I
104TH CONGRESS
1ST SESSION
H. R. 1912
To deter and penalize health care fraud and abuse and to simplify the
administration of health benefit plans.
IN THE HOUSE OF REPRESENTATIVES
JUNE 22, 1995
Mr. STARK introduced the following bill; which was referred to the Committee
on Commerce, and in addition to the Committees on Ways and Means,
and the Judiciary, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To deter and penalize health care fraud and abuse and
to simplify the administration of health benefit plans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Health Care Fraud Prevention and Paperwork Reduction
Act of 1995’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Inapplicability of McCarran-Ferguson Act.
Sec. 4. Definitions.
TITLE I—FRAUD AND ABUSE
Subtitle A—Amendments to Anti-Fraud and Abuse Provisions Applicable to
Medicare, Medicaid, and State Health Care Programs
Sec. 101. Anti-kickback statutory provisions.
Sec. 102. Civil money penalties.
Sec. 103. Private right of action.
Sec. 104. Amendments to exclusionary provisions in fraud and abuse program.
Sec. 105. Sanctions against practitioners and persons for failure to comply with
statutory obligations relating to quality of care.
Sec. 106. Revisions to criminal penalties.
Sec. 107. Effective date.
Subtitle B—Establishment of All-Payer Health Care Fraud and Abuse
Control Program
Sec. 111. All-payer health care fraud and abuse control program.
Sec. 112. Establishment of all-payer health care fraud and abuse control ac-
count.
Subtitle C—Application of Fraud and Abuse Authorities Under the Social
Security Act to Other Payers
Sec. 121. Application of civil money penalties to all payers.
Sec. 122. Application of certain criminal penalties to all payers.
Sec. 123. Construction of social security act references.
Subtitle D—Advisory Opinions on Kickbacks and Self-Referral
Sec. 131. Establishment of process for issuance of advisory opinions.
Sec. 132. Imposition of fees.
Subtitle E—Preemption of State Corporate Practice Laws
Sec. 141. Preemption of State laws prohibiting corporate practice of medicine.
TITLE II—INFORMATION SYSTEMS AND ADMINISTRATIVE
SIMPLIFICATION
Sec. 201. Requirement for health benefit cards.
Sec. 202. National enrollment verification system.
Sec. 203. Requirements for uniform claims and electronic claims data set.
Sec. 204. Reporting of uniform clinical data sets.
Sec. 205. Uniform hospital cost reporting.
Sec. 206. Use of task forces.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) The costs of health care consume more than
14 percent of the gross domestic product of the
United States, significantly affecting interstate com-
merce and the budget of the Federal Government.
(2) Federal outlays for the medicare program
alone totaled $162,500,000,000 in fiscal year 1994
and are expected to exceed $177,000,000,000 in fis-
cal year 1995 and $198,000,000,000 in fiscal year
1996.
(3) According to the General Accounting Office,
as much as 10 percent of all health care expendi-
tures in the United States, or $100,000,000,000, is
lost each year to health care fraud and abuse.
(4) As a direct provider of health care and as
a source of payment for health care, the Federal
Government has a significant interest in assessing
the quality and costs of health care through the eval-
uative activities of several Federal agencies.
(5) The health care system existing throughout
the United States has a significant effect on the
amount, distribution, and use of Federal funds be-
cause of the large numbers of—
(A) individuals who receive health care
benefits under programs operated or financed
in whole or in part by the Federal Government;
(B) individuals who benefit because of the
exclusion from Federal taxes of the amounts
spent by their employers to provide them with
health insurance benefits;
(C) health care providers and professionals
who provide items and services for which the
Federal Government makes payments; and
(D) health care providers and professionals
who have received direct or indirect financial
assistance from the Federal Government be-
cause of their status as such a provider or pro-
fessional.
(6) It is in the interest of the United States
that there be a national ‘‘all-payer’’ anti-fraud pro-
gram, and a national administrative simplification
program, for our health care industry.
SEC. 3. INAPPLICABILITY OF MCCARRAN-FERGUSON ACT.
For purposes of section 2(b) of the Act of March 9,
1945 (15 U.S.C. 1012(b); commonly known as the
McCarran-Ferguson Act), this Act shall be considered to
specifically relate to the business of insurance.
SEC. 4. DEFINITIONS.
For purposes of this Act:
(1) CARRIER.—The term ‘‘carrier’’ means a li-
censed insurance company, a hospital or medical
service corporation (including an existing Blue Cross
or Blue Shield organization, within the meaning of
section 833(c)(2) of the Internal Revenue Code of
1986), a health maintenance organization, or other
entity licensed or certified by a State to provide
health insurance or health benefits. The Secretary
may issue regulations that provide for affiliated car-
riers to be treated as a single carrier where appro-
priate under this title.
(2) HEALTH BENEFIT PLAN.—
(A) IN GENERAL.—The term ‘‘health bene-
fit plan’’ means—
(i) a health plan, other than a plan
described in subparagraph (B);
(ii) the medicare program;
(ii) medicare supplemental health in-
surance;
(iii) the medicaid program; and
(iv) except as the Secretary may pro-
vide, other Federal or State programs that
provide for payments for health care serv-
ices (other than coverage or insurance de-
scribed in subparagraph (B)).
(B) EXCEPTION.—The term ‘‘health bene-
fit plan’’ does not include any of the following
(or any combination thereof):
(i) Coverage only for accident, dental,
vision, disability income, or long-term care
insurance, or any combination thereof.
(ii) Coverage issued as a supplement
to liability insurance.
(iii) Liability insurance, including gen-
eral liability insurance and automobile li-
ability insurance.
(iv) Worker’s compensation or similar
insurance.
(v) Automobile medical-payment in-
surance.
(vi) Coverage for a specified disease
or illness.
(vii) A hospital or fixed indemnity pol-
icy.
(3) HEALTH
BENEFIT
PLAN
SPONSOR.—The
term ‘‘health benefit plan sponsor’’ means, in rela-
tion to a health benefit plan that—
(A) is an insured plan, the carrier provid-
ing the plan; or
(B) is a self-insured plan, the entity that
sponsors the plan (as defined by the Secretary).
(4) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ includes a provider of services
(as defined in section 1861(u) of the Social Security
Act), a physician, a laboratory (as defined in section
353(a) of the Public Health Service Act), a supplier,
and any other person furnishing health care in a
State. Such term includes a Federal or State pro-
gram that provides directly for the provision of
health care to beneficiaries.
(5) HEALTH PLAN.—The term ‘‘health plan’’
means—
(A) any contract of health insurance, in-
cluding any hospital or medical service policy or
certificate, hospital or medical service plan con-
tract, or health maintenance organization group
contract, that is provided by a carrier in a
State; or
(B) an employee welfare benefit plan or
other arrangement insofar as the plan or ar-
rangement provides health benefits in a State
and is funded in a manner other than through
the purchase of one or more policies or con-
tracts described in subparagraph (A).
(6) MANAGED CARE PLAN.—The term ‘‘man-
aged care plan’’ means a health plan that provides
for items and services covered under the plan pri-
marily through providers in the provider network of
the plan.
(7) 
POINT-OF-SERVICE
PLAN.—The 
term
‘‘point-of-service plan’’ means a health plan other
than a managed care plan that permits an enrollee
to receive benefits through a provider network.
(8) PROVIDER NETWORK.—The term ‘‘provider
network’’ means, with respect to a health plan, pro-
viders who have entered into an agreement with the
plan under which such providers are obligated to
provide items and services covered under the plan to
individuals enrolled in the plan.
(9) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
(10) SELF-INSURED.—The term ‘‘self-insured’’
means, with respect to a health plan, a plan that is
described in paragraph (5)(B).
(11) STATE.—The term ‘‘State’’ means the 50
States, the District of Columbia, Puerto Rico, the
Virgin Islands, Guam, the Northern Mariana Is-
lands, and American Samoa.
TITLE I—FRAUD AND ABUSE
Subtitle A—Amendments to Anti-
Fraud and Abuse Provisions Ap-
plicable to Medicare, Medicaid,
and State Health Care Programs
SEC. 101. ANTI-KICKBACK STATUTORY PROVISIONS.
(a) REVISION TO PENALTIES.—
(1) PERMITTING SECRETARY TO IMPOSE CIVIL
MONETARY PENALTY.—Section 1128A(a) of the So-
cial Security Act (42 U.S.C. 1320a–7a(a)) is amend-
ed—
(A) by striking ‘‘or’’ at the end of para-
graphs (1) and (2);
(B) by striking the semicolon at the end of
paragraph (3) and inserting ‘‘; or’’; and
(C) by inserting after paragraph (3) the
following new paragraph:
‘‘(4) carries out any activity in violation of
paragraph (1) or (2) of section 1128B(b);’’.
(2) DESCRIPTION
OF
CIVIL
MONETARY
PEN-
ALTY APPLICABLE.—Section 1128A(a) of such Act
(42 U.S.C. 1320a–7a(a)) is amended—
(A) by striking ‘‘given).’’ at the end of the
first sentence and inserting the following:
‘‘given or, in cases under paragraph (4),
$50,000 for each such violation).’’; and
(B) by striking ‘‘claim.’’ at the end of the
second sentence and inserting the following:
‘‘claim (or, in cases under paragraph (4), dam-
ages of not more than three times the total
amount of remuneration offered, paid, solicited,
or received.’’.
(3) INCREASE IN CRIMINAL PENALTY.—Para-
graphs (1) and (2) of section 1128B(b) of such Act
(42 U.S.C. 1320a–7b(b)) are each amended—
(A) by striking ‘‘$25,000’’ and inserting
‘‘$50,000’’; and
(B) by striking the period at the end and
inserting the following: ‘‘, and shall be subject
to damages of not more than three times the
total remuneration offered, paid, solicited, or
received.’’.
(b) REVISIONS TO EXCEPTIONS.—
(1) 
EXCEPTION
FOR
DISCOUNTS.—Section
1128B(b)(3)(A) of such Act (42 U.S.C. 1320a–
7b(b)(3)(A)) is amended by striking ‘‘program;’’ and
inserting ‘‘program and is not in the form of a cash
payment;’’.
(2) EXCEPTION
FOR
PAYMENTS
TO
EMPLOY-
EES.—Section 1128B(b)(3)(B) of such Act (42
U.S.C. 1320a–7b(b)(3)(B)) is amended by inserting
at the end ‘‘if the amount of remuneration under the
arrangement is consistent with the fair market value
of the services and is not determined in a manner
that takes into account (directly or indirectly) the
volume or value of any referrals, except that such
employee can be paid remuneration in the form of
a productivity bonus based on services personally
performed by the employee.’’.
(3) EXCEPTION FOR WAIVER OF COINSURANCE
BY CERTAIN PROVIDERS.—Section 1128B(b)(3)(D)
of such Act (42 U.S.C. 1320a–7b(b)(3)(D)) is
amended to read as follows:
‘‘(D) a waiver or reduction of any coinsurance
or other copayment if—
‘‘(i) the waiver or reduction is made pursu-
ant to a public schedule of discounts which the
person is obligated as a matter of law to apply
to certain individuals,
‘‘(ii) the waiver or reduction is made pur-
suant to an established program and applies to
a defined group of individuals whose incomes do
not exceed 150 percent (or such higher percent-
age as the Secretary may permit) of the official
poverty line (as defined by the Office of Man-
agement and Budget, and revised annually in
accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable
to a family of the size involved,
‘‘(iii) the waiver or reduction of coinsur-
ance is not offered as part of any advertisement
or solicitation and the person offering the waiv-
er or reduction determines in good faith that
the individual is in financial need,
‘‘(iv) the person offering the waiver or re-
duction fails to collect the coinsurance or other
payment after making reasonable collection ef-
forts, or
‘‘(v) the waiver or reduction of coinsurance
is in accordance with a cost sharing schedule or
a supplemental benefit package which may be
offered by a managed care plan (as defined in
section 4 of the Health Care Fraud Prevention
and Paperwork Reduction Act of 1995); and’’.
(4) NEW
EXCEPTION
FOR
CAPITATED
PAY-
MENTS.—Section 1128B(b)(3) of such Act (42
U.S.C. 1320a–7b(b)(3)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (D);
(B) by striking the period at the end of
subparagraph (E) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
subparagraphs:
‘‘(F) any reduction in cost sharing or increased
benefits given to an individual, any amounts paid to
a provider for an item or service furnished to an in-
dividual, or any discount or reduction in price given
by the provider for such an item or service, if the
individual is enrolled with and such item or service
is covered under any of the following:
‘‘(i) A health plan which is furnishing
items or services under a risk-sharing contract
under section 1876 or section 1903(m).
‘‘(ii) A health plan receiving payments on
a prepaid basis, under a demonstration project
under section 402(a) of the Social Security
Amendments of 1967 or under section 222(a)
of the Social Security Amendments of 1972;
and
‘‘(G) any amounts paid to a provider for an
item or service furnished to an individual or any dis-
count or reduction in price given by the provider for
such an item or service, if the individual is enrolled
with and such item or service is covered under a
health plan under which the provider furnishing the
item or service is paid by the health plan for fur-
nishing the item or service only on a capitated basis
pursuant to a written arrangement between the plan
and the provider in which the provider assumes fi-
nancial risk for furnishing the item or service.’’.
(c) AUTHORIZATION FOR THE SECRETARY TO ISSUE
REGULATIONS.—Section 1128B(b) of such Act (42 U.S.C.
1320a–7b(b)) is amended by adding at the end the follow-
ing new paragraph:
‘‘(4) The Secretary is authorized to impose by regula-
tion such other requirements as needed to protect against
program or patient abuse with respect to any of the excep-
tions described in paragraph (3).’’.
(d) CLARIFICATION OF OTHER ELEMENTS OF OF-
FENSE.—Section 1128B(b) of such Act (42 U.S.C.
1320a–7b(b)) is amended—
(1) in paragraph (1)(A), by striking ‘‘in return
for referring’’ and inserting ‘‘to refer’’;
(2) in paragraph (1)(B), by striking ‘‘in return
for purchasing, leasing, ordering, or arranging for or
recommending’’ and inserting ‘‘to purchase, lease,
order, or arrange for or recommend’’; and
(3) by adding at the end of paragraphs (1) and
(2) the following sentence: ‘‘A violation exists under
this paragraph if one or more purposes of the remu-
neration is unlawful under this paragraph.’’.
SEC. 102. CIVIL MONEY PENALTIES.
(a) PROHIBITION AGAINST OFFERING INDUCEMENTS
TO INDIVIDUALS ENROLLED UNDER PLANS.—
(1) 
OFFER
OF
REMUNERATION.—Section
1128A(a) of the Social Security Act (42 U.S.C.
1320a–7a(a)), as amended by section 101(a)(1), is
amended—
(A) by striking ‘‘; or’’ at the end of para-
graph (3) and inserting a semicolon;
(B) by striking the semicolon at the end of
paragraph (4) and inserting ‘‘; or’’; and
(C) by inserting after paragraph (4) the
following new paragraph:
‘‘(5) offers, pays, or transfers remuneration to
any individual eligible for benefits under title XVIII
of this Act, or under a State health care program
(as defined in section 1128(h)) that such person
knows or should know is likely to influence such in-
dividual to order or receive from a particular pro-
vider, practitioner, or supplier any item or service
for which payment may be made, in whole or in
part, under title XVIII, or a State health care pro-
gram, other than to influence an individual enrolled
in a managed care plan or a point-of-service plan (as
defined in section 4 of the Health Care Fraud Pre-
vention and Paperwork Reduction Act of 1995 to re-
ceive benefits under the plan in accordance with es-
tablished practice patterns for the delivery of medi-
cally necessary services;’’.
(2) 
REMUNERATION
DEFINED.—Section
1128A(i) of such Act (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 or reduction of coinsurance amounts, and trans-
fers of items or services for free or for other than
fair market value, except that such term does not in-
clude the waiver or reduction of coinsurance
amounts by a person or entity, if—
‘‘(A) the waiver or reduction is made pur-
suant to a public schedule of discounts which
the person is obligated as a matter of law to
apply to certain individuals,
‘‘(B) the waiver or reduction is made pur-
suant to an established program and applies to
a defined group of individuals whose incomes do
not exceed 150 percent (or such higher percent-
age as the Secretary may permit) of the official
poverty line (as defined by the Office of Man-
agement and Budget, and revised annually in
accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable
to a family of the size involved,
‘‘(C) the waiver or reduction of coinsur-
ance is not offered as part of any advertisement
or solicitation and the person offering the waiv-
er or reduction determines in good faith that
the individual is in financial need,
‘‘(D) the person offering the waiver or re-
duction fails to collect the coinsurance or other
payment after making reasonable collection ef-
forts, or
‘‘(E) the waiver or reduction of coinsur-
ance is in accordance with a cost sharing sched-
ule or a supplemental benefit package which
may be offered by a managed care plan under
section 4 of the Health Care Fraud Prevention
and Paperwork Reduction Act of 1995.’’.
(b) ADDITIONAL OFFENSES.—Section 1128A(a) of
such Act, as amended by section 101(a)(1) and subsection
(a)(1), is further amended—
(1) by striking ‘‘or’’ at the end of paragraph
(4);
(2) by striking the semicolon at the end of
paragraph (5) and inserting ‘‘; or’’; and
(3) by inserting after paragraph (5) the follow-
ing new paragraphs:
‘‘(6) engages in a practice which has the effect
of limiting or discouraging (as compared to other
plan enrollees) the utilization of medically necessary
health care services covered by law or under the
service contract by title XIX or other publicly sub-
sidized patients, including but not limited to dif-
ferential standards for the location and hours of
service offered by providers participating in the plan;
‘‘(7) substantially fails to cooperate with a qual-
ity assurance program or a utilization review activ-
ity;
‘‘(8) engaging in a pattern of failing substan-
tially to provide or authorize medically necessary
items and services that are required to be provided
to an individual covered under a health plan (as de-
fined in section 4 of the Health Care Fraud Preven-
tion and Paperwork Reduction Act of 1995) or pub-
lic program for the delivery of or payment for health
care items or services, if the failure has adversely af-
fected (or had a substantial likelihood of adversely
affecting) the individual; or
‘‘(9) submits false or fraudulent statements,
data or information on claims to the Secretary, a
State health care agency, or any other Federal,
State or local agency charged with implementation
or oversight of a health plan or a public program
that the person knows or should know is fraudu-
lent;’’.
(c) MODIFICATIONS
OF AMOUNTS
OF PENALTIES
AND ASSESSMENTS.—Section 1128A(a) of such Act (42
U.S.C. 1320a–7a(a)), as amended by section 101(a), sub-
section (a)(1), and subsection (b), is amended in the mat-
ter following paragraph (9)—
(1) 
by 
striking 
‘‘$2,000’’ 
and 
inserting
‘‘$10,000’’;
(2) by inserting after ‘‘under paragraph (4),
$50,000 for each such violation’’ the following: ‘‘; in
cases under paragraph (5), $10,000 for each such
offer, payment, or transfer; in cases under para-
graphs (6) through (9), an amount not to exceed
$10,000 for each such determination by the Sec-
retary’’; and
(3) by striking ‘‘twice the amount’’ and insert-
ing ‘‘three times the amount’’.
(d) INTEREST ON PENALTIES.—Section 1128A(f) of
such Act (42 U.S.C. 1320a–7a(f)) is amended by adding
after the first sentence the following: ‘‘Interest shall ac-
crue on the penalties and assessments imposed by a final
determination of the Secretary in accordance with an an-
nual rate established by the Secretary under the Federal
Claims Collection Act. The rate of interest charged shall
be the rate in effect on the date the determination becomes
final and shall remain fixed at that rate until the entire
amount due is paid. In addition, the Secretary is author-
ized to recover the costs of collection in any case where
the penalties and assessments are not paid within 30 days
after the determination becomes final, or in the case of
a compromised amount, where payments are more than
90 days past due. In lieu of actual costs, the Secretary
is authorized to impose a charge of up to 10 percent of
the amount of penalties and assessments owed to cover
the costs of collection.’’.
(e) AUTHORIZATION TO ACT.—
(1) IN GENERAL.—The first sentence of section
1128A(c)(1) of such Act (42 U.S.C. 1320a–
7a(c)(1)) is amended by striking all that follows
‘‘(b)’’ and inserting the following: ‘‘unless, within
one year after the date the Secretary presents a case
to the Attorney General for consideration, the Attor-
ney General brings an action in a district court of
the United States.’’.
(2) EFFECTIVE DATE.—The amendment made
by this paragraph (1) shall apply to cases presented
by the Secretary of Health and Human Services for
consideration on or after the date of the enactment
of this Act.
(f) DEPOSIT OF PENALTIES COLLECTED INTO ALL-
PAYER ACCOUNT.—Section 1128A(f)(3) of such Act (42
U.S.C. 1320a–7a(f)(3)) is amended by striking ‘‘as mis-
cellaneous receipts of the Treasury of the United States’’
and inserting ‘‘in the All-Payer Health Care Fraud and
Abuse Control Account established under section 112 of
the Health Care Fraud Prevention and Paperwork Reduc-
tion Act of 1995’’.
(g) CLARIFICATION OF PENALTY IMPOSED ON EX-
CLUDED
PROVIDER
FURNISHING
SERVICES.—Section
1128A(a)(1)(D) of such Act (42 U.S.C. 1320a–
7a(a)(1)(D)) is amended by inserting ‘‘who furnished the
service’’ after ‘‘in which the person’’.
SEC. 103. PRIVATE RIGHT OF ACTION.
Section 1128A of the Social Security Act (42 U.S.C.
1320a–7a) is amended by adding at the end the following
new subsection:
‘‘(m)(1) Subject to paragraphs (2) and (3), a carrier
offering an insured health plan and the sponsor of a self-
insured health plan that suffers financial harm as a direct
result of the submission of claims by an individual or en-
tity for payment for items and services furnished under
the plan which makes the individual or entity subject to
a civil monetary penalty under this section may, in a civil
action against the individual or entity in the United States
District Court, obtain damages against the individual or
entity and such equitable relief as is appropriate.
‘‘(2) A carrier or sponsor may bring a civil action
under this subsection only if the carrier or sponsor pro-
vides the Secretary and the Attorney General with written
notice of the intent to bring an action under this sub-
section, the identities of the individuals or entities the car-
rier or sponsor intends to name as defendants to the ac-
tion, and all information the carrier or sponsor possesses
regarding the activity that is the subject of the action that
may materially affect the Secretary’s decision to initiate
a proceeding to impose a civil monetary penalty under this
section against the defendants.
‘‘(3) A carrier or sponsor may bring a civil action
under this subsection only if any of the following condi-
tions are met:
‘‘(A) During the 60-day period that begins on
the date the Secretary receives the written notice de-
scribed in paragraph (2), the Secretary does not no-
tify the carrier or sponsor that the Secretary intends
to initiate a proceeding to impose a civil monetary
penalty under this section against the defendants.
‘‘(B) If the Secretary notifies the carrier or
sponsor during the 60-day period described in sub-
paragraph (A) that the Secretary intends to initiate
a proceeding to impose a civil monetary penalty
under this section against the defendants, the Sec-
retary subsequently notifies the carrier or sponsor
that the Secretary no longer intends to initiate such
a proceeding against the defendants.
‘‘(C) After the expiration of the 2-year period
that begins on the date the Secretary notifies the
carrier or sponsor that the Secretary intends to initi-
ate a proceeding to impose a civil monetary penalty
under this section against the defendants, the Sec-
retary has not made a good faith effort to initiate
such a proceeding against the defendants.
‘‘(4) If a carrier or sponsor is awarded any amounts
in an action brought under this subsection that are in ex-
cess of the damages suffered by the carrier or sponsor as
a result of the defendant’s activities, 10 percent of such
amounts shall be withheld from the carrier or sponsor for
payment into the All-Payer Health Care Fraud and Abuse
Control Account established under section 112 of the
Health Care Fraud Prevention and Paperwork Reduction
Act of 1995.
‘‘(5) No action may be brought under this subsection
more than 6 years after the date of the activity with re-
spect to which the action is brought.’’.
SEC. 104. AMENDMENTS TO EXCLUSIONARY PROVISIONS IN
FRAUD AND ABUSE PROGRAM.
(a) MANDATORY EXCLUSION OF INDIVIDUAL CON-
VICTED OF CRIMINAL OFFENSE RELATED TO HEALTH
CARE FRAUD.—
(1) IN GENERAL.—Section 1128(a) of the So-
cial Security Act (42 U.S.C. 1320a–7(a)) is amend-
ed by adding at the end the following new para-
graph:
‘‘(3) 
FELONY
CONVICTION
RELATING
TO
FRAUD.—Any individual or entity that has been con-
victed under Federal or State law, in connection
with the delivery of a health care item or service on
or after January 1, 1997, or with respect to any act
or omission on or after such date in a program oper-
ated by or financed in whole or in part by any Fed-
eral, State, or local government agency, of a criminal
offense consisting of a felony relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or
other financial misconduct.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1128(b)(1) of such Act (42 U.S.C. 1320a–7(b)(1))
is amended—
(A) in the heading, by striking ‘‘CONVIC-
TION’’ and inserting ‘‘MISDEMEANOR CONVIC-
TION’’; and
(B) by striking ‘‘criminal offense’’ and in-
serting ‘‘criminal offense consisting of a mis-
demeanor’’.
(b) ESTABLISHMENT OF MINIMUM PERIOD OF EX-
CLUSION FOR CERTAIN INDIVIDUALS AND ENTITIES SUB-
JECT TO PERMISSIVE EXCLUSION FROM MEDICARE AND
STATE HEALTH CARE PROGRAMS.—
(1) IN GENERAL.—Section 1128(c)(3) of such
Act (42 U.S.C. 1320a–7(c)(3)) is amended by add-
ing at the end the following new subparagraphs:
‘‘(D) In the case of an exclusion of an individual or
entity under paragraphs (1), (2), or (3) of subsection (b),
the period of exclusion shall be a minimum of 3 years,
unless the Secretary determines that an alternative period
is appropriate because of aggravating or mitigating cir-
cumstances.
‘‘(E) In the case of an exclusion of an individual or
entity under paragraph (4) or (5) of subsection (b), 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.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1128(c)(3)(A) of such Act (42 U.S.C. 1320a–
7(c)(3)(A)) is amended by striking ‘‘subsection
(b)(12)’’ and inserting ‘‘paragraph (1), (2), (3), (4),
(6)(B), or (12) of subsection (b)’’.
SEC. 105. SANCTIONS AGAINST PRACTITIONERS AND PER-
SONS FOR FAILURE TO COMPLY WITH STATU-
TORY OBLIGATIONS RELATING TO QUALITY
OF CARE.
(a) MINIMUM PERIOD OF EXCLUSION FOR PRACTI-
TIONERS AND PERSONS FAILING TO MEET STATUTORY
OBLIGATIONS.—
(1) IN GENERAL.—The second sentence of sec-
tion 1156(b)(1) of the Social Security Act (42
U.S.C. 1320c–5(b)(1)) is amended by striking ‘‘may
prescribe)’’ and inserting ‘‘may prescribe, except
that such period may not be less than one year)’’.
(2) 
CONFORMING
AMENDMENT.—Section
1156(b)(2) of such Act (42 U.S.C. 1320c–5(b)(2)) is
amended by striking ‘‘shall remain’’ and inserting
‘‘shall (subject to the minimum period specified in
the second sentence of paragraph (1)) remain’’.
(b) AMOUNT OF CIVIL MONEY PENALTY.—Section
1156(b)(3) of such Act (42 U.S.C. 1320c–5(b)(3)) is
amended by striking ‘‘the actual or estimated cost’’ and
inserting the following: ‘‘$10,000 for each instance’’.
(c) REPEAL OF ‘‘UNWILLING OR UNABLE’’ CONDI-
TION FOR IMPOSITION OF SANCTION.—Section 1156(b)(1)
of such Act (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. 106. REVISIONS TO CRIMINAL PENALTIES.
(a) TREBLE DAMAGES FOR CRIMINAL SANCTIONS.—
Section 1128B of the Social Security Act (42 U.S.C.
1320a–7b) is amended by adding at the end the following
new subsection:
‘‘(f) In addition to the fines that may be imposed
under subsection (a) or (c) any individual found to have
violated the provisions of any of such subsections may be
subject to treble damages.’’.
(b) IDENTIFICATION OF COMMUNITY SERVICE OP-
PORTUNITIES.—Section 1128B of such Act (42 U.S.C.
1320a–7b), as amended by subsection (a), is further
amended by adding at the end the following new sub-
section:
‘‘(g) The Secretary shall—
‘‘(1) in consultation with State and local health
care officials, identify opportunities for the satisfac-
tion of community service obligations that a court
may impose upon the conviction of an offense under
this section, and
‘‘(2) make information concerning such oppor-
tunities available to Federal and State law enforce-
ment officers and State and local health care offi-
cials.’’.
SEC. 107. EFFECTIVE DATE.
The amendments made by this subtitle shall take ef-
fect January 1, 1997.
Subtitle B—Establishment of All-
Payer Health Care Fraud and
Abuse Control Program
SEC. 111. ALL-PAYER HEALTH CARE FRAUD AND ABUSE
CONTROL PROGRAM.
(a) IN GENERAL.—Not later than January 1, 1997,
the Secretary (acting through the Inspector General of the
Department of Health and Human Services) and the At-
torney General shall establish a program—
(1) to coordinate the functions of the Attorney
General, the Secretary, and other organizations with
respect to the prevention, detection, and control of
health care fraud and abuse,
(2)(A) to conduct investigations, audits, evalua-
tions, and inspections relating to the delivery of and
payment for health care services in the United
States which are not subject to investigation, audit,
evaluation, and inspection by the Inspector General
of another executive department, and (B) to facili-
tate the conducting of such investigations, audits,
evaluations, and inspections relating to the delivery
of and payment for other health care services in the
United States, and
(3) to facilitate the enforcement of this subtitle
and other statutes applicable to health care fraud
and abuse.
(b) COORDINATION
WITH
LAW
ENFORCEMENT
AGENCIES.—In carrying out the program under sub-
section (a), the Secretary and Attorney General shall con-
sult with, and arrange for the sharing of data and re-
sources with Federal, State and local law enforcement
agencies, State Medicaid Fraud Control Units, and State
agencies responsible for the licensing and certification of
health care providers.
(c) COORDINATION WITH HEALTH PLANS.—In car-
rying out the program under subsection (a), the Secretary
and Attorney General shall consult with, and arrange for
the sharing of data with representatives of qualified health
plans.
(d) AUTHORITIES OF ATTORNEY GENERAL AND IN-
SPECTOR GENERAL.—In carrying out duties under sub-
section (a), the Attorney General and the Inspector Gen-
eral are authorized—
(1) to conduct, supervise, and coordinate audits,
civil and criminal investigations, inspections, and
evaluations relating to the program established
under such subsection; and
(2) to have access (including on-line access as
requested and available) to all records available to
qualified health plans relating to the activities de-
scribed in paragraph (1) (subject to restrictions
based on the confidentiality of certain information
under section 204(a)).
(e) 
FAILURE
TO
PROVIDE
INFORMATION
AS
GROUNDS FOR PERMISSIVE EXCLUSION UNDER MEDI-
CARE AND MEDICAID.—Section 1128(b)(9) of the Social
Security Act (42 U.S.C. 1320a–7(b)(9)) is amended by
striking the period at the end and inserting ‘‘, or provide
any information requested by the Attorney General or the
Inspector General of the Department of Health and
Human Services to carry out the All-Payer Health Care
Fraud and Abuse Control Program established under sec-
tion 111 of the Health Care Fraud Prevention and Paper-
work Reduction Act of 1995.’’;
(f) QUALIFIED IMMUNITY FOR PROVIDING INFORMA-
TION.—The provisions of section 1157(a) of the Social Se-
curity Act (relating to limitation on liability) shall apply
to a person providing information or communications to
the Secretary or Attorney General in conjunction with
their performance of duties under this section, in the same
manner as such section applies to information provided
to organizations with a contract under part B of title XI
of such Act.
(g) AUTHORIZATIONS OF APPROPRIATIONS FOR IN-
VESTIGATORS AND OTHER PERSONNEL.—In addition to
any other amounts authorized to be appropriated to the
Secretary and the Attorney General for health care anti-
fraud and abuse activities for a fiscal year, there are au-
thorized to be appropriated such additional amounts as
may be necessary to enable the Secretary and the Attorney
General to conduct investigations, audits, evaluations, and
inspections of allegations of health care fraud and abuse
and otherwise carry out the program established under
subsection (a) in a fiscal year.
(h) USE OF POWERS UNDER INSPECTOR GENERAL
ACT OF 1978.—In carrying out duties and responsibilities
under the program established under subsection (a), the
Inspector General is authorized to exercise all powers
granted under the Inspector General Act of 1978 to the
same manner and extent as provided in that Act.
(i) DEFINITION.—In this subtitle, the term ‘‘Inspec-
tor General’’ means the Inspector General of the Depart-
ment of Health and Human Services.
SEC. 112. ESTABLISHMENT OF ALL-PAYER HEALTH CARE
FRAUD AND ABUSE CONTROL ACCOUNT.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—There is hereby created on
the books of the Treasury of the United States an
account to be known as the ‘‘All-Payer Health Care
Fraud and Abuse Control Account’’ (in this section
referred to as the ‘‘Anti-Fraud Account’’). The Anti-
Fraud Account shall consist of such gifts and be-
quests as may be made as provided in paragraph (2)
and such amounts as may be deposited in such Anti-
Fraud Account as provided in section 122(d)(2) and
title XI of the Social Security Act. It shall also in-
clude the following:
(A) All criminal fines imposed in cases in-
volving a Federal health care offense (as de-
fined in subsection (d)).
(B) Penalties and damages imposed under
the False Claims Act (31 U.S.C. 3729 et seq.),
in cases involving claims related to the provision
of health care items and services (other than
funds awarded to a relator or for restitution).
(C) Administrative penalties and assess-
ments imposed under titles XI, XVIII, and XIX
of the Social Security Act and section 122 (ex-
cept as otherwise provided by law).
(D) Amounts resulting from the forfeiture
of property by reason of a Federal health care
offense.
(E) Amounts received from the payment of
fees to the Secretary of Health and Human
Services and the Attorney General under sec-
tion 132 by individuals and entities requesting
advisory opinions under section 131.
Any such funds received on or after the date of the
enactment of this Act shall be deposited in the Anti-
Fraud Account.
(2) AUTHORIZATION TO ACCEPT GIFTS.—The
Anti-Fraud Account is authorized to accept on be-
half of the United States money gifts and bequests
made unconditionally to the Anti-Fraud Account, for
the benefit of the Anti-Fraud Account or any activ-
ity financed through the Anti-Fraud Account.
(3) ADMINISTRATION
THROUGH
BOARD
OF
TRUSTEES.—The Anti-Fraud Account shall have a
Board of Trustees consisting of the Secretary of
Treasury, the Attorney General, the Secretary of
Health and Human Services, the Inspector General,
and a State Attorney General selected by the Inspec-
tor General. The Board of Trustees shall allocate
and dispense funds in the Account and generally ad-
minister the operations of the Account.
(b) USE OF FUNDS.—
(1) IN GENERAL.—Amounts in the Anti-Fraud
Account shall be available without appropriation and
until expended as determined jointly by the Sec-
retary and Attorney General in carrying out the All-
Payer Health Care Fraud and Abuse Control Pro-
gram established under section 111 (including the
administration of the Program), and may be used to
cover costs incurred in operating the Program, in-
cluding—
(A) costs of prosecuting health care mat-
ters (through criminal, civil and administrative
proceedings);
(B) costs of investigations (including
equipment, salaries, administratively uncontrol-
lable work, travel, and training of law enforce-
ment personnel);
(C) costs of financial and performance au-
dits of health care programs and operations;
and
(D) costs of inspections and other evalua-
tions.
(2) FUNDS USED TO SUPPLEMENT AGENCY AP-
PROPRIATIONS.—It is intended that disbursements
made from the Anti-Fraud Account to any Federal
agency be used to increase and not supplant the re-
cipient agency’s appropriated operating budget.
(3) USE OF FUNDS FOR EDUCATIONAL ACTIVI-
TIES.—Amounts in the Anti-Fraud Account may be
used to carry out activities designed to educate pro-
viders of health care services about the provisions of
this subtitle (and the provisions of law amended by
this subtitle).
(4) START-UP COSTS OF PROCESS FOR ISSU-
ANCE
OF
ADVISORY
OPINIONS.—Amounts in the
Anti-Fraud Account may be used to establish the
process described in section 131 for the issuance of
advisory opinions by the Secretary of Health and
Human Services and the Attorney General, but only
during the first year for which the process is in op-
eration.
(c) ANNUAL REPORT.—The Board of Trustees shall
submit an annual report to Congress on the amount of
revenue which is generated and disbursed by the Anti-
Fraud Account in each fiscal year.
(d) FEDERAL HEALTH CARE OFFENSE DEFINED.—
The term ‘‘Federal health care offense’’ means a violation
of, or a criminal conspiracy to violate—
(1) sections 226, 668, 1033, or 1347 of title
18, United States Code;
(2) section 1128B of the Social Security Act;
(3) sections 287, 371, 664, 666, 1001, 1027,
1341, 1343, or 1954 of title 18, United States Code,
if the violation or conspiracy relates to health care
fraud;
(4) sections 501 or 511 of the Employee Retire-
ment Income Security Act of 1974, if the violation
or conspiracy relates to health care fraud; or
(5) sections 301, 303(a)(2), or 303(b) or (e) of
the Federal Food, Drug and Cosmetic Act, if the
violation or conspiracy relates to health care fraud.
Subtitle C—Application of Fraud
and Abuse Authorities Under
the Social Security Act to Other
Payers
SEC. 121. APPLICATION OF CIVIL MONEY PENALTIES TO
ALL PAYERS.
(a) ACTIONS SUBJECT TO PENALTY.—Any person
who is determined by the Secretary to have committed any
of the following actions with respect to a qualified health
plan shall be subject to a penalty in accordance with sub-
section (b):
(1) ACTIONS
SUBJECT
TO
PENALTY
UNDER
MEDICARE, MEDICAID, AND OTHER SOCIAL SECURITY
HEALTH PROGRAMS.—Any action that would subject
the person to a penalty under paragraphs (1)
through (9) of section 1128A(a) of the Social Secu-
rity Act if the action was taken with respect to title
V, XVIII, XIX, or XX of such Act.
(2) DISCRIMINATING
ON
BASIS
OF
MEDICAL
CONDITION.—The engagement in any practice that
would reasonably be expected to have the effect of
denying or discouraging the initial or continued en-
rollment in a health plan by individuals whose medi-
cal condition or history indicates a need for substan-
tial future medical services.
(3) INDUCING
ENROLLMENT
ON
FALSE
PRE-
TENSES.—The engagement in any practice to induce
enrollment in a health plan through representations
to individuals which the person knows or should
know are false or fraudulent.
(b) PENALTIES DESCRIBED.—
(1) GENERAL RULE.—Any person who the Sec-
retary determines has committed an action described
in paragraphs (2) through (4) of subsection (a) shall
be subject to a civil monetary penalty in an amount
not to exceed $10,000 for each such determination.
(2) ACTIONS SUBJECT TO PENALTIES UNDER
SOCIAL SECURITY ACT.—In the case of a person who
the Secretary determines has committed an action
described in paragraph (1) of subsection (a), the
person shall be subject to the civil monetary penalty
(together with any additional assessment) to which
the person would be subject under section 1128A of
the Social Security Act if the action on which the
determination is based had been committed with re-
spect to title V, XVIII, XIX, or XX of such Act.
(c) APPLICABILITY OF PROCEDURES UNDER SOCIAL
SECURITY ACT.—The provisions of section 1128A of the
Social Security Act (other than subsections (a) and (b)
and the second sentence of subsection (f)) shall apply to
the imposition of a civil monetary penalty or assessment
under this section in the same manner as such provisions
apply with respect to the imposition of a penalty or assess-
ment under section 1128A of such Act.
(d) TREATMENT OF AMOUNTS RECOVERED.—Any
amounts recovered under this section shall be paid to the
Secretary and disposed of as follows:
(1) Such portions of the amounts recovered as
is determined to have been improperly paid from a
qualified health plan for the delivery of or payment
for health care items or services shall be repaid to
such plan.
(2) The remainder of the amounts recovered
shall be deposited in the All-Payer Health Care
Fraud and Abuse Control Account established under
section 112.
(e) NOTIFICATION OF LICENSING AUTHORITIES.—
Whenever the Secretary’s determination to impose a pen-
alty or assessment under this section becomes final, the
Secretary shall notify the appropriate State or local licens-
ing agency or organization (including the agency specified
in section 1864(a) and 1902(a)(33) of the Social Security
Act) that such a penalty or assessment has become final
and the reasons therefore.
SEC. 122. APPLICATION OF CERTAIN CRIMINAL PENALTIES
TO ALL PAYERS.
Any person who is determined by the Attorney Gen-
eral (in consultation with the Secretary) to have commit-
ted any action with respect to a qualified health plan that
would subject the person to a penalty under subsection
(a) or (b) of section 1128B of the Social Security Act if
the action was taken with respect to title V, XVIII, XIX,
or XX of such Act shall be subject to the penalty (together
with any assessment) that would apply if the action was
taken with respect to any such title.
SEC. 123. CONSTRUCTION OF SOCIAL SECURITY ACT REF-
ERENCES.
(a) INCORPORATION OF OTHER AMENDMENTS.—Any
reference in this subtitle to a provision of the Social Secu-
rity Act shall be considered a reference to the provision
as amended under subtitle A.
(b) EFFECT OF SUBSEQUENT AMENDMENTS.—Ex-
cept as provided in subsection (a), any reference to a pro-
vision of the Social Security Act in this subtitle shall be
deemed to be a reference to such provision as in effect
on the date of the enactment of this Act, and (except as
Congress may otherwise provide) any amendments made
to such provisions after such date shall not be taken into
account in determining the applicability of such provisions
to individuals and entities under this Act.
Subtitle D—Advisory Opinions on
Kickbacks and Self-Referral
SEC. 131. ESTABLISHMENT OF PROCESS FOR ISSUANCE OF
ADVISORY OPINIONS.
(a) ESTABLISHMENT.—Not later than 1 year after
the date of the enactment of this Act, the Secretary of
Health and Human Services (in consultation with the At-
torney General) shall establish a process under which indi-
viduals and entities may submit a request to the Secretary
for an advisory opinion regarding whether any conduct of
the individual or entity—
(1) constitutes grounds for the imposition of a
sanction under section 1128B(b) (relating to kick-
backs, bribes, and rebates) of the Social Security
Act or under subtitle C through the application of
such section; or
(2) would result in the denial of payment for a
service furnished by the individual or entity, or the
imposition of a civil money penalty, on the basis de-
scribed in section 1877 of the Social Security Act.
(b) DEADLINE FOR RESPONSE.—The Secretary of
Health and Human Services shall respond to a request
for an advisory opinion submitted under subsection (a) not
later than 90 days after receiving the request.
(c) OPINIONS LIMITED TO QUESTIONS OF FACT.—
An advisory opinion issued under subsection (a) may only
respond to the facts presented by the individual or entity
requesting the advisory opinion.
(d) ISSUANCE
OF REGULATIONS.—The Secretary
may issue such regulations as the Secretary considers ap-
propriate to carry out this subtitle, including regulations
concerning the process under which individuals and enti-
ties submit and the Secretary responds to requests for ad-
visory opinions.
SEC. 132. IMPOSITION OF FEES.
(a) IN GENERAL.—The Secretary of Health and
Human Services and the Attorney General shall require
an individual or entity requesting an advisory opinion
under section 131 to submit a fee.
(b) AMOUNT.—The amount of the fee required under
subsection (a) shall be equal to the costs incurred by the
Secretary and the Attorney General in responding to the
request.
Subtitle E—Preemption of State
Corporate Practice Laws
SEC. 141. PREEMPTION OF STATE LAWS PROHIBITING COR-
PORATE PRACTICE OF MEDICINE.
No provision of State or local law shall apply that
prohibits a corporation from practicing medicine.
TITLE 
II—INFORMATION 
SYS-
TEMS AND ADMINISTRATIVE
SIMPLIFICATION
SEC. 201. REQUIREMENT FOR HEALTH BENEFIT CARDS.
(a) HEALTH BENEFIT CARDS.—
(1) REQUIREMENT.—Each health benefit plan
sponsor shall issue a health benefit card that meets
the requirements of subsection (c) for each individ-
ual who is entitled to benefits under a health benefit
plan provided or sponsored by the sponsor.
(2) DEADLINE FOR APPLICATION OF REQUIRE-
MENT.—The deadline specified under this paragraph
for the requirement under paragraph (1) is 12
months after the date the standards are established
under subsection (c).
(b) ENFORCEMENT THROUGH CIVIL MONEY PEN-
ALTIES.—
(1) IN GENERAL.—In the case of a health bene-
fit plan sponsor that fails to issue a health benefit
card in accordance with subsection (a)(1), the spon-
sor is subject to a civil money penalty not to exceed
$100 for each such violation. The provisions of sec-
tion 1128A of the Social Security Act (other than
subsections (a) and (b)) shall apply to a civil money
penalty under this subsection in the same manner as
such provisions apply to a penalty or proceeding
under section 1128A(a) of such Act.
(2) EFFECTIVE DATE.—No penalty may be im-
posed under paragraph (1) for any failure occurring
before the deadline specified in subsection (a)(2).
(c) HEALTH BENEFIT CARDS.—
(1) IN GENERAL.—The Secretary shall establish
standards consistent with this subsection respecting
the form and information to be contained on health
benefit cards (for purposes of subsection (a)).
(2) ELECTRONIC.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the card shall be in a form similar
to that of a credit card and shall have, encoded
in electronic form—
(i) the identity of the individual enti-
tled to health benefits;
(ii) the health benefit plan in which
the individual is enrolled;
(iii) the identity of each principal in-
sured (as defined by the Secretary) for the
family that includes the individual, in the
case of an individual who is enrolled under
a family class of enrollment;
(iv) the telephone number or numbers
to be used for the submission electronically
of claims under the plan under section
203; and
(v) information relating to organ do-
nation.
(B) USE
OF
ELECTRONIC
READ-AND-
WRITE CARDS.—The Secretary may provide for
cards in an electronic form that permits infor-
mation on the card to be readily changed. Such
information may include information relating to
the health coverage status of the individual and
the medical history of the individual.
(C) PERSONAL
IDENTIFIER.—For pur-
poses of subparagraph (A) and for purposes of
claims processing and related purposes under
section 203, the Social Security account number
of the individual or, in the case of an infant or
other individual to whom such a number has
not been issued, such a Social Security account
number of a parent or guardian or other num-
ber as the Secretary shall specify, shall be used
as the personal identifier for the individual.
(3) 
ADDITIONAL
INFORMATION.—The 
card
shall include such additional information, in elec-
tronic or other form, as the Secretary may require
to carry out the purposes of this Act. In addition,
the health benefit plan sponsor issuing the card may
include such additional information on the card as
the sponsor desires, subject to such limitations as
the Secretary may provide.
(4) PERMISSIBLE
USES
OF
CARD.—A health
benefit card that is issued to an individual who is
entitled to benefits under a health benefit plan may
be used by an individual or entity only for the pur-
pose of providing or assisting the individual entitled
to benefits in obtaining an item or service that is
covered under such plan.
(5) DEADLINE.—The Secretary shall first es-
tablish the standards for health benefit cards under
this subsection by not later than 18 months after
the date of the enactment of this Act.
(d) APPLICATION TO MEDICARE AND MEDICAID PRO-
GRAM.—
(1) MEDICARE PROGRAM.—The Secretary shall
provide, in regulations promulgated to carry out the
medicare program, that identification cards issued
under that program are modified to the extent re-
quired to conform to the standards established under
subsection (c), by not later than the deadline speci-
fied in subsection (a)(2).
(2) STATE MEDICAID PLANS.—As a condition
for the approval of a State plan under the medicaid
program, effective for calendar quarters beginning
on or after the deadline specified in subsection
(a)(2), each such plan shall provide, in accordance
with regulations of the Secretary, that identification
cards issued under the plan are modified to the ex-
tent required to conform to subsection (c).
SEC. 202. NATIONAL ENROLLMENT VERIFICATION SYSTEM.
(a) ESTABLISHMENT.—The Secretary shall establish
a national enrollment verification system for the verifica-
tion of an individual’s enrollment in a health benefit plan
and entitlement to benefits under such plan. The system
shall assist in the identification of, and collection from,
parties responsible for the payment for health care items
and services furnished to individuals enrolled under a
health benefit plan.
(b) INFORMATION IN SYSTEM.—The enrollment ver-
ification system shall contain such information submitted
by health benefit plan sponsors, employers, and other indi-
viduals and entities specified by the Secretary as the Sec-
retary shall determine in standards established under this
section. The information shall include the following with
respect to each individual enrolled in a health benefit plan
(regardless of whether the individual is enrolled under an
individual or a family class of enrollment):
(1) The name, address, and personal identifier
of the individual and the identity of each principal
insured (as defined by the Secretary under section
201(c)(2)(A)(iii)) for the family that includes the in-
dividual, in the case of an individual who is enrolled
under a family class of enrollment.
(2) The name, address, and telephone number
of each health benefit plan in which the individual
is enrolled.
(3) The type of coverage elected.
(4) Race and ethnicity data.
(5) The period for which such coverage is elect-
ed.
(6) The status of individuals with respect to
deductibles, copayments, coinsurance, or out-of-pock-
et limits on cost sharing.
(7) Coordination of benefit information appro-
priate in determining liability in cases in which bene-
fits may be payable under 2 or more health benefit
plans.
(c) PERIODICITY OF SUBMISSIONS.—The standards
established by the Secretary under this subsection shall
require the submission of information to the national en-
rollment verification system on a periodic basis (as deter-
mined by the Secretary) in order to report applicable
changes with respect to enrollment status or eligibility.
(d) FORM
OF INQUIRY.—The verification system
shall be capable of accepting inquiries from health care
providers, health benefit plan sponsors (and any other in-
dividual or entity determined appropriate by the Sec-
retary) in a variety of electronic and other forms, includ-
ing—
(1) through electronic transmission of informa-
tion on the health benefit card (in a manner similar
to that for verification of credit card purchases);
(2) through the use of a touch-tone telephone
line; and
(3) through the use of a computer modem.
(e) FORM OF RESPONSE.—The system shall be capa-
ble of responding to inquiries under subsection (d) in a
variety of electronic and other forms, including—
(1) through modem transmission of informa-
tion;
(2) through computer synthesized voice commu-
nication; and
(3) through transmission of information to a
facsimile (fax) machine.
(f) LIMITS ON DISCLOSURE OF INFORMATION RE-
PORTED.—The disclosure of information reported to the
national enrollment verification system shall be restricted
by the Secretary under standards established by the Sec-
retary.
(g) FEES.—The Secretary may impose a fee for the
acceptance of, or response to, an inquiry to the verification
system.
(h) PUBLIC DOMAIN SOFTWARE TO PROVIDERS.—
The Secretary shall provide for the development, and shall
make available without charge to health care providers,
such computer software as will enable such providers to
make inquiries to, and receive responses from, the national
enrollment verification system in electronic form.
(i) DEADLINE.—The Secretary shall establish the
system and standards under this section (and shall develop
and make available the software under subsection (h)) by
not later than 12 months after the date of the enactment
of this Act.
(j) CIVIL MONEY PENALTY.—In the case of a failure
of an individual or entity to report information to the en-
rollment verification system under a standard established
by the Secretary under this section, the individual or en-
tity shall be subject, in addition to any other penalties that
may be prescribed by law, to a civil money penalty of not
more than $100 for each day in which such failure per-
sists. The provisions of section 1128A of the Social Secu-
rity Act (other than subsections (a) and (b)) shall apply
to a civil money penalty under this subsection in the same
manner as such provisions apply to a penalty or proceed-
ing under section 1128A(a) of such Act.
(k) ELIMINATION OF EMPLOYER REQUIREMENT TO
REPORT CERTAIN INFORMATION
TO MEDICARE
AND
MEDICAID COVERAGE DATA BANK.—Effective upon full
implementation of the national enrollment verification sys-
tem under this section—
(1) no employer is required to make any reports
under section 1144(c) of the Social Security Act;
and
(2) information and functions previously in or
performed by the Medicare and Medicaid Coverage
Data Bank under section 1144 of such Act shall be
subsumed by the enrollment verification system.
SEC. 203. REQUIREMENTS FOR UNIFORM CLAIMS AND
ELECTRONIC CLAIMS DATA SET.
(a) REQUIREMENTS.—
(1) SUBMISSION OF CLAIMS.—Each health care
provider that furnishes services in the United States
for which payment may be made under a health ben-
efit plan shall submit any claim for payment for
such services only in a form and manner consistent
with the standards established under subsection (c).
(2) ACCEPTANCE OF CLAIMS.—A health benefit
plan sponsor may not reject a claim for payment
under the health benefit plan provided on the basis
of the form or manner in which the claim is submit-
ted if the claim is submitted in accordance with the
standards established under subsection (c).
(3) EFFECTIVE
DATE.—This subsection shall
apply to claims for services furnished on or after the
date that is 6 months after the date standards are
established under subsection (c).
(b) ENFORCEMENT THROUGH CIVIL MONEY PEN-
ALTIES.—
(1) IN GENERAL.—
(A) PROVIDERS.—In the case of a health
care provider that submits a claim in violation
of subsection (a)(1), the provider is subject to
a civil money penalty of not to exceed $100 (or,
if greater, the amount of the claim) for each
such violation.
(B) HEALTH BENEFIT PLAN SPONSORS.—
In the case of a health benefit plan sponsor
that rejects a claim in violation of subsection
(a)(2), the sponsor is subject to a civil money
penalty of not to exceed $100 (or, if greater,
the amount of the claim) for each such viola-
tion.
(2) PROCESS.—The provisions of section 1128A
of the Social Security Act (other than subsections
(a) and (b)) shall apply to a civil money penalty
under paragraph (1) in the same manner as such
provisions apply to a penalty or proceeding under
section 1128A(a) of such Act.
(c) STANDARDS RELATING TO UNIFORM CLAIMS AND
ELECTRONIC CLAIMS DATA SET.—
(1) ESTABLISHMENT
OF
STANDARDS.—The
Secretary shall establish standards that relate to the
form and manner of submission of claims for bene-
fits under a health benefit plan. The standards—
(A) shall require that such claims be sub-
mitted electronically;
(B) shall define the data elements to be
contained in a uniform electronic claims data
set to be used with respect to such claims;
(C) establish a uniform electronic format
for the electronic transmission of such elements;
(D) shall include instructions on record
keeping in support of claims submitted; and
(E) shall ensure the suitability of elec-
tronic data as evidence in a court of law.
(2) SCOPE OF INFORMATION.—
(A) IN
GENERAL.—The standards under
this subsection are intended to cover substan-
tially most claims that are filed under health
benefit plans. Such information need not in-
clude all elements that may potentially be re-
quired to be reported under utilization review
provisions of plans.
(B) 
ENSURING
ACCOUNTABILITY
FOR
CLAIMS SUBMITTED ELECTRONICALLY.—In es-
tablishing such standards, the Secretary, in
consultation with appropriate agencies, shall in-
clude such methods of ensuring provider re-
sponsibility and accountability for claims sub-
mitted electronically that are designed to con-
trol fraud and abuse in the submission of such
claims.
(C) COMPONENTS.—In establishing such
standards the Secretary shall—
(i) with respect to data elements, de-
fine data fields, formats, and medical no-
menclature, and plan benefit and insurance
information; and
(ii) develop a single, uniform, up-to-
date coding system for procedures, serv-
ices, and diagnoses based, to the maximum
extent possible, on the American Medical
Association’s Common Procedural Termi-
nology, Fourth Edition or a revised version
of such text (with respect to procedures
and services) and the International Classi-
fication of Diseases, 9th Revision, Clinical
Modification, Third Edition or a revised
version of such text (with respect to diag-
noses), with additional coding developed as
necessary by the Secretary.
(3) COORDINATION
WITH
STANDARDS
FOR
ELECTRONIC
MEDICAL
RECORDS.—In establishing
standards under this subsection, the Secretary shall
assure that—
(A) the development of such standards is
coordinated with the development of the stand-
ards for reporting uniform clinical data sets
under section 204; and
(B) the coding of data elements under the
uniform electronic claims data set and the cod-
ing of the same elements in the uniform hos-
pital clinical data set and the uniform patient
information data set developed under section
204 are consistent.
(4) UNIFORM, UNIQUE PROVIDER IDENTIFICA-
TION CODES.—In establishing standards under this
subsection—
(A) the Secretary shall provide for a
unique identifier code for each health care pro-
vider and group practice that furnishes services
for which a claim may be submitted under a
health benefit plan; and
(B) in the case of a provider that has a
unique identifier issued for purposes of the
medicare program, the code provided under
subparagraph (A) shall be the same as such
unique identifier.
(5) PUBLIC
DOMAIN
SOFTWARE
TO
PROVID-
ERS.—The Secretary shall provide for the develop-
ment, and shall make available without charge to
health care providers, such computer software as will
enable the providers to submit claims and to receive
verification of claims status electronically.
(6) STANDARDS
FOR
CLAIMS
FOR
CLINICAL
LABORATORY TESTS.—The standards shall provide
that claims for clinical laboratory tests for which
benefits are provided under a health benefit plan
shall be submitted directly by the person or entity
that performed (or supervised the performance of)
the tests to the plan in a manner consistent with
(and subject to such exceptions as are provided
under) the requirement for direct submission of such
claims under the medicare program.
(7) DEADLINE.—The Secretary shall first pro-
vide for the standards for the uniform claims under
this subsection (and shall develop and make avail-
able the software under paragraph (6)) by not later
than 1 year after the date of the enactment of this
Act.
(d) USE UNDER MEDICARE AND MEDICAID PRO-
GRAMS.—
(1) REQUIREMENT
FOR
PROVIDERS.—In the
case of a health care provider that submits a claim
for services furnished under the medicare program
or medicaid program in violation of subsection
(a)(1), no payment shall be made under such pro-
gram for such services.
(2) REQUIREMENTS OF INTERMEDIARIES AND
CARRIERS UNDER MEDICARE PROGRAM.—The Sec-
retary shall provide, in regulations promulgated to
carry out title XVIII of the Social Security Act, that
the claims process provided under that title is modi-
fied to the extent required to conform to the stand-
ards established under subsection (c).
(3) 
REQUIREMENTS
OF
STATE
MEDICAID
PLANS.—As a condition for the approval of State
plans under the medicaid program, effective as of
the effective date specified in subsection (a)(3), each
such plan shall provide, in accordance with regula-
tions of the Secretary, that the claims process pro-
vided under the plan is modified to the extent re-
quired to conform to the standards established under
subsection (c).
SEC. 204. REPORTING OF UNIFORM CLINICAL DATA SETS.
(a) STANDARDS FOR ELECTRONIC REPORTING OF
UNIFORM CLINICAL DATA SETS.—
(1) PROMULGATION OF STANDARDS.—
(A) IN
GENERAL.—Not later than the
deadlines provided in paragraph (5), the Sec-
retary shall promulgate standards described in
paragraph (2) concerning the uniform clinical
data sets described in such paragraph.
(B) REVISION.—The Secretary may from
time to time revise the standards promulgated
under this paragraph.
(2) CONTENTS OF STANDARDS.—The standards
promulgated under paragraph (1) shall include at
least the following:
(A) A definition of a uniform hospital clini-
cal data set, including a definition of the set of
comprehensive data elements, for use by utiliza-
tion and quality control peer review organiza-
tions.
(B) A definition of a uniform patient infor-
mation data set including data obtained at the