(B) by striking ‘‘title XVIII, or a State
health care program (as so defined)’’ and in-
serting ‘‘such program’’;
(3) in the last sentence of subsection (a), by
striking ‘‘and to direct the appropriate State agency
to exclude the person from participation in any State
health care program’’; and
(4) in subsection (h), by striking ‘‘State agency
or agencies administering or supervising the admin-
istration of State health care programs (as defined
in section 1128(h))’’ and inserting ‘‘State or Federal
State agency or agencies administering or super-
vising the administration of Federal health care pro-
grams’’.
(c) APPLICATION OF WAIVER PROVISIONS TO FED-
ERAL HEALTH CARE PROGRAMS.—Section 1128 (42
U.S.C. 1320a–7) is amended—
(1) in subsection (c)(3)(B), by striking ‘‘upon
the request of a State’’ and inserting ‘‘upon the re-
quest of the director of a Federal health care pro-
gram’’;
(2) in subsection (d)(3)(B)(i)—
(A) by striking ‘‘State health care pro-
gram’’ and inserting ‘‘Federal health care pro-
gram’’, and
(B) by striking ‘‘State agency’’ and insert-
ing ‘‘State or Federal agency’’; and
(3) in subsection (d)(3)(B)(ii), by striking
‘‘State health care program’’ and inserting ‘‘Federal
health care program (other than under title
XVIII)’’.
(d) NOTICE
PROVISION
REGARDING
FEDERAL
HEALTH CARE PROGRAMS.—Section 1128 (42 U.S.C.
1320a–7) is amended—
(1) in the heading of subsection (d), by striking
‘‘TO STATE AGENCIES
AND EXCLUSION UNDER
STATE HEALTH CARE PROGRAMS’’ and inserting
‘‘AND EXCLUSION UNDER FEDERAL HEALTH CARE
PROGRAMS’’;
(2) in subsection (d)(1), by striking ‘‘State’’
and inserting ‘‘Federal’’;
(3) in subsection (d)(2)—
(A) by striking ‘‘State agency’’ and insert-
ing ‘‘Federal or State agency’’ each place it ap-
pears, and
(B) by striking ‘‘State health care pro-
gram’’ and inserting ‘‘Federal health care pro-
gram’’ each place it appears;
(4) in subsection (d)(3)(A), by striking ‘‘State’’
and inserting ‘‘Federal’’; and
(5) in subsection (g)(3)—
(A) by striking ‘‘State agency’’ and insert-
ing ‘‘Federal or State agency’’, and
(B) by striking ‘‘State health care pro-
gram’’ and inserting ‘‘Federal health care pro-
gram’’.
(e) USE OF DEFINITION OF FEDERAL HEALTH CARE
PROGRAM AND TREATMENT OF FEDERAL EMPLOYEES
HEALTH BENEFITS PROGRAM AS A FEDERAL HEALTH
CARE
PROGRAM.—Section 
1128B(f)(1) 
(42 
U.S.C.
1320a–7b(f)(1)), as amended by section 123(a)(2)(B), is
amended—
(1) by inserting ‘‘and sections 1128, 1128A,
and 1128B’’ after ‘‘this section’’, and
(2) in subparagraph (A), by striking ‘‘(other
than the health insurance program under chapter 89
of title 5, United States Code)’’.
(f) EFFECTIVE DATE.—(1) Subject to paragraph (2),
the amendments made by this section shall take effect on
the date of the enactment of this Act.
(2) The amendment made by subsection (e)(2) shall
apply, with respect to convictions under the health insur-
ance program under chapter 89 of title 5, United States
Code, that occur on or after the date of the enactment
of this Act.
SEC. 104. CLARIFICATION OF APPLICATION TO CERTAIN IN-
DIVIDUALS WHO HAVE HAD AN OWNERSHIP
OR CONTROL INTEREST.
Section 
1128(b)(15)(A)(i) 
(42 
U.S.C. 
1320a–
7(b)(15)(A)(i)) is amended by inserting ‘‘or has had’’ after
‘‘who has’’.
Subtitle B—Civil Monetary
Penalties
SEC. 111. REPEAL OF CLARIFICATION CONCERNING LEV-
ELS OF KNOWLEDGE REQUIRED FOR IMPOSI-
TION OF CIVIL MONETARY PENALTIES.
(a) ELIMINATION OF ‘‘KNOWING’’ STANDARD.—Sec-
tion 1128A(a) (42 U.S.C. 1320a–7a(a)) is amended by
striking ‘‘knowingly’’ in paragraphs (1), (2), and (3).
(b) ELIMINATION OF STATUTORY DEFINITION OF
‘‘SHOULD KNOW’’.—Section 1128A(i) (42 U.S.C. 1320a–
7a(i)) is amended by striking paragraph (7).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to acts or omissions occurring on
or after the date of the enactment of this Act.
SEC. 112. CIVIL MONEY PENALTIES FOR SERVICES OR-
DERED OR PRESCRIBED BY AN EXCLUDED IN-
DIVIDUAL OR ENTITY.
(a) IN GENERAL.—Section 1128A(a)(1) (42 U.S.C.
1320a–7a(a)(1)) is amended—
(1) in subparagraph (D)—
(A) by inserting ‘‘, ordered, or prescribed
by such person’’ after ‘‘other item or service
furnished’’;
(B) by inserting ‘‘(pursuant to this title or
title XVIII)’’ after ‘‘period in which the person
was excluded’’;
(C) by striking ‘‘pursuant to a determina-
tion by the Secretary’’ and all that follows
through ‘‘the provisions of section 1842(j)(2)’’;
and
(D) by striking ‘‘or’’ at the end;
(2) by redesignating subparagraph (E) as sub-
paragraph (F); and
(3) by inserting after subparagraph (D) the fol-
lowing:
‘‘(E) is for a medical or other item or serv-
ice ordered or prescribed by a person excluded
pursuant to this title or title XVIII from the
program under which the claim was made, and
the person furnishing such item or service
knows or should know of such exclusion, or’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to items and services furnished,
ordered, or prescribed after the date of the enactment of
this Act.
SEC. 113. PERMITTING HHS TO PURSUE CIVIL MONETARY
PENALTY ACTIONS AFTER CONSULTATION
WITH THE ATTORNEY GENERAL.
(a) IN GENERAL.—The first sentence of section
1128A(c)(1) (42 U.S.C. 1320a–7a(c)(1)) is amended by
striking ‘‘as authorized’’ and all that follows up to the pe-
riod at the end and inserting ‘‘after consultation with the
Attorney General’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to proceedings initiated on or
after the date of the enactment of this Act.
SEC. 114. CLARIFICATION OF PAYMENT PRACTICE EXCEP-
TION AUTHORITY TO DEFINITION OF REMU-
NERATION.
Section 
1128A(i)(6)(B) 
(42 
U.S.C. 
1320a–
7a(i)(6)(B)) is amended by inserting ‘‘or payment prac-
tice’’ after ‘‘permissible waiver’’.
SEC. 115. EXTENSION OF SUBPOENA AND INJUNCTION AU-
THORITY.
(a) SUBPOENA AUTHORITY.—Section 1128A(j)(1)
(42 U.S.C. 1320a–7a(j)(1)) is amended by inserting ‘‘and
section 1128’’ after ‘‘with respect to this section’’.
(b) INJUNCTION AUTHORITY.—Section 1128A(k) (42
U.S.C. 1320a–7a(k)) is amended by inserting ‘‘or an ex-
clusion under section 1128,’’ after ‘‘subject to a civil mon-
etary penalty under this section,’’.
(c) 
CLARIFYING
AMENDMENTS.—(1) 
Section
1128A(j)(1) (42 U.S.C. 1320a–7a(j)(1)) is amended—
(A) by inserting ‘‘, except that, in so applying
such sections, any reference therein to the Commis-
sioner of Social Security or the Social Security Ad-
ministration shall be considered a reference to the
Secretary or the Department of Health and Human
Services, respectively’’ after ‘‘with respect to title
II’’; and
(B) by striking the second sentence.
(2) Section 1128A(j)(2) (42 U.S.C. 1320a–7a(j)(2))
is amended to read as follows:
‘‘(2) The Secretary may delegate to the Inspector
General of the Department of Health and Human Services
any or all authority granted under this section or under
section 1128.’’.
(d) CONFORMING AMENDMENT.—Section 1128 (42
U.S.C. 1320a–7), as amended by section 4303(a)(2) of the
Balanced Budget Act of 1997 (Public Law 105–33), is
amended by adding at the end the following new sub-
section:
‘‘(k) For provisions of law concerning the Secretary’s
subpoena and injunction authority respect to activities
under this section, see subsections (j) and (k) of section
1128A.’’.
SEC. 116. AMOUNTS OF CIVIL MONETARY PENALTIES.
Section 1842(j)(2) (42 U.S.C. 1395u(j)(2)) is amend-
ed in the second sentence—
(1) by striking ‘‘other than the first 2 sentences
of subsection (a) and’’;
(2) by inserting before the period ‘‘(and for the
purpose of so applying section 1128A(a), each act of
a physician for which a sanction may be applied with
respect to an item or service shall be treated as a
claim for payment for that item or service, and the
amount of such claim shall be considered to be the
amount of the request for payment made by that
physician with respect to that item or service)’’.
SEC. 117. APPLYING ANTI-DUMPING SANCTIONS AGAINST
PHYSICIANS WHO REFUSE AN APPROPRIATE
TRANSFER AT A HOSPITAL WITH SPECIAL-
IZED CAPABILITIES OR FACILITIES.
(a) IN GENERAL.—Section 1867(d)(1) (42 U.S.C.
1395dd(d)(1)) is amended by adding at the end the follow-
ing new subparagraph:
‘‘(D) Any physician (including a physician on-
call) who—
‘‘(i) is responsible for the acceptance of an
individual at a hospital that is subject to the re-
quirements of subsection (g) and who fails or
refuses to accept a transfer of the individual to
such hospital in a case in which the hospital
may not refuse to accept the transfer under
such subsection; or
‘‘(ii) is responsible for the treatment of an
individual at a hospital that is subject to the re-
quirements of subsection (g) and who fails or
refuses to appear within a reasonable period of
time at the hospital in order to provide treat-
ment required in connection with the transfer of
the individual,
is subject to a civil money penalty and exclusion in
the same manner as provided under subparagraph
(B) in the case of a negligent violation described in
such subparagraph.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to failures and refusals occurring on
or after the date of the enactment of this Act.
Subtitle C—Criminal Penalties
SEC. 121. KICKBACK PENALTIES FOR KNOWING VIOLA-
TIONS.
Section 1128B(b) (42 U.S.C. 1320a–7b(b)) is
amended by striking ‘‘and willfully’’ each place it occurs.
SEC. 122. REPEAL OF EXPANDED EXCEPTION FOR RISK-
SHARING 
CONTRACT 
TO 
ANTI-KICKBACK
PROVISIONS.
(a) IN GENERAL.—Section 1128B(b)(3) (42 U.S.C.
1320a–7b(b)(3)) is amended—
(1) by adding ‘‘and’’ at the end of subpara-
graph (D);
(2) by striking ‘‘; and’’ at the end of subpara-
graph (E) and inserting a period; and
(3) by striking subparagraph (F).
(b) ELIMINATION OF REPORT.—Subsection (b) of
section 216 of the Health Insurance Portability and Ac-
countability Act of 1996 is repealed.
(c) EFFECTIVE DATES.—(1) The amendments made
by subsection (a) shall apply to remuneration provided on
or after the date of the enactment of this Act, regardless
of whether it is pursuant to an agreement or arrangement
entered into before such date.
(2) Subsection (b) shall take effect on the date of the
enactment of this Act.
SEC. 123. EXPANSION OF CRIMINAL PENALTIES FOR KICK-
BACKS.
(a) APPLICATION OF CRIMINAL PENALTY AUTHOR-
ITY TO ALL HEALTH CARE BENEFIT PROGRAMS.—
(1) 
IN
GENERAL.—Section 
1128B(b) 
(42
U.S.C. 1320a–7b(b)) is amended by striking ‘‘Fed-
eral health care program’’ each place it appears and
inserting ‘‘health care benefit program’’.
(2) DEFINITION
OF
HEALTH
CARE
BENEFIT
PROGRAM.—Section 1128B(f) (42 U.S.C. 1320a–
7b(f)) is amended—
(A) by redesignating paragraphs (1) and
(2) as subparagraphs (A) and (B);
(B) by striking ‘‘(f)’’ and inserting
‘‘(f)(1)’’; and
(C) by adding at the end the following new
paragraph:
‘‘(2) For purposes of this section, the term ‘health
care benefit program’ has the meaning given such term
in section 24(b) of title 18, United States Code.’’.
(3) 
CONFORMING
AMENDMENT.—Section
1128A(a) (42 U.S.C. 1320a–7a(a)) is amended in
the final sentence by striking ‘‘1128B(f)(1)’’ and in-
serting ‘‘1128B(f)(1)(A)’’.
SEC. 124. TREATMENT OF CERTAIN SOCIAL SECURITY ACT
CRIMES AS FEDERAL HEALTH CARE OF-
FENSES.
Section 24(a) of title 18, United States Code, is
amended—
(1) by striking the period at the end of para-
graph (2) and inserting ‘‘; or’’; and
(2) by adding after paragraph (2) the following
new paragraph:
‘‘(3) section 1128B of the Social Security Act.’’.
Subtitle D—Miscellaneous
Provision
SEC. 131. REPEAL OF HIPAA ADVISORY OPINION AUTHOR-
ITY.
(a) GENERAL
AUTHORITY.—Section 1128D (42
U.S.C. 1320a–7d) is amended by striking subsection (b).
(b) CONFORMING AMENDMENTS.—
(1) Section 1128D (42 U.S.C. 1320a–7d) is
amended—
(A) in subsection (a)(1)(A)—
(i) by adding ‘‘and’’ at the end of
clause (ii),
(ii) by striking clause (iii), and
(iii) by redesignating clause (iv) as
clause (iii) and by striking ‘‘subsection (c)’’
and inserting ‘‘subsection (b)’’; and
(B) by redesignating subsection (c) as sub-
section (b).
(2) Section 1128C(a)(1)(D) (42 U.S.C. 1320a–
7c(a)(1)(D)), as inserted by section 201(a) of the
Balanced Budget Act of 1997, is amended by strik-
ing ‘‘advisory opinions and’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date of the enactment of
this Act, but shall not apply to advisory opinions issued
before such date.
SEC. 132. CLARIFICATION OF IDENTIFICATION NUMBERS
TO BE USED WITH ADVERSE ACTION DATA
BASE.
(a) IN
GENERAL.—Section 1128E(b)(2)(A) (42
U.S.C. 1320a–7e(b)(2)(A)) is amended by striking ‘‘and
TIN (as defined in section 7701(a)(41) of the Internal
Revenue Code of 1986)’’ and inserting ‘‘social security ac-
count number and, if applicable, Federal employer identi-
fication number’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to information reported on or
after such date (not later than 60 days after the date of
the enactment of this Act) as the Secretary of Health and
Human Services shall specify.
SEC. 133. ACCESS TO INFORMATION IN ADVERSE ACTION
DATA BANK BY ENTITIES PROVIDED INFOR-
MATION ON LICENSING SANCTIONS.
Section 1128E(d)(1) (42 U.S.C. 1320a–7e(d)(1)) is
amended by striking ‘‘and health plans’’ and inserting ‘‘,
health plans, private accreditation organizations, and
other agencies, organizations, hospitals, and health care
entities to which information may be disclosed under sec-
tion 1921(b)’’.
TITLE 
II—IMPROVEMENTS 
IN
PROTECTING 
PROGRAM 
IN-
TEGRITY
Subtitle A—General Provisions
SEC. 201. LIMITING THE USE OF AUTOMATIC STAYS AND
DISCHARGE IN BANKRUPTCY PROCEEDINGS
FOR PROVIDER LIABILITY FOR HEALTH CARE
FRAUD.
(a) NONAPPLICABILITY OF AUTOMATIC STAY PROVI-
SIONS.—
(1) IN
EXCLUSION
PROCEEDINGS.—Section
1128 (42 U.S.C. 1320a–7), as amended by section
4303(a) of the Balanced Budget Act of 1997, is
amended by adding at the end the following new
subsection:
‘‘(k) NONAPPLICABILITY OF BANKRUPTCY STAY.—
An exclusion imposed under this section or a proceeding
seeking an exclusion under this section is not subject to
the automatic stay under section 362(a) of title 11, United
States Code.’’.
(2) IN CIVIL MONEY PENALTY PROCEEDINGS.—
Section 1128A(a) (42 U.S.C. 1320a–7a(a)) is
amended by adding at the end the following: ‘‘An ex-
clusion, penalty, or assessment imposed under this
section or a proceeding that seeks an exclusion, pen-
alty, or assessment under this section, is not subject
to the automatic stay under section 362(a) of title
11, United States Code. Notwithstanding any other
provision of law, amounts made payable under this
section are not dischargeable under any provision of
such title.’’.
(3) IN RECOUPMENT UNDER PART A OF MEDI-
CARE.—Section 1815(d) (42 U.S.C. 1395g(d)) is
amended—
(A) by inserting ‘‘(1)’’ after ‘‘(d)’’, and
(B) by adding at the end the following:
‘‘(2) The recoupment of an overpayment under this
section is not subject to the automatic stay under section
362(a) of title 11, United States Code. Notwithstanding
any other provision of law, amounts due to the Secretary
under this section are not dischargeable under any provi-
sion of such title.’’.
(4) IN RECOUPMENT UNDER PART B OF MEDI-
CARE.—Section 1833(j) (42 U.S.C. 1395l(j)) is
amended—
(A) by inserting ‘‘(1)’’ after ‘‘(j)’’, and
(B) by adding at the end the following:
as amended by subsection (a)(3), is further amended
by adding at the end the following:
‘‘(3) Notwithstanding any other provision of law,
amounts due to the Secretary under this section are not
dischargeable under any provision of such title.’’.
(3) IN RECOUPMENT UNDER PART B OF MEDI-
CARE.—Section 1833(j) (42 U.S.C. 1395l(j)), as
amended by subsection (a)(4), is further amended by
adding at the end the following: ‘‘Notwithstanding
any other provision of law, amounts due to the Sec-
retary under this section are not dischargeable under
any provision of such title.’’.
(c) EFFECTIVE DATES.—
(1) The amendments made by subsection (a)
shall apply to bankruptcy petitions filed after the
date of the enactment of this Act.
(2) The amendments made by subsection (b)
shall apply on and after the date of the enactment
of this Act to any proceeding which has not been
completed as of such date.
SEC. 202. REQUIRING CERTAIN PROVIDERS TO FUND AN-
NUAL FINANCIAL AND COMPLIANCE AUDITS
AS A CONDITION OF PARTICIPATION UNDER
THE MEDICARE AND MEDICAID PROGRAMS.
(a) ESTABLISHMENT OF ANNUAL FINANCIAL AND
COMPLIANCE
AUDIT
FEE
SCHEDULE.—Title XI, as
amended by section 4321(c) of the Balanced Budget Act
of 1997, is amended by inserting after section 1146 the
following new section:
‘‘COMPLIANCE AND FINANCIAL AUDIT FEE SCHEDULE
‘‘SEC. 1147. (a) ESTABLISHMENT.—
‘‘(1) IN GENERAL.—Subject to subsection (c),
the Secretary shall—
‘‘(A) establish a schedule of hourly rates
for the conduct of annual financial and compli-
ance audits during each fiscal year for all cov-
ered health care entities (as defined in sub-
section (b)); and
‘‘(B) provide for the conduct, in a separate
office within the Department of Health and
Human Services, of such audits by specially
trained and qualified personnel of each entity’s
substantial compliance with the requirements
for payment to such entity under title XVIII,
title XIX, or both (whichever is applicable), in-
cluding requirements relating to medical neces-
sity and appropriate coding and documentation
for services and supplies provided.
‘‘(2) SCOPE OF AUDITS.—An audit of an entity
under paragraph (1)(B) shall include, as appro-
priate, audits of related entities (including busi-
nesses owned, in whole or in part, by the provider).
‘‘(b) COVERED HEALTH CARE ENTITY.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘covered health care entity’ means,
with respect to a fiscal year, an entity that—
‘‘(A) is a disclosing entity (as defined in
section 1124(a)(2)), a health care provider, a
practitioner (or group of practitioners), an eligi-
ble organization (as defined in section 1876(b)),
or a Medicare+Choice organization (as defined
in section 1959(a)(1)), and
‘‘(B) provides (or arranges for the provi-
sion of) services for which aggregate payment
of at least $500,000 is made under titles XVIII
and XIX during the fiscal year.
‘‘(2) 
APPLICATION
OF
CONTROL
GROUP
RULE.—In applying paragraph (1), all persons treat-
ed as a single employer under subsection (a) or (b)
of section 52 of the Internal Revenue Code of 1986
shall be treated as a single entity.
‘‘(c) REQUIRING MAINTENANCE OF APPROPRIATION
LEVEL.—No rates shall be collected under subsection (a)
and no audits conducted under such subsection for a fiscal
year if the amount appropriated and available for the con-
duct of audits of the type described in subsection
(a)(1)(B) for the fiscal year is less than the amount so
appropriated for fiscal year 1998 or for the fiscal year pre-
ceding the fiscal year involved, whichever is greater.
‘‘(d) USE OF FUNDS EXCLUSIVELY FOR FINANCIAL
AND COMPLIANCE AUDITS.—Annual payments made to
the Secretary under sections 1866(a)(1)(T), 1862(a)(22),
and 1903(i)(19) in the amounts specified under subsection
(a) are hereby appropriated to the Secretary for the sole
purpose of conducting audits described in subsection (a).
Such amounts are available to the Secretary for such pur-
pose without fiscal year limitation.’’.
(b) APPLICATION UNDER MEDICARE PROGRAM.—
(1) 
PAYMENT
REQUIREMENT
UNDER
MEDICARE+CHOICE
PROGRAM.—Section 
1857(d)
(42 U.S.C. 1395w–27(d)), as inserted by section
4001 of the Balanced Budget Act of 1997, is
amended by adding at the end the following new
paragraph:
‘‘(6) PAYMENT FOR ANNUAL AUDIT.—The con-
tract shall require the Medicare+Choice organiza-
tion to provide for annual payment to the Secretary
of the appropriate amount specified under section
1147(a) as necessary for the conduct of an annual
financial and compliance audit of the organization
under such section.’’.
(2) PAYMENT REQUIREMENT UNDER CURRENT
CAPITATION.—Section 
1876(k)(4) 
(42 
U.S.C.
1395mm(k)(4)), as inserted by section of the Bal-
anced Budget Act of 1997, is amended by adding at
the end the following:
‘‘(E) The requirement of providing for payment
for annual audits under section 1857(d)(6).’’.
(3) PAYMENT REQUIREMENT FOR PROVIDERS
OF
SERVICES.—Section 1866(a)(1) (42 U.S.C.
1395cc(a)(1)), as amended by section 4321(b) of the
Balanced Budget Act of 1997, is amended—
(A) by adding a semicolon at the end of
subparagraph (R);
(B) by striking the period at the end of
subparagraph (S) and inserting ‘‘; and’’; and
(C) by inserting after subparagraph (S)
the following new subparagraph:
‘‘(T) in the case of a provider that is a covered
health care entity (as defined in section 1147(b)), to
provide for annual payment to the Secretary of the
appropriate amount specified under section 1147(a)
as necessary for the conduct of an annual financial
and compliance audit of the provider under such sec-
tion.’’.
(4) REQUIREMENT
FOR
OTHER
PROVIDERS,
SUPPLIERS, AND PRACTITIONERS.—Section 1862(a)
(42 U.S.C. 1395y(a)), as amended by sections
4319(b), 4432(b), 4507(a)(2)(B), 4541(b), and
4603(c)(2)(C) of the Balanced Budget Act of 1997,
is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (20);
(B) by striking the period at the end of
paragraph (21) and inserting ‘‘; or’’; and
(C) by inserting after paragraph (21) the
following new paragraph:
‘‘(22) where such expenses are for items and
services furnished by a covered health care entity (as
defined in section 1147(b)), unless the entity has an
agreement in effect under section 1857, 1866, or
1876(i) or has provided for annual payment to the
Secretary of the appropriate amount specified under
section 1147(a) as necessary for the conduct of an
annual financial and compliance audit of the audit
under such section.’’.
defined in section 1147(b)), unless the entity has a
contract under section 1903(m)(2)(A) or 1905(t)(3)
or has provided for annual payment to the Secretary
of the appropriate amount specified under section
1147(a) as necessary for the conduct of an annual
financial and compliance audit of the entity under
such section.’’.
(d) REPORT ON AUDITING AGENCIES.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study of the exam-
ining and accrediting agencies that conduct audits
and inspections of covered health care entities (as
defined in section 1147(b) of the Social Security
Act, as added by subsection (a)). Such study shall
include an examination of the audits and inspections
conducted by such agencies.
(2) REPORT.—Based on the study conducted
under paragraph (1), the Secretary shall submit to
Congress, by not later than June 1, 1999, a report
that includes recommendations on how best to co-
ordinate and consolidate these audits and inspec-
tions to minimize unnecessary duplication.
(e) EFFECTIVE DATE.—The amendments made by
subsections (a) through (c) shall take effect on the date
of the enactment of this Act and shall first apply to fiscal
years beginning with fiscal year 1998.
SEC. 203. LIABILITY OF MEDICARE CARRIERS AND FISCAL
INTERMEDIARIES AND OF STATE MEDICAID
AGENCIES FOR CLAIMS SUBMITTED BY EX-
CLUDED PROVIDERS.
(a) REIMBURSEMENT
TO
THE
SECRETARY
FOR
AMOUNTS PAID TO EXCLUDED PROVIDERS.—
(1) 
REQUIREMENTS
FOR
FISCAL
INTERMEDIARIES.—
(A) IN
GENERAL.—Section 1816 (42
U.S.C. 1395h) is amended by adding at the end
the following new subsection:
‘‘(m) An agreement with an agency or organization
under this section shall require that such agency or orga-
nization reimburse the Secretary for any amounts paid by
the agency or organization for a service under this title
which is furnished, directed, or prescribed by an individual
or entity during any period for which the individual or
entity is excluded pursuant to section 1128, 1128A, or
1156, from participation in the program under this title,
if the amounts are paid after the Secretary notifies the
agency or organization of the exclusion.’’.
(B) 
CONFORMING
AMENDMENT.—Sub-
section (i) of such section is amended by adding
at the end the following new paragraph:
‘‘(4) Nothing in this subsection shall be construed to
prohibit reimbursement by an agency or organization
under subsection (m).’’.
(2) REQUIREMENTS
FOR
CARRIERS.—Section
1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (I); and
(B) by inserting after subparagraph (I) the
following new subparagraph:
‘‘(J) will reimburse the Secretary for any
amounts paid by the carrier for an item or service
under this part which is furnished, directed, or pre-
scribed by an individual or entity during any period
for which the individual or entity is excluded pursu-
ant to section 1128, 1128A, or 1156, from partici-
pation in the program under this title, if the
amounts are paid after the Secretary notifies the
carrier of the exclusion, and’’.
(3) 
MEDICAID
PROVISION.—Section
1902(a)(39) (42 U.S.C. 1396a(a)(39)) is amended—
(A) by inserting ‘‘(A)’’ after ‘‘provide’’,
and
(B) by inserting before the semicolon at
the end the following: ‘‘, and (B) for reimburse-
ment to the Secretary of any payments made
under the plan or any item or service furnished,
directed, or prescribed by the excluded individ-
ual or entity during such period, after the Sec-
retary notifies the State of such exclusion’’.
(b) CONFORMING REPEAL OF MANDATORY PAYMENT
RULE.—Section 1862(e) (42 U.S.C. 1395y(e)) is amend-
ed—
(1) in paragraph (1)(B), by striking ‘‘and when
the person’’ and all that follows through ‘‘person)’’;
and
(2) in paragraph (2), by striking the first sen-
tence and inserting the following: ‘‘No individual or
entity may bill (or collect any amount from) any in-
dividual for any item or service for which payment
is denied under paragraph (1). No person is liable
for payment of any amounts billed for such an item
or service in violation of the previous sentence.’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to claims for payment sub-
mitted on or after the date of the enactment of this
Act.
(2) CONTRACT MODIFICATION.—The Secretary
of Health and Human Services shall take such steps
as may be necessary to modify contracts and agree-
ments entered into, renewed, or extended before
such date to conform such contracts or agreements
to the provisions of this subsection.
SEC. 204. MEDICARE HOSPITAL OUTPATIENT PAYMENT
POLICIES.
(a) BASING MEDICARE PAYMENT
FOR HOSPITAL
OUTPATIENT
DEPARTMENT
SERVICES
ON
PAYMENT
RATES FOR SIMILAR SERVICES PROVIDED OUTSIDE THE
HOSPITAL SETTING.—
(1) IN
GENERAL.—Section 1833(t)(1) (42
U.S.C. 1395l(t)(1)), as added by section 4523(a) of
the Balanced Budget Act of 1997, is amended—
(A) in subparagraph (A), by inserting
‘‘subject to subparagraph (C),’’ after ‘‘1999,’’,
and
(B) by adding at the end the following new
subparagraph:
‘‘(C) USE
OF
RATES
IN
NON-HOSPITAL
SETTINGS.—With respect to covered OPD serv-
ices furnished on or after January 1, 2000, if
payment may be made under this part for simi-
lar services (such as physicians’ services) fur-
nished outside the hospital setting, in accord-
ance with regulations of the Secretary, the total
amount of payment under this part for such
covered OPD services (including any facility-re-
lated component to such services) shall be de-
termined on the same basis on which payment
may be made for such similar services furnished
outside the hospital setting.’’.
(2) CONFORMING AMENDMENT.—The fifth sen-
tence 
of 
section 
1866(a)(2)(A) 
(42 
U.S.C.
1395cc(a)(2)(A)), as added by section 4523(b) of
the Balanced Budget Act of 1997, is amended by in-
serting ‘‘, or in the case described in section
1833(t)(1)(C), the coinsurance amount that would
otherwise apply with respect to the provision of the
similar services referred to in such section’’ before
the period at the end.
(b) MEDICARE PAYMENTS FOR INPATIENT HOSPITAL
SERVICES INVOLVING EMERGENCY CARE.—
(1) MEDPAC REPORT ON DRG WEIGHTING FAC-
TORS.—The Medicare Payment Advisory Commis-
sion (established under section 1805 of the Social
Security Act (42 U.S.C. 1395b–6), as inserted by
section 4022(a) of the Balanced Budget Act of
1997, shall submit a report to Congress and the
Secretary of Health and Human Services, by Janu-
ary 1, 1999, on whether the DRG weighting factors
under section 1886(d)(4)(B) of the Social Security
Act for diagnosis-related groups associated with
emergency care are adequate to cover the costs of
emergency room use within discharges classified
within such groups.
(2) ADJUSTMENT OF WEIGHTING FACTORS.—
Taking into account the report submitted under
paragraph (1), the Secretary of Health and Human
Services shall make appropriate adjustments in the
DRG weighting factors described in paragraph (1)
for discharges occurring on or after January 1,
2000, as may be appropriate to ensure that hospital
emergency room costs attributable to medicare pa-
tients are appropriately covered.
SEC. 205. STANDARDIZATION OF FORMS USED FOR CER-
TIFICATIONS OF MEDICAL NECESSITY AND
CERTIFICATIONS OF TERMINAL ILLNESS.
(a) PART A SERVICES.—
(1) 
PUBLICATION
OF
STANDARD.—Section
1814 (42 U.S.C. 1395f) is amended by adding at
the end the following new subsection:
‘‘Standard Form for Certifications
‘‘(m)(1) For purposes of certifications and recertifi-
cations under paragraphs (2), (3), and (8) of subsection
(a), the Secretary shall specify and publish a standard
form and manner in which such certifications and recer-
tifications are to be made.’’.
(2) APPLICATION TO PART A SERVICES.—Sec-
tion 1814(a) (42 U.S.C. 1395f(a)) is amended—
(A) in paragraph (2), by striking ‘‘certifies
(and recertifies,’’ and inserting ‘‘certifies in a
form and manner consistent with subsection
(m)(1) (and recertifies in such a form and man-
ner,’;
(B) in paragraph (3), by striking ‘‘cer-
tifies’’ and inserting ‘‘certifies in a form and
manner consistent with subsection (m)(1)’’; and
(C) in paragraph (8), by striking ‘‘cer-
tifies’’ and inserting ‘‘certifies in a form and
manner consistent with subsection (m)(1)’’.
(b) HOSPICE CARE.—
(1) 
PUBLICATION
OF
STANDARD.—Section
1814(m) (42 U.S.C. 1395f(m)), as added by sub-
section (a), is amended by adding at the end the fol-
lowing new paragraph:
‘‘(2) For purposes of certifications and recertifi-
cations of terminal illness under subsection (a)(7), the
Secretary shall specify and publish a standard form and
manner in which such certifications and recertifications
are to be made.’’.
(2) APPLICATION TO HOSPICE CARE.—Section
1814(a)(7) (42 U.S.C. 1395f(a)(7)) is amended—
(A) in subsection (A)(i), by inserting ‘‘in a
form and manner consistent with subsection
(m)(2)’’ after ‘‘each certify in writing’’; and
(B) in subsection (A)(ii), by inserting ‘‘in
such a form and manner’’ after ‘‘recertifies’’.
(c) PART B SERVICES.—
(1) 
PUBLICATION
OF
STANDARD.—Section
1835 (42 U.S.C. 1395n) is amended by adding at
the end the following:
‘‘(f) For purposes of certifications and recertifi-
cations under subsection (a)(2), the Secretary shall specify
and publish a standard form and manner in which such
certifications and recertifications are to be made.’’.
(2) APPLICATION TO PART B SERVICES.—Sec-
tion 1835(a)(2) (42 U.S.C. 1395n(a)(2)) is amended
by striking ‘‘certifies (and recertifies,’’ and inserting
‘‘certifies in a form and manner consistent with sub-
section (f) (and recertifies in such a form and man-
ner,’.
(d) EFFECTIVE DATE.—The amendments made by
subsections (a)(2), (b)(2), and (c)(2) shall apply to certifi-
cations and recertifications made on or after 6 months
after the date the Secretary of Health and Human Serv-
ices publishes a standard form and manner for such cer-
tifications and recertifications under the amendments
made by subsections (a)(1), (b)(1), and (c)(1) respectively.
SEC. 206. NO MARK-UP FOR DRUGS, BIOLOGICALS, OR NU-
TRIENTS; USE OF NATIONAL DRUG CODE
NUMBERS IN MEDICARE CLAIMS.
(a) NO MARK-UP FOR DRUGS OR BIOLOGICALS.—
(1) IN GENERAL.—Section 1842(o) (42 U.S.C.
1395u(o)), as added by section 4556(a) of the Bal-
anced Budget Act of 1997, is amended to read as
follows:
‘‘(o)(1) For purposes of section 1833(a)(1)(S), the
payment amount established in this subsection for a drug
or biological shall be the lowest of the following:
‘‘(A) The actual acquisition cost, as defined in
paragraph (2), to the person submitting the claim
for payment for the drug or biological.
‘‘(B) The average wholesale price of such drug
or biological, as determined by the Secretary.
‘‘(C) For payments for drugs or biologicals fur-
nished on or after January 1, 2000, the median ac-
tual acquisition cost of all claims for payment for
such drugs or biologicals for the 12-month period
beginning July 1, 1998 (and adjusted, as the Sec-
retary determines appropriate, to reflect changes in
the cost of such drugs or biologicals due to inflation,
and such other factors as the Secretary determines
appropriate).
‘‘(D) The amount otherwise determined under
this part.
‘‘(2) For purposes of paragraph (1)(A), the term ‘ac-
tual acquisition cost’ means, with respect to such drugs
or biologicals the cost of the drugs or biologicals based
on the most economical case size in inventory on the date
of dispensing or, if less, the most economical case size pur-
chased within six months of the date of dispensing wheth-
er or not that specific drug was furnished to an individual
whether or not enrolled under this part. Such term in-
cludes appropriate adjustments, as determined by the Sec-
retary, for all discounts, rebates, or any other benefit in
cash or in kind (including travel, equipment, or free prod-
ucts). The Secretary shall include an additional payment
for administrative, storage, and handling costs.
‘‘(3)(A) No payment shall be made under this part
for drugs or biologicals to a person whose bill or request
for payment for such drugs or biologicals does not include
a statement of the person’s actual acquisition cost.
‘‘(B) A person may not bill an individual enrolled
under this part—
‘‘(i) any amount other than the payment
amount specified in paragraph (1) or (4) (plus any
applicable deductible and coinsurance amounts), or
‘‘(ii) any amount for such drugs or biologicals
for which payment may not be made pursuant to
subparagraph (A).
‘‘(C) If a person knowingly and willfully in repeated
cases bills one or more individuals in violation of subpara-
graph (B), the Secretary may apply sanctions against that
person in accordance with subsection (j)(2).
‘‘(4) The Secretary may pay a reasonable dispensing
fee (less the applicable deductible and coinsurance
amounts) for drugs and biologicals to a licensed pharmacy
approved to dispense drugs or biologicals under this part,
if payment for such drugs or biologicals is made to the
pharmacy.’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) apply to drugs and biologicals fur-
nished on or after January 1, 1998.