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Title VI, Subtitle G
(1) IN GENERAL.—Section 1128(a) of the So-
cial Security Act (42 U.S.C. 1320a–7(a)) is amend-
ed by adding at the end the following new para-
graph:
‘‘(3) 
FELONY
CONVICTION
RELATING
TO
FRAUD.—Any individual or entity that has been con-
victed, under Federal or State law, in connection
with the delivery of a health care item or service on
or after the date of the enactment of this paragraph,
or with respect to any act or omission on or after
such date 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 ‘‘CONVIC-
TION’’ and inserting ‘‘MISDEMEANOR CONVIC-
TION’’; and
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Title VI, Subtitle G
(B) by striking ‘‘criminal offense’’ and in-
serting ‘‘criminal offense consisting of a mis-
demeanor’’.
(b) INDIVIDUAL CONVICTED OF FELONY RELATING
TO CONTROLLED SUBSTANCE.—
(1) IN GENERAL.—Section 1128(a) of the So-
cial Security Act (42 U.S.C. 1320a–7(a)), as amend-
ed by subsection (a), is amended by adding at the
end the following new paragraph:
‘‘(4) FELONY CONVICTION RELATING TO CON-
TROLLED
SUBSTANCE.—Any individual or entity
that has been convicted, under Federal or State law,
of a criminal offense consisting of a felony relating
to the unlawful manufacture, distribution, prescrip-
tion, 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 ‘‘CONVIC-
TION’’ and inserting ‘‘MISDEMEANOR CONVIC-
TION’’; and
(B) by striking ‘‘criminal offense’’ and in-
serting ‘‘criminal offense consisting of a mis-
demeanor’’.
607
Title VI, Subtitle G
SEC. 6612. ESTABLISHMENT OF MINIMUM PERIOD OF EX-
CLUSION FOR CERTAIN INDIVIDUALS AND
ENTITIES SUBJECT TO PERMISSIVE EXCLU-
SION 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 regula-
tions that a shorter period is appropriate because of miti-
gating circumstances or that a longer period is appro-
priate 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 exclu-
sion shall be not less than 1 year.’’.
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Title VI, Subtitle G
SEC. 6613. REVISIONS TO CRIMINAL PENALTIES.
(a) CLARIFICATION OF DISCOUNT EXCEPTION TO
ANTI-KICKBACK PROVISIONS.—Section 1128B(b)(3)(A)
of the Social Security Act (42 U.S.C. 1320a–7b(b)(3)(A))
is amended—
(1) by inserting ‘‘(regardless of its timing or
availability)’’ after ‘‘in price’’; and
(2) by striking ‘‘program;’’ and inserting ‘‘pro-
gram and is not paid in the form of currency or
coin;’’.
(b) EXEMPTION FROM ANTI-KICKBACK PENALTIES
FOR CERTAIN MANAGED CARE ARRANGEMENTS.—Section
1128B(b)(3) of such Act (42 U.S.C. 1320a–7b(b)(3)) is
amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (D);
(2) by striking the period at the end of sub-
paragraph (E) and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(F) any reduction in cost sharing or increased
benefits given to an individual, any amounts paid to
a provider for an item or service furnished to an in-
dividual, or any discount or reduction in price given
by the provider for such an item or service, if—
609
Title VI, Subtitle G
‘‘(A) the item or service is provided
through an organization described in section
1877(b)(3), or
‘‘(B) the item or service is provided
through such an organization on behalf of an-
other entity (including but not limited to a self-
insured employer or indemnity plan) that as-
sumes financial risk for the provision of the
item or service.’’.
(c) EXEMPTION FROM ANTI-KICKBACK PENALTIES
FOR CERTAIN PROTECTED FINANCIAL RELATIONSHIPS.—
Section 1128B(b)(3) of such Act (42 U.S.C. 1320a–
7b(b)(3)), as amended by subsection (b), is further
amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (E);
(2) by striking the period at the end of sub-
paragraph (F) and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(G) any amount in a financial relationship of
a physician (or an immediate family member of such
physician) with an entity specified in section
1877(a)(2), if section 1877(a)(1) does not apply to
that amount or financial relationship.’’.
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Title VI, Subtitle G
(d) EXEMPTION FROM ANTI-KICKBACK PENALTIES
FOR CERTAIN COLLABORATIVE EFFORTS THAT BENEFIT
MEDICALLY UNDERSERVED PERSONS.—
(1) IN GENERAL.—Section 1128B(b)(3) of such
Act (42 U.S.C. 1320a–7b(b)(3)), as amended by
subsections (b) and (c), is further amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (F);
(B) by striking the period at the end of
subparagraph (G) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(F) any remuneration paid by or to a re-
cipient or subrecipient of Federal grant funds
under or in connection with an arrangement for
the procurement of goods or services by the re-
cipient or subrecipient, the referral of patients,
or the lease or purchase of space or equipment,
if—
‘‘(i) the arrangement is in writing and
signed by the parties;
‘‘(ii) the arrangement will result in
the savings of Federal grant funds or in-
creased revenues to the recipient or sub-
recipient that will be used to increase the
612
Title VI, Subtitle G
goods or services that meets the require-
ments for competition under Federal grant
awards;
‘‘(v) with respect to an arrangement
for a referral of patients, the arrangement
will assure that all patients covered or af-
fected by the arrangement are advised that
they may request a referral to any person
or entity of their choosing, subject to ap-
propriate contractual limitations under
which the recipient or subrecipient may op-
erate as a health plan or as a contract
health plan provider and such limitations
as the patient may be under as an enrollee
of a health plan;
‘‘(vi) with respect to an arrangement
for a referral of patients, the arrangement
will not interfere with the discretion of
health professionals to refer patients in a
manner they believe will most appro-
priately deal with a patient’s particular cir-
cumstances, subject to appropriate con-
tractual limitations under which the recipi-
ent or subrecipient may operate as a
health plan or as a contract health plan
613
Title VI, Subtitle G
provider and such limitations as the pa-
tient may be under as an enrollee of a
health plan; and
‘‘(vii) with respect to an arrangement
that does not meet the requirements of any
of the preceding clauses, the recipient or
subrecipient of Federal grant funds in-
volved has applied to the Secretary for ap-
proval of the arrangement and the Sec-
retary, after consultation with the Inspec-
tor General of the Department of Health
and Human Services, has approved the ar-
rangement based upon a finding that the
arrangement will produce a substantial
benefit to a medically underserved popu-
lation that outweighs the arrangement’s
failure to fully satisfy all of the above re-
quirements.
In this subparagraph, a ‘recipient’ means a
public or nonprofit private entity that receives
a grant or cooperative agreement under the
Public Health Service Act or title V, and a
‘subrecipient’ means a public or nonprofit pri-
vate entity that performs substantive work
under a grant or cooperative agreement under
614
Title VI, Subtitle G
the Public Health Service Act or title V to a re-
cipient.’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall take effect after the expira-
tion of the 6-month period that begins on the date
of the enactment of this Act.
SEC. 6615. REVISIONS TO LIMITATIONS ON PHYSICIAN
SELF-REFERRAL.
(a) CLARIFICATION OF COVERAGE OF RADIOLOGY OR
DIAGNOSTIC SERVICES.—Section 1877(h)(6) of the Social
Security Act (42 U.S.C. 1395nn(h)(6)) is amended by
striking subparagraph (D).
(b) NEW EXCEPTION FOR SHARED FACILITY SERV-
ICES.—Section 
1877(b) 
of 
such 
Act 
(42 
U.S.C.
1395nn(b)) is amended—
(1) by redesignating paragraph (4) as para-
graph (5); and
(2) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4) SHARED FACILITY SERVICES.—
‘‘(A) IN
GENERAL.—In the case of a
shared facility service of a shared facility—
‘‘(i) that is furnished—
‘‘(I) personally by the referring
physician who is a shared facility phy-
615
Title VI, Subtitle G
sician or personally by an individual
directly employed or directly super-
vised by such a physician,
‘‘(II) by a shared facility in a
building in which the referring physi-
cian furnishes substantially all of the
services of the physician that are un-
related to the furnishing of shared fa-
cility services, and
‘‘(III) to a patient of a shared fa-
cility physician; and
‘‘(ii) that is billed by the referring
physician.
‘‘(B) SHARED FACILITY RELATED DEFINI-
TIONS.—
‘‘(i) SHARED
FACILITY
SERVICE.—
The term ‘shared facility service’ means,
with respect to a shared facility, a des-
ignated health service furnished by the fa-
cility to patients of shared facility physi-
cians.
‘‘(ii) SHARED
FACILITY.—The term
‘shared facility’ means an entity that fur-
nishes shared facility services under a
shared facility arrangement.
616
Title VI, Subtitle G
‘‘(iii) SHARED FACILITY PHYSICIAN.—
The term ‘shared facility physician’ means,
with respect to a shared facility, a physi-
cian who has a financial relationship under
a shared facility arrangement with the fa-
cility.
‘‘(iv) SHARED
FACILITY
ARRANGE-
MENT.—The term ‘shared facility arrange-
ment’ means, with respect to the provision
of shared facility services in a building, a
financial arrangement—
‘‘(I) which is only between physi-
cians who are providing services (un-
related to shared facility services) in
the same building,
‘‘(II) in which the overhead ex-
penses of the facility are shared, in
accordance with methods previously
determined by the physicians in the
arrangement, among the physicians in
the arrangement, and
‘‘(III) which, in the case of a cor-
poration, is wholly owned and con-
trolled by shared facility physicians.’’.
617
Title VI, Subtitle G
(c) REVISION TO RURAL PROVIDER EXCEPTION.—
Section 1877(d)(2) of such Act (42 U.S.C. 1395nn(d)(2))
is amended by striking ‘‘substantially all’’ and inserting
‘‘not less than 75 percent (as determined in accordance
with regulations of the Secretary)’’.
(d) 
CLARIFICATION
OF
REFERRALS
BY
NEPHROLOGISTS.—Section 1877(h)(5)(C) of such Act (42
U.S.C. 1395nn(H)(5)(C)) is amended—
(1) by striking ‘‘and a request’’ and inserting
‘‘a request’’;
(2) by inserting after ‘‘radiation therapy,’’ the
following: ‘‘and a request by a nephrologist for items
or services related to renal dialysis,’’; and
(3) by striking ‘‘or radiation oncologist’’ and in-
serting ‘‘radiation oncologist, or nephrologist’’.
(e) REVISION OF REPORTING REQUIREMENTS.—Sec-
tion 1877(f) of such Act (42 U.S.C. 1395nn(f)) is
amended—
(1) by striking ‘‘Each entity’’ and all that fol-
lows through paragraph (2) and inserting the follow-
ing: ‘‘The Secretary may require each entity (other
than a physician or physician group practice) provid-
ing designated health services to provide the Sec-
retary with the following information concerning the
618
Title VI, Subtitle G
entity’s ownership, investment, and compensation ar-
rangements:
‘‘(1) the designated health services provided by
the entity; and
‘‘(2) the names and unique physician identifier
numbers of all physicians with an ownership or in-
vestment interest (as described in subsection
(a)(2)(A)) or with a compensation interest (as de-
scribed in subsection (a)(2)(B)) in the entity, or
whose immediate relatives have such an ownership,
investment, or compensation interest in the entity.’’;
and
(2) by striking the fifth sentence.
(f) EXCEPTION FOR CERTAIN MANAGED CARE AR-
RANGEMENTS.—Section 1877(b)(3) of such Act (42
U.S.C. 1395nn(b)(3)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(C);
(2) by striking the period at the end of sub-
paragraph (D) and inserting a comma; and
(3) by adding at the end the following new sub-
paragraphs:
‘‘(E) with a contract with a State to pro-
vide services under the State plan under title
XIX (in accordance with section 1903(m)); or
619
Title VI, Subtitle G
‘‘(F) which meets State regulatory require-
ments applicable to health maintenance organi-
zations and which—
‘‘(i) provides designated health serv-
ices directly or through contractual ar-
rangements with providers;
‘‘(ii) assumes financial risk for the
provision of services or provides services on
behalf of another individual or entity (in-
cluding but not limited to a self-insured
employer, indemnity plan, physician, or
physician group) that assumes financial
risk for the provision of the item or serv-
ice; and
‘‘(iii) subjects the services to a pro-
gram of utilization review offered by an or-
ganization described in a preceding sub-
paragraph, an organization meeting State
regulatory requirements applicable to utili-
zation review, or an organization accred-
ited to perform utilization review consid-
ered appropriate by the Secretary.’’.
(g) PREEMPTION OF STATE LAW.—Section 1877(g)
of such Act (42 U.S.C. 1395nn(g)) is amended by adding
at the end the following new paragraph:
620
Title VI, Subtitle G
‘‘(6) PREEMPTION OF STATE LAW.—The provi-
sions of this section shall supersede any State law to
the extent State law prohibits a physician from mak-
ing a referral, or an entity from presenting a bill, for
the furnishing of a service which is not subject to
the restrictions applicable under paragraph (1).’’.
(h) REVISION OF EFFECTIVE DATE EXCEPTION PRO-
VISION.—Section 13562(b)(2) of the Omnibus Budget
Reconciliation Act of 1993 is amended by striking sub-
paragraphs (A) and (B) and inserting the following:
‘‘(A) the second sentence of subsection
(a)(2), and subsections (b)(2)(B) and (d)(2), of
section 1877 of the Social Security Act (as in
effect on the day before the date of the enact-
ment of this Act) shall apply instead of the cor-
responding provisions in section 1877 (as
amended by this Act);
‘‘(B) section 1877(b)(4) of the Social Se-
curity Act (as in effect on the day before the
date of the enactment of this Act) shall apply;
‘‘(C) 
the 
requirements 
of 
section
1877(c)(2) of the Social Security Act (as
amended by this Act) shall not apply to any se-
curities of a corporation that meets the require-
ments of section 1877(c)(2) of the Social Secu-
621
Title VI, Subtitle G
rity Act (as in effect on the day before the date
of the enactment of this Act);
‘‘(D) section 1877(e)(3) of the Social Secu-
rity Act (as amended by this Act) shall apply,
except that it shall not apply to any arrange-
ment that meets the requirements of subsection
(e)(2) or subsection (e)(3) of section 1877 of
the Social Security Act (as in effect on the day
before the date of the enactment of this Act);
‘‘(E) the requirements of clauses (iv) and
(v) of section 1877(h)(4)(A), and of clause (i)
of section 1877(h)(4)(B), of the Social Security
Act (as amended by this Act) shall not apply;
and
‘‘(F) section 1877(h)(4)(B) of the Social
Security Act (as in effect on the day before the
date of the enactment of this Act) shall apply
instead of section 1877(h)(4)(A)(ii) of such Act
(as amended by this Act).’’.
(i) EFFECTIVE DATE.—The amendments made by
this section shall apply to referrals made on or after Janu-
ary 1, 1995, except that the amendments made by sub-
section (h) shall apply as if included in the enactment of
the Omnibus Budget Reconciliation Act of 1993.
622
Title VI, Subtitle G
SEC. 6616. MEDICARE HEALTH MAINTENANCE ORGANIZA-
TIONS.
(a) STUDY ON COSTS OF PEER REVIEW CONTRACTS
FOR MEDICARE HMO’S.—The Comptroller General shall
conduct a study of the costs incurred by eligible organiza-
tions with risk-sharing contracts under section 1876(b) of
the Social Security Act of complying with the requirement
of entering into a written agreement with an entity provid-
ing peer review services with respect to services provided
by the organization, together with an analysis of how in-
formation generated by such entities is used by the Sec-
retary of Health and Human Services to assess the quality
of services provided by such eligible organizations.
(b) REPORT TO CONGRESS.—Not later than July 1,
1997, 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 sub-
section (a).
SEC. 6617. EFFECTIVE DATE.
Except as otherwise provided, the amendments made
by this part shall take effect January 1, 1996.
PART 3—AMENDMENTS TO CRIMINAL LAW
SEC. 6621. PENALTIES FOR HEALTH CARE FRAUD.
(a) IN GENERAL.—
623
Title VI, Subtitle G
(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:
‘‘§ 1347. Health care fraud
‘‘(a) Whoever knowingly executes, or attempts to exe-
cute, a scheme or artifice—
‘‘(1) to defraud any health care plan or other
person, in connection with the delivery of or pay-
ment 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 care plan, or person in con-
nection with the delivery of or payment for health
care benefits, items, or services;
shall be guilty of a felony, and fined under this title or
imprisoned not more than 5 years, or both.
‘‘(b) In determining the amount or scope of any pen-
alty or assessment, the court shall take into account—
‘‘(1) the nature of the false or fraudulent
claims and the circumstances under which they are
presented;
‘‘(2) the degree of culpability and history of
prior offenses by the convicted health care provider;
624
Title VI, Subtitle G
‘‘(3) the extent to which restitution is paid; and
‘‘(4) such other matters as justice may require.
‘‘(c) A principal is liable for penalties and assess-
ments under this section for the acts of the principal’s
agents acting within the scope of the agency.
‘‘(d) For purposes of this section, the term ‘health
care plan’ means a Federally-funded public program or
private program for the delivery of or payment for health
care items or services.’’.
(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.’’.
SEC. 6622. REWARDS FOR INFORMATION LEADING TO
PROSECUTION AND CONVICTION.
Section 3059 of title 18, United States Code, is
amended by adding at the end the following new sub-
section:
‘‘(c)(1) In special circumstances and in the Attorney
General’s sole discretion, the Attorney General may make
a payment of up to $10,000 to a person who furnishes
information unknown to the Government relating to a pos-
sible prosecution under section 1347.
‘‘(2) A person is not eligible for a payment under
paragraph (1) if—
625
Title VI, Subtitle G
‘‘(A) the person is a current or former officer
or employee of a Federal or State government agen-
cy or instrumentality who furnishes information dis-
covered or gathered in the course of government em-
ployment;
‘‘(B) the person knowingly participated in the
offense;
‘‘(C) the information furnished by the person
consists of allegations or transactions that have been
disclosed to the public—
‘‘(i) in a criminal, civil, or administrative
proceeding;
‘‘(ii) in a congressional, administrative or
General Accounting Office report, hearing,
audit or investigation; or
‘‘(iii) by the news media, unless the person
is the original source of the information; or
‘‘(D) when, in the judgment of the Attorney
General, it appears that a person whose illegal ac-
tivities are being prosecuted or investigated could
benefit from the award.
‘‘(3) For the purposes of paragraph (2)(C)(iii), the
term ‘original source’ means a person who has direct and
independent knowledge of the information that is fur-
626
Title VI, Subtitle G
nished and has voluntarily provided the information to the
Government prior to disclosure by the news media.
‘‘(4) Neither the failure of the Attorney General to
authorize a payment under paragraph (1) nor the amount
authorized shall be subject to judicial review.’’.
SEC. 6623. BROADENING APPLICATION OF MAIL FRAUD
STATUTE.
Section 1341 of title 18, United States Code, is
amended—
(1) by inserting ‘‘or deposits or causes to be de-
posited any matter or thing whatever to be sent or
delivered by any private or commercial interstate
carrier,’’ after ‘‘Postal Service,’’; and
(2) by inserting ‘‘or such carrier’’ after ‘‘causes
to be delivered by mail’’.
PART 4—ADVISORY OPINIONS
SEC. 6631. AUTHORIZING THE SECRETARY OF HEALTH AND
HUMAN SERVICES TO ISSUE ADVISORY OPIN-
IONS UNDER TITLE XI.
Title XI of the Social Security Act (42 U.S.C. 1301
et seq.) is amended by inserting after section 1128B the
following new section:
‘‘ADVISORY OPINIONS
‘‘SEC. 1129. (a) ISSUANCE
OF ADVISORY OPIN-
IONS.—The Secretary shall issue advisory opinions as pro-
vided in this section.
627
Title VI, Subtitle G
‘‘(b) MATTERS SUBJECT TO ADVISORY OPINIONS.—
The Secretary shall issue advisory opinions as to the fol-
lowing matters:
‘‘(1) What constitutes prohibited remuneration
within the meaning of section 1128B(b).
‘‘(2) Whether an arrangement or proposed ar-
rangement satisfies the criteria set forth in section
1128B(b)(3) for activities which do not result in
prohibited remuneration.
‘‘(3) Whether an arrangement or proposed ar-
rangement satisfies the criteria which the Secretary
has established, or shall establish by regulation for
activities which do not result in prohibited remu-
neration.
‘‘(4) What constitutes an inducement to reduce
or limit services to individuals entitled to benefits
under title XVIII or title XIX within the meaning
of section 1128B(b).
‘‘(5) Whether an arrangement, activity or pro-
posed arrangement or proposed activity violates any
other provision of this Act.
‘‘(c) MATTERS NOT SUBJECT TO ADVISORY OPIN-
IONS.—Such advisory opinions shall not address the fol-
lowing matters: