I

104TH CONGRESS

2D SESSION H. R. 3224

To improve Federal efforts to combat fraud and abuse against health care

programs, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 29, 1996

Mr. SCHIFF (for himself and Mr. SHAYS) introduced the following bill; which

was referred to the Committee on the Judiciary, and in addition to the

Committees on Government Reform and Oversight, Ways and Means, and

Commerce, for a period to be subsequently determined by the Speaker,

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To improve Federal efforts to combat fraud and abuse

against health care programs, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Health Care Fraud and Abuse Prevention Act of 1996’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—COORDINATION OF FEDERAL ENFORCEMENT
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Sec. 101. Federal enforcement by Inspectors General and Attorney General.

Sec. 102. State enforcement.

Sec. 103. Payments to States.

Sec. 104. Health Care Fraud and Abuse Control Account.

Sec. 105. Acceptance of gifts, bequests, and devises.

Sec. 106. Reimbursements of expenses and other payments to participating

agencies.

Sec. 107. Account Payments Advisory Board.

Sec. 108. Establishment of health care fraud and abuse data base.

Sec. 109. Definitions.

Sec. 110. Effective date.

TITLE II—REVISIONS TO CRIMINAL LAW

Sec. 201. Definition of Federal health care offense.

Sec. 202. Health care fraud.

Sec. 203. Theft or embezzlement.

Sec. 204. False Statements.

Sec. 205. Bribery and graft.

Sec. 206. Illegal remuneration with respect to health care benefit programs.

Sec. 207. Obstruction of criminal investigations of health care offenses.

Sec. 208. Civil penalties for violations of Federal health care offenses.

Sec. 209. Injunctive relief relating to health care offenses.

Sec. 210. Authorized investigative demand procedures.

Sec. 211. Grand jury disclosure.

Sec. 212. Miscellaneous amendments to title 18, United States code.

TITLE III—ANTI-FRAUD INITIATIVES UNDER MEDICARE AND

MEDICAID

Sec. 301. Revision to current penalties.

Sec. 302. Solicitation and publication of modifications to existing safe harbors

and new safe harbors; additional exception for certain discounting and managed care arrangements.

Sec. 303. Expediting implementation of payment adjustments for durable medical equipment based upon inherent reasonableness.

Sec. 304. Requiring annual notice to medicare beneficiaries of need to prevent

fraud and abuse against medicare program.

Sec. 305. Requiring use of single provider number in submission of claims for

payment under medicare and medicaid.

Sec. 306. Liability of carriers and fiscal intermediaries for claims submitted by

excluded providers.

Sec. 307. Requiring fiscal intermediaries and carriers to use automated data

processing equipment comparable to equipment used in private

insurance business.

Sec. 308. Nondischargeability under bankruptcy code of amounts owed for overpayments.
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1 TITLE I—COORDINATION OF

2 FEDERAL ENFORCEMENT

3 SEC. 101. FEDERAL ENFORCEMENT BY INSPECTORS GEN4 ERAL AND ATTORNEY GENERAL.

5 (a) AUDITS, INVESTIGATIONS, INSPECTIONS, AND

6 EVALUATIONS.—

7 (1) IN GENERAL.—Except as provided in para8 graph (2), the Inspector General of each of the De9 partment of Health and Human Services, the De10 partment of Defense, the Department of Labor, the

11 Office of Personnel Management, and the Depart12 ment of Veterans Affairs, and the Attorney General

13 shall conduct audits, civil and criminal investiga14 tions, inspections, and evaluations relating to the

15 prevention, detection, and control of health care

16 fraud and abuse in violation of any Federal law.

17 (2) LIMITATION.—An Inspector General, other

18 than the Inspector General of the Department of

19 Health and Human Services, may not conduct any

20 audit, investigation, inspection, or evaluation under

21 paragraph (1) with respect to health care fraud or

22 abuse under title V, XI, XVIII, XIX, or XX of the

23 Social Security Act.

24 (b) POWERS.—For purposes of carrying out duties

25 and responsibilities under subsection (a), each Inspector
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1 General referred to in subsection (a) may exercise powers

2 that are available to the Inspector General for purposes

3 of audits, investigations, and other activities under the In4 spector General Act of 1978 (5 U.S.C. App.).

5 (c) COORDINATION AND REVIEW OF ACTIVITIES OF

6 OTHER FEDERAL, STATE, AND LOCAL AGENCIES.—

7 (1) PROGRAM.—The Inspector General and the

8 Attorney General shall—

9 (A) jointly establish, on the effective date

10 specified in section 110(a), a program to pre11 vent, detect, and control health care fraud and

12 abuse in violation of any Federal law, which

13 takes into account the activities of Federal,

14 State, and local law enforcement agencies, Fed15 eral and State agencies responsible for the li16 censing and certification of health care provid17 ers, and State agencies designated under sec18 tion 102(a)(1); and

19 (B) publish a description of the program in

20 the Federal Register, by not later than 180

21 days after the date of the enactment of this

22 Act.

23 (2) ANNUAL INVESTIGATIVE PLAN.—Each In24 spector General referred to in subsection (a)(1) and

25 the Attorney General shall each develop an annual
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1 investigative plan for the prevention, detection, and

2 control of health care fraud and abuse in accordance

3 with the program established under paragraph (1).

4 (d) CONSULTATIONS.—Each of the Inspectors Gen5 eral referred to in subsection (a)(1) and the Attorney Gen6 eral shall regularly consult with each other, with Federal,

7 State, and local law enforcement agencies, with Federal

8 and State agencies responsible for the licensing and cer9 tification of health care providers, and with Health Care

10 Fraud and Abuse Control Units, in order to assist in co11 ordinating the prevention, detection, and control of health

12 care fraud and abuse in violation of any federal law.

13 SEC. 102. STATE ENFORCEMENT.

14 (a) DESIGNATION OF STATE AGENCIES AND ESTAB15 LISHMENT OF HEALTH CARE FRAUD AND ABUSE CON16 TROL UNIT.—The Governor of each State—

17 (1) shall, consistent with State law, designate

18 agencies of the State which conduct, supervise, and

19 coordinate audits, civil and criminal investigations,

20 inspections, and evaluations relating to the preven21 tion, detection, and control of health care fraud and

22 abuse in violation of any Federal law in the State;

23 and

24 (2) may establish and maintain in accordance

25 with subsection (b) a State agency to act as a
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1 Health Care Fraud and Abuse Control Unit for pur2 poses of this title.

3 (b) HEALTH CARE FRAUD AND ABUSE CONTROL

4 UNIT REQUIREMENTS.—A Health Care Fraud and Abuse

5 Control Unit established by a State under subsection

6 (a)(2) shall be a single identifiable entity of State govern7 ment which is separate and distinct from any State agency

8 with principal responsibility for the administration of

9 health care programs, and which meets the following re10 quirements:

11 (1) The entity—

12 (A) is a unit of the office of the State At13 torney General or of another department of

14 State government that possesses statewide au15 thority to prosecute individuals for criminal vio16 lations;

17 (B) is in a State the constitution of which

18 does not provide for the criminal prosecution of

19 individuals by a statewide authority, and has

20 formal procedures, approved by the Secretary,

21 that assure it will refer suspected criminal vio22 lations relating to health care fraud or abuse in

23 violation of any Federal law to the appropriate

24 authority or authorities of the State for pros-
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1 ecution and assure it will assist such authority

2 or authorities in such prosecutions; or

3 (C) has a formal working relationship with

4 the office of the State Attorney General or the

5 appropriate authority or authorities for pros6 ecution and has formal procedures (including

7 procedures under which it will refer suspected

8 criminal violations to such office), that provide

9 effective coordination of activities between the

10 Health Care Fraud and Abuse Control Unit

11 and such office with respect to the detection, in12 vestigation, and prosecution of suspected health

13 care fraud or abuse in violation of any Federal

14 law.

15 (2) The entity conducts a statewide program

16 for the investigation and prosecution of violations of

17 all applicable State laws regarding any and all as18 pects of health care fraud and abuse under Federal

19 law.

20 (3) The entity has procedures for—

21 (A) reviewing complaints of the abuse or

22 neglect of patients of health care facilities in

23 the State, and

24 (B) where appropriate, investigating and

25 prosecuting such complaints under the criminal
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1 laws of the State or for referring the complaints

2 to other State or Federal agencies for action.

3 (4) The entity provides for the collection, or re4 ferral for collection to the appropriate agency, of

5 overpayments that—

6 (A) are made under any federally funded

7 or mandated health care program required by

8 this Act, and

9 (B) it discovers in carrying out its activi10 ties.

11 (5) The entity employs attorneys, auditors, in12 vestigators, and other necessary personnel, is orga13 nized in such a manner, and provides sufficient re14 sources, as is necessary to promote the effective and

15 efficient conduct of its activities.

16 (c) SUBMISSION OF ANNUAL PLAN.—Each Health

17 Care Fraud and Abuse Control Unit may submit each year

18 to the Inspector General and the Attorney General a plan

19 for preventing, detecting, and controlling, consistent with

20 the program established under section 101(c)(1), health

21 care fraud and abuse in violation of any Federal law.

22 (d) APPROVAL OF ANNUAL PLAN.—The Inspector

23 General shall approve a plan submitted under subsection

24 (c) by the Health Care Fraud and Abuse Control Unit
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1 of a State, unless the Inspector General establishes that

2 the plan—

3 (1) is inconsistent with the program established

4 under section 101(c)(1); or

5 (2) will not enable the agencies of the State

6 designated under subsection (a)(1) to prevent, de7 tect, and control health care fraud and abuse in vio8 lation of any Federal law.

9 (e) REPORTS.—Each Health Care Fraud and Abuse

10 Control Unit shall submit to the Inspector General an an11 nual report containing such information as the Inspector

12 General determines to be necessary.

13 (f) SEMIANNUAL REPORTS OF INSPECTOR GENERAL

14 OF HEALTH AND HUMAN SERVICES.—The Inspector Gen15 eral shall include in its semiannual reports to the Congress

16 under section 5(a) of the Inspector General Act of 1978

17 (5 U.S.C. App.) an assessment of the Inspector General

18 of the effectiveness of States in preventing, detecting, and

19 controlling health care fraud and abuse.

20 SEC. 103. PAYMENTS TO STATES.

21 (a) IN GENERAL.—For each year for which a State

22 has an annual plan approved under section 102(d), and

23 subject to the availability of appropriations, the Inspector

24 General shall pay to the State for each quarter an amount

25 equal to 75 percent of the sums expended during the quar-
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1 ter by agencies designated by the Governor of the State

2 under section 102(a)(1) in conducting activities described

3 in that subsection.

4 (b) TIME OF PAYMENT.—The Inspector General shall

5 make a payment under subsection (a) for a quarter by

6 not later than 30 days after the end of the quarter.

7 (c) PAYMENTS ARE ADDITIONAL.—Payments to a

8 State under this subsection shall be in addition to any

9 amounts paid under section 106.

10 SEC. 104. HEALTH CARE FRAUD AND ABUSE CONTROL AC11 COUNT.

12 (a) ESTABLISHMENT.—There is established on the

13 books of the Treasury of the United States a separate ac14 count, which shall be known as the Health Care Fraud

15 and Abuse Control Account. The Account shall consist

16 of—

17 (1) the Health Care Fraud and Abuse Expenses

18 Subaccount; and

19 (2) the Health Care Fraud and Abuse Reserve

20 Subaccount.

21 (b) EXPENSES SUBACCOUNT.—

22 (1) CONTENTS.—The Expenses Subaccount

23 consists of—

24 (A) amounts deposited under paragraph

25 (2); and
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1 (B) amounts transferred from the Reserve

2 Subaccount under subsection (c)(2).

3 (2) DEPOSITS.—Except as provided in sub4 section (c)(1), there shall be deposited in the Ex5 penses Subaccount all amounts received by the Unit6 ed States as—

7 (A) fines imposed in cases involving a Fed8 eral health care offense;

9 (B) civil penalties or damages (other than

10 restitution) in actions under section 3729 or

11 3730 of title 31, United States Code (commonly

12 referred to as the ‘‘False Claims Act’’), that are

13 based on claims related to the provision of

14 health care items and services;

15 (C) administrative penalties under titles

16 XI, XVIII, and XIX of the Social Security Act;

17 (D) proceeds of seizures and forfeitures of

18 property for acts or omissions in violation of

19 any Federal law related to the provision of

20 health care items and services; and

21 (E) money and proceeds of property that

22 are accepted under section 105.

23 (3) USE.—Amounts in the Expenses Sub24 account shall be available to the Inspector General

25 and the Attorney General, under such terms and
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1 conditions as the Inspector General and the Attor2 ney General jointly determine to be appropriate,

3 for—

4 (A) paying expenses incurred by their re5 spective agencies in carrying out activities

6 under section 101; and

7 (B) making reimbursements to other In8 spectors General and Federal, State, and local

9 agencies in accordance with section 106.

10 (c) RESERVE SUBACCOUNT.—

11 (1) DEPOSITS.—An amount otherwise required

12 under subsection (b)(1) to be deposited in the Ex13 penses Subaccount in a fiscal year shall be deposited

14 in the Reserve Subaccount, if—

15 (A) the amount in the Expenses Sub16 account is greater than $500,000,000; and

17 (B) the deposit of that amount in the Ex18 penses Subaccount would result in the amount

19 in the Expenses Subaccount exceeding 110 per20 cent of the total amount deposited in the Ex21 penses Subaccount in the preceding fiscal year.

22 (2) TRANSFERS TO EXPENSES SUBACCOUNT.—

23 (A) ESTIMATION OF SHORTFALL.—Not

24 later than the first day of the last quarter of

25 each fiscal year, the Inspector General (in con-
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1 sultation with the Attorney General) shall esti2 mate whether sufficient amounts will be avail3 able during such quarter in the Expenses Sub4 account for the uses described in subsection

5 (b)(3).

6 (B) TRANSFER TO COVER SHORTFALL.—If

7 the Inspector General estimates under sub8 section (a) that there will not be available suffi9 cient amounts in the Expenses Subaccount dur10 ing the last quarter of a fiscal year, there shall

11 be transferred from the Reserve Subaccount to

12 the Expenses Subaccount such amount as the

13 Inspector General estimates is required to en14 sure that sufficient amounts are available in the

15 Expenses Subaccount during such quarter.

16 (3) LIMITATION ON AMOUNT CARRIED OVER TO

17 SUCCEEDING FISCAL YEAR.—There shall be trans18 ferred to the general fund of the Treasury any

19 amount remaining in the Reserve Subaccount at the

20 end of a fiscal year (after any transfer made under

21 paragraph (2)) in excess of 10 percent of the total

22 amount authorized to be deposited in the Expenses

23 Subaccount (consistent with paragraph (1)) during

24 the fiscal year.
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1 (d) ANNUAL REPORT TO CONGRESS.—Not later than

2 180 days after the end of each fiscal year (beginning with

3 fiscal year 1997), the Secretary of Health and Human

4 Services and the Attorney General shall submit a report

5 to the Committee on Government Reform and Oversight

6 of the House of Representatives and the Committee on

7 Governmental Affairs of the Senate on the operations of

8 the Account during the fiscal year, including a description

9 of the deposits made into the Account and the payments

10 made from the Account during the year.

11 SEC. 105. ACCEPTANCE OF GIFTS, BEQUESTS, AND DEVISES.

12 The Attorney General or any Inspector General re13 ferred to in section 101(a) may accept, use, and dispose

14 of gifts, bequests, or devises of services or property (real

15 or personal), for the purpose of aiding or facilitating ac16 tivities under this title regarding health care fraud and

17 abuse. Gifts, bequests, or devises of money and proceeds

18 from sales of other property received as gifts, bequests,

19 or devises shall be deposited in the Account and shall be

20 available for use in accordance with section 104(b)(3).

21 SEC. 106. REIMBURSEMENTS OF EXPENSES AND OTHER

22 PAYMENTS TO PARTICIPATING AGENCIES.

23 (a) REIMBURSEMENT OF EXPENSES OF FEDERAL

24 AGENCIES.—The Inspector General and the Attorney

25 General, subject to the availability of amounts in the Ac-
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1 count, shall jointly and promptly reimburse Federal agen2 cies for expenses incurred in carrying out section 101.

3 (b) PAYMENTS TO STATE AND LOCAL LAW EN4 FORCEMENT AGENCIES.—The Inspector General and the

5 Attorney General, subject to the availability of amounts

6 in the Account, shall jointly and promptly pay to any State

7 or local law enforcement agency that participated directly

8 in any activity which led to deposits in the Account, or

9 property the proceeds of which are deposited in the Ac10 count, an amount that reflects generally and equitably the

11 participation of the agency in the activity.

12 (c) FUNDS USED TO SUPPLEMENT AGENCY APPRO13 PRIATIONS.—It is intended that disbursements made from

14 the Account to any Federal agency be used to increase

15 and not supplant the recipient agency’s appropriated oper16 ating budget.

17 SEC. 107. ACCOUNT PAYMENTS ADVISORY BOARD.

18 (a) ESTABLISHMENT.—There is established the Ac19 count Payments Advisory Board, which shall make rec20 ommendations to the Inspector General and the Attorney

21 General regarding the equitable allocation of payments

22 from the Account.

23 (b) MEMBERSHIP.—The Board shall consist of—

24 (1) each of the Inspectors General referred to

25 in section 101(a), other than the Inspector General
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1 of the Department of Health and Human Services;

2 and

3 (2) 10 members appointed by the Inspector

4 General of the Department of Health and Human

5 Services to represent Health Care Fraud and Abuse

6 Control Units, of whom one shall be appointed—

7 (A) for each of the 10 regions established

8 by the Director of the Office of Management

9 and Budget under Office of Management and

10 Budget Circular A–105, to represent Units in

11 that region; and

12 (B) from among individuals recommended

13 by the heads of those agencies in that region.

14 (c) TERMS.—The term of a Member of the Board ap15 pointed under subsection (b)(2) shall be 3 years, except

16 that of such members first appointed 3 members shall

17 serve an initial term of one year and 3 members shall serve

18 an initial term of 2 years, as specified by the Inspector

19 General at the time of appointment.

20 (d) VACANCIES.—A vacancy on the Board shall be

21 filled in the same manner in which the original appoint22 ment was made, except that an individual appointed to

23 fill a vacancy occurring before the expiration of the term

24 for which the individual is appointed shall be appointed

25 only for the remainder of that term.
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1 (e) CHAIRPERSON AND BYLAWS.—The Board shall

2 elect one of its members as chairperson and shall adopt

3 bylaws.

4 (f) COMPENSATION AND EXPENSES.—Members of

5 the Board shall serve without compensation, except that

6 the Inspector General may pay the expenses reasonably

7 incurred by the Board in carrying out its functions under

8 this section.

9 (g) NO TERMINATION.—Section 14(a)(2) of the Fed10 eral Advisory Committee Act (5 U.S.C. App.) does not

11 apply to the Board.

12 SEC. 108. ESTABLISHMENT OF HEALTH CARE FRAUD AND

13 ABUSE DATA BASE.

14 (a) IN GENERAL.—The Secretary of Health and

15 Human Services, in consultation with the Attorney Gen16 eral, shall establish a data base for the reporting of final

17 adverse actions taken by a Government agency against

18 health care providers, suppliers, or practitioners, or

19 against health care benefit programs, in order to provide

20 a central repository of such information to assist in the

21 prevention, detection, and prosecution of health care fraud

22 and abuse.

23 (b) REPORTING INFORMATION.—

24 (1) IN GENERAL.—For purposes of establishing

25 and maintaining the data base under this section,
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1 each Government agency shall report any final ad2 verse action taken against a health care provider,

3 supplier, or practitioner, or against a health care

4 benefit program, together with the information de5 scribed in paragraph (2).

6 (2) INFORMATION TO BE REPORTED.—The in7 formation referred to in this paragraph is as follows:

8 (A) The name of any health care insurer,

9 provider, supplier, or practitioner or health care

10 benefit program which is the subject of the final

11 adverse action reported under paragraph (1).

12 (B) In the case of a final adverse action

13 taken against a health care provider, supplier,

14 or practitioner, the name (if known) of any

15 health care benefit program with which the in16 surer, provider, supplier, or practitioner is af17 filiated or associated.

18 (C) The nature of the final adverse action.

19 (D) A description of the acts or omissions

20 and injuries upon which the final adverse action

21 was based.

22 (E) Such other information as required by

23 the Secretary.

24 (3) CONFIDENTIALITY.—The Secretary shall es25 tablish procedures to assure that in the submission
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1 of information under this subsection the privacy of

2 individuals receiving health care services is appro3 priately protected.

4 (4) FORM AND MANNER OF REPORTING.—The

5 information required to be reported under this sub6 section shall be reported on a monthly basis and in

7 such form and manner as determined by the Sec8 retary. Such information shall first be required to be

9 reported on a date specified by the Secretary.

10 (5) TO WHOM REPORTED.—The information re11 quired to be reported under this subsection shall be

12 reported to the Secretary or such person or persons

13 designated by the Secretary.

14 (c) CORRECTION OF ERRONEOUS INFORMATION.—

15 (1) DISCLOSURE AND CORRECTION.—The Sec16 retary shall provide for a procedure through which

17 a person, to whom information within the data base

18 established under this section pertains, may review

19 that information and obtain the correction of errors

20 pertaining to that person.

21 (2) OTHER CORRECTIONS.—Each Government

22 agency shall report corrections of information al23 ready reported about any final adverse action taken

24 against a health care provider, supplier, or practi-
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1 tioner, or a health care benefit program, in such

2 form and manner as required by the Secretary.

3 (d) ACCESS TO REPORTED INFORMATION.—

4 (1) AVAILABILITY.—The information in this

5 data base shall be available to the public, Federal

6 and State law enforcement agencies, Federal and

7 State government agencies, and health care benefit

8 programs pursuant to procedures established by the

9 Secretary and Attorney General.

10 (2) FEES.—The Secretary may establish rea11 sonable fees for the disclosure of information in this

12 data base.

13 (e) PROTECTION FROM LIABILITY FOR REPORT14 ING.—No person may be held liable in any civil action with

15 respect to reporting information required to be reported

16 under this section, unless the information reported was

17 false and the person had knowledge of the falsity of the

18 information.

19 (f) DEFINITIONS AND SPECIAL RULES.—For pur20 poses of this section:

21 (1) The term ‘‘final adverse action’’ includes

22 the following:

23 (A) Civil judgments in Federal or State

24 court related to the delivery of a health care

25 item or service.
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1 (B) Federal or State criminal convictions

2 related to the delivery of a health care item or

3 service, as determined in accordance with proce4 dures applicable to the exclusion of individuals

5 and entities under section 1128(j) of the Social

6 Security Act.

7 (C) Actions by State or Federal agencies

8 responsible for the licensing and certification of

9 health care providers, suppliers, and licensed

10 health care practitioners, including—

11 (i) formal or official actions, such as

12 revocation or suspension of a license (and

13 the length of any such suspension), rep14 rimand, censure or probation;

15 (ii) any other loss of license of the

16 provider, supplier, or practitioner, whether

17 by operation of law, voluntary surrender or

18 otherwise; or

19 (iii) any other negative action or find20 ing by such State or Federal agency that

21 is publicly available information.

22 (D) Exclusion from participation in Fed23 eral or State health care programs.

24 (E) Any other actions as required by the

25 Secretary.
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1 (2) The term ‘‘Government agency’’ includes—

2 (A) the Department of Justice;

3 (B) the Department of Health and Human

4 Services;

5 (C) any other Federal agency that either

6 administers or provides payment for the deliv7 ery of health care services, including (but not

8 limited to) the Department of Defense and the

9 Department of Veterans Affairs;

10 (D) State law enforcement agencies;

11 (E) State Medicaid fraud and abuse con12 trol units described in section 1903(q) of the

13 Social Security Act; and

14 (F) State or Federal agencies responsible

15 for the licensing and certification of health care

16 providers and licensed health care practitioners.

17 (3) The term ‘‘health care benefit program’’ has

18 the meaning given such term in section 1347(b) of

19 title 18, United States Code, as added by section

20 202(b).

21 (4) The term ‘‘health care provider’’ means a

22 provider of services (as defined in section 1861(u) of

23 the Social Security Act) and any entity, including a

24 health maintenance organization or group medical
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1 practice, that provides health care services (as speci2 fied by the Secretary in regulations).

3 (5) The terms ‘‘licensed health care practi4 tioner’’ and ‘‘practitioner’’ mean, with respect to a

5 State, an individual who is licensed or otherwise au6 thorized by the State to provide health care services

7 (or any individual who without authority holds him8 self or herself out to be so licensed or authorized).

9 (6) The term ‘‘Secretary’’ means the Secretary

10 of Health and Human Services.

11 (7) The term ‘‘supplier’’ means a supplier of

12 items and services for which payment may be made

13 under part B of title XVIII of the Social Security

14 Act.

15 SEC. 109. DEFINITIONS.

16 In this title:

17 (1) ACCOUNT.—The term ‘‘Account’’ means the

18 Health Care Fraud and Abuse Control Account es19 tablished by section 104(a).

20 (2) EXPENSES SUBACCOUNT.—The term ‘‘Ex21 penses Subaccount’’ means the Health Care Fraud

22 and Abuse Expenses Subaccount of the Account.

23 (3) FEDERAL HEALTH CARE OFFENSE.—The

24 term ‘‘Federal health care offense’’ has the meaning
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1 given such term in section 24(a) of title 18, United

2 States Code.

3 (4) HEALTH CARE FRAUD AND ABUSE CONTROL

4 UNIT.—The term ‘‘Health Care Fraud and Abuse

5 Control Unit’’ means such a unit established by a

6 State in accordance with section 102(b).

7 (5) INSPECTOR GENERAL.—Except as otherwise

8 provided, the term ‘‘Inspector General’’ means the

9 Inspector General of the Department of Health and

10 Human Services.

11 (6) RESERVE SUBACCOUNT.—The term ‘‘Re12 serve Subaccount’’ means the Health Care Fraud

13 and Abuse Reserve Subaccount of the Account.

14 SEC. 110. EFFECTIVE DATE.

15 (a) IN GENERAL.—Except as provided in subsection

16 (b), this title shall take effect after the expiration of the

17 180-day period which begins on the date of the enactment

18 of this Act.

19 (b) DEVELOPMENT AND PUBLICATION OF DESCRIP20 TION OF PROGRAM.—Section 101(c)(1) shall take effect

21 on the date of the enactment of this Act.
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1 TITLE II—REVISIONS TO

2 CRIMINAL LAW

3 SEC. 201. DEFINITION OF FEDERAL HEALTH CARE OF4 FENSE.

5 (a) IN GENERAL.—Chapter 2 of title 18, United

6 States Code, is amended by adding at the end the follow7 ing:

8 ‘‘§ 24. Definition of Federal health care offense

9 ‘‘(a) As used in this title, the term ‘Federal health

10 care offense’ means—

11 ‘‘(1) a violation of, or criminal conspiracy to

12 violate section 226, 227, 669, 1035, 1347, or 1518

13 of this title;

14 ‘‘(2) a violation of, or criminal conspiracy to

15 violate section 1128B of the Social Security Act (42

16 U.S.C. 1320a–7b);

17 ‘‘(3) a violation of, or criminal conspiracy to

18 violate section 201, 287, 371, 664, 666, 1001, 1027,

19 1341, 1343, or 1954 of this title, if the violation or

20 conspiracy relates to a health care benefit program;

21 ‘‘(4) a violation of, or criminal conspiracy to

22 violate section 411, 501, or 511 of the Employee Re23 tirement Income Security Act of 1974 (29 U.S.C.

24 1111; 29 U.S.C. 1131; 29 U.S.C. 1141), if the viola-
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1 tion or conspiracy relates to a health care benefit

2 program; or

3 ‘‘(5) a violation of, or criminal conspiracy to

4 violate, section 3 of the Anti-Kickback Act of 1986

5 (41 U.S.C. 53), if the violation or conspiracy relates

6 to a health care benefit program.

7 ‘‘(b) As used in this title, the term ‘health care bene8 fit program’ has the meaning given such term in section

9 1347(b) of this title.’’.

10 (b) CLERICAL AMENDMENT.—The table of sections

11 at the beginning of chapter 2 of title 18, United States

12 Code, is amended by inserting after the item relating to

13 section 23 the following new item:

‘‘24. Definition relating to Federal health care offense defined.’’.

14 SEC. 202. HEALTH CARE FRAUD.

15 (a) IN GENERAL.—Chapter 63 of title 18, United

16 States Code, is amended by adding at the end the follow17 ing:

18 ‘‘§ 1347. Health care fraud

19 ‘‘(a) Whoever, having devised or intending to devise

20 a scheme or artifice, commits or attempts to commit an

21 act in furtherance of or for the purpose of executing such

22 scheme or artifice—

23 ‘‘(1) to defraud any health care benefit pro24 gram; or
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1 ‘‘(2) to obtain, by means of false or fraudulent

2 pretenses, representations, or promises, any of the

3 money or property owned by, or under the custody

4 or control of, any health care benefit program,

5 shall be fined under this title or imprisoned not more than

6 10 years, or both. If the violation results in serious bodily

7 injury (as defined in section 1365 of this title), such per8 son shall be fined under this title or imprisoned not more

9 than 20 years, or both; and if the violation results in

10 death, such person shall be fined under this title, or im11 prisoned for any term of years or for life, or both.

12 ‘‘(b) As used in this section, the term ‘health care

13 benefit program’ means any public or private plan or con14 tract under which any medical benefit, item, or service is

15 provided to any individual, and includes any individual or

16 entity who is providing a medical benefit, item, or service

17 for which payment may be made under the plan or con18 tract.’’.

19 (b) CLERICAL AMENDMENT.—The table of sections

20 at the beginning of chapter 63 of title 18, United States

21 Code, is amended by adding at the end the following:

‘‘1347. Health care fraud.’’.

22 SEC. 203. THEFT OR EMBEZZLEMENT.

23 (a) IN GENERAL.—Chapter 31 of title 18, United

24 States Code, is amended by adding at the end the follow25 ing:
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1 ‘‘§ 669. Theft or embezzlement in connection with

2 health care

3 ‘‘(a) Whoever embezzles, steals, or otherwise without

4 authority willfully and unlawfully converts to the use of

5 any person other than the rightful owner, or intentionally

6 misapplies any of the moneys, funds, securities, premiums,

7 credits, property, or other assets of a health care benefit

8 program, shall be fined under this title or imprisoned not

9 more than 10 years, or both.

10 ‘‘(b) As used in this section, the term ‘health care

11 benefit program’ has the meaning given such term in sec12 tion 1347(b) of this title.’’.

13 (b) CLERICAL AMENDMENT.—The table of sections

14 at the beginning of chapter 31 of title 18, United States

15 Code, is amended by adding at the end the following:

‘‘669. Theft or embezzlement in connection with health care.’’.

16 SEC. 204. FALSE STATEMENTS.

17 (a) IN GENERAL.—Chapter 47 of title 18, United

18 States Code, is amended by adding at the end the follow19 ing:

20 ‘‘§ 1035. False statements relating to health care mat21 ters

22 ‘‘(a) Whoever, in any matter involving a health care

23 benefit program, knowingly and willfully falsifies, conceals,

24 or covers up by any trick, scheme, or device a material

25 fact, or makes any false, fictitious, or fraudulent state-
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1 ments or representations, or makes or uses any false writ2 ing or document knowing the same to contain any false,

3 fictitious, or fraudulent statement or entry, shall be fined

4 under this title or imprisoned not more than 5 years, or

5 both.

6 ‘‘(b) As used in this section, the term ‘health care

7 benefit program’ has the meaning given such term in sec8 tion 1347(b) of this title.’’.

9 (b) CLERICAL AMENDMENT.—The table of sections

10 at the beginning of chapter 47 of title 18, United States

11 Code, is amended by adding at the end the following new

12 item:

‘‘1035. False statements relating to health care matters.’’.

13 SEC. 205. BRIBERY AND GRAFT.

14 (a) IN GENERAL.—Chapter 11 of title 18, United

15 States Code, is amended by adding at the end the follow16 ing:

17 ‘‘§ 226. Bribery and graft in connection with health

18 care

19 ‘‘(a) Whoever—

20 ‘‘(1) directly or indirectly, corruptly gives, of21 fers, or promises anything of value to a health care

22 official, or offers or promises to give anything of

23 value to any other person, or attempts to violate this

24 subsection, with intent—
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1 ‘‘(A) to influence any of the health care of2 ficial’s actions, decisions, or duties relating to a

3 health care benefit program;

4 ‘‘(B) to influence such an official to com5 mit or aid in the committing, or collude in or

6 allow, any fraud, or make opportunity for the

7 commission of any fraud, on a health care bene8 fit program; or

9 ‘‘(C) to induce such an official to engage

10 in any conduct in violation of the lawful duty of

11 such official; or

12 ‘‘(2) being a health care official, directly or in13 directly, corruptly demands, seeks, receives, accepts,

14 or agrees to accept anything of value personally or

15 for any other person or entity, the giving of which

16 violates paragraph (1) of this subsection, or at17 tempts to violate this subsection,

18 shall be fined under this title or imprisoned not more than

19 15 years, or both.

20 ‘‘(b) Whoever—

21 ‘‘(1) otherwise than as provided by law for the

22 proper discharge of any duty, directly or indirectly

23 gives, offers, or promises anything of value to a

24 health care official, for or because of any of the

25 health care official’s actions, decisions, or duties re-
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1 lating to a health care benefit program, or attempts

2 to violate this subsection; or

3 ‘‘(2) being a health care official, otherwise than

4 as provided by law for the proper discharge of any

5 duty, directly or indirectly, demands, seeks, receives,

6 accepts or agrees to accept anything of value person7 ally or for any other person or entity, the giving of

8 which violates paragraph (1) of this subsection, or

9 attempts to violate this subsection,

10 shall be fined under this title, or imprisoned not more than

11 2 years, or both.

12 ‘‘(c) As used in this section—

13 ‘‘(1) the term ‘health care official’ means—

14 ‘‘(A) an administrator, officer, trustee, fi15 duciary, custodian, counsel, agent, or employee

16 of any health care benefit program;

17 ‘‘(B) an officer, counsel, agent, or em18 ployee, of an organization that provides services

19 under contract to any health care benefit pro20 gram; or

21 ‘‘(C) an official, employee, or agent of an

22 entity having regulatory authority over any

23 health care benefit program; and
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•HR 3224 IH

1 ‘‘(2) the term ‘health care benefit program’ has

2 the meaning given such term in section 1347(b) of

3 this title.’’.

4 (b) CLERICAL AMENDMENT.—The table of chapters

5 at the beginning of chapter 11 of title 18, United States

6 Code, is amended by adding at the end the following new

7 item:

‘‘226. Bribery and graft in connection with health care.’’.

8 SEC. 206. ILLEGAL REMUNERATION WITH RESPECT TO

9 HEALTH CARE BENEFIT PROGRAMS.

10 (a) IN GENERAL.—Chapter 11 of title 18, United

11 States Code, is amended by adding at the end the follow12 ing:

13 ‘‘§ 227. Illegal remuneration with respect to health

14 care benefit programs

15 ‘‘(a) Whoever knowingly and willfully solicits or re16 ceives any remuneration (including any kickback, bribe, or

17 rebate) directly or indirectly, overtly or covertly, in cash

18 or in kind—

19 ‘‘(1) in return for referring any individual to a

20 person for the furnishing or arranging for the fur21 nishing of any item or service for which payment

22 may be made in whole or in part by any health care

23 benefit program; or

24 ‘‘(2) in return for purchasing, leasing, ordering,

25 or arranging for or recommending purchasing, leas-
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•HR 3224 IH

1 ing, or ordering any good, facility, service, or item

2 for which payment may be made in whole or in part

3 by any health care benefit program, or attempting to

4 do so,

5 shall be fined under this title or imprisoned for not more

6 than 5 years, or both.

7 ‘‘(b) Whoever knowingly and willfully offers or pays

8 any remuneration (including any kickback, bribe, or re9 bate) directly or indirectly, overtly, or covertly, in cash or

10 in kind to any person to induce such person—

11 ‘‘(1) to refer an individual to a person for the

12 furnishing or arranging for the furnishing of any

13 item or service for which payment may be made in

14 whole or in part by any health benefit program; or

15 ‘‘(2) to purchase, lease, order, or arrange for or

16 recommend purchasing, leasing, or ordering any

17 good, facility, service, or item for which payment

18 may be made in whole or in part by any health bene19 fit program or attempts to do so,

20 shall be fined under this title or imprisoned for not more

21 than 5 years, or both.

22 ‘‘(c) Subsections (a) and (b) shall not apply to—

23 ‘‘(1) a discount or other reduction in price ob24 tained by a provider of services or other entity under

25 a health care benefit program if the reduction in
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1 price is properly disclosed and appropriately re2 flected in the costs claimed or charges made by the

3 provider or entity under a health care benefit pro4 gram;

5 ‘‘(2) any amount paid by an employer to an em6 ployee (who has a bona fide employment relationship

7 with such employer) for employment in the provision

8 of covered items or services if the amount of the re9 muneration under the arrangement is consistent

10 with the fair market value of the services and is not

11 determined in a manner that takes into account (di12 rectly or indirectly) the volume or value of any refer13 rals;

14 ‘‘(3) any amount paid by a vendor of goods or

15 services to a person authorized to act as a purchas16 ing agent for a group of individuals or entities who

17 are furnishing services reimbursed under a health

18 care benefit program if—

19 ‘‘(A) the person has a written contract,

20 with each such individual or entity, which speci21 fies the amount to be paid the person, which

22 amount may be a fixed amount or a percentage

23 of the value of the purchases made by each

24 such individual or entity under the contract,

25 and
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•HR 3224 IH

1 ‘‘(B) in the case of an entity that is a pro2 vider of services (as defined in section 1861(u)

3 of the Social Security Act, the person discloses

4 (in such form and manner as the Secretary of

5 Health and Human Services requires) to the

6 entity and, upon request, to the Secretary the

7 amount received from each such vendor with re8 spect to purchases made by or on behalf of the

9 entity;

10 ‘‘(4) a waiver of any coinsurance under part B

11 of title XVIII of the Social Security Act by a feder12 ally qualified health care center with respect to an

13 individual who qualifies for subsidized services under

14 a provision of the Public Health Service Act; and

15 ‘‘(5) any payment practice specified by the Sec16 retary of Health and Human Services in regulations

17 promulgated pursuant to section 14(a) of the Medi18 care and Medicaid Patient and Program Protection

19 Act of 1987.

20 ‘‘(d) Any person injured in his business or property

21 by reason of a violation of this section or section 226 of

22 this title may sue therefor in any appropriate United

23 States district court and shall recover threefold the dam24 ages such person sustains and the cost of the suit, includ25 ing a reasonable attorney’s fee.
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•HR 3224 IH

1 ‘‘(e) As used in this section, ‘health care benefit pro2 gram’ has the meaning given such term in section 1347(b)

3 of this title.’’.

4 (b) CLERICAL AMENDMENT.—The table of sections

5 at the beginning of chapter 11 of title 18, United States

6 Code, is amended by adding at the end the following:

‘‘227. Illegal remuneration with respect to health care benefit programs.’’.

7 (c) CONFORMING AMENDMENT.—Section 1128B of

8 the Social Security Act (42 U.S.C. 1320a–7b) is amended

9 by striking subsection (b).

10 SEC. 207. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF

11 HEALTH CARE OFFENSES.

12 (a) IN GENERAL.—Chapter 73 of title 18, United

13 States Code, is amended by adding at the end the follow14 ing:

15 ‘‘§ 1518. Obstruction of criminal investigations of

16 health care offenses

17 ‘‘(a) Whoever willfully prevents, obstructs, misleads,

18 delays or attempts to prevent, obstruct, mislead, or delay

19 the communication of information or records relating to

20 a violation of a health care offense to a criminal investiga21 tor shall be fined under this title or imprisoned not more

22 than 5 years, or both.

23 ‘‘(b) As used in this section the term ‘health care of24 fense’ has the meaning given such term in section 24 of

25 this title.
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1 ‘‘(c) As used in this section the term ‘criminal inves2 tigator’ means any individual duly authorized by a depart3 ment, agency, or armed force of the United States to con4 duct or engage in investigations for prosecutions for viola5 tions of health care offenses.’’.

6 (b) CLERICAL AMENDMENT.—The table of sections

7 at the beginning of chapter 73 of title 18, United States

8 Code, is amended by adding at the end the following new

9 item:

‘‘1518. Obstruction of criminal investigations of health care offenses.’’.

10 SEC. 208. CIVIL PENALTIES FOR VIOLATIONS OF FEDERAL

11 HEALTH CARE OFFENSES.

12 (a) IN GENERAL.—Chapter 63 of title 18, United

13 States Code, is amended by adding at the end the follow14 ing:

15 ‘‘§ 1348. Civil penalties for violations of Federal

16 health care offenses

17 ‘‘The Attorney General may bring a civil action in

18 the appropriate United States district court against any

19 person who engages in conduct constituting a Federal

20 health care offense, as that term is defined in section 24

21 of this title and, upon proof of such conduct by a prepon22 derance of the evidence, such person shall be subject to

23 a civil penalty of not more than 3 times the amount of

24 compensation or proceeds which the person received or of25 fered for the prohibited conduct. The imposition of a civil
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1 penalty under this section does not preclude any other

2 criminal or civil statutory, common law, or administrative

3 remedy, which is available by law to the United States or

4 any other person.’’.

5 (b) CLERICAL AMENDMENT.—The table of sections

6 for chapter 63 of title 18, United States Code, is amended

7 by adding at the end the following item:

‘‘1348. Civil penalties for violations of Federal health care offenses.’’.

8 SEC. 209. INJUNCTIVE RELIEF RELATING TO HEALTH CARE

9 OFFENSES.

10 (a) IN GENERAL.—Section 1345(a)(1) of title 18,

11 United States Code, is amended—

12 (1) by striking ‘‘or’’ at the end of subparagraph

13 (A);

14 (2) by inserting ‘‘or’’ at the end of subpara15 graph (B); and

16 (3) by adding at the end the following:

17 ‘‘(C) committing or about to commit a

18 Federal health care offense (as defined in sec19 tion 24 of this title).’’.

20 (b) FREEZING OF ASSETS.—Section 1345(a)(2) of

21 title 18, United States Code, is amended by inserting ‘‘or

22 a Federal health care offense (as defined in section 24)’’

23 after ‘‘title)’’.
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1 SEC. 210. AUTHORIZED INVESTIGATIVE DEMAND PROCE2 DURES.

3 (a) IN GENERAL.—Chapter 223 of title 18, United

4 States Code, is amended by adding after section 3485 the

5 following:

6 ‘‘§ 3486. Authorized investigative demand procedures

7 ‘‘(a) AUTHORIZATION.—(1) In any investigation re8 lating to functions set forth in paragraph (2), the Attorney

9 General or the Attorney General’s designee may issue in

10 writing and cause to be served a summons compelling the

11 attendance and testimony of witnesses and requiring the

12 production of any records (including any books, papers,

13 documents, electronic media, or other objects or tangible

14 things), which may be relevant to an authorized law en15 forcement inquiry, that a person or legal entity may pos16 sess or have care, custody, or control. The attendance of

17 witnesses and the production of records may be required

18 from any place in any State or in any territory or other

19 place subject to the jurisdiction of the United States at

20 any designated place of hearing; except that a witness

21 shall not be required to appear at any hearing more than

22 500 miles distant from the place where he was served with

23 a subpoena. Witnesses summoned under this section shall

24 be paid the same fees and mileage that are paid witnesses

25 in the courts of the United States. A summons requiring

26 the production of records shall describe the objects re-
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1 quired to be produced and prescribe a return date within

2 a reasonable period of time within which the objects can

3 be assembled and made available.

4 ‘‘(2) Investigative demands utilizing an administra5 tive summons are authorized for:

6 ‘‘(A) Any investigation with respect to any act

7 or activity constituting an offense involving a Fed8 eral health care offense as that term is defined in

9 section 24 of title 18, United States Code.

10 ‘‘(B) Any investigation, with respect to viola11 tions of sections 1073 and 1074 of title 18, United

12 States Code, or in which an individual has been law13 fully charged with a Federal offense and such indi14 vidual is avoiding prosecution or custody or confine15 ment after conviction of such offense or attempt.

16 ‘‘(b) SERVICE.—A subpoena issued under this section

17 may be served by any person designated in the subpoena

18 to serve it. Service upon a natural person may be made

19 by personal delivery of the subpoena to him. Service may

20 be made upon a domestic or foreign corporation or upon

21 a partnership or other unincorporated association which

22 is subject to suit under a common name, by delivering the

23 subpoena to an officer, to a managing or general agent,

24 or to any other agent authorized by appointment or by

25 law to receive service of process. The affidavit of the per-
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1 son serving the subpoena entered on a true copy thereof

2 by the person serving it shall be proof of service.

3 ‘‘(c) ENFORCEMENT.—In the case of contumacy by

4 or refusal to obey a subpoena issued to any person, the

5 Attorney General may invoke the aid of any court of the

6 United States within the jurisdiction of which the inves7 tigation is carried on or of which the subpoenaed person

8 is an inhabitant, or in which he carries on business or may

9 be found, to compel compliance with the subpoena. The

10 court may issue an order requiring the subpoenaed person

11 to appear before the Attorney General to produce records,

12 if so ordered, or to give testimony touching the matter

13 under investigation. Any failure to obey the order of the

14 court may be punished by the court as a contempt thereof.

15 All process in any such case may be served in any judicial

16 district in which such person may be found.

17 ‘‘(d) IMMUNITY FROM CIVIL LIABILITY.—Notwith18 standing any Federal, State, or local law, any person, in19 cluding officers, agents, and employees, receiving a sum20 mons under this section, who complies in good faith with

21 the summons and thus produces the materials sought,

22 shall not be liable in any court of any State or the United

23 States to any customer or other person for such produc24 tion or for nondisclosure of that production to the cus25 tomer.’’.
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 at the beginning of chapter 223 of title 18, United States

3 Code, is amended by inserting after the item relating to

4 section 3485 the following new item:

‘‘3486. Authorized investigative demand procedures.’’.

5 (c) CONFORMING AMENDMENT.—Section

6 1510(b)(3)(B) of title 18, United States Code, is amended

7 by inserting ‘‘or a Federal Bureau of Investigation sum8 mons (issued under section 3486 of title 18),’’ after ‘‘sub9 poena’’.

10 SEC. 211. GRAND JURY DISCLOSURE.

11 Section 3322 of title 18, United States Code, is

12 amended—

13 (1) by redesignating subsections (c) and (d) as

14 subsections (d) and (e), respectively; and

15 (2) by inserting after subsection (b) the follow16 ing:

17 ‘‘(c) A person who is privy to grand jury information

18 concerning a health care offense—

19 ‘‘(1) received in the course of duty as an attor20 ney for the Government; or

21 ‘‘(2) disclosed under rule 6(e)(3)(A)(ii) of the

22 Federal Rules of Criminal Procedure;

23 may disclose that information to an attorney for the Gov24 ernment to use in any civil investigation or proceeding re-
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1 lated to a Federal health care offense (as defined in sec2 tion 24 of this title).’’.

3 SEC. 212. MISCELLANEOUS AMENDMENTS TO TITLE 18,

4 UNITED STATES CODE.

5 (a) LAUNDERING OF MONETARY INSTRUMENTS.—

6 Section 1956(c)(7) of title 18, United States Code, is

7 amended by adding at the end thereof the following:

8 ‘‘(F) Any act or activity constituting an offense

9 involving a Federal health care offense as that term

10 is defined in section 24 of title 18, United States

11 Code.’’.

12 (b) ENHANCED PENALTIES.—Section 2326(2) of title

13 18, United States Code, is amended by striking ‘‘sections

14 that—’’ and inserting ‘‘or in the case of a Federal health

15 care offense as that term is defined in section 24 of this

16 title, that—’’.

17 (c) AUTHORIZATION FOR INTERCEPTION OF WIRE,

18 ORAL, OR ELECTRONIC COMMUNICATIONS.—Section

19 2516(1)(c) of title 18, United States Code, is amended—

20 (1) by inserting ‘‘section 226 (bribery and graft

21 in connection with health care), section 227 (illegal

22 remunerations)’’ after ‘‘section 224 (bribery in

23 sporting contests),’’; and
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1 (2) by inserting ‘‘section 1347 (health care

2 fraud)’’ after ‘‘section 1344 (relating to bank

3 fraud),’’ .

4 (d) DEFINITIONS.—Section 1961(1) of title 18,

5 United States Code, is amended—

6 (1) by inserting ‘‘sections 226 and 227 (relating

7 to bribery and graft, and illegal remuneration in

8 connection with health care)’’ after ‘‘section 224 (re9 lating to sports bribery),’’;

10 (2) by inserting ‘‘section 669 (relating to theft

11 or embezzlement in connection with health care)’’

12 after ‘‘section 664 (relating to embezzlement from

13 pension and welfare funds),’’; and

14 (3) by inserting ‘‘section 1347 (relating to

15 health care fraud)’’ after ‘‘section 1344 (relating to

16 financial institution fraud),’’.

17 (e) CRIMINAL FORFEITURE.—Section 982(a) of title

18 18, United States Code, is amended by adding at the end

19 the following new paragraph:

20 ‘‘(6) The court in imposing sentence on a per21 son convicted of a Federal health care offense as de22 fined in section 24 of this title, shall order that the

23 offender forfeit to the United States any real or per24 sonal property constituting or derived from proceeds
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1 that the offender obtained directly or indirectly as

2 the result of the offense.’’.

3 (f) REWARDS FOR INFORMATION LEADING TO PROS4 ECUTION AND CONVICTION.—Section 3059(c)(1) of title

5 18, United States Code, is amended by inserting ‘‘or fur6 nishes information unknown to the Government relating

7 to a possible prosecution of a Federal health care offense

8 as defined in section 24 of this title, which results in a

9 conviction’’ before the period at the end.

10 TITLE III—ANTI-FRAUD INITIA11 TIVES UNDER MEDICARE AND

12 MEDICAID

13 SEC. 301. REVISION TO CURRENT PENALTIES.

14 (a) PERMISSIVE EXCLUSION OF INDIVIDUALS WITH

15 OWNERSHIP OR CONTROL INTEREST IN SANCTIONED EN16 TITIES.—Section 1128(b) of the Social Security Act (42

17 U.S.C. 1320a–7(b)) is amended by adding at the end the

18 following new paragraph:

19 ‘‘(15) INDIVIDUALS CONTROLLING A SANC20 TIONED ENTITY.—Any individual who has a direct

21 or indirect ownership or control interest of 5 percent

22 or more, or an ownership or control interest (as de23 fined in section 1124(a)(3)) in, or who is an officer,

24 director, agent, or managing employee (as defined in

25 section 1126(b)) of, an entity—
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1 ‘‘(A) that has been convicted of any of2 fense described in subsection (a) or in para3 graph (1), (2), or (3) of this subsection;

4 ‘‘(B) against which a civil monetary pen5 alty has been assessed under section 1128A; or

6 ‘‘(C) that has been excluded from partici7 pation under a program under title XVIII or

8 under a State health care program.’’.

9 (b) IMPOSITION OF CIVIL MONETARY PENALTY ON

10 EMPLOYER BILLING FOR SERVICES FURNISHED BY EX11 CLUDED EMPLOYEE.—Section 1128A(a)(1) of the Social

12 Security Act (42 U.S.C. 1320a–7a(a)(1)) is amended—

13 (1) by striking ‘‘or’’ at the end of subparagraph

14 (C);

15 (2) by striking ‘‘; or’’ at the end of subpara16 graph (D) and inserting ‘‘, or’’; and

17 (3) by adding at the end the following new sub18 paragraph:

19 ‘‘(E) is for a medical or other item or serv20 ice furnished by an individual who is an em21 ployee or agent of the person during a period

22 in which such employee or agent was excluded

23 from the program under which the claim was

24 made on any of the grounds for exclusion de25 scribed in subparagraph (D);’’.
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1 (c) DEPOSIT OF PENALTIES INTO HEALTH CARE

2 FRAUD AND ABUSE CONTROL ACCOUNT.—Section

3 1128A(f)(3) of such Act (42 U.S.C. 1320a–7a(f)(3)) is

4 amended by striking ‘‘as miscellaneous receipts of the

5 Treasury of the United States’’ and inserting ‘‘in the

6 Health Care Fraud and Abuse Control Account estab7 lished under section 104 of the Health Care Fraud and

8 Abuse Prevention Act of 1996’’.

9 (d) EFFECTIVE DATE.—The amendments made by

10 this section shall apply with respect to sanctions imposed

11 for acts or omissions occurring on or after the date of the

12 enactment of this Act.

13 SEC. 302. SOLICITATION AND PUBLICATION OF MODIFICA14 TIONS TO EXISTING SAFE HARBORS AND NEW

15 SAFE HARBORS; ADDITIONAL EXCEPTION

16 FOR CERTAIN DISCOUNTING AND MANAGED

17 CARE ARRANGEMENTS.

18 (a) IN GENERAL.—

19 (1) SOLICITATION OF PROPOSALS FOR SAFE

20 HARBORS.—Not later than one year after the date

21 of the enactment of this Act and not less than every

22 2 years thereafter, the Secretary of Health and

23 Human Services (hereafter in this title referred to as

24 the ‘‘Secretary’’) shall publish a notice in the Fed-
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1 eral Register soliciting proposals, which will be ac2 cepted during a 60-day period, for—

3 (A) modifications to existing safe harbors

4 issued pursuant to section 14(a) of the Medi5 care and Medicaid Patient and Program Protec6 tion Act of 1987; and

7 (B) additional safe harbors specifying pay8 ment practices that shall not be treated as a

9 criminal offense under section 1128B(b) of the

10 Social Security Act and shall not serve as the

11 basis for an exclusion under section 1128(b)(7)

12 of such Act.

13 (2) PUBLICATION OF PROPOSED MODIFICA14 TIONS AND PROPOSED ADDITIONAL SAFE HAR15 BORS.—After considering the proposals described in

16 paragraph (1), the Secretary, in consultation with

17 the Attorney General, shall publish in the Federal

18 Register proposed modifications to existing safe har19 bors and proposed additional safe harbors, if appro20 priate, with a 60-day comment period. After consid21 ering any public comments received during this pe22 riod, the Secretary shall issue final rules modifying

23 the existing safe harbors and establishing new safe

24 harbors, as appropriate.
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1 (3) REPORT.—The Inspector General of the

2 Department of Health and Human Services (here3 after in this section referred to as the ‘‘Inspector

4 General’’) shall, in an annual report to Congress or

5 as part of the year-end semiannual report required

6 by section 5 of the Inspector General Act of 1978,

7 describe the proposals received under paragraph (1)

8 and explain which proposals were included in the

9 publication described in paragraph (2), which pro10 posals were not included in that publication, and the

11 reasons for the rejection of the proposals that were

12 not included.

13 (b) CRITERIA FOR MODIFYING AND ESTABLISHING

14 SAFE HARBORS.—In modifying and establishing safe har15 bors under subsection (a)(2), the Secretary may consider

16 the extent to which providing a safe harbor for the speci17 fied payment practice may result in any of the following:

18 (1) An increase or decrease in access to health

19 care services.

20 (2) An increase or decrease in the quality of

21 health care services.

22 (3) An increase or decrease in patient freedom

23 of choice among health care providers.

24 (4) An increase or decrease in competition

25 among health care providers.
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1 (5) An increase or decrease in the ability of

2 health care facilities to provide services in medically

3 underserved areas or to medically underserved popu4 lations.

5 (6) An increase or decrease in the cost to health

6 care programs operated or financed by the Federal,

7 State, or local governments.

8 (7) An increase or decrease in the potential

9 overutilization of health care services.

10 (8) The existence or nonexistence of any poten11 tial financial benefit to a health care professional or

12 provider which may vary based on their decisions

13 of—

14 (A) whether to order a health care item or

15 service; or

16 (B) whether to arrange for a referral of

17 health care items or services to a particular

18 practitioner or provider.

19 (9) Any other factors the Secretary deems ap20 propriate in the interest of preventing fraud and

21 abuse in health care programs operated or financed

22 by the Federal, State, or local governments.

23 (c) EXCEPTION TO ANTI-KICKBACK PROHIBITIONS

24 FOR CERTAIN DISCOUNTING AND MANAGED CARE AR25 RANGEMENTS.—
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1 (1) IN GENERAL.—Section 1128B(b)(3) of the

2 Social Security Act (42 U.S.C. 1320a–7b(b)(3)) is

3 amended—

4 (A) by striking ‘‘and’’ at the end of sub5 paragraph (D);

6 (B) by striking the period at the end of

7 subparagraph (E) and inserting ‘‘; and’’; and

8 (C) by adding at the end the following new

9 subparagraph:

10 ‘‘(F) any remuneration between an organization

11 and an individual or entity providing items or serv12 ices, or a combination thereof, pursuant to a written

13 agreement between the organization and the individ14 ual or entity if the organization is an eligible organi15 zation under section 1876 or if the written agree16 ment places the individual or entity at substantial fi17 nancial risk for the cost or utilization of the items

18 or services, or a combination thereof, which the indi19 vidual or entity is obligated to provide, whether

20 through a withhold, capitation, incentive pool, per

21 diem payment, or any other similar risk arrange22 ment which places the individual or entity at sub23 stantial financial risk.’’.
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1 (2) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to written agreements

3 entered into on or after January 1, 1997.

4 SEC. 303. EXPEDITING IMPLEMENTATION OF PAYMENT AD5 JUSTMENTS FOR DURABLE MEDICAL EQUIP6 MENT BASED UPON INHERENT REASONABLE7 NESS.

8 The first sentence of section 1834(a)(10)(B) of the

9 Social Security Act (42 U.S.C. 1395m(a)(10)(B)) is

10 amended by striking the period and inserting the follow11 ing: ‘‘, except that (notwithstanding any provision of such

12 paragraphs or this title) the Secretary shall make an ad13 justment in payment for an item under this subsection

14 pursuant to this subparagraph through the issuance of an

15 interim final regulation issued not later than 1 year after

16 the Secretary initially proposes to make the adjustment.’’.

17 SEC. 304. REQUIRING ANNUAL NOTICE TO MEDICARE

18 BENEFICIARIES OF NEED TO PREVENT

19 FRAUD AND ABUSE AGAINST MEDICARE PRO20 GRAM.

21 (a) IN GENERAL.—Section 1804(a) of the Social Se22 curity Act (42 U.S.C. 1395b–2(a)) is amended—

23 (1) by striking ‘‘and’’ at the end of paragraph

24 (2);
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1 (2) by striking the period at the end of para2 graph (3) and inserting ‘‘, and’’; and

3 (3) by inserting after paragraph (3) the follow4 ing new paragraph:

5 ‘‘(4) a description of the costs to the medicare

6 program of waste, fraud, and abuse, together with

7 suggestions for steps which medicare beneficiaries

8 may take to help combat waste, fraud, and abuse

9 against the program, including the toll-free tele10 phone number operated by the Secretary and the In11 spector General of the Department of Health and

12 Human Services for reporting information on fraud

13 and abuse against the program and the potential

14 availability of a reward for individuals reporting in15 formation which leads to a criminal prosecution and

16 conviction for health care fraud under title 18, Unit17 ed States Code.’’.

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to the annual notice mailed

20 under section 1804(a) of the Social Security Act for years

21 beginning with 1997.
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1 SEC. 305. REQUIRING USE OF SINGLE PROVIDER NUMBER

2 IN SUBMISSION OF CLAIMS FOR PAYMENT

3 UNDER MEDICARE AND MEDICAID.

4 (a) USE OF SINGLE NUMBER UNDER MEDICARE; IN5 CLUDING DOCUMENTATION ON SOLVENCY AND FISCAL

6 INTEGRITY.—Section 1842(r) of the Social Security Act

7 (42 U.S.C. 1395u(r)) is amended to read as follows:

8 ‘‘(r)(1) Not later than 1 year after the date of the

9 enactment of the Health Care Fraud and Abuse Preven10 tion Act of 1996, the Secretary shall establish a system

11 which provides for a unique identifier for each individual

12 or entity who furnishes items or services for which pay13 ment may be made under this part.

14 ‘‘(2) The Secretary may not provide a unique identi15 fier to an individual or entity under the system established

16 under paragraph (1) unless the individual or entity sub17 mits such documentation relating to financial solvency and

18 fiscal integrity as the Secretary may require to ensure that

19 the issuance of the unique identifier to the individual or

20 entity will not expose the program under this part to

21 waste, fraud, and abuse, except that the Secretary may

22 waive the application of this paragraph in the case of—

23 ‘‘(A) a provider of services (as defined in sec24 tion 1861(u)); or

25 ‘‘(B) an individual or entity eligible to receive

26 payment for items or services furnished under this
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1 part on the basis of licensure or authorization under

2 State law (or the State regulatory mechanism pro3 vided by State law) to furnish the items or services.

4 ‘‘(3) No payment may be made under this title for

5 any item or service furnished by an individual or entity

6 unless the claim for payment with respect to the item or

7 service includes the unique identifier provided to the indi8 vidual or entity under the system established under para9 graph (1).’’.

10 (b) PROVIDING MEDICARE NUMBER FOR SUBMIS11 SION OF MEDICAID CLAIMS.—Section 1902(x) of such Act

12 (42 U.S.C. 1396a(x)) is amended—

13 (1) by striking ‘‘(x)’’ and inserting ‘‘(x)(1)’’;

14 and

15 (2) by adding at the end the following new

16 paragraph:

17 ‘‘(2) If an individual or entity submitting a claim to

18 the State for payment for providing medical assistance

19 under the State plan has a unique identifier assigned by

20 the Secretary pursuant to section 1842(r) for purposes of

21 title XVIII, the individual or entity shall include the iden22 tifier with such claim.’’.
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1 SEC. 306. LIABILITY OF CARRIERS AND FISCAL

2 INTERMEDIARIES FOR CLAIMS SUBMITTED

3 BY EXCLUDED PROVIDERS.

4 (a) REIMBURSEMENT TO SECRETARY FOR AMOUNTS

5 PAID TO EXCLUDED PROVIDERS.—

6 (1) REQUIREMENT FOR FISCAL

7 INTERMEDIARIES.—

8 (A) IN GENERAL.—Section 1816 of the So9 cial Security Act (42 U.S.C. 1395h) is amended

10 by adding at the end the following new sub11 section:

12 ‘‘(l) An agreement with an agency or organization

13 under this section shall require that such agency or orga14 nization reimburse the Secretary for any amounts paid for

15 a service under this title which is furnished by an individ16 ual or entity during any period for which the individual

17 or entity is excluded pursuant to section 1128, 1128A,

18 1156, or subsection (j)(2) from participation in the pro19 gram under this title, if the amounts are paid after the

20 Secretary notifies the agency or organization of the exclu21 sion.’’.

22 (B) CONFORMING AMENDMENT.—Section

23 1816(i) of such Act (42 U.S.C. 1395h(i)) is

24 amended by adding at the end the following

25 new paragraph:
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1 ‘‘(4) Nothing in this subsection shall be construed to

2 prohibit reimbursement by an agency or organization

3 under subsection (l).’’.

4 (2) REQUIREMENT FOR CARRIERS.—Section

5 1842(b)(3) of such Act (42 U.S.C. 1395u(b)(3)) is

6 amended—

7 (A) by striking ‘‘and’’ at the end of sub8 paragraph (I); and

9 (B) by inserting after subparagraph (I) the

10 following new subparagraph:

11 ‘‘(J) will reimburse the Secretary for any

12 amounts paid for an item or service under this part

13 which is furnished by an individual or entity during

14 any period for which the individual or entity is ex15 cluded pursuant to section 1128, 1128A, 1156, or

16 subsection (j)(2) from participation in the program

17 under this title, if the amounts are paid after the

18 Secretary notifies the carrier of the exclusion; and’’.

19 (b) CONFORMING REPEAL OF MANDATORY PAYMENT

20 RULE.—Section 1862(e)(2) of such Act (42 U.S.C.

21 1395y(e)(2)) is amended to read as follows:

22 ‘‘(2) No individual or entity may bill (or collect any

23 amount from) any individual for any item or service for

24 which payment is denied under paragraph (1). No person

25 is liable for payment of any amounts billed for such an
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1 item or service in violation of the previous sentence. If an

2 individual or entity knowingly and willfully bills (or col3 lects an amount) for such an item or service in violation

4 of such sentence, the Secretary may apply sanctions

5 against the individual or entity in the same manner as

6 the Secretary may apply sanctions against a physician in

7 accordance with subsection (j)(2) in the same manner as

8 such section applies with respect to a physician. Para9 graph (4) of subsection (j) shall apply in this paragraph

10 in the same manner as such paragraph applies to such

11 section.’’.

12 SEC. 307. REQUIRING FISCAL INTERMEDIARIES AND CAR13 RIERS TO USE AUTOMATED DATA PROCESS14 ING EQUIPMENT COMPARABLE TO EQUIP15 MENT USED IN PRIVATE INSURANCE BUSI16 NESS.

17 (a) IN GENERAL.—

18 (1) REQUIREMENT FOR FISCAL

19 INTERMEDIARIES.—Section 1816(f)(2) of the Social

20 Security Act (42 U.S.C. 1395h(f)(2)) is amended—

21 (A) by striking ‘‘and’’ at the end of sub22 paragraph (A);

23 (B) by striking the period at the end of

24 subparagraph (B) and inserting ‘‘; and’’; and
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1 (C) by adding at the end the following new

2 subparagraph:

3 ‘‘(C) in the case of an agency or organization

4 which processes claims for private insurance, a re5 quirement that the automated data processing equip6 ment used by the agency or organization in carrying

7 out the agreement under this section is as effective

8 (or more effective) in detecting code manipulations,

9 unbundling, global service violations, double billings,

10 and other forms of waste, fraud, and abuse as the

11 equipment the agency or organization uses in proc12 essing claims for private insurance.’’.

13 (2) REQUIREMENT FOR CARRIERS.—Section

14 1842(b)(3) of such Act (42 U.S.C. 1395u(b)(3)) is

15 amended—

16 (A) by striking ‘‘and’’ at the end of sub17 paragraph (I); and

18 (B) by inserting after subparagraph (I) the

19 following new subparagraph:

20 ‘‘(J) if it processes claims for private insurance,

21 will use automated data processing equipment in

22 carrying out the contract that is as effective (or

23 more effective) in detecting code manipulations,

24 unbundling, global service violations, double billings,

25 and other forms of waste, fraud, and abuse as the
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1 equipment it uses in processing claims for private in2 surance; and’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 subsection (a) shall apply with respect to agreements with

5 agencies and organizations under section 1816 of the So6 cial Security Act and contracts with carriers under section

7 1842 of such Act for contract years beginning after the

8 date of the enactment of this Act.

9 SEC. 308. NONDISCHARGEABILITY UNDER BANKRUPTCY

10 CODE OF AMOUNTS OWED FOR OVERPAY11 MENTS.

12 (a) IN GENERAL.—Section 523(a) of title 11, United

13 States Code, is amended—

14 (1) by striking the period at the end of para15 graph (16) and inserting ‘‘; or’’; and

16 (2) by adding at the end the following new

17 paragraph:

18 ‘‘(17) to the extent such debt is for amounts

19 owed for overpayments made under title XVIII of

20 the Social Security Act.’’.

21 (b) APPLICABILITY UNDER CHAPTER 13.—Section

22 1328(a)(2) of title 11, United States Code, is amended

23 by striking ‘‘or (9)’’ and inserting ‘‘(9), or (17)’’.

24 (c) EFFECTIVE DATE.—The amendments made by

25 this section shall apply only with respect to cases com-
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1 menced under title 11, United States Code, after the date

2 of the enactment of this Act.

Æ