CMS Pub. 100-06, ch. 8, § 150.1

Section 952 of the Omnibus Reconciliation Act of 1980, enacted December 5, 1980,

amended §1861(v)(1)(I) of the Social Security Act to require that a contract (if its cost or

value over a 12-month period is $10,000 or more) between a provider and a subcontractor

must contain a clause allowing the Department of Health and Human Services' (HHS)

Secretary and the U.S. Comptroller General (or their representatives) access to the

subcontractor's books, documents, and records that are necessary to verify the nature and

extent of costs of services furnished under the contract. This clause must be included in

the contract in order for the costs of services furnished under the contract to be included

as costs for Medicare reimbursement. In addition, the contract must allow access to

contracts of a similar nature between subcontractors and related organizations of the

subcontractor, and to their books, documents, and records. The authorized

representatives of the HHS Secretary are CMS, CMS’ Medicare contractors, and the HHS

Inspector General. In most instances, a contractor will be the entity requesting access.

This legislation (codified at 42 Code of Federal Regulations, Subpart D, §§420.300-304)

applies to contracts entered into or renewed after December 5, 1980; hence, contracts

renewed after December 5, 1980 must be amended to include the clause. The clause

must provide for access to the subcontractor's contract and books, documents, and

records until 4 years have elapsed after the services are furnished under the contract or

subcontract.

NOTE: A provider's cost of renegotiation with a subcontractor to include the access

clause in their contract, if it is not excessive and can be adequately justified, is an

allowable Medicare cost and therefore may be included in the Administrative and

General cost center.