I

104TH CONGRESS

1ST SESSION H. R. 1461

To amend the Public Health Service Act to eliminate the incentives that

lead to increased prices and utilization of clinical laboratory diagnostic

testing services and other ancillary health services.

IN THE HOUSE OF REPRESENTATIVES

APRIL 6, 1995

Mr. UPTON (for himself and Mr. BROWN of Ohio) introduced the following

bill; which was referred to the Committee on Commerce

A BILL

To amend the Public Health Service Act to eliminate the

incentives that lead to increased prices and utilization

of clinical laboratory diagnostic testing services and other

ancillary health services.

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.

4 This Act may be cited as the ‘‘Direct Billing Act’’.

5 SEC. 2. AMENDMENT TO THE PUBLIC HEALTH SERVICE

6 ACT.

7 The Public Health Service Act is amended by adding

8 at the end the following:
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1 ‘‘TITLE XXVII—RESTRICTIONS

2 ON BILLING

3 ‘‘SEC. 2701. PROHIBITION.

4 ‘‘(a) BILLING OF OTHERS FOR ANCILLARY HEALTH

5 SERVICES.—Except as provided in section 2702, it shall

6 be unlawful for any person (including any individual or

7 entity) who furnishes ancillary health services (as defined

8 in section 2705(1)) to present or cause to be presented,

9 a claim, bill, or demand for payment to any person other

10 than the patient receiving such services.

11 ‘‘(b) BILLING OF RECIPIENT OF SERVICES.—Except

12 as provided in section 2702, it shall be unlawful for any

13 physician, or the agent of any physician, to present, or

14 cause to be presented, a claim, bill, or demand for pay15 ment for ancillary health services to any recipient of such

16 services unless the services covered by the claim, bill, or

17 demand were furnished—

18 ‘‘(1) personally by, or under the supervision of,

19 the referring physician;

20 ‘‘(2) personally by, or under the supervision of,

21 a physician who is a member of the same group

22 practice as the referring physician; or

23 ‘‘(3) personally by individuals who are employed

24 by such physician or group practice and who are
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1 personally supervised by the physician or by another

2 physician in the group practice.

3 ‘‘(c) GENERAL EXCEPTION FOR SERVICES UNDER

4 MEDICARE.—This section does not apply with respect to

5 any ancillary health services for which payment may be

6 made under title XVIII of the Social Security Act.

7 ‘‘SEC. 2702. EXCEPTIONS.

8 ‘‘Notwithstanding the provisions of section 2701, a

9 person who furnishes ancillary health services to an indi10 vidual may present, or cause to be presented, for payment

11 for actual services rendered a claim, bill, or demand to—

12 ‘‘(1) an immediate family member of the recipi13 ent of the services or any other person legally re14 sponsible for the debts or care of the recipient of the

15 services;

16 ‘‘(2) a third party payor designated by the re17 cipient of the services;

18 ‘‘(3) a health maintenance organization in

19 which the recipient of the services is enrolled;

20 ‘‘(4) a hospital or skilled nursing facility where

21 the recipient of the services was an inpatient or out22 patient at the time the services were provided;

23 ‘‘(5) an employer where the recipient of the

24 services is an employee of such employer and the

25 employer is responsible for payment for the services;
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1 ‘‘(6) a governmental agency or specified agent,

2 on behalf of the recipient of the services;

3 ‘‘(7) a substance abuse program where the cli4 ents of such a program were the recipient of the

5 services;

6 ‘‘(8) a clinic or other health care provider that

7 has been designated (or that is operated by an orga8 nization that has been designated) as tax-exempt

9 pursuant to section 501(c)(3) of the Internal Reve10 nue Code of 1986 whose purpose is the promotion

11 of public health, if the services rendered relate to

12 testing for sexually transmitted disease, acquired im13 mune deficiency syndrome, pregnancy, pregnancy

14 termination, or other conditions where the Secretary

15 has determined that compliance with section 2701

16 could seriously compromise the recipient’s need for

17 confidentiality;

18 ‘‘(9) a person engaged in bona fide research

19 studies;

20 ‘‘(10) the party requesting the ancillary health

21 services where Federal, State, or local law requires

22 that the identity of the recipient be kept confiden23 tial;

24 ‘‘(11) another person furnishing the same ancil25 lary health services for which payment is sought
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1 (hereafter referred to in this paragraph as the ‘re2 questing party’) where the person presenting, or

3 causing to be presented, the claim, bill, or demand

4 for payment furnished the services at the request of

5 the requesting party, except that the requesting

6 party may not be a facility owned or operated by the

7 physician requesting the ancillary health service; and

8 ‘‘(12) an entity approved to receive such claims,

9 bills or demands by the Secretary in regulations.

10 The persons described in paragraphs (1) through (12) who

11 have received a claim, bill, or demand for payment for

12 such ancillary health services may present, or cause to be

13 presented, such claim, bill, or demand to the responsible

14 party.

15 ‘‘SEC. 2703. SANCTIONS.

16 ‘‘(a) PAYMENT.—No payment may be made for a

17 service that is provided in violation of section 2701.

18 ‘‘(b) COLLECTION OF AMOUNTS.—

19 ‘‘(1) LIABILITY ON COLLECTION.—If a person

20 collects any amounts that were billed in violation of

21 section 2701(a), such person shall be liable for, and

22 shall refund on a timely basis to the individual

23 whom such amounts were collected, any amounts so

24 collected.
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1 ‘‘(2) COLLECTION BY PHYSICIAN.—If a physi2 cian collects any amounts from a recipient of serv3 ices, or from another person on behalf of the recipi4 ent of services (including a third-party payor) that

5 were billed in violation of section 2701(b), such phy6 sician shall be liable for, and shall refund on a time7 ly basis to the recipient or person, any amounts so

8 collected.

9 ‘‘(c) REPEATED CLAIMS.—Any person that presents,

10 or causes to be presented, on a repeated basis, a bill or

11 a claim that such person knows, or should have known,

12 is for a service for which payment may not be made under

13 subsection (a), or for which a refund has not been made

14 under subsection (b), shall be subject to a civil money pen15 alty of not more than $5,000 for each such bill or claim.

16 The provisions of section 1128A of the Social Security Act

17 (other than the first sentence of subsection (a) and sub18 section (b)) shall apply to a civil money penalty assessed

19 under the previous sentence in the same manner as such

20 provisions apply to a penalty or proceeding under such

21 section 1128A(a).

22 ‘‘(d) SUSPENSION OF LABORATORY CERTIFI23 CATION.—If the Secretary finds, after reasonable notice

24 and opportunity for a hearing, that a laboratory which

25 holds a certificate pursuant to section 353 has violated
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1 section 2701, the Secretary may suspend, revoke or limit

2 such certification in accordance with the procedures estab3 lished in section 353(k).

4 ‘‘(e) EXCLUSION FROM OTHER PROGRAMS.—

5 ‘‘(1) AUTHORITY.—The Secretary may exclude

6 from participation in any program under title XVIII

7 of the Social Security Act, any individual or entity

8 that the Secretary determines has violated section

9 2701 and may direct that such individual and entity

10 be excluded from participation in any State health

11 care program receiving Federal funds.

12 ‘‘(2) APPLICATION OF OTHER LAW.—The provi13 sions of section 1128(e) of the Social Security Act

14 shall apply to any exclusion under paragraph (1) in

15 the same manner as such provisions apply to a pro16 ceeding under such section 1128.

17 ‘‘SEC. 2704. REGULATIONS.

18 ‘‘The Secretary shall by regulation impose such other

19 requirements as may be necessary to implement the pur20 poses of this title.

21 ‘‘SEC. 2705. DEFINITIONS.

22 ‘‘As used in this title:

23 ‘‘(1) ANCILLARY HEALTH SERVICES.—The term

24 ‘ancillary health services’ means—

25 ‘‘(A) clinical laboratory services;
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1 ‘‘(B) diagnostic x-ray tests and other diag2 nostic imaging services including CT and mag3 netic resonance imaging services;

4 ‘‘(C) other diagnostic tests;

5 ‘‘(D) durable medical equipment; and

6 ‘‘(E) physical therapy services.

7 ‘‘(2) GROUP PRACTICES.—The term ‘group

8 practice’ means a group of 2 or more physicians le9 gally organized as a partnership, professional cor10 poration, foundation, not-for-profit corporation, fac11 ulty practice plan, or similar association—

12 ‘‘(A) in which each physician who is a

13 member of the group provides substantially the

14 full range of services that the physician rou15 tinely provides (including medical care, con16 sultation, diagnosis, or treatment) through the

17 joint use of shared office space, facilities, equip18 ment, and personnel;

19 ‘‘(B) for which substantially all of the serv20 ices of the physicians who are members of the

21 group are provided through the group and are

22 billed in the name of the group and amounts so

23 received are treated as receipts of the group;

24 ‘‘(C) in which the overhead expenses of

25 and the income from the practice are distrib-
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1 uted in accordance with methods previously de2 termined by members of the group; and

3 ‘‘(D) which meets such other standards as

4 the Secretary may impose by regulation.

5 In the case of a faculty practice plan associated with

6 a hospital with an approved medical residency train7 ing program in which physician members may pro8 vide a variety of different specialty services and pro9 vide professional services both within and outside the

10 group (as well as perform other tasks, such as re11 search), the definition of such term shall be limited

12 with respect to the services provided outside of the

13 faculty practice plan.

14 ‘‘(3) IMMEDIATE FAMILY MEMBER.—The term

15 ‘immediate family member’ shall include spouses,

16 natural and adoptive parents, natural and adoptive

17 children, natural and adopted siblings, stepparents,

18 stepchildren and stepsiblings, fathers-in-law, moth19 ers-in-law, brothers-in-law, sisters-in-law, sons-in-law

20 and daughters-in-law, grandparents and grand21 children, and such additional family members as

22 may be specified in regulations adopted by the Sec23 retary.

24 ‘‘(4) PHYSICIAN.—The term ‘physician’

25 means—
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1 ‘‘(A) a doctor of medicine or osteopathy le2 gally authorized to practice medicine and per3 form surgery by the State in which such indi4 vidual performs such function or action;

5 ‘‘(B) a doctor of dental surgery or of den6 tal medicine who is legally authorized to prac7 tice dentistry in the State in which such indi8 vidual performs such functions;

9 ‘‘(C) a doctor of podiatric medicine;

10 ‘‘(D) a doctor of optometry; or

11 ‘‘(E) a chiropractor.

12 ‘‘(5) THIRD PARTY PAYOR.—The term ‘third

13 party payor’ means any health care insurer, includ14 ing any hospital services corporation, health services

15 corporation, medical expense indemnity corporation,

16 mutual insurance company, or self-insured corpora17 tion, that provides coverage for health or health-re18 lated items or service.’’.

19 SEC. 3. EFFECTIVE DATE.

20 (a) IN GENERAL.—This Act shall become effective

21 December 31, 1996.

22 (b) REGULATIONS.—Not later than July 1, 1997, the

23 Secretary of Health and Human Services shall promulgate
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1 such regulations as may be appropriate to carry out this

2 Act.

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