,i  #aac? ,,congress  #a/ ,session  ,h4 
,r4 #afb  ,,9 ,,! ,,h\se ,,(            
,,repres5tatives  ,janu>y #d1 #bjac     
,mrs4 ,ba*mann introduc$ ! foll[+ bill2 
:i* 0 ref]r$ to ! ,committee on ,en]gy &
 ,comm]ce  ,a ,,bill  ,to am5d section  
#aicb ( ! ,social ,security ,act to     
require indep5d5t audits & actu>ial     
s]vices "u ,m$icaid manag$ c>e programs1
 & = o!r purposes4  #a4 ,%ort title ,?is
 ,act may be cit$ z ! ,m$icaid          
,integrity ,act ( #bjac4  #b4 ,indep5d5t
 audit & actu>y requirem5ts = ,/ate     
,m$icaid manag$ c>e programs  7a7 ,9    
g5]al ,section #aicb ( ! ,social        
,security ,act 7#db ,u4,s4,c4 #acifu-#b7
 is am5d$ by add+ at ! end ! foll[+3    
7i7 ,indep5d5t audit requirem5ts  7#a7  
,9 g5]al ,z a condition ( receiv+ a     
paym5t "u section #aijc7;a7 ) respect to
 exp5ditures "u a contract ) a manag$   
c>e entity "u section #aijc7m71 a ,/ate1
 act+ ?r\gh ! ,/ate ag5cy "u ! ,/ate    
plan or ano!r ,/ate entity1 %all1 9     
accordance ) ?is subsection1 ent] into a

 contract ) an indep5d5t auditor to--   
7,a7 conduct audits ( su* manag$ c>e    
entity "u su* contract2 &  7,b7 report !
 results ( su* audits "u p>agraph 7#g74 
7#b7 ,indep5d5t auditor def9$ ,9 ?is    
subsection1 subject to subp>agraph 7,b71
 ! t]m indep5d5t auditor means1 )       
respect to ! audit ( a manag$ c>e entity
 9 a ,/ate = a p]iod ( "t1 an audit+    
entity t--  7,a7 _h no f9ancial         
relation%ip ) ! manag$ c>e entity or an 
affiliate ( su* manag$ c>e entity =     
activities occurr+ dur+ ! p]iod = :i* ! 
audit is conduct$2  7,b7 has no su*     
f9ancial relation%ip ) ! manag$ c>e     
entity or affiliate = ! p]iod dur+ :i* !
 audit is be+ conduct$2 &  7,c7 )       
respect to ! initial audits "u p>agraph 
7#d7 ( a manag$ c>e entity1 has n _h su*
 a f9ancial relation%ip ) ! manag$ c>e  
entity or affiliate dur+ ! #b-ye> p]iod 
end+ on ! date ! audit+ entity & ,/ate  
ent] into a contract "u p>agraph 7#a74  
7#c7 ,/&>ds = audits  7,a7 ,9 g5]al ,!  
,secret>y %all set uni=m /&>ds = !      

audits requir$ "u p>agraph 7#d74  7,b7  
,requirem5ts = /&>ds ,! /&>ds "u        
subp>agraph 7,a7 %all--  7i7 be consi/5t
 ) ,f$]al ,gov]nm5t audit+ /&>ds issu$  
by ! ,comptroll] ,g5]al ( ! ,unit$      
,/ates2  7ii7 specify a uni=m report+   
=mat = ! report+ ( su* audits "u        
p>agraph 7#g72 &  7iii7 require t any   
report = an audit requir$ "u p>agraph   
7#g7 include a c]tification by a c]tifi$
 public acc\ntant4  7#d7 ,types ( audits
 & in=mation requir$  7,a7 ,9 g5]al ,!  
indep5d5t auditor contract+ ) a ,/ate "u
 p>agraph 7#a7 %all conduct & complete1 
= ea* manag$ c>e entity ) a contract "u 
section #aijc7m7 9 su* ,/ate ! foll[+3  
7i7 ,a biannual f9ancial audit describ$ 
9 p>agraph 7#e74  7ii7 ,a biannual      
p]=mance-compliance audit describ$ 9    
p>agraph 7#f74  7,b7 ,tim+ ( audits  7i7
 ,initial1 /agg]$ audits ,= ! purpose ( 
e/abli%+ basel9e data1 ) respect to ea* 
manag$ c>e entity ) a contract "u       
section #aijc7m7 ) a ,/ate1 ! ,/ate %all
 complete--  7,i7 an initial audit "u   

subp>agraph 7,a77i7 n lat] ?an #f mon?s 
aft] ! date ( enactm5t ( ! ,m$icaid     
,integrity ,act ( #bjac2 &  7,,ii7 an   
initial audit "u subp>agraph 7,a77ii7 n 
lat] ?an #ah mon?s aft] su* date4  ,!   
initial audit ( an entity "u subp>agraph
 7,a77ii7 %all be complet$ approximately
 #a ye> aft] ! initial audit ( ! entity 
"u subp>agraph 7,a77i74  7ii7           
,subsequ5t1 /agg]$ audits ,subsequ5t    
audits "u ea* su* subp>agraph %all be   
complet$ e two ye>s4  7,c7 ,p]iod cov]$ 
by audit  7i7 ,9 g5]al ,ea* audit "u ?is
 p>agraph %all cov] a #b-;cal5d>-ye>    
p]iod4  7ii7 ,initial f9ancial audit ,! 
fir/ bi5nial f9ancial audit "u          
subp>agraph 7,a77i7 %all cov] !         
#b-;cal5d>-ye> p]iod t ends on ! la/ day
 ( ! cal5d> ye> t ends #f mon?s be=e !  
deadl9e = completion ( su* initial audit
 "u 7,b77i77,i74  7iii7 ,initial        
p]=mance-compliance audit ,! fir/       
bi5nial p]=mance-compliance audit "u    
subp>agraph 7,a77ii7 %all cov] !        
#b-;cal5d>-ye> p]iod t ends on ! la/ day

 ( ! cal5d> ye> t ends #f mon?s be=e !  
deadl9e = completion ( su* initial audit
 "u 7,b77i77,,ii74  7#e7 ,biannual      
f9ancial audit ,a biannual f9ancial     
audit "u p>agraph 7#d77;,a77i71 )       
respect to a manag$ c>e entity ) a      
contract "u section #aijc7m7 9 a ,/ate1 
is an audit ( ! f9ances ( ! manag$ c>e  
entity relat+ to su* contract4 ,ea* su* 
audit %all include an audit ( at lea/ ! 
foll[+ in=mation3  7,a7 ,exp5ses &      
rev5ues ,) respect to s]vices provid$ "u
 su* contract1 ! manag$ c>e entity's--  
7i7 adm9i/rative exp5ses2  7ii7 rev5ues1
 includ+ inve/m5t income2 &  7iii7      
paym5ts made by ! manag$ c>e entity =   
nonadm9i/rative s]vices4  7,b7 ,claims &
 enc\nt] data ,subject to p>agraph      
7#g77;,c7--  7i7 claims data relat$ to  
s]vices provid$ by su* manag$ c>e entity
 "u su* contract2 &  7ii7 enc\nt] data t
 relate to su* s]vices & support su*    
claims4  7,c7 ,exp5ditures on pati5t    
s]vices ,) respect to s]vices provid$ "u
 su* contract1 ! manag$ c>e entity's    

paym5ts to heal? c>e provid]s1 t h be5  
issu$ a national provid] id5tifi] "u    
title ,,xi1 = items & s]vices furni%$ on
 behalf ( b5efici>ies bas$ on ! claims &
 enc\nt] data describ$ 9 subp>agraph    
7,b74  7,d7 ,provid] paym5t ratio  7i7  
,9 g5]al ,! ratio ( ! paym5ts to heal?  
c>e provid]s describ$ 9 subp>agraph 7,c7
 to ! aggregate paym5ts to ! manag$ c>e 
entity "u ! contract4  7ii7 ,con/ruction
 ,! ratio "u clause 7i7 is n a m$ical   
loss ratio & is n comp>able to a m$ical 
loss ratio4  7,e7 ,provid] paym5t rates 
& me?odologies ,subject to p>agraph     
7#g77;,c77ii71 ! manag$ c>e entity's    
paym5t rates & paym5t me?odology = heal?
 c>e s]vices "u su* contract1 by provid]
 type or s]vice category1 includ+ a     
description (--  7i7 alt]native paym5t  
arrangem5ts betwe5 ! manag$ c>e entity &
 provid]s2 &  7ii7 paym5ts made by !    
manag$ c>e entity to provid]s t are     
sep>ate f claims = s]vices provid$4     
7,f7 ,id5tification ( adm9i/rative      
v5dors ,) respect to s]vices provid$ "u 

su* contract1 id5tification ( provid]s &
 v5dors = adm9i/rative s]vices "u       
contract ) ! manag$ c>e entity4  7,g7   
,res]ve fund contributions              
,contributions t ! manag$ c>e entity has
 made to its res]ve fund "u su*         
contract4  7,h7 ,re9surance ,data on !  
am\nt ( re9surance or transf] ( risk t !
 manag$ c>e entity has obta9$ ) respect 
to ! risk assum$ by su* entity "u su*   
contract4  7,i7 ,*>itable contributions 
& donations ,contributions & donations t
 ! manag$ c>e entity has made to        
gov]nm5t or non-pr(it entities1 !       
id5tity ( su* gov]nm5t or non-pr(it     
entities1 & ! am\nt ( ! contributions & 
donations made to ea* su* entity4  7#f7 
,biannual p]=mance-compliance audit ,a  
biannual audit "u ?is p>agraph          
7#d77;,a77ii71 ) respect to a manag$ c>e
 entity ) a contract "u section #aijc7m7
 9 a ,/ate1 is an audit ( ! p]=mance (  
su* manag$ c>e entity "u su* contract   
7includ+ ) respect to ! p]=mance ( risk 
assessm5t "u ! contract7 & ! compliance 

( su* manag$ c>e entity1 dur+ ! p]iod   
cov]$ by ! audit1 )--  7,a7 ! t]ms ( !  
contract2 &  7,b7 applicable ,/ate &    
,f$]al laws1 regulations1 & guidance1   
includ+ provisions ( su* laws1          
regulations1 & guidance relat$ to       
all[able co/s "u su* contracts4  7#g7   
,report+ & public availability ( audit  
results  7,a7 ,notice & opportunity =   
comm5t  7i7 ,9 g5]al ,) respect to an   
audit ( a manag$ c>e entity conduct$ by 
an indep5d5t auditor "u ?is subsection1 
su* auditor %all--  7,i7 submit a report
 on ! results ( ! audit to ! manag$ c>e 
entity2 &  7,,ii7 provide ! manag$ c>e  
entity ) ! opportunity to submit comm5ts
 on su* audit to ! auditor dur+ a       
#cj-;day p]iod4  7ii7 ,review ( comm5ts 
& revision ( report ,! indep5d5t auditor
 %all review ! comm5ts submitt$ "u      
clause 7i77,,ii7 & may revise su* report
 bas$ on su* comm5ts4  7,b7 ,public     
report  7i7 ,9 g5]al ,n lat] ?an #de    
days aft] ! end ( ! #cj-;day comm5t     
p]iod provid$ "u subp>agraph            

7,a77i77,,ii71 ! indep5d5t auditor %all 
submit to ! ,secret>y1 ! ,/ate1 & !     
manag$ c>e entity a report conta9+ !    
results ( su* audit 7includ+1 9 ! case (
 an annual f9ancial audit "u p>agraph   
7#d77;,a77i71 ! in=mation describ$ 9    
p>agraph 7#e77;,d771 any comm5ts receiv$
 "u subp>agraph 7,a77i77,,ii71 & an     
executive summ>y ( ! audit report4 ,!   
,secret>y = good cause may ext5d by n m 
?an #cj days ! deadl9e = submitt+ a     
report "u ! previ\s s5t5ce4  7ii7 ,po/+ 
on public web site ,subject to          
subp>agraph 7,c71 n lat] ?an #cj days   
aft] ! date t ! ,/ate receives a report 
"u clause 7i71 ! ,/ate %all po/ su*     
report 7includ+ ! executive summ>y ( !  
report7 on a ,web site ma9ta9$ by !     
,/ate 9 connection ) adm9i/ration ( ?is 
title & available to ! public4  7,c7    
,privacy & confid5tiality protection    
7i7 ,pati5t protections ,no?+ 9 ?is     
subsection %all be con/ru$ z modify+ !  
application ( ! ,,hipaa privacy         
regulations 7z def9$ 9 section          

#aahj7;b77#c774  7ii7 ,protection (     
c]ta9 propriet>y in=mation ,no?+ 9 ?is  
subsection %all be con/ru$ z au?oriz+ ! 
public disclosure ( ! paym5t rates t a  
manag$ c>e entity uses to pay any heal? 
c>e provid] or ! me?odology t ! manag$  
c>e entity uses to develop su* rates4   
7iii7 ,protection ( enc\nt] data        
,subject to clause 7i71 an indep5d5t    
auditor1 :5 submitt+ a report "u        
subp>agraph 7,a71 may submit enc\nt]    
data to a ,/ate4 ,an indep5d5t auditor1 
or a ,/ate1 %all n submit to ! ,f$]al   
,gov]nm5t any enc\nt] data t are        
collect$ = purposes ( ! audits "u ?is   
subsection4  7,d7 ,)hold+ ( paym5t =    
failure to report  7i7 ,9 g5]al ,if a   
report requir$ "u ?is p>agraph is n     
submitt$ to ! ,secret>y z requir$ "u    
subp>agraph 7,b77i7 by an indep5d5t     
auditor ) respect to a manag$ c>e entity
 9 a ,/ate1 ! ,secret>y %all )hold1 by !
 )hold+ p]c5tage "u clause 7ii71 !      
paym5t to ! ,/ate "u section #aijc7;a7 =
 exp5ditures "u a contract "u section   

#aijc7m7 = ! manag$ c>e entity = ! p]iod
 dur+ :i* ! report is due b n submitt$4 
7ii7 ,)hold+ p]c5tage ,! )hold+ p]c5tage
 specifi$ 9 ?is clause is--  7,i7 #e    
p]c5tage po9ts2 plus  7,,ii7 if !       
failure to report cont9u$ beyond #cj    
days aft] ! date on :i* su* report 0 due
 "u subp>agraph 7,b77i71 #e additional  
p]c5tage po9ts = ea* subsequ5t #cj-;day 
p]iod until su* report is submitt$4     
7iii7 ,re/oration ( paym5t ,any am\nts  
)held "u ?is subp>agraph due to !       
failure to submit a report %all be paid 
to a ,/ate n lat] ?an #aj days aft] !   
date su* report is submitt$4  7#h7      
,response to defici5cies  7,a7 ,report  
,if a report submitt$ "u p>agraph 7#g7  
indicates a defici5cy ) respect to !    
f9ancial report+1 p]=mance1 or          
compliance 7z applicable7 ) respect to a
 manag$ c>e entity ) a contract "u      
section #aijc7m7 ) a ,/ate1 n lat] ?an  
#cj days aft] ! date ( submission ( su* 
report ! ,/ate %all submit to !         
,secret>y 7& po/ on ! ,web site ref]r$  

to 9 p>agraph 7#g77;,b77ii77            
docum5tation ( any action t ! ,/ate has 
tak5 or int5ds to take 9 response to a  
report$ defici5cy4 ,su* docum5tation    
%all include docum5tation ( any ( !     
foll[+3  7i7 ,adju/m5ts to ! t]ms ( new 
or r5ew$ contracts ) su* manag$ c>e     
entity4  7ii7 ,a corrective action plan 
ent]$ into by ! manag$ c>e entity ) su* 
,/ate4  7iii7 ,any int]m$iate sanction  
"u subsection 7e7 aga9/ ! manag$ c>e    
entity4  7iv7 ,t]m9ation ( ! contract ) 
! manag$ c>e entity4  7,b7 ,,oig report 
to ,congress ,! ,secret>y1 act+ ?r\gh ! 
,inspector ,g5]al 9 ! ,dep>tm5t ( ,heal?
 & ,human ,s]vices1 %all annually submit
 to ,congress & make available to !     
public a report on ! audits conduct$ "u 
?is subsection & ! responses ( ,/ates to
 reports ( defici5cies 9 su* audits4    
,su* report %all conta9 su*             
recomm5dations = *anges 9 law or        
regulation z may be appropriate to      
ensure ! prud5t exp5diture ( funds =    
items & s]vices furni%$ ?r\gh manag$ c>e

 entities4  7#i7 ,access to in=mation   
requir$ "u contract2 sanctions =        
misrepres5tation or falsification (     
records  7,a7 ,access ,if a ,/ate ent]s 
into or r5ews a contract "u section     
#aijc7m7 aft] ! date ( ! enactm5t ( !   
,m$icaid ,integrity ,act ( #bjac1 su*   
contract %all provide t ! manag$ c>e    
entity1 z a condition ( receiv+ paym5t  
"u su* contract1 %all provide !         
indep5d5t auditor ) access to all       
in=mation necess>y = purposes ( ! audits
 "u p>agraph 7#d74  7,b7 ,sanctions =   
misrepres5tation or falsification ,!    
misrepres5tation or falsification (     
in=mation t is furni%$ = purposes ( su* 
an audit %all be subject to a civil     
monet>y p5alty "u subp>agraph 7,b77i7 ( 
section #aijc7m77#e7 9 ! same mann] z a 
misrepres5tation or falsification       
describ$ 9 subp>agraph 7,a77iv77,i7 (   
su* section4  7#aj7 ,application to     
waiv] ,/ates ,9 ! case ( any ,/ate :i*  
is provid+ m$ical assi/ance to its      
resid5ts "u a waiv] grant$ "u section   

#aaae1 ! ,secret>y %all require ! ,/ate 
to meet ! requirem5ts ( ?is subsection &
 subsection 7j7 9 ! same mann] z ! ,/ate
 w\ld be requir$ to meet su* requirem5t 
if ! ,/ate _h 9 effect a plan approv$ "u
 ?is title4  7#aa7 ,r$uc+ duplicate     
audits ,not)/&+ any o!r provision ( ?is 
title1 ins(> z ! ,secret>y det]m9es t ! 
p]=mance ( an audit "u ?is subsection   
duplicates ! p]=mance ( an audit requir$
 "u ano!r provision ( ?is title1 !      
completion ( ! audit "u ?is subsection  
%all satisfy su* requirem5t4  7#ab7     
,res]vation ( ,/ate p[]s ,no?+ 9 ?is    
subsection %all be con/ru$ to limit !   
p[] ( a ,/ate1 includ+ ! p[] ( a ,/ate  
to pursue civil & crim9al p5alties "u   
,/ate law aga9/ any individual or entity
 t misuses1 or engages 9 fraud or abuse 
relat$ to1 ! funds provid$ to a ,/ate "u
 ?is title4  7#ac7 ,con/ruction ,no?+ 9 
?is subsection %all be con/ru$ to prev5t
 ! ,secret>y f tak+ any action1 includ+ 
disall[ances ( paym5t1 ) respect to     
violations ( ?is title relat$ to a      

contract ) a manag$ c>e entity4  7#ad7  
,def9itions  7,a7 ,affiliate ( ! manag$ 
c>e entity ,= purposes ( ?is subsection 
& subsection 7j71 ! t]m affiliate ( !   
manag$ c>e entity means an entity t1 to 
a significant ext5t1 is associat$ or    
affiliat$ )1 or has control ( or is     
controll$ by1 ! manag$ c>e entity or t  
is relat$ to su* manag$ c>e entity by   
common own]%ip4 ,= purposes ( ?is       
def9ition--  7i7 common own]%ip exi/s if
 an individual or individuals possess   
significant own]%ip or equity 9 ! manag$
 c>e entity & ! affiliate ( ! manag$ c>e
 entity2 &  7ii7 control exi/s if an    
entity has ! p[]1 directly or           
indirectly1 to significantly influ5ce or
 direct ! actions or policies ( ano!r   
entity4  7,b7 ,contract ye> ,= purposes 
( ?is subsection1 ! t]m contract ye>    
means1 ) respect to a manag$ c>e entity 
& a ,/ate1 ! #ab-mon? p]iod t beg9s on !
 effective date ( a contract "u section 
#aijc7m7 betwe5 ! manag$ c>e entity & ! 
,/ate1 & ea* subsequ5t #ab-mon? p]iod   

:ile su* contract is effective4  4  7b7 
,indep5d5t actu>y ,section #aicb ( !    
,social ,security ,act 7#db ,u4,s4,c4   
#acifu-#b71 z am5d$ by section #b1 is   
fur!r am5d$ by add+ at ! end ! foll[+3  
7j7 ,indep5d5t actu>y ,z a condition (  
receiv+ a paym5t "u section #aijc7;a7 ) 
respect to exp5ditures "u a contract    
betwe5 a ,/ate & a manag$ c>e entity "u 
section #aijc7m71 a ,/ate may n ent]    
into an agreem5t ) an entity 7ref]r$ to 
9 ?is subsection z an actu>y7 to provide
 actu>ial s]vices relat$ to ! ,/ate's   
adm9i/ration ( su* contract unless !    
foll[+ requirem5ts are met3  7#a7 ,no   
actu>ial s]vices or f9ancial relation%ip
 = contract p]iod ,! actu>y has n       
provid$ actu>ial s]vices to ! manag$ c>e
 entity =1 or o!rwise _h any f9ancial   
relation%ip ) ! manag$ c>e entity dur+1 
any p]iod ( ! contract 7betwe5 su*      
manag$ c>e entity & ! ,/ate7 ) respect  
to :i* ! actu>ial s]vices "u ! agreem5t 
7betwe5 ! actu>y & ! ,/ate7 are to be   
provid$4  7#b7 ,no f9ancial relation%ip 

dur+ t]m ( agreem5t ) ,/ate ,! actu>y   
agrees n to h su* a f9ancial relation%ip
 ) ! manag$ c>e entity or affiliate dur+
 any "p ( ! p]iod ( ! agreem5t 7betwe5 !
 ,/ate & ! actu>y74  7#c7 ,special rule 
= fir/ contract ye> ,= ! fir/ contract  
ye> 9 :i* ?is subsection applies1 !     
actu>y has n _h su* a f9ancial          
relation%ip ) ! manag$ c>e entity or    
affiliate dur+ ! #b-ye> p]iod end+ on ! 
date ! actu>y & ,/ate ent] into an      
agreem5t subject to ?is subsection4  4  
7c7 ,transitional f9ancial inc5tives to 
,/ates ,section #aijc7;a77#c7 ( !       
,social ,security ,act 7#db ,u4,s4,c4   
#acif;b7a77#c77 is am5d$ by ins]t+ aft] 
subp>agraph 7,f7 ! foll[+3  7,g7 #ge    
p]c5t ( s mu* ( ! sums exp5d$ z are     
attributable to exp5ditures = ! fir/ #c 
biannual f9ancial audits conduct$ "u    
section #aicb7;i77#d77;,a77i7 aft] !    
date ( enactm5t ( ! ,m$icaid ,integrity 
,act ( #bjac1 & = ! fir/ #b biannual    
p]=mance-compliance audits conduct$ "u  
section #aicb7;i77#d77;,a77ii7 aft] su* 

date2 plus  4