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 follow-
ing new paragraph:
‘‘(4) in the case of a person who is not an orga-
nization, 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 de-
fined 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 Se-
curity Act (42 U.S.C. 1320a–7a(a)), as amended by sub-
section (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 insert-
ing ‘‘3 times the amount’’.
(d) CLAIM FOR ITEM OR SERVICE BASED ON INCOR-
RECT CODING
OR MEDICALLY UNNECESSARY SERV-
ICES.—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 pre-
sented 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 fol-
lowing new subparagraph:
‘‘(E) is for a medical or other item or serv-
ice that a person repeatedly knows or should
know is not medically necessary; or’’.
(e) PERMITTING SECRETARY TO IMPOSE CIVIL MON-
ETARY PENALTY.—Section 1128A(b) of the Social Secu-
rity 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 assess-
ment 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 cal-
culated without regard to whether some portion
thereof also may have been intended to serve a pur-
pose 
other 
than 
one 
proscribed 
by 
section
1128B(b).’’.
(f) SANCTIONS AGAINST PRACTITIONERS AND PER-
SONS FOR FAILURE TO COMPLY WITH STATUTORY OBLI-
GATIONS.—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 pen-
alty 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 para-
graph (1)(D);
(B) by striking ‘‘, or’’ at the end of para-
graph (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, practi-
tioner, or supplier any item or service for which pay-
ment 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 waiv-
er 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 deduct-
ible 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 permis-
sible waiver as specified in section
1128B(b)(3) or in regulations issued
by the Secretary;
‘‘(B) differentials in coinsurance and de-
ductible amounts as part of a benefit plan de-
sign as long as the differentials have been dis-
closed 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 pro-
mote the delivery of preventive care as deter-
mined 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:
‘‘§ 1347. Health care fraud
‘‘(a) Whoever knowingly executes, or attempts to exe-
cute, a scheme or artifice—
‘‘(1) to defraud any health plan or other per-
son, 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 connec-
tion 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 sec-
tions 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 Sec-
retary of the Treasury shall deposit into the Health Care
Fraud and Abuse Control Account established under sec-
tion 101(b) an amount equal to the criminal fines imposed
under section 1347 of title 18, United States Code (relat-
ing to health care fraud).
SEC. 502. FORFEITURES FOR FEDERAL HEALTH CARE OF-
FENSES.
(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 ‘Fed-
eral 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 Re-
tirement Income Security Act of 1974, if the viola-
tion or conspiracy relates to health care fraud.’’.
(b) PROPERTY FORFEITED DEPOSITED IN HEALTH
CARE FRAUD AND ABUSE CONTROL ACCOUNT.—The Sec-
retary of the Treasury shall deposit into the Health Care
Fraud and Abuse Control Account established under sec-
tion 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 subpara-
graph (B); and
(3) by adding at the end the following:
‘‘(C) committing or about to commit a
Federal health care offense (as defined in sec-
tion 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 follow-
ing:
‘‘(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 attor-
ney 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 Gov-
ernment to use in any investigation or civil proceeding re-
lating 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:
‘‘§ 1033. False statements relating to health care mat-
ters
‘‘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 representa-
tions, or makes or uses any false writing or document
knowing the same to contain any false, fictitious, or fraud-
ulent 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, is 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 Serv-
ices 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 Fed-
eral law relating to health care fraud and abuse. Such pro-
gram should promote and provide incentives for disclo-
sures of potential violations of such sections and provi-
sions by providing that, under certain circumstances, the
voluntary disclosure of wrongdoing would result in the im-
position of penalties and punishments less substantial
than those that would be assessed for the same wrong-
doing 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 follow-
ing new section:
‘‘§ 1518. Obstruction of criminal investigations of
Federal health care offenses
‘‘(a) IN GENERAL.—Whoever willfully prevents, ob-
structs, 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 im-
prisoned 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 sec-
tion 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 follow-
ing new section:
‘‘§ 669. Theft or embezzlement in connection with
health care
‘‘(a) IN GENERAL.—Whoever willfully embezzles,
steals, or otherwise without authority willfully and unlaw-
fully converts to the use of any person other than the
rightful owner, or intentionally misapplies any of the mon-
eys, 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 sub-
paragraph:
‘‘(F) Any act or activity constituting an of-
fense 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 adminis-
tration 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 govern-
ment which possesses statewide authority to pros-
ecute individuals for criminal violations;
(2) if it is in a State the constitution of which
does not provide for the criminal prosecution of indi-
viduals by a statewide authority and has formal pro-
cedures, (A) assure its referral of suspected criminal
violations to the appropriate authority or authorities
in the State for prosecution, and (B) assure its as-
sistance 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 appro-
priate authority or authorities for prosecution and
have formal procedures (including procedures for its
referral of suspected criminal violations to such of-
fice) 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 Feder-
ally-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 co-
operative agreements with—
(1) Federally-funded or mandated health care
programs;
(2) similar Fraud Units in other States, as ex-
emplified through membership and participation in
the National Association of Medicaid Fraud Control
Units or its successor; and
(3) the Secretary.
(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 re-
ceive payments under any Federally-funded or man-
dated 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 appro-
priate agency, of overpayments that are made under
any Federally-funded or mandated health care pro-
gram 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 ‘‘ap-
plicable percentage’’ with respect to a State for a
fiscal year is—
(A) 90 percent, for quarters occurring dur-
ing 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 sub-
section (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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