I
104TH CONGRESS
1ST SESSION
H. R. 2389
To combat fraud and abuse in the medicare program, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 21, 1995
Mr. THOMAS (for himself, Mr. BILIRAKIS, and Mr. BARTON of Texas) intro-
duced the following bill; which was referred to the Committee on Ways
and Means, and in addition to the Committees on Commerce and the Ju-
diciary, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To combat fraud and abuse in the medicare program, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES IN ACT; TABLE OF
CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Safeguarding Medicare Integrity Act of 1995’’.
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
Act an amendment is expressed in terms of an amendment
to or repeal of a section or other provision, the reference
shall be considered to be made to that section or other
provision of the Social Security Act.
(c) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; references in act; table of contents.
TITLE I—PREVENTING FRAUD AND ABUSE
Sec. 101. Increasing awareness of fraud and abuse.
Sec. 102. Beneficiary incentive programs.
Sec. 103. Intermediate sanctions for medicare health maintenance organiza-
tions.
Sec. 104. Voluntary disclosure program.
Sec. 105. Revisions to current sanctions.
Sec. 106. Consolidated funding for anti-fraud and abuse activities under Medi-
care Integrity Program.
Sec. 107. Permitting carriers to carry out prior authorization for certain items
of durable medical equipment.
Sec. 108. Establishment of Health Care Anti-Fraud Task Force.
Sec. 109. Study of adequacy of private quality assurance programs.
TITLE II—REGULATORY RELIEF
Sec. 201. Clarification of level of intent required for imposition of sanctions.
Sec. 202. Clarification of and additions to exceptions to anti-kickback penalties.
Sec. 203. Solicitation and publication of modifications to existing safe harbors
and new safe harbors.
Sec. 204. Issuance of advisory opinions under title XI.
TITLE I—PREVENTING FRAUD
AND ABUSE
SEC. 101. INCREASING AWARENESS OF FRAUD AND ABUSE.
(a) BENEFICIARY OUTREACH EFFORTS.—The Sec-
retary of Health and Human Services (acting through the
Administrator of the Health Care Financing Administra-
tion and the Inspector General of the Department of
Health and Human Services) shall make ongoing efforts
(through public service announcements, publications, and
other appropriate methods) to alert individuals entitled to
benefits under the medicare program of the existence of
fraud and abuse committed against the program and the
costs to the program of such fraud and abuse, and of the
existence of the toll-free telephone line operated by the
Secretary to receive information on fraud and abuse com-
mitted against the program.
(b) CLARIFICATION OF REQUIREMENT TO PROVIDE
EXPLANATION OF MEDICARE BENEFITS.—The Secretary
shall provide an explanation of benefits under the medi-
care program with respect to each item or service for
which payment may be made under the program which
is furnished to an individual, without regard to whether
or not a deductible or coinsurance may be imposed against
the individual with respect to the item or service.
(c) PROVIDER OUTREACH EFFORTS; PUBLICATION
OF FRAUD ALERTS.—
(1) SPECIAL FRAUD ALERTS.—
(A) IN GENERAL.—
(i) REQUEST
FOR
SPECIAL
FRAUD
ALERTS.—Any person may present, at any
time, a request to the Secretary to issue
and publish a special fraud alert.
(ii) 
SPECIAL
FRAUD
ALERT
DE-
FINED.—In this section, a ‘‘special fraud
alert’’ is a notice which informs the public
of practices which the Secretary considers
to be suspect or of particular concern
under the medicare program or a State
health care program (as defined in section
1128(h) of the Social Security Act).
(B) ISSUANCE AND PUBLICATION OF SPE-
CIAL FRAUD ALERTS.—
(i) INVESTIGATION.—Upon receipt of
a request for a special fraud alert under
subparagraph (A), the Secretary shall in-
vestigate the subject matter of the request
to determine whether a special fraud alert
should be issued. If appropriate, the Sec-
retary (in consultation with the Attorney
General) shall issue a special fraud alert in
response to the request. All special fraud
alerts issued pursuant to this subpara-
graph shall be published in the Federal
Register.
(ii) CRITERIA FOR ISSUANCE.—In de-
termining whether to issue a special fraud
alert upon a request under subparagraph
(A), the Secretary may consider—
(I) whether and to what extent
the practices that would be identified
in the special fraud alert may result
in any of the consequences described
in section 203(b); and
(II) the extent and frequency of
the conduct that would be identified
in the special fraud alert.
(2) PUBLICATION OF ALL HCFA FRAUD ALERTS
IN FEDERAL REGISTER.—Each notice issued by the
Health Care Financing Administration which in-
forms the public of practices which the Secretary
considers to be suspect or of particular concern
under the medicare program or a State health care
program (as defined in section 1128(h) of the Social
Security Act) shall be published in the Federal Reg-
ister, without regard to whether or not the notice is
issued by a regional office of the Health Care Fi-
nancing Administration.
SEC. 102. BENEFICIARY INCENTIVE PROGRAMS.
(a) 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 individ-
uals to report to the Secretary information on indi-
viduals and entities who are engaging or who have
engaged in acts or omissions which constitute
grounds for the imposition of a sanction under sec-
tion 1128, section 1128A, or section 1128B of the
Social Security Act, or who have otherwise engaged
in fraud and abuse against the medicare program.
(2) PAYMENT OF PORTION OF AMOUNTS COL-
LECTED.—If an individual reports information to
the Secretary under the program established under
paragraph (1) which serves as the basis for the col-
lection 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 Security 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 individuals providing information on
violations of such Code).
(b) PROGRAM TO COLLECT INFORMATION ON PRO-
GRAM 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 individ-
uals to submit to the Secretary suggestions on meth-
ods to improve the efficiency of the medicare pro-
gram.
(2) PAYMENT OF PORTION OF PROGRAM SAV-
INGS.—If an individual submits a suggestion to the
Secretary under the program established under
paragraph (1) which is adopted by the Secretary and
which results in savings to the program, the Sec-
retary may make a payment to the individual of
such amount as the Secretary considers appropriate.
SEC. 103. 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 the following: ‘‘in accordance with proce-
dures established under paragraph (9), the Secretary
may at any time terminate any such contract or may
impose the intermediate sanctions described in para-
graph (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;
‘‘(B) is carrying out the contract in a manner
inconsistent with the efficient and effective adminis-
tration of this section;
‘‘(C) is operating in a manner that is not in the
best interests of the individuals covered under the
contract; or
‘‘(D) no longer substantially meets the applica-
ble conditions of subsections (b), (c), (e), and (f).’’.
(2) OTHER
INTERMEDIATE
SANCTIONS
FOR
MISCELLANEOUS
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 determina-
tion has directly adversely affected (or has the sub-
stantial likelihood of adversely affecting) an individ-
ual covered 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.
‘‘(iii) Suspension of enrollment of individuals
under this section after the date the Secretary noti-
fies the organization of a determination under para-
graph (1) and until the Secretary is satisfied that
the deficiency 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 provides the organization
with the opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the Secretary’s determination
under paragraph (1);
‘‘(B) the Secretary shall impose more severe
sanctions on organizations that have a history of de-
ficiencies or that have not taken steps to correct de-
ficiencies the Secretary has brought to their atten-
tion;
‘‘(C) there are no unreasonable or unnecessary
delays between the finding of a deficiency and the
imposition 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.—(A) Section
1876(i)(6)(B) (42 U.S.C. 1395mm(i)(6)(B)) is
amended by striking the second sentence.
(B) 
Section 
1876(i)(6) 
(42 
U.S.C.
1395mm(i)(6)) is further amended by adding at the
end the following new subparagraph:
‘‘(D) The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil money pen-
alty under subparagraph (A) or (B) in the same manner
as they apply to a civil money penalty or proceeding under
section 1128A(a).’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to contract years be-
ginning on or after January 1, 1996.
SEC. 104. VOLUNTARY DISCLOSURE PROGRAM.
Title XI (42 U.S.C. 1301 et seq.) is amended by in-
serting after section 1128B the following new section:
‘‘VOLUNTARY DISCLOSURE OF ACTS OR OMISSIONS
‘‘SEC. 1129. (a) ESTABLISHMENT OF VOLUNTARY
DISCLOSURE PROGRAM.—Not later than 3 months after
the date of the enactment of the Omnibus Budget Rec-
onciliation Act of 1995, the Secretary shall establish a
program to encourage individuals and entities to volun-
tarily disclose to the Secretary information on acts or
omissions of the individual or entity which constitute
grounds for the imposition of a sanction described in sec-
tion 1128, 1128A, or 1128B.
‘‘(b) EFFECT OF VOLUNTARY DISCLOSURE.—If an
individual or entity voluntarily discloses information with
respect to an act or omission to the Secretary under sub-
section (a), the following rules shall apply:
‘‘(1) The Secretary may waive, reduce, or other-
wise mitigate any sanction which would otherwise be
applicable to the individual or entity under section
1128, 1128A, or 1128B as a result of the act or
omission involved.
‘‘(2) No qui tam action may be brought pursu-
ant to chapter 37 of title 31, United States Code,
against the individual or entity with respect to the
act or omission involved.’’.
SEC. 105. REVISIONS TO CURRENT SANCTIONS.
(a) INCREASE IN AMOUNT OF CRIMINAL FINES.—
Section 1128B (42 U.S.C. 1320a–7b) is amended by strik-
ing ‘‘$25,000’’ each place it appears in subsections (a),
(b)(1), (b)(2), (c), and (d) and inserting ‘‘$250,000’’.
(b) ESTABLISHMENT OF MINIMUM PERIOD OF EX-
CLUSION FOR CERTAIN INDIVIDUALS AND ENTITIES SUB-
JECT TO PERMISSIVE EXCLUSION.—Section 1128(c)(3)
(42 U.S.C. 1320a–7(c)(3)) is amended by adding at the
end the following new subparagraphs:
‘‘(D) In the case of an exclusion of an individual or
entity under paragraph (1), (2), or (3) of subsection (b),
the period of the exclusion shall be 3 years, unless the
Secretary determines in accordance with published regula-
tions that a shorter period is appropriate because of miti-
gating circumstances or that a longer period is appro-
priate because of aggravating circumstances.
‘‘(E) In the case of an exclusion of an individual or
entity under subsection (b)(4) or (b)(5), the period of the
exclusion shall not be less than the period during which
the individual’s or entity’s license to provide health care
is revoked, suspended, or surrendered, or the individual
or the entity is excluded or suspended from a Federal or
State health care program.
‘‘(F) In the case of an exclusion of an individual or
entity under subsection (b)(6)(B), the period of the exclu-
sion shall be not less than 1 year.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to acts or omissions
occurring on or after January 1, 1996.
SEC. 106. CONSOLIDATED FUNDING FOR ANTI-FRAUD AND
ABUSE ACTIVITIES UNDER MEDICARE INTEG-
RITY 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. 1894. (a) ESTABLISHMENT OF PROGRAM.—
There is hereby established the Medicare Integrity Pro-
gram (hereafter in this section referred to as the ‘Pro-
gram’) under which the Secretary shall promote the integ-
rity of the medicare program by entering into contracts
in accordance with this section with eligible private entities
to carry out the activities described in subsection (b).
‘‘(b) ACTIVITIES DESCRIBED.—The activities de-
scribed 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 utiliza-
tion review and fraud review (employing similar
standards, processes, and technologies used by pri-
vate health plans, including equipment and software
technologies which surpass the capability of the
equipment and technologies used in the review of
claims under this title as of the date of the enact-
ment of the Omnibus Budget Reconciliation Act of
1995).
‘‘(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.
‘‘(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
Attorney General of the United States, and other
law enforcement agencies, as appropriate, in the in-
vestigation and deterrence of fraud and abuse in re-
lation to this title and in other cases arising out of
such activities;
‘‘(3) the entity’s financial holdings, interests, or
relationships will not interfere with its ability to per-
form the functions to be required by the contract in
an effective and impartial manner; and
‘‘(4) the entity meets such other requirements
as the Secretary may impose.
‘‘(d) PROCESS FOR ENTERING INTO CONTRACTS.—
The Secretary shall enter into contracts under the Pro-
gram in accordance with such procedures as the Secretary
may by regulation establish, except that such procedures
shall include 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, except that contracts must be in effect to
carry out the activities described in subsection (b)
with respect to services, providers, and investigations
and other activities for all fiscal years beginning on
or after October 1, 1998.
‘‘(2) The provisions of section 1153(e)(1) shall
apply to contracts and contracting authority under
this section, except that competitive procedures must
be used when entering into new contracts under this
section, or at any other time considered appropriate
by the Secretary.
‘‘(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 ex-
ceeded the performance requirements established in
the current 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 proce-
dural provisions as are contained in section 1157.
‘‘(f) TRANSFER OF AMOUNTS TO MEDICARE ANTI-
FRAUD AND ABUSE TRUST FUND.—For each fiscal year,
the Secretary shall transfer from the Federal Hospital In-
surance Trust Fund and the Federal Supplementary Med-
ical Insurance Trust Fund to the Medicare Anti-Fraud
and Abuse Trust Fund under subsection (g) an amount
equal to the total amount of expenditures which would
have been made by the Secretary under this title (whether
through contracts with fiscal intermediaries under section
1816, contracts with carriers under section 1842, or other-
wise) during the year to carry out the activities described
in subsection (b) if the Program had not been in effect
(as estimated by the Secretary prior to the beginning of
the year). Such transfer shall be in an allocation as rea-
sonably reflects the proportion of such expenditures asso-
ciated with part A and part B.
‘‘(g) MEDICARE ANTI-FRAUD
AND ABUSE TRUST
FUND.—
‘‘(1) ESTABLISHMENT.—
‘‘(A) IN GENERAL.—There is hereby estab-
lished in the Treasury of the United States the
Anti-Fraud and Abuse Trust Fund (hereafter
in this subsection referred to as the ‘Trust
Fund’). The Trust Fund shall consist of such
gifts and bequests as may be made as provided
in subparagraph (B) and such amounts as may
be deposited in the Trust Fund as provided in
subsection (f), paragraph (3), and title XI.
‘‘(B) AUTHORIZATION
TO
ACCEPT
GIFTS
AND BEQUESTS.—The Trust Fund is author-
ized to accept on behalf of the United States
money gifts and bequests made unconditionally
to the Trust Fund, for the benefit of the Trust
Fund or any activity financed through the
Trust Fund.
‘‘(2) INVESTMENT.—
‘‘(A) IN GENERAL.—The Secretary of the
Treasury shall invest such amounts of the Fund
as such Secretary determines are not required
to meet current withdrawals from the Fund.
Such investments may be made only in interest-
bearing obligations of the United States. For
such purpose, such obligations may be acquired
on original issue at the issue price, or by pur-
chase of outstanding obligations at the market
price.
‘‘(B) SALE OF OBLIGATIONS.—Any obliga-
tion acquired by the Fund may be sold by the
Secretary of the Treasury at the market price.
‘‘(C) AVAILABILITY OF INCOME.—Any in-
terest derived from obligations acquired by the
Fund, and proceeds from any sale or redemp-
tion of such obligations, are hereby appro-
priated to the Fund.
‘‘(3) 
AMOUNTS
DEPOSITED
INTO
TRUST
FUND.—There shall be deposited in the Trust
Fund—
‘‘(A) that portion of amounts recovered in
relation to section 1128A arising out of a claim
under title XVIII as remains after application
of subsection (f)(2) (relating to repayment of
the Federal Hospital Insurance Trust Fund or
the Federal Supplementary Medical Insurance
Trust Fund) of that section, as may be applica-
ble,
‘‘(B) fines imposed under section 1128B
arising out of a claim under this title, and
‘‘(C) penalties and damages imposed (other
than funds awarded to a relator or for restitu-
tion) under sections 3729 through 3732 of title
31, United States Code (pertaining to false
claims) in cases involving claims relating to pro-
grams under title XVIII or XIX.
‘‘(4) DIRECT
APPROPRIATION
OF
FUNDS
TO
CARRY
OUT
PROGRAM.—There are appropriated
from the Trust Fund for each fiscal year such
amounts as are necessary to carry out the Medicare
Integrity Program under this section.
‘‘(5) ANNUAL
REPORT.—The Secretary shall
submit an annual report to Congress on the amount
of revenue which is generated and disbursed by the
Trust Fund in each fiscal year.’’.
(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 ac-
tivity is carried out pursuant to a contract under the Med-
icare Integrity Program under section 1894.’’.
(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
Program under section 1894.’’.
(c) 
CONFORMING
AMENDMENT.—Section
1128A(f)(3) (42 U.S.C. 1320a–7a(f)(3)) is amended by
striking ‘‘as miscellaneous receipts of the Treasury of the
United States’’ and inserting ‘‘in the Anti-Fraud and
Abuse Trust Fund established under section 1145’’.
SEC. 107. PERMITTING CARRIERS TO CARRY OUT PRIOR
AUTHORIZATION FOR CERTAIN ITEMS OF DU-
RABLE MEDICAL EQUIPMENT.
(a) IN GENERAL.—Section 1834(a)(15) (42 U.S.C.
1395m(a)(15)), as amended by section 135(b) of the So-
cial Security Act Amendments of 1994, is amended by
adding at the end the following new subparagraphs:
‘‘(D) APPLICATION BY CARRIERS.—A car-
rier may develop (and periodically update) a list
of items under subparagraph (A) and a list of
suppliers under subparagraph (B) in the same
manner as the Secretary may develop (and peri-
odically update) such lists.
‘‘(E) WAIVER OF PUBLICATION REQUIRE-
MENT.—A carrier may make an advance deter-
mination under subparagraph (C) with respect
to an item or supplier on a list developed by the
Secretary or the carrier without regard to
whether or not the Secretary has promulgated
a regulation with respect to the list, except that
the carrier may not make such an advance de-
termination with respect to an item or supplier
on a list until the expiration of the 30-day pe-
riod beginning on the date the Secretary or the
carrier places the item or supplier on the list.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in the enact-
ment of the Social Security Act Amendments of 1994.
SEC. 108. ESTABLISHMENT OF HEALTH CARE ANTI-FRAUD
TASK FORCE.
(a) IN GENERAL.—Not later than 120 days after the
date of the enactment of this Act, the Attorney General
shall establish (in consultation with the Advisory Group
described in subsection (c)) within the Department of Jus-
tice a task force (similar to the Organized Crime Drug
Enforcement Task Force) to be known as the ‘‘Health
Care Anti-Fraud Task Force’’ (hereafter in this section
referred to as the ‘‘Task Force’’) to prosecute health care
fraud offenses. Nothing in this section may be construed
as affecting the powers of the Attorney General or any
other individual.
(b) OPERATIONS OF TASK FORCE.—The Attorney
General shall establish and operate the Task Force in a
manner such that—
(1) at least one fully staffed operational seg-
ment of the Task Force (including at least one Fed-
eral representative engaged in Task Force activities
on a full-time basis) shall operate in each judicial
district of the United States; and
(2) the Task Force maintains separate account-
ing of its finances, personnel, case load, and resolu-
tion of claims and actions.
(c) ADVISORY GROUP DESCRIBED.—The Advisory
Group described in this subsection is a group consisting
of the following individuals (or their designees):
(1) The Secretary of Health and Human Serv-
ices.
(2) The Secretary of the Treasury.
(3) The Secretary of Veterans’ Affairs.
(4) The Chair of the Board of Governors of the
United States Postal Service.
SEC. 109. STUDY OF ADEQUACY OF PRIVATE QUALITY AS-
SURANCE PROGRAMS.
(a) IN GENERAL.—The Administrator of the Health
Care Financing Administration (acting through the Direc-
tor of the Office of Research and Development) shall enter
into an agreement with a private entity to conduct a study
during the 5-year period beginning on the date of the en-
actment of this Act of the adequacy of the quality assur-
ance programs and consumer protections used by eligible
organizations with risk-sharing contracts under section
1876 of the Social Security Act, and shall include in the
study an analysis of the effectiveness of such organizations
in protecting enrollees against the risk of insufficient pro-
vision of benefits which may result from utilization con-
trols.
(b) REPORT.—Not later than 6 months after the con-
clusion of the 5-year period described in subsection (a),
the Administrator shall submit a report to Congress on
the study conducted under such subsection.
TITLE II—REGULATORY RELIEF
SEC. 201. 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)) is amended by
adding at the end the following new paragraph:
‘‘(6) 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) CLARIFICATION OF EFFECT AND APPLICATION
OF SAFE HARBOR EXCEPTIONS.—For purposes of section
1128B(b)(3) of the Social Security Act, the specification
of any payment practice in regulations promulgated pur-
suant to section 14(a) of the Medicare and Medicaid Pro-
gram Patient Protection Act of 1987 is—
(1) solely for the purpose of adding additional
exceptions to the types of conduct which are not
subject to an anti-kickback penalty under such sec-
tion and not for the purpose of limiting the scope of
such exceptions; and
(2) for the purpose of prescribing criteria for
qualifying for such an exception notwithstanding the
intent of the party involved.
(c) LIMITING IMPOSITION OF ANTI-KICKBACK PEN-
ALTIES TO ACTIONS WITH SIGNIFICANT PURPOSE TO IN-
DUCE REFERRALS.—Section 1128B(b)(2) (42 U.S.C.
1320a–7b(b)(2)) is amended in the matter preceding sub-
paragraph (A) by striking ‘‘to induce’’ and inserting ‘‘for
the significant purpose of inducing’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to acts or omissions occurring on
or after January 1, 1996.
SEC. 202. CLARIFICATION OF AND ADDITIONS TO EXCEP-
TIONS TO ANTI-KICKBACK PENALTIES.
(a) DISCOUNTS, RISK-SHARING AND OTHER MAN-
AGED CARE ARRANGEMENTS, AND DE MINIMIS REMU-
NERATION.—Section 1128B(b)(3) (42 U.S.C. 1320a–
7b(b)(3)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (D);
(2) by striking the period at the end of sub-
paragraph (E) and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(F) any reduction in cost sharing or increased
benefits given to an individual, any amounts paid to
a provider for an item or service furnished to an in-
dividual, any discount or reduction in price given by
the provider for such an item or service, or any
other remuneration if—
‘‘(i) the item or service is provided—
‘‘(I) the item or service is provided
through an organization described in sec-
tion 1877(b)(3), or is provided through
such an organization on behalf of another
entity (including but not limited to a self-
insured employer or indemnity plan) that
assumes financial risk for the provision of
the item or service, or
‘‘(II) the item or service is provided
through any capitation, risk-sharing, or
disease management program (or any pro-
gram found by the Secretary to be similar
to such a program) and the Secretary and
the directors of State health care programs
are provided with information on the na-
ture and scope of the reduction, amount
paid, or discount involved;
‘‘(ii) the reduction, amount paid, or dis-
count or reduction in price is with respect to
another item or service related to or furnished
in conjunction with such item or service; or
‘‘(iii) the remuneration is in the form of an
item which is de minimis (as established by the
Secretary taking into account professional or
ethical guidelines applicable to the provider or
organization involved) or is a sample of a drug
or drug product (in compliance with section
503(d) of the Federal Food, Drug, and Cos-
metic Act).’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to acts or omissions occurring on
or after January 1, 1996.
SEC. 203. SOLICITATION AND PUBLICATION OF MODIFICA-
TIONS TO EXISTING SAFE HARBORS AND NEW
SAFE HARBORS.
(a) IN GENERAL.—
(1) SOLICITATIONS.—Not later than January 1,
1996, and not less than annually thereafter, the Sec-
retary of Health and Human Services shall publish
a notice in the Federal Register soliciting proposals,
which will be accepted during a 60-day period, for—
(A) modifications to existing safe harbors
issued pursuant to section 14(a) of the Medi-
care and Medicaid Patient and Program Protec-
tion Act of 1987;
(B) additional safe harbors specifying pay-
ment practices that shall not be treated as a
criminal offense under section 1128B(b) of the
Social Security Act and shall not serve as the
basis for an exclusion under section 1128(b)(7)
of such Act; and
(C) special fraud alerts to be issued pursu-
ant to section 101(c).
(2) PUBLICATION
OF
PROPOSED
MODIFICA-
TIONS
AND
PROPOSED
ADDITIONAL
SAFE
HAR-
BORS.—Not later than 120 days after receiving the
proposals described in subparagraphs (A) and (B) of
paragraph (1), the Secretary, after considering such
proposals in consultation with the Attorney General,
shall publish in the Federal Register proposed modi-
fications to existing safe harbors and proposed addi-
tional safe harbors, if appropriate, with a 60-day
comment period. After considering any public com-
ments received during this period, the Secretary
shall issue final rules modifying the existing safe
harbors and establishing new safe harbors, as appro-
priate.
(3) REPORT.—The Inspector General shall, in
an annual report to Congress or as part of the year-
end semiannual report required by section 5 of the
Inspector General Act of 1978, describe the propos-
als received under subparagraphs (A) and (B) of
paragraph (1) and explain which proposals were in-
cluded in the publication described in paragraph (2),
which proposals were not included in that publica-
tion, and the reasons for the rejection of the propos-
als that were not included.
(b) CRITERIA FOR MODIFYING AND ESTABLISHING
SAFE HARBORS.—In modifying and establishing safe har-
bors under subsection (a)(2), the Secretary may consider
the extent to which providing a safe harbor for the speci-
fied payment practice may result in any of the following:
(1) An increase or decrease in access to health
care services.
(2) An increase or decrease in the quality of
health care services.
(3) An increase or decrease in patient freedom
of choice among health care providers.
(4) An increase or decrease in competition
among health care providers.
(5) An increase or decrease in the cost to health
care programs of the Federal Government.
(6) An increase or decrease in the potential
overutilization of health care services.
(7) Any other factors the Secretary deems ap-
propriate in the interest of preventing fraud and
abuse in health care programs of the Federal Gov-
ernment.
SEC. 204. ISSUANCE OF ADVISORY OPINIONS UNDER TITLE
XI.
(a) IN GENERAL.—Title XI (42 U.S.C. 1301 et seq.),
as amended by section 104(a), is amended by inserting
after section 1129 the following new section:
‘‘ADVISORY OPINIONS
‘‘SEC. 1130. (a) ISSUANCE
OF ADVISORY OPIN-
IONS.—The Secretary shall issue written advisory opinions
as provided in this section.
‘‘(b) MATTERS SUBJECT TO ADVISORY OPINIONS.—
The Secretary shall issue advisory opinions as to the fol-
lowing matters:
‘‘(1) What constitutes prohibited remuneration
within the meaning of section 1128B(b).
‘‘(2) Whether an arrangement or proposed ar-
rangement satisfies the criteria set forth in section
1128B(b)(3) for activities which do not result in
prohibited remuneration.
‘‘(3) Whether an arrangement or proposed ar-
rangement satisfies the criteria which the Secretary
has established, or shall establish by regulation for
activities which do not result in prohibited remu-
neration.
‘‘(4) What constitutes an inducement to reduce
or limit services to individuals entitled to benefits
under title XVIII or title XIX within the meaning
of section 1128B(b).
‘‘(5) Whether any activity or proposed activity
constitutes grounds for the imposition of a sanction
under section 1128, 1128A, or 1128B.
‘‘(c) MATTERS NOT SUBJECT TO ADVISORY OPIN-
IONS.—Such advisory opinions shall not address the fol-
lowing matters:
‘‘(1) Whether the fair market value shall be, or
was paid or received for any goods, services or prop-
erty.
‘‘(2) Whether an individual is a bona fide em-
ployee within the requirements of section 3121(d)(2)
of the Internal Revenue Code of 1986.
‘‘(d) EFFECT OF ADVISORY OPINIONS.—
‘‘(1) BINDING AS TO SECRETARY AND PARTIES
INVOLVED.—Each advisory opinion issued by the
Secretary shall be binding as to the Secretary and
the party or parties requesting the opinion.
‘‘(2) FAILURE TO SEEK OPINION.—The failure
of a party to seek an advisory opinion may not be
introduced into evidence to prove that the party in-
tended to violate the provisions of sections 1128,
1128A, or 1128B.
‘‘(e) REGULATIONS.—
‘‘(1) IN GENERAL.—Not later than 180 days
after the date of the enactment of this section, the
Secretary shall issue regulations to carry out this
section. Such regulations shall provide for—
‘‘(A) the procedure to be followed by a
party applying for an advisory opinion;
‘‘(B) the procedure to be followed by the
Secretary in responding to a request for an ad-
visory opinion;
‘‘(C) the interval in which the Secretary
shall respond;
‘‘(D) the reasonable fee to be charged to
the party requesting an advisory opinion; and
‘‘(E) the manner in which advisory opin-
ions will be made available to the public.
‘‘(2) SPECIFIC CONTENTS.—Under the regula-
tions promulgated pursuant to paragraph (1)—
‘‘(A) the Secretary shall be required to re-
spond to a party requesting an advisory opinion
by not later than 30 days after the request is
made; and
‘‘(B) the fee charged to the party request-
ing an advisory opinion shall be equal to the
costs incurred by the Secretary in responding to
the request.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to requests for advisory opinions
made on or after January 1, 1996.
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HR 2389 IH——2
HR 2389 IH——3