I

104TH CONGRESS

1ST SESSION H. R. 2326

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

programs, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 13, 1995

Mr. SCHIFF (for himself, Mr. SHAYS, Mr. CLINGER, Mr. FOX of Pennsylvania,

Mr. SCHUMER, and Mr. TOWNS) introduced the following bill; which was

referred to the Committee on the Judiciary, and in addition to the Committees on Government Reform and Oversight, Ways and Means, and

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

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

A BILL

To improve Federal efforts to combat fraud and abuse

against health care programs, and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Health Care Fraud and Abuse Prevention Act of 1995’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.
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TITLE I—COORDINATION OF FEDERAL ENFORCEMENT

Sec. 101. Federal enforcement by Inspectors General and Attorney General.

Sec. 102. State enforcement.

Sec. 103. Payments to States.

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

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

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

agencies.

Sec. 107. Account Payments Advisory Board.

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

Sec. 109. Definitions.

Sec. 110. Effective date.

TITLE II—REVISIONS TO CRIMINAL LAW

Sec. 201. Definition of Federal health care offense.

Sec. 202. Health care fraud.

Sec. 203. Theft or embezzlement.

Sec. 204. False Statements.

Sec. 205. Bribery and graft.

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

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

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

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

Sec. 210. Authorized investigative demand procedures.

Sec. 211. Grand jury disclosure.

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

TITLE III—ANTI-FRAUD INITIATIVES UNDER MEDICARE AND

MEDICAID

Sec. 301. Revision to current penalties.

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

and new safe harbors.

Sec. 303. Requiring Secretary to implement proposal to expedite payment adjustments based upon inherent reasonableness.

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

fraud and abuse against medicare program.

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

payment under medicare and medicaid.

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

excluded providers.

Sec. 307. Study of financial solvency and integrity standards for providers and

suppliers.
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1 TITLE I—COORDINATION OF

2 FEDERAL ENFORCEMENT

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

5 (a) AUDITS, INVESTIGATIONS, INSPECTIONS, AND

6 EVALUATIONS.—

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

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

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

15 prevention, detection, and control of health care

16 fraud and abuse in violation of any Federal law.

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

18 than the Inspector General of the Department of

19 Health and Human Services, may not conduct any

20 audit, investigation, inspection, or evaluation under

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

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

23 Social Security Act.

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

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

2 that are available to the Inspector General for purposes

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

5 (c) COORDINATION AND REVIEW OF ACTIVITIES OF

6 OTHER FEDERAL, STATE, AND LOCAL AGENCIES.—

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

8 Attorney General shall—

9 (A) jointly establish, on the effective date

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

12 abuse in violation of any Federal law, which

13 takes into account the activities of Federal,

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

19 (B) publish a description of the program in

20 the Federal Register, by not later than 180

21 days after the date of the enactment of this

22 Act.

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

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

2 control of health care fraud and abuse in accordance

3 with the program established under paragraph (1).

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

7 State, and local law enforcement agencies, with Federal

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

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

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

13 SEC. 102. STATE ENFORCEMENT.

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

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

18 agencies of the State which conduct, supervise, and

19 coordinate audits, civil and criminal investigations,

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

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

23 and

24 (2) may establish and maintain in accordance

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

3 (b) HEALTH CARE FRAUD AND ABUSE CONTROL

4 UNIT REQUIREMENTS.—A Health Care Fraud and Abuse

5 Control Unit established by a State under subsection

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

8 with principal responsibility for the administration of

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

11 (1) The entity—

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

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

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

18 does not provide for the criminal prosecution of

19 individuals by a statewide authority, and has

20 formal procedures, approved by the Secretary,

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

23 violation of any Federal law to the appropriate

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

2 or authorities in such prosecutions; or

3 (C) has a formal working relationship with

4 the office of the State Attorney General or the

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

7 procedures under which it will refer suspected

8 criminal violations to such office), that provide

9 effective coordination of activities between the

10 Health Care Fraud and Abuse Control Unit

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

13 care fraud or abuse in violation of any Federal

14 law.

15 (2) The entity conducts a statewide program

16 for the investigation and prosecution of violations of

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

19 law.

20 (3) The entity has procedures for—

21 (A) reviewing complaints of the abuse or

22 neglect of patients of health care facilities in

23 the State, and

24 (B) where appropriate, investigating and

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

2 to other State or Federal agencies for action.

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

5 overpayments that—

6 (A) are made under any federally funded

7 or mandated health care program required by

8 this Act, and

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

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

15 efficient conduct of its activities.

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

17 Care Fraud and Abuse Control Unit may submit each year

18 to the Inspector General and the Attorney General a plan

19 for preventing, detecting, and controlling, consistent with

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

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

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

23 General shall approve a plan submitted under subsection

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

2 the plan—

3 (1) is inconsistent with the program established

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

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

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

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

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

12 General determines to be necessary.

13 (f) SEMIANNUAL REPORTS OF INSPECTOR GENERAL

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

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

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

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

19 controlling health care fraud and abuse.

20 SEC. 103. PAYMENTS TO STATES.

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

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

23 subject to the availability of appropriations, the Inspector

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

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

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

3 in that subsection.

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

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

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

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

8 State under this subsection shall be in addition to any

9 amounts paid under section 106.

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

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

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

15 and Abuse Control Account. The Account shall consist

16 of—

17 (1) the Health Care Fraud and Abuse Expenses

18 Subaccount; and

19 (2) the Health Care Fraud and Abuse Reserve

20 Subaccount.

21 (b) EXPENSES SUBACCOUNT.—

22 (1) CONTENTS.—The Expenses Subaccount

23 consists of—

24 (A) amounts deposited under paragraph

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

2 Subaccount under subsection (c)(2).

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

6 United States as—

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

9 (B) civil penalties or damages (other than

10 restitution) in actions under section 3729 or

11 3730 of title 31, United States Code (commonly

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

13 based on claims related to the provision of

14 health care items and services;

15 (C) administrative penalties under titles

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

17 (D) proceeds of seizures and forfeitures of

18 property for acts or omissions in violation of

19 any Federal law related to the provision of

20 health care items and services; and

21 (E) money and proceeds of property that

22 are accepted under section 105.

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

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

3 for—

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

6 under section 101; and

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

9 agencies in accordance with section 106.

10 (c) RESERVE SUBACCOUNT.—

11 (1) DEPOSITS.—An amount otherwise required

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

14 in the Reserve Subaccount, if—

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

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

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

22 (2) TRANSFERS TO EXPENSES SUBACCOUNT.—

23 (A) ESTIMATION OF SHORTFALL.—Not

24 later than the first day of the last quarter of

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

5 (b)(3).

6 (B) TRANSFER TO COVER SHORTFALL.—If

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

11 be transferred from the Reserve Subaccount to

12 the Expenses Subaccount such amount as the

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

15 Expenses Subaccount during such quarter.

16 (3) LIMITATION ON AMOUNT CARRIED OVER TO

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

19 amount remaining in the Reserve Subaccount at the

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

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

22 amount authorized to be deposited in the Expenses

23 Subaccount (consistent with paragraph (1)) during

24 the fiscal year.
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1 (d) RESTRICTION ON DEPOSITS.—In the case of a

2 Federal health care offense, the attorney for the Govern3 ment may not, in exchange for payment by a defendant

4 of a fine or other monetary amount to be deposited in the

5 Account, reduce the exposure of the defendant to a term

6 of imprisonment by moving for dismissal or reduction of

7 charges, agreeing to dismiss charges, agreeing not to bring

8 charges, or recommending a lesser sentence.

9 (e) ANNUAL REPORT TO CONGRESS.—Not later than

10 180 days after the end of each fiscal year (beginning with

11 fiscal year 1996), the Secretary of Health and Human

12 Services and the Attorney General shall submit a report

13 to the Committee on Government Reform and Oversight

14 of the House of Representatives and the Committee on

15 Governmental Affairs of the Senate on the operations of

16 the Account during the fiscal year, including a description

17 of the deposits made into the Account and the payments

18 made from the Account during the year.

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

20 The Attorney General or any Inspector General re21 ferred to in section 101(a) may accept, use, and dispose

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

23 or personal), for the purpose of aiding or facilitating ac24 tivities under this title regarding health care fraud and

25 abuse. Gifts, bequests, or devises of money and proceeds
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1 from sales of other property received as gifts, bequests,

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

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

4 SEC. 106. REIMBURSEMENTS OF EXPENSES AND OTHER

5 PAYMENTS TO PARTICIPATING AGENCIES.

6 (a) REIMBURSEMENT OF EXPENSES OF FEDERAL

7 AGENCIES.—The Inspector General and the Attorney

8 General, subject to the availability of amounts in the Ac9 count, shall jointly and promptly reimburse Federal agen10 cies for expenses incurred in carrying out section 101.

11 (b) PAYMENTS TO STATE AND LOCAL LAW EN12 FORCEMENT AGENCIES.—The Inspector General and the

13 Attorney General, subject to the availability of amounts

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

15 or local law enforcement agency that participated directly

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

17 property the proceeds of which are deposited in the Ac18 count, an amount that reflects generally and equitably the

19 participation of the agency in the activity.

20 (c) FUNDS USED TO SUPPLEMENT AGENCY APPRO21 PRIATIONS.—It is intended that disbursements made from

22 the Account to any Federal agency be used to increase

23 and not supplant the recipient agency’s appropriated oper24 ating budget.
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1 SEC. 107. ACCOUNT PAYMENTS ADVISORY BOARD.

2 (a) ESTABLISHMENT.—There is established the Ac3 count Payments Advisory Board, which shall make rec4 ommendations to the Inspector General and the Attorney

5 General regarding the equitable allocation of payments

6 from the Account.

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

8 (1) each of the Inspectors General referred to

9 in section 101(a), other than the Inspector General

10 of the Department of Health and Human Services;

11 and

12 (2) 10 members appointed by the Inspector

13 General of the Department of Health and Human

14 Services to represent Health Care Fraud and Abuse

15 Control Units, of whom one shall be appointed—

16 (A) for each of the 10 regions established

17 by the Director of the Office of Management

18 and Budget under Office of Management and

19 Budget Circular A–105, to represent Units in

20 that region; and

21 (B) from among individuals recommended

22 by the heads of those agencies in that region.

23 (c) TERMS.—The term of a Member of the Board ap24 pointed under subsection (b)(2) shall be 3 years, except

25 that of such members first appointed 3 members shall

26 serve an initial term of one year and 3 members shall serve
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1 an initial term of 2 years, as specified by the Inspector

2 General at the time of appointment.

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

4 filled in the same manner in which the original appoint5 ment was made, except that an individual appointed to

6 fill a vacancy occurring before the expiration of the term

7 for which the individual is appointed shall be appointed

8 only for the remainder of that term.

9 (e) CHAIRPERSON AND BYLAWS.—The Board shall

10 elect one of its members as chairperson and shall adopt

11 bylaws.

12 (f) COMPENSATION AND EXPENSES.—Members of

13 the Board shall serve without compensation, except that

14 the Inspector General may pay the expenses reasonably

15 incurred by the Board in carrying out its functions under

16 this section.

17 (g) NO TERMINATION.—Section 14(a)(2) of the Fed18 eral Advisory Committee Act (5 U.S.C. App.) does not

19 apply to the Board.

20 SEC. 108. ESTABLISHMENT OF HEALTH CARE FRAUD AND

21 ABUSE DATA BASE.

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

23 Human Services, in consultation with the Attorney Gen24 eral, shall establish a data base for the reporting of final

25 adverse actions taken by a Government agency against
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1 health care providers, suppliers, or practitioners, or

2 against health care benefit programs, in order to provide

3 a central repository of such information to assist in the

4 prevention, detection, and prosecution of health care fraud

5 and abuse.

6 (b) REPORTING INFORMATION.—

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

8 and maintaining the data base under this section,

9 each Government agency shall report any final ad10 verse action taken against a health care provider,

11 supplier, or practitioner, or against a health care

12 benefit program, together with the information de13 scribed in paragraph (2).

14 (2) INFORMATION TO BE REPORTED.—The in15 formation referred to in this paragraph is as follows:

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

17 provider, supplier, or practitioner or health care

18 benefit program which is the subject of the final

19 adverse action reported under paragraph (1).

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

21 taken against a health care provider, supplier,

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

23 health care benefit program with which the in24 surer, provider, supplier, or practitioner is af25 filiated or associated.
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1 (C) The nature of the final adverse action.

2 (D) A description of the acts or omissions

3 and injuries upon which the final adverse action

4 was based.

5 (E) Such other information as required by

6 the Secretary.

7 (3) CONFIDENTIALITY.—The Secretary shall es8 tablish procedures to assure that in the submission

9 of information under this subsection the privacy of

10 individuals receiving health care services is appro11 priately protected.

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

13 information required to be reported under this sub14 section shall be reported on a monthly basis and in

15 such form and manner as determined by the Sec16 retary. Such information shall first be required to be

17 reported on a date specified by the Secretary.

18 (5) TO WHOM REPORTED.—The information re19 quired to be reported under this subsection shall be

20 reported to the Secretary or such person or persons

21 designated by the Secretary.

22 (c) CORRECTION OF ERRONEOUS INFORMATION.—

23 (1) DISCLOSURE AND CORRECTION.—The Sec24 retary shall provide for a procedure through which

25 a person, to whom information within the data base
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1 established under this section pertains, may review

2 that information and obtain the correction of errors

3 pertaining to that person.

4 (2) OTHER CORRECTIONS.—Each Government

5 agency shall report corrections of information al6 ready reported about any final adverse action taken

7 against a health care provider, supplier, or practi8 tioner, or a health care benefit program, in such

9 form and manner as required by the Secretary.

10 (d) ACCESS TO REPORTED INFORMATION.—

11 (1) AVAILABILITY.—The information in this

12 data base shall be available to the public, Federal

13 and State law enforcement agencies, Federal and

14 State government agencies, and health care benefit

15 programs pursuant to procedures established by the

16 Secretary and Attorney General.

17 (2) FEES.—The Secretary may establish rea18 sonable fees for the disclosure of information in this

19 data base.

20 (e) PROTECTION FROM LIABILITY FOR REPORT21 ING.—No person may be held liable in any civil action with

22 respect to reporting information required to be reported

23 under this section, unless the information reported was

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

25 information.
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1 (f) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section:

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

4 the following:

5 (A) Civil judgments in Federal or State

6 court related to the delivery of a health care

7 item or service.

8 (B) Federal or State criminal convictions

9 related to the delivery of a health care item or

10 service, as determined in accordance with proce11 dures applicable to the exclusion of individuals

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

13 Security Act.

14 (C) Actions by State or Federal agencies

15 responsible for the licensing and certification of

16 health care providers, suppliers, and licensed

17 health care practitioners, including—

18 (i) formal or official actions, such as

19 revocation or suspension of a license (and

20 the length of any such suspension), rep21 rimand, censure or probation;

22 (ii) any other loss of license of the

23 provider, supplier, or practitioner, whether

24 by operation of law, voluntary surrender or

25 otherwise; or
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1 (iii) any other negative action or find2 ing by such State or Federal agency that

3 is publicly available information.

4 (D) Exclusion from participation in Fed5 eral or State health care programs.

6 (E) Any other actions as required by the

7 Secretary.

8 (2) The term ‘‘Government agency’’ includes—

9 (A) the Department of Justice;

10 (B) the Department of Health and Human

11 Services;

12 (C) any other Federal agency that either

13 administers or provides payment for the deliv14 ery of health care services, including (but not

15 limited to) the Department of Defense and the

16 Department of Veterans Affairs;

17 (D) State law enforcement agencies;

18 (E) State Medicaid fraud and abuse con19 trol units described in section 1903(q) of the

20 Social Security Act; and

21 (F) State or Federal agencies responsible

22 for the licensing and certification of health care

23 providers and licensed health care practitioners.

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

25 the meaning given such term in section 1347(b) of
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1 title 18, United States Code, as added by section

2 202(b).

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

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

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

6 health maintenance organization or group medical

7 practice, that provides health care services (as speci8 fied by the Secretary in regulations).

9 (5) The terms ‘‘licensed health care practi10 tioner’’ and ‘‘practitioner’’ mean, with respect to a

11 State, an individual who is licensed or otherwise au12 thorized by the State to provide health care services

13 (or any individual who without authority holds him14 self or herself out to be so licensed or authorized).

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

16 of Health and Human Services.

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

18 items and services for which payment may be made

19 under part B of title XVIII of the Social Security

20 Act.

21 SEC. 109. DEFINITIONS.

22 In this title:

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

24 Health Care Fraud and Abuse Control Account es25 tablished by section 104(a).
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1 (2) EXPENSES SUBACCOUNT.—The term ‘‘Ex2 penses Subaccount’’ means the Health Care Fraud

3 and Abuse Expenses Subaccount of the Account.

4 (3) FEDERAL HEALTH CARE OFFENSE.—The

5 term ‘‘Federal health care offense’’ has the meaning

6 given such term in section 24(a) of title 18, United

7 States Code.

8 (4) HEALTH CARE FRAUD AND ABUSE CONTROL

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

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

11 State in accordance with section 102(b).

12 (5) INSPECTOR GENERAL.—Except as otherwise

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

14 Inspector General of the Department of Health and

15 Human Services.

16 (6) RESERVE SUBACCOUNT.—The term ‘‘Re17 serve Subaccount’’ means the Health Care Fraud

18 and Abuse Reserve Subaccount of the Account.

19 SEC. 110. EFFECTIVE DATE.

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

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

22 180-day period which begins on the date of the enactment

23 of this Act.
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1 (b) DEVELOPMENT AND PUBLICATION OF DESCRIP2 TION OF PROGRAM.—Section 101(c)(1) shall take effect

3 on the date of the enactment of this Act.

4 TITLE II—REVISIONS TO

5 CRIMINAL LAW

6 SEC. 201. DEFINITION OF FEDERAL HEALTH CARE OF7 FENSE.

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

9 States Code, is amended by adding at the end the follow10 ing:

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

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

13 care offense’ means—

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

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

16 of this title;

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

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

19 U.S.C. 1320a–7b);

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

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

22 1341, 1343, or 1954 of this title, if the violation or

23 conspiracy relates to a health care benefit program;

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

25 violate section 501 or 511 of the Employee Retire-
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1 ment Income Security Act of 1974 (29 U.S.C. 1131

2 or 29 U.S.C. 1141), if the violation or conspiracy re3 lates to a health care benefit program;

4 ‘‘(5) the commission of, or attempt to commit,

5 an act which constitutes grounds for the imposition

6 of a penalty under section 303 of the Federal Food,

7 Drug, and Cosmetic Act, if the act or attempt re8 lates to a health care benefit program; or

9 ‘‘(6) a violation of, or criminal conspiracy to

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

11 (41 U.S.C. 53), if the violation or conspiracy relates

12 to a health care benefit program.

13 ‘‘(b) As used in this title, the term ‘health care bene14 fit program’ has the meaning given such term in section

15 1347(b) of this title.’’.

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

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

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

19 section 23 the following new item:

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

20 SEC. 202. HEALTH CARE FRAUD.

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

22 States Code, is amended by adding at the end the follow23 ing:
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1 ‘‘§ 1347. Health care fraud

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

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

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

5 scheme or artifice—

6 ‘‘(1) to defraud any health care benefit pro7 gram; or

8 ‘‘(2) to obtain, by means of false or fraudulent

9 pretenses, representations, or promises, any of the

10 money or property owned by, or under the custody

11 or control of, any health care benefit program,

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

13 10 years, or both. If the violation results in serious bodily

14 injury (as defined in section 1365 of this title), such per15 son shall be fined under this title or imprisoned not more

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

17 death, such person shall be fined under this title, or im18 prisoned for any term of years or for life, or both.

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

20 benefit program’ means any public or private plan or con21 tract under which any medical benefit, item, or service is

22 provided to any individual, and includes any individual or

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

24 for which payment may be made under the plan or con25 tract.’’.
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1 (b) CLERICAL AMENDMENT.—The table of sections

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

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

‘‘1347. Health care fraud.’’.

4 SEC. 203. THEFT OR EMBEZZLEMENT.

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

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

8 ‘‘§ 669. Theft or embezzlement in connection with

9 health care

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

11 authority willfully and unlawfully converts to the use of

12 any person other than the rightful owner, or intentionally

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

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

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

16 more than 10 years, or both.

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

18 benefit program’ has the meaning given such term in sec19 tion 1347(b) of this title.’’.

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

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

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

‘‘669. Theft or embezzlement in connection with health care.’’.
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1 SEC. 204. FALSE STATEMENTS.

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

3 States Code, is amended by adding at the end the follow4 ing:

5 ‘‘§ 1035. False statements relating to health care mat6 ters

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

8 benefit program, knowingly and willfully falsifies, conceals,

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

10 fact, or makes any false, fictitious, or fraudulent state11 ments or representations, or makes or uses any false writ12 ing or document knowing the same to contain any false,

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

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

15 both.

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

17 benefit program’ has the meaning given such term in sec18 tion 1347(b) of this title.’’.

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

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

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

22 item:

‘‘1035. False statements relating to health care matters.’’.
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1 SEC. 205. BRIBERY AND GRAFT.

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

3 States Code, is amended by adding at the end the follow4 ing:

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

6 care

7 ‘‘(a) Whoever—

8 ‘‘(1) directly or indirectly, corruptly gives, of9 fers, or promises anything of value to a health care

10 official, or offers or promises to give anything of

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

12 subsection, with intent—

13 ‘‘(A) to influence any of the health care of14 ficial’s actions, decisions, or duties relating to a

15 health care benefit program;

16 ‘‘(B) to influence such an official to com17 mit or aid in the committing, or collude in or

18 allow, any fraud, or make opportunity for the

19 commission of any fraud, on a health care bene20 fit program; or

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

22 in any conduct in violation of the lawful duty of

23 such official; or

24 ‘‘(2) being a health care official, directly or in25 directly, corruptly demands, seeks, receives, accepts,

26 or agrees to accept anything of value personally or
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1 for any other person or entity, the giving of which

2 violates paragraph (1) of this subsection, or at3 tempts to violate this subsection,

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

5 15 years, or both.

6 ‘‘(b) Whoever—

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

8 proper discharge of any duty, directly or indirectly

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

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

11 health care official’s actions, decisions, or duties re12 lating to a health care benefit program, or attempts

13 to violate this subsection; or

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

15 as provided by law for the proper discharge of any

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

17 accepts or agrees to accept anything of value person18 ally or for any other person or entity, the giving of

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

20 attempts to violate this subsection,

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

22 2 years, or both.

23 ‘‘(c) As used in this section—

24 ‘‘(1) the term ‘health care official’ means—
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1 ‘‘(A) an administrator, officer, trustee, fi2 duciary, custodian, counsel, agent, or employee

3 of any health care benefit program;

4 ‘‘(B) an officer, counsel, agent, or em5 ployee, of an organization that provides services

6 under contract to any health care benefit pro7 gram; or

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

9 entity having regulatory authority over any

10 health care benefit program; and

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

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

13 this title.’’.

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

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

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

17 item:

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

18 SEC. 206. ILLEGAL REMUNERATION WITH RESPECT TO

19 HEALTH CARE BENEFIT PROGRAMS.

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

21 States Code, is amended by adding at the end the follow22 ing:
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1 ‘‘§ 227. Illegal remuneration with respect to health

2 care benefit programs

3 ‘‘(a) Whoever knowingly and willfully solicits or re4 ceives any remuneration (including any kickback, bribe, or

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

6 or in kind—

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

8 person for the furnishing or arranging for the fur9 nishing of any item or service for which payment

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

11 benefit program; or

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

13 or arranging for or recommending purchasing, leas14 ing, or ordering any good, facility, service, or item

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

16 by any health care benefit program, or attempting to

17 do so,

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

19 than 5 years, or both.

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

21 any remuneration (including any kickback, bribe, or re22 bate) directly or indirectly, overtly, or covertly, in cash or

23 in kind to any person to induce such person—

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

25 furnishing or arranging for the furnishing of any
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1 item or service for which payment may be made in

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

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

4 recommend purchasing, leasing, or ordering any

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

6 may be made in whole or in part by any health bene7 fit program or attempts to do so,

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

9 than 5 years, or both.

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

11 ‘‘(1) a discount or other reduction in price ob12 tained by a provider of services or other entity under

13 a health care benefit program if the reduction in

14 price is properly disclosed and appropriately re15 flected in the costs claimed or charges made by the

16 provider or entity under a health care benefit pro17 gram;

18 ‘‘(2) any amount paid by an employer to an em19 ployee (who has a bona fide employment relationship

20 with such employer) for employment in the provision

21 of covered items or services if the amount of the re22 muneration under the arrangement is consistent

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

24 determined in a manner that takes into account (di-
35

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1 rectly or indirectly) the volume or value of any refer2 rals;

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

4 services to a person authorized to act as a purchas5 ing agent for a group of individuals or entities who

6 are furnishing services reimbursed under a health

7 care benefit program if—

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

9 with each such individual or entity, which speci10 fies the amount to be paid the person, which

11 amount may be a fixed amount or a percentage

12 of the value of the purchases made by each

13 such individual or entity under the contract,

14 and

15 ‘‘(B) in the case of an entity that is a pro16 vider of services (as defined in section 1861(u)

17 of the Social Security Act, the person discloses

18 (in such form and manner as the Secretary of

19 Health and Human Services requires) to the

20 entity and, upon request, to the Secretary the

21 amount received from each such vendor with re22 spect to purchases made by or on behalf of the

23 entity;

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

25 of title XVIII of the Social Security Act by a feder-
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1 ally qualified health care center with respect to an

2 individual who qualifies for subsidized services under

3 a provision of the Public Health Service Act; and

4 ‘‘(5) any payment practice specified by the Sec5 retary of Health and Human Services in regulations

6 promulgated pursuant to section 14(a) of the Medi7 care and Medicaid Patient and Program Protection

8 Act of 1987.

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

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

11 this title may sue therefor in any appropriate United

12 States district court and shall recover threefold the dam13 ages such person sustains and the cost of the suit, includ14 ing a reasonable attorney’s fee.

15 ‘‘(e) As used in this section, ‘health care benefit pro16 gram’ has the meaning given such term in section 1347(b)

17 of this title.’’.

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

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

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

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

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

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

23 by striking subsection (b).
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1 SEC. 207. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF

2 HEALTH CARE OFFENSES.

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

4 States Code, is amended by adding at the end the follow5 ing:

6 ‘‘§ 1518. Obstruction of criminal investigations of

7 health care offenses

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

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

10 the communication of information or records relating to

11 a violation of a health care offense to a criminal investiga12 tor shall be fined under this title or imprisoned not more

13 than 5 years, or both.

14 ‘‘(b) As used in this section the term ‘health care of15 fense’ has the meaning given such term in section 24 of

16 this title.

17 ‘‘(c) As used in this section the term ‘criminal inves18 tigator’ means any individual duly authorized by a depart19 ment, agency, or armed force of the United States to con20 duct or engage in investigations for prosecutions for viola21 tions of health care offenses.’’.

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

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

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

25 item:

‘‘1518. Obstruction of criminal investigations of health care offenses.’’.
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1 SEC. 208. CIVIL PENALTIES FOR VIOLATIONS OF FEDERAL

2 HEALTH CARE OFFENSES.

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

4 States Code, is amended by adding at the end the follow5 ing:

6 ‘‘§ 1348. Civil penalties for violations of Federal

7 health care offenses

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

9 the appropriate United States district court against any

10 person who engages in conduct constituting a violation of

11 Federal health care offense, as that term is defined in sec12 tion 24 of this title and, upon proof of such conduct by

13 a preponderance of the evidence, such person shall be sub14 ject to a civil penalty of not more than $50,000 for each

15 violation or the amount of compensation or proceeds which

16 the person received or offered for the prohibited conduct,

17 whichever amount is greater. The imposition of a civil pen18 alty under this section does not preclude any other crimi19 nal or civil statutory, common law, or administrative rem20 edy, which is available by law to the United States or any

21 other person.’’.

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

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

24 by adding at the end the following item:

‘‘1348. Civil penalties for violations of Federal health care offenses.’’.
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1 SEC. 209. INJUNCTIVE RELIEF RELATING TO HEALTH CARE

2 OFFENSES.

3 Section 1345(a)(1) of title 18, United States Code,

4 is amended—

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

6 (A);

7 (2) by inserting ‘‘or’’ at the end of subpara8 graph (B); and

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

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

11 Federal health care offense (as defined in sec12 tion 24 of this title).’’.

13 SEC. 210. AUTHORIZED INVESTIGATIVE DEMAND PROCE14 DURES.

15 (a) IN GENERAL.—Chapter 233 of title 18, United

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

17 following:

18 ‘‘§ 3486. Authorized investigative demand procedures

19 ‘‘(a) AUTHORIZATION.—(1) In any investigation re20 lating to functions set forth in paragraph (2), the Attorney

21 General or the Director of the Federal Bureau of Inves22 tigation or their designees may issue in writing and cause

23 to be served a summons compelling the attendance and

24 testimony of witnesses and requiring the production of any

25 records (including any books, papers, documents, elec26 tronic media, or other objects or tangible things), which
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1 may be relevant to an authorized law enforcement inquiry,

2 that a person or legal entity may possess or have care,

3 custody, or control. The attendance of witnesses and the

4 production of records may be required from any place in

5 any State or in any territory or other place subject to the

6 jurisdiction of the United States at any designated place

7 of hearing; except that a witness shall not be required to

8 appear at any hearing more than 500 miles distant from

9 the place where he was served with a subpoena. Witnesses

10 summoned under this section shall be paid the same fees

11 and mileage that are paid witnesses in the courts of the

12 United States. A summons requiring the production of

13 records shall describe the objects required to be produced

14 and prescribe a return date within a reasonable period of

15 time within which the objects can be assembled and made

16 available.

17 ‘‘(2) Investigative demands utilizing an administra18 tive summons are authorized for:

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

20 or activity constituting an offense involving a Fed21 eral health care offense as that term is defined in

22 section 24 of title 18, United States Code.

23 ‘‘(B) Any investigation, with respect to viola24 tions of sections 1073 and 1074 of title 18, United

25 States Code, or in which an individual has been law-
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1 fully charged with a Federal offense and such indi2 vidual is avoiding prosecution or custody or confine3 ment after conviction of such offense or attempt.

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

5 may be served by any person designated in the subpoena

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

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

8 be made upon a domestic or foreign corporation or upon

9 a partnership or other unincorporated association which

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

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

12 or to any other agent authorized by appointment or by

13 law to receive service of process. The affidavit of the per14 son serving the subpoena entered on a true copy thereof

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

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

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

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

19 United States within the jurisdiction of which the inves20 tigation is carried on or of which the subpoenaed person

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

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

23 court may issue an order requiring the subpoenaed person

24 to appear before the Attorney General to produce records,

25 if so ordered, or to give testimony touching the matter
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1 under investigation. Any failure to obey the order of the

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

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

4 district in which such person may be found.

5 ‘‘(d) IMMUNITY FROM CIVIL LIABILITY.—Notwith6 standing any Federal, State, or local law, any person, in7 cluding officers, agents, and employees, receiving a sum8 mons under this section, who complies in good faith with

9 the summons and thus produces the materials sought,

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

11 States to any customer or other person for such produc12 tion or for nondisclosure of that production to the cus13 tomer.’’.

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

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

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

17 section 3485 the following new item:

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

18 (c) CONFORMING AMENDMENT.—Section

19 1510(b)(3)(B) of title 18, United States Code, is amended

20 by inserting ‘‘or a Federal Bureau of Investigation sum21 mons (issued under section 3486 of title 18),’’ after ‘‘sub22 poena’’.

23 SEC. 211. GRAND JURY DISCLOSURE.

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

25 amended—
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1 (1) by redesignating subsections (c) and (d) as

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

3 (2) by inserting after subsection (b) the follow4 ing:

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

6 concerning a health care offense—

7 ‘‘(1) received in the course of duty as an attor8 ney for the Government; or

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

10 Federal Rules of Criminal Procedure;

11 may disclose that information to an attorney for the Gov12 ernment to use in any civil investigation or proceeding re13 lated to a Federal health care offense (as defined in sec14 tion 24 of this title).’’.

15 SEC. 212. MISCELLANEOUS AMENDMENTS TO TITLE 18,

16 UNITED STATES CODE.

17 (a) LAUNDERING OF MONETARY INSTRUMENTS.—

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

19 amended by adding at the end thereof the following:

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

21 involving a Federal health care offense as that term

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

23 Code.’’.

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

25 18, United States Code, is amended by striking ‘‘sections
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1 that—’’ and inserting ‘‘or in the case of a Federal health

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

3 title, that—’’.

4 (c) AUTHORIZATION FOR INTERCEPTION OF WIRE,

5 ORAL, OR ELECTRONIC COMMUNICATIONS.—Section

6 2516(1)(c) of title 18, United States Code, is amended—

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

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

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

10 sporting contests),’’; and

11 (2) by inserting ‘‘section 1347 (health care

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

13 fraud),’’ .

14 (d) DEFINITIONS.—Section 1961(1) of title 18, Unit15 ed States Code, is amended—

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

17 to bribery and graft, and illegal remuneration in

18 connection with health care)’’ after ‘‘section 224 (re19 lating to sports bribery),’’;

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

21 or embezzlement in connection with health care)’’

22 after ‘‘section 664 (relating to embezzlement from

23 pension and welfare funds),’’; and
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1 (3) by inserting ‘‘section 1347 (relating to

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

3 financial institution fraud),’’.

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

5 18, United States Code, is amended by adding at the end

6 the following new paragraph:

7 ‘‘(6) The court in imposing sentence on a per8 son convicted of a Federal health care offense as de9 fined in section 24 of this title, shall order that the

10 offender forfeit to the United States any real or per11 sonal property constituting or derived from proceeds

12 that the offender obtained directly or indirectly as

13 the result of the offense.’’.

14 (f) REWARDS FOR INFORMATION LEADING TO PROS15 ECUTION AND CONVICTION.—Section 3059(c)(1) of title

16 18, United States Code, is amended by inserting ‘‘or fur17 nishes information unknown to the Government relating

18 to a possible prosecution of a Federal health care offense

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

20 conviction’’ before the period at the end.
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1 TITLE III—ANTI-FRAUD INITIA2 TIVES UNDER MEDICARE AND

3 MEDICAID

4 SEC. 301. REVISION TO CURRENT PENALTIES.

5 (a) PERMISSIVE EXCLUSION OF INDIVIDUALS WITH

6 OWNERSHIP OR CONTROL INTEREST IN SANCTIONED EN7 TITIES.—Section 1128(b) of the Social Security Act (42

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

9 following new paragraph:

10 ‘‘(15) INDIVIDUALS CONTROLLING A SANC11 TIONED ENTITY.—Any individual who has a direct

12 or indirect ownership or control interest of 5 percent

13 or more, or an ownership or control interest (as de14 fined in section 1124(a)(3)) in, or who is an officer,

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

16 section 1126(b)) of, an entity—

17 ‘‘(A) that has been convicted of any of18 fense described in subsection (a) or in para19 graph (1), (2), or (3) of this subsection;

20 ‘‘(B) against which a civil monetary pen21 alty has been assessed under section 1128A; or

22 ‘‘(C) that has been excluded from partici23 pation under a program under title XVIII or

24 under a State health care program.’’.
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1 (b) IMPOSITION OF CIVIL MONETARY PENALTY ON

2 EMPLOYER BILLING FOR SERVICES FURNISHED BY EX3 CLUDED EMPLOYEE.—Section 1128A(a)(1) of the Social

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

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

6 (C);

7 (2) by striking ‘‘; or’’ at the end of subpara8 graph (D) and inserting ‘‘, or’’; and

9 (3) by adding at the end the following new sub10 paragraph:

11 ‘‘(E) is for a medical or other item or serv12 ice furnished by an individual who is an em13 ployee or agent of the person during a period

14 in which such employee or agent was excluded

15 from the program under which the claim was

16 made on any of the grounds for exclusion de17 scribed in subparagraph (D);’’.

18 (c) DEPOSIT OF PENALTIES INTO HEALTH CARE

19 FRAUD AND ABUSE CONTROL ACCOUNT.—Section

20 1128A(f)(3) of such Act (42 U.S.C. 1320a–7a(f)(3)) is

21 amended by striking ‘‘as miscellaneous receipts of the

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

23 Health Care Fraud and Abuse Control Account estab24 lished under section 104 of the Health Care Fraud and

25 Abuse Prevention Act of 1995’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply with respect to sanctions imposed

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

4 enactment of this Act.

5 SEC. 302. SOLICITATION AND PUBLICATION OF MODIFICA6 TIONS TO EXISTING SAFE HARBORS AND NEW

7 SAFE HARBORS.

8 (a) IN GENERAL.—

9 (1) SOLICITATION OF PROPOSALS FOR SAFE

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

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

12 2 years thereafter, the Secretary of Health and

13 Human Services (hereafter in this title referred to as

14 the ‘‘Secretary’’) shall publish a notice in the Fed15 eral Register soliciting proposals, which will be ac16 cepted during a 60-day period, for—

17 (A) modifications to existing safe harbors

18 issued pursuant to section 14(a) of the Medi19 care and Medicaid Patient and Program Protec20 tion Act of 1987; and

21 (B) additional safe harbors specifying pay22 ment practices that shall not be treated as a

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

24 Social Security Act and shall not serve as the
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1 basis for an exclusion under section 1128(b)(7)

2 of such Act.

3 (2) PUBLICATION OF PROPOSED MODIFICA4 TIONS AND PROPOSED ADDITIONAL SAFE HAR5 BORS.—After considering the proposals described in

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

7 the Attorney General, shall publish in the Federal

8 Register proposed modifications to existing safe har9 bors and proposed additional safe harbors, if appro10 priate, with a 60-day comment period. After consid11 ering any public comments received during this pe12 riod, the Secretary shall issue final rules modifying

13 the existing safe harbors and establishing new safe

14 harbors, as appropriate.

15 (3) REPORT.—The Inspector General of the

16 Department of Health and Human Services (here17 after in this section referred to as the ‘‘Inspector

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

19 as part of the year-end semiannual report required

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

21 describe the proposals received under paragraph (1)

22 and explain which proposals were included in the

23 publication described in paragraph (2), which pro24 posals were not included in that publication, and the
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1 reasons for the rejection of the proposals that were

2 not included.

3 (b) CRITERIA FOR MODIFYING AND ESTABLISHING

4 SAFE HARBORS.—In modifying and establishing safe har5 bors under subsection (a)(2), the Secretary may consider

6 the extent to which providing a safe harbor for the speci7 fied payment practice may result in any of the following:

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

9 care services.

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

11 health care services.

12 (3) An increase or decrease in patient freedom

13 of choice among health care providers.

14 (4) An increase or decrease in competition

15 among health care providers.

16 (5) An increase or decrease in the ability of

17 health care facilities to provide services in medically

18 underserved areas or to medically underserved popu19 lations.

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

21 care programs operated or financed by the Federal,

22 State, or local governments.

23 (7) An increase or decrease in the potential

24 overutilization of health care services.
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1 (8) The existence or nonexistence of any poten2 tial financial benefit to a health care professional or

3 provider which may vary based on their decisions

4 of—

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

6 service; or

7 (B) whether to arrange for a referral of

8 health care items or services to a particular

9 practitioner or provider.

10 (9) Any other factors the Secretary deems ap11 propriate in the interest of preventing fraud and

12 abuse in health care programs operated or financed

13 by the Federal, State, or local governments.

14 SEC. 303. REQUIRING SECRETARY TO IMPLEMENT PRO15 POSAL TO EXPEDITE PAYMENT ADJUST16 MENTS BASED UPON INHERENT REASON17 ABLENESS.

18 Not later than 6 months after the date of the enact19 ment of this Act, the Secretary of Health and Human

20 Services shall implement its initiative of December 1994

21 to expedite the implementation of payment adjustments

22 for covered items under section 1834(a)(10)(B) of the So23 cial Security Act pursuant to the provisions of paragraphs

24 (8) and (9) of section 1842(b) of such Act.
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1 SEC. 304. REQUIRING ANNUAL NOTICE TO MEDICARE

2 BENEFICIARIES OF NEED TO PREVENT

3 FRAUD AND ABUSE AGAINST MEDICARE PRO4 GRAM.

5 (a) IN GENERAL.—Section 1804(a) of the Social Se6 curity Act (42 U.S.C. 1395b–2(a)) is amended—

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

8 (2);

9 (2) by striking the period at the end of para10 graph (3) and inserting ‘‘, and’’; and

11 (3) by inserting after paragraph (3) the follow12 ing new paragraph:

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

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

15 suggestions for steps which medicare beneficiaries

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

17 against the program, including the toll-free tele18 phone number operated by the Secretary and the In19 spector General of the Department of Health and

20 Human Services for reporting information on fraud

21 and abuse against the program and the potential

22 availability of a reward for individuals reporting in23 formation which leads to a criminal prosecution and

24 conviction for health care fraud under title 18,

25 United States Code.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

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

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

4 beginning with 1997.

5 SEC. 305. REQUIRING USE OF SINGLE PROVIDER NUMBER

6 IN SUBMISSION OF CLAIMS FOR PAYMENT

7 UNDER MEDICARE AND MEDICAID.

8 (a) USE OF SINGLE NUMBER UNDER MEDICARE.—

9 Section 1842(r) of the Social Security Act (42 U.S.C.

10 1395u(r)) is amended to read as follows:

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

12 enactment of the Health Care Fraud and Abuse Preven13 tion Act of 1995, the Secretary shall establish a system

14 which provides for a unique identifier for each individual

15 or entity who furnishes items or services for which pay16 ment may be made under this part.

17 ‘‘(2) No payment may be made under this title for

18 any item or service furnished by an individual or entity

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

20 service includes the unique identifier provided to the indi21 vidual or entity under the system established under para22 graph (1).’’.

23 (b) PROVIDING MEDICARE NUMBER FOR SUBMIS24 SION OF MEDICAID CLAIMS.—Section 1902(x) of such Act

25 (42 U.S.C. 1396a(x)) is amended—
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1 (1) by striking ‘‘(x)’’ and inserting ‘‘(x)(1)’’;

2 and

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

4 paragraph:

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

6 the State for payment for providing medical assistance

7 under the State plan has a unique identifier assigned by

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

9 title XVIII, the individual or entity shall include the iden10 tifier with such claim.’’.

11 SEC. 306. LIABILITY OF CARRIERS AND FISCAL

12 INTERMEDIARIES FOR CLAIMS SUBMITTED

13 BY EXCLUDED PROVIDERS.

14 (a) REIMBURSEMENT TO SECRETARY FOR AMOUNTS

15 PAID TO EXCLUDED PROVIDERS.—

16 (1) REQUIREMENT FOR FISCAL

17 INTERMEDIARIES.—

18 (A) IN GENERAL.—Section 1816 of the So19 cial Security Act (42 U.S.C. 1395h), as amend20 ed by section 151(b)(1)(A) of the Social Secu21 rity Act Amendments of 1994, is amended by

22 adding at the end the following new subsection:

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

24 under this section shall require that such agency or orga25 nization reimburse the Secretary for any amounts paid for
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1 a service under this title which is furnished by an individ2 ual or entity during any period for which the individual

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

4 1156, or subsection (j)(2) from participation in the pro5 gram under this title, if the amounts are paid after the

6 Secretary notifies the agency or organization of the exclu7 sion.’’.

8 (B) CONFORMING AMENDMENT.—Section

9 1816(i) of such Act (42 U.S.C. 1395h(i)) is

10 amended by adding at the end the following

11 new paragraph:

12 ‘‘(4) Nothing in this subsection shall be construed to

13 prohibit reimbursement by an agency or organization

14 under subsection (l).’’.

15 (2) REQUIREMENT FOR CARRIERS.—Section

16 1842(b)(3) of such Act (42 U.S.C. 1395u(b)(3)), as

17 amended by section 151(b)(1)(B) of the Social Secu18 rity Act Amendments of 1994, is amended—

19 (A) by striking ‘‘and’’ at the end of sub20 paragraph (I); and

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

22 following new subparagraph:

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

24 amounts paid for an item or service under this part

25 which is furnished by an individual or entity during
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1 any period for which the individual or entity is ex2 cluded pursuant to section 1128, 1128A, 1156, or

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

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

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

6 (b) CONFORMING REPEAL OF MANDATORY PAYMENT

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

8 1395y(e)(2)) is amended to read as follows:

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

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

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

12 is liable for payment of any amounts billed for such an

13 item or service in violation of the previous sentence. If an

14 individual or entity knowingly and willfully bills (or col15 lects an amount) for such an item or service in violation

16 of such sentence, the Secretary may apply sanctions

17 against the individual or entity in the same manner as

18 the Secretary may apply sanctions against a physician in

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

20 such section applies with respect to a physician. Para21 graph (4) of subsection (j) shall apply in this paragraph

22 in the same manner as such paragraph applies to such

23 section.’’.
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1 SEC. 307. STUDY OF FINANCIAL SOLVENCY AND INTEGRITY

2 STANDARDS FOR PROVIDERS AND SUPPLI3 ERS.

4 (a) STUDY.—The Secretary of Health and Human

5 Services shall conduct a study of the feasibility and desir6 ability of imposing qualifications on individuals and enti7 ties providing items and services for which payment may

8 be made under the medicare and medicaid programs relat9 ing to financial solvency and fiscal integrity to protect the

10 programs from waste, fraud, and abuse.

11 (b) REPORT.—Not later than 1 year after the date

12 of the enactment of this Act, the Secretary shall submit

13 a report to Congress on the study conducted under sub14 section (a), and shall include in the report such rec15 ommendations as the Secretary considers appropriate for

16 financial solvency and fiscal integrity standards for provid17 ers and suppliers under the medicare and medicaid pro18 grams.

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