``(1) In general.--Subject to paragraph (2), each of the following is a health care provider described in this subsection: ``(A) A hospital. ``(B) A skilled nursing facility or nursing facility. ``(C) A home health agency. ``(D) A hospice program. ``(E) A provider of clinical laboratory services. ``(F) A provider of ambulance services. ``(2) Low volume provider exemption.--The Secretary may exclude a particular health care provider described in paragraph (1) if the Secretary finds that the provider receives a small amount of revenues from titles XVIII and XIX. ``(c) Requiring Maintenance of Appropriation Level.--No rates shall be collected under subsection (a) and no audits conducted under such subsection for a fiscal year if the amount appropriated and available for the conduct of audits of the type described in subsection (a)(1)(B) for the fiscal year is less than the amount so appropriated for fiscal year 1998 or for the fiscal year preceding the fiscal year involved, whichever is greater. ``(d) Use of Funds Exclusively for Financial and Compliance Audits.--Annual payments made to the Secretary under sections 1866(a)(1)(T), 1862(a)(22), and 1903(i)(19) in the amounts specified under subsection (a) are hereby appropriated to the Secretary for the sole purpose of conducting audits described in subsection (a).''. (b) Application under Medicare Program.-- (1) Payment requirement for hospitals, skilled nursing facilities, home health agencies, and hospice programs.-- Section 1866(a)(1) of the Social Security Act, as amended by section 4321(b) of the Balanced Budget Act of 1997 (42 U.S.C. 1395cc), is amended-- (A) by striking ``and'' at the end of subparagraph (R), (B) by striking the period at the end of subparagraph (S), and (C) by inserting after subparagraph (S) the following new subparagraph: ``(T) in the case of a hospital, skilled nursing facility, home health agency, or hospice program, subject to section 1147(c), to provide for annual payment to the Secretary of the appropriate amount specified under section 1147(a) as necessary for the conduct of an annual financial and compliance audit of the hospital, facility, agency, or program under such section.''. (2) Requirement for ambulance services and clinical laboratories.--Section 1862(a) of the Social Security Act (42 U.S.C. 1395y(a)), as amended by sections 4319(b), 4432(b), 4507(a)(2)(B), 4541(b), and 4603(c)(2)(C) of the Balanced Budget Act of 1997, is amended-- (A) by striking ``or'' at the end of paragraph (20), (B) by striking the period at the end of paragraph (21) and inserting ``; or'', and (C) by inserting after paragraph (21) the following new paragraph: ``(22) where such expenses are for ambulance services or clinical laboratory services unless, subject to section 1147(c), the provider of such services has provided for annual payment to the Secretary of the appropriate amount specified under section 1147(a) as necessary for the conduct of an annual financial and compliance audit of the provider under such section.''. (c) Medicaid.--Section 1903(i) of such Act (42 U.S.C. 1396b(i)), as amended by sections 4724(a) and 4724(b) of the Balanced Budget Act of 1997 (Public Law 105-33), is amended-- (1) by striking ``or'' at the end of paragraph (17), (2) by striking the period at the end of paragraph (18) and inserting ``; or'', and (3) by inserting after paragraph (18) the following new paragraph: ``(19) with respect to any amount expended for services furnished by a covered provider described in section 1147(b) unless, subject to section 1147(c), the provider has provided for annual payment to the Secretary of the appropriate amount specified under section 1147(a) as necessary for the conduct of an annual financial and compliance audit of the provider under such section.''. (d) Report on Auditing Agencies.-- (1) Study.--The Secretary of Health and Human Services shall conduct a study of the examining and accrediting agencies that conduct audits and inspections of covered providers (described in section 1147(b) of the Social Security Act, as added by subsection (a)). Such study shall include an examination of the audits and inspections conducted by such agencies. (2) Report.--Based on the study conducted under paragraph (1), the Secretary shall submit to Congress, by not later than June 1, 1999, a report that includes recommendations on how best to coordinate and consolidate these audits and inspections to minimize unnecessary duplication. (e) Effective Date.--The amendments made by subsections (a) through (c) shall take effect as of January 1, 1998.
summary: Medicare and Medicaid Provider Review Act of 1997 - Amends title XI of the Social Security Act (SSA) to direct the Secretary of Health and Human Services (HHS) to: (1) establish a schedule of hourly rates for the conduct of annual financial and compliance audits during each fiscal year for all covered health care providers that receive payments under SSA title XVIII (Medicare) or XIX (Medicaid); and (2) provide for the conduct of such audits, in a separate HHS office, by specially trained and qualified personnel of each provider's substantial compliance with the requirements for receiving such payments. Amends SSA titles XVIII and XIX to require covered providers to provide for annual payment to the Secretary of appropriate amounts for the conduct of such audits. Makes appropriations to the Secretary from such payments for the sole purpose of conducting such audits. Directs the Secretary to study and report to the Congress on examining and accrediting agencies that audit and inspect covered providers.