(b) INCORPORATION OF CERTAIN DEFINITIONS IN EM-
PLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.—
Except as provided in this section, the terms ‘‘beneficiary’’,
‘‘church plan’’, ‘‘employee’’, ‘‘employee welfare benefit
plan’’, ‘‘employer’’, ‘‘governmental plan’’, ‘‘multiemployer
plan’’, ‘‘multiple employer welfare arrangement’’, ‘‘partici-
pant’’, ‘‘plan sponsor’’, and ‘‘State’’ have the meanings
given such terms in section 3 of the Employee Retirement
Income Security Act of 1974.
(c) OTHER DEFINITIONS.—For purposes of this title:
(1) APPLICABLE STATE AUTHORITY.—The term
‘‘applicable State authority’’ means, with respect to
an insurer or health maintenance organization in a
State, the State insurance commissioner or official or
officials designated by the State to enforce the require-
ments of this title for the State involved with respect
to such insurer or organization.
(2) BONA FIDE ASSOCIATION.—The term ‘‘bona
fide association’’ means an association which—
(A) has been actively in existence for at
least 5 years,
(B) has been formed and maintained in
good faith for purposes other than obtaining in-
surance,
(C) does not condition membership in the
association on health status,
(D) makes health insurance coverage offered
through the association available to all members
regardless of health status,
(E) does not make health insurance coverage
offered through the association available to any
individual who is not a member (or dependent
of a member) of the association at the time the
coverage is initially issued,
(F) does not impose preexisting condition
exclusions except in a manner consistent with
the requirements of sections 101 and 102 as they
relate to group health plans, and
(G) provides for renewal and continuation
of health insurance coverage in a manner con-
sistent with the requirements of section 132 as
they relate to the renewal and continuation in
force of coverage in a group market.
(3) COBRA 
CONTINUATION
PROVISION.—The
term ‘‘COBRA continuation provision’’ means any of
the following:
(A) Section 4980B of the Internal Revenue
Code of 1986, other than subsection (f)(1) of such
section insofar as it relates to pediatric vaccines.
(B) Part 6 of subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974
(29 U.S.C. 1161 et seq.), other than section 609.
(C) Title XXII of the Public Health Service
Act.
(4) HEALTH INSURANCE COVERAGE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘‘health insurance
coverage’’ means benefits consisting of medical
care (provided directly, through insurance or re-
imbursement, or otherwise) under any hospital
or medical service policy or certificate, hospital
or medical service plan contract, or health main-
tenance organization group contract offered by
an insurer or a health maintenance organiza-
tion.
(B) EXCEPTION.—Such term does not in-
clude coverage under any separate policy, certifi-
cate, or contract only for one or more of any of
the following:
(i) Coverage for accident, credit-only,
vision, disability income, long-term care,
nursing home care, community-based care
dental, on-site medical clinics, or employee
assistance programs, or any combination
thereof.
(ii) Medicare supplemental health in-
surance (within the meaning of section
1882(g)(1) of the Social Security Act (42
U.S.C. 1395ss(g)(1))) and similar supple-
mental coverage provided under a group
health plan.
(iii) Coverage issued as a supplement
to liability insurance.
(iv) Liability insurance, including
general liability insurance and automobile
liability insurance.
(v) Workers’ compensation or similar
insurance.
(vi) Automobile medical-payment in-
surance.
(vii) Coverage consisting of benefit
payments made on a periodic basis for a
specified disease or illness or period of hos-
pitalization, without regard to the costs in-
curred or services rendered during the pe-
riod to which the payments relate.
(viii) Short-term limited duration in-
surance.
(ix) Such other coverage, comparable to
that described in previous clauses, as may
be specified in regulations prescribed under
this title.
(5) 
HEALTH
MAINTENANCE
ORGANIZATION;
HMO.—The terms ‘‘health maintenance organization’’
and ‘‘HMO’’ mean—
(A) a Federally qualified health mainte-
nance organization (as defined in section
1301(a) of the Public Health Service Act (42
U.S.C. 300e(a))),
(B) an organization recognized under State
law as a health maintenance organization, or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health maintenance
organization,
if (other than for purposes of part 2 of subtitle B) it
is subject to State law which regulates insurance
(within the meaning of section 514(b)(2) of the Em-
ployee Retirement Income Security Act of 1974).
(6) HEALTH STATUS.—The term ‘‘health status’’
includes, with respect to an individual, medical con-
dition, claims experience, receipt of health care, medi-
cal history, genetic information, evidence of insurabil-
ity (including conditions arising out of acts of domes-
tic violence), or disability.
(7) 
INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘‘individual health insurance cov-
erage’’ means health insurance coverage offered to in-
dividuals if the coverage is not offered in connection
with a group health plan (other than such a plan that
has fewer than two participants as current employees
on the first day of the plan year).
(8) INSURER.—The term ‘‘insurer’’ means an in-
surance company, insurance service, or insurance or-
ganization which is licensed to engage in the business
of insurance in a State and (except for purposes of
part 2 of subtitle B) which is regulated by a State
(within the meaning of section 514(b)(2)(A) of the
Employee Retirement Income Security Act of 1974).
(9) MEDICAL CARE.—The term ‘‘medical care’’
means—
(A) amounts paid for, or items or services
in the form of, the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts
paid for, or items or services provided for, the
purpose of affecting any structure or function of
the body,
(B) amounts paid for, or services in the
form of, transportation primarily for and essen-
tial to medical care referred to in subparagraph
(A), and
(C) amounts paid for insurance covering
medical care referred to in subparagraphs (A)
and (B).
(10) NETWORK PLAN.—The term ‘‘network plan’’
means, with respect to health insurance coverage, an
arrangement of an insurer or a health maintenance
organization under which the financing and delivery
of medical care are provided, in whole or in part,
through a defined set of providers under contract with
the insurer or health maintenance organization.
(11) WAITING PERIOD.—The term ‘‘waiting pe-
riod’’ means, with respect to a group health plan and
an individual who is a potential participant or bene-
ficiary in the plan, the minimum period that must
pass with respect to the individual before the individ-
ual is eligible to be covered for benefits under the
plan.
(d) TREATMENT OF PARTNERSHIPS.—
(1) TREATMENT AS A GROUP HEALTH PLAN.—
Any plan, fund, or program which would not be (but
for this paragraph) an employee welfare benefit plan
and which is established or maintained by a partner-
ship, to the extent that such plan, fund, or program
provides medical care to present or former partners
in the partnership or to their dependents (as defined
under the terms of the plan, fund, or program), di-
rectly or through insurance, reimbursement, or other-
wise, shall be treated (subject to paragraph (1)) as an
employee welfare benefit plan which is a group health
plan.
(2) TREATMENT
OF
PARTNERSHIP
AND
PART-
NERS
AND
EMPLOYER
AND
PARTICIPANTS.—In the
case of a group health plan—
(A) the term ‘‘employer’’ includes the part-
nership in relation to any partner; and
(B) the term ‘‘participant’’ includes—
(i) in connection with a group health
plan maintained by a partnership, an indi-
vidual who is a partner in relation to the
partnership, or
(ii) in connection with a group health
plan maintained by a self-employed indi-
vidual (under which one or more employees
are participants), the self-employed individ-
ual,
if such individual is or may become eligible to
receive a benefit under the plan or such individ-
ual’s beneficiaries may be eligible to receive any
such benefit.
(e) DEFINITIONS RELATING TO MARKETS AND SMALL
EMPLOYERS.—As used in this title:
(1) INDIVIDUAL MARKET.—The term ‘‘individual
market’’ means the market for health insurance cov-
erage offered to individuals and not to employers or
in connection with a group health plan and does not
include the market for such coverage issued only by
an insurer or HMO that makes such coverage avail-
able only on the basis of affiliation with a bona fide
association (as defined in subsection (c)(2)).
(2) LARGE GROUP MARKET.—The term ‘‘large
group market’’ means the market for health insurance
coverage offered to employers (other than small em-
ployers) on behalf of their employees (and their de-
pendents) and does not include health insurance cov-
erage available solely in connection with a bona fide
association (as defined in subsection (c)(2)).
(3) SMALL
EMPLOYER.—The term ‘‘small em-
ployer’’ means, in connection with a group health
plan with respect to a calendar year, an employer
who employs at least 2 but fewer than 51 employees
on a typical business day in the year. For purposes
of this paragraph, two or more trades or businesses,
whether or not incorporated, shall be deemed a single
employer if such trades or businesses are within the
same control group (within the meaning of section
3(40)(B)(ii)) of the Employee Retirement Income Se-
curity Act of 1974.
(4) SMALL GROUP MARKET.—The term ‘‘small
group market’’ means the health insurance market
under which individuals obtain health insurance cov-
erage (directly or through any arrangement) on behalf
of themselves (and their dependents) on the basis of
employment or other relationship with respect to a
small employer and does not include health insurance
coverage available solely in connection with a bona
fide association (as defined in subsection (c)(2)).
SEC. 192. STATE FLEXIBILITY TO PROVIDE GREATER PRO-
TECTION.
(a) STATE FLEXIBILITY TO PROVIDE GREATER PRO-
TECTION.—Subject to subsection (b), nothing in this title
shall be construed to preempt State laws that require insur-
ers or HMOs—
(1) to impose a limitation or exclusion of bene-
fits relating to the treatment of a preexisting condi-
tion for a period that is shorter than the applicable
period provided for under this title;
(2) to allow individuals, participants, and bene-
ficiaries to be considered to be in a period of previous
qualifying coverage if such individual, participant, or
beneficiary experiences a lapse in coverage that is
greater than the 60-day periods provided for under
sections 101(b)(3)(A), 101(b)(3)(B)(ii), and 102(b)(2);
or
(3) in defining ‘‘pre-existing condition’’ to have
a look-back period that is shorter than the 6-month
period described in section 101(b)(1)(A).
(b) NO OVERRIDE OF ERISA PREEMPTION.—Nothing
in this Act shall be construed to affect or modify the provi-
sions of section 514 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1144).
SEC. 193. EFFECTIVE DATE.
(a) IN GENERAL.—Except as otherwise provided for
in this title, the provisions of this title shall apply with
respect to—
(1) group health plans, and health insurance
coverage offered in connection with group health
plans, for plan years beginning on or after January
1, 1998, and
(2) individual health insurance coverage issued,
renewed, in effect, or operated on or after July 1,
1998.
(b) CONSIDERATION OF PREVIOUS COVERAGE.—The
Secretaries of Health and Human Services, Treasury, and
Labor shall jointly establish rules regarding the treatment
(in determining qualified coverage periods under sections
102(b) and 141(b)) of coverage before the applicable effective
date specified in subsection (a).
(c) TIMELY ISSUANCE OF REGULATIONS.—The Sec-
retaries of Health and Human Services, the Treasury, and
Labor shall issue such regulations on a timely basis as may
be required to carry out this title.
SEC. 194. RULE OF CONSTRUCTION.
Nothing in this title or any amendment made thereby
may be construed to require the coverage of any specific
procedure, treatment, or service as part of a group health
plan or health insurance coverage under this title or
through regulation.
TITLE II—PREVENTING HEALTH
CARE FRAUD AND ABUSE; AD-
MINISTRATIVE 
SIMPLIFICA-
TION
SEC. 200. REFERENCES IN TITLE.
Except as otherwise specifically provided, whenever in
this title an amendment is expressed in terms of an amend-
ment to or repeal of a section or other provision, the ref-
erence shall be considered to be made to that section or other
provision of the Social Security Act.
Subtitle A—Fraud and Abuse
Control Program
SEC. 201. FRAUD AND ABUSE CONTROL PROGRAM.
(a) ESTABLISHMENT
OF PROGRAM.—Title XI (42
U.S.C. 1301 et seq.) is amended by inserting after section
1128B the following new section:
‘‘FRAUD AND ABUSE CONTROL PROGRAM
‘‘SEC. 1128C. (a) ESTABLISHMENT OF PROGRAM.—
‘‘(1) IN GENERAL.—Not later than January 1,
1997, the Secretary, acting through the Office of the
Inspector General of the Department of Health and
Human Services, and the Attorney General shall es-
tablish a program—
‘‘(A) to coordinate Federal, State, and local
law enforcement programs to control fraud and
abuse with respect to health plans,
‘‘(B) to conduct investigations, audits, eval-
uations, and inspections relating to the delivery
of and payment for health care in the United
States,
‘‘(C) to facilitate the enforcement of the pro-
visions of sections 1128, 1128A, and 1128B and
other statutes applicable to health care fraud and
abuse,
‘‘(D) to provide for the modification and es-
tablishment of safe harbors and to issue advisory
opinions and special fraud alerts pursuant to
section 1128D, and
‘‘(E) to provide for the reporting and disclo-
sure of certain final adverse actions against
health care providers, suppliers, or practitioners
pursuant to the data collection system established
under section 1128E.
‘‘(2) COORDINATION WITH HEALTH PLANS.—In
carrying out the program established under para-
graph (1), the Secretary and the Attorney General
shall consult with, and arrange for the sharing of
data with representatives of health plans.
‘‘(3) GUIDELINES.—
‘‘(A) IN GENERAL.—The Secretary and the
Attorney General shall issue guidelines to carry
out the program under paragraph (1). The pro-
visions of sections 553, 556, and 557 of title 5,
United States Code, shall not apply in the issu-
ance of such guidelines.
‘‘(B) INFORMATION GUIDELINES.—
‘‘(i) IN
GENERAL.—Such guidelines
shall include guidelines relating to the fur-
nishing of information by health plans, pro-
viders, and others to enable the Secretary
and the Attorney General to carry out the
program 
(including 
coordination 
with
health plans under paragraph (2)).
‘‘(ii) CONFIDENTIALITY.—Such guide-
lines shall include procedures to assure that
such information is provided and utilized
in a manner that appropriately protects the
confidentiality of the information and the
privacy of individuals receiving health care
services and items.
‘‘(iii) QUALIFIED IMMUNITY FOR PRO-
VIDING
INFORMATION.—The provisions of
section 1157(a) (relating to limitation on
liability) shall apply to a person providing
information to the Secretary or the Attor-
ney General in conjunction with their per-
formance of duties under this section.
‘‘(4) ENSURING ACCESS TO DOCUMENTATION.—
The Inspector General of the Department of Health
and Human Services is authorized to exercise such
authority described in paragraphs (3) through (9) of
section 6 of the Inspector General Act of 1978 (5
U.S.C. App.) as necessary with respect to the activi-
ties under the fraud and abuse control program estab-
lished under this subsection.
‘‘(5) AUTHORITY
OF
INSPECTOR
GENERAL.—
Nothing in this Act shall be construed to diminish the
authority of any Inspector General, including such
authority as provided in the Inspector General Act of
1978 (5 U.S.C. App.).
‘‘(b) ADDITIONAL USE OF FUNDS BY INSPECTOR GEN-
ERAL.—
‘‘(1) REIMBURSEMENTS FOR INVESTIGATIONS.—
The Inspector General of the Department of Health
and Human Services is authorized to receive and re-
tain for current use reimbursement for the costs of
conducting investigations and audits and for mon-
itoring compliance plans when such costs are ordered
by a court, voluntarily agreed to by the payor, or oth-
erwise.
‘‘(2) CREDITING.—Funds received by the Inspec-
tor General under paragraph (1) as reimbursement
for costs of conducting investigations shall be depos-
ited to the credit of the appropriation from which ini-
tially paid, or to appropriations for similar purposes
currently available at the time of deposit, and shall
remain available for obligation for 1 year from the
date of the deposit of such funds.
‘‘(c) HEALTH PLAN DEFINED.—For purposes of this
section, the term ‘health plan’ means a plan or program
that provides health benefits, whether directly, through in-
surance, or otherwise, and includes—
‘‘(1) a policy of health insurance;
‘‘(2) a contract of a service benefit organization;
and
‘‘(3) a membership agreement with a health
maintenance organization or other prepaid health
plan.’’.
(b) ESTABLISHMENT OF HEALTH CARE FRAUD AND
ABUSE CONTROL ACCOUNT IN FEDERAL HOSPITAL INSUR-
ANCE TRUST FUND.—Section 1817 (42 U.S.C. 1395i) is
amended by adding at the end the following new subsection:
‘‘(k) HEALTH CARE FRAUD AND ABUSE CONTROL AC-
COUNT.—
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished in the Trust Fund an expenditure account to
be known as the ‘Health Care Fraud and Abuse Con-
trol Account’ (in this subsection referred to as the ‘Ac-
count’).
‘‘(2) 
APPROPRIATED
AMOUNTS
TO
TRUST
FUND.—
‘‘(A) IN GENERAL.—There are hereby ap-
propriated to the Trust Fund—
‘‘(i) such gifts and bequests as may be
made as provided in subparagraph (B);
‘‘(ii) such amounts as may be depos-
ited in the Trust Fund as provided in sec-
tions 242(b) and 249(c) of the Health Cov-
erage Availability and Affordability Act of
1996, and title XI; and
‘‘(iii) such amounts as are transferred
to the Trust Fund under subparagraph (C).
‘‘(B) AUTHORIZATION TO ACCEPT GIFTS.—
The Trust Fund is authorized to accept on behalf
of the United States money gifts and bequests
made unconditionally to the Trust Fund, for the
benefit of the Account or any activity financed
through the Account.
‘‘(C) TRANSFER OF AMOUNTS.—The Manag-
ing Trustee shall transfer to the Trust Fund,
under rules similar to the rules in section 9601
of the Internal Revenue Code of 1986, an amount
equal to the sum of the following:
‘‘(i) Criminal fines recovered in cases
involving a Federal health care offense (as
defined in section 982(a)(6)(B) of title 18,
United States Code).
‘‘(ii) Civil monetary penalties and as-
sessments imposed in health care cases, in-
cluding amounts recovered under titles XI,
XVIII, and XIX, and chapter 38 of title 31,
United States Code (except as otherwise
provided by law).
‘‘(iii) Amounts resulting from the for-
feiture of property by reason of a Federal
health care offense.
‘‘(iv) Penalties and damages obtained
and otherwise creditable to miscellaneous re-
ceipts of the general fund of the Treasury
obtained under sections 3729 through 3733
of title 31, United States Code (known as
the False Claims Act), in cases involving
claims related to the provision of health
care items and services (other than funds
awarded to a relator, for restitution or oth-
erwise authorized by law).
‘‘(3) APPROPRIATED AMOUNTS TO ACCOUNT FOR
FRAUD AND ABUSE CONTROL PROGRAM, ETC.—
‘‘(A) 
DEPARTMENTS
OF
HEALTH
AND
HUMAN SERVICES AND JUSTICE.—
‘‘(i) IN
GENERAL.—There are hereby
appropriated to the Account from the Trust
Fund such sums as the Secretary and the
Attorney General certify are necessary to
carry out the purposes described in sub-
paragraph (C), to be available without fur-
ther appropriation, in an amount not to ex-
ceed—
‘‘(I) 
for 
fiscal 
year 
1997,
$104,000,000,
‘‘(II) for each of the fiscal years
1998 through 2003, the limit for the
preceding fiscal year, increased by 15
percent; and
‘‘(III) for each fiscal year after
fiscal year 2003, the limit for fiscal
year 2003.
‘‘(ii) MEDICARE AND MEDICAID ACTIVI-
TIES.—For each fiscal year, of the amount
appropriated in clause (i), the following
amounts shall be available only for the pur-
poses of the activities of the Office of the In-
spector General of the Department of Health
and Human Services with respect to the
medicare and medicaid programs—
‘‘(I) for fiscal year 1997, not less
than $60,000,000 and not more than
$70,000,000;
‘‘(II) for fiscal year 1998, not less
than $80,000,000 and not more than
$90,000,000;
‘‘(III) for fiscal year 1999, not
less than $90,000,000 and not more
than $100,000,000;
‘‘(IV) for fiscal year 2000, not less
than $110,000,000 and not more than
$120,000,000;
‘‘(V) for fiscal year 2001, not less
than $120,000,000 and not more than
$130,000,000;
‘‘(VI) for fiscal year 2002, not less
than $140,000,000 and not more than
$150,000,000; and
‘‘(VII) for each fiscal year after
fiscal 
year 
2002, 
not 
less 
than
$150,000,000 and not more than
$160,000,000.
‘‘(B) FEDERAL
BUREAU
OF
INVESTIGA-
TION.—There are hereby appropriated from the
general fund of the United States Treasury and
hereby appropriated to the Account for transfer
to the Federal Bureau of Investigation to carry
out the purposes described in subparagraph (C),
to be available without further appropriation—
‘‘(i) for fiscal year 1997, $47,000,000;
‘‘(ii) for fiscal year 1998, $56,000,000;
‘‘(iii) for fiscal year 1999, $66,000,000;
‘‘(iv) for fiscal year 2000, $76,000,000;
‘‘(v) for fiscal year 2001, $88,000,000;
‘‘(vi) 
for 
fiscal 
year 
2002,
$101,000,000; and
‘‘(vii) for each fiscal year after fiscal
year 2002, $114,000,000.
‘‘(C) USE
OF
FUNDS.—The purposes de-
scribed in this subparagraph are to cover the
costs (including equipment, salaries and benefits,
and travel and training) of the administration
and operation of the health care fraud and abuse
control 
program 
established 
under 
section
1128C(a), including the costs of—
‘‘(i) prosecuting health care matters
(through criminal, civil, and administrative
proceedings);
‘‘(ii) investigations;
‘‘(iii) financial and performance au-
dits of health care programs and operations;
‘‘(iv) inspections and other evalua-
tions; and
‘‘(v) provider and consumer education
regarding compliance with the provisions of
title XI.
‘‘(4) APPROPRIATED AMOUNTS TO ACCOUNT FOR
MEDICARE INTEGRITY PROGRAM.—
‘‘(A) IN GENERAL.—There are hereby ap-
propriated to the Account from the Trust Fund
for each fiscal year such amounts as are nec-
essary to carry out the Medicare Integrity Pro-
gram under section 1893, subject to subpara-
graph (B) and to be available without further
appropriation.
‘‘(B) AMOUNTS
SPECIFIED.—The amount
appropriated under subparagraph (A) for a fis-
cal year is as follows:
‘‘(i) For fiscal year 1997, such amount
shall be not less than $430,000,000 and not
more than $440,000,000.
‘‘(ii) For fiscal year 1998, such
amount shall be not less than $490,000,000
and not more than $500,000,000.
‘‘(iii) For fiscal year 1999, such
amount shall be not less than $550,000,000
and not more than $560,000,000.
‘‘(iv) For fiscal year 2000, such
amount shall be not less than $620,000,000
and not more than $630,000,000.
‘‘(v) For fiscal year 2001, such amount
shall be not less than $670,000,000 and not
more than $680,000,000.
‘‘(vi) For fiscal year 2002, such
amount shall be not less than $690,000,000
and not more than $700,000,000.
‘‘(vii) For each fiscal year after fiscal
year 2002, such amount shall be not less
than $710,000,000 and not more than
$720,000,000.
‘‘(5) ANNUAL REPORT.—The Secretary and the
Attorney General shall submit jointly an annual re-
port to Congress on the amount of revenue which is
generated and disbursed, and the justification for such
disbursements, by the Account in each fiscal year.’’.
SEC. 202. MEDICARE INTEGRITY PROGRAM.
(a) ESTABLISHMENT OF MEDICARE INTEGRITY PRO-
GRAM.—Title XVIII is amended by adding at the end the
following new section:
‘‘MEDICARE INTEGRITY PROGRAM
‘‘SEC. 1893. (a) ESTABLISHMENT
OF PROGRAM.—
There is hereby established the Medicare Integrity Program
(in this section referred to as the ‘Program’) under which
the Secretary shall promote the integrity of the medicare
program by entering into contracts in accordance with this
section with eligible private entities to carry out the activi-
ties described in subsection (b).
‘‘(b) ACTIVITIES DESCRIBED.—The activities described
in this subsection are as follows:
‘‘(1) Review of activities of providers of services
or other individuals and entities furnishing items and
services for which payment may be made under this
title (including skilled nursing facilities and home
health agencies), including medical and utilization
review and fraud review (employing similar stand-
ards, processes, and technologies used by private
health plans, including equipment and software tech-
nologies which surpass the capability of the equip-
ment and technologies used in the review of claims
under this title as of the date of the enactment of this
section).
‘‘(2) Audit of cost reports.
‘‘(3) Determinations as to whether payment
should not be, or should not have been, made under
this title by reason of section 1862(b), and recovery
of payments that should not have been made.
‘‘(4) Education of providers of services, bene-
ficiaries, and other persons with respect to payment
integrity and benefit quality assurance issues.
‘‘(5) Developing (and periodically updating) a
list of items of durable medical equipment in accord-
ance with section 1834(a)(15) which are subject to
prior authorization under such section.
‘‘(c) ELIGIBILITY OF ENTITIES.—An entity is eligible
to enter into a contract under the Program to carry out
any of the activities described in subsection (b) if—
‘‘(1) the entity has demonstrated capability to
carry out such activities;
‘‘(2) in carrying out such activities, the entity
agrees to cooperate with the Inspector General of the
Department of Health and Human Services, the At-
torney General of the United States, and other law
enforcement agencies, as appropriate, in the inves-
tigation and deterrence of fraud and abuse in relation
to this title and in other cases arising out of such ac-
tivities;
‘‘(3) the entity demonstrates to the Secretary
that the entity’s financial holdings, interests, or rela-
tionships will not interfere with its ability to perform
the functions to be required by the contract in an ef-
fective and impartial manner; and
‘‘(4) the entity meets such other requirements as
the Secretary may impose.
In the case of the activity described in subsection (b)(5),
an entity shall be deemed to be eligible to enter into a con-
tract under the Program to carry out the activity if the
entity is a carrier with a contract in effect under section
1842.
‘‘(d) PROCESS FOR ENTERING INTO CONTRACTS.—The
Secretary shall enter into contracts under the Program in
accordance with such procedures as the Secretary shall by
regulation establish, except that such procedures shall in-
clude the following:
‘‘(1) The Secretary shall determine the appro-
priate number of separate contracts which are nec-
essary to carry out the Program and the appropriate
times at which the Secretary shall enter into such
contracts.
‘‘(2)(A) Except as provided in subparagraph
(B), the provisions of section 1153(e)(1) shall apply
to contracts and contracting authority under this sec-
tion.
‘‘(B) Competitive procedures must be used when
entering into new contracts under this section, or at
any other time considered appropriate by the Sec-
retary, except that the Secretary may contract with
entities that are carrying out the activities described
in this section pursuant to agreements under section
1816 or contracts under section 1842 in effect on the
date of the enactment of this section.
‘‘(3) A contract under this section may be re-
newed without regard to any provision of law requir-
ing competition if the contractor has met or exceeded
the performance requirements established in the cur-
rent contract.
‘‘(e) LIMITATION
ON CONTRACTOR LIABILITY.—The
Secretary shall by regulation provide for the limitation of
a contractor’s liability for actions taken to carry out a con-
tract under the Program, and such regulation shall, to the
extent the Secretary finds appropriate, employ the same or
comparable standards and other substantive and procedural
provisions as are contained in section 1157.’’.
(b) ELIMINATION OF FI AND CARRIER RESPONSIBIL-
ITY FOR CARRYING OUT ACTIVITIES SUBJECT TO PRO-
GRAM.—
(1) 
RESPONSIBILITIES
OF
FISCAL
INTERMEDIARIES UNDER PART A.—Section 1816 (42
U.S.C. 1395h) is amended by adding at the end the
following new subsection:
‘‘(l) No agency or organization may carry out (or re-
ceive payment for carrying out) any activity pursuant to
an agreement under this section to the extent that the activ-
ity is carried out pursuant to a contract under the Medicare
Integrity Program under section 1893.’’.
(2) RESPONSIBILITIES
OF
CARRIERS
UNDER
PART B.—Section 1842(c) (42 U.S.C. 1395u(c)) is
amended by adding at the end the following new
paragraph:
‘‘(6) No carrier may carry out (or receive payment for
carrying out) any activity pursuant to a contract under
this subsection to the extent that the activity is carried out
pursuant to a contract under the Medicare Integrity Pro-
gram under section 1893. The previous sentence shall not
apply with respect to the activity described in section
1893(b)(5) (relating to prior authorization of certain items
of durable medical equipment under section 1834(a)(15)).’’.
SEC. 203. BENEFICIARY INCENTIVE PROGRAMS.
(a) CLARIFICATION OF REQUIREMENT TO PROVIDE
EXPLANATION OF MEDICARE BENEFITS.—The Secretary of
Health and Human Services (in this section referred to as
the ‘‘Secretary’’) shall provide an explanation of benefits
under the medicare program under title XVIII of the Social
Security Act with respect to each item or service for which
payment may be made under the program which is fur-
nished to an individual, without regard to whether or not
a deductible or coinsurance may be imposed against the in-
dividual with respect to the item or service.
(b) PROGRAM TO COLLECT INFORMATION ON FRAUD
AND ABUSE.—
(1) ESTABLISHMENT
OF
PROGRAM.—Not later
than 3 months after the date of the enactment of this
Act, the Secretary shall establish a program under
which the Secretary shall encourage individuals to re-
port to the Secretary information on individuals and
entities who are engaging or who have engaged in
acts or omissions which constitute grounds for the im-
position of a sanction under section 1128, section
1128A, or section 1128B of the Social Security Act,
or who have otherwise engaged in fraud and abuse
against the medicare program for which there is a
sanction provided under law. The program shall dis-
courage provision of, and not consider, information
which is frivolous or otherwise not relevant or mate-
rial to the imposition of such a sanction.
(2) PAYMENT
OF
PORTION
OF
AMOUNTS
COL-
LECTED.—If an individual reports information to the
Secretary under the program established under para-
graph (1) which serves as the basis for the collection
by the Secretary or the Attorney General of any
amount of at least $100 (other than any amount paid
as a penalty under section 1128B of the Social Secu-
rity Act), the Secretary may pay a portion of the
amount collected to the individual (under procedures
similar to those applicable under section 7623 of the
Internal Revenue Code of 1986 to payments to indi-
viduals providing information on violations of such
Code).
(c) PROGRAM TO COLLECT INFORMATION ON PROGRAM
EFFICIENCY.—
(1) ESTABLISHMENT
OF
PROGRAM.—Not later
than 3 months after the date of the enactment of this
Act, the Secretary shall establish a program under
which the Secretary shall encourage individuals to
submit to the Secretary suggestions on methods to im-
prove the efficiency of the medicare program.
(2) PAYMENT
OF
PORTION
OF
PROGRAM
SAV-
INGS.—If an individual submits a suggestion to the
Secretary under the program established under para-
graph (1) which is adopted by the Secretary and
which results in savings to the program, the Secretary
may make a payment to the individual of such
amount as the Secretary considers appropriate.
SEC. 204. APPLICATION OF CERTAIN HEALTH ANTI-FRAUD
AND ABUSE SANCTIONS TO FRAUD AND
ABUSE AGAINST FEDERAL HEALTH CARE
PROGRAMS.
(a) IN GENERAL.—Section 1128B (42 U.S.C. 1320a–
7b) is amended as follows:
(1) In the heading, by striking ‘‘MEDICARE OR
STATE
HEALTH
CARE
PROGRAMS’’ and inserting
‘‘FEDERAL HEALTH CARE PROGRAMS’’.
(2) In subsection (a)(1), by striking ‘‘a program
under title XVIII or a State health care program (as
defined in section 1128(h))’’ and inserting ‘‘a Federal
health care program’’.
(3) In subsection (a)(5), by striking ‘‘a program
under title XVIII or a State health care program’’
and inserting ‘‘a Federal health care program’’.
(4) In the second sentence of subsection (a)—
(A) by striking ‘‘a State plan approved
under title XIX’’ and inserting ‘‘a Federal health
care program’’, and
(B) by striking ‘‘the State may at its option
(notwithstanding any other provision of that
title or of such plan)’’ and inserting ‘‘the admin-
istrator of such program may at its option (not-
withstanding any other provision of such pro-
gram)’’.
(5) In subsection (b), by striking ‘‘title XVIII or
a State health care program’’ each place it appears
and inserting ‘‘a Federal health care program’’.
(6) In subsection (c), by inserting ‘‘(as defined
in section 1128(h))’’ after ‘‘a State health care pro-
gram’’.
(7) By adding at the end the following new sub-
section:
‘‘(f) For purposes of this section, the term ‘Federal
health care program’ means—
‘‘(1) any plan or program that provides health
benefits, whether directly, through insurance, or other-
wise, which is funded directly, in whole or in part,
by the United States Government (other than the
health insurance program under chapter 89 of title 5,
United States Code); or
‘‘(2) any State health care program, as defined
in section 1128(h).’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall take effect on January 1, 1997.
SEC. 205. GUIDANCE REGARDING APPLICATION OF HEALTH
CARE FRAUD AND ABUSE SANCTIONS.
Title XI (42 U.S.C. 1301 et seq.), as amended by sec-
tion 201, is amended by inserting after section 1128C the
following new section:
‘‘GUIDANCE REGARDING APPLICATION OF HEALTH CARE
FRAUD AND ABUSE SANCTIONS
‘‘SEC. 1128D. (a) SOLICITATION AND PUBLICATION OF
MODIFICATIONS TO EXISTING SAFE HARBORS AND NEW
SAFE HARBORS.—
‘‘(1) IN GENERAL.—
‘‘(A) SOLICITATION
OF
PROPOSALS
FOR
SAFE
HARBORS.—Not later than January 1,
1997, and not less than annually thereafter, the
Secretary shall publish a notice in the Federal
Register soliciting proposals, which will be ac-
cepted during a 60-day period, for—
‘‘(i) modifications to existing safe har-
bors issued pursuant to section 14(a) of the
Medicare and Medicaid Patient and Pro-
gram Protection Act of 1987 (42 U.S.C.
1320a–7b note);
‘‘(ii) additional safe harbors specifying
payment practices that shall not be treated
as 
a 
criminal 
offense 
under 
section
1128B(b) and shall not serve as the basis
for an exclusion under section 1128(b)(7);
‘‘(iii) advisory opinions to be issued
pursuant to subsection (b); and
‘‘(iv) special fraud alerts to be issued
pursuant to subsection (c).
‘‘(B) PUBLICATION OF PROPOSED MODIFICA-
TIONS AND PROPOSED ADDITIONAL SAFE HAR-
BORS.—After considering the proposals described
in clauses (i) and (ii) of subparagraph (A), the
Secretary, in consultation with the Attorney
General, shall publish in the Federal Register
proposed modifications to existing safe harbors
and proposed additional safe harbors, if appro-
priate, with a 60-day comment period. After
considering any public comments received dur-
ing this period, the Secretary shall issue final
rules modifying the existing safe harbors and es-
tablishing new safe harbors, as appropriate.
‘‘(C) REPORT.—The Inspector General of
the Department of Health and Human Services
(in this section referred to as the ‘Inspector Gen-
eral’) shall, in an annual report to Congress or
as part of the year-end semiannual report re-
quired by section 5 of the Inspector General Act
of 1978 (5 U.S.C. App.), describe the proposals
received under clauses (i) and (ii) of subpara-
graph (A) and explain which proposals were in-
cluded in the publication described in subpara-
graph (B), which proposals were not included in
that publication, and the reasons for the rejection
of the proposals that were not included.
‘‘(2) CRITERIA FOR MODIFYING AND ESTABLISH-
ING SAFE HARBORS.—In modifying and establishing
safe harbors under paragraph (1)(B), the Secretary
may consider the extent to which providing a safe
harbor for the specified payment practice may result
in any of the following:
‘‘(A) An increase or decrease in access to
health care services.
‘‘(B) An increase or decrease in the quality
of health care services.
‘‘(C) An increase or decrease in patient free-
dom of choice among health care providers.
‘‘(D) An increase or decrease in competition
among health care providers.
‘‘(E) An increase or decrease in the ability
of health care facilities to provide services in
medically underserved areas or to medically un-
derserved populations.
‘‘(F) An increase or decrease in the cost to
Federal health care programs (as defined in sec-
tion 1128B(f)).
‘‘(G) An increase or decrease in the poten-
tial overutilization of health care services.
‘‘(H) The existence or nonexistence of any
potential financial benefit to a health care pro-
fessional or provider which may vary based on
their decisions of—
‘‘(i) whether to order a health care
item or service; or
‘‘(ii) whether to arrange for a referral
of health care items or services to a particu-
lar practitioner or provider.
‘‘(I) Any other factors the Secretary deems
appropriate in the interest of preventing fraud
and abuse in Federal health care programs (as
so defined).
‘‘(b) ADVISORY OPINIONS.—
‘‘(1) ISSUANCE
OF
ADVISORY
OPINIONS.—The
Secretary shall issue written advisory opinions as
provided in this subsection.
‘‘(2) MATTERS
SUBJECT
TO
ADVISORY
OPIN-
IONS.—The Secretary shall issue advisory opinions as
to the following matters:
‘‘(A) What constitutes prohibited remunera-
tion within the meaning of section 1128B(b).
‘‘(B) Whether an arrangement or proposed
arrangement satisfies the criteria set forth in sec-
tion 1128B(b)(3) for activities which do not re-
sult in prohibited remuneration.
‘‘(C) Whether an arrangement or proposed
arrangement satisfies the criteria which the Sec-
retary has established, or shall establish by regu-
lation for activities which do not result in pro-
hibited remuneration.
‘‘(D) What constitutes an inducement to re-
duce or limit services to individuals entitled to
benefits under title XVIII or title XIX or title
XXI within the meaning of section 1128B(b).
‘‘(E) Whether any activity or proposed ac-
tivity constitutes grounds for the imposition of a
sanction under section 1128, 1128A, or 1128B.
‘‘(3) MATTERS NOT SUBJECT TO ADVISORY OPIN-
IONS.—Such advisory opinions shall not address the
following matters:
‘‘(A) Whether the fair market value shall be,
or was paid or received for any goods, services
or property.
‘‘(B) Whether an individual is a bona fide
employee within the requirements of section
3121(d)(2) of the Internal Revenue Code of 1986.
‘‘(4) EFFECT OF ADVISORY OPINIONS.—
‘‘(A) BINDING AS TO SECRETARY AND PAR-
TIES INVOLVED.—Each advisory opinion issued
by the Secretary shall be binding as to the Sec-
retary and the party or parties requesting the
opinion.
‘‘(B) FAILURE TO SEEK OPINION.—The fail-
ure of a party to seek an advisory opinion may
not be introduced into evidence to prove that the
party intended to violate the provisions of sec-
tions 1128, 1128A, or 1128B.
‘‘(5) REGULATIONS.—
‘‘(A) IN
GENERAL.—Not later than 180
days after the date of the enactment of this sec-
tion, the Secretary shall issue regulations to
carry out this section. Such regulations shall
provide for—
‘‘(i) the procedure to be followed by a
party applying for an advisory opinion;
‘‘(ii) the procedure to be followed by
the Secretary in responding to a request for
an advisory opinion;
‘‘(iii) the interval in which the Sec-
retary shall respond;
‘‘(iv) the reasonable fee to be charged to
the party requesting an advisory opinion;
and
‘‘(v) the manner in which advisory
opinions will be made available to the pub-
lic.
‘‘(B) SPECIFIC CONTENTS.—Under the regu-
lations promulgated pursuant to subparagraph
(A)—
‘‘(i) the Secretary shall be required to
respond to a party requesting an advisory
opinion by not later than 30 days after the
request is received; and
‘‘(ii) the fee charged to the party re-
questing an advisory opinion shall be equal
to the costs incurred by the Secretary in re-
sponding to the request.
‘‘(c) SPECIAL FRAUD ALERTS.—
‘‘(1) IN GENERAL.—
‘‘(A) 
REQUEST
FOR
SPECIAL
FRAUD
ALERTS.—Any person may present, at any time,
a request to the Inspector General for a notice
which informs the public of practices which the
Inspector General considers to be suspect or of
particular concern under the medicare program
or a State health care program, as defined in
section 1128(h) (in this subsection referred to as
a ‘special fraud alert’).
‘‘(B) ISSUANCE AND PUBLICATION OF SPE-
CIAL FRAUD ALERTS.—Upon receipt of a request
described in subparagraph (A), the Inspector
General shall investigate the subject matter of the
request to determine whether a special fraud
alert should be issued. If appropriate, the Inspec-
tor General shall issue a special fraud alert in
response to the request. All special fraud alerts
issued pursuant to this subparagraph shall be
published in the Federal Register.
‘‘(2) CRITERIA FOR SPECIAL FRAUD ALERTS.—In
determining whether to issue a special fraud alert
upon a request described in paragraph (1), the In-
spector General may consider—
‘‘(A) whether and to what extent the prac-
tices that would be identified in the special fraud
alert may result in any of the consequences de-
scribed in subsection (a)(2); and
‘‘(B) the volume and frequency of the con-
duct that would be identified in the special fraud
alert.’’.
Subtitle B—Revisions to Current
Sanctions for Fraud and Abuse
SEC. 211. MANDATORY EXCLUSION FROM PARTICIPATION
IN MEDICARE AND STATE HEALTH CARE PRO-
GRAMS.
(a) INDIVIDUAL CONVICTED OF FELONY RELATING TO
HEALTH CARE FRAUD.—
(1) IN GENERAL.—Section 1128(a) (42 U.S.C.
1320a–7(a)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(3) FELONY CONVICTION RELATING TO HEALTH
CARE
FRAUD.—Any individual or entity that has
been convicted after the date of the enactment of the
Health Coverage Availability and Affordability Act of
1996, under Federal or State law, in connection with
the delivery of a health care item or service or with
respect to any act or omission in a health care pro-
gram (other than those specifically described in para-
graph (1)) operated by or financed in whole or in
part by any Federal, State, or local government agen-
cy, of a criminal offense consisting of a felony relat-
ing to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct.’’.
(2) CONFORMING AMENDMENT.—Paragraph (1)
of section 1128(b) (42 U.S.C. 1320a–7(b)) is amended
to read as follows:
‘‘(1) CONVICTION RELATING TO FRAUD.—Any in-
dividual or entity that has been convicted after the
date of the enactment of the Health Coverage Avail-
ability and Affordability Act of 1996, under Federal
or State law—
‘‘(A) of a criminal offense consisting of a
misdemeanor relating to fraud, theft, embezzle-
ment, breach of fiduciary responsibility, or other
financial misconduct—
‘‘(i) in connection with the delivery of
a health care item or service, or
‘‘(ii) with respect to any act or omis-
sion in a health care program (other than
those specifically described in subsection
(a)(1)) operated by or financed in whole or
in part by any Federal, State, or local gov-
ernment agency; or
‘‘(B) of a criminal offense relating to fraud,
theft, embezzlement, breach of fiduciary respon-
sibility, or other financial misconduct with re-
spect to any act or omission in a program (other
than a health care program) operated by or fi-
nanced in whole or in part by any Federal,
State, or local government agency.’’.
(b) INDIVIDUAL CONVICTED OF FELONY RELATING TO
CONTROLLED SUBSTANCE.—
(1) IN GENERAL.—Section 1128(a) (42 U.S.C.
1320a–7(a)), as amended by subsection (a), is amend-
ed 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 after the date of the enactment of
the Health Coverage Availability and Affordability
Act of 1996, under Federal or State law, of a crimi-
nal offense consisting of a felony relating to the un-
lawful manufacture, distribution, prescription, or dis-
pensing of a controlled substance.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1128(b)(3) (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’’.
SEC. 212. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLU-
SION FOR CERTAIN INDIVIDUALS AND ENTI-
TIES SUBJECT TO PERMISSIVE EXCLUSION
FROM MEDICARE AND STATE HEALTH CARE
PROGRAMS.
Section 1128(c)(3) (42 U.S.C. 1320a–7(c)(3)) is
amended by adding at the end the following new subpara-
graphs:
‘‘(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 Sec-
retary determines in accordance with published regulations
that a shorter period is appropriate because of mitigating
circumstances or that a longer period is appropriate be-
cause 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 re-
voked, 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.’’.
SEC. 213. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH
OWNERSHIP 
OR 
CONTROL 
INTEREST 
IN
SANCTIONED ENTITIES.
Section 1128(b) (42 U.S.C. 1320a–7(b)) is amended by
adding at the end the following new paragraph:
‘‘(15) INDIVIDUALS CONTROLLING A SANCTIONED
ENTITY.—(A) Any individual—
‘‘(i) who has a direct or indirect ownership
or control interest in a sanctioned entity and
who knows or should know (as defined in section
1128A(i)(6)) of the action constituting the basis
for the conviction or exclusion described in sub-
paragraph (B); or
100
‘‘(ii) who is an officer or managing em-
ployee (as defined in section 1126(b)) of such an
entity.
‘‘(B) For purposes of subparagraph (A), the term
‘sanctioned entity’ means an entity—
‘‘(i) that has been convicted of any offense
described in subsection (a) or in paragraph (1),
(2), or (3) of this subsection; or
‘‘(ii) that has been excluded from participa-
tion under a program under title XVIII or under
a State health care program.’’.
SEC. 214. SANCTIONS AGAINST PRACTITIONERS AND PER-
SONS FOR FAILURE TO COMPLY WITH STATU-
TORY OBLIGATIONS.
(a) MINIMUM PERIOD OF EXCLUSION FOR PRACTI-
TIONERS AND PERSONS FAILING TO MEET STATUTORY OB-
LIGATIONS.—
(1) IN GENERAL.—The second sentence of section
1156(b)(1) (42 U.S.C. 1320c–5(b)(1)) is amended by
striking ‘‘may prescribe)’’ and inserting ‘‘may pre-
scribe, except that such period may not be less than
1 year)’’.
(2) 
CONFORMING
AMENDMENT.—Section
1156(b)(2) (42 U.S.C. 1320c–5(b)(2)) is amended by
striking ‘‘shall remain’’ and inserting ‘‘shall (subject
101
to the minimum period specified in the second sen-
tence of paragraph (1)) remain’’.
(b) REPEAL OF ‘‘UNWILLING OR UNABLE’’ CONDITION
FOR IMPOSITION OF SANCTION.—Section 1156(b)(1) (42
U.S.C. 1320c–5(b)(1)) is amended—
(1) in the second sentence, by striking ‘‘and de-
termines’’ and all that follows through ‘‘such obliga-
tions,’’; and
(2) by striking the third sentence.
SEC. 
215. 
INTERMEDIATE 
SANCTIONS 
FOR 
MEDICARE
HEALTH MAINTENANCE ORGANIZATIONS.
(a) APPLICATION OF INTERMEDIATE SANCTIONS FOR
ANY PROGRAM VIOLATIONS.—
(1) IN GENERAL.—Section 1876(i)(1) (42 U.S.C.
1395mm(i)(1)) is amended by striking ‘‘the Secretary
may terminate’’ and all that follows and inserting
‘‘in accordance with procedures established under
paragraph (9), the Secretary may at any time termi-
nate any such contract or may impose the intermedi-
ate sanctions described in paragraph (6)(B) or (6)(C)
(whichever is applicable) on the eligible organization
if the Secretary determines that the organization—
‘‘(A) has failed substantially to carry out the
contract;
102
‘‘(B) is carrying out the contract in a manner
substantially inconsistent with the efficient and effec-
tive administration of this section; or
‘‘(C) no longer substantially meets the applicable
conditions of subsections (b), (c), (e), and (f).’’.
(2) OTHER INTERMEDIATE SANCTIONS FOR MIS-
CELLANEOUS
PROGRAM
VIOLATIONS.—Section
1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is amended by
adding at the end the following new subparagraph:
‘‘(C) In the case of an eligible organization for which
the Secretary makes a determination under paragraph (1)
the basis of which is not described in subparagraph (A),
the Secretary may apply the following intermediate sanc-
tions:
‘‘(i) Civil money penalties of not more than
$25,000 for each determination under paragraph (1)
if the deficiency that is the basis of the determination
has directly adversely affected (or has the substantial
likelihood of adversely affecting) an individual cov-
ered under the organization’s contract.
‘‘(ii) Civil money penalties of not more than
$10,000 for each week beginning after the initiation
of procedures by the Secretary under paragraph (9)
during which the deficiency that is the basis of a de-
termination under paragraph (1) exists.
103
‘‘(iii) Suspension of enrollment of individuals
under this section after the date the Secretary notifies
the organization of a determination under paragraph
(1) and until the Secretary is satisfied that the defi-
ciency that is the basis for the determination has been
corrected and is not likely to recur.’’.
(3) PROCEDURES FOR IMPOSING SANCTIONS.—
Section 1876(i) (42 U.S.C. 1395mm(i)) is amended
by adding at the end the following new paragraph:
‘‘(9) The Secretary may terminate a contract with an
eligible organization under this section or may impose the
intermediate sanctions described in paragraph (6) on the
organization in accordance with formal investigation and
compliance procedures established by the Secretary under
which—
‘‘(A) the Secretary first provides the organiza-
tion with the reasonable opportunity to develop and
implement a corrective action plan to correct the defi-
ciencies that were the basis of the Secretary’s deter-
mination under paragraph (1) and the organization
fails to develop or implement such a plan;
‘‘(B) in deciding whether to impose sanctions,
the Secretary considers aggravating factors such as
whether an organization has a history of deficiencies
104
or has not taken action to correct deficiencies the Sec-
retary has brought to the organization’s attention;
‘‘(C) there are no unreasonable or unnecessary
delays between the finding of a deficiency and the im-
position of sanctions; and
‘‘(D) the Secretary provides the organization
with reasonable notice and opportunity for hearing
(including the right to appeal an initial decision) be-
fore imposing any sanction or terminating the con-
tract.’’.
(4) 
CONFORMING
AMENDMENTS.—Section
1876(i)(6)(B) 
(42 
U.S.C. 
1395mm(i)(6)(B)) 
is
amended by striking the second sentence.
(b) AGREEMENTS WITH PEER REVIEW ORGANIZA-
TIONS.—Section 
1876(i)(7)(A) 
(42 
U.S.C.
1395mm(i)(7)(A)) is amended by striking ‘‘an agreement’’
and inserting ‘‘a written agreement’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply with respect to contract years beginning
on or after January 1, 1996.
SEC. 216. ADDITIONAL EXCEPTION TO ANTI-KICKBACK PEN-
ALTIES FOR DISCOUNTING AND MANAGED
CARE ARRANGEMENTS.
(a) IN GENERAL.—Section 1128B(b)(3) (42 U.S.C.
1320a–7b(b)(3)) is amended—
106
SEC. 217. CRIMINAL PENALTY FOR FRAUDULENT DISPOSI-
TION OF ASSETS IN ORDER TO OBTAIN MED-
ICAID BENEFITS.
Section 1128B(a) (42 U.S.C. 1320a–7b(a)) is amend-
ed—
(1) by striking ‘‘or’’ at the end of paragraph (4);
(2) by adding ‘‘or’’ at the end of paragraph (5);
and
(3) by inserting after paragraph (5) the follow-
ing new paragraph:
‘‘(6) knowingly and willfully disposes of assets
(including by any transfer in trust) in order for an
individual to become eligible for medical assistance
under a State plan under title XIX, if disposing of
the assets results in the imposition of a period of in-
eligibility for such assistance under section 1917(c),’’.
SEC. 218. EFFECTIVE DATE.
Except as otherwise provided, the amendments made
by this subtitle shall take effect January 1, 1997.
Subtitle C—Data Collection
SEC. 221. ESTABLISHMENT OF THE HEALTH CARE FRAUD
AND ABUSE DATA COLLECTION PROGRAM.
(a) IN GENERAL.—Title XI (42 U.S.C. 1301 et seq.),
as amended by sections 201 and 205, is amended by insert-
ing after section 1128D the following new section:
107
‘‘HEALTH CARE FRAUD AND ABUSE DATA COLLECTION
PROGRAM
‘‘SEC. 1128E. (a) GENERAL PURPOSE.—Not later than
January 1, 1997, the Secretary shall establish a national
health care fraud and abuse data collection program for the
reporting of final adverse actions (not including settlements
in which no findings of liability have been made) against
health care providers, suppliers, or practitioners as required
by subsection (b), with access as set forth in subsection (c).
‘‘(b) REPORTING OF INFORMATION.—
‘‘(1) IN
GENERAL.—Each Government agency
and health plan shall report any final adverse action
(not including settlements in which no findings of li-
ability have been made) taken against a health care
provider, supplier, or practitioner.
‘‘(2) INFORMATION TO BE REPORTED.—The in-
formation to be reported under paragraph (1) in-
cludes:
‘‘(A) The name and TIN (as defined in sec-
tion 7701(a)(41) of the Internal Revenue Code of
1986) of any health care provider, supplier, or
practitioner who is the subject of a final adverse
action.
‘‘(B) The name (if known) of any health
care entity with which a health care provider,
108
supplier, or practitioner is affiliated or associ-
ated.
‘‘(C) The nature of the final adverse action
and whether such action is on appeal.
‘‘(D) A description of the acts or omissions
and injuries upon which the final adverse action
was based, and such other information as the
Secretary determines by regulation is required
for appropriate interpretation of information re-
ported under this section.
‘‘(3) CONFIDENTIALITY.—In determining what
information is required, the Secretary shall include
procedures to assure that the privacy of individuals
receiving health care services is appropriately pro-
tected.
‘‘(4) TIMING AND FORM OF REPORTING.—The in-
formation required to be reported under this sub-
section shall be reported regularly (but not less often
than monthly) and in such form and manner as the
Secretary prescribes. Such information shall first be
required to be reported on a date specified by the Sec-
retary.
‘‘(5) TO WHOM REPORTED.—The information re-
quired to be reported under this subsection shall be re-
ported to the Secretary.
109
‘‘(c) DISCLOSURE
AND CORRECTION
OF INFORMA-
TION.—
‘‘(1) DISCLOSURE.—With respect to the informa-
tion about final adverse actions (not including settle-
ments in which no findings of liability have been
made) reported to the Secretary under this section re-
specting a health care provider, supplier, or practi-
tioner, the Secretary shall, by regulation, provide
for—
‘‘(A) disclosure of the information, upon re-
quest, to the health care provider, supplier, or li-
censed practitioner, and
‘‘(B) procedures in the case of disputed ac-
curacy of the information.
‘‘(2) CORRECTIONS.—Each Government agency
and health plan shall report corrections of informa-
tion already reported about any final adverse action
taken against a health care provider, supplier, or
practitioner, in such form and manner that the Sec-
retary prescribes by regulation.
‘‘(d) ACCESS TO REPORTED INFORMATION.—
‘‘(1) AVAILABILITY.—The information in this
database shall be available to Federal and State gov-
ernment agencies and health plans pursuant to proce-
dures that the Secretary shall provide by regulation.
110
‘‘(2) FEES
FOR
DISCLOSURE.—The Secretary
may establish or approve reasonable fees for the dis-
closure of information in this database (other than
with respect to requests by Federal agencies). The
amount of such a fee shall be sufficient to recover the
full costs of operating the database. Such fees shall be
available to the Secretary or, in the Secretary’s dis-
cretion to the agency designated under this section to
cover such costs.
‘‘(e) PROTECTION FROM LIABILITY FOR REPORTING.—
No person or entity, including the agency designated by the
Secretary in subsection (b)(5) shall be held liable in any
civil action with respect to any report made as required
by this section, without knowledge of the falsity of the infor-
mation contained in the report.
‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section:
‘‘(1) FINAL ADVERSE ACTION.—
‘‘(A) IN GENERAL.—The term ‘final adverse
action’ includes:
‘‘(i) Civil judgments against a health
care provider, supplier, or practitioner in
Federal or State court related to the deliv-
ery of a health care item or service.
111
‘‘(ii) Federal or State criminal convic-
tions related to the delivery of a health care
item or service.
‘‘(iii) Actions by Federal or State
agencies responsible for the licensing and
certification of health care providers, sup-
pliers, and licensed health care practition-
ers, including—
‘‘(I) formal or official actions,
such as revocation or suspension of a
license (and the length of any such sus-
pension), reprimand, censure or proba-
tion,
‘‘(II) any other loss of license or
the right to apply for, or renew, a li-
cense of the provider, supplier, or prac-
titioner, whether by operation of law,
voluntary surrender, non-renewability,
or otherwise, or
‘‘(III) any other negative action
or finding by such Federal or State
agency that is publicly available infor-
mation.
‘‘(iv) Exclusion from participation in
Federal or State health care programs.
112
‘‘(v) Any other adjudicated actions or
decisions that the Secretary shall establish
by regulation.
‘‘(B) EXCEPTION.—The term does not in-
clude any action with respect to a malpractice
claim.
‘‘(2) PRACTITIONER.—The terms ‘licensed health
care practitioner’, ‘licensed practitioner’, and ‘practi-
tioner’ mean, with respect to a State, an individual
who is licensed or otherwise authorized by the State
to provide health care services (or any individual
who, without authority holds himself or herself out to
be so licensed or authorized).
‘‘(3) GOVERNMENT AGENCY.—The term ‘Govern-
ment agency’ shall include:
‘‘(A) The Department of Justice.
‘‘(B) The Department of Health and
Human Services.
‘‘(C) Any other Federal agency that either
administers or provides payment for the delivery
of health care services, including, but not limited
to the Department of Defense and the Veterans’
Administration.
‘‘(D) State law enforcement agencies.
‘‘(E) State medicaid fraud control units.
113
‘‘(F) Federal or State agencies responsible
for the licensing and certification of health care
providers and licensed health care practitioners.
‘‘(4) HEALTH PLAN.—The term ‘health plan’ has
the meaning given such term by section 1128C(c).
‘‘(5) DETERMINATION OF CONVICTION.—For pur-
poses of paragraph (1), the existence of a conviction
shall be determined under paragraph (4) of section
1128(i).’’.
(b) IMPROVED PREVENTION IN ISSUANCE OF MEDI-
CARE PROVIDER NUMBERS.—Section 1842(r) (42 U.S.C.
1395u(r)) is amended by adding at the end the following
new sentence: ‘‘Under such system, the Secretary may im-
pose appropriate fees on such physicians to cover the costs
of investigation and recertification activities with respect
to the issuance of the identifiers.’’.
Subtitle D—Civil Monetary
Penalties
SEC. 231. SOCIAL SECURITY ACT CIVIL MONETARY PEN-
ALTIES.
(a) GENERAL CIVIL MONETARY PENALTIES.—Section
1128A (42 U.S.C. 1320a–7a) is amended as follows:
(1) In the third sentence of subsection (a), by
striking ‘‘programs under title XVIII’’ and inserting
114
‘‘Federal health care programs (as defined in section
1128B(f)(1))’’.
(2) In subsection (f)—
(A) by redesignating paragraph (3) as
paragraph (4); and
(B) by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) With respect to amounts recovered arising
out of a claim under a Federal health care program
(as defined in section 1128B(f)), the portion of such
amounts as is determined to have been paid by the
program shall be repaid to the program, and the por-
tion of such amounts attributable to the amounts re-
covered under this section by reason of the amend-
ments made by the Health Coverage Availability and
Affordability Act of 1996 (as estimated by the Sec-
retary) shall be deposited into the Federal Hospital
Insurance 
Trust 
Fund 
pursuant 
to 
section
1817(k)(2)(C).’’.
(3) In subsection (i)—
(A) in paragraph (2), by striking ‘‘title V,
XVIII, XIX, or XX of this Act’’ and inserting ‘‘a
Federal health care program (as defined in sec-
tion 1128B(f))’’,
115
(B) in paragraph (4), by striking ‘‘a health
insurance or medical services program under
title XVIII or XIX of this Act’’ and inserting ‘‘a
Federal health care program (as so defined)’’,
and
(C) in paragraph (5), by striking ‘‘title V,
XVIII, XIX, or XX’’ and inserting ‘‘a Federal
health care program (as so defined)’’.
(4) By adding at the end the following new sub-
section:
‘‘(m)(1) For purposes of this section, with respect to
a Federal health care program not contained in this Act,
references to the Secretary in this section shall be deemed
to be references to the Secretary or Administrator of the de-
partment or agency with jurisdiction over such program
and references to the Inspector General of the Department
of Health and Human Services in this section shall be
deemed to be references to the Inspector General of the appli-
cable department or agency.
‘‘(2)(A) The Secretary and Administrator of the de-
partments and agencies referred to in paragraph (1) may
include in any action pursuant to this section, claims with-
in the jurisdiction of other Federal departments or agencies
as long as the following conditions are satisfied:
116
‘‘(i) The case involves primarily claims submit-
ted to the Federal health care programs of the depart-
ment or agency initiating the action.
‘‘(ii) The Secretary or Administrator of the de-
partment or agency initiating the action gives notice
and an opportunity to participate in the investiga-
tion to the Inspector General of the department or
agency with primary jurisdiction over the Federal
health care programs to which the claims were sub-
mitted.
‘‘(B) If the conditions specified in subparagraph (A)
are fulfilled, the Inspector General of the department or
agency initiating the action is authorized to exercise all
powers granted under the Inspector General Act of 1978
with respect to the claims submitted to the other depart-
ments or agencies to the same manner and extent as pro-
vided in that Act with respect to claims submitted to such
departments or agencies.’’.
(b) EXCLUDED INDIVIDUAL RETAINING OWNERSHIP
OR CONTROL INTEREST IN PARTICIPATING ENTITY.—Sec-
tion 1128A(a) (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;
117
(3) by striking the semicolon at the end of para-
graph (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—
‘‘(A) retains a direct or indirect ownership
or control interest in an entity that is partici-
pating in a program under title XVIII or a
State health care program, and who knows or
should know of the action constituting the basis
for the exclusion; or
‘‘(B) is an officer or managing employee (as
defined in section 1126(b)) of such an entity;’’.
(c) MODIFICATIONS OF AMOUNTS OF PENALTIES AND
ASSESSMENTS.—Section 1128A(a) (42 U.S.C. 1320a–
7a(a)), as amended by subsection (b), is amended in the
matter following paragraph (4)—
(1) 
by 
striking 
‘‘$2,000’’ 
and 
inserting
‘‘$10,000’’;
118
(2) by inserting ‘‘; in cases under paragraph (4),
$10,000 for each day the prohibited relationship oc-
curs’’ after ‘‘false or misleading information was
given’’; and
(3) by striking ‘‘twice the amount’’ and inserting
‘‘3 times the amount’’.
(d) CLAIM FOR ITEM OR SERVICE BASED ON INCOR-
RECT CODING OR MEDICALLY UNNECESSARY SERVICES.—
Section 1128A(a)(1) (42 U.S.C. 1320a–7a(a)(1)) is amend-
ed—
(1) in subparagraph (A) by striking ‘‘claimed,’’
and inserting ‘‘claimed, including any person who
engages in a pattern or practice of presenting or
causing to be presented a claim for an item or service
that is based on a code that the person knows or
should know will result in a greater payment to the
person than the code the person knows or should know
is applicable to the item or service actually pro-
vided,’’;
(2) in subparagraph (C), by striking ‘‘or’’ at the
end; and
(3) by inserting after subparagraph (D) the fol-
lowing new subparagraph:
119
‘‘(E) is for a medical or other item or serv-
ice that a person knows or should know is not
medically necessary; or’’.
(e) SANCTIONS AGAINST PRACTITIONERS AND PER-
SONS FOR FAILURE TO COMPLY WITH STATUTORY OBLIGA-
TIONS.—Section 1156(b)(3) (42 U.S.C. 1320c–5(b)(3)) is
amended by striking ‘‘the actual or estimated cost’’ and in-
serting ‘‘up to $10,000 for each instance’’.
(f) PROCEDURAL PROVISIONS.—Section 1876(i)(6) (42
U.S.C. 1395mm(i)(6)), as amended by section 215(a)(2), is
amended by adding at the end the following new subpara-
graph:
‘‘(D) The provisions of section 1128A (other than sub-
sections (a) and (b)) shall apply to a civil money penalty
under subparagraph (B)(i) or (C)(i) in the same manner
as such provisions apply to a civil money penalty or pro-
ceeding under section 1128A(a).’’.
(g) PROHIBITION AGAINST OFFERING INDUCEMENTS
TO
INDIVIDUALS
ENROLLED
UNDER
PROGRAMS
OR
PLANS.—
(1) 
OFFER
OF
REMUNERATION.—Section
1128A(a) (42 U.S.C. 1320a–7a(a)), as amended, is
amended—
(A) by striking ‘‘or’’ at the end of para-
graph (3);
120
(B) by striking the semicolon at the end of
paragraph (4) and inserting ‘‘; or’’; and
(D) by inserting after paragraph (4) the fol-
lowing new paragraph:
‘‘(5) 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 de-
fined 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 (as so de-
fined);’’.
(2) REMUNERATION DEFINED.—Section 1128A(i)
(42 U.S.C. 1320a–7a(i)) is amended by adding at the
end 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 ‘re-
muneration’ does not include—
‘‘(A) the waiver of coinsurance and deduct-
ible amounts by a person, if—
121
‘‘(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 design
as long as the differentials have been disclosed in
writing to all beneficiaries, third party payers,
and providers, to whom claims are presented and
as long as the differentials meet the standards as
defined in regulations promulgated by the Sec-
retary not later than 180 days after the date of
122
the enactment of the Health Coverage Availabil-
ity and Affordability Act of 1996; or
‘‘(C) incentives given to individuals to pro-
mote the delivery of preventive care as deter-
mined by the Secretary in regulations so pro-
mulgated.’’.
(h) EFFECTIVE DATE.—The amendments made by this
section shall take effect January 1, 1997.
SEC. 232. CLARIFICATION OF LEVEL OF INTENT REQUIRED
FOR IMPOSITION OF SANCTIONS.
(a) CLARIFICATION OF LEVEL OF KNOWLEDGE RE-
QUIRED
FOR
IMPOSITION
OF
CIVIL
MONETARY
PEN-
ALTIES.—
(1) IN GENERAL.—Section 1128A(a) (42 U.S.C.
1320a–7a(a)) is amended—
(A) in paragraphs (1) and (2), by inserting
‘‘knowingly’’ before ‘‘presents’’ each place it ap-
pears; and
(B) in paragraph (3), by striking ‘‘gives’’
and inserting ‘‘knowingly gives or causes to be
given’’.
(2) 
DEFINITION
OF
STANDARD.—Section
1128A(i) (42 U.S.C. 1320a–7a(i)), as amended by
section 231(g)(2), is amended by adding at the end
the following new paragraph:
123
‘‘(7) The term ‘should know’ means that a per-
son, with respect to information—
‘‘(A) acts in deliberate ignorance of the
truth or falsity of the information; or
‘‘(B) acts in reckless disregard of the truth
or falsity of the information,
and no proof of specific intent to defraud is re-
quired.’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to acts or omissions occurring on or
after January 1, 1997.
SEC. 233. PENALTY FOR FALSE CERTIFICATION FOR HOME
HEALTH SERVICES.
(a) IN
GENERAL.—Section 1128A(b) (42 U.S.C.
1320a–7a(b)) is amended by adding at the end the following
new paragraph:
‘‘(3)(A) Any physician who executes a document de-
scribed in subparagraph (B) with respect to an individual
knowing that all of the requirements referred to in such sub-
paragraph are not met with respect to the individual shall
be subject to a civil monetary penalty of not more than the
greater of—
‘‘(i) $5,000, or
124
‘‘(ii) three times the amount of the payments
under title XVIII for home health services which are
made pursuant to such certification.
‘‘(B) A document described in this subparagraph is
any document that certifies, for purposes of title XVIII, that
an 
individual 
meets 
the 
requirements 
of 
section
1814(a)(2)(C) or 1835(a)(2)(A) in the case of home health
services furnished to the individual.’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to certifications made on or after
the date of the enactment of this Act.
Subtitle E—Revisions to Criminal
Law
SEC. 241. DEFINITION OF FEDERAL HEALTH CARE OF-
FENSE.
(a) IN GENERAL.—Chapter 1 of title 18, United States
Code, is amended by adding at the end the following:
‘‘§ 24. Definition of Federal health care offense
‘‘(a) As used in this title, the term ‘Federal health care
offense’ means a violation of, or a criminal conspiracy to
violate—
‘‘(1) section 669, 1035, or 1347 of this title; or
‘‘(2) section 287, 371, 664, 666, 1001, 1027,
1341, 1343, or 1954 of this title, if the violation or
conspiracy relates to a health care benefit program.
125
‘‘(b) As used in this title, the term ‘health care benefit
program’ has the meaning given such term in section
1347(b) of this title.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 2 of title 18, United States Code,
is amended by inserting after the item relating to section
23 the following new item:
‘‘24. Definition of Federal health care offense.’’.
SEC. 242. HEALTH CARE FRAUD.
(a) OFFENSE.—
(1) IN GENERAL.—Chapter 63 of title 18, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 1347. Health care fraud
‘‘(a) Whoever knowingly executes, or attempts to exe-
cute, a scheme or artifice—
‘‘(1) to defraud any health care benefit program;
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 benefit program,
in connection with the delivery of or payment for health
care benefits, items, or services, shall be fined under this
title or imprisoned not more than 10 years, or both. If the
violation results in serious bodily injury (as defined in sec-
126
tion 1365 of this title), such person shall be fined under
this title or imprisoned not more than 20 years, or both;
and if the violation results in death, such person shall be
fined under this title, or imprisoned for any term of years
or for life, or both.
‘‘(b) As used in this section, the term ‘health care bene-
fit program’ means any public or private plan or contract,
affecting commerce, under which any medical benefit, item,
or service is provided to any individual, and includes any
individual or entity who is providing a medical benefit,
item, or service for which payment may be made under the
plan or contract.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 63 of title 18, Unit-
ed States Code, is amended by adding at the end the
following:
‘‘1347. Health care fraud.’’.
(b) CRIMINAL FINES DEPOSITED IN FEDERAL HOS-
PITAL INSURANCE TRUST FUND.—The Secretary of the
Treasury shall deposit into the Federal Hospital Insurance
Trust Fund pursuant to section 1817(k)(2)(C) of the Social
Security Act (42 U.S.C. 1395i) an amount equal to the
criminal fines imposed under section 1347 of title 18, Unit-
ed States Code (relating to health care fraud).
127
SEC. 243. THEFT OR EMBEZZLEMENT.
(a) IN GENERAL.—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
‘‘(a) Whoever embezzles, steals, or otherwise without
authority willfully and unlawfully converts to the use of
any person other than the rightful owner, or intentionally
misapplies any of the moneys, funds, securities, premiums,
credits, property, or other assets of a health care benefit pro-
gram, shall be fined under this title or imprisoned not more
than 10 years, or both; but if the value of such property
does not exceed the sum of $100 the defendant shall be fined
under this title or imprisoned not more than one year, or
both.
‘‘(b) As used in this section, the term ‘health care bene-
fit program’ has the meaning given such term in section
1347(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. 244. FALSE STATEMENTS.
(a) IN GENERAL.—Chapter 47 of title 18, United
States Code, is amended by adding at the end the following:
128
‘‘§ 1035. False statements relating to health care mat-
ters
‘‘(a) Whoever, in any matter involving a health care
benefit program, knowingly—
‘‘(1) falsifies, conceals, or covers up by any trick,
scheme, or device a material fact; or
‘‘(2) makes any false, fictitious, or fraudulent
statements or representations, or makes or uses any
false writing or document knowing the same to con-
tain any false, fictitious, or fraudulent statement or
entry,
in connection with the delivery of or payment for health
care benefits, items, or services, shall be fined under this
title or imprisoned not more than 5 years, or both.
‘‘(b) As used in this section, the term ‘health care bene-
fit program’ has the meaning given such term in section
1347(b) of this title.’’.
(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 new item:
‘‘1035. False statements relating to health care matters.’’.
SEC. 245. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF
HEALTH CARE OFFENSES.
(a) IN GENERAL.—Chapter 73 of title 18, United
States Code, is amended by adding at the end the following:
129
‘‘§ 1518. Obstruction of criminal investigations of
health care offenses
‘‘(a) Whoever willfully prevents, obstructs, misleads,
delays or attempts to prevent, obstruct, mislead, or delay
the communication of information or records relating to a
violation of a Federal health care offense to a criminal in-
vestigator shall be fined under this title or imprisoned not
more than 5 years, or both.
‘‘(b) As used in this section the term ‘criminal inves-
tigator’ means any individual duly authorized by a depart-
ment, agency, or armed force of the United States to con-
duct or engage in investigations for prosecutions for viola-
tions of health care offenses.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 73 of title 18, United States Code,
is amended by adding at the end the following new item:
‘‘1518. Obstruction of criminal investigations of health care offenses.’’.
SEC. 246. LAUNDERING OF MONETARY INSTRUMENTS.
Section 1956(c)(7) of title 18, United States Code, is
amended by adding at the end the following:
‘‘(F) Any act or activity constituting an of-
fense involving a Federal health care offense.’’.
SEC. 247. INJUNCTIVE RELIEF RELATING TO HEALTH CARE
OFFENSES.
(a) IN GENERAL.—Section 1345(a)(1) of title 18,
United States Code, is amended—
155
‘‘(1) OFFENSES
OTHERWISE
PUNISHABLE.—A
penalty may not be imposed under subsection (a)
with respect to an act if the act constitutes an offense
punishable under section 1177.
‘‘(2) NONCOMPLIANCE NOT DISCOVERED.—A pen-
alty may not be imposed under subsection (a) with
respect to a provision of this part if it is established
to the satisfaction of the Secretary that the person lia-
ble for the penalty did not know, and by exercising
reasonable diligence would not have known, that such
person violated the provision.
‘‘(3) FAILURES DUE TO REASONABLE CAUSE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a penalty may not be im-
posed under subsection (a) if—
‘‘(i) the failure to comply was due to
reasonable cause and not to willful neglect;
and
‘‘(ii) the failure to comply is corrected
during the 30-day period beginning on the
first date the person liable for the penalty
knew, or by exercising reasonable diligence
would have known, that the failure to com-
ply occurred.
‘‘(B) EXTENSION OF PERIOD.—