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.
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.
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