I

104TH CONGRESS

1ST SESSION H. R. 2389

To combat fraud and abuse in the medicare program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 21, 1995

Mr. THOMAS (for himself, Mr. BILIRAKIS, and Mr. BARTON of Texas) introduced the following bill; which was referred to the Committee on Ways

and Means, and in addition to the Committees on Commerce and the Judiciary, 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 combat fraud and abuse in the medicare program, 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; REFERENCES IN ACT; TABLE OF

4 CONTENTS.

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

6 ‘‘Safeguarding Medicare Integrity Act of 1995’’.

7 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex8 cept as otherwise specifically provided, whenever in this

9 Act an amendment is expressed in terms of an amendment
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1 to or repeal of a section or other provision, the reference

2 shall be considered to be made to that section or other

3 provision of the Social Security Act.

4 (c) TABLE OF CONTENTS.—The table of contents of

5 this Act is as follows:

Sec. 1. Short title; references in act; table of contents.

TITLE I—PREVENTING FRAUD AND ABUSE

Sec. 101. Increasing awareness of fraud and abuse.

Sec. 102. Beneficiary incentive programs.

Sec. 103. Intermediate sanctions for medicare health maintenance organizations.

Sec. 104. Voluntary disclosure program.

Sec. 105. Revisions to current sanctions.

Sec. 106. Consolidated funding for anti-fraud and abuse activities under Medicare Integrity Program.

Sec. 107. Permitting carriers to carry out prior authorization for certain items

of durable medical equipment.

Sec. 108. Establishment of Health Care Anti-Fraud Task Force.

Sec. 109. Study of adequacy of private quality assurance programs.

TITLE II—REGULATORY RELIEF

Sec. 201. Clarification of level of intent required for imposition of sanctions.

Sec. 202. Clarification of and additions to exceptions to anti-kickback penalties.

Sec. 203. Solicitation and publication of modifications to existing safe harbors

and new safe harbors.

Sec. 204. Issuance of advisory opinions under title XI.

6 TITLE I—PREVENTING FRAUD

7 AND ABUSE

8 SEC. 101. INCREASING AWARENESS OF FRAUD AND ABUSE.

9 (a) BENEFICIARY OUTREACH EFFORTS.—The Sec10 retary of Health and Human Services (acting through the

11 Administrator of the Health Care Financing Administra12 tion and the Inspector General of the Department of

13 Health and Human Services) shall make ongoing efforts

14 (through public service announcements, publications, and
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1 other appropriate methods) to alert individuals entitled to

2 benefits under the medicare program of the existence of

3 fraud and abuse committed against the program and the

4 costs to the program of such fraud and abuse, and of the

5 existence of the toll-free telephone line operated by the

6 Secretary to receive information on fraud and abuse com7 mitted against the program.

8 (b) CLARIFICATION OF REQUIREMENT TO PROVIDE

9 EXPLANATION OF MEDICARE BENEFITS.—The Secretary

10 shall provide an explanation of benefits under the medi11 care program with respect to each item or service for

12 which payment may be made under the program which

13 is furnished to an individual, without regard to whether

14 or not a deductible or coinsurance may be imposed against

15 the individual with respect to the item or service.

16 (c) PROVIDER OUTREACH EFFORTS; PUBLICATION

17 OF FRAUD ALERTS.—

18 (1) SPECIAL FRAUD ALERTS.—

19 (A) IN GENERAL.—

20 (i) REQUEST FOR SPECIAL FRAUD

21 ALERTS.—Any person may present, at any

22 time, a request to the Secretary to issue

23 and publish a special fraud alert.

24 (ii) SPECIAL FRAUD ALERT DE25 FINED.—In this section, a ‘‘special fraud
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1 alert’’ is a notice which informs the public

2 of practices which the Secretary considers

3 to be suspect or of particular concern

4 under the medicare program or a State

5 health care program (as defined in section

6 1128(h) of the Social Security Act).

7 (B) ISSUANCE AND PUBLICATION OF SPE8 CIAL FRAUD ALERTS.—

9 (i) INVESTIGATION.—Upon receipt of

10 a request for a special fraud alert under

11 subparagraph (A), the Secretary shall in12 vestigate the subject matter of the request

13 to determine whether a special fraud alert

14 should be issued. If appropriate, the Sec15 retary (in consultation with the Attorney

16 General) shall issue a special fraud alert in

17 response to the request. All special fraud

18 alerts issued pursuant to this subpara19 graph shall be published in the Federal

20 Register.

21 (ii) CRITERIA FOR ISSUANCE.—In de22 termining whether to issue a special fraud

23 alert upon a request under subparagraph

24 (A), the Secretary may consider—
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1 (I) whether and to what extent

2 the practices that would be identified

3 in the special fraud alert may result

4 in any of the consequences described

5 in section 203(b); and

6 (II) the extent and frequency of

7 the conduct that would be identified

8 in the special fraud alert.

9 (2) PUBLICATION OF ALL HCFA FRAUD ALERTS

10 IN FEDERAL REGISTER.—Each notice issued by the

11 Health Care Financing Administration which in12 forms the public of practices which the Secretary

13 considers to be suspect or of particular concern

14 under the medicare program or a State health care

15 program (as defined in section 1128(h) of the Social

16 Security Act) shall be published in the Federal Reg17 ister, without regard to whether or not the notice is

18 issued by a regional office of the Health Care Fi19 nancing Administration.

20 SEC. 102. BENEFICIARY INCENTIVE PROGRAMS.

21 (a) PROGRAM TO COLLECT INFORMATION ON FRAUD

22 AND ABUSE.—

23 (1) ESTABLISHMENT OF PROGRAM.—Not later

24 than 3 months after the date of the enactment of

25 this Act, the Secretary shall establish a program
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1 under which the Secretary shall encourage individ2 uals to report to the Secretary information on indi3 viduals and entities who are engaging or who have

4 engaged in acts or omissions which constitute

5 grounds for the imposition of a sanction under sec6 tion 1128, section 1128A, or section 1128B of the

7 Social Security Act, or who have otherwise engaged

8 in fraud and abuse against the medicare program.

9 (2) PAYMENT OF PORTION OF AMOUNTS COL10 LECTED.—If an individual reports information to

11 the Secretary under the program established under

12 paragraph (1) which serves as the basis for the col13 lection by the Secretary or the Attorney General of

14 any amount of at least $100 (other than any

15 amount paid as a penalty under section 1128B of

16 the Social Security Act), the Secretary may pay a

17 portion of the amount collected to the individual

18 (under procedures similar to those applicable under

19 section 7623 of the Internal Revenue Code of 1986

20 to payments to individuals providing information on

21 violations of such Code).

22 (b) PROGRAM TO COLLECT INFORMATION ON PRO23 GRAM EFFICIENCY.—

24 (1) ESTABLISHMENT OF PROGRAM.—Not later

25 than 3 months after the date of the enactment of
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1 this Act, the Secretary shall establish a program

2 under which the Secretary shall encourage individ3 uals to submit to the Secretary suggestions on meth4 ods to improve the efficiency of the medicare pro5 gram.

6 (2) PAYMENT OF PORTION OF PROGRAM SAV7 INGS.—If an individual submits a suggestion to the

8 Secretary under the program established under

9 paragraph (1) which is adopted by the Secretary and

10 which results in savings to the program, the Sec11 retary may make a payment to the individual of

12 such amount as the Secretary considers appropriate.

13 SEC. 103. INTERMEDIATE SANCTIONS FOR MEDICARE

14 HEALTH MAINTENANCE ORGANIZATIONS.

15 (a) APPLICATION OF INTERMEDIATE SANCTIONS FOR

16 ANY PROGRAM VIOLATIONS.—

17 (1) IN GENERAL.—Section 1876(i)(1) (42

18 U.S.C. 1395mm(i)(1)) is amended by striking ‘‘the

19 Secretary may terminate’’ and all that follows and

20 inserting the following: ‘‘in accordance with proce21 dures established under paragraph (9), the Secretary

22 may at any time terminate any such contract or may

23 impose the intermediate sanctions described in para24 graph (6)(B) or (6)(C) (whichever is applicable) on
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1 the eligible organization if the Secretary determines

2 that the organization—

3 ‘‘(A) has failed substantially to carry out the

4 contract;

5 ‘‘(B) is carrying out the contract in a manner

6 inconsistent with the efficient and effective adminis7 tration of this section;

8 ‘‘(C) is operating in a manner that is not in the

9 best interests of the individuals covered under the

10 contract; or

11 ‘‘(D) no longer substantially meets the applica12 ble conditions of subsections (b), (c), (e), and (f).’’.

13 (2) OTHER INTERMEDIATE SANCTIONS FOR

14 MISCELLANEOUS PROGRAM VIOLATIONS.—Section

15 1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is amended by

16 adding at the end the following new subparagraph:

17 ‘‘(C) In the case of an eligible organization for which

18 the Secretary makes a determination under paragraph (1)

19 the basis of which is not described in subparagraph (A),

20 the Secretary may apply the following intermediate sanc21 tions:

22 ‘‘(i) Civil money penalties of not more than

23 $25,000 for each determination under paragraph (1)

24 if the deficiency that is the basis of the determina25 tion has directly adversely affected (or has the sub-
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1 stantial likelihood of adversely affecting) an individ2 ual covered under the organization’s contract.

3 ‘‘(ii) Civil money penalties of not more than

4 $10,000 for each week beginning after the initiation

5 of procedures by the Secretary under paragraph (9)

6 during which the deficiency that is the basis of a de7 termination under paragraph (1) exists.

8 ‘‘(iii) Suspension of enrollment of individuals

9 under this section after the date the Secretary noti10 fies the organization of a determination under para11 graph (1) and until the Secretary is satisfied that

12 the deficiency that is the basis for the determination

13 has been corrected and is not likely to recur.’’.

14 (3) PROCEDURES FOR IMPOSING SANCTIONS.—

15 Section 1876(i) (42 U.S.C. 1395mm(i)) is amended

16 by adding at the end the following new paragraph:

17 ‘‘(9) The Secretary may terminate a contract with an

18 eligible organization under this section or may impose the

19 intermediate sanctions described in paragraph (6) on the

20 organization in accordance with formal investigation and

21 compliance procedures established by the Secretary under

22 which—

23 ‘‘(A) the Secretary provides the organization

24 with the opportunity to develop and implement a

25 corrective action plan to correct the deficiencies that
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1 were the basis of the Secretary’s determination

2 under paragraph (1);

3 ‘‘(B) the Secretary shall impose more severe

4 sanctions on organizations that have a history of de5 ficiencies or that have not taken steps to correct de6 ficiencies the Secretary has brought to their atten7 tion;

8 ‘‘(C) there are no unreasonable or unnecessary

9 delays between the finding of a deficiency and the

10 imposition of sanctions; and

11 ‘‘(D) the Secretary provides the organization

12 with reasonable notice and opportunity for hearing

13 (including the right to appeal an initial decision) be14 fore imposing any sanction or terminating the con15 tract.’’.

16 (4) CONFORMING AMENDMENTS.—(A) Section

17 1876(i)(6)(B) (42 U.S.C. 1395mm(i)(6)(B)) is

18 amended by striking the second sentence.

19 (B) Section 1876(i)(6) (42 U.S.C.

20 1395mm(i)(6)) is further amended by adding at the

21 end the following new subparagraph:

22 ‘‘(D) The provisions of section 1128A (other than

23 subsections (a) and (b)) shall apply to a civil money pen24 alty under subparagraph (A) or (B) in the same manner
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1 as they apply to a civil money penalty or proceeding under

2 section 1128A(a).’’.

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

4 this section shall apply with respect to contract years be5 ginning on or after January 1, 1996.

6 SEC. 104. VOLUNTARY DISCLOSURE PROGRAM.

7 Title XI (42 U.S.C. 1301 et seq.) is amended by in8 serting after section 1128B the following new section:

9 ‘‘VOLUNTARY DISCLOSURE OF ACTS OR OMISSIONS

10 ‘‘SEC. 1129. (a) ESTABLISHMENT OF VOLUNTARY

11 DISCLOSURE PROGRAM.—Not later than 3 months after

12 the date of the enactment of the Omnibus Budget Rec13 onciliation Act of 1995, the Secretary shall establish a

14 program to encourage individuals and entities to volun15 tarily disclose to the Secretary information on acts or

16 omissions of the individual or entity which constitute

17 grounds for the imposition of a sanction described in sec18 tion 1128, 1128A, or 1128B.

19 ‘‘(b) EFFECT OF VOLUNTARY DISCLOSURE.—If an

20 individual or entity voluntarily discloses information with

21 respect to an act or omission to the Secretary under sub22 section (a), the following rules shall apply:

23 ‘‘(1) The Secretary may waive, reduce, or other24 wise mitigate any sanction which would otherwise be

25 applicable to the individual or entity under section
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1 1128, 1128A, or 1128B as a result of the act or

2 omission involved.

3 ‘‘(2) No qui tam action may be brought pursu4 ant to chapter 37 of title 31, United States Code,

5 against the individual or entity with respect to the

6 act or omission involved.’’.

7 SEC. 105. REVISIONS TO CURRENT SANCTIONS.

8 (a) INCREASE IN AMOUNT OF CRIMINAL FINES.—

9 Section 1128B (42 U.S.C. 1320a–7b) is amended by strik10 ing ‘‘$25,000’’ each place it appears in subsections (a),

11 (b)(1), (b)(2), (c), and (d) and inserting ‘‘$250,000’’.

12 (b) ESTABLISHMENT OF MINIMUM PERIOD OF EX13 CLUSION FOR CERTAIN INDIVIDUALS AND ENTITIES SUB14 JECT TO PERMISSIVE EXCLUSION.—Section 1128(c)(3)

15 (42 U.S.C. 1320a–7(c)(3)) is amended by adding at the

16 end the following new subparagraphs:

17 ‘‘(D) In the case of an exclusion of an individual or

18 entity under paragraph (1), (2), or (3) of subsection (b),

19 the period of the exclusion shall be 3 years, unless the

20 Secretary determines in accordance with published regula21 tions that a shorter period is appropriate because of miti22 gating circumstances or that a longer period is appro23 priate because of aggravating circumstances.

24 ‘‘(E) In the case of an exclusion of an individual or

25 entity under subsection (b)(4) or (b)(5), the period of the
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1 exclusion shall not be less than the period during which

2 the individual’s or entity’s license to provide health care

3 is revoked, suspended, or surrendered, or the individual

4 or the entity is excluded or suspended from a Federal or

5 State health care program.

6 ‘‘(F) In the case of an exclusion of an individual or

7 entity under subsection (b)(6)(B), the period of the exclu8 sion shall be not less than 1 year.’’.

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

10 this section shall apply with respect to acts or omissions

11 occurring on or after January 1, 1996.

12 SEC. 106. CONSOLIDATED FUNDING FOR ANTI-FRAUD AND

13 ABUSE ACTIVITIES UNDER MEDICARE INTEG14 RITY PROGRAM.

15 (a) ESTABLISHMENT OF MEDICARE INTEGRITY PRO16 GRAM.—Title XVIII is amended by adding at the end the

17 following new section:

18 ‘‘MEDICARE INTEGRITY PROGRAM

19 ‘‘SEC. 1894. (a) ESTABLISHMENT OF PROGRAM.—

20 There is hereby established the Medicare Integrity Pro21 gram (hereafter in this section referred to as the ‘Pro22 gram’) under which the Secretary shall promote the integ23 rity of the medicare program by entering into contracts

24 in accordance with this section with eligible private entities

25 to carry out the activities described in subsection (b).
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1 ‘‘(b) ACTIVITIES DESCRIBED.—The activities de2 scribed in this subsection are as follows:

3 ‘‘(1) Review of activities of providers of services

4 or other individuals and entities furnishing items

5 and services for which payment may be made under

6 this title (including skilled nursing facilities and

7 home health agencies), including medical and utiliza8 tion review and fraud review (employing similar

9 standards, processes, and technologies used by pri10 vate health plans, including equipment and software

11 technologies which surpass the capability of the

12 equipment and technologies used in the review of

13 claims under this title as of the date of the enact14 ment of the Omnibus Budget Reconciliation Act of

15 1995).

16 ‘‘(2) Audit of cost reports.

17 ‘‘(3) Determinations as to whether payment

18 should not be, or should not have been, made under

19 this title by reason of section 1862(b), and recovery

20 of payments that should not have been made.

21 ‘‘(4) Education of providers of services, bene22 ficiaries, and other persons with respect to payment

23 integrity and benefit quality assurance issues.
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1 ‘‘(c) ELIGIBILITY OF ENTITIES.—An entity is eligible

2 to enter into a contract under the Program to carry out

3 any of the activities described in subsection (b) if—

4 ‘‘(1) the entity has demonstrated capability to

5 carry out such activities;

6 ‘‘(2) in carrying out such activities, the entity

7 agrees to cooperate with the Inspector General of

8 the Department of Health and Human Services, the

9 Attorney General of the United States, and other

10 law enforcement agencies, as appropriate, in the in11 vestigation and deterrence of fraud and abuse in re12 lation to this title and in other cases arising out of

13 such activities;

14 ‘‘(3) the entity’s financial holdings, interests, or

15 relationships will not interfere with its ability to per16 form the functions to be required by the contract in

17 an effective and impartial manner; and

18 ‘‘(4) the entity meets such other requirements

19 as the Secretary may impose.

20 ‘‘(d) PROCESS FOR ENTERING INTO CONTRACTS.—

21 The Secretary shall enter into contracts under the Pro22 gram in accordance with such procedures as the Secretary

23 may by regulation establish, except that such procedures

24 shall include the following:
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1 ‘‘(1) The Secretary shall determine the appro2 priate number of separate contracts which are nec3 essary to carry out the Program and the appropriate

4 times at which the Secretary shall enter into such

5 contracts, except that contracts must be in effect to

6 carry out the activities described in subsection (b)

7 with respect to services, providers, and investigations

8 and other activities for all fiscal years beginning on

9 or after October 1, 1998.

10 ‘‘(2) The provisions of section 1153(e)(1) shall

11 apply to contracts and contracting authority under

12 this section, except that competitive procedures must

13 be used when entering into new contracts under this

14 section, or at any other time considered appropriate

15 by the Secretary.

16 ‘‘(3) A contract under this section may be re17 newed without regard to any provision of law requir18 ing competition if the contractor has met or ex19 ceeded the performance requirements established in

20 the current contract.

21 ‘‘(e) LIMITATION ON CONTRACTOR LIABILITY.—The

22 Secretary shall by regulation provide for the limitation of

23 a contractor’s liability for actions taken to carry out a con24 tract under the Program, and such regulation shall, to the

25 extent the Secretary finds appropriate, employ the same
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1 or comparable standards and other substantive and proce2 dural provisions as are contained in section 1157.

3 ‘‘(f) TRANSFER OF AMOUNTS TO MEDICARE ANTI4 FRAUD AND ABUSE TRUST FUND.—For each fiscal year,

5 the Secretary shall transfer from the Federal Hospital In6 surance Trust Fund and the Federal Supplementary Med7 ical Insurance Trust Fund to the Medicare Anti-Fraud

8 and Abuse Trust Fund under subsection (g) an amount

9 equal to the total amount of expenditures which would

10 have been made by the Secretary under this title (whether

11 through contracts with fiscal intermediaries under section

12 1816, contracts with carriers under section 1842, or other13 wise) during the year to carry out the activities described

14 in subsection (b) if the Program had not been in effect

15 (as estimated by the Secretary prior to the beginning of

16 the year). Such transfer shall be in an allocation as rea17 sonably reflects the proportion of such expenditures asso18 ciated with part A and part B.

19 ‘‘(g) MEDICARE ANTI-FRAUD AND ABUSE TRUST

20 FUND.—

21 ‘‘(1) ESTABLISHMENT.—

22 ‘‘(A) IN GENERAL.—There is hereby estab23 lished in the Treasury of the United States the

24 Anti-Fraud and Abuse Trust Fund (hereafter

25 in this subsection referred to as the ‘Trust
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1 Fund’). The Trust Fund shall consist of such

2 gifts and bequests as may be made as provided

3 in subparagraph (B) and such amounts as may

4 be deposited in the Trust Fund as provided in

5 subsection (f), paragraph (3), and title XI.

6 ‘‘(B) AUTHORIZATION TO ACCEPT GIFTS

7 AND BEQUESTS.—The Trust Fund is author8 ized to accept on behalf of the United States

9 money gifts and bequests made unconditionally

10 to the Trust Fund, for the benefit of the Trust

11 Fund or any activity financed through the

12 Trust Fund.

13 ‘‘(2) INVESTMENT.—

14 ‘‘(A) IN GENERAL.—The Secretary of the

15 Treasury shall invest such amounts of the Fund

16 as such Secretary determines are not required

17 to meet current withdrawals from the Fund.

18 Such investments may be made only in interest19 bearing obligations of the United States. For

20 such purpose, such obligations may be acquired

21 on original issue at the issue price, or by pur22 chase of outstanding obligations at the market

23 price.
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1 ‘‘(B) SALE OF OBLIGATIONS.—Any obliga2 tion acquired by the Fund may be sold by the

3 Secretary of the Treasury at the market price.

4 ‘‘(C) AVAILABILITY OF INCOME.—Any in5 terest derived from obligations acquired by the

6 Fund, and proceeds from any sale or redemp7 tion of such obligations, are hereby appro8 priated to the Fund.

9 ‘‘(3) AMOUNTS DEPOSITED INTO TRUST

10 FUND.—There shall be deposited in the Trust

11 Fund—

12 ‘‘(A) that portion of amounts recovered in

13 relation to section 1128A arising out of a claim

14 under title XVIII as remains after application

15 of subsection (f)(2) (relating to repayment of

16 the Federal Hospital Insurance Trust Fund or

17 the Federal Supplementary Medical Insurance

18 Trust Fund) of that section, as may be applica19 ble,

20 ‘‘(B) fines imposed under section 1128B

21 arising out of a claim under this title, and

22 ‘‘(C) penalties and damages imposed (other

23 than funds awarded to a relator or for restitu24 tion) under sections 3729 through 3732 of title

25 31, United States Code (pertaining to false
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1 claims) in cases involving claims relating to pro2 grams under title XVIII or XIX.

3 ‘‘(4) DIRECT APPROPRIATION OF FUNDS TO

4 CARRY OUT PROGRAM.—There are appropriated

5 from the Trust Fund for each fiscal year such

6 amounts as are necessary to carry out the Medicare

7 Integrity Program under this section.

8 ‘‘(5) ANNUAL REPORT.—The Secretary shall

9 submit an annual report to Congress on the amount

10 of revenue which is generated and disbursed by the

11 Trust Fund in each fiscal year.’’.

12 (b) ELIMINATION OF FI AND CARRIER RESPONSIBIL13 ITY FOR CARRYING OUT ACTIVITIES SUBJECT TO PRO14 GRAM.—

15 (1) RESPONSIBILITIES OF FISCAL

16 INTERMEDIARIES UNDER PART A.—Section 1816

17 (42 U.S.C. 1395h) is amended by adding at the end

18 the following new subsection:

19 ‘‘(l) No agency or organization may carry out (or re20 ceive payment for carrying out) any activity pursuant to

21 an agreement under this section to the extent that the ac22 tivity is carried out pursuant to a contract under the Med23 icare Integrity Program under section 1894.’’.

24 (2) RESPONSIBILITIES OF CARRIERS UNDER

25 PART B.—Section 1842(c) (42 U.S.C. 1395u(c)) is
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1 amended by adding at the end the following new

2 paragraph:

3 ‘‘(6) No carrier may carry out (or receive payment

4 for carrying out) any activity pursuant to a contract under

5 this subsection to the extent that the activity is carried

6 out pursuant to a contract under the Medicare Integrity

7 Program under section 1894.’’.

8 (c) CONFORMING AMENDMENT.—Section

9 1128A(f)(3) (42 U.S.C. 1320a–7a(f)(3)) is amended by

10 striking ‘‘as miscellaneous receipts of the Treasury of the

11 United States’’ and inserting ‘‘in the Anti-Fraud and

12 Abuse Trust Fund established under section 1145’’.

13 SEC. 107. PERMITTING CARRIERS TO CARRY OUT PRIOR

14 AUTHORIZATION FOR CERTAIN ITEMS OF DU15 RABLE MEDICAL EQUIPMENT.

16 (a) IN GENERAL.—Section 1834(a)(15) (42 U.S.C.

17 1395m(a)(15)), as amended by section 135(b) of the So18 cial Security Act Amendments of 1994, is amended by

19 adding at the end the following new subparagraphs:

20 ‘‘(D) APPLICATION BY CARRIERS.—A car21 rier may develop (and periodically update) a list

22 of items under subparagraph (A) and a list of

23 suppliers under subparagraph (B) in the same

24 manner as the Secretary may develop (and peri25 odically update) such lists.
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1 ‘‘(E) WAIVER OF PUBLICATION REQUIRE2 MENT.—A carrier may make an advance deter3 mination under subparagraph (C) with respect

4 to an item or supplier on a list developed by the

5 Secretary or the carrier without regard to

6 whether or not the Secretary has promulgated

7 a regulation with respect to the list, except that

8 the carrier may not make such an advance de9 termination with respect to an item or supplier

10 on a list until the expiration of the 30-day pe11 riod beginning on the date the Secretary or the

12 carrier places the item or supplier on the list.’’.

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

14 subsection (a) shall take effect as if included in the enact15 ment of the Social Security Act Amendments of 1994.

16 SEC. 108. ESTABLISHMENT OF HEALTH CARE ANTI-FRAUD

17 TASK FORCE.

18 (a) IN GENERAL.—Not later than 120 days after the

19 date of the enactment of this Act, the Attorney General

20 shall establish (in consultation with the Advisory Group

21 described in subsection (c)) within the Department of Jus22 tice a task force (similar to the Organized Crime Drug

23 Enforcement Task Force) to be known as the ‘‘Health

24 Care Anti-Fraud Task Force’’ (hereafter in this section

25 referred to as the ‘‘Task Force’’) to prosecute health care
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1 fraud offenses. Nothing in this section may be construed

2 as affecting the powers of the Attorney General or any

3 other individual.

4 (b) OPERATIONS OF TASK FORCE.—The Attorney

5 General shall establish and operate the Task Force in a

6 manner such that—

7 (1) at least one fully staffed operational seg8 ment of the Task Force (including at least one Fed9 eral representative engaged in Task Force activities

10 on a full-time basis) shall operate in each judicial

11 district of the United States; and

12 (2) the Task Force maintains separate account13 ing of its finances, personnel, case load, and resolu14 tion of claims and actions.

15 (c) ADVISORY GROUP DESCRIBED.—The Advisory

16 Group described in this subsection is a group consisting

17 of the following individuals (or their designees):

18 (1) The Secretary of Health and Human Serv19 ices.

20 (2) The Secretary of the Treasury.

21 (3) The Secretary of Veterans’ Affairs.

22 (4) The Chair of the Board of Governors of the

23 United States Postal Service.
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1 SEC. 109. STUDY OF ADEQUACY OF PRIVATE QUALITY AS2 SURANCE PROGRAMS.

3 (a) IN GENERAL.—The Administrator of the Health

4 Care Financing Administration (acting through the Direc5 tor of the Office of Research and Development) shall enter

6 into an agreement with a private entity to conduct a study

7 during the 5-year period beginning on the date of the en8 actment of this Act of the adequacy of the quality assur9 ance programs and consumer protections used by eligible

10 organizations with risk-sharing contracts under section

11 1876 of the Social Security Act, and shall include in the

12 study an analysis of the effectiveness of such organizations

13 in protecting enrollees against the risk of insufficient pro14 vision of benefits which may result from utilization con15 trols.

16 (b) REPORT.—Not later than 6 months after the con17 clusion of the 5-year period described in subsection (a),

18 the Administrator shall submit a report to Congress on

19 the study conducted under such subsection.

20 TITLE II—REGULATORY RELIEF

21 SEC. 201. CLARIFICATION OF LEVEL OF INTENT REQUIRED

22 FOR IMPOSITION OF SANCTIONS.

23 (a) CLARIFICATION OF LEVEL OF KNOWLEDGE RE24 QUIRED FOR IMPOSITION OF CIVIL MONETARY PEN25 ALTIES.—
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1 (1) IN GENERAL.—Section 1128A(a) (42

2 U.S.C. 1320a–7a(a)) is amended—

3 (A) in paragraphs (1) and (2), by inserting

4 ‘‘knowingly’’ before ‘‘presents’’ each place it ap5 pears; and

6 (B) in paragraph (3), by striking ‘‘gives’’

7 and inserting ‘‘knowingly gives or causes to be

8 given’’.

9 (2) DEFINITION OF STANDARD.—Section

10 1128A(i) (42 U.S.C. 1320a–7a(i)) is amended by

11 adding at the end the following new paragraph:

12 ‘‘(6) The term ‘should know’ means that a per13 son, with respect to information—

14 ‘‘(A) acts in deliberate ignorance of the

15 truth or falsity of the information; or

16 ‘‘(B) acts in reckless disregard of the truth

17 or falsity of the information,

18 and no proof of specific intent to defraud is re19 quired.’’.

20 (b) CLARIFICATION OF EFFECT AND APPLICATION

21 OF SAFE HARBOR EXCEPTIONS.—For purposes of section

22 1128B(b)(3) of the Social Security Act, the specification

23 of any payment practice in regulations promulgated pur24 suant to section 14(a) of the Medicare and Medicaid Pro25 gram Patient Protection Act of 1987 is—
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1 (1) solely for the purpose of adding additional

2 exceptions to the types of conduct which are not

3 subject to an anti-kickback penalty under such sec4 tion and not for the purpose of limiting the scope of

5 such exceptions; and

6 (2) for the purpose of prescribing criteria for

7 qualifying for such an exception notwithstanding the

8 intent of the party involved.

9 (c) LIMITING IMPOSITION OF ANTI-KICKBACK PEN10 ALTIES TO ACTIONS WITH SIGNIFICANT PURPOSE TO IN11 DUCE REFERRALS.—Section 1128B(b)(2) (42 U.S.C.

12 1320a–7b(b)(2)) is amended in the matter preceding sub13 paragraph (A) by striking ‘‘to induce’’ and inserting ‘‘for

14 the significant purpose of inducing’’.

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

16 this section shall apply to acts or omissions occurring on

17 or after January 1, 1996.

18 SEC. 202. CLARIFICATION OF AND ADDITIONS TO EXCEP19 TIONS TO ANTI-KICKBACK PENALTIES.

20 (a) DISCOUNTS, RISK-SHARING AND OTHER MAN21 AGED CARE ARRANGEMENTS, AND DE MINIMIS REMU22 NERATION.—Section 1128B(b)(3) (42 U.S.C. 1320a–

23 7b(b)(3)) is amended—

24 (1) by striking ‘‘and’’ at the end of subpara25 graph (D);
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1 (2) by striking the period at the end of sub2 paragraph (E) and inserting ‘‘; and’’; and

3 (3) by adding at the end the following new sub4 paragraph:

5 ‘‘(F) any reduction in cost sharing or increased

6 benefits given to an individual, any amounts paid to

7 a provider for an item or service furnished to an in8 dividual, any discount or reduction in price given by

9 the provider for such an item or service, or any

10 other remuneration if—

11 ‘‘(i) the item or service is provided—

12 ‘‘(I) the item or service is provided

13 through an organization described in sec14 tion 1877(b)(3), or is provided through

15 such an organization on behalf of another

16 entity (including but not limited to a self17 insured employer or indemnity plan) that

18 assumes financial risk for the provision of

19 the item or service, or

20 ‘‘(II) the item or service is provided

21 through any capitation, risk-sharing, or

22 disease management program (or any pro23 gram found by the Secretary to be similar

24 to such a program) and the Secretary and

25 the directors of State health care programs
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1 are provided with information on the na2 ture and scope of the reduction, amount

3 paid, or discount involved;

4 ‘‘(ii) the reduction, amount paid, or dis5 count or reduction in price is with respect to

6 another item or service related to or furnished

7 in conjunction with such item or service; or

8 ‘‘(iii) the remuneration is in the form of an

9 item which is de minimis (as established by the

10 Secretary taking into account professional or

11 ethical guidelines applicable to the provider or

12 organization involved) or is a sample of a drug

13 or drug product (in compliance with section

14 503(d) of the Federal Food, Drug, and Cos15 metic Act).’’.

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

17 this section shall apply to acts or omissions occurring on

18 or after January 1, 1996.

19 SEC. 203. SOLICITATION AND PUBLICATION OF MODIFICA20 TIONS TO EXISTING SAFE HARBORS AND NEW

21 SAFE HARBORS.

22 (a) IN GENERAL.—

23 (1) SOLICITATIONS.—Not later than January 1,

24 1996, and not less than annually thereafter, the Sec25 retary of Health and Human Services shall publish
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1 a notice in the Federal Register soliciting proposals,

2 which will be accepted 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;

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; and

13 (C) special fraud alerts to be issued pursu14 ant to section 101(c).

15 (2) PUBLICATION OF PROPOSED MODIFICA16 TIONS AND PROPOSED ADDITIONAL SAFE HAR17 BORS.—Not later than 120 days after receiving the

18 proposals described in subparagraphs (A) and (B) of

19 paragraph (1), the Secretary, after considering such

20 proposals in consultation with the Attorney General,

21 shall publish in the Federal Register proposed modi22 fications to existing safe harbors and proposed addi23 tional safe harbors, if appropriate, with a 60-day

24 comment period. After considering any public com25 ments received during this period, the Secretary
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1 shall issue final rules modifying the existing safe

2 harbors and establishing new safe harbors, as appro3 priate.

4 (3) REPORT.—The Inspector General shall, in

5 an annual report to Congress or as part of the year6 end semiannual report required by section 5 of the

7 Inspector General Act of 1978, describe the propos8 als received under subparagraphs (A) and (B) of

9 paragraph (1) and explain which proposals were in10 cluded in the publication described in paragraph (2),

11 which proposals were not included in that publica12 tion, and the reasons for the rejection of the propos13 als that were not included.

14 (b) CRITERIA FOR MODIFYING AND ESTABLISHING

15 SAFE HARBORS.—In modifying and establishing safe har16 bors under subsection (a)(2), the Secretary may consider

17 the extent to which providing a safe harbor for the speci18 fied payment practice may result in any of the following:

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

20 care services.

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

22 health care services.

23 (3) An increase or decrease in patient freedom

24 of choice among health care providers.
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1 (4) An increase or decrease in competition

2 among health care providers.

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

4 care programs of the Federal Government.

5 (6) An increase or decrease in the potential

6 overutilization of health care services.

7 (7) Any other factors the Secretary deems ap8 propriate in the interest of preventing fraud and

9 abuse in health care programs of the Federal Gov10 ernment.

11 SEC. 204. ISSUANCE OF ADVISORY OPINIONS UNDER TITLE

12 XI.

13 (a) IN GENERAL.—Title XI (42 U.S.C. 1301 et seq.),

14 as amended by section 104(a), is amended by inserting

15 after section 1129 the following new section:

16 ‘‘ADVISORY OPINIONS

17 ‘‘SEC. 1130. (a) ISSUANCE OF ADVISORY OPIN18 IONS.—The Secretary shall issue written advisory opinions

19 as provided in this section.

20 ‘‘(b) MATTERS SUBJECT TO ADVISORY OPINIONS.—

21 The Secretary shall issue advisory opinions as to the fol22 lowing matters:

23 ‘‘(1) What constitutes prohibited remuneration

24 within the meaning of section 1128B(b).

25 ‘‘(2) Whether an arrangement or proposed ar26 rangement satisfies the criteria set forth in section
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1 1128B(b)(3) for activities which do not result in

2 prohibited remuneration.

3 ‘‘(3) Whether an arrangement or proposed ar4 rangement satisfies the criteria which the Secretary

5 has established, or shall establish by regulation for

6 activities which do not result in prohibited remu7 neration.

8 ‘‘(4) What constitutes an inducement to reduce

9 or limit services to individuals entitled to benefits

10 under title XVIII or title XIX within the meaning

11 of section 1128B(b).

12 ‘‘(5) Whether any activity or proposed activity

13 constitutes grounds for the imposition of a sanction

14 under section 1128, 1128A, or 1128B.

15 ‘‘(c) MATTERS NOT SUBJECT TO ADVISORY OPIN16 IONS.—Such advisory opinions shall not address the fol17 lowing matters:

18 ‘‘(1) Whether the fair market value shall be, or

19 was paid or received for any goods, services or prop20 erty.

21 ‘‘(2) Whether an individual is a bona fide em22 ployee within the requirements of section 3121(d)(2)

23 of the Internal Revenue Code of 1986.

24 ‘‘(d) EFFECT OF ADVISORY OPINIONS.—
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1 ‘‘(1) BINDING AS TO SECRETARY AND PARTIES

2 INVOLVED.—Each advisory opinion issued by the

3 Secretary shall be binding as to the Secretary and

4 the party or parties requesting the opinion.

5 ‘‘(2) FAILURE TO SEEK OPINION.—The failure

6 of a party to seek an advisory opinion may not be

7 introduced into evidence to prove that the party in8 tended to violate the provisions of sections 1128,

9 1128A, or 1128B.

10 ‘‘(e) REGULATIONS.—

11 ‘‘(1) IN GENERAL.—Not later than 180 days

12 after the date of the enactment of this section, the

13 Secretary shall issue regulations to carry out this

14 section. Such regulations shall provide for—

15 ‘‘(A) the procedure to be followed by a

16 party applying for an advisory opinion;

17 ‘‘(B) the procedure to be followed by the

18 Secretary in responding to a request for an ad19 visory opinion;

20 ‘‘(C) the interval in which the Secretary

21 shall respond;

22 ‘‘(D) the reasonable fee to be charged to

23 the party requesting an advisory opinion; and

24 ‘‘(E) the manner in which advisory opin25 ions will be made available to the public.
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1 ‘‘(2) SPECIFIC CONTENTS.—Under the regula2 tions promulgated pursuant to paragraph (1)—

3 ‘‘(A) the Secretary shall be required to re4 spond to a party requesting an advisory opinion

5 by not later than 30 days after the request is

6 made; and

7 ‘‘(B) the fee charged to the party request8 ing an advisory opinion shall be equal to the

9 costs incurred by the Secretary in responding to

10 the request.’’.

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

12 subsection (a) shall apply to requests for advisory opinions

13 made on or after January 1, 1996.

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