I

104TH CONGRESS

1ST SESSION H. R. 2408

To provide for enhanced penalties for health care fraud, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 27, 1995

Mr. COBURN introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committees on Ways and

Means, the Judiciary, and Government Reform and Oversight, 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 provide for enhanced penalties for health care fraud,

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 Anti-Fraud Act of 1995’’.

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—FRAUD AND ABUSE CONTROL PROGRAM
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Sec. 101. Creation of Health Care Anti-Fraud Task Force.

Sec. 102. Employees of task force.

Sec. 103. Fraud and abuse control program.

Sec. 104. Court-imposed obligations upon health anti-fraud and abuse convictions.

Sec. 105. Health care fraud and abuse guidance.

TITLE II—REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND

ABUSE

Sec. 201. Mandatory exclusion from participation in Medicare and State health

care programs.

Sec. 202. Establishment of minimum period of exclusion for certain individuals

and entities subject to permissive exclusion from Medicare and

State health care programs.

Sec. 203. Permissive exclusion of individuals with ownership or control interest

in sanctioned entities.

Sec. 204. Sanctions against practitioners and persons for failure to comply with

statutory obligations.

Sec. 205. Intermediate sanctions for Medicare health maintenance organizations.

Sec. 206. Effective date.

TITLE III—ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

Sec. 301. Establishment of the health care fraud and abuse data collection program.

TITLE IV—MONETARY PENALTIES

Sec. 401. Social Security Act civil monetary penalties.

Sec. 402. Other Social Security Act civil penalties.

Sec. 403. Social Security Act criminal penalties.

TITLE V—AMENDMENTS TO ANTI-KICKBACK LAW

Sec. 501. Clarification of standards.

Sec. 502. Clarifications and additions to anti-kickback exceptions.

Sec. 503. Clarification of safe harbor authority in anti-kickback provisions.

TITLE VI—AMENDMENTS TO THE PHYSICIAN SELF-REFERRAL

LAW

Sec. 601. Financial relationship defined.

Sec. 602. Self-referrals for physician services.

Sec. 603. Risk-sharing arrangements.

Sec. 604. Physician Ownership

Sec. 605. Shared facility services.

Sec. 606. Payer directed care.

Sec. 607. Self-referrals for certain designated health services.

Sec. 608. Definition of direct supervision.

Sec. 609. Effective date.

TITLE VII—MEDICARE BILLING ABUSE PREVENTION

Sec. 701. Implementation of General Accounting Office recommendations regarding Medicare claims processing.

Sec. 702. Minimum software requirements.
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Sec. 703. Disclosure.

Sec. 704. Review and modification of regulations.

Sec. 705. Definitions.

Sec. 706. Termination of Proposed Medicare Transaction System.

1 TITLE I—FRAUD AND ABUSE CONTROL

2 PROGRAM

3 SEC. 101. CREATION OF NATIONAL HEALTH CARE ANTI4 FRAUD TASK FORCE.

5 (a) PURPOSE.—The Attorney General in consultation

6 with the Secretary of the Department of Health and

7 Human Services shall establish a national health care

8 fraud task force to coordinate Federal law enforcement

9 agencies to control fraud and abuse in the delivery of

10 health care in the United States. This task force, through

11 its regional offices, shall have the power to pursue both

12 civil and/or criminal actions against any individual organi13 zation, or other entity whose acts knowingly and willfully

14 amount to health care fraud or knowingly and willfully

15 amount to fraud and abuse in the delivery of health care

16 in the United States.

17 (b) IN GENERAL.—Consistent with section 101 of

18 subtitle A, not later than one hundred twenty days after

19 enactment, the Attorney General shall establish a health

20 care fraud task force—

21 (1) to target, investigate, and prosecute individ22 uals who organize, direct, finance, or are otherwise

23 knowingly engaged in health care fraud;
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1 (2) to work fully and effectively with State and

2 local law enforcement agencies;

3 (3) to promote a coordinated health care fraud

4 enforcement effort and to encourage maximum co5 operation among all Federal agencies; and

6 (4) to make full use of financial investigative

7 techniques, including tax law enforcement and, in

8 order identify and convict individuals and sanction

9 entities that engage in health care fraud.

10 (c) PARTICIPANTS.—The Federal agencies that shall

11 participate in the health care fraud task force are—

12 (1) the Department of Justice (including the

13 Federal Bureau of Investigation);

14 (2) the Department of Health and Human

15 Services (including the Office of the Inspector Gen16 eral);

17 (3) the Department of Defense (CHAMPUS);

18 (4) the Veteran’s Administration:

19 (5) the Railroad Retirement Board;

20 (6) the United States Postal Inspection Service;

21 and

22 (7) the Internal Revenue Service.

23 (d) The President shall designate one of the members

24 as chair. The chair serves a term concurrent with that
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1 of the President. The chair shall serve as the chief execu2 tive officer of the task force.

3 SEC. 102. EMPLOYEES OF THE TASK FORCE.

4 (a) Effective January 1, 1996, the following employ5 ees of the Government of the United States shall be as6 signed to the task force but shall remain as employees of

7 their former Government employer for purposes of salary,

8 compensation, benefits and all related matters:

9 (1) Employees of the Department of Health

10 and Human Services whose primary duties related to

11 health care fraud.

12 (2) Employees of the Department of Justice

13 whose primary duties relate to health care fraud to

14 include employees of the Federal Bureau of Inves15 tigation and the Office for United States Attorneys;

16 and

17 (3) Any other employee of the Federal Govern18 ment selected by the Commission for assignment to

19 the task force.

20 (b) The number of employees assigned to the task

21 force pursuant to subsection (a) shall be sufficient to allow

22 the task force to perform its objectives; provided, however,

23 that the total number of individuals does not exceed fifty

24 (50).
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1 (c) OBJECTIVES.—The objectives of the task force

2 shall be—

3 (1) to target, investigate, and prosecute individ4 uals who organize, direct, finance, or are otherwise

5 engaged in health care fraud;

6 (2) to promote a coordinated health care fraud

7 enforcement effort, and to encourage maximum co8 operation among all Federal agencies; and

9 (3) to work fully and effectively with State and

10 local law enforcement agencies.

11 SEC. 103. FRAUD AND ABUSE CONTROL PROGRAM.

12 (a) ESTABLISHMENT OF PROGRAM.—

13 (1) IN GENERAL.—Not later than January 1,

14 1996, the Secretary of Health and Human Services

15 (in this title referred to as the ‘‘Secretary’’), acting

16 through the Office of the Inspector General of the

17 Department of Health and Human Services, and the

18 Attorney General shall, after consultation with the

19 task force, establish a program—

20 (A) to coordinate Federal, State, and local

21 law enforcement programs to control fraud and

22 abuse with respect to the delivery of and pay23 ment for health care in the United States;

24 (B) to conduct investigations, audits, eval25 uations, and inspections, including undercover
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1 operations, relating to ‘‘fraud and abuse in’’ the

2 delivery of and payment for health care in the

3 United States;

4 (C) to facilitate the enforcement of the

5 provisions of sections 1128, 1128A, and 1128B

6 of the Social Security Act (42 U.S.C. 1320a–7,

7 1320a–7a, and 1320a–7b) and other statutes

8 applicable to health care fraud and abuse; and

9 (D) to provide for the modification and es10 tablishment of safe harbors, and to issue advi11 sory opinions and special fraud alerts pursuant

12 to section 105.

13 (2) COORDINATION WITH HEALTH PLANS.—In

14 carrying out the program established under para15 graph (1), the Secretary and the Attorney General

16 shall consult with, and arrange for the sharing of

17 data, with representatives of health plans.

18 (3) REGULATIONS.—

19 (A) IN GENERAL.—The Secretary and the

20 Attorney General shall by regulation establish

21 standards to carry out the program under para22 graph (1).

23 (B) INFORMATION STANDARDS.—

24 (i) IN GENERAL.—Such regulations

25 shall include standards relating to the fur-
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1 nishing of information by health plans,

2 providers, and others to enable the Sec3 retary and the Attorney General to carry

4 out the program (including coordination

5 with health plans under paragraph (2)).

6 (ii) CONFIDENTIALITY.—Such regula7 tions shall include procedures to assure

8 that such information is provided and uti9 lized in a manner that appropriately pro10 tects the confidentiality of the information

11 and the privacy of individuals receiving

12 health care services and items.

13 (iii) QUALIFIED IMMUNITY FOR PRO14 VIDING INFORMATION.—The provisions of

15 section 1157(a) of the Social Security Act

16 (relating to limitation on liability) shall

17 apply—

18 (I) to a person providing infor19 mation or communications to the

20 Commission, the Secretary or the At21 torney General in conjunction with

22 their performance of duties under this

23 Act; or

24 (II) to health plans sharing infor25 mation in good faith and without mal-
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1 ice with any other health plan with re2 spect to matters relating to health

3 care fraud detection, investigation and

4 prosecution.

5 (4) ENSURING ACCESS TO DOCUMENTATION.—

6 The Inspector General of the Department of Health

7 and Human services is authorized to exercise such

8 authority described in paragraphs (4) and (5) of sec9 tion 6 of the Inspector General Act of 1978 (5

10 U.S.C. App.) (relating to subpoenas and administra11 tion of oaths) with respect to the activities under the

12 fraud and abuse control program established under

13 this subsection to the same extent as the Inspector

14 General may exercise such authorities to perform the

15 functions assigned by such Act.

16 (5) AUTHORITY OF INSPECTOR GENERAL.—

17 Nothing in this Act shall be construed to diminish

18 the authority of any Inspector General, including

19 such authority as provided in the Inspector General

20 Act of 1978 (5 U.S.C. App.).

21 (b) HEALTH PLAN DEFINED.—For purposes of this

22 section, the term ‘‘health plan’’ means a plan or program

23 that provides health benefits, whether directly, through in24 surance, or otherwise, and includes—

25 (1) a policy of health insurance;
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1 (2) a contract of a service benefit organization;

2 (3) a membership agreement with a health

3 maintenance organization or other prepaid health

4 plan; and

5 (4) an employee welfare benefit plan or a mul6 tiple employer welfare plan (as such terms are de7 fined in section 3 of the Employee Retirement In8 come Security Act of 1974 (29 U.S.C. 1002).

9 SEC. 104. COURT-IMPOSED OBLIGATIONS UPON HEALTH

10 CARE FRAUD AND ABUSE CONVICTIONS.

11 (a) IDENTIFICATION OF COMMUNITY SERVICE OP12 PORTUNITIES.—Section 1128B of the Social Security Act

13 (42 U.S.C. 1320a–7b) is amended by adding at the end

14 the following new subsection:

15 ‘‘(g) The Secretary may—

16 ‘‘(1) in consultation with State and local health

17 care officials, identify opportunities for the satisfac18 tion of community service obligations that a court

19 may impose upon the conviction of an offense under

20 this section, and

21 ‘‘(2) make information concerning such oppor22 tunities available to Federal and State law enforce23 ment officers and State and local health care offi24 cials.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on January 1, 1996.

3 SEC. 105. HEALTH CARE FRAUD AND ABUSE GUIDANCE.

4 (a) SOLICITATION AND PUBLICATION OF MODIFICA5 TIONS TO EXISTING SAFE HARBORS AND NEW SAFE

6 HARBORS.—

7 (1) IN GENERAL.—

8 (A) SOLICITATION OF PROPOSALS FOR

9 SAFE HARBORS.—Not later than January 1,

10 1996, and not less than annually thereafter, the

11 Secretary shall publish a notice in the Federal

12 Register soliciting proposals, which will be ac13 cepted during a 60-day period, for—

14 (i) modifications to existing safe har15 bors issued pursuant to section 14(a) of

16 the Medicare and Medicaid Patient and

17 Program Protection Act of 1987 (42

18 U.S.C. 1320a–7b note);

19 (ii) additional safe harbors specifying

20 payment practices that shall not be treated

21 as a criminal offense under section

22 1128B(b) of the Social Security Act (42

23 U.S.C. 1320a–7b(b)) and shall not serve

24 as the basis for an exclusion under section
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1 1128(b)(7) of such Act (42 U.S.C. 1320a–

2 7(b)(7));

3 (iii) advisory opinions to be issued

4 pursuant to subsection (b); and

5 (iv) special fraud alerts to be issued

6 pursuant to subsection (c).

7 (B) PUBLICATION OF PROPOSED MODI8 FICATIONS AND PROPOSED ADDITIONAL SAFE

9 HARBORS.—After considering the proposals de10 scribed in clauses (i) and (ii) of subparagraph

11 (A), the Secretary, in consultation with the At12 torney General, shall by May of each year pub13 lish in the Federal Register proposed modifica14 tions to existing safe harbors and proposed ad15 ditional safe harbors, if appropriate, with a 60-

16 day comment period. After considering any pub17 lic comments received during this period, the

18 Secretary shall within 60 days after the close of

19 the comment period issue final rules modifying

20 the existing safe harbors and establishing new

21 safe harbors, as appropriate.

22 (C) REPORT.—The Inspector General of

23 the Department of Health and Human Services

24 (in this section referred to as the ‘‘Inspector

25 General’’) shall, in an annual report to Con-
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1 gress or as part of the year-end semiannual re2 port required by section 5 of the Inspector Gen3 eral Act of 1978 (5 U.S.C. App.), describe the

4 proposals received under clauses (i) and (ii) of

5 subparagraph (A) and explain which proposals

6 were included in the publication described in

7 subparagraph (B), which proposals were not in8 cluded in that publication, and the reasons for

9 the rejection of the proposals that were not in10 cluded.

11 (2) CRITERIA FOR MODIFYING AND ESTABLISH12 ING SAFE HARBORS.—In modifying and establishing

13 safe harbors under paragraph (1)(B), the Secretary

14 may consider the extent to which providing a safe

15 harbor for the specified payment practice may result

16 in any of the following:

17 (A) An increase or decrease in access to

18 health care services.

19 (B) An increase or decrease in the quality

20 of health care services.

21 (C) An increase or decrease in patient free22 dom of choice among health care providers.

23 (D) An increase or decrease in competition

24 among health care providers.
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1 (E) An increase or decrease in the cost to

2 health care programs under the Social Security

3 Act.

4 (F) An increase or decrease in the poten5 tial overutilization of health care services.

6 (G) Any other factors the Secretary deems

7 appropriate in the interest of preventing fraud

8 and abuse in health care programs under the

9 Social Security Act.

10 (b) ADVISORY OPINIONS.—

11 (1) ADVISORY OPINIONS UNDER TITLE XI.—

12 Title XI of the Social Security Act (42 U.S.C. 1301

13 et seq.) is amended by inserting after section 1128B

14 the following new section:

15 ‘‘ADVISORY OPINIONS

16 ‘‘SEC. 1129. (a) ISSUANCE OF ADVISORY OPIN17 IONS.—The Secretary shall issue advisory opinions as pro18 vided in this section.

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

20 The Secretary shall issue advisory opinions as to the fol21 lowing matters:

22 ‘‘(1) What constitutes prohibited remuneration

23 within the meaning of section 1128B(b) of the So24 cial Security Act.

25 ‘‘(2) Whether an arrangement or proposed ar26 rangement satisfies the criteria set forth in section
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1 1128B(b)(3) of the Social Security Act for activities

2 which do not result in 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 an arrangement or proposed ar13 rangement will result in a prohibited referral within

14 the meaning of section 1877 of the Social Security

15 Act.

16 ‘‘(6) Whether an arrangement, activity or pro17 posed arrangement or proposed activity violates any

18 other provision of this Act.

19 ‘‘(c) MATTERS NOT SUBJECT TO ADVISORY OPIN20 IONS.—Such advisory opinions shall not address the fol21 lowing matters:

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

23 was paid or received for any goods, services or prop24 erty.
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1 ‘‘(2) Whether an individual is a bona fide em2 ployee within the requirements of section 3121(d)(2)

3 of the Internal Revenue Code of 1986.

4 ‘‘(d) EFFECT OF ADVISORY OPINIONS.—

5 ‘‘(1) IN GENERAL.—Each advisory opinion is6 sued by the Secretary shall be binding as to the Sec7 retary and the party or parties requesting the opin8 ion, so long as the party’s actions or omissions do

9 not deviate from the actions or omissions presented

10 in the request for the advisory opinion.

11 ‘‘(2) The failure of a party to seek an advisory

12 opinion may not be introduced into evidence to prove

13 that the party intended to violate the provisions of

14 sections 1128, 1128A, 1128B, 1877, of this Act.

15 ‘‘(e) FEE.—

16 ‘‘(1) IN GENERAL.—The Secretary shall require

17 an individual or entity requesting an advisory opin18 ion under this section to submit a fee.

19 ‘‘(2) AMOUNT.—The amount of the fee required

20 under paragraph (1) shall be equal to the costs in21 curred by the Secretary in responding to the re22 quest.

23 ‘‘(f) REGULATIONS.—The Secretary within 90 days

24 of the date of the enactment shall issue regulations estab-
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1 lishing a system for the issuance of advisory opinions.

2 Such regulations shall provide for—

3 ‘‘(1) the procedure to be followed by a party ap4 plying for an advisory opinion;

5 ‘‘(2) the procedure to be followed by the Sec6 retary in responding to a request for an advisory

7 opinion;

8 ‘‘(3) the interval in which the Secretary shall

9 respond; and

10 ‘‘(4) the manner in which advisory opinions will

11 be made available to the public.

12 ‘‘(g) INTERVAL FOR ISSUANCE OF ADVISORY OPIN13 IONS.—Under no circumstances shall the interval in which

14 the Secretary shall respond to a party requesting an advi15 sory opinion exceed 30 days.’’.

16 (2) ADVISORY OPINIONS RELATING TO PHYSI17 CIAN OWNERSHIP AND REFERRAL.—Section 1877 of

18 the Social Security Act (42 U.S.C. 1395nn) is

19 amended by the addition of the following new sub20 section:

21 ‘‘(i) ADVISORY OPINIONS.—

22 ‘‘(1) IN GENERAL.—The Secretary shall issue

23 advisory opinions on whether an arrangement or

24 proposed arrangement will result in a prohibited re25 ferral within the meaning of this section.
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1 ‘‘(2) EFFECT OF ADVISORY OPINIONS.—

2 ‘‘(A) Each advisory opinion issued by the

3 Secretary shall be binding as to the Secretary

4 and the party or parties requesting the opinion,

5 so long as the party’s actions or omissions do

6 not deviate from the actions or omissions pre7 sented in the request for the advisory opinion.

8 ‘‘(B) The failure of a party to seek an ad9 visory opinion may not be introduced into evi10 dence to prove that the party intended to vio11 late the provisions of this section.

12 ‘‘(3) FEE.—

13 ‘‘(A) IN GENERAL.—The Secretary shall

14 require an individual or entity requesting an ad15 visory opinion under this section to submit a

16 fee.

17 ‘‘(B) AMOUNT.—The amount of the fee re18 quired under paragraph (1) shall be equal to

19 the costs incurred by the Secretary in respond20 ing to the request.

21 ‘‘(3) REGULATIONS.—The Secretary within one

22 hundred and twenty days of the date of enactment,

23 shall issue regulations establishing a system for the

24 issuance of advisory opinions. Such regulations shall

25 provide for—
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1 ‘‘(A) the procedure to be followed by a

2 party applying for an advisory opinion;

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

4 Secretary in responding to a request for an ad5 visory opinion;

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

7 shall respond; and

8 ‘‘(D) the manner in which advisory opin9 ions will be made available to the public.

10 ‘‘(4) INTERVAL FOR ISSUANCE OF ADVISORY

11 OPINIONS.—Under no circumstances shall the inter12 val in which the Secretary shall respond to a party

13 requesting an advisory opinion exceed thirty days.’’.

14 (c) SPECIAL FRAUD ALERTS.—

15 (1) IN GENERAL.—

16 (A) REQUEST FOR SPECIAL FRAUD

17 ALERTS.—Any person may present, at any

18 time, a request to the Inspector General for a

19 notice which informs the public of practices

20 which the Inspector General considers to be

21 suspect or of particular concern under section

22 1128B(b) or section 1877 of the Social Security

23 Act (42 U.S.C. 1320a–7b(b) or 42 U.S.C.

24 1395nn) (in this subsection referred to as a

25 ‘‘special fraud alert’’).
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1 (B) ISSUANCE AND PUBLICATION OF SPE2 CIAL FRAUD ALERTS.—Upon receipt of a re3 quest described in subparagraph (A), the In4 spector General shall investigate the subject

5 matter of the request to determine whether a

6 special fraud alert should be issued. If appro7 priate, the Inspector General shall issue a spe8 cial fraud alert in response to the request. All

9 special fraud alerts issued pursuant to this sub10 paragraph shall be published in the Federal

11 Register.

12 (2) CRITERIA FOR SPECIAL FRAUD ALERTS.—

13 In determining whether to issue a special fraud alert

14 upon a request described in paragraph (1), the In15 spector General may consider—

16 (A) whether and to what extent the prac17 tices that would be identified in the special

18 fraud alert may result in any of the con19 sequences described in subsection (a)(2); and

20 (B) the volume and frequency of the con21 duct that would be identified in the special

22 fraud alert.
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1 TITLE II—REVISIONS TO CURRENT

2 SANCTIONS FOR FRAUD AND ABUSE

3 SEC. 201. MANDATORY EXCLUSION FROM PARTICIPATION

4 IN MEDICARE AND STATE HEALTH CARE PRO5 GRAMS.

6 (a) INDIVIDUAL CONVICTED OF FELONY RELATING

7 TO HEALTH CARE FRAUD.—

8 (1) IN GENERAL.—Section 1128(a) of the So9 cial Security Act (42 U.S.C. 1320a–7(a)) is amend10 ed by adding at the end the following new para11 graph:

12 ‘‘(3) FELONY CONVICTION RELATING TO

13 HEALTH CARE FRAUD.—Any individual that has

14 been convicted after the date of the enactment of the

15 Health Care Anti-Fraud Act of 1995, under Federal

16 or State law, in connection with the delivery of a

17 health care item or service or with respect to any act

18 or omission in a health care program (other than

19 those specifically described in paragraph (1)) oper20 ated by or financed in whole or in part by any Fed21 eral, State, or local government agency, of a criminal

22 offense consisting of a felony relating to fraud, theft,

23 embezzlement, breach of fiduciary responsibility, or

24 other financial misconduct.’’.
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1 (2) CONFORMING AMENDMENT.—Paragraph (1)

2 of section 1128(b) of such Act (42 U.S.C. 1320a–

3 7(b)) is amended to read as follows:

4 ‘‘(1) CONVICTION RELATING TO FRAUD.—

5 ‘‘(A) CONVICTION RELATING TO HEALTH

6 CARE FRAUD.—Any individual or entity with re7 spect to a misdemeanor, or entity with respect

8 to a felony, that has been convicted after the

9 date of the enactment of the Health Care Anti10 Fraud Act of 1995, under Federal or State law,

11 of a criminal offense relating to fraud, theft,

12 embezzlement, breach of fiduciary responsibil13 ity, or other financial misconduct—

14 ‘‘(i) in connection with the delivery of

15 a health care item or service; or

16 ‘‘(ii) with respect to any act or omis17 sion in a health care program (other than

18 those specifically described in subsection

19 (a)(1)) operated by or financed in whole or

20 in part by any Federal, State, or local gov21 ernment agency;

22 ‘‘(B) CONVICTION RELATING TO FRAUD

23 GENERALLY.—Any individual or entity that has

24 been convicted after the date of enactment of

25 the Health Care Anti-Fraud Act of 1995, under
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1 Federal or State law, of a criminal offense re2 lating to fraud, theft, embezzlement, breach of

3 fiduciary responsibility, or other financial mis4 conduct with respect to any act or omission in

5 a program (other than a health care program)

6 operated by or financed in whole or in part by

7 any Federal, State, or local government agen8 cy.’’.

9 (b) INDIVIDUAL CONVICTED OF FELONY RELATING

10 TO CONTROLLED SUBSTANCE.—

11 (1) IN GENERAL.—Section 1128(a) of the So12 cial Security Act (42 U.S.C. 1320a–7(a)), as amend13 ed by subsection (a), is amended by adding at the

14 end the following new paragraph:

15 ‘‘(4) FELONY CONVICTION RELATING TO CON16 TROLLED SUBSTANCE.—Any individual or entity

17 that has been convicted after the date of the enact18 ment of the Health Care Anti-Fraud Act of 1995,

19 under Federal or State law, of a criminal offense

20 consisting of a felony relating to the unlawful manu21 facture, distribution, prescription, or dispensing of a

22 controlled substance.’’.

23 (2) CONFORMING AMENDMENT.—Section

24 1128(b)(3) of such Act (42 U.S.C. 1320a–7(b)(3))

25 is amended—
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1 (A) in the heading, by striking ‘‘CONVIC2 TION’’ and inserting ‘‘MISDEMEANOR CONVIC3 TION’’; and

4 (B) by striking ‘‘criminal offense’’ and in5 serting ‘‘criminal offense consisting of a mis6 demeanor’’.

7 SEC. 202. ESTABLISHMENT OF MINIMUM PERIOD OF EX8 CLUSION FOR CERTAIN INDIVIDUALS AND

9 ENTITIES SUBJECT TO PERMISSIVE EXCLU10 SION FROM MEDICARE AND STATE HEALTH

11 CARE PROGRAMS.

12 Section 1128(c)(3) of the Social Security Act (42

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

14 the following new subparagraphs:

15 ‘‘(D) In the case of an exclusion of an indi16 vidual or entity under paragraph (1), (2), or (3)

17 of subsection (b), the period of the exclusion

18 shall be 3 years, unless the Secretary deter19 mines in accordance with published regulations

20 that a shorter period is appropriate because of

21 mitigating circumstances or that a longer pe22 riod is appropriate because of aggravating cir23 cumstances.

24 ‘‘(E) In the case of an exclusion of an indi25 vidual or entity under subsection (b)(4) or
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1 (b)(5), the period of the exclusion shall not be

2 less than the period during which the individ3 ual’s or entity’s license to provide health care is

4 revoked, suspended, or surrendered, or the indi5 vidual or the entity is excluded or suspended

6 from a Federal or State health care program.

7 ‘‘(F) In the case of an exclusion of an indi8 vidual or entity under subsection (b)(6)(B), the

9 period of the exclusion shall be not less than 1

10 year.’’.

11 SEC. 203. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH

12 OWNERSHIP OR CONTROL INTEREST IN

13 SANCTIONED ENTITIES.

14 Section 1128(b) of the Social Security Act (42 U.S.C.

15 1320a–7(b)) is amended by adding at the end the follow16 ing new paragraph:

17 ‘‘(15) INDIVIDUALS CONTROLLING A SANC18 TIONED ENTITY.—Any individual who has a direct

19 or indirect ownership or control interest of 5 percent

20 or more, or an ownership or control interest (as de21 fined in section 1124(a)(3)) in, or who is an officer

22 or managing employee (as defined in section

23 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; or

4 ‘‘(B) that has been excluded from partici5 pation under a program under title XVIII or

6 under a State health care program, if the indi7 vidual knew or had reason to know of the of8 fense of the entity upon which the conviction or

9 exclusion was based.’’.

10 SEC. 204. SANCTIONS AGAINST PRACTITIONERS AND PER11 SONS FOR FAILURE TO COMPLY WITH STATU12 TORY OBLIGATIONS.

13 ‘‘(a) MINIMUM PERIOD OF EXCLUSION FOR PRACTI14 TIONERS AND PERSONS FAILING TO MEET STATUTORY

15 OBLIGATIONS.—

16 (1) IN GENERAL.—The second sentence of sec17 tion 1156(b)(1) of the Social Security Act (42

18 U.S.C. 1320c–5(b)(1)) is amended by striking ‘‘may

19 prescribe)’’ and inserting ‘‘may prescribe, except

20 that such period may not be less than 1 year)’’.

21 (2) CONFORMING AMENDMENT.—Section

22 1156(b)(2) of such Act (42 U.S.C. 1320c–5(b)(2)) is

23 amended by striking ‘‘shall remain’’ and inserting

24 ‘‘shall (subject to the minimum period specified in

25 the second sentence of paragraph (1)) remain’’.
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1 (b) REPEAL OF ‘‘UNWILLING OR UNABLE’’ CONDI2 TION FOR IMPOSITION OF SANCTION.—Section 1156(b)(1)

3 of the Social Security Act (42 U.S.C. 1320c–5(b)(1)) is

4 amended—

5 (1) in the second sentence, by striking ‘‘and de6 termines’’ and all that follows through ‘‘such obliga7 tions,’’; and

8 (2) by striking the third sentence.

9 SEC. 205. INTERMEDIATE SANCTIONS FOR MEDICARE

10 HEALTH MAINTENANCE ORGANIZATIONS.

11 (a) APPLICATION OF INTERMEDIATE SANCTIONS FOR

12 ANY PROGRAM VIOLATIONS.—

13 (1) IN GENERAL.—Section 1876(i)(1) of the

14 Social Security Act (42 U.S.C. 1395mm(i)(1)) is

15 amended by striking ‘‘the Secretary may terminate’’

16 and all that follows and inserting ‘‘in accordance

17 with procedures established under paragraph (9),

18 the Secretary may at any time terminate any such

19 contract or may impose the intermediate sanctions

20 described in paragraph (6)(B) or (6)(C) (whichever

21 is applicable) on the eligible organization if the Sec22 retary determines that the organization—

23 ‘‘(A) has failed substantially to carry out

24 the contract;
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1 ‘‘(B) is carrying out the contract in a man2 ner substantially inconsistent with the efficient

3 and effective administration of this section; or

4 ‘‘(C) no longer substantially meets the ap5 plicable conditions of subsections (b), (c), (e),

6 and (f).’’.

7 (2) OTHER INTERMEDIATE SANCTIONS FOR

8 MISCELLANEOUS PROGRAM VIOLATIONS.—Section

9 1876(i)(6) of such Act (42 U.S.C. 1395mm(i)(6)) is

10 amended by adding at the end the following new

11 subparagraph:

12 ‘‘(C) In the case of an eligible organization

13 for which the Secretary makes a determination

14 under paragraph (1) the basis of which is not

15 described in subparagraph (A), the Secretary

16 may apply the following intermediate sanctions:

17 ‘‘(i) Civil money penalties of not more

18 than $25,000 for each determination under

19 paragraph (1) if the deficiency that is the

20 basis of the determination has directly ad21 versely affected (or has the substantial

22 likelihood of adversely affecting) an indi23 vidual covered under the organization’s

24 contract.
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1 ‘‘(ii) Civil money penalties of not more

2 than $10,000 for each week beginning

3 after the initiation of procedures by the

4 Secretary under paragraph (9) during

5 which the deficiency that is the basis of a

6 determination under paragraph (1) exists.

7 ‘‘(iii) Suspension of enrollment of in8 dividuals under this section after the date

9 the Secretary notifies the organization of a

10 determination under paragraph (1) and

11 until the Secretary is satisfied that the de12 ficiency that is the basis for the determina13 tion has been corrected and is not likely to

14 recur.’’.

15 (3) PROCEDURES FOR IMPOSING SANCTIONS.—

16 Section 1876(i) of such Act (42 U.S.C. m(i)) is

17 amended by adding at the end the following new

18 paragraph:

19 ‘‘(9) The Secretary may terminate a contract

20 with an eligible organization under this section or

21 may impose the intermediate sanctions described in

22 paragraph (6) on the organization in accordance

23 with formal investigation and compliance procedures

24 established by the Secretary under which—
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1 ‘‘(A) the Secretary first provides the orga2 nization with the reasonable opportunity to de3 velop and implement a corrective action plan to

4 correct the deficiencies that were the basis of

5 the Secretary’s determination under paragraph

6 (1) and the organization fails to develop or im7 plement such a plan;

8 ‘‘(B) in deciding whether to impose sanc9 tions, the Secretary considers aggravating fac10 tors such as whether an entity has a history of

11 deficiencies or has not taken action to correct

12 deficiencies the Secretary has brought to their

13 attention;

14 ‘‘(C) there are no unreasonable or unneces15 sary delays between the finding of a deficiency

16 and the imposition of sanctions; and

17 ‘‘(D) the Secretary provides the organiza18 tion with reasonable notice and opportunity for

19 hearing (including the right to appeal an initial

20 decision) before imposing any sanction or termi21 nating the contract.’’.

22 (4) CONFORMING AMENDMENTS.—Section

23 1876(i)(6)(B) of such Act (42 U.S.C. mm(i)(6)(B))

24 is amended by striking the second sentence.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply with respect to contract years be3 ginning on or after January 1, 1996.

4 TITLE III—ADMINISTRATIVE AND

5 MISCELLANEOUS PROVISIONS

6 SEC. 301. ESTABLISHMENT OF THE HEALTH CARE FRAUD

7 AND ABUSE DATA COLLECTION PROGRAM.

8 (a) GENERAL PURPOSE.—Not later than January 1,

9 1996, the Secretary (in this title referred to as the ‘‘Sec10 retary’’) shall establish a national health care fraud and

11 abuse data collection program for the reporting of final

12 adverse actions (not including settlements in which no

13 findings of liability have been made) against health care

14 providers, suppliers, or practitioners as required by sub15 section (b), with access as set forth in subsection (c).

16 (b) REPORTING OF INFORMATION.—

17 (1) IN GENERAL.—Each Government agency

18 and health plan shall report to the task force de19 scribed in section 101 any final adverse action (not

20 including settlements in which no findings of liability

21 have been made) taken against a health care pro22 vider, supplier, or practitioner.

23 (2) INFORMATION TO BE REPORTED.—The in24 formation to be reported under paragraph (1) in25 cludes:
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1 (A) The name and TIN (as defined in sec2 tion 7701(a)(41)) of any health care provider,

3 supplier, or practitioner who is the subject of a

4 final adverse action.

5 (B) The name (if known) of any health

6 care entity with which a health care provider,

7 supplier, or practitioner is affiliated or associ8 ated.

9 (C) The nature of the final adverse action

10 and whether such action is on appeal.

11 (D) A description of the acts or omissions

12 and injuries upon which the final adverse action

13 was based, and such other information as the

14 task force determines is required for appro15 priate interpretation of information reported

16 under this section.

17 (3) CONFIDENTIALITY.—In determining what

18 information is required, the Secretary shall include

19 procedures to assure that the privacy of individuals

20 receiving health care services is appropriately pro21 tected.

22 (4) TIMING AND FORM OF REPORTING.—The

23 information required to be reported under this sub24 section shall be reported regularly (but not less often

25 than monthly) and in such form and manner as the
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1 task force prescribes. Such information shall first be

2 required to be reported on a date specified by the

3 task force.

4 (5) TO WHOM REPORTED.—The information re5 quired to be reported under this subsection shall be

6 reported to the task force.

7 (c) DISCLOSURE AND CORRECTION OF INFORMA8 TION.—

9 (1) DISCLOSURE.—With respect to the informa10 tion about final adverse actions (not including settle11 ments in which no findings of liability have been

12 made) reported to the task force under this section

13 respecting a health care provider, supplier, or practi14 tioner, the task force shall provide for—

15 (A) disclosure of the information, upon re16 quest, to the health care provider, supplier, or

17 licensed practitioner, and

18 (B) procedures in the case of disputed ac19 curacy of the information.

20 (2) CORRECTIONS.—Each Government agency

21 and health plan shall report corrections of informa22 tion already reported about any final adverse action

23 taken against a health care provider, supplier, or

24 practitioner, in such form and manner that the task

25 force prescribes.
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1 (d) ACCESS TO REPORTED INFORMATION.—

2 (1) AVAILABILITY.—The information in this

3 database shall be available to Federal and State gov4 ernment agencies and health plans pursuant to pro5 cedures that the task force shall provide.

6 (2) FEES FOR DISCLOSURE.—The task force

7 may establish or approve reasonable fees for the dis8 closure of information in this database (other than

9 with respect to requests by Federal agencies). The

10 amount of such a fee may not exceed the costs of

11 processing the requests for disclosure and of provid12 ing such information. Such fees shall be available to

13 the task force.

14 (e) PROTECTION FROM LIABILITY FOR REPORT15 ING.—No person or entity shall be held liable in any civil

16 action with respect to any report made as required by this

17 section, without knowledge of the falsity of the informa18 tion contained in the report.

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

21 (1)(A) The term ‘‘final adverse action’’ in22 cludes:

23 (i) Civil judgments against a health care

24 provider in Federal or State court related to the

25 delivery of a health care item or service.
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1 (ii) Federal or State criminal convictions

2 related to the delivery of a health care item or

3 service.

4 (iii) Actions by Federal or State agencies

5 responsible for the licensing and certification of

6 health care providers, suppliers, and licensed

7 health care practitioners, including—

8 (I) formal or official actions, such as

9 revocation or suspension of a license (and

10 the length of any such suspension), rep11 rimand, censure or probation;

12 (II) any other loss of license of the

13 provider, supplier, or practitioner, by oper14 ation of law; or

15 (III) any other negative action or

16 finding by such Federal or State agency

17 that is publicly available information.

18 (iv) Exclusion from participation in Fed19 eral and State health care programs.

20 (v) Any other adjudicated actions or deci21 sions that the task force shall establish.

22 (B) The term does not include any action—

23 (i) with respect to a malpractice claim; or

24 (ii) which is based on something other

25 than health care fraud and abuse.
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1 (2) The terms ‘‘licensed health care practi2 tioner’’, ‘‘licensed practitioner’’, and ‘‘practitioner’’

3 mean, with respect to a State, an individual who is

4 licensed or otherwise authorized by the State to pro5 vide health care services (or any individual who,

6 without authority holds himself or herself out to be

7 so licensed or authorized).

8 (3) The term ‘‘health care provider’’ means a

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

10 the Social Security Act, and any entity, including a

11 health maintenance organization, group medical

12 practice, or any other entity listed by the Secretary

13 in regulation, that provides health care services.

14 (4) The term ‘‘supplier’’ means a supplier of

15 health care items and services described in section

16 1819 (a) and (b), and section 1861 of the Social Se17 curity Act.

18 (5) The term ‘‘Government agency’’ shall in19 clude:

20 (A) The Department of Justice.

21 (B) The Department of Health and

22 Human Services.

23 (C) Any other Federal agency that either

24 administers or provides payment for the deliv25 ery of health care services, including, but not
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1 limited to the Department of Defense and the

2 Veterans’ Administration.

3 (D) State law enforcement agencies.

4 (E) State Medicaid fraud and abuse units.

5 (F) Federal or State agencies responsible

6 for the licensing and certification of health care

7 providers and licensed health care practitioners.

8 (G) The task force.

9 (6) The term ‘‘health plan’’ has the meaning

10 given such term by section 101(c).

11 (7) For purposes of paragraph (2), the exist12 ence of a conviction shall be determined under para13 graph (4) of section 1128(j) of the Social Security

14 Act.

15 (g) CONFORMING AMENDMENT.—Section 1921(d) of

16 the Social Security Act is amended by inserting ‘‘and sec17 tion 301 of the Health Care Anti-Fraud Act of 1995’’

18 after ‘‘section 422 of the Health Care Quality Improve19 ment Act of 1986’’.

20 TITLE IV—MONETARY PENALTIES

21 SEC. 401. SOCIAL SECURITY ACT CIVIL MONETARY PEN22 ALTIES.

23 (a) MODIFICATIONS OF AMOUNTS OF PENALTIES

24 AND ASSESSMENTS.—Section 1128A(a) of the Social Se-
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1 curity Act (42 U.S.C. 1320a–7a(a)) is amended in the

2 matter following paragraph (3)—

3 (1) by striking ‘‘$2,000’’ and inserting

4 ‘‘$10,000’’;

5 (2) by striking $15,000 and inserting $75,000;

6 and

7 (3) by striking ‘‘twice the amount’’ and insert8 ing ‘‘3 times the amount’’.

9 (b) CLAIM FOR ITEM OR SERVICE BASED ON INCOR10 RECT CODING OR MEDICALLY UNNECESSARY SERV11 ICES.—Section 1128A(a)(1) of the Social Security Act (42

12 U.S.C. 1320a–7a(a)(1)) is amended—

13 (1) in subparagraph (A) by striking ‘‘claimed,’’

14 and inserting ‘‘claimed, including any person who

15 engages in a pattern or practice of presenting or

16 causing to be presented a claim for an item or serv17 ice that is based on a code that the person knows

18 or has reason to know will result in a greater pay19 ment to the person than the code the person knows

20 or has reason to know is applicable to the item or

21 service actually provided,’’;

22 (2) in subparagraph (C), by striking ‘‘or’’ at

23 the end;

24 (3) in subparagraph (D), by striking ‘‘; or’’ and

25 inserting ‘‘, or’’; and
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1 (4) by inserting after subparagraph (D) the fol2 lowing new subparagraph:

3 ‘‘(E) is for a medical or other item or serv4 ice that a person knows or has reason to know

5 is not medically necessary; or’’.

6 (c) PERMITTNG SECRETARY TO IMPOSE CIVIL MON7 ETARY PENALTY.—Section 1128A(b) of the Social Secu8 rity Act (42 U.S.C. 1320a–7a(a)) is amended by

9 (1) adding the following new paragraph:

10 ‘‘(3) Any person (including any organization,

11 agency, or other entity, but excluding a beneficiary

12 as defined in subsection (i)(5)) who the Secretary

13 determines has violated section 1128B(b) of this

14 title shall be subject to a civil monetary penalty of

15 not more than $10,000 for each such violation. In

16 addition, such person shall be subject to an assess17 ment of not more than three times the total amount

18 of the remuneration offered, paid, solicited, or re19 ceived in violation of section 1128B(b). The total

20 amount of remuneration subject to an assessment

21 shall be calculated without regard to whether some

22 portion thereof also may have been intended to serve

23 a purpose other than one proscribed by section

24 1128B(b).’’ and
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1 (2) striking $2,000 each place it appears and

2 inserting $10,000.

3 (d) SANCTIONS AGAINST PRACTITIONERS AND PER4 SONS FOR FAILURE TO COMPLY WITH STATUTORY OBLI5 GATIONS.—Section 1156(b)(3) of the Social Security Act

6 (42 U.S.C. 1320c–5(b)(3)) is amended by striking ‘‘the

7 actual or estimated cost’’ and inserting ‘‘up to $10,000

8 for each instance’’.

9 (e) PROCEDURAL PROVISIONS.—Section 1876(i)(6)

10 of the Social Security Act (42 U.S.C. m(i)(6)) is amended

11 (1) by adding at the end the following new sub12 paragraph:

13 ‘‘(D) The provisions of section 1128A

14 (other than subsections (a) and (b)) shall apply

15 to a civil money penalty under subparagraph

16 (A) or (B) in the same manner as they apply

17 to a civil money penalty or proceeding under

18 section 1128A(a).’’,

19 (2) by striking $25,000 and inserting $125,000;

20 (3) by striking $100,000 and inserting

21 $1,000,000; and

22 (4) by striking $15,000 and inserting $75,000.

23 (f) PROHIBITION AGAINST OFFERING INDUCEMENTS

24 TO INDIVIDUALS ENROLLED UNDER PROGRAMS OR

25 PLANS.—
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1 (1) OFFER OF REMUNERATION.—Section

2 1128A(a) of the Social Security Act (42 U.S.C.

3 1320a–7a(a)) is amended—

4 (A) by striking ‘‘or’’ at the end of para5 graph (1)(D);

6 (B) by striking ‘‘, or’’ at the end of para7 graph (2) and inserting a semicolon;

8 (C) by striking the semicolon at the end of

9 paragraph (3) and inserting ‘‘; or’’; and

10 (D) by inserting after paragraph (3) the

11 following new paragraph:

12 ‘‘(4) offers to or transfers remuneration to any

13 individual eligible for benefits under title XVIII of

14 this Act, or under a State health care program (as

15 defined in section 1128(h)) that such person knows

16 or should know is likely to influence such individual

17 to order or receive from a particular provider, practi18 tioner, or supplier any item or service for which pay19 ment may be made, in whole or in part, under title

20 XVIII, or a State health care program;’’.

21 (2) REMUNERATION DEFINED.—Section

22 1128A(i) of such Act (42 U.S.C. 1320a–7a(i)) is

23 amended by adding the following new paragraph:

24 ‘‘(6) The term ‘remuneration’ includes the waiv25 er of coinsurance and deductible amounts (or any
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1 part thereof), and transfers of items or services for

2 free or for other than fair market value. The term

3 ‘remuneration’ does not include—

4 ‘‘(A) the waiver of coinsurance and deduct5 ible amounts by a person, if—

6 ‘‘(i) the waiver is not offered as part

7 of any advertisement or solicitation;

8 ‘‘(ii) the person does not routinely

9 waive coinsurance or deductible amounts;

10 and

11 ‘‘(iii) the person—

12 ‘‘(I) waives the coinsurance and

13 deductible amounts after determining

14 in good faith that the individual is in

15 financial need;

16 ‘‘(II) fails to collect coinsurance

17 or deductible amounts after making

18 reasonable collection efforts; or

19 ‘‘(III) provides for any permis20 sible waiver as specified in section

21 1128B(b)(3) or in regulations issued

22 by the Secretary;

23 ‘‘(B) differentials in coinsurance and de24 ductible amounts as part of a benefit plan de25 sign as long as the differentials have been dis-
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1 closed in writing to all beneficiaries, third party

2 payors, and providers, to whom claims are pre3 sented; or

4 ‘‘(C) incentives given to individuals to pro5 mote the delivery of preventive care.

6 (g) CLARIFICATION OF INTENT STANDARD.—Section

7 1128A(i) of the Social Security Act (42 U.S.C. 1320a–

8 7a(i)) is amended, by adding at the end the following new

9 paragraph:

10 ‘‘(6) The term ‘should know’ means that a per11 son, with respect to information—

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

13 truth or falsity of the information; or

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

15 or falsity of the information.’’

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

17 this section shall take effect January 1, 1996.

18 SEC. 402. OTHER SOCIAL SECURITY ACT CIVIL PENALTIES.

19 (a) STANDARDS FOR NURSING FACILITIES.—

20 (1) PROVIDING ADVANCE NOTICE OF SURVEY

21 TO NURSING FACILITY.—Section 1819(g)(2)(A)(i) of

22 such Act (42 U.S.C. 1395i–3(g)(2)(A)(i)) is amend23 ed by striking ‘‘$2,000’’ and inserting ‘‘$10,000’’.

24 (b) DISTRIBUTION BY SUPPLIERS OF MEDICAL

25 EQUIPMENT OF MEDICAL NECESSITY FORMS.—
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1 (1) Section 1834(j)(2)(A)(iii) of such Act (42

2 U.S.C. 1395m(j)(2)(A)(iii)), as added by section

3 131(a)(1) of the Social Security Act Amendments of

4 1994, is amended by striking ‘‘$1,000’’ and insert5 ing ‘‘$5,000’’; and

6 (2) Section 1834(j)(2)(B) of the Social Security

7 Act is amended by inserting ‘‘one-page’’ before

8 ‘‘form’’; and deleting ‘‘or other document’’ after

9 ‘‘form’’.

10 (c) INTERMEDIATE SANCTIONS FOR PROVIDERS OR

11 SUPPLIERS OF CLINICAL DIAGNOSTIC LABORATORY

12 TESTS.—Section 1846(b)(2)(A)(ii) of such Act (42 U.S.C.

13 1395w–2(b)(2)(A)(ii)) is amended by striking ‘‘$10,000’’

14 and inserting ‘‘$50,000’’.

15 (d) MEDICARE SECONDARY PAYER.—

16 (1) OFFERING FINANCIAL INCENTIVES FOR

17 BENEFICIARIES NOT TO ENROLL IN PRIMARY

18 PLANS.—The second sentence of section

19 1862(b)(3)(C) of such Act (42 U.S.C.

20 1395y(b)(3)(C)) is amended by striking ‘‘$5,000’’

21 and inserting ‘‘$25,000’’.

22 (2) FAILURE OF EMPLOYER TO PROVIDE

23 MATCHING INFORMATION ON SECONDARY PAYER

24 SITUATIONS.—The second sentence of section

25 1862(b)(5)(C)(ii) of such Act (42 U.S.C.
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1 1395y(b)(5)(C)(ii) is amended by striking ‘‘$1,000’’

2 and inserting ‘‘$5,000’’.

3 (3) FAILURE OF PROVIDER TO PROVIDE INFOR4 MATION ON AVAILABILITY OF OTHER PAYERS.—Sec5 tion 1862(b)(6)(B) of such Act (42 U.S.C.

6 1395y(b)(6)(B)), as added by section 151(a)(2)(A)

7 of the Social Security Act Amendments of 1994, is

8 amended by striking ‘‘$2,000’’ and inserting

9 ‘‘$10,000’’.

10 (e) REFERRALS BY PHYSICIANS WITH OWNERSHIP

11 OR INVESTMENT INTERESTS.—

12 (1) CIRCUMVENTION SCHEMES.—Section

13 1877(g)(4) of such Act (42 U.S.C. 1395nn(g)(4)) is

14 amended by striking ‘‘$100,000’’ and inserting

15 ‘‘$500,000’’.

16 (2) FAILURE TO REPORT INFORMATION.—Sec17 tion 1877(g)(5) of such Act (42 U.S.C.

18 1395nn(g)(5)) is amended by striking ‘‘$10,000’’

19 and inserting ‘‘$50,000’’.

20 (f) MEDICARE SUPPLEMENTAL POLICIES.—

21 (1) ISSUANCE OF POLICIES WHERE NO STAND22 ARDS IN EFFECT.—The second sentence of section

23 1882(a)(2) of such Act (42 U.S.C. 1395ss(a)(2)) is

24 amended by striking ‘‘$25,000’’ and inserting

25 ‘‘$125,000’’.
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1 (2) MISREPRESENTATIONS OF POLICIES.—Sec2 tion 1882(d) of such Act (42 U.S.C. 1395ss(d)) is

3 amended—

4 (A) in paragraphs (1), (2), and (4)(A), by

5 striking ‘‘$5,000’’ and inserting ‘‘$25,000’’;

6 and

7 (B) in paragraphs (3)(A) and (3)(B)(iv),

8 by striking ‘‘$25,000 (or $15,000’’ and insert9 ing ‘‘$125,000 (or $75,000’’.

10 (3) VIOLATION OF BENEFITS STANDARDS.—

11 Section 1882(p) of such Act (42 U.S.C. 1395ss(p))

12 is amended by striking ‘‘$25,000 (or $15,000’’ each

13 place it appears in paragraphs (8) and (9)(C) and

14 inserting ‘‘$125,000 (or $75,000’’.

15 (4) VIOLATION OF GUARANTEED RENEWABIL16 ITY STANDARDS.—Section 1882(q)(5)(C) of such

17 Act (42 U.S.C. 1395ss(q)(5)(C)) is amended by

18 striking ‘‘$25,000’’ and inserting ‘‘$125,000’’.

19 (5) VIOLATION OF LOSS RATIO STANDARDS.—

20 Section 1882(r)(6)(A) of such Act (42 U.S.C.

21 1395ss(r)(6)(A)) is amended by striking ‘‘$25,000’’

22 and inserting ‘‘$125,000’’.

23 (6) VIOLATION OF PRE-EXISTING CONDITION

24 STANDARDS.—Section 1882(s)(3) of such Act (42
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1 U.S.C. 1395ss(s)(3)) is amended by striking

2 ‘‘$5,000’’ and inserting ‘‘$25,000’’.

3 (7) MEDICARE SELECT POLICIES.—Section

4 1882(t)(2) of such Act (42 U.S.C. 1395ss(t)(2)) is

5 amended by striking ‘‘$25,000’’ and inserting

6 ‘‘$125,000’’.

7 (g) VIOLATION OF HOME HEALTH PARTICIPATION

8 STANDARDS.—Section 1891 of such Act (42 U.S.C.

9 1395bbb) is amended—

10 (1) in subsection (a)(3)(D)(iii)(III), by striking

11 ‘‘$5,000’’ and inserting ‘‘$25,000’’;

12 (2) in subsection (c)(1), by striking ‘‘$2,000’’

13 and inserting ‘‘$10,000’’; and

14 (3) in subsection (f)(2)(A)(i), by striking

15 ‘‘$10,000’’ and inserting ‘‘$50,000’’.

16 SEC. 403. SOCIAL SECURITY ACT CRIMINAL PENALTIES.

17 (a) Section 1128B of the Social Security Act (42

18 U.S.C. 1320a–7b) is amended—

19 (1) in subsection (a)—

20 (A) by striking ‘‘$25,000’’ and inserting

21 ‘‘$50,000’’, and

22 (B) by striking ‘‘$10,000’’ and inserting

23 ‘‘$20,000’’;
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1 (2) in subsections (b), (c), and (d), by striking

2 ‘‘$25,000’’ each place it appears and inserting

3 ‘‘$50,000’’; and

4 (3) in subsection (e), by striking ‘‘$2,000’’ and

5 inserting ‘‘$4,000’’.

6 TITLE V—AMENDMENTS TO ANTI7 KICKBACK LAW

8 SEC. 501. CLARIFICATION OF STANDARDS.

9 (a) Section 1128B(b) of the Social Security Act (42

10 U.S.C. 1320a–7b(b)) is amended by inserting, ‘‘the sub11 stantial and primary purpose of which is,’’ after ‘‘in kind’’

12 in paragraph (1) thereof, and after ‘‘any person’’ in para13 graph (2) thereof.

14 (b) Section 1128A(i) of the Social Security Act (42

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

16 following new paragraph:

17 ‘‘(6) The term ‘‘should know’’ means that a

18 person, with respect to information—

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

20 truth or falsity of the information; or

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

22 or falsity of the information.’’
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1 SEC. 502. CLARIFICATIONS AND ADDITIONS TO ANTI-KICK2 BACK EXCEPTIONS.

3 (a) EXCEPTION FOR DISCOUNTS.—Section

4 1128B(b)(3)(A) of the Social Security Act (42 U.S.C.

5 1320a–7b(b)(3)(A)) is amended by inserting the following:

6 ‘‘(including reductions in price applied to combinations of

7 items and services, and reductions made available as part

8 of capitation, risk sharing, disease management or similar

9 programs)’’ after ‘‘a discount or other reduction in price’’;

10 and by inserting at the end: ‘‘provided, however, that

11 where an entity which does not report its costs on a cost

12 report separately claims an item or service for payment,

13 and payment by the Medicare program or a state health

14 care program is not based on actual acquisition costs, then

15 a price reduction on the item or service may be properly

16 disclosed and appropriately reflected by providing full and

17 accurate information concerning the price reduction at the

18 time the value of the reduction is known, at the request

19 of the Secretary or a State agency.’’

20 (b) Section 1128B(b)(3) of the Social Security Act

21 (42 U.S.C. § 1320a–7b(b)(3)) is amended as follows:

22 (1) In subparagraph (D), by striking ‘‘Public

23 Health Service Act; and’’ and inserting ‘‘Public

24 Health Service Act;’’

25 (2) By renumbering subparagraph (E) as sub26 paragraph (K).
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1 (c) EXCEPTION FOR MANAGED CARE RELATION2 SHIPS.—Section 1128B(b)(3) of the Social Security Act

3 (42 U.S.C. 1320a–7b(b)(3) is amended by inserting after

4 subparagraph (D) the following:

5 ‘‘(E) any reduction in cost sharing or in6 creased benefits given to an individual, any

7 amounts paid to a provider for an item or serv8 ice furnished to an individual, or any discount

9 or reduction in price given by the provider for

10 such item or service if the item or service is

11 provided by an organization which—

12 ‘‘(i) provides health care services di13 rectly or through one or more subsidiary

14 entities or arranges under agreement with

15 contract health care providers for the pro16 vision of items or services, in exchange for

17 a premium; and

18 ‘‘(ii) assumes or, in the case of items

19 or services provided under agreement with

20 contract health care providers, places the

21 contract health care providers under, sub22 stantial financial risk (including through a

23 withhold, capitation, incentive pool, per

24 diem payment, or other similar substantial
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1 risk-sharing arrangement) for the provision

2 of health services.

3 For the purpose of this subparagraph, the term

4 ‘‘contract health care provider’’ means an indi5 vidual or entity under contract with a health

6 plan to furnish items or services to enrollees

7 who are covered by the health plan (which may

8 include Title XVIII beneficiaries and Title XIX

9 recipients).’’.

10 (d) EXCEPTION FOR RISK-SHARING ARRANGE11 MENTS.—Section 1128B(b)(3) of the Social Security Act

12 (42 U.S.C. 1320a–7b(b)(3) is amended—

13 (1) by redesignating subparagraph (E) as sub14 paragraph (F);

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

17 (3) by inserting after subparagraph (D) the fol18 lowing:

19 ‘‘(E) any remuneration between an organi20 zation and a provider of services pursuant to an

21 agreement between the organization and pro22 vider if the written agreement places the pro23 vider of services at substantial financial risk for

24 the cost or utilization of the services the pro25 vider is obligated to provide, whether through
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1 capitation, incentive pools, per diem payments,

2 or a similar risk-sharing arrangement that

3 places the provider at substantial financial risk;

4 and’’.

5 (e) EXCEPTION FOR DE MINIMUS REMUNERA6 TION.—Section 1128B(b)(3) of the Social Security Act

7 (42 U.S.C. 1320a–7b(b)(3)) is amended by inserting the

8 following new subparagraph:

9 ‘‘(F) items provided free of charge to a li10 censed health care practitioner who is furnish11 ing services reimbursed under title XVIII or a

12 State health care program, provided the items

13 primarily benefit patients receiving such serv14 ices and the value of the items does not exceed

15 limits set forth in generally accepted profes16 sional or ethical guidelines applicable to the

17 health care practitioner (or, if no such guide18 lines exist, the value of the items does not ex19 ceed limits established by the Secretary);’’.

20 (f) EXCEPTIONS FOR DRUG SAMPLES.—Section

21 1128B(b)(3) of the Social Security Act (42 U.S.C. 1320a–

22 7b(b)(3)) is amended by inserting the following new sub23 paragraph:
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1 ‘‘(G) drug samples distributed in compli2 ance with section 503(d) of the Federal Food,

3 Drug, and Cosmetic Act (21 U.S.C. § 553(d));’’.

4 (g) EXCEPTION FOR SCIENTIFIC AND EDUCATIONAL

5 PROGRAMS FOR PRACTITIONERS.—Section 1128B(b)(3)

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

7 amended by inserting the following new subparagraph:

8 ‘‘(H) any amount paid to support scientific

9 or educational programs or materials for li10 censed health care practitioners or pharmacists,

11 provided that—

12 ‘‘(i) such programs or materials are

13 designed to improve the care or treatment

14 of patients;

15 ‘‘(ii) such programs are conducted in

16 accordance with generally accepted profes17 sional or ethical guidelines applicable to

18 the health care practitioner; and

19 ‘‘(iii) the receipt of such amount, or of

20 such programs or materials, is not condi21 tioned on the purchase, lease, order, or

22 furnishing (or the recommending for pur23 chase, lease, order, or furnishing) of any

24 item or service reimbursed under Title

25 XVIII or a State health care program;’’.
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1 (h) EXCEPTION FOR EDUCATIONAL PROGRAMS FOR

2 PATIENTS.—Section 1128B(b)(3) of the Social Security

3 Act (42 U.S.C. 1320a–7b(b)(3)) is amended by inserting

4 the following new subparagraph:

5 ‘‘(I) any amount paid to provide edu6 cational programs or materials for patients,

7 provided that—

8 ‘‘(i) the programs or materials are de9 signed to improve the care, treatment (in10 cluding compliance with treatment re11 gimes), or health of such patients; and

12 ‘‘(ii) the receipt of such amount, or of

13 such programs or materials, is not condi14 tioned on the purchase, lease, order or fur15 nishing (or the recommending of the pur16 chase, lease, order, or furnishing) of any

17 item or service reimbursed under Title

18 XVIII or a State health care program;’’.

19 (i) EXCEPTION FOR PAYMENTS MADE ON BEHALF

20 OF HEALTH PLANS.—Section 1128B(b)(3) of the Social

21 Security Act (42 U.S.C. 1320a–7b(b)(3)) is amended by

22 inserting the following new subparagraph:

23 ‘‘(J) any amount paid by a contract health

24 plan service firm to a contract health provider,

25 provided that the amount is paid at the direc-
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1 tion of or on behalf of a health plan, and that

2 the purpose of the payment is to reduce the

3 cost or improve the quality of items or services

4 provided by the health plan to its enrollees. For

5 purposes of this subparagraph, the term—

6 ‘‘(i) ‘contract health plan service firm’

7 means an entity that is under a written

8 agreement with a health plan to assist in

9 carrying out the functions of the health

10 plan;

11 ‘‘(ii) ‘contract health provider’ means

12 an individual or entity that is under writ13 ten agreement with a health plan to fur14 nish to the health plan’s enrollees items or

15 services that are covered by the health

16 plan, or reimburse under Title XVIII or a

17 State health care plan; and

18 ‘‘(iii) ‘health plan’ means an entity

19 that furnishes or arranges under agree20 ment with contract health care providers

21 for the furnishing of items or services to

22 enrollees, or furnishes insurance coverage

23 for the provision of such items and serv24 ices, in exchange for a premium.’’.
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1 SEC. 503. CLARIFICATION OF SAFE HARBOR AUTHORITY IN

2 ANTI-KICKBACK PROVISIONS.

3 Section 1128B(b) of the Social Security Act (42

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

5 following new paragraph:

6 ‘‘(4) The regulations authorized by section

7 14(a) of the Medicare and Medicaid Patient and

8 Program Protection Act of 1987 are—

9 ‘‘(A) solely for the purpose of adding addi10 tional exceptions to the conduct proscribed by

11 this subsection, not for the purpose of limiting

12 the scope of the exceptions specified in para13 graph (3) of this subsection; and

14 ‘‘(B) for the purpose of prescribing criteria

15 for qualifying for an exception notwithstanding

16 the intent of the parties.’’.

17 TITLE VI AMENDMENTS TO THE

18 PHYSICIAN SELF-REFERRAL LAW

19 SEC. 601. FINANCIAL RELATIONSHIP DEFINED.

20 (a) Section 1877(a)(2) of the Social Security Act (42

21 U.S.C. 1395nn(a)(2)) is amended by deleting the para22 graph heading ‘‘(A)’’; by deleting ‘‘,or’’ at the end of para23 graph (a) and by deleting, in its entirety, paragraph (B).

24 (b) Section 1877(b) of the Social Security Act (42

25 U.S.C. 1395nn(b)) by deleting in its heading all language

26 following ‘‘EXCEPTIONS’’.
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1 (c) Section 1877(d) of the Social Security Act (42

2 U.S.C. 1395nn(d)) is amended in its title by deleting all

3 language after ‘‘EXCEPTIONS’’.

4 (d) Section 1877(e) of the Social Security Act (42

5 U.S.C. 1395nn(e)) is deleted in its entirety.

6 (e) Section 1877(f) of the Social Security Act (42

7 U.S.C. 1395nn(f)) is amended by deleting ‘‘, and com8 pensation’’ after ‘‘investment’’ and paragraph (2) is

9 amended by deleting ‘‘, or with a compensation arrange10 ment (as described in subsection (a)(2)(B)) after ‘‘invest11 ment interest’’ and by deleting ‘‘or who have such a com12 pensation relationship with the entity’’ after ‘‘investment

13 interest.’’

14 (f) Section 1877(h) of the Social Security Act (42

15 U.S.C. 1395nn(h)) is amended by deleting paragraphs (1),

16 (2), and (3).

17 SEC. 602. SELF-REFERRALS FOR PHYSICIAN SERVICES.

18 Section 1877(b)(1) of the Social Security Act (42

19 U.S.C. 1395nn(b)(1)) is amended by inserting ‘‘the physi20 cian or’’ immediately before ‘‘another physician.’’

21 SEC. 603. RISK-SHARING ARRANGEMENTS.

22 Section 1877(b)(3) of the Social Security Act (42

23 U.S.C. 1395nn(b)(3)) is amended as follows:
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1 (1) By deleting from the heading the phrase

2 ‘‘Prepaid Plans’’ and inserting in its place ‘‘Risk3 Sharing Arrangements’’.

4 (2) By deleting from the heading the word ‘‘by’’

5 and inserting in its place ‘‘to an individual enrolled

6 with’’; and

7 (3) By adding after subparagraph (3)(D) the

8 following new subparagraph:

9 ‘‘(E) pursuant to written agreement be10 tween the organization and the provider of serv11 ices if the written agreement places the provider

12 of services at substantial financial risk (full or

13 partial) for the cost or utilization of the services

14 the provider is obligated to provide, whether

15 through capitation, incentive pools, per diem

16 payment arrangements, or other substantial fi17 nancial risk-sharing arrangements.’’.

18 SEC. 604. PHYSICIAN OWNERSHIP.

19 Section 1877(d) of the Social Security Act (42 U.S.C.

20 1395nn(d)) is amended by inserting at the end the follow21 ing new paragraph:

22 ‘‘(4) INTEGRATED DELIVERY SYSTEM OWNER23 SHIP.—In the case of the physician’s ownership or

24 investment interest in a management services orga25 nization (MSO), preferred provider organization
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1 (PPO), physician-hospital organization (PHO), phy2 sician-hospital arrangement (PHA), or similar orga3 nization designed to facilitate the integrated delivery

4 of health care services, if the referring physician is

5 managed by or contracts with the MSO, PPO, PHO,

6 PHA or similar organization (or the group practice

7 of which the physician is a member is managed by

8 or contracts with the MSO, PPO, PHO, PHA or

9 similar organization and the ownership or invest10 ment interest is in the MSO, PPO, PHA or similar

11 organization itself (and not merely in a subdivision

12 thereof).’’.

13 SEC. 605. SHARED FACILITY SERVICES.

14 Section 1877(b) of such Act (42 U.S.C. 1395nn(b))

15 is amended—

16 (1) by redesignating paragraph (4) as para17 graph (6); and

18 (2) by inserting after paragraph (3) the follow19 ing new paragraph:

20 ‘‘(4) SHARED FACILITY SERVICES.—

21 ‘‘(A) IN GENERAL.—In the case of a

22 shared facility services of a shared facility

23 ‘‘(i) that is furnished

24 ‘‘(I) personally by the referring

25 physician who is a shared facility phy-
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1 sician by an individual directly em2 ployed or directly supervised by such

3 a physician,

4 ‘‘(II) by a shared facility in a

5 building in which the referring physi6 cian furnishes substantially all of the

7 services of the physician that are un8 related to the furnishing of shared fa9 cility services, and

10 ‘‘(III) to a patient of a shared fa11 cility physician; and

12 ‘‘(ii) that is billed by the referring

13 physician.

14 ‘‘(B) SHARED FACILITY RELATED DEFINI15 TIONS.—

16 (i) SHARED FACILITY SERVICE.—The

17 term ‘‘shared facility service’’ means, with

18 respect to a shared facility, a designated

19 health service furnished by the facility to

20 patients of shared facility physicians.

21 (ii) SHARED FACILITY.—The term

22 ‘‘shared facility’’ means an entity that fur23 nishes shared facility services under a

24 shared facility arrangement.
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1 (iii) SHARED FACILITY PHYSICIAN.—

2 The term ‘‘shared facility, a physician who

3 has a financial relationship under a shared

4 facility arrangement with the facility.

5 (iv) SHARED FACILITY ARRANGE6 MENT.—The term ‘‘shared facility arrange7 ment’’ means, with respect to the provision

8 of shared facility services in a building, a

9 financial arrangement.

10 (I) which is only between physi11 cians who are providing services (un12 related to shared facility services) in

13 the same building;

14 (II) in which the overhead ex15 penses of the facility are shared, in

16 accordance with methods previously

17 determined by the physicians in the

18 arrangement; and

19 (III) which, in the case of a cor20 poration, is wholly owned and con21 trolled by shared facility physicians.’’.

22 SEC. 606. PAYER DIRECTED CARE.

23 (a) Section 1877(b) of the Social Security Act (42

24 U.S.C. 1395nn(b)) is amended by inserting the following
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1 paragraph after paragraph 4, as amended by section 604

2 of the Health Care Anti-Fraud Act of 1995:

3 ‘‘(5) PAYER DIRECTED CARE.—In the case of

4 items or services furnished to a patient where the se5 lection of provider is substantially determined by, or

6 results from financial incentives provided by, a payer

7 of such items or services.’’.

8 SEC. 607. SELF-REFERRALS FOR CERTAIN DESIGNATED

9 HEALTH SERVICES.

10 (a) Section 1877(h)(6) of the Social Security Act (42

11 U.S.C. n(h)(6)) is amended by deleting paragraph (k)

12 thereof.

13 SEC. 608. DEFINITION OF DIRECT SUPERVISION.

14 (a) Section 1877(h) of the Social Security Act (42

15 U.S.C. n(h)) is amended by adding at the end thereof the

16 following new paragraph:

17 ‘‘(7) ‘Directly supervised’ by a physician means

18 the physician has responsibility for oversight of the

19 provision, by a person (whether or not an employee

20 of the physician or group practice), of in-office ancil21 lary services, and such responsibility must include:

22 ‘‘(A) Specifying the tasks to be performed

23 by the person;
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1 ‘‘(B) Instructing the person with regard to

2 the manner and method for performing the

3 tasks;

4 ‘‘(C) Evaluating the person’s performance

5 of the tasks;

6 ‘‘(D) Taking, or causing to be taken, per7 sonnel actions which are based upon evaluation

8 of the person’s performance of the tasks; and

9 ‘‘(E) Being available, in person or by tele10 phone, to the person at all times such person is

11 providing in-office ancillary services.’’.

12 SEC. 609. EFFECTIVE DATE.

13 (a) Section 1877 of the Social Security Act (42

14 U.S.C. n(h)) is amended with respect to its effective date

15 as follows:

16 ‘‘In the case of designated health services other than

17 clinical laboratory services, this law shall apply to referrals

18 made after the later of:

19 ‘‘(1) December 31, 1994; or

20 ‘‘(2) the date that final regulations implement21 ing all sections of this law are promulgated.’’.
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1 TITLE VII—MEDICARE BILLING ABUSE

2 PREVENTION

3 SEC. 701. IMPLEMENTATION OF GENERAL ACCOUNTING OF4 FICE RECOMMENDATIONS REGARDING MEDI5 CARE CLAIMS PROCESSING.

6 (a) IN GENERAL.—Not later than 90 days after the

7 date of the enactment of this Act, the Secretary shall, by

8 regulation, contract, change order, or otherwise, require

9 Medicare carriers to acquire commercial automatic data

10 processing equipment (in this title referred to as

11 ‘‘ADPE’’) meeting the requirements of section 702 to

12 process Medicare part B claims for the purpose of identi13 fying intentional billing code abuse.

14 (b) SUPPLEMENTATION.—Any ADPE acquired in ac15 cordance with subsection (a) shall be used as a supplement

16 to any other ADPE used in claims processing by Medicare

17 carriers.

18 (c) STANDARDIZATION.—In order to ensure uniform19 ity, the Secretary may require that Medicare carriers that

20 use a common claims processing system acquire common

21 ADPE in implementing subsection (a).

22 (d) IMPLEMENTATION DATE.—Any ADPE acquired

23 in accordance with subsection (a) shall be in use by Medi24 care carriers not later than one year after the date of the

25 enactment of this Act.
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1 SEC. 702. MINIMUM SOFTWARE REQUIREMENTS.

2 (a) IN GENERAL.—The requirements described in

3 this section are as follows:

4 (1) The ADPE shall be a commercial item and

5 shall be reviewed by a private standard setting orga6 nization with expertise in the development of de7 scriptive terms and identifying codes for reporting

8 medical services and procedures. The Secretary shall

9 determine the appropriate organization to perform

10 this review.

11 (2) The ADPE shall surpass the capability of

12 ADPE used in the processing of Medicare part B

13 claims for identification of code manipulation on the

14 day before the date of the enactment of this Act.

15 (3) The ADPE shall be capable of being modi16 fied to—

17 (A) satisfy pertinent statutory require18 ments of the Medicare program; and

19 (B) conform to general policies of the

20 Health Care Financing Administration regard21 ing claims processing.

22 (b) MINIMUM STANDARDS.—Nothing in this title

23 shall be construed as preventing the use of ADPE which

24 exceeds the minimum requirements described in sub25 section (a).
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1 SEC. 703. DISCLOSURE.

2 (a) IN GENERAL.—Notwithstanding any other provi3 sion of law, and except as provided in subsection (b), any

4 ADPE or date related thereto acquired by Medicare car5 riers in accordance with section 701(a) shall not be subject

6 to public disclosure.

7 (b) EXCEPTION.—The Secretary may authorize the

8 public disclosure of any ADPE or data related thereto ac9 quired by Medicare carriers in accordance with section

10 701(a) if the Secretary determines that—

11 (1) release of such information is in the public

12 interest; and

13 (2) the information to be released is not pro14 tected from disclosure under section 552(b) of title

15 5, United States Code.

16 (c) COPYRIGHT PROTECTION.—Nothing in this part,

17 or any other part, shall be construed to divest the holder

18 of a copyright in any code set, of its copyright in such

19 code set or in any derivative work made therefrom.

20 SEC. 704. REVIEW AND MODIFICATION OF REGULATIONS.

21 Not later than 30 days after the date of the enact22 ment of this Act, the Secretary shall order a review of

23 existing regulations, guidelines, and other guidance gov24 erning Medicare payment policies and billing code abuse

25 to determine if revision of or addition to those regulations,

26 guidelines, or guidance is necessary to maximize the bene-
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1 fits to the Federal Government of the use of ADPE ac2 quired pursuant to section 701.

3 SEC. 705. DEFINITIONS.

4 For purposes of this title—

5 (1) The term ‘‘automatic data processing equip6 ment’’ (ADPE) has the same meaning as in section

7 111(a)(2) of the Federal Property and Medicare

8 payments for Medicare part B benefits payable on a

9 charge basis and to perform other related functions.

10 (2) The term ‘‘billing code abuse’’ means the

11 intentional and willful submission to Medicare car12 riers of claims for services that include procedure

13 codes that do not appropriately describe the total

14 services provided or otherwise violate Medicare pay15 ment policies.

16 (3) The term ‘‘commercial item’’ has the same

17 meaning as in section 4(12) of the Office of Federal

18 Procurement Policy Act (41 U.S.C. 403(12)).

19 (4) The term ‘‘Medicare part B’’ means the

20 supplementary medical insurance program author21 ized under part B of title XVIII of the Social Secu22 rity Act (42 U.S.C. 1395j–1395w–4).

23 (5) The term ‘‘Medicare carrier’’ means an en24 tity that has a contract with the Health Care Fi25 nancing Administration to determine and make Med-
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1 icare payments for Medicare part B benefits payable

2 on a charge basis and to perform other related func3 tions.

4 (6) The term ‘‘payment policies’’ means regula5 tions and other rules that govern billing code abuses

6 such as unbundling, global service violations, double

7 billing, and unnecessary use of assistants at surgery.

8 (7) The term ‘‘Secretary’’ means the Secretary

9 of Health and Human Services.

10 SEC. 706. TERMINATION OF PROPOSED MEDICARE TRANS11 ACTION SYSTEM.

12 The Secretary may not implement the Medicare

13 transaction system proposed to detect improper billing for

14 items and services under the Medicare program resulting

15 from the improper unbundling of items and services.

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