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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 245 Introduced in Senate (IS)]

  1st Session
                                 S. 245

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

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

             January 19 (legislative day, January 10), 1995

    Mr. Cohen (for himself, Mr. Dole, Mr. Simpson, Mr. Stevens, Mr. 
D'Amato, Mr. Graham, Mr. Coats, Mr. Gregg, Mr. Warner, Mr. Nickles, Mr. 
Pryor, Mr. Bond, Mr. Chafee, Mr. Ford, and Mr. Domenici) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL

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

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Care Fraud 
Prevention Act of 1995''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
           TITLE I--ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM

Sec. 101. All-payer fraud and abuse control program.
Sec. 102. Application of certain Federal health anti-fraud and abuse 
                            sanctions to all fraud and abuse against 
                            any health plan.
Sec. 103. Health care fraud and abuse guidance.
Sec. 104. Reporting of fraudulent actions under medicare.
      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--CIVIL MONETARY PENALTIES

Sec. 401. Civil monetary penalties.
                  TITLE V--AMENDMENTS TO CRIMINAL LAW

Sec. 501. Health care fraud.
Sec. 502. Forfeitures for Federal health care offenses.
Sec. 503. Injunctive relief relating to Federal health care offenses.
Sec. 504. Grand jury disclosure.
Sec. 505. False Statements.
Sec. 506. Voluntary disclosure program.
Sec. 507. Obstruction of criminal investigations of Federal health care 
                            offenses.
Sec. 508. Theft or embezzlement.
Sec. 509. Laundering of monetary instruments.
      TITLE VI--PAYMENTS FOR STATE HEALTH CARE FRAUD CONTROL UNITS

Sec. 601. Establishment of State fraud units.
Sec. 602. Requirements for State fraud units.
Sec. 603. Scope and purpose.
Sec. 604. Payments to States.

           TITLE I--ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM

SEC. 101. ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM.

    (a) Establishment of Program.--
            (1) In general.--Not later than January 1, 1996, the 
        Secretary of Health and Human Services (in this title referred 
        to as the ``Secretary''), acting through the Office of the 
        Inspector General of the Department of Health and Human 
        Services, and the Attorney General shall establish a program--
                    (A) to coordinate Federal, State, and local law 
                enforcement programs to control fraud and abuse with 
                respect to the delivery of and payment for health care 
                in the United States,
                    (B) to conduct investigations, audits, evaluations, 
                and inspections relating to the delivery of and payment 
                for health care in the United States,
                    (C) to facilitate the enforcement of the provisions 
                of sections 1128, 1128A, and 1128B of the Social 
                Security Act and other statutes applicable to health 
                care fraud and abuse, and
                    (D) to provide for the modification and 
                establishment of safe harbors and to issue 
                interpretative rulings and special fraud alerts 
                pursuant to section 103.
            (2) Coordination with health plans.--In carrying out the 
        program established under paragraph (1), the Secretary and the 
        Attorney General shall consult with, and arrange for the 
        sharing of data with representatives of health plans.
            (3) Regulations.--
                    (A) In general.--The Secretary and the Attorney 
                General shall by regulation establish standards to 
                carry out the program under paragraph (1).
                    (B) Information standards.--
                            (i) In general.--Such standards shall 
                        include standards relating to the furnishing of 
                        information by health plans, providers, and 
                        others to enable the Secretary and the Attorney 
                        General to carry out the program (including 
                        coordination with health plans under paragraph 
                        (2)).
                            (ii) Confidentiality.--Such standards shall 
                        include procedures to assure that such 
                        information is provided and utilized in a 
                        manner that appropriately protects the 
                        confidentiality of the information and the 
privacy of individuals receiving health care services and items.
                            (iii) Qualified immunity for providing 
                        information.--The provisions of section 1157(a) 
                        of the Social Security Act (relating to 
                        limitation on liability) shall apply to a 
                        person providing information to the Secretary 
                        or the Attorney General in conjunction with 
                        their performance of duties under this section.
                    (C) Disclosure of ownership information.--
                            (i) In general.--Such standards shall 
                        include standards relating to the disclosure of 
                        ownership information described in clause (ii) 
                        by any entity providing health care services 
                        and items.
                            (ii) Ownership information described.--The 
                        ownership information described in this clause 
                        includes--
                                    (I) a description of such items and 
                                services provided by such entity;
                                    (II) the names and unique physician 
                                identification numbers of all 
                                physicians with a financial 
                                relationship (as defined in section 
                                1877(a)(2) of the Social Security Act) 
                                with such entity;
                                    (III) the names of all other 
                                individuals with such an ownership or 
                                investment interest in such entity; and
                                    (IV) any other ownership and 
                                related information required to be 
                                disclosed by such entity under section 
                                1124 or section 1124A of the Social 
                                Security Act, except that the Secretary 
                                shall establish procedures under which 
                                the information required to be 
                                submitted under this subclause will be 
                                reduced with respect to health care 
                                provider entities that the Secretary 
                                determines will be unduly burdened if 
                                such entities are required to comply 
                                fully with this subclause.
            (4) Authorization of appropriations for investigators and 
        other personnel.--In addition to any other amounts authorized 
        to be appropriated to the Secretary, the Attorney General, the 
        Director of the Federal Bureau of Investigation, and the 
        Inspectors General of the Departments of Defense, Labor, and 
        Veterans Affairs and of the Office of Personnel Management, for 
        health care anti-fraud and abuse activities for a fiscal year, 
        there are authorized to be appropriated additional amounts, 
        from the Health Care Fraud and Abuse Account described in 
        subsection (b) of this section, as may be necessary to enable 
        the Secretary, the Attorney General, and such Inspectors 
        General to conduct investigations and audits of allegations of 
        health care fraud and abuse and otherwise carry out the program 
        established under paragraph (1) in a fiscal year.
            (5) Ensuring access to documentation.--The Inspector 
        General of the Department of Health and Human Services is 
        authorized to exercise the authority described in paragraphs 
        (4) and (5) of section 6 of the Inspector General Act of 1978 
        (relating to subpoenas and administration of oaths) with 
        respect to the activities under the all-payer fraud and abuse 
        control program established under this subsection to the same 
        extent as such Inspector General may exercise such authorities 
        to perform the functions assigned by such Act.
            (6) Authority of inspector general.--Nothing in this Act 
        shall be construed to diminish the authority of any Inspector 
        General, including such authority as provided in the Inspector 
        General Act of 1978.
            (7) health plan defined.--For the purposes of this 
        subsection, the term ``health plan'' shall have the meaning 
        given such term in section 1128(i) of the Social Security Act.
    (b) Health Care Fraud and Abuse Control Account.--
            (1) Establishment.--
                    (A) In general.--There is hereby established an 
                account to be known as the ``Health Care Fraud and 
                Abuse Control Account'' (in this section referred to as 
                the ``Anti-Fraud Account''). The Anti-Fraud Account 
                shall consist of--
                            (i) such gifts and bequests as may be made 
                        as provided in subparagraph (B);
                            (ii) such amounts as may be deposited in 
                        the Anti-Fraud Account as provided in 
                        subsection (a)(4), sections 5441(b) and 
                        5442(b), and title XI of the Social Security 
                        Act; and
                            (iii) such amounts as are transferred to 
                        the Anti-Fraud Account under subparagraph (C).
                    (B) Authorization to accept gifts.--The Anti-Fraud 
                Account is authorized to accept on behalf of the United 
                States money gifts and bequests made unconditionally to 
                the Anti-Fraud Account, for the benefit of the Anti-
                Fraud Account or any activity financed through the 
                Anti-Fraud Account.
                    (C) Transfer of amounts.--
                            (i) In general.--The Secretary of the 
                        Treasury shall transfer to the Anti-Fraud 
                        Account an amount equal to the sum of the 
                        following:
                                    (I) Criminal fines imposed in cases 
                                involving a Federal health care offense 
                                (as defined in section 982(a)(6)(B) of 
                                title 18, United States Code).
                            (ii) Administrative penalties and 
                        assessments imposed under titles XI, XVIII, and 
                        XIX of the Social Security Act (except as 
                        otherwise provided by law).
                            (iii) Amounts resulting from the forfeiture 
                        of property by reason of a Federal health care 
                        offense.
                            (iv) Penalties and damages imposed under 
                        the False Claims Act (31 U.S.C. 3729 et seq.), 
                        in cases involving claims related to the 
                        provision of health care items and services 
                        (other than funds awarded to a relator or for 
                        restitution).
            (2) Use of funds.--
                    (A) In general.--Amounts in the Anti-Fraud Account 
                shall be available to carry out the health care fraud 
                and abuse control program established under subsection 
                (a) (including the administration of the program), and 
                may be used to cover costs incurred in operating the 
                program, including costs (including equipment, salaries 
                and benefits, and travel and training) of--
                            (i) prosecuting health care matters 
                        (through criminal, civil, and administrative 
                        proceedings);
                            (ii) investigations;
                            (iii) financial and performance audits of 
                        health care programs and operations;
                            (iv) inspections and other evaluations; and
                            (v) provider and consumer education 
                        regarding compliance with the provisions of 
                        this title.
                    (B) Funds used to supplement agency 
                appropriations.--It is intended that disbursements made 
                from the Anti-Fraud Account to any Federal agency be 
                used to increase and not supplant the recipient 
                agency's appropriated operating budget.
            (3) Annual report.--The Secretary and the Attorney General 
        shall submit jointly an annual report to Congress on the amount 
        of revenue which is generated and disbursed by the Anti-Fraud 
        Account in each fiscal year.
            (4) Use of funds by inspector general.--
                    (A) Reimbursements for investigations.--The 
                Inspector General is authorized to receive and retain 
                for current use reimbursement for the costs of 
                conducting investigations, when such restitution is 
                ordered by a court, voluntarily agreed to by the payer, 
                or otherwise.
                    (B) Crediting.--Funds received by the Inspector 
                General or the Inspectors General of the Departments of 
                Defense, Labor, and Veterans Affairs and of the Office 
                of Personnel Management, as reimbursement for costs of 
                conducting investigations shall be deposited to the 
                credit of the appropriation from which initially paid, 
                or to appropriations for similar purposes currently 
                available at the time of deposit, and shall remain 
                available for obligation for 1 year from the date of 
                their deposit.

SEC. 102. APPLICATION OF CERTAIN FEDERAL HEALTH ANTI-FRAUD AND ABUSE 
              SANCTIONS TO FRAUD AND ABUSE AGAINST ANY HEALTH PLAN.

    (a) Crimes.--
            (1) Social security act.--Section 1128B of the Social 
        Security Act (42 U.S.C. 1320a-7b) is amended as follows:
                    (A) In the heading, by adding at the end the 
                following: ``or health plans''.
                    (B) In subsection (a)(1)--
                            (i) by striking ``title XVIII or'' and 
                        inserting ``title XVIII,'', and
                            (ii) by adding at the end the following: 
                        ``or a health plan (as defined in section 
                        1128(i)),''.
                    (C) In subsection (a)(5), by striking ``title XVIII 
                or a State health care program'' and inserting ``title 
                XVIII, a State health care program, or a health plan''.
                    (D) In the second sentence of subsection (a)--
                            (i) by inserting after ``title XIX'' the 
                        following: ``or a health plan'', and
                            (ii) by inserting after ``the State'' the 
                        following: ``or the plan''.
            (2) Identification of community service opportunities.--
        Section 1128B of such Act (42 U.S.C. 1320a-7b) is further 
        amended by adding at the end the following new subsection:
    ``(f) The Secretary may--
            ``(1) in consultation with State and local health care 
        officials, identify opportunities for the satisfaction of 
        community service obligations that a court may impose upon the 
        conviction of an offense under this section, and
            ``(2) make information concerning such opportunities 
        available to Federal and State law enforcement officers and 
        State and local health care officials.''.
    (b) Health Plan Defined.--Section 1128 of the Social Security Act 
(42 U.S.C. 1320a-7) is amended by redesignating subsection (i) as 
subsection (j) and by inserting after subsection (h) the following new 
subsection:
    ``(i) Health Plan Defined.--For purposes of sections 1128A and 
1128B, the term `health plan' means a plan that provides health 
benefits, whether through directly, through insurance, or otherwise, 
and includes a policy of health insurance, a contract of a service 
benefit organization, or a membership agreement with a health 
maintenance organization or other prepaid health plan, and also 
includes an employee welfare benefit plan or a multiple employer 
welfare plan (as such terms are defined in section 3 of the Employee 
Retirement Income Security Act of 1974).''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1996.

SEC. 103. HEALTH CARE FRAUD AND ABUSE GUIDANCE.

    (a) Solicitation and Publication of Modifications to Existing Safe 
Harbors and New Safe Harbors.--
            (1) In general.--
                    (A) Solicitation of proposals for safe harbors.--
                Not later than January 1, 1996, and not less than 
                annually thereafter, the Secretary shall publish a 
                notice in the Federal Register soliciting proposals, 
                which will be accepted during a 60-day period, for--
                            (i) modifications to existing safe harbors 
                        issued pursuant to section 14(a) of the 
                        Medicare and Medicaid Patient and Program 
                        Protection Act of 1987 (42 U.S.C. 1320a-7b 
                        note);
                            (ii) additional safe harbors specifying 
                        payment practices that shall not be treated as 
                        a criminal offense under section 1128B(b) of 
                        the Social Security Act the (42 U.S.C. 1320a-
                        7b(b)) and shall not serve as the basis for an 
                        exclusion under section 1128(b)(7) of such Act 
                        (42 U.S.C. 1320a-7(b)(7));
                            (iii) interpretive rulings to be issued 
                        pursuant to subsection (b); and
                            (iv) special fraud alerts to be issued 
                        pursuant to subsection (c).
                    (B) Publication of proposed modifications and 
                proposed additional safe harbors.--After considering 
                the proposals described in clauses (i) and (ii) of 
                subparagraph (A), the Secretary, in consultation with 
                the Attorney General, shall publish in the Federal 
                Register proposed modifications to existing safe 
                harbors and proposed additional safe harbors, if 
                appropriate, with a 60-day comment period. After 
                considering any public comments received during this 
                period, the Secretary shall issue final rules modifying 
                the existing safe harbors and establishing new safe 
                harbors, as appropriate.
                    (C) Report.--The Inspector General of the 
                Department of Health and Human Services (hereafter in 
                this section referred to as the ``Inspector General'') 
                shall, in an annual report to Congress or as part of 
                the year-end semiannual report required by section 5 of 
                the Inspector General Act of 1978 (5 U.S.C. App.), 
                describe the proposals received under clauses (i) and 
                (ii) of subparagraph (A) and explain which proposals 
                were included in the publication described in 
                subparagraph (B), which proposals were not included in 
                that publication, and the reasons for the rejection of 
                the proposals that were not included.
            (2) Criteria for modifying and establishing safe harbors.--
        In modifying and establishing safe harbors under paragraph 
        (1)(B), the Secretary may consider the extent to which 
        providing a safe harbor for the specified payment practice may 
        result in any of the following:
                    (A) An increase or decrease in access to health 
                care services.
                    (B) An increase or decrease in the quality of 
                health care services.
                    (C) An increase or decrease in patient freedom of 
                choice among health care providers.
                    (D) An increase or decrease in competition among 
                health care providers.
                    (E) An increase or decrease in the ability of 
                health care facilities to provide services in medically 
                underserved areas or to medically underserved 
                populations.
                    (F) An increase or decrease in the cost to 
                Government health care programs.
                    (G) An increase or decrease in the potential 
                overutilization of health care services.
                    (H) The existence or nonexistence of any potential 
                financial benefit to a health care professional or 
                provider which may vary based on their decisions of--
                            (i) whether to order a health care item or 
                        service; or
                            (ii) whether to arrange for a referral of 
                        health care items or services to a particular 
                        practitioner or provider.
                    (I) Any other factors the Secretary deems 
                appropriate in the interest of preventing fraud and 
                abuse in Government health care programs.
    (b)  Interpretive Rulings.--
            (1) In general.--
                    (A) Request for interpretive ruling.--Any person 
                may present, at any time, a request to the Inspector 
                General for a statement of the Inspector General's 
                current interpretation of the meaning of a specific 
                aspect of the application of sections 1128A and 1128B 
                of the Social Security Act (hereafter in this section 
                referred to as an ``interpretive ruling'').
                    (B) Issuance and effect of interpretive ruling.--
                            (i) In general.--If appropriate, the 
                        Inspector General shall in consultation with 
                        the Attorney General, issue an interpretive 
                        ruling in response to a request described in 
                        subparagraph (A). Interpretive rulings shall 
                        not have the force of law and shall be treated 
                        as an interpretive rule within the meaning of 
                        section 553(b) of title 5, United States Code. 
                        All interpretive rulings issued pursuant to 
                        this provision shall be published in the 
                        Federal Register or otherwise made available 
                        for public inspection.
                            (ii) Reasons for denial.--If the Inspector 
                        General does not issue an interpretive ruling 
                        in response to a request described in 
                        subparagraph (A), the Inspector General shall 
                        notify the requesting party of such decision 
                        and shall identify the reasons for such 
                        decision.
            (2) Criteria for interpretive rulings.--
                    (A) In general.--In determining whether to issue an 
                interpretive ruling under paragraph (1)(B), the 
                Inspector General may consider--
                            (i) whether and to what extent the request 
                        identifies an ambiguity within the language of 
                        the statute, the existing safe harbors, or 
                        previous interpretive rulings; and
                            (ii) whether the subject of the requested 
                        interpretive ruling can be adequately addressed 
                        by interpretation of the language of the 
                        statute, the existing safe harbor rules, or 
                        previous interpretive rulings, or whether the 
                        request would require a substantive ruling not 
                        authorized under this subsection.
                    (B) No rulings on factual issues.--The Inspector 
                General shall not give an interpretive ruling on any 
                factual issue, including the intent of the parties or 
                the fair market value of particular leased space or 
                equipment.
    (c) Special Fraud Alerts.--
            (1) In general.--
                    (A) Request for special fraud alerts.--Any person 
                may present, at any time, a request to the Inspector 
                General for a notice which informs the public of 
                practices which the Inspector General considers to be 
                suspect or of particular concern under section 1128B(b) 
                of the Social Security Act (42 U.S.C. 1320a-7b(b)) 
                (hereafter in this subsection referred to as a 
                ``special fraud alert'').
                    (B) Issuance and publication of special fraud 
                alerts.--Upon receipt of a request described in 
                subparagraph (A), the Inspector General shall 
                investigate the subject matter of the request to 
determine whether a special fraud alert should be issued. If 
appropriate, the Inspector General shall in consultation with the 
Attorney General, issue a special fraud alert in response to the 
request. All special fraud alerts issued pursuant to this subparagraph 
shall be published in the Federal Register.
            (2) Criteria for special fraud alerts.--In determining 
        whether to issue a special fraud alert upon a request described 
        in paragraph (1), the Inspector General may consider--
                    (A) whether and to what extent the practices that 
                would be identified in the special fraud alert may 
                result in any of the consequences described in 
                subsection (a)(2); and
                    (B) the volume and frequency of the conduct that 
                would be identified in the special fraud alert.

SEC. 104. REPORTING OF FRAUDULENT ACTIONS UNDER MEDICARE.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary shall establish a program through which individuals 
entitled to benefits under the medicare program may report to the 
Secretary on a confidential basis (at the individual's request) 
instances of suspected fraudulent actions arising under the program by 
providers of items and services under the program.

      TITLE II--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE

SEC. 201. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE AND STATE 
              HEALTH CARE PROGRAMS.

    (a) Individual Convicted of Felony Relating to Fraud.--
            (1) In general.--Section 1128(a) of the Social Security Act 
        (42 U.S.C. 1320a-7(a)) is amended by adding at the end the 
        following new paragraph:
            ``(3) Felony conviction relating to fraud.--Any individual 
        or entity that has been convicted after the date of the 
        enactment of the Health Care Fraud Prevention Act of 1995, 
        under Federal or State law, in connection with the delivery of 
        a health care item or service or with respect to any act or 
        omission in a program (other than those specifically described 
        in paragraph (1)) operated by or financed in whole or in part 
        by any Federal, State, or local government agency, of a 
        criminal offense consisting of a felony relating to fraud, 
        theft, embezzlement, breach of fiduciary responsibility, or 
        other financial misconduct.''.
            (2) Conforming amendment.--Section 1128(b)(1) of such Act 
        (42 U.S.C. 1320a-7(b)(1)) is amended--
                    (A) in the heading, by striking ``Conviction'' and 
                inserting ``Misdemeanor conviction''; and
                    (B) by striking ``criminal offense'' and inserting 
                ``criminal offense consisting of a misdemeanor''.
    (b) Individual Convicted of Felony Relating to Controlled 
Substance.--
            (1) In general.--Section 1128(a) of the Social Security Act 
        (42 U.S.C. 1320a-7(a)), as amended by subsection (a), is 
        amended by adding at the end the following new paragraph:
            ``(4) Felony conviction relating to controlled substance.--
        Any individual or entity that has been convicted after the date 
        of the enactment of the Health Care Fraud Prevention Act of 
        1995, under Federal or State law, of a criminal offense 
        consisting of a felony relating to the unlawful manufacture, 
distribution, prescription, or dispensing of a controlled substance.''.
            (2) Conforming amendment.--Section 1128(b)(3) of such Act 
        (42 U.S.C. 1320a-7(b)(3)) is amended--
                    (A) in the heading, by striking ``Conviction'' and 
                inserting ``Misdemeanor conviction''; and
                    (B) by striking ``criminal offense'' and inserting 
                ``criminal offense consisting of a misdemeanor''.

SEC. 202. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR CERTAIN 
              INDIVIDUALS AND ENTITIES SUBJECT TO PERMISSIVE EXCLUSION 
              FROM MEDICARE AND STATE HEALTH CARE PROGRAMS.

    Section 1128(c)(3) of the Social Security Act (42 U.S.C. 1320a-
7(c)(3)) is amended by adding at the end the following new 
subparagraphs:
    ``(D) In the case of an exclusion of an individual or entity under 
paragraph (1), (2), or (3) of subsection (b), the period of the 
exclusion shall be 3 years, unless the Secretary determines in 
accordance with published regulations that a shorter period is 
appropriate because of mitigating circumstances or that a longer period 
is appropriate because of aggravating circumstances.
    ``(E) In the case of an exclusion of an individual or entity under 
subsection (b)(4) or (b)(5), the period of the exclusion shall not be 
less than the period during which the individual's or entity's license 
to provide health care is revoked, suspended, or surrendered, or the 
individual or the entity is excluded or suspended from a Federal or 
State health care program.
    ``(F) In the case of an exclusion of an individual or entity under 
subsection (b)(6)(B), the period of the exclusion shall be not less 
than 1 year.''.

SEC. 203. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH OWNERSHIP OR CONTROL 
              INTEREST IN SANCTIONED ENTITIES.

    Section 1128(b) of the Social Security Act (42 U.S.C. 1320a-7(b)) 
is amended by adding at the end the following new paragraph:
            ``(15) Individuals controlling a sanctioned entity.--Any 
        individual who has a direct or indirect ownership or control 
        interest of 5 percent or more, or an ownership or control 
        interest (as defined in section 1124(a)(3)) in, or who is an 
        officer, director, agent, or managing employee (as defined in 
        section 1126(b)) of, an entity--
                    ``(A) that has been convicted of any offense 
                described in subsection (a) or in paragraph (1), (2), 
                or (3) of this subsection;
                    ``(B) against which a civil monetary penalty has 
                been assessed under section 1128A; or
                    ``(C) that has been excluded from participation 
                under a program under title XVIII or under a State 
                health care program.''.

SEC. 204. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAILURE TO 
              COMPLY WITH STATUTORY OBLIGATIONS.

    (a) Minimum Period of Exclusion for Practitioners and Persons 
Failing To Meet Statutory Obligations.--
            (1) In general.--The second sentence of section 1156(b)(1) 
        of the Social Security Act (42 U.S.C. 1320c-5(b)(1)) is amended 
        by striking ``may prescribe)'' and inserting ``may prescribe, 
        except that such period may not be less than 1 year)''.
            (2) Conforming amendment.--Section 1156(b)(2) of such Act 
        (42 U.S.C. 1320c-5(b)(2)) is amended by striking ``shall 
        remain'' and inserting ``shall (subject to the minimum period 
        specified in the second sentence of paragraph (1)) remain''.
    (b) Repeal of ``Unwilling or Unable'' Condition for Imposition of 
Sanction.--Section 1156(b)(1) of the Social Security Act (42 U.S.C. 
1320c-5(b)(1)) is amended--
            (1) in the second sentence, by striking ``and determines'' 
        and all that follows through ``such obligations,''; and
            (2) by striking the third sentence.

SEC. 205. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH MAINTENANCE 
              ORGANIZATIONS.

    (a) Application of Intermediate Sanctions for Any Program 
Violations.--
            (1) In general.--Section 1876(i)(1) of the Social Security 
        Act (42 U.S.C. 1395mm(i)(1)) is amended by striking ``the 
        Secretary may terminate'' and all that follows and inserting 
        the following: ``in accordance with procedures established 
        under paragraph (9), the Secretary may at any time terminate 
        any such contract or may impose the intermediate sanctions 
        described in paragraph (6)(B) or (6)(C) (whichever is 
        applicable) on the eligible organization if the Secretary 
        determines that the organization--
                    ``(A) has failed substantially to carry out the 
                contract;
                    ``(B) is carrying out the contract in a manner 
                inconsistent with the efficient and effective 
                administration of this section; or
                    ``(C) no longer substantially meets the applicable 
                conditions of subsections (b), (c), (e), and (f).''.
            (2) Other intermediate sanctions for miscellaneous program 
        violations.--Section 1876(i)(6) of such Act (42 U.S.C. 
        1395mm(i)(6)) is amended by adding at the end the following new 
        subparagraph:
    ``(C) In the case of an eligible organization for which the 
Secretary makes a determination under paragraph (1) the basis of which 
is not described in subparagraph (A), the Secretary may apply the 
following intermediate sanctions:
            ``(i) Civil money penalties of not more than $25,000 for 
        each determination under paragraph (1) if the deficiency that 
        is the basis of the determination has directly adversely 
        affected (or has the substantial likelihood of adversely 
        affecting) an individual covered under the organization's 
        contract.
            ``(ii) Civil money penalties of not more than $10,000 for 
        each week beginning after the initiation of procedures by the 
        Secretary under paragraph (9) during which the deficiency that 
        is the basis of a determination under paragraph (1) exists.
            ``(iii) Suspension of enrollment of individuals under this 
        section after the date the Secretary notifies the organization 
        of a determination under paragraph (1) and until the Secretary 
        is satisfied that the deficiency that is the basis for the 
        determination has been corrected and is not likely to recur.''.
            (3) Procedures for imposing sanctions.--Section 1876(i) of 
        such Act (42 U.S.C. 1395mm(i)) is amended by adding at the end 
        the following new paragraph:
    ``(9) The Secretary may terminate a contract with an eligible 
organization under this section or may impose the intermediate 
sanctions described in paragraph (6) on the organization in accordance 
with formal investigation and compliance procedures established by the 
Secretary under which--
            ``(A) the Secretary provides the organization with the 
        opportunity to develop and implement a corrective action plan 
        to correct the deficiencies that were the basis of the 
        Secretary's determination under paragraph (1);
            ``(B) in deciding whether to impose sanctions, the 
        Secretary considers aggravating factors such as whether an 
        entity has a history of deficiencies or has not taken action to 
        correct deficiencies the Secretary has brought to their 
        attention;
            ``(C) there are no unreasonable or unnecessary delays 
        between the finding of a deficiency and the imposition of 
        sanctions; and
            ``(D) the Secretary provides the organization with 
        reasonable notice and opportunity for hearing (including the 
right to appeal an initial decision) before imposing any sanction or 
terminating the contract.''.
            (4) Conforming amendments.--Section 1876(i)(6)(B) of such 
        Act (42 U.S.C. 1395mm(i)(6)(B)) is amended by striking the 
        second sentence.
    (b) Agreements With Peer Review Organizations.--
            (1) Requirement for written agreement.--Section 
        1876(i)(7)(A) of the Social Security Act (42 U.S.C. 
        1395mm(i)(7)(A)) is amended by striking ``an agreement'' and 
        inserting ``a written agreement''.
            (2) Development of model agreement.--Not later than July 1, 
        1996, the Secretary shall develop a model of the agreement that 
        an eligible organization with a risk-sharing contract under 
        section 1876 of the Social Security Act must enter into with an 
        entity providing peer review services with respect to services 
        provided by the organization under section 1876(i)(7)(A) of 
        such Act.
            (3) Report by gao.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study of the costs incurred by 
                eligible organizations with risk-sharing contracts 
                under section 1876(b) of such Act of complying with the 
                requirement of entering into a written agreement with 
                an entity providing peer review services with respect 
                to services provided by the organization, together with 
                an analysis of how information generated by such 
                entities is used by the Secretary to assess the quality 
                of services provided by such eligible organizations.
                    (B) Report to congress.--Not later than July 1, 
                1998, the Comptroller General shall submit a report to 
                the Committee on Ways and Means and the Committee on 
                Energy and Commerce of the House of Representatives and 
                the Committee on Finance and the Special Committee on 
                Aging of the Senate on the study conducted under 
                subparagraph (A).
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to contract years beginning on or after January 1, 
1996.

SEC. 206. EFFECTIVE DATE.

    The amendments made by this part shall take effect January 1, 1996.

         TITLE III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

SEC. 301. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE DATA 
              COLLECTION PROGRAM.

    (a) General Purpose.--Not later than January 1, 1996, the Secretary 
shall establish a national health care fraud and abuse data collection 
program for the reporting of final adverse actions (not including 
settlements in which no findings of liability have been made) against 
health care providers, suppliers, or practitioners as required by 
subsection (b), with access as set forth in subsection (c).
    (b) Reporting of Information.--
            (1) In general.--Each government agency and health plan 
        shall report any final adverse action (not including 
        settlements in which no findings of liability have been made) 
        taken against a health care provider, supplier, or 
        practitioner.
            (2) Information to be reported.--The information to be 
        reported under paragraph (1) includes:
                    (A) The name of any health care provider, supplier, 
                or practitioner who is the subject of a final adverse 
                action.
                    (B) The name (if known) of any health care entity 
                with which a health care provider, supplier, or 
                practitioner is affiliated or associated.
                    (C) The nature of the final adverse action.
                    (D) A description of the acts or omissions and 
                injuries upon which the final adverse action was based, 
                and such other information as the Secretary determines 
                by regulation is required for appropriate 
                interpretation of information reported under this 
                section.
            (3) Confidentiality.--In determining what information is 
        required, the Secretary shall include procedures to assure that 
        the privacy of individuals receiving health care services is 
        appropriately protected.
            (4) Timing and form of reporting.--The information required 
        to be reported under this subsection shall be reported 
        regularly (but not less often than monthly) and in such form 
        and manner as the Secretary prescribes. Such information shall 
        first be required to be reported on a date specified by the 
        Secretary.
            (5) To whom reported.--The information required to be 
        reported under this subsection shall be reported to the 
        Secretary.
    (c) Disclosure and Correction of Information.--
            (1) Disclosure.--With respect to the information about 
        final adverse actions (not including settlements in which no 
        findings of liability have been made) reported to the Secretary 
        under this section respecting a health care provider, supplier, 
        or practitioner, the Secretary shall, by regulation, provide 
        for--
                    (A) disclosure of the information, upon request, to 
                the health care provider, supplier, or licensed 
                practitioner, and
                    (B) procedures in the case of disputed accuracy of 
                the information.
            (2) Corrections.--Each Government agency and health plan 
        shall report corrections of information already reported about 
        any final adverse action taken against a health care provider, 
        supplier, or practitioner, in such form and manner that the 
        Secretary prescribes by regulation.
    (d) Access to Reported Information.--
            (1) Availability.--The information in this database shall 
        be available to Federal and State government agencies and 
        health plans pursuant to procedures that the Secretary shall 
        provide by regulation.
            (2) Fees for disclosure.--The Secretary may establish or 
        approve reasonable fees for the disclosure of information in 
        this database. The amount of such a fee may not exceed the 
        costs of processing the requests for disclosure and of 
        providing such information. Such fees shall be available to the 
        Secretary or, in the Secretary's discretion to the agency 
        designated under this section to cover such costs.
    (e) Protection From Liability for Reporting.--No person or entity, 
including the agency designated by the Secretary in subsection (b)(5) 
shall be held liable in any civil action with respect to any report 
made as required by this section, without knowledge of the falsity of 
the information contained in the report.
    (f) Definitions and Special Rules.--For purposes of this section:
            (1) The term ``final adverse action'' includes:
                    (A) Civil judgments against a health care provider 
                in Federal or State court related to the delivery of a 
                health care item or service.
                    (B) Federal or State criminal convictions related 
                to the delivery of a health care item or service.
                    (C) Actions by Federal or State agencies 
                responsible for the licensing and certification of 
                health care providers, suppliers, and licensed health 
                care practitioners, including--
                            (i) formal or official actions, such as 
                        revocation or suspension of a license (and the 
                        length of any such suspension), reprimand, 
                        censure or probation,
                            (ii) any other loss of license of the 
                        provider, supplier, or practitioner, by 
                        operation of law, or
                            (iii) any other negative action or finding 
                        by such Federal or State agency that is 
                        publicly available information.
                    (D) Exclusion from participation in Federal or 
                State health care programs.
                    (E) Any other adjudicated actions or decisions that 
                the Secretary shall establish by regulation.
            (2) The terms ``licensed health care practitioner'', 
        ``licensed practitioner'', and ``practitioner'' mean, with 
        respect to a State, an individual who is licensed or otherwise 
        authorized by the State to provide health care services (or any 
        individual who, without authority holds himself or herself out 
        to be so licensed or authorized).
            (3) The term ``health care provider'' means a provider of 
        services as defined in section 1861(u) of the Social Security 
        Act, and any entity, including a health maintenance 
        organization, group medical practice, or any other entity 
        listed by the Secretary in regulation, that provides health 
        care services.
            (4) The term ``supplier'' means a supplier of health care 
        items and services described in section 1819(a) and (b), and 
        section 1861 of the Social Security Act.
            (5) The term ``Government agency'' shall include:
                    (A) The Department of Justice.
                    (B) The Department of Health and Human Services.
                    (C) Any other Federal agency that either 
                administers or provides payment for the delivery of 
                health care services, including, but not limited to the 
                Department of Defense and the Veterans' Administration.
                    (D) State law enforcement agencies.
                    (E) State medicaid fraud and abuse units.
                    (F) Federal or State agencies responsible for the 
                licensing and certification of health care providers 
                and licensed health care practitioners.
            (6) The term ``health plan'' has the meaning given to such 
        term by section 1128(i) of the Social Security Act.
            (7) For purposes of paragraph (2), the existence of a 
        conviction shall be determined under paragraph (4) of section 
        1128(j) of the Social Security Act.
    (g) Conforming Amendment.--Section 1921(d) of the Social Security 
Act is amended by inserting ``and section 301 of the Health Care Fraud 
Prevention Act of 1995'' after ``section 422 of the Health Care Quality 
Improvement Act of 1986''.

                   TITLE IV--CIVIL MONETARY PENALTIES

SEC. 401. CIVIL MONETARY PENALTIES.

    (a) General Civil Monetary Penalties.--Section 1128A of the Social 
Security Act (42 U.S.C. 1320a-7a) is amended as follows:
            (1) In subsection (a)(1), by inserting ``or of any health 
        plan (as defined in section 1128(i)),'' after ``subsection 
        (i)(1)),''.
            (2) In subsection (f)--
                    (A) by redesignating paragraph (3) as paragraph 
                (4); and
                    (B) by inserting after paragraph (2) the following 
                new paragraphs:
            ``(3) With respect to amounts recovered arising out of a 
        claim under a health plan, the portion of such amounts as is 
        determined to have been paid by the plan shall be repaid to the 
        plan, and the portion of such amounts attributable to the 
        amounts recovered under this section by reason of the 
        amendments made by the Health Care Fraud Prevention Act of 1995 
        (as estimated by the Secretary) shall be deposited into the 
        Health Care Fraud and Abuse Control Account established under 
        section 101(b) of such Act.''.
            (3) In subsection (i)--
                    (A) in paragraph (2), by inserting ``or under a 
                health plan'' before the period at the end, and
                    (B) in paragraph (5), by inserting ``or under a 
                health plan'' after ``or XX''.
    (b) Excluded Individual Retaining Ownership or Control Interest in 
Participating Entity.--Section 1128A(a) of the Social Security Act (42 
U.S.C. 1320a-7a(a)) is amended--
            (1) by striking ``or'' at the end of paragraph (1)(D);
            (2) by striking ``, or'' at the end of paragraph (2) and 
        inserting a semicolon;
            (3) by striking the semicolon at the end of paragraph (3) 
        and inserting ``; or''; and
            (4) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) in the case of a person who is not an organization, 
        agency, or other entity, is excluded from participating in a 
        program under title XVIII or a State health care program in 
        accordance with this subsection or under section 1128 and who, 
        at the time of a violation of this subsection, retains a direct 
        or indirect ownership or control interest of 5 percent or more, 
        or an ownership or control interest (as defined in section 
        1124(a)(3)) in, or who is an officer, director, agent, or 
        managing employee (as defined in section 1126(b)) of, an entity 
        that is participating in a program under title XVIII or a State 
        health care program;''.
    (c) Modifications of Amounts of Penalties and Assessments.--Section 
1128A(a) of the Social Security Act (42 U.S.C. 1320a-7a(a)), as amended 
by subsection (b), is amended in the matter following paragraph (4)--
            (1) by striking ``$2,000'' and inserting ``$10,000'';
            (2) by inserting ``; in cases under paragraph (4), $10,000 
        for each day the prohibited relationship occurs'' after ``false 
        or misleading information was given''; and
            (3) by striking ``twice the amount'' and inserting ``3 
        times the amount''.
    (d) Claim for Item or Service Based on Incorrect Coding or 
Medically Unnecessary Services.--Section 1128A(a)(1) of the Social 
Security Act (42 U.S.C. 1320a-7a(a)(1)) is amended--
            (1) in subparagraph (A) by striking ``claimed,'' and 
        inserting the following: ``claimed, including any person who 
        repeatedly presents or causes to be presented a claim for an 
        item or service that is based on a code that the person knows 
        or should know will result in a greater payment to the person 
        than the code the person knows or should know is applicable to 
        the item or service actually provided,'';
            (2) in subparagraph (C), by striking ``or'' at the end;
            (3) in subparagraph (D), by striking ``; or'' and inserting 
        ``, or''; and
            (4) by inserting after subparagraph (D) the following new 
        subparagraph:
                    ``(E) is for a medical or other item or service 
                that a person repeatedly knows or should know is not 
                medically necessary; or''.
    (e) Permitting Secretary To Impose Civil Monetary Penalty.--Section 
1128A(b) of the Social Security Act (42 U.S.C. 1320a-7a(a)) is amended 
by adding the following new paragraph:
            ``(3) Any person (including any organization, agency, or 
        other entity, but excluding a beneficiary as defined in 
        subsection (i)(5)) who the Secretary determines has violated 
        section 1128B(b) of this title shall be subject to a civil 
        monetary penalty of not more than $10,000 for each such 
        violation. In addition, such person shall be subject to an 
        assessment of not more than twice the total amount of the 
        remuneration offered, paid, solicited, or received in violation 
        of section 1128B(b). The total amount of remuneration subject 
        to an assessment shall be calculated without regard to whether 
        some portion thereof also may have been intended to serve a 
        purpose other than one proscribed by section 1128B(b).''.
    (f) Sanctions Against Practitioners and Persons for Failure To 
Comply With Statutory Obligations.--Section 1156(b)(3) of the Social 
Security Act (42 U.S.C. 1320c-5(b)(3)) is amended by striking ``the 
actual or estimated cost'' and inserting the following: ``up to $10,000 
for each instance''.
    (g) Procedural Provisions.--Section 1876(i)(6) of such Act (42 
U.S.C. 1395mm(i)(6)) is further amended by adding at the end the 
following new subparagraph:
    ``(D) The provisions of section 1128A (other than subsections (a) 
and (b)) shall apply to a civil money penalty under subparagraph (A) or 
(B) in the same manner as they apply to a civil money penalty or 
proceeding under section 1128A(a).''.
    (h) Effective Date.--The amendments made by this section shall take 
effect January 1, 1996.
    (i) Prohibition Against Offering Inducements to Individuals 
Enrolled Under Programs or Plans.--
            (1) Offer of remuneration.--Section 1128A(a) of the Social 
        Security Act (42 U.S.C. 1320a-7a(a)) is amended--
                    (A) by striking ``or'' at the end of paragraph 
                (1)(D);
                    (B) by striking ``, or'' at the end of paragraph 
                (2) and inserting a semicolon;
                    (C) by striking the semicolon at the end of 
                paragraph (3) and inserting ``; or''; and
                    (D) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) offers to or transfers remuneration to any individual 
        eligible for benefits under title XVIII of this Act, or under a 
        State health care program (as defined in section 1128(h)) that 
        such person knows or should know is likely to influence such 
        individual to order or receive from a particular provider, 
        practitioner, or supplier any item or service for which payment 
        may be made, in whole or in part, under title XVIII, or a State 
        health care program;''.
            (2) Remuneration defined.--Section 1128A(i) of such Act (42 
        U.S.C. 1320a-7a(i)) is amended by adding the following new 
        paragraph:
            ``(6) The term `remuneration' includes the waiver of 
        coinsurance and deductible amounts (or any part thereof), and 
        transfers of items or services for free or for other than fair 
        market value. The term `remuneration' does not include--
                    ``(A) the waiver of coinsurance and deductible 
                amounts by a person, if--
                            ``(i) the waiver is not offered as part of 
                        any advertisement or solicitation;
                            ``(ii) the person does not routinely waive 
                        coinsurance or deductible amounts; and
                            ``(iii) the person--
                                    ``(I) waives the coinsurance and 
                                deductible amounts after determining in 
                                good faith that the individual is in 
                                financial need;
                                    ``(II) fails to collect coinsurance 
                                or deductible amounts after making 
                                reasonable collection efforts; or
                                    ``(III) provides for any 
                                permissible waiver as specified in 
                                section 1128B(b)(3) or in regulations 
                                issued by the Secretary;
                    ``(B) differentials in coinsurance and deductible 
                amounts as part of a benefit plan design as long as the 
                differentials have been disclosed in writing to all 
                third party payors to whom claims are presented and as 
                long as the differentials meet the standards as defined 
                in regulations promulgated by the Secretary; or
                    ``(C) incentives given to individuals to promote 
                the delivery of preventive care as determined by the 
                Secretary in regulations.''.

                  TITLE V--AMENDMENTS TO CRIMINAL LAW

SEC. 501. HEALTH CARE FRAUD.

    (a) In General.--
            (1)  Fines and imprisonment for health care fraud 
        violations.--Chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following new section:
``Sec. 1347. Health care fraud
    ``(a) Whoever knowingly executes, or attempts to execute, a scheme 
or artifice--
            ``(1) to defraud any health plan or other person, in 
        connection with the delivery of or payment for health care 
        benefits, items, or services; or
            ``(2) to obtain, by means of false or fraudulent pretenses, 
        representations, or promises, any of the money or property 
        owned by, or under the custody or control of, any health plan, 
        or person in connection with the delivery of or payment for 
        health care benefits, items, or services;
shall be fined under this title or imprisoned not more than 10 years, 
or both. If the violation results in serious bodily injury (as defined 
in section 1365(g)(3) of this title), such person shall be imprisoned 
for any term of years.
    ``(b) For purposes of this section, the term `health plan' has the 
same meaning given such term in section 1128(i) of the Social Security 
Act.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following:

``1347. Health care fraud.''.
    (b) Criminal Fines Deposited in the Health Care Fraud and Abuse 
Control Account.--The Secretary of the Treasury shall deposit into the 
Health Care Fraud and Abuse Control Account established under section 
101(b) an amount equal to the criminal fines imposed under section 1347 
of title 18, United States Code (relating to health care fraud).

SEC. 502. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.

    (a) In General.--Section 982(a) of title 18, United States Code, is 
amended by adding after paragraph (5) the following new paragraph:
    ``(6)(A) The court, in imposing sentence on a person convicted of a 
Federal health care offense, shall order the person to forfeit 
property, real or personal, that--
            ``(i) is used in the commission of the offense if the 
        offense results in a financial loss or gain of $50,000 or more; 
        or
            ``(ii) constitutes or is derived from proceeds traceable to 
        the commission of the offense.
    ``(B) For purposes of this paragraph, the term `Federal health care 
offense' means a violation of, or a criminal conspiracy to violate--
            ``(i) section 1347 of this title;
            ``(ii) section 1128B of the Social Security Act;
            ``(iii) sections 287, 371, 664, 666, 1001, 1027, 1341, 
        1343, or 1954 of this title if the violation or conspiracy 
        relates to health care fraud; and
            ``(iv) section 501 or 511 of the Employee Retirement Income 
        Security Act of 1974, if the violation or conspiracy relates to 
        health care fraud.''.
    (b) Property Forfeited Deposited in Health Care Fraud and Abuse 
Control Account.--The Secretary of the Treasury shall deposit into the 
Health Care Fraud and Abuse Control Account established under section 
101(b) an amount equal to amounts resulting from forfeiture of property 
by reason of a Federal health care offense pursuant to section 
982(a)(6) of title 18, United States Code.

SEC. 503. INJUNCTIVE RELIEF RELATING TO FEDERAL HEALTH CARE OFFENSES.

    (a) In General.--Section 1345(a)(1) of title 18, United States 
Code, is amended--
            (1) by striking ``or'' at the end of subparagraph (A);
            (2) by inserting ``or'' at the end of subparagraph (B); and
            (3) by adding at the end the following:
                    ``(C) committing or about to commit a Federal 
                health care offense (as defined in section 982(a)(6)(B) 
                of this title);''.
    (b) Freezing of Assets.--Section 1345(a)(2) of title 18, United 
States Code, is amended by inserting ``or a Federal health care offense 
(as defined in section 982(a)(6)(B))'' after ``title)''.

SEC. 504. GRAND JURY DISCLOSURE.

    Section 3322 of title 18, United States Code, is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (2) by inserting after subsection (b) the following:
    ``(c) A person who is privy to grand jury information concerning a 
Federal health care offense (as defined in section 982(a)(6)(B))--
            ``(1) received in the course of duty as an attorney for the 
        Government; or
            ``(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal 
        Rules of Criminal Procedure;
may disclose that information to an attorney for the Government to use 
in any investigation or civil proceeding relating to health care 
fraud.''.

SEC. 505. FALSE STATEMENTS.

    (a) In General.--Chapter 47, of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1033. False statements relating to health care matters
    ``Whoever, in any matter involving a health plan, knowingly and 
willfully falsifies, conceals, or covers up by any trick, scheme, or 
device a material fact, or makes any false, fictitious, or fraudulent 
statements or representations, or makes or uses any false writing or 
document knowing the same to contain any false, fictitious, or 
fraudulent statement or entry, shall be fined under this title or 
imprisoned not more than 5 years, or both.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 47 of title 18, United States Code, in amended by adding at the 
end the following:

``1033. False statements relating to health care matters.''.

SEC. 506. VOLUNTARY DISCLOSURE PROGRAM.

    In consultation with the Attorney General of the United States, the 
Secretary of Health and Human Services shall publish proposed 
regulations not later than 9 months after the date of enactment of this 
Act, and final regulations not later than 18 months after such date of 
enactment, establishing a program of voluntary disclosure that would 
facilitate the enforcement of sections 1128A and 1128B of the Social 
Security Act (42 U.S.C. 1320a-7a and 1320a-7b) and other relevant 
provisions of Federal law relating to health care fraud and abuse. Such 
program should promote and provide incentives for disclosures of 
potential violations of such sections and provisions by providing that, 
under certain circumstances, the voluntary disclosure of wrongdoing 
would result in the imposition of penalties and punishments less 
substantial than those that would be assessed for the same wrongdoing 
if voluntary disclosure did not occur.

SEC. 507. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF FEDERAL HEALTH CARE 
              OFFENSES.

    (a) In General.--Chapter 73 of title 18, United States Code, is 
amended by adding at the end the following new section:
``Sec. 1518. Obstruction of Criminal Investigations of Federal Health 
              Care Offenses.
    ``(a) In General.--Whoever willfully prevents, obstructs, misleads, 
delays or attempts to prevent, obstruct, mislead, or delay the 
communication of information or records relating to a Federal health 
care offense to a criminal investigator shall be fined under this title 
or imprisoned not more than 5 years, or both.
    ``(b) Federal Health Care Offense.--As used in this section the 
term `Federal health care offense' has the same meaning given such term 
in section 982(a)(6)(B) of this title.
    ``(c) Criminal Investigator.--As used in this section the term 
`criminal investigator' means any individual duly authorized by a 
department, agency, or armed force of the United States to conduct or 
engage in investigations for prosecutions for violations of health care 
offenses.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 73 of title 18, United States Code, in amended by adding at the 
end the following:

``1518. Obstruction of Criminal Investigations of Federal Health Care 
                            Offenses.''.

SEC. 508. THEFT OR EMBEZZLEMENT.

    (a) In General.--Chapter 31 of title 18, United States Code, is 
amended by adding at the end the following new section:
``Sec. 669. Theft or Embezzlement in Connection with Health Care.
    ``(a) In General.--Whoever willfully embezzles, steals, or 
otherwise without authority willfully and unlawfully converts to the 
use of any person other than the rightful owner, or intentionally 
misapplies any of the moneys, funds, securities, premiums, credits, 
property, or other assets of a health care benefit program, shall be 
fined under this title or imprisoned not more than 10 years, or both.
    ``(b) Federal Health Care Offense.--As used in this section the 
term `Federal health care offense' has the same meaning given such term 
in section 982(a)(6)(B) of this title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 31 of title 18, United States Code, is amended by adding at the 
end the following:

``669. Theft or Embezzlement in Connection with Health Care.''.

SEC. 509. LAUNDERING OF MONETARY INSTRUMENTS.

    Section 1956(c)(7) of title 18, United States Code, is amended by 
adding at the end the following new subparagraph:
                    ``(F) Any act or activity constituting an offense 
                involving a Federal health care offense as that term is 
                defined in section 982(a)(6)(B) of this title.''.

      TITLE VI--PAYMENTS FOR STATE HEALTH CARE FRAUD CONTROL UNITS

SEC. 601. ESTABLISHMENT OF STATE FRAUD UNITS.

    (a) Establishment of Health Care Fraud and Abuse Control Unit.--The 
Governor of each State shall, consistent with State law, establish and 
maintain in accordance with subsection (b) a State agency to act as a 
Health Care Fraud and Abuse Control Unit for purposes of this part.
    (b) Definition.--In this section, a ``State Fraud Unit'' means a 
Health Care Fraud and Abuse Control Unit designated under subsection 
(a) that the Secretary certifies meets the requirements of this part.

SEC. 602. REQUIREMENTS FOR STATE FRAUD UNITS.

    (a) In General.--The State Fraud Unit must--
            (1) be a single identifiable entity of the State 
        government;
            (2) be separate and distinct from any State agency with 
        principal responsibility for the administration of any 
        Federally-funded or mandated health care program;
            (3) meet the other requirements of this section.
    (b) Specific Requirements Described.--The State Fraud Unit shall--
            (1) be a Unit of the office of the State Attorney General 
        or of another department of State government which possesses 
        statewide authority to prosecute individuals for criminal 
        violations;
            (2) if it is in a State the constitution of which does not 
        provide for the criminal prosecution of individuals by a 
        statewide authority and has formal procedures, (A) assure its 
        referral of suspected criminal violations to the appropriate 
        authority or authorities in the State for prosecution, and (B) 
        assure its assistance of, and coordination with, such authority 
        or authorities in such prosecutions; or
            (3) have a formal working relationship with the office of 
        the State Attorney General or the appropriate authority or 
        authorities for prosecution and have formal procedures 
        (including procedures for its referral of suspected criminal 
        violations to such office) which provide effective coordination 
        of activities between the Fraud Unit and such office with 
        respect to the detection, investigation, and prosecution of 
        suspected criminal violations relating to any Federally-funded 
        or mandated health care programs.
    (c) Staffing Requirements.--The State Fraud Unit shall--
            (1) employ attorneys, auditors, investigators and other 
        necessary personnel; and
            (2) be organized in such a manner and provide sufficient 
        resources as is necessary to promote the effective and 
        efficient conduct of State Fraud Unit activities.
    (d) Cooperative Agreements; Memoranda of Understanding.--The State 
Fraud Unit shall have cooperative agreements with--
            (1) Federally-funded or mandated health care programs;
            (2) similar Fraud Units in other States, as exemplified 
        through membership and participation in the National 
        Association of Medicaid Fraud Control Units or its successor; 
        and
            (3) the Secretary.
    (e) Reports.--The State Fraud Unit shall submit to the Secretary an 
application and an annual report containing such information as the 
Secretary determines to be necessary to determine whether the State 
Fraud Unit meets the requirements of this section.
    (f) Funding Source; Participation in All-Payer Program.--In 
addition to those sums expended by a State under section 604(a) for 
purposes of determining the amount of the Secretary's payments, a State 
Fraud Unit may receive funding for its activities from other sources, 
the identity of which shall be reported to the Secretary in its 
application or annual report. The State Fraud Unit shall participate in 
the all-payer fraud and abuse control program established under section 
101.

SEC. 603. SCOPE AND PURPOSE.

    The State Fraud Unit shall carry out the following activities:
            (1) The State Fraud Unit shall conduct a statewide program 
        for the investigation and prosecution (or referring for 
        prosecution) of violations of all applicable state laws 
        regarding any and all aspects of fraud in connection with any 
        aspect of the administration and provision of health care 
        services and activities of providers of such services under any 
        Federally-funded or mandated health care programs;
            (2) The State Fraud Unit shall have procedures for 
        reviewing complaints of the abuse or neglect of patients of 
        facilities (including patients in residential facilities and 
        home health care programs) that receive payments under any 
        Federally-funded or mandated health care programs, and, where 
        appropriate, to investigate and prosecute such complaints under 
        the criminal laws of the State or for referring the complaints 
        to other State agencies for action.
            (3) The State Fraud Unit shall provide for the collection, 
        or referral for collection to the appropriate agency, of 
        overpayments that are made under any Federally-funded or 
        mandated health care program and that are discovered by the 
        State Fraud Unit in carrying out its activities.

SEC. 604. PAYMENTS TO STATES.

    (a) Matching Payments to States.--Subject to subsection (c), for 
each year for which a State has a State Fraud Unit approved under 
section 602(b) in operation the Secretary shall provide for a payment 
to the State for each quarter in a fiscal year in an amount equal to 
the applicable percentage of the sums expended during the quarter by 
the State Fraud Unit.
    (b) Applicable Percentage Defined.--
            (1) In general.--In subsection (a), the ``applicable 
        percentage'' with respect to a State for a fiscal year is--
                    (A) 90 percent, for quarters occurring during the 
                first 3 years for which the State Fraud Unit is in 
                operation; or
                    (B) 75 percent, for any other quarters.
            (2) Treatment of states with medicaid fraud control 
        units.--In the case of a State with a State medicaid fraud 
        control in operation prior to or as of the date of the 
        enactment of this Act, in determining the number of years for 
        which the State Fraud Unit under this part has been in 
        operation, there shall be included the number of years for 
        which such State medicaid fraud control unit was in operation.
    (c) Limit on Payment.--Notwithstanding subsection (a), the total 
amount of payments made to a State under this section for a fiscal year 
may not exceed the amounts as authorized pursuant to section 1903(b)(3) 
of the Social Security Act.
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