[Federal Register Volume 65, Number 204 (Friday, October 20, 2000)]
[Proposed Rules]
[Pages 63035-63043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-26736]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Parts 1001, 1003, 1005 and 1008

RIN 0991-AB09


Medicare and State Health Care Programs: Fraud and Abuse; 
Revisions and Technical Corrections

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule sets forth several revisions and technical 
corrections to the OIG regulations. This rule proposes revisions or 
clarifications to the definition of the term ``item or service'', to 
the reinstatement procedures relating to exclusions resulting from a 
default on health education or scholarship obligations, and to the 
limitations period applicable to exclusions. In addition, this rule 
would make a number of minor technical corrections to the current 
regulations, and serves to clarify various issues and inadvertent 
errors appearing in the OIG's existing regulatory authorities in order 
to achieve greater clarity and consistency.

DATES: To assure consideration, public comments must be mailed and 
delivered to the address provided below by no later than 5 p.m. 
November 20, 2000.

ADDRESSES: Please mail or deliver your written comments to the 
following address: Department of Health and Human Services, Office of 
Inspector General, Room 5246, Attention: OIG-62-P, Washington, D.C. 
20201.

FOR FURTHER INFORMATION CONTACT: Joel J. Schaer, Office of Counsel to 
the Inspector General, (202) 619-0089.

SUPPLEMENTARY INFORMATION: Consistent with existing regulatory 
authority, the OIG is proposing the following revisions to 42 CFR 
chapter V, many of which are technical in nature:

<bullet> Limitations Period for Exclusions; Sec. 1001.1 (Scope of 
Exclusions).

    The purpose of an OIG program exclusion is to protect Medicare, 
Medicaid and all other Federal health care programs from fraud and 
abuse, and to protect beneficiaries of those programs from 
untrustworthy providers. Questions have been raised as to whether a 
limitations period is applicable to the imposition of OIG program 
exclusions. The OIG frequently determines that conduct which occurred 
several years in the past does not warrant an exclusion (other than an 
exclusion that is mandated by statute). However, there is no statute of 
limitations specified for exclusions in the Social Security Act (the 
Act).\1\ Moreover, program exclusions are remedial in nature,\2\ and it 
is the OIG's position that if we determine that an exclusion is 
necessary to protect the programs and beneficiaries from untrustworthy 
individuals and entities, we are authorized to impose such an exclusion 
without being subject to a limitations period. To eliminate any 
confusion on this point, we are clarifying Sec. 1001.1 to indicate that 
there is no time limitation on the imposition of a program exclusion.
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    \1\ See section 1128 of the Act; 42 U.S.C. 1320a-7.
    \2\ See Manocchio v. Kusserow (961 F.2d 1539 (11th Cir. 1992)), 
which held that exclusions are remedial.<ls-thn-eq>
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    Thus, for example, when a program exclusion imposed under section 
1128(b)(7) of the Act is based on violations of another statute, such 
as the civil money penalty (CMP) statute (section 1128A of the Act), 
which has a 6 year statute of limitations, the program exclusion is not 
similarly time limited.

<bullet> Amendment to Sec. 1001.101(c) (Basis for Liability)

    In introductory paragraph (c) of Sec. 1001.101, we propose to add 
the word ``financial'' before the word ``misconduct.'' This revision 
would be consistent with the statutory language set forth in section 
1128(a)(3) of the Act which specifically uses the word ``financial'' to 
describe the felony under which the OIG will exclude an individual or 
entity. The revision to this paragraph is intended to mirror the 
statutory language.

<bullet> Revisions to Secs. 1001.102 and 1001.201 With Respect to 
Financial Loss and the Threshold Amount

    Currently, Secs. 1001.102 and 1001.201 set forth an aggravating 
factor for lengthening the period of exclusion when an individual's 
conviction, or similar acts, resulted in financial loss of $1,500 or 
more. First, we are proposing to revise Secs. 1001.102(b)(1) and 
1001.201(b)(2)(i) to increase the financial loss considered to be an 
aggravating factor from $1,500 to $5,000. We believe that this revision 
would more properly reflect the current economics of health care fraud 
in the programs and would establish a more reasonable threshold amount 
as an aggravating factor to be considered as a basis for lengthening a 
period of exclusion.
    In addition, we are proposing to clarify Secs. 1001.102(b)(1) and 
1001.201(b)(2)(i) to reflect as an aggravating factor both the actual 
and intended loss to the programs associated with this conduct. We 
believe that any loss--not just the actual, out-of-pocket loss--that is 
designed to cause harm to the programs should be taken into 
consideration. For example, in a situation where an individual intends 
to commit damage to the programs by filing false cost reports, but 
whose plans are detected and prevented from reaching fruition by an 
intermediary who intercepts the damage before it can occur, we believe 
the intended loss, and not just any actual loss, should also be taken 
in consideration as a valid measure of the individual's culpability. 
Accordingly, we would also clarify Secs. 1001.102(b)(1) and 
1001.201(b)(2)(i)

[[Page 63036]]

to specifically indicate that any intended loss to the programs would 
be considered as an aggravating factor in assessing an individual's 
behavior and trustworthiness. Parallel changes to Secs. 1001.102(c)(1) 
and 1001.201(b)(3)(i) would also be made.

In addition,

<bullet> Clarification of Paragraph (b)(9) in Sec. 1001.102 (Length of 
Exclusion)

    Section 1001.102 addresses the length of an exclusion, and 
paragraph (b) of that section sets forth various factors that may be 
considered to be aggravating and a basis for lengthening the period of 
exclusion. We propose to revise paragraph (b)(9) by adding the word 
``even'' to indicate that one factor we would consider is ``[w]hether 
the individual or entity was convicted of other offenses besides those 
which formed the basis for the exclusion, or has been the subject of 
any other adverse action by a Federal, State or local government agency 
or board, even if the adverse action is based on the same set of 
circumstances that serves as the basis for the imposition of the 
exclusion'' (underlining added). The inclusion of the word ``even'' was 
inadvertently omitted in the revisions to Sec. 1001.102(b) that were 
set forth in the OIG final rulemaking issued on September 2, 1998 (63 
FR 46676), addressing revised OIG exclusion authorities resulting from 
Public Law 104-191, and a subsequent revision set forth in final 
rulemaking issued on July 22, 1999 (64 FR 39420), addressing revised 
OIG sanction authorities resulting from Public Law 105-33.

<bullet> Revisions to Secs. 1001.102(c)(1), 1001.951 and 1001.952 To 
Encompass Acts Occurring With Respect to ``All Other Federal Health 
Care Programs''

    Section 231 of Public Law 104-191, the Health Insurance Portability 
and Accountability Act (HIPAA) of 1996, amended the CMP and criminal 
provisions in section 1128A and 1128B of the Act (42 U.S.C. 1320a-7a 
and 1320a-7b) to encompass acts occurring with respect to a ``Federal 
health care program,'' as defined in section 1128B(f) of the Act. 
Section 4331(c) of Public Law 105-33, the Balanced Budget Act (BBA) of 
1997, further amended section 1128(a) and (b) of the Act to extend the 
scope of an OIG exclusion beyond the Medicare and State health care 
programs to all other Federal health care programs and to enable the 
OIG directly to impose exclusions from all other Federal health care 
programs. In the final regulations addressing OIG exclusion authorities 
resulting from HIPAA (63 FR 46676) and in the final rulemaking 
addressing revised OIG sanction authorities resulting from the BBA (64 
FR 39420), while we made several revisions to part 1001 to include the 
term ``Federal health care program,'' conforming revisions were not 
made in Secs. 1001.102(c)(1), 1001.951 and 1001.952. We propose to 
amend these sections to accurately reflect this expanded authority.

<bullet> Additional Technical Revisions to Sec. 1001.952

    On November 19, 1999, we published a final rule setting forth 
clarifications to the initial OIG safe harbor provisions in 1991 and 
establishing additional safe harbor provisions under the anti-kickback 
statute (64 FR 63518). In that final rule, certain minor technical 
errors appeared in the regulations text when published, which we are 
proposing to clarify or correct at this time. Specifically, in 
paragraph (h)(1)(ii), we are proposing to substitute the phrase 
``Department or a State health care program,'' with the phrase 
``Department or health agency,'' to be consistent with similar context 
language used in this same paragraph. (The italics appearing in 
introductory paragraph (h)(1) in the November 19, 1999 final rule would 
also be removed.) In addition, in paragraph (h)(2) (ii)(A), the current 
introductory phrase reads: ``[W]here a discount is required to be 
reported to Medicare or a State health care program under paragraph 
(h)(1) of this section, * * *'' We are proposing to clarify this 
discussion by amending this introductory statement to read as ``[W]here 
the value of the discount is known at the time of sale, * * *'' This 
would be consistent with the current introductory language appearing in 
paragraph (h)(2)(ii)(B) of Sec. 1001.952. We are also clarifying the 
definition of the term ``rebate'' in Sec. 1001.952(h)(4) to make clear 
that a rebate is a price reduction after the time of sale. We are 
further proposing to clarify the language in paragraph (h)(5)(ii) by 
including an example as to what is meant by the phrase ``same 
methodology'' as used in this discussion. The example is consistent 
with the November 19, 1999 final rule preamble discussion. The 
additional language would indicate that the ``same methodology'' would 
reflect, as an example, the same DRG, prospective payment or per diem 
payment, but would not include fee schedules. For clarification 
purposes, we are also proposing to include a comma after the word 
``reflected'' in this same paragraph to make clear that the phrase 
``where appropriate and as appropriate'' modifies both the terms 
``disclosed'' and ``reflected.''
    In addition, we are also proposing to clarify, gramatically, the 
introductory language for paragraph (r) to more clearly state the 
conditions under which ``remuneration'' does not include a payment that 
is a return on an investment interest for ambulatory surgical centers. 
Also, in paragraph (r)(2)(ii), we are proposing to substitute the word 
``physician's'' for the word ``surgeon's,'' which was inadvertently set 
forth in the November 19, 1999 final regulations. As corrected, the 
paragraph would read as: ``(ii) At least one-third of each physician 
investor's medical practice income from all sources for the previous 
fiscal year or previous 12-month period must be derived from the 
physician's performance of procedures (as defined in this paragraph).''
    With regard to Sec. 1001.952, we are only requesting comments on 
the changes set forth specifically in this proposed rule. We expect to 
address other substantive revisions to aspects of the November 19, 1999 
new safe harbors, as appropriate, through a separate clarifying 
proposed rule.

<bullet> Revision to Sec. 1001.1501 (Default of Health Education Loan 
or Scholarship Obligations)

    Under section 1128(b)(14) of the Act, and Sec. 1001.1501 of the 
implementing regulations, the OIG may exclude any individual that the 
Public Health Service (PHS) determines is in default on repayment of 
scholarship obligations or loans made in connection with health 
profession education. The current regulations provide that an 
individual may be excluded until such time as PHS notifies the OIG that 
the default has been cured or the obligations have been resolved to the 
PHS's satisfaction. This regulatory language has resulted in some 
uncertainty as to exactly when a determination may be made that a 
default is cured or that the obligations have been adequately resolved.
    We propose to revise Sec. 1001.1501(b) to make it clear that once 
an individual is excluded, he or she will be eligible for reinstatement 
only (1) after the debt is repaid by the individual or (2) when there 
is no longer an outstanding debt as determined by the PHS (e.g., the 
debt has been written off). We specifically propose to revise paragraph 
(b) to indicate that an individual will be excluded until such time as 
PHS notifies the OIG that the individual's debt has been paid or 
resolved. Upon receipt of notice from PHS, the OIG will, in turn, 
inform the individual of his or her right to apply for reinstatement. 
In addition, we are amending this

[[Page 63037]]

paragraph to specifically state that an individual who has had his or 
her debt written off by PHS will be eligible to apply to the OIG for 
reinstatement any time following PHS's notification to the individual 
that there is no longer an outstanding debt.

<bullet> Clarification to Sec. 1001.1801 (Waivers of Exclusions)

    We are proposing to expand the designated programs which may 
request a waiver of an exclusion to conform with statutory amendments 
which broadened the scope of an OIG program exclusion. Prior to the 
BBA, an exclusion was applicable only to participation in Medicare and 
all State health care programs (as defined in section 1128(h) of the 
Act). In section 4331 of the BBA, Congress amended sections 1128(a) and 
(b) of the Act to provide that an exclusion will be from all ``Federal 
health care programs,'' as defined in section 1128B(f) of the Act. 
Notwithstanding this authority, current law only permits waivers to be 
requested by State health care programs.
    Although Congress expanded the scope of exclusion under section 
1128 of the Act to participation in all other Federal health care 
programs, it did not explicitly broaden the authority to request a 
waiver of an exclusion under either section 1128(c)(3)(B) or 
1128(d)(3)(B) of the Act to include requests of waivers by Federal 
health care programs other than Medicare or State health care programs. 
However, we believe that the clear congressional intent was to broaden 
both the scope and applicability of the entire exclusion authority to 
``all other Federal health care programs.'' Thus, we believe that it 
would be consistent for the implementing regulations to provide for a 
parallel approach with respect to requests for waiver of an exclusion. 
We are, therefore, proposing to amend Sec. 1001.1801 to specify that a 
``Federal health care program'' may request a waiver, thus replacing 
the current provision which only authorizes such waiver requests from a 
``State health care program.''

<bullet> Collateral Estoppel Effect in Sec. 1001.2007 (Appeal of 
Exclusions)

    Many of the OIG exclusion authorities are predicated on prior 
determinations made by courts or other administrative agencies. Section 
1001.2007 of the OIG regulations currently contains a provision that 
precludes, in the administrative appeal of such exclusions, the 
relitigation of the underlying determination. We are proposing to 
further clarify paragraph (d) of this section to specifically state 
that a civil judgment rendered by a Federal, State or local court is an 
additional type of prior determination that may serve as the basis for 
an exclusion (and may not be relitigated in the exclusion proceeding). 
This clarification is predicated on the general principles of 
collateral estoppel.

<bullet> Revision to Sec. 1001.3005 (Reversed or Vacated Decisions)

    Section 1001.3005 provides that an individual or entity will be 
reinstated into the Medicare program retroactive to the effective date 
of the exclusion when such exclusion is based on either (1) a 
conviction that is reversed or vacated on appeal, or (2) an action by 
another agency, such as a State agency or licensing board, that is 
reversed or vacated on appeal. However, current regulations do not 
specify at what point in the appeal process retroactive reinstatement 
will occur. We are proposing to modify Sec. 1001.3005 to provide that 
when an exclusion action is reversed or vacated at any stage of an 
administrative appeal process, the OIG will reinstate the individual or 
entity at that time retroactive to the effective date of the underlying 
exclusion. However, the regulation would make clear that the exclusion 
would be reimposed if the administrative decision reversing or vacating 
the exclusion is overturned upon further appeal.

<bullet> Revisions to Sec. 1003.100 (Basis and Purpose)

    Section 1003.100 sets for the basis and purpose for the OIG's CMP 
and assessment authorities. In final rulemaking published on July 22, 
1999 (64 FR 39428), Sec. 1003.100 was amended by, among other things, 
revising (b)(1)(iv), (viii), (x) and (xi) and by adding a new paragraph 
(b)(1)(xii). These revisions to Sec. 1003.100 were not properly 
reflected in the OIG final rulemaking on April 26, 2000 (65 FR 24415) 
that also made additional revisions to this section. Accordingly, we 
are amending Sec. 1003.100 to accurately reflect paragraph (b)(1)(iv). 
In addition, paragraphs designated in the July 22, 1999 final rule as 
(b)(1)(viii) and (b)(1)(xii) would now being set forth as paragraphs 
(b)(1)(xiv) and (b)(1)(xv), respectively, in the section.

<bullet> Revision to the Definition of the Term ``Item and Service'' in 
Sec. 1003.101 (Definitions)

    The current definition of the term ``item or service'' set forth in 
Sec. 1003.101 follows the statutory language by defining the term to 
include items or services paid either in accordance with (1) an 
itemized claim or (2) an entry or omission on a cost report. Some 
health care providers have mistakenly believed that this definition 
only covered goods and services paid on the bases of those two 
methodologies, and did not cover goods or services paid in accordance 
with one of the various prospective payment methodologies. To reflect 
the varying reimbursement systems and mechanisms in practice, we are 
proposing to modify the current definition of the term ``item and 
service'' in this section to clarify that, in addition to itemized 
claims or cost reports, the term ``item and service'' includes any item 
or service that is reimbursed through any health care payment 
mechanism, such as prospective payment systems.

<bullet> Clarifying Factor in Sec. 1003.106(a)(4) for Determining the 
Amount of Penalty for Patient Dumping Violations

    Section 1003.106(a)(4) sets forth six factors to be taken into 
account in determining a CMP amount for violations in accordance with 
Sec. 1003.102(c), the patient anti-dumping provisions. One of the 
criteria for considering the amount of CMP to impose in a patient 
dumping case is ``the prior history of offenses'' under the Patient 
Anti-Dumping Act. The current language allows the OIG only to consider 
``prior'' offenses, and does not allow the consideration of similar 
conduct after the incident in question. For example, if the OIG is 
pursuing a case against a physician responsible for an inappropriate 
transfer, and it is learned that the physician was later terminated for 
causing another inappropriate transfer, we cannot currently consider 
this in determining the CMP amount, even though we believe that this 
conduct is relevant in making a determination. In order to permit the 
OIG to consider this subsequent act in determining the amount of 
penalty to be assessed, we are proposing to revise paragraph 
(a)(4)(iii) of this section to allow the OIG to consider as a factor 
other related or similar allegations subsequent to the incident under 
review.

<bullet> Revised Time Frames in Sec. 1005.7(e) (Discovery)

    Section 1005.7(e) sets forth procedures and time frames governing 
the discovery process. The time frames set forth in paragraph (e)(1) 
are intended to ensure that the hearing process proceeds in an orderly 
and timely manner, and to induce parties to produce documents within a 
reasonable period of time. While the 15-day period set forth in the 
current regulations may be adequate in many cases, it has been

[[Page 63038]]

suggested that the time frames given to parties to comply fully with 
requests for documents and for raising objections may be too short a 
period of time. Because we believe it is practical to provide greater 
flexibility and establish more reasonable and appropriate time frames 
consistent with the Federal Rules of Civil Procedure, we are 
recommending amending Sec. 1005.7(e)(1) to expand the specified time 
frames to 30 days. (Section 1005.7(e)(3) already permits the 
administrative law judge (ALJ) the discretion to further expand or 
modify these time frames, on a case-by-case basis, for parties to 
comply and object with discovery.)

<bullet> Revision to Sec. 1005.16 (Witnesses)

    The OIG is proposing to amend Sec. 1005.16(b) to give the ALJ 
discretion to admit written expert testimony that is reliable. Under 
the current regulations, the ALJ is not permitted to accept reliable 
written testimony, such as depositions, trial testimony and 
administrative proceedings, from experts. We are proposing to revise 
paragraph (b) by further stating that ``[T]he ALJ may admit prior sworn 
testimony of experts which has been subject to adverse examination, 
such as a deposition or trial testimony.'' We believe this revision 
would allow the ALJ the discretion to admit written testimony of 
experts if he or she finds it is relevant and reliable.

<bullet> Revision to Sec. 1005.17 (Evidence)

    Section 1005.17 addresses the admissibility of evidence in 
administrative proceedings. While the ALJs are not strictly bound by 
the Federal Rules of Evidence (FRE), paragraph (b) of this section 
permits the ALJs to apply the FRE where appropriate, e.g., to exclude 
unreliable evidence. However, we believe that there is a need to 
protect the credibility of witnesses from being attacked by the 
introduction of evidence of character and conduct not conforming to the 
limitations of Rule 608 of the FRE. Without such limitations, the 
introduction of such character and conduct evidence is purely at the 
discretion of the ALJ who may choose to hear testimony that would be 
excluded under Rule 608. Because of the unpredictability of this 
situation, witnesses may be reluctant to testify for fear that their 
credibility will be attacked by the introduction of highly personal 
information that may be embarrassing or upsetting, but not highly 
probative of the witnesses' character for truthfulness or 
untruthfulness. Therefore, we are proposing to amend Sec. 1005.17 by 
adding a new paragraph to require adherence to Rule 608 of the FRE in 
administrative proceedings under this section. We believe that by 
requiring adherence to Rule 608, the use of character and conduct 
evidence will be appropriately limited and more predictable for all 
parties. We do not intend to foreclose other forms of impeachment, such 
as evidence of criminal conviction or prior inconsistent statements.

<bullet> Revision to U.S.C. Citation in Sec. 1008.37

    In the OIG final rule published in the Federal Register on July 16, 
1998 (63 FR 38311) addressing the issuance of advisory opinions by the 
OIG, an inadvertent error was made in citing the United States Code 
referenced in Sec. 1008.37, disclosure of ownership and related 
information. The citation error in Sec. 1008.37, which refers to 42 
U.S.C. 1302a-3(a)(1), would be corrected to read as 42 U.S.C. 1320a-
3(a)(1).

Regulatory Impact Statement

    The Office of Management and Budget (OMB) has reviewed this 
proposed rule in accordance with the provisions of Executive Order 
12866, and has determined that it does not meet the criteria for an 
economically significant regulatory action. Specifically, Executive 
Order 12866 directs agencies to assess all costs and benefits of 
available regulatory alternatives and, when rulemaking is necessary, to 
select regulatory approaches that maximize net benefits, including 
potential economic, environmental, public health, safety distributive 
and equity effects. In addition, section 202 of the Unfunded Mandates 
Reform Act, Public Law 104-4, requires that agencies prepare an 
assessment of anticipated costs and benefits on any rulemaking that may 
result in an expenditure by State, local or tribal government, or by 
the private sector of $100 million or more in any given year. Further, 
under the Small Business Enforcement Act (SBEA) of 1996, if a rule has 
a significant economic effect on a substantial number of small 
businesses, the Secretary must specifically consider the economic 
effect of a rule on small business entities and analyze regulatory 
options that could lessen the impact of the rule, and under the 
Regulatory Flexibility Act, if a rule has a significant economic effect 
on a substantial number of small businesses, the Secretary must 
specifically consider the economic effect of a rule on small business 
entities and analyze regulatory options that could lessen the impact of 
the rule. Executive Order 13132, Federalism, further requires agencies 
to determine if a rule will have a significant affect on States, on 
their relationship with the Federal Government, and on the distribution 
of power and responsibility among the various levels of Government.

Executive Order 12866

    Executive Order 12866 requires that all regulations reflect 
consideration of alternatives, costs, benefits, incentives, equity and 
available information. Regulations must meet certain standards, such as 
avoiding unnecessary burden. We believe that this proposed rule would 
have no significant economic impact. The proposed revisions set forth 
in this rulemaking are either technical in nature or are designed to 
further clarify OIG statutory requirements.
    Specifically, these provisions are designed to clarify the scope of 
the OIG's existing authorities to exclude individuals and entities from 
Medicare, Medicaid and all other Federal health care programs, and to 
strengthen current legal authorities pertaining to the imposition of 
CMPs against individuals and entities engaged in prohibited actions and 
activities. We believe that any aggregate economic effect of these 
revised regulatory provisions would be minimal and would impact only 
those limited few who engage in prohibited behavior in violation of the 
statute. As such, we believe that the aggregate economic impact of 
these proposed regulations is minimal and would have no appreciable 
effect on the economy or on Federal or State expenditures.
    Unfunded Mandates Reform Act of 1995. Additionally, in accordance 
with the Unfunded Mandates Reform Act of 1995, we believe that there 
are no significant costs associated with these proposed revisions that 
would impose any mandates on State, local or tribal governments, or the 
private sector that will result in an expenditure of $100 million or 
more in any given year. As indicated, these proposed revisions are 
narrow in scope and effect, comport with congressional and statutory 
intent, and clarify the Department's legal authorities against those 
who defraud or otherwise act improperly against the Federal and State 
health care programs. Accordingly, we believe that a full analysis 
under the Act is not necessary.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (RFA) of 1980, 
and the Small Business Regulatory Enforcement Act of 1996, which 
amended the RFA, we are required to determine if this rule will have a 
significant economic effect on a substantial number of small entities

[[Page 63039]]

and, if so, to identify regulatory options that could lessen the 
impact. While these clarifying provisions may have an impact on small 
entities, we believe that the aggregate economic impact of this 
rulemaking would be minimal, since it is the nature of the violation 
and not the size of the entity that will result in a violation of the 
statute. Since the vast majority of individuals and entities 
potentially affected by these regulations do not engage in prohibited 
arrangements, schemes or practices in violation of the law, we believe 
that these proposed regulations would not have a significant economic 
impact on a number of small business entities.

Executive Order 13132, Federalism

    We have also reviewed this rule under the threshold criteria of 
Executive Order 13132, Federalism, and we have determined that this 
rulemaking would not have significantly affect the rights, roles and 
responsibilities of States. In summary, we have concluded, and the 
Secretary certifies, that since this rule would have no significant 
economic impact on Federal, State or local economies, nor have a 
significant economic impact on a substantial number of small entities, 
a regulatory flexibility analysis is not required.

Paperwork Reduction Act

    The provisions of these proposed regulations impose no new 
reporting or recordkeeping requirements necessitating clearance by OMB.

Response to Public Comments

    Comments will be available for public inspection beginning on 
November 3, 2000 in Room 5518 of the Office of Inspector General at 330 
Independence Avenue, S.W., Washington, DC, on Monday through Friday of 
each week from 8:30 a.m. to 4:30 p.m., (202) 619-0089. Because of the 
large number of comments we normally receive on regulations, we cannot 
acknowledge or respond to them individually. However, we will consider 
all timely and appropriate comments when developing the final rule.

List of Subjects

42 CFR Part 1001

    Administrative practice and procedure, Fraud, Health facilities, 
Health professions, Medicaid, Medicare.

42 CFR Part 1003

    Administrative practice and procedure, Fraud, Grant programs--
health, Health facilities, Health professions, Maternal and child 
health, Medicaid, Medicare, Penalties.

42 CFR Part 1005

    Administrative practice and procedure, Fraud, Penalties.

42 CFR Part 1008

    Administrative practice and procedure, Fraud, Grant programs--
health, Health facilities, Health professions, Medicaid, Medicare, 
Penalties.

    Accordingly, 42 CFR chapter V would be amended as set forth below:

PART 1001--[AMENDED]

    1. The authority citation for part 1001 would continue to read as 
follows:

    Authority: 42 U.S.C. 1302, 1320a-7, 1320a-7b, 1395u(h), 
1395u(j), 1395u(k), 1395y(d), 1395y(e), 1395cc(b)(2)(D), (E) and 
(F), and 1395hh; and sec. 2455, Pub.L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note).

    2. Section 1001.1 would be amended by redesignating existing 
paragraph (b) to read as paragraph (c) and by adding a new paragraph 
(b) to read as follows:


Sec. 1001.1  Scope and purpose.

* * * * *
    (b) A program exclusion is deemed to be remedial in nature and 
designed to protect Medicare, Medicaid and other Federal health care 
programs and their beneficiaries from fraudulent individuals and 
entities. Accordingly, an exclusion is neither time-barred nor subject 
to any limitations period, even when the exclusion is based on 
violations of another statute which may have a specified limitations 
period.
    (c) * * *
    3. Section 1001.101 would be amended by republishing the 
introductory text and by revising introductory paragraph (c) to read as 
follows:


Sec. 1001.101  Basis for liability.

    The OIG will exclude any individual or entity that--
* * * * *
    (c) Has been convicted, under Federal or State law, of a felony 
that occurred after August 21, 1996, relating to fraud, theft, 
embezzlement, breach of fiduciary responsibility, or other financial 
misconduct--
* * * * *
    4. Section 1001.102 would be amended by republishing the 
introductory text for paragraph (b) and revising paragraphs (b)(1) and 
(b)(9), and by republishing the introductory text for paragraph (c) and 
revising paragraph (c)(1) to read as follows:


Sec. 1001.102  Length of exclusion.

* * * * *
    (b) Any of the following factors may be considered to be 
aggravating and a basis for lengthening the period of exclusion--
    (1) The acts resulting in the conviction, or similar acts, resulted 
in financial loss (both actual loss and intended loss) to a Government 
program or to one or more entities of $5,000 or more. (The entire 
amount of financial loss to such programs or entities, including any 
amounts resulting from similar acts not adjudicated, will be considered 
regardless of whether full or partial restitution has been made);
* * * * *
    (9) Whether the individual or entity was convicted of other 
offenses besides those which formed the basis for the exclusion, or has 
been the subject of any other adverse action by any Federal, State or 
local government agency or board, even if the adverse action is based 
on the same set of circumstances that serves as the basis for the 
imposition of the exclusion.
    (c) Only if any of the aggravating factors set forth in paragraph 
(b) of this section justifies an exclusion longer than 5 years, may 
mitigating factors be considered as a basis for reducing the period of 
exclusion to no less than 5 years. Only the following factors may be 
considered mitigating--
    (1) The individual or entity was convicted of 3 or fewer 
misdemeanor offenses, and the entire amount of financial loss (both 
actual loss and intended loss) to Medicare or any other Federal, State 
or local governmental health care program due to the acts that resulted 
in the conviction, and similar acts, is less than $1,500;
* * * * *
    5. Section 1001.201 would be amended by republishing the 
introductory text for paragraph (b)(2) and revising paragraph 
(b)(2)(i), and by republishing the introductory text for paragraph 
(b)(3) and revising paragraph (b)(3)(i) to read as follows:


Sec. 1001.201  Conviction relating to program or health care fraud.

* * * * *
    (b) * * *
    (2) Any of the following factors may be considered to be 
aggravating and a basis for lengthening the period of exclusion--
    (i) The acts resulting in the conviction, or similar acts, resulted 
in financial loss (both actual loss and intended loss) of $5,000 or 
more to a Government program or to one or more other entities, or had a 
significant financial impact on program beneficiaries or other 
individuals. (The total amount of financial loss will be

[[Page 63040]]

considered, including any amounts resulting from similar acts not 
adjudicated, regardless of whether full or partial restitution has been 
made);
* * * * *
    (3) Only the following factors may be considered as mitigating and 
a basis for reducing the period of exclusion--
    (i) The individual or entity was convicted of 3 or fewer offenses, 
and the entire amount of financial loss (both actual loss and intended 
loss) to a Government program or to other individuals or entities due 
to the acts that resulted in the conviction and similar acts is less 
than $1,500;
* * * * *
    6. Section 1001.951 would be amended by revising paragraph 
(b)(1)(ii) to read as follows:


Sec. 1001.951  Fraud and kickbacks and other prohibited activities.

* * * * *
    (b) * * *
    (1) * * *
    (ii) The nature and extent of any adverse physical, mental, 
financial or other impact the conduct had on program beneficiaries or 
other individuals or the Medicare, Medicaid and all other Federal 
health care programs;
* * * * *
    7. Section 1001.952 would be amended as follows:
    a. By republishing the introductory text;
    b. Republishing the introductory text to paragraph (b), revising 
paragraph (b)(5), removing the undesignated paragraph following 
paragraph (b)(5), and adding a sentence at the end of paragraph (b)(6);
    c. Republishing the introductory text to paragraph (c), revising 
paragraph (c)(5), removing the undesignated paragraph following 
paragraph (c)(5), and adding a sentence at the end of paragraph (c)(6);
    d. Republishing the introductory text to paragraph (d) and revising 
paragraph (d)(5);
    e. Republishing introductory text to paragraph (e)(1) and revising 
paragraph (e)(1)(ii);
    f. Republishing introductory text to paragraph (e)(2) revising 
paragraph (e)(2)(ii);
    g. Republishing introductory paragraph (f) and revising paragraph 
(f)(2) ;
    h. Revising introductory paragraph (h); introductory paragraph 
(h)(1), introductory paragraph (h)(1)(ii) and introductory paragraph 
(h)(1)(iii); introductory paragraph (h)(2) and paragraph (h)(2)(ii)(A); 
introductory paragraph (h)(3) and introductory paragraph (h)(3)(iii); 
paragraph (h)(4); and paragraphs (h)(5)(ii) and (h)(5)(iii);
    i. Revising paragraph (i);
    j. Republishing the introductory paragraph (j), adding a sentence 
at the end of paragraph (j)(2), and removing the undesignated paragraph 
following paragraph (j)(2);
    k. Republishing introductory paragraph (n) and revising paragraph 
(n)(6);
    l. Republishing introductory paragraph (o) and revising paragraph 
(o)(5);
    m. Revising introductory paragraph (r) and paragraph (r)(2)(ii); 
and
    n. Revising the introductory text for paragraph (s).
    The revisions to Sec. 1001.952 would read as follows:


Sec. 1001.952  Exceptions.

    The following payment practices shall not be treated as a criminal 
offense under section 1128B of the Act and shall not serve as the basis 
for an exclusion:
* * * * *
    (b) Space rental. As used in section 1128B of the Act, 
``remuneration'' does not include any payment made by a lessee to a 
lessor for the use of premises, as long as all of the following six 
standards are met--
* * * * *
    (5) The aggregate rental charge is set in advance, is consistent 
with fair market value in arms-length transactions and is not 
determined in a manner that takes into account the volume or value of 
any referrals or business otherwise generated between the parties for 
which payment may be made in whole or in part under Medicare, Medicaid 
or other Federal health care program.
    (6) * * * Note that for purposes of paragraph (b) of this section, 
the term fair market value means the value of the rental property for 
general commercial purposes, but shall not be adjusted to reflect the 
additional value that one party (either the prospective lessee or 
lessor) would attribute to the property as a result of its proximity or 
convenience to sources of referrals or business otherwise generated for 
which payment may be made in whole or in part under Medicare, Medicaid 
and all other Federal health care programs.
* * * * *
    (c) Equipment rental. As used in section 1128B of the Act, 
``remuneration'' does not include any payment made by a lessee of 
equipment to the lessor of the equipment for the use of the equipment, 
as long as all of the following six standards are met--
* * * * *
    (5) The aggregate rental charge is set in advance, is consistent 
with fair market value in arms-length transactions and is not 
determined in a manner that takes into account the volume or value of 
any referrals or business otherwise generated between the parties for 
which payment may be made in whole or in part under Medicare, Medicaid 
or all other Federal health care programs.
    (6) * * * Note that for purposes of paragraph (c) of this section, 
the term fair market value means the value of the equipment when 
obtained from a manufacturer or professional distributor, but shall not 
be adjusted to reflect the additional value one party (either the 
prospective lessee or lessor) would attributable to the equipment as a 
result of its proximity or convenience to sources of referrals or 
business otherwise generated for which payment may be made in whole or 
in part under Medicare, Medicaid or other Federal health care program.
    (d) Personal services and management contracts. As used in section 
1128B of the Act , ``remuneration'' does not include any payment made 
by a principal to an agent as compensation for the services of the 
agent , as long as all of the following seven standards are met--
* * * * *
    (5) The aggregate compensation paid to the agent over the term of 
the agreement is set in advance, is consistent with fair market value 
in arms-length transactions and is not determined in a manner that 
takes into account the volume or value of any referrals or business 
otherwise generated between the parties for which payment may be made 
in whole or in part under Medicare, Medicaid or other Federal health 
care programs.
* * * * *
    (e) Sale of practice. (1) As used in section 1128B of the Act, 
``remuneration'' does not include any payment made to a practitioner by 
another practitioner where the former practitioner is selling his or 
her practice to the latter practitioner, as long as both of the 
following two standards are met--
* * * * *
    (ii) The practitioner who is selling his or her practice will not 
be in a professional position to make referrals to, or otherwise 
generate business for, the purchasing practitioner for which payment 
may be made in whole or in part under Medicare, Medicaid or other 
Federal health care programs after one

[[Page 63041]]

year from the date of the first agreement pertaining to the sale.
    (2) As used in section 1128B of the Act, ``remuneration'' does not 
include any payment made to a practitioner by a hospital or other 
entity where the practitioner is selling his or her practice to the 
hospital or other entity, so long as the following four standards are 
met:
* * * * *
    (ii) The practitioner who is selling his or her practice will not 
be in a professional position after completion of the sale to make or 
influence referrals to, or otherwise generate business for, the 
purchasing hospital or entity for which payment may be made under 
Medicare, Medicaid or other Federal health care programs.
* * * * *
    (f) Referral services. As used in section 1128B of the Act, 
``remuneration'' does not include any payment or exchange of anything 
of value between an individual or entity (``participant'') and another 
entity serving as a referral service (``referral service''), as long as 
all of the following four standards are met--
* * * * *
    (2) Any payment the participant makes to the referral service is 
assessed equally against and collected equally from all participants, 
and is only based on the cost of operating the referral service, and 
not on the volume or value of any referrals to or business otherwise 
generated by the either party for the referral service for which 
payment may be made in whole or in part under Medicare, Medicaid or 
other Federal health care programs.
* * * * *
    (h) Discounts. As used in section 1128B of the Act, 
``remuneration'' does not include a discount, as defined in paragraph 
(h)(5) of this section, on an item or service for which payment may be 
made, in whole or in part, under Medicare, Medicaid or other Federal 
health care programs for a buyer as long as the buyer complies with the 
applicable standards of paragraph (h)(1) of this section; a seller as 
long as the seller complies with the applicable standards of paragraph 
(h)(2) of this section; and an offeror of a discount who is not a 
seller under paragraph (h)(2) of this section so long as such offeror 
complies with the applicable standards of paragraph (h)(3) of this 
section:
    (1) With respect to the following three categories of buyers, the 
buyer must comply with all of the applicable standards within one of 
the three following categories--
* * * * *
    (ii) If the buyer is an entity which reports its costs on a cost 
report required by the Department or a health agency, it must comply 
with all of the following four standards--
* * * * *
    (iii) If the buyer is an individual or entity in whose name a claim 
or request for payment is submitted for the discounted item or service 
and payment may be made, in whole in part, under Medicare, Medicaid or 
other Federal health care programs (not including individuals or 
entities defined as buyers in paragraph (h)(1)(i) or (h)(1)(ii) of this 
section), the buyer must comply with both of the following standards--
* * * * *
    (2) The seller is an individual or entity that supplies an item or 
service for which payment may be made, in whole or in part, under 
Medicare, Medicaid or other Federal health care programs to the buyer 
and who permits a discount to be taken off the buyer's purchase price. 
The seller must comply with all of the applicable standards within one 
of the following three categories--
* * * * *
    (ii) * * *
    (A) Where the value of the discount is known at the time of sale, 
the seller must fully and accurately report such discount on the 
invoice, coupon or statement submitted to the buyer; inform the buyer 
in a manner that is reasonably calculated to give notice to the buyer 
of its obligations to report such discount and to provide information 
upon request under paragraph (h)(1) of this section; and refrain from 
doing anything that would impede the buyer from meeting its obligations 
under this paragraph; or
* * * * *
    (3) The offeror of a discount is an individual or entity who is not 
a seller under paragraph (h)(2) of this section, but promotes the 
purchase of an item or service by a buyer under paragraph (h)(1) of 
this section at a reduced price for which payment may be made, in whole 
or in part, under Medicare, Medicaid or other Federal health care 
programs. The offeror must comply with all of the applicable standards 
within the following three categories--
* * * * *
    (iii) If the buyer is an individual or entity in whose name a 
request for payment is submitted for the discounted item or service and 
payment may be made, in whole or in part, under Medicare, Medicaid or 
other Federal health care programs (not including individual or 
entities defined as buyers in paragraph (h)(1)(i) or (h)(1)(ii) of this 
section), the offeror must comply with the following two standards--
* * * * *
    (4) For purposes of this paragraph, a rebate is any discount the 
terms of which are fixed and disclosed in writing to the buyer at the 
time of the initial purchase to which the discount applies, but which 
is given after the time of sale.
    (5) * * *
    (ii) Supplying one good or service without charge or at a reduced 
charge to induce the purchase of a different good or service, unless 
the goods and services are reimbursed by the same Federal health care 
program using the same methodology (e.g., under the same DRG, 
prospective payment, or per diem, but not including fee schedules) and 
the reduced charge is fully disclosed to the Federal health care 
program and accurately reflected, where appropriate, and as 
appropriate, to the reimbursement methodology;
    (iii) A reduction in price applicable to one payer but not to 
Medicare, Medicaid or other Federal health care programs;
* * * * *
    (i) Employees. As used in section 1128B of the Act, 
``remuneration'' does not include any amount paid by an employer to an 
employee, who has a bona fide employment relationship with the 
employer, for employment in the furnishing of any item or service for 
which payment may be made in whole or in part under Medicare, Medicaid 
or other Federal health care program. For purposes of paragraph (i) of 
this section, the term employee has the same meaning as it does for 
purposes of 26 U.S.C. 3121(d)(2).
    (j) Group purchasing organizations. As used in section 1128B of the 
Act, ``remuneration'' does not include any payment by a vendor of goods 
or services to a group purchasing organization (GPO), as part of an 
agreement to furnish such goods or services to an individual or entity 
as long as both of the following two standards are met--
* * * * *
    (2) * * * Note that for purposes of paragraph (j) of this section, 
the term group purchasing organization (GPO) means an entity authorized 
to act as a purchasing agent for a group of individuals or entities who 
are furnishing services for which payment may be made in whole or in 
part under Medicare, Medicaid or other Federal health care programs, 
and who are neither wholly-owned by the GPO nor subsidiaries of a 
parent corporation that wholly owns the GPO (either directly or through 
another wholly-owned entity).
* * * * *

[[Page 63042]]

    (n) Practitioner recruitment. As used in section 1128B of the Act, 
``remuneration'' does not include any payment or exchange of anything 
of value by an entity in order to induce a practitioner who has been 
practicing within his or her current specialty for less than 1 year to 
locate, or to induce any other practitioner to relocate, his or her 
primary place of practice into a HPSA for his or her specialty area, as 
defined in Departmental regulations, that is served by the entity, as 
long as all of the following nine standards are met--
* * * * *
    (6) The amount or value of the benefits provided by the entity may 
not vary (or be adjusted or renegotiated) in any manner based on the 
volume or value of any expected referrals to or business otherwise 
generated for the entity by the practitioner for which payment may be 
made in whole in part under Medicare, Medicaid or any other Federal 
health care programs.
* * * * *
    (o) Obstetrical malpractice insurance subsidies. As used in section 
1128B of the Act, ``remuneration'' does not include any payment made by 
a hospital or other entity to another entity that is providing 
malpractice insurance (including a self-funded entity), where such 
payment is used to pay for some or all of the costs of malpractice 
insurance premiums for a practitioner (including a certified nurse-
midwife as defined in section 1861(gg) of the Act) who engages in 
obstetrical practice as a routine part of his or her medical practice 
in a primary care HPSA, as long as all of the following seven standards 
are met--
* * * * *
    (5) The amount of payment may not vary based on the volume or value 
of any previous or expected referrals to or business otherwise 
generated for the entity by the practitioner for which payment may be 
made in whole or in part under Medicare, Medicaid or any other Federal 
health care programs.
* * * * *
    (r) Ambulatory surgical center. As used in section 1128B of the 
Act, ``remuneration'' does not include any payment that is in return on 
an investment interest, such as a dividend or interest income, made to 
an investor, as long as the investment entity is a certified ambulatory 
surgical center (ASC) under part 416 of this title, the operating and 
recovery room space of which is dedicated exclusively to the ASC; 
patients referred to the investment entity by an investor are fully 
informed of the investor's investment interest; and all of the 
applicable standards are met within one of the following four 
categories--
* * * * *
    (2) * * *
    (ii) At least one-third of each physician investor's medical 
practice income from all sources for the previous fiscal year or 
previous 12-month period must be derived from the physician's 
performance of procedures (as defined in this paragraph).
* * * * *
    (s) Referral arrangements for specialty services. As used in 
section 1128B of the Act, ``remuneration'' does not include any 
exchange of value among individuals and entities where one party agrees 
to refer a patient to the other party for the provision of a specialty 
service payable in whole or in part under Medicare, Medicaid or any 
other Federal health care programs in return for an agreement on the 
part of the other party to refer that patient back at a mutually agreed 
upon time or circumstance as long as the following four standards are 
met--
* * * * *
    8. Section 1001.1501 would be amended by revising paragraph (b) to 
read as follows:


Sec. 1001.1501  Default of health education loan or scholarship 
obligations.

* * * * *
    (b) Length of exclusion. The individual will be excluded until such 
time as PHS notifies the OIG that the default has been cured or that 
there is no longer an outstanding debt. Upon such notice, the OIG will 
inform the individual of his or her right to apply for reinstatement. 
9. Section 1001.1801 would be amended by revising paragraphs (a), (b), 
(e) and (f), and by deleting paragraph (g) to read as follows:


Sec. 1001.1801  Waivers of exclusions.

    (a) The OIG has authority to grant or deny a request from a Federal 
health care program that an exclusion from that program be waived with 
respect to an individual or entity, except that no waiver may be 
granted with respect to an exclusion under Sec. 1001.101(b). The waiver 
request must be in writing and from an individual directly responsible 
for administering the Federal health care program.
    (b) With respect to exclusions under Sec. 1001.101(a), a request 
from a Federal health care program for a waiver of the exclusion will 
only be considered if the individual is the sole community physician or 
if the individual or entity is the sole source of essential specialized 
items or services.
* * * * *
    (e) In the event a waiver is granted, the OIG may determine the 
scope of the waiver to apply to particular items, services, locations 
or programs.
    (f) The decision to grant or deny a request for a waiver, to limit 
the scope of a waiver, or to rescind a waiver is not subject to 
administrative or judicial review.
    10. Section 1001.2007 would be amended by revising paragraph (d) to 
read as follows:


Sec. 1001.2007  Appeal of exclusions.

* * * * *
    (d) When the exclusion is based on the existence of a criminal 
conviction or a civil judgment imposing liability by Federal, State or 
local court, a determination by another Government agency, or any other 
prior determination where the facts were adjudicated and a final 
decision was made, the basis for the underlying conviction, civil 
judgment or determination is not reviewable and the individual or 
entity may not collaterally attack it either on substantive or 
procedural grounds in this appeal.
* * * * *
    11. Section 1001.3005 would be amended by revising paragraph (a) 
and by adding a new paragraph (e) to read as follows:


Sec. 1001.3005  Reversed or vacated decisions.

    (a) An individual or entity will be reinstated into Medicare, 
Medicaid and other Federal health care programs retroactive to the 
effective date of the exclusion when such exclusion is based on--
    (1) A conviction that is reversed or vacated on appeal;
    (2) An action by another agency, such as a State agency or 
licensing board, that is reversed or vacated on appeal; or
    (3) An OIG exclusion action that is reversed or vacated at any 
stage of an individual's or entity's administrative appeal process.
* * * * *
    (e) If an action which results in the retroactive reinstatement of 
an individual or entity is subsequently overturned, the OIG may 
reimpose the exclusion for the initial period of time, less the period 
of time that was served prior to the reinstatement of the individual or 
entity.

PART 1003--[AMENDED]

    1. The authority citation for part 1003 would continue to read as 
follows:

    Authority: 42 U.S.C. 1302, 1320a-7, 1320a-7a, 1320a-7e, 1320b-
10, 1395u(j), 1395u(k), 1395cc(g), 1395dd(d)(1), 1395mm,

[[Page 63043]]

1395nn(g), 1395ss(d), 1396b(m), 11131(c) and 11137(b)(2).

    2. Section 1003.100 would be amended by revising paragraphs 
(b)(1)(iv), (b)(1)(xii) and (b)(1)(xiii); and by adding paragraphs 
(b)(1)(xiv) and (b)(1)(xv) to read as follows:


Sec. 1003.100  Basis and purpose.

* * * * *
    (b) * * *
    (1) * * *
    (iv)(A) Fail to report information concerning medical malpractice 
payments or who improperly disclose, use or permit access to 
information reported under part B of title IV of Public Law 99-660, and 
regulations specified in 45 CFR part 60, or
    (B) Are health plans and fail to report information concerning 
sanctions or other adverse actions imposed on providers as required to 
be reported to the Healthcare Integrity and protection Data Bank 
(HIPDB) in accordance with section 1128E of the Act;
* * * * *
    (xii) Offer inducements that they know or should know are likely to 
influence Medicare or State health care program beneficiaries to order 
or receive particular items or services;
    (xiii) Are physicians who knowingly misrepresent that a Medicare 
beneficiary requires home health services;
    (xiv) Have submitted, or caused to be submitted, certain prohibited 
claims, including claims for services rendered by excluded individuals 
employed by or otherwise under contract with such person, under one or 
more Federal health care programs; or
    (xv) Violate the Federal health care programs' anti-kickback 
statute as set forth in section 1128B of the Act.
* * * * *
    3. Section 1003.101 would be amended by republishing the 
introductory text and by revising the definition for the term item or 
service to read as follows:


Sec. 1003.101  Definitions.

    For purposes of this part:
* * * * *
    Item or service includes--
    (1) Any item, device, medical supply or service provided to a 
patient--
    (i) Which is listed in an itemized claim for program payment or a 
request for payment, or
    (ii) For which payment is included in other Federal or State health 
care reimbursement methods, such as a prospective payment system; and
    (2) In the case of a claim based on costs, any entry or omission in 
a cost report, books of account or other documents supporting the 
claim.
* * * * *
    4. Section 1003.106 would be amended by republishing the 
introductory text for paragraph (a)(4) and by revising paragraph 
(a)(4)(iii) to read as follows:


Sec. 1003.106  Determinations regarding the amount of the penalty and 
assessment.

    (a) * * *
    (4) In determining the amount of any penalty in accordance with 
Sec. 1003.102(c), the OIG takes into account--
* * * * *
    (iii) Any other instances where the respondent failed to provide 
appropriate emergency medical screening, stabilization and treatment of 
individuals coming to a hospital's emergency department or to effect an 
appropriate transfer;
* * * * *

PART 1005--[AMENDED]

    1. The authority citation for part 1005 would continue to read as 
follows:

    Authority: 42 U.S.C. 405(a), 405(b), 1302, 1320a-7, 1320a-7a and 
1320c-5.

    2. Section 1005.7 would by amended by revising paragraph (e)(1) to 
read as follows:


Sec. 1005.7  Discovery.

* * * * *
    (e)(1) When a request for production of documents has been 
received, within 30 days the party receiving that request will either 
fully respond to the request, or state that the request is being 
objected to and the reasons for that objection. If objection is made to 
part of an item or category, the part will be specified. Upon receiving 
any objections, the party seeking production may then, within 30 days 
or any other time frame set by the ALJ, file a motion for an order 
compelling discovery. (The party receiving a request for production may 
also file a motion for protective order any time prior to the date the 
production is due.)
* * * * *
    3. Section 1005.16 would be amended by revising paragraph (b) to 
read as follows:


Sec. 1005.16.  Witnesses.

* * * * *
    (b) At the discretion of the ALJ, testimony (other than expert 
testimony) may be admitted in the form of a written statement. The ALJ 
may admit prior sworn testimony of experts which has been subject to 
adverse examination, such as a deposition or trial testimony. Any such 
written statement must be provided to all other parties along with the 
last known address of such witnesses, in a manner that allows 
sufficient time for other parties to subpoena such witness for cross-
examination at the hearing. Prior written statements of witnesses 
proposed to testify at the hearing will be exchanged as provided in 
Sec. 1005.8.
* * * * *
    4. Section 1005.17 would be amended by redesignating existing 
paragraphs (g) through (j) respectively as new paragraphs (h) through 
(k); and by adding a new paragraph (g) to read as follows:


Sec. 1005.17  Evidence.

* * * * *
    (g) Evidence related to the character and conduct of witnesses may 
be introduced only as permitted under Rule 608 of the Federal Rules of 
Evidence.
* * * * *

PART 1008--[AMENDED]

    1. The authority citation for part 1008 would continue to read as 
follows:

    Authority: 42 U.S.C. 1320a-7d(b).

    2. Section 1008.37 would be revised to read as follows:


Sec. 1008.37  Disclosure of ownership and related information.

    Each individual or entity requesting an advisory opinion must 
supply full and complete information as to the identity of each entity 
owned or controlled by the individual or entity, and of each person 
with an ownership or control interest in the entity, as defined in 
section 1124(a)(1) of the Social Security Act (42 U.S.C. 1320a-3(a)(1)) 
and part 420 of this chapter.


(Approved by the Office of Management and Budget under control number 
0990-0213)

    Dated: May 31, 2000.
Michael F. Mangano,
Principal Deputy Inspector General.
    Approved: June 29, 2000.
Donna E. Shalala,
Secretary.
[FR Doc. 00-26736 Filed 10-19-00; 8:45 am]
BILLING CODE 4152-01-P