H. R. 3103—76
‘‘(ii) Federal or State criminal convictions related
to the delivery of a health care item or service.
‘‘(iii) Actions by Federal or State agencies respon-
sible for the licensing and certification of health care
providers, 
suppliers, 
and 
licensed 
health 
care
practitioners, including—
‘‘(I) formal or official actions, such as revoca-
tion or suspension of a license (and the length
of any such suspension), reprimand, censure or
probation,
‘‘(II) any other loss of license or the right to
apply for, or renew, a license of the provider, sup-
plier, or practitioner, whether by operation of law,
voluntary surrender, non-renewability, or other-
wise, or
‘‘(III) any other negative action or finding by
such Federal or State agency that is publicly avail-
able information.
‘‘(iv) Exclusion from participation in Federal or
State health care programs (as defined in sections
1128B(f) and 1128(h), respectively).
‘‘(v) Any other adjudicated actions or decisions that
the Secretary shall establish by regulation.
‘‘(B) EXCEPTION.—The term does not include any action
with respect to a malpractice claim.
‘‘(2) PRACTITIONER.—The terms ‘licensed health care practi-
tioner’, ‘licensed practitioner’, and ‘practitioner’ mean, with
respect to a State, an individual who is licensed or otherwise
authorized by the State to provide health care services (or
any individual who, without authority holds himself or herself
out to be so licensed or authorized).
‘‘(3) GOVERNMENT AGENCY.—The term ‘Government agency’
shall include:
‘‘(A) The Department of Justice.
‘‘(B) The Department of Health and Human Services.
‘‘(C) Any other Federal agency that either administers
or provides payment for the delivery of health care services,
including, but not limited to the Department of Defense
and the Veterans’ Administration.
‘‘(D) State law enforcement agencies.
‘‘(E) State medicaid fraud control units.
‘‘(F) Federal or State agencies responsible for the
licensing and certification of health care providers and
licensed health care practitioners.
‘‘(4) HEALTH PLAN.—The term ‘health plan’ has the meaning
given such term by section 1128C(c).
‘‘(5) DETERMINATION OF CONVICTION.—For purposes of para-
graph (1), the existence of a conviction shall be determined
under paragraph (4) of section 1128(i).’’.
(b) IMPROVED PREVENTION IN ISSUANCE OF MEDICARE PROVIDER
NUMBERS.—Section 1842(r) (42 U.S.C. 1395u(r)) is amended by
adding at the end the following new sentence: ‘‘Under such system,
the Secretary may impose appropriate fees on such physicians to
cover the costs of investigation and recertification activities with
respect to the issuance of the identifiers.’’.
H. R. 3103—77
Subtitle D—Civil Monetary Penalties
SEC. 231. SOCIAL SECURITY ACT CIVIL MONETARY PENALTIES.
(a) GENERAL CIVIL MONETARY PENALTIES.—Section 1128A (42
U.S.C. 1320a–7a) is amended as follows:
(1) In the third sentence of subsection (a), by striking
‘‘programs under title XVIII’’ and inserting ‘‘Federal health
care programs (as defined in section 1128B(f)(1))’’.
(2) In subsection (f)—
(A) by redesignating paragraph (3) as paragraph
(4); and
(B) by inserting after paragraph (2) the following new
paragraph:
‘‘(3) With respect to amounts recovered arising out of a
claim under a Federal health care program (as defined in
section 1128B(f)), the portion of such amounts as is determined
to have been paid by the program shall be repaid to the pro-
gram, and the portion of such amounts attributable to the
amounts recovered under this section by reason of the amend-
ments made by the Health Insurance Portability and Account-
ability Act of 1996 (as estimated by the Secretary) shall be
deposited into the Federal Hospital Insurance Trust Fund
pursuant to section 1817(k)(2)(C).’’.
(3) In subsection (i)—
(A) in paragraph (2), by striking ‘‘title V, XVIII, XIX,
or XX of this Act’’ and inserting ‘‘a Federal health care
program (as defined in section 1128B(f))’’,
(B) in paragraph (4), by striking ‘‘a health insurance
or medical services program under title XVIII or XIX of
this Act’’ and inserting ‘‘a Federal health care program
(as so defined)’’, and
(C) in paragraph (5), by striking ‘‘title V, XVIII, XIX,
or XX’’ and inserting ‘‘a Federal health care program (as
so defined)’’.
(4) By adding at the end the following new subsection:
‘‘(m)(1) For purposes of this section, with respect to a Federal
health care program not contained in this Act, references to the
Secretary in this section shall be deemed to be references to the
Secretary or Administrator of the department or agency with juris-
diction over such program and references to the Inspector General
of the Department of Health and Human Services in this section
shall be deemed to be references to the Inspector General of the
applicable department or agency.
‘‘(2)(A) The Secretary and Administrator of the departments
and agencies referred to in paragraph (1) may include in any
action pursuant to this section, claims within the jurisdiction of
other Federal departments or agencies as long as the following
conditions are satisfied:
‘‘(i) The case involves primarily claims submitted to the
Federal health care programs of the department or agency
initiating the action.
‘‘(ii) The Secretary or Administrator of the department
or agency initiating the action gives notice and an opportunity
to participate in the investigation to the Inspector General
of the department or agency with primary jurisdiction over
H. R. 3103—78
the Federal health care programs to which the claims were
submitted.
‘‘(B) If the conditions specified in subparagraph (A) are fulfilled,
the Inspector General of the department or agency initiating the
action is authorized to exercise all powers granted under the Inspec-
tor General Act of 1978 (5 U.S.C. App.) with respect to the claims
submitted to the other departments or agencies to the same manner
and extent as provided in that Act with respect to claims submitted
to such departments or agencies.’’.
(b) EXCLUDED INDIVIDUAL RETAINING OWNERSHIP OR CONTROL
INTEREST IN PARTICIPATING ENTITY.—Section 1128A(a) (42 U.S.C.
1320a–7a(a)) is amended—
(1) by striking ‘‘or’’ at the end of paragraph (1)(D);
(2) by striking ‘‘, or’’ at the end of paragraph (2) and
inserting a semicolon;
(3) by striking the semicolon at the end of paragraph (3)
and inserting ‘‘; or’’; and
(4) by inserting after paragraph (3) the following new para-
graph:
‘‘(4) in the case of a person who is not an organization,
agency, or other entity, is excluded from participating in a
program under title XVIII or a State health care program
in accordance with this subsection or under section 1128 and
who, at the time of a violation of this subsection—
‘‘(A) retains a direct or indirect ownership or control
interest in an entity that is participating in a program
under title XVIII or a State health care program, and
who knows or should know of the action constituting the
basis for the exclusion; or
‘‘(B) is an officer or managing employee (as defined
in section 1126(b)) of such an entity;’’.
(c) MODIFICATIONS OF AMOUNTS OF PENALTIES AND ASSESS-
MENTS.—Section 1128A(a) (42 U.S.C. 1320a–7a(a)), as amended by
subsection (b), is amended in the matter following paragraph (4)—
(1) by striking ‘‘$2,000’’ and inserting ‘‘$10,000’’;
(2) by inserting ‘‘; in cases under paragraph (4), $10,000
for each day the prohibited relationship occurs’’ after ‘‘false
or misleading information was given’’; and
(3) by striking ‘‘twice the amount’’ and inserting ‘‘3 times
the amount’’.
(d) CLARIFICATION OF LEVEL OF KNOWLEDGE REQUIRED FOR
IMPOSITION OF CIVIL MONETARY PENALTIES.—
(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 appears; and
(B) in paragraph (3), by striking ‘‘gives’’ and inserting
‘‘knowingly gives or causes to be given’’.
(2) DEFINITION OF STANDARD.—Section 1128A(i) (42 U.S.C.
1320a–7a(i)), as amended by subsection (h)(2), is amended by
adding at the end the following new paragraph:
‘‘(7) The term ‘should know’ means that a person, 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,
H. R. 3103—79
and no proof of specific intent to defraud is required.’’.
(e) CLAIM FOR ITEM OR SERVICE BASED ON INCORRECT CODING
OR MEDICALLY UNNECESSARY SERVICES.—Section 1128A(a)(1) (42
U.S.C. 1320a–7a(a)(1)), as amended by subsection (b), is amended—
(1) in subparagraph (A) by striking ‘‘claimed,’’ and inserting
‘‘claimed, including any person who engages in a pattern or
practice of presenting or causing to be presented a claim for
an item or service that is based on a code that the person
knows or should know will result in a greater payment to
the person than the code the person knows or should know
is applicable to the item or service actually provided,’’;
(2) in subparagraph (C), by striking ‘‘or’’ at the end;
(3) in subparagraph (D), by striking the semicolon and
inserting ‘‘, or’’; and
(4) by inserting after subparagraph (D) the following new
subparagraph:
‘‘(E) is for a pattern of medical or other items or serv-
ices that a person knows or should know are not medically
necessary;’’.
(f) SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAIL-
URE TO COMPLY WITH STATUTORY OBLIGATIONS.—Section 1156(b)(3)
(42 U.S.C. 1320c–5(b)(3)) is amended by striking ‘‘the actual or
estimated cost’’ and inserting ‘‘up to $10,000 for each instance’’.
(g) PROCEDURAL PROVISIONS.—Section 1876(i)(6) (42 U.S.C.
1395mm(i)(6)), as amended by section 215(a)(2), is amended by
adding at the end the following new subparagraph:
‘‘(D) The provisions of section 1128A (other than subsections
(a) and (b)) shall apply to a civil money penalty under subparagraph
(B)(i) or (C)(i) in the same manner as such provisions apply to
a civil money penalty or proceeding under section 1128A(a).’’.
(h) PROHIBITION AGAINST OFFERING INDUCEMENTS TO INDIVID-
UALS ENROLLED UNDER PROGRAMS OR PLANS.—
(1) OFFER OF REMUNERATION.—Section 1128A(a) (42 U.S.C.
1320a–7a(a)), as amended by subsection (b), is amended—
(A) by striking ‘‘or’’ at the end of paragraph (3);
(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 to 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 individual to order or receive from a particular provider,
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 program (as so defined);’’.
(2) REMUNERATION DEFINED.—Section 1128A(i) (42 U.S.C.
1320a–7a(i)) is amended by adding at the end the following
new paragraph:
‘‘(6) The term ‘remuneration’ includes the waiver of coinsur-
ance and deductible amounts (or any part thereof), and trans-
fers of items or services for free or for other than fair market
value. The term ‘remuneration’ does not include—
‘‘(A) the waiver of coinsurance and deductible amounts
by a person, if—
H. R. 3103—80
‘‘(i) the waiver is not offered as part of any
advertisement or solicitation;
‘‘(ii) the person does not routinely waive coinsur-
ance or deductible amounts; and
‘‘(iii) the person—
‘‘(I) waives the coinsurance and deductible
amounts after determining in good faith that the
individual is in financial need;
‘‘(II) fails to collect coinsurance or deductible
amounts 
after 
making 
reasonable 
collection
efforts; or
‘‘(III) provides for any permissible waiver as
specified in section 1128B(b)(3) or in regulations
issued by the Secretary;
‘‘(B) 
differentials 
in 
coinsurance 
and 
deductible
amounts as part of a benefit plan design as long as the
differentials have been disclosed in writing to all
beneficiaries, third party payers, and providers, to whom
claims are presented and as long as the differentials meet
the standards as defined in regulations promulgated
by the Secretary not later than 180 days after the date
of the enactment of the Health Insurance Portability and
Accountability Act of 1996; or
‘‘(C) incentives given to individuals to promote the
delivery of preventive care as determined by the Secretary
in regulations so promulgated.’’.
(i) EFFECTIVE DATE.—The amendments made by this section
shall apply to acts or omissions occurring on or after January
1, 1997.
SEC. 232. PENALTY FOR FALSE CERTIFICATION FOR HOME HEALTH
SERVICES.
(a) IN GENERAL.—Section 1128A(b) (42 U.S.C. 1320a–7a(b)) is
amended by adding at the end the following new paragraph:
‘‘(3)(A) Any physician who executes a document described in
subparagraph (B) with respect to an individual knowing that all
of the requirements referred to in such subparagraph are not met
with respect to the individual shall be subject to a civil monetary
penalty of not more than the greater of—
‘‘(i) $5,000, or
‘‘(ii) three times the amount of the payments under title
XVIII for home health services which are made pursuant to
such certification.
‘‘(B) A document described in this subparagraph is any docu-
ment that certifies, for purposes of title XVIII, that an individual
meets the requirements of section 1814(a)(2)(C) or 1835(a)(2)(A)
in the case of home health services furnished to the individual.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to certifications made on or after the date of the enact-
ment of this Act.
H. R. 3103—81
Subtitle E—Revisions to Criminal Law
SEC. 241. DEFINITIONS 
RELATING 
TO 
FEDERAL 
HEALTH 
CARE
OFFENSE.
(a) IN GENERAL.—Chapter 1 of title 18, United States Code,
is amended by adding at the end the following:
‘‘§ 24. Definitions relating to Federal health care offense
‘‘(a) As used in this title, the term ‘Federal health care offense’
means a violation of, or a criminal conspiracy to violate—
‘‘(1) section 669, 1035, 1347, or 1518 of this title;
‘‘(2) section 287, 371, 664, 666, 1001, 1027, 1341, 1343,
or 1954 of this title, if the violation or conspiracy relates to
a health care benefit program.
‘‘(b) As used in this title, the term ‘health care benefit program’
means any public or private plan or contract, affecting commerce,
under which any medical benefit, item, or service is provided to
any individual, and includes any individual or entity who is provid-
ing a medical benefit, item, or service for which payment may
be made under the plan or contract.’’.
(b) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 2 of title 18, United States Code, is amended
by inserting after the item relating to section 23 the following
new item:
‘‘24. Definitions relating to Federal health care offense.’’.
SEC. 242. HEALTH CARE FRAUD.
(a) OFFENSE.—
(1) IN GENERAL.—Chapter 63 of title 18, United States
Code, is amended by adding at the end the following:
‘‘§ 1347. Health care fraud
‘‘Whoever knowingly and willfully executes, or attempts to exe-
cute, a scheme or artifice—
‘‘(1) to defraud any health care benefit program; or
‘‘(2) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property
owned by, or under the custody or control of, any health care
benefit program,
in connection with the delivery of or payment for health care bene-
fits, items, or services, shall be fined under this title or imprisoned
not more than 10 years, or both. If the violation results in serious
bodily injury (as defined in section 1365 of this title), such person
shall be fined under this title or imprisoned not more than 20
years, or both; and if the violation results in death, such person
shall be fined under this title, or imprisoned for any term of years
or for life, or both.’’.
(2) CLERICAL AMENDMENT.—The table of sections at the
beginning of chapter 63 of title 18, United States Code, is
amended by adding at the end the following:
‘‘1347. Health care fraud.’’.
(b) CRIMINAL FINES DEPOSITED IN FEDERAL HOSPITAL INSUR-
ANCE TRUST FUND.—The Secretary of the Treasury shall deposit
into the Federal Hospital Insurance Trust Fund pursuant to section
1817(k)(2)(C) of the Social Security Act (42 U.S.C. 1395i) an amount
H. R. 3103—82
equal to the criminal fines imposed under section 1347 of title
18, United States Code (relating to health care fraud).
SEC. 243. THEFT OR EMBEZZLEMENT.
(a) IN GENERAL.—Chapter 31 of title 18, United States Code,
is amended by adding at the end the following:
‘‘§ 669. Theft or embezzlement in connection with health care
‘‘(a) Whoever knowingly and willfully embezzles, steals, or
otherwise without authority converts to the use of any person
other than the rightful owner, or intentionally misapplies any of
the moneys, funds, securities, premiums, credits, property, or other
assets of a health care benefit program, shall be fined under this
title or imprisoned not more than 10 years, or both; but if the
value of such property does not exceed the sum of $100 the defend-
ant shall be fined under this title or imprisoned not more than
one year, or both.
‘‘(b) As used in this section, the term ‘health care benefit
program’ has the meaning given such term in section 24(b) of
this title.’’.
(b) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 31 of title 18, United States Code, is amended
by adding at the end the following:
‘‘669. Theft or embezzlement in connection with health care.’’.
SEC. 244. FALSE STATEMENTS.
(a) IN GENERAL.—Chapter 47 of title 18, United States Code,
is amended by adding at the end the following:
‘‘§ 1035. False statements relating to health care matters
‘‘(a) Whoever, in any matter involving a health care benefit
program, knowingly and willfully—
‘‘(1) falsifies, conceals, or covers up by any trick, scheme,
or device a material fact; or
‘‘(2) makes any materially false, fictitious, or fraudulent
statements or representations, or makes or uses any materially
false writing or document knowing the same to contain any
materially false, fictitious, or fraudulent statement or entry,
in connection with the delivery of or payment for health care bene-
fits, items, or services, shall be fined under this title or imprisoned
not more than 5 years, or both.
‘‘(b) As used in this section, the term ‘health care benefit
program’ has the meaning given such term in section 24(b) of
this title.’’.
(b) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 47 of title 18, United States Code, is amended
by adding at the end the following new item:
‘‘1035. False statements relating to health care matters.’’.
SEC. 245. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF HEALTH
CARE OFFENSES.
(a) IN GENERAL.—Chapter 73 of title 18, United States Code,
is amended by adding at the end the following:
H. R. 3103—83
‘‘§ 1518. Obstruction of criminal investigations of health care
offenses
‘‘(a) Whoever willfully prevents, obstructs, misleads, delays or
attempts to prevent, obstruct, mislead, or delay the communication
of information or records relating to a violation of a Federal health
care offense to a criminal investigator shall be fined under this
title or imprisoned not more than 5 years, or both.
‘‘(b) As used in this section the term ‘criminal investigator’
means any individual duly authorized by a department, agency,
or armed force of the United States to conduct or engage in inves-
tigations for prosecutions for violations of health care offenses.’’.
(b) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 73 of title 18, United States Code, is amended
by adding at the end the following new item:
‘‘1518. Obstruction of criminal investigations of health care offenses.’’.
SEC. 246. LAUNDERING OF MONETARY INSTRUMENTS.
Section 1956(c)(7) of title 18, United States Code, is amended
by adding at the end the following:
‘‘(F) Any act or activity constituting an offense involv-
ing a Federal health care offense.’’.
SEC. 247. INJUNCTIVE RELIEF RELATING TO HEALTH CARE OFFENSES.
(a) IN GENERAL.—Section 1345(a)(1) of title 18, United States
Code, is amended—
(1) by striking ‘‘or’’ at the end of subparagraph (A);
(2) by inserting ‘‘or’’ at the end of subparagraph (B); and
(3) by adding at the end the following:
‘‘(C) committing or about to commit a Federal health care
offense.’’.
(b) FREEZING OF ASSETS.—Section 1345(a)(2) of title 18, United
States Code, is amended by inserting ‘‘or a Federal health care
offense’’ after ‘‘title)’’.
SEC. 248. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES.
(a) IN GENERAL.—Chapter 223 of title 18, United States Code,
is amended by adding after section 3485 the following:
‘‘§ 3486. Authorized investigative demand procedures
‘‘(a) AUTHORIZATION.—(1) In any investigation relating to any
act or activity involving a Federal health care offense, the Attorney
General or the Attorney General’s designee may issue in writing
and cause to be served a subpoena—
‘‘(A) requiring the production of any records (including any
books, papers, documents, electronic media, or other objects
or tangible things), which may be relevant to an authorized
law enforcement inquiry, that a person or legal entity may
possess or have care, custody, or control; or
‘‘(B) requiring a custodian of records to give testimony
concerning the production and authentication of such records.
‘‘(2) A subpoena under this subsection shall describe the objects
required to be produced and prescribe a return date within a
reasonable period of time within which the objects can be assembled
and made available.
‘‘(3) The production of records shall not be required under
this section at any place more than 500 miles distant from the
H. R. 3103—84
place where the subpoena for the production of such records is
served.
‘‘(4) Witnesses summoned under this section shall be paid the
same fees and mileage that are paid witnesses in the courts of
the United States.
‘‘(b) SERVICE.—A subpoena issued under this section may be
served by any person who is at least 18 years of age and is
designated in the subpoena to serve it. Service upon a natural
person may be made by personal delivery of the subpoena to him.
Service may be made upon a domestic or foreign corporation or
upon a partnership or other unincorporated association which is
subject to suit under a common name, by delivering the subpoena
to an officer, to a managing or general agent, or to any other
agent authorized by appointment or by law to receive service of
process. The affidavit of the person serving the subpoena entered
on a true copy thereof by the person serving it shall be proof
of service.
‘‘(c) ENFORCEMENT.—In the case of contumacy by or refusal
to obey a subpoena issued to any person, the Attorney General
may invoke the aid of any court of the United States within the
jurisdiction of which the investigation is carried on or of which
the subpoenaed person is an inhabitant, or in which he carries
on business or may be found, to compel compliance with the sub-
poena. The court may issue an order requiring the subpoenaed
person to appear before the Attorney General to produce records,
if so ordered, or to give testimony concerning the production and
authentication of such records. Any failure to obey the order of
the court may be punished by the court as a contempt thereof.
All process in any such case may be served in any judicial district
in which such person may be found.
‘‘(d) IMMUNITY FROM CIVIL LIABILITY.—Notwithstanding any
Federal, State, or local law, any person, including officers, agents,
and employees, receiving a summons under this section, who com-
plies in good faith with the summons and thus produces the mate-
rials sought, shall not be liable in any court of any State or the
United States to any customer or other person for such production
or for nondisclosure of that production to the customer.
‘‘(e) LIMITATION
ON USE.—(1) Health information about an
individual that is disclosed under this section may not be used
in, or disclosed to any person for use in, any administrative, civil,
or criminal action or investigation directed against the individual
who is the subject of the information unless the action or investiga-
tion arises out of and is directly related to receipt of health care
or payment for health care or action involving a fraudulent claim
related to health; or if authorized by an appropriate order of a
court of competent jurisdiction, granted after application showing
good cause therefor.
‘‘(2) In assessing good cause, the court shall weigh the public
interest and the need for disclosure against the injury to the patient,
to the physician-patient relationship, and to the treatment services.
‘‘(3) Upon the granting of such order, the court, in determining
the extent to which any disclosure of all or any part of any record
is necessary, shall impose appropriate safeguards against unauthor-
ized disclosure.’’.
(b) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of chapter 223 of title 18, United States Code, is amended
H. R. 3103—85
by inserting after the item relating to section 3485 the following
new item:
‘‘3486. Authorized investigative demand procedures.’’.
(c) CONFORMING AMENDMENT.—Section 1510(b)(3)(B) of title
18, United States Code, is amended by inserting ‘‘or a Department
of Justice subpoena (issued under section 3486 of title 18),’’ after
‘‘subpoena’’.
SEC. 249. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.
(a) IN GENERAL.—Section 982(a) of title 18, United States Code,
is amended by adding after paragraph (5) the following new para-
graph:
‘‘(6) The court, in imposing sentence on a person convicted
of a Federal health care offense, shall order the person to forfeit
property, real or personal, that constitutes or is derived, directly
or indirectly, from gross proceeds traceable to the commission of
the offense.’’.
(b) CONFORMING AMENDMENT.—Section 982(b)(1)(A) of title 18,
United States Code, is amended by inserting ‘‘or (a)(6)’’ after ‘‘(a)(1)’’.
(c) PROPERTY FORFEITED DEPOSITED
IN FEDERAL HOSPITAL
INSURANCE TRUST FUND.—
(1) IN GENERAL.—After the payment of the costs of asset
forfeiture has been made and after all restoration payments
(if any) have been made, and notwithstanding any other provi-
sion of law, the Secretary of the Treasury shall deposit into
the Federal Hospital Insurance Trust Fund pursuant to section
1817(k)(2)(C) of the Social Security Act, as added by section
301(b), an amount equal to the net amount realized from the
forfeiture of property by reason of a Federal health care offense
pursuant to section 982(a)(6) of title 18, United States Code.
(2) COSTS OF ASSET FORFEITURE.—For purposes of para-
graph (1), the term ‘‘payment of the costs of asset forfeiture’’
means—
(A) the payment, at the discretion of the Attorney
General, of any expenses necessary to seize, detain, inven-
tory, safeguard, maintain, advertise, sell, or dispose of prop-
erty under seizure, detention, or forfeited, or of any other
necessary expenses incident to the seizure, detention, for-
feiture, or disposal of such property, including payment
for—
(i) contract services;
(ii) the employment of outside contractors to oper-
ate and manage properties or provide other specialized
services necessary to dispose of such properties in an
effort to maximize the return from such properties;
and
(iii) reimbursement of any Federal, State, or local
agency for any expenditures made to perform the func-
tions described in this subparagraph;
(B) at the discretion of the Attorney General, the pay-
ment of awards for information or assistance leading to
a civil or criminal forfeiture involving any Federal agency
participating in the Health Care Fraud and Abuse Control
Account;
(C) the compromise and payment of valid liens and
mortgages against property that has been forfeited, subject
to the discretion of the Attorney General to determine
H. R. 3103—86
the validity of any such lien or mortgage and the amount
of payment to be made, and the employment of attorneys
and other personnel skilled in State real estate law as
necessary;
(D) payment authorized in connection with remission
or mitigation procedures relating to property forfeited; and
(E) the payment of State and local property taxes on
forfeited real property that accrued between the date of
the violation giving rise to the forfeiture and the date
of the forfeiture order.
(3) RESTORATION
PAYMENT.—Notwithstanding any other
provision of law, if the Federal health care offense referred
to in paragraph (1) resulted in a loss to an employee welfare
benefit plan within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, the Secretary of the
Treasury shall transfer to such employee welfare benefit plan,
from the amount realized from the forfeiture of property
referred to in paragraph (1), an amount equal to such loss.
For purposes of paragraph (1), the term ‘‘restoration payment’’
means the amount transferred to an employee welfare benefit
plan pursuant to this paragraph.
SEC. 250. RELATION TO ERISA AUTHORITY.
Nothing in this subtitle shall be construed as affecting the
authority of the Secretary of Labor under section 506(b)
of the Employee Retirement Income Security Act of 1974, including
the Secretary’s authority with respect to violations of title 18,
United States Code (as amended by this subtitle).
Subtitle F—Administrative Simplification
SEC. 261. PURPOSE.
It is the purpose of this subtitle to improve the Medicare
program under title XVIII of the Social Security Act, the medicaid
program under title XIX of such Act, and the efficiency and effective-
ness of the health care system, by encouraging the development
of a health information system through the establishment of stand-
ards and requirements for the electronic transmission of certain
health information.
SEC. 262. ADMINISTRATIVE SIMPLIFICATION.
(a) IN GENERAL.—Title XI (42 U.S.C. 1301 et seq.) is amended
by adding at the end the following:
‘‘PART C—ADMINISTRATIVE SIMPLIFICATION
‘‘DEFINITIONS
‘‘SEC. 1171. For purposes of this part:
‘‘(1) CODE SET.—The term ‘code set’ means any set of codes
used for encoding data elements, such as tables of terms, medi-
cal concepts, medical diagnostic codes, or medical procedure
codes.
‘‘(2) HEALTH CARE CLEARINGHOUSE.—The term ‘health care
clearinghouse’ means a public or private entity that processes
or facilitates the processing of nonstandard data elements of
health information into standard data elements.
H. R. 3103—87
‘‘(3) HEALTH CARE PROVIDER.—The term ‘health care pro-
vider’ includes a provider of services (as defined in section
1861(u)), a provider of medical or other health services (as
defined in section 1861(s)), and any other person furnishing
health care services or supplies.
‘‘(4) HEALTH INFORMATION.—The term ‘health information’
means any information, whether oral or recorded in any form
or medium, that—
‘‘(A) is created or received by a health care provider,
health plan, public health authority, employer, life insurer,
school or university, or health care clearinghouse; and
‘‘(B) relates to the past, present, or future physical
or mental health or condition of an individual, the provision
of health care to an individual, or the past, present, or
future payment for the provision of health care to an
individual.
‘‘(5) HEALTH
PLAN.—The term ‘health plan’ means an
individual or group plan that provides, or pays the cost of,
medical care (as such term is defined in section 2791 of the
Public Health Service Act). Such term includes the following,
and any combination thereof:
‘‘(A) A group health plan (as defined in section 2791(a)
of the Public Health Service Act), but only if the plan—
‘‘(i) has 50 or more participants (as defined in
section 3(7) of the Employee Retirement Income Secu-
rity Act of 1974); or
‘‘(ii) is administered by an entity other than the
employer who established and maintains the plan.
‘‘(B) A health insurance issuer (as defined in section
2791(b) of the Public Health Service Act).
‘‘(C) A health maintenance organization (as defined
in section 2791(b) of the Public Health Service Act).
‘‘(D) Part A or part B of the Medicare program under
title XVIII.
‘‘(E) The medicaid program under title XIX.
‘‘(F) A Medicare supplemental policy (as defined in
section 1882(g)(1)).
‘‘(G) A long-term care policy, including a nursing home
fixed indemnity policy (unless the Secretary determines
that such a policy does not provide sufficiently comprehen-
sive coverage of a benefit so that the policy should be
treated as a health plan).
‘‘(H) An employee welfare benefit plan or any other
arrangement which is established or maintained for the
purpose of offering or providing health benefits to the
employees of 2 or more employers.
‘‘(I) The health care program for active military person-
nel under title 10, United States Code.
‘‘(J) The veterans health care program under chapter
17 of title 38, United States Code.
‘‘(K) The Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS), as defined in section
1072(4) of title 10, United States Code.
‘‘(L) The Indian health service program under the
Indian Health Care Improvement Act (25 U.S.C. 1601 et
seq.).
H. R. 3103—88
‘‘(M) The Federal Employees Health Benefit Plan under
chapter 89 of title 5, United States Code.
‘‘(6) INDIVIDUALLY
IDENTIFIABLE
HEALTH
INFORMATION.—
The term ‘individually identifiable health information’ means
any information, including demographic information collected
from an individual, that—
‘‘(A) is created or received by a health care provider,
health plan, employer, or health care clearinghouse; and
‘‘(B) relates to the past, present, or future physical
or mental health or condition of an individual, the provision
of health care to an individual, or the past, present, or
future payment for the provision of health care to an
individual, and—
‘‘(i) identifies the individual; or
‘‘(ii) with respect to which there is a reasonable
basis to believe that the information can be used to
identify the individual.
‘‘(7) STANDARD.—The term ‘standard’, when used with ref-
erence to a data element of health information or a transaction
referred to in section 1173(a)(1), means any such data element
or transaction that meets each of the standards and
implementation specifications adopted or established by the
Secretary with respect to the data element or transaction under
sections 1172 through 1174.
‘‘(8) STANDARD SETTING ORGANIZATION.—The term ‘standard
setting organization’ means a standard setting organization
accredited by the American National Standards Institute,
including the National Council for Prescription Drug Programs,
that develops standards for information transactions, data ele-
ments, or any other standard that is necessary to, or will
facilitate, the implementation of this part.
‘‘GENERAL REQUIREMENTS FOR ADOPTION OF STANDARDS
‘‘SEC. 1172. (a) APPLICABILITY.—Any standard adopted under
this part shall apply, in whole or in part, to the following persons:
‘‘(1) A health plan.
‘‘(2) A health care clearinghouse.
‘‘(3) A health care provider who transmits any health
information in electronic form in connection with a transaction
referred to in section 1173(a)(1).
‘‘(b) REDUCTION OF COSTS.—Any standard adopted under this
part shall be consistent with the objective of reducing the adminis-
trative costs of providing and paying for health care.
‘‘(c) ROLE OF STANDARD SETTING ORGANIZATIONS.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
any standard adopted under this part shall be a standard
that has been developed, adopted, or modified by a standard
setting organization.
‘‘(2) SPECIAL RULES.—
‘‘(A) DIFFERENT STANDARDS.—The Secretary may adopt
a standard that is different from any standard developed,
adopted, or modified by a standard setting organization,
if—
‘‘(i) the different standard will substantially reduce
administrative costs to health care providers and
health plans compared to the alternatives; and
H. R. 3103—89
‘‘(ii) the standard is promulgated in accordance
with the rulemaking procedures of subchapter III of
chapter 5 of title 5, United States Code.
‘‘(B) NO STANDARD BY STANDARD SETTING ORGANIZA-
TION.—If no standard setting organization has developed,
adopted, or modified any standard relating to a standard
that the Secretary is authorized or required to adopt under
this part—
‘‘(i) paragraph (1) shall not apply; and
‘‘(ii) subsection (f) shall apply.
‘‘(3) CONSULTATION REQUIREMENT.—
‘‘(A) IN
GENERAL.—A standard may not be adopted
under this part unless—
‘‘(i) in the case of a standard that has been devel-
oped, adopted, or modified by a standard setting
organization, the organization consulted with each of
the organizations described in subparagraph (B) in
the course of such development, adoption, or modifica-
tion; and
‘‘(ii) in the case of any other standard, the Sec-
retary, in complying with the requirements of sub-
section (f), consulted with each of the organizations
described in subparagraph (B) before adopting the
standard.
‘‘(B) ORGANIZATIONS
DESCRIBED.—The organizations
referred to in subparagraph (A) are the following:
‘‘(i) The National Uniform Billing Committee.
‘‘(ii) The National Uniform Claim Committee.
‘‘(iii) The Workgroup for Electronic Data Inter-
change.
‘‘(iv) The American Dental Association.
‘‘(d) IMPLEMENTATION SPECIFICATIONS.—The Secretary shall
establish specifications for implementing each of the standards
adopted under this part.
‘‘(e) PROTECTION
OF TRADE SECRETS.—Except as otherwise
required by law, a standard adopted under this part shall not
require disclosure of trade secrets or confidential commercial
information by a person required to comply with this part.
‘‘(f) ASSISTANCE TO THE SECRETARY.—In complying with the
requirements of this part, the Secretary shall rely on the rec-
ommendations of the National Committee on Vital and Health
Statistics established under section 306(k) of the Public Health
Service Act (42 U.S.C. 242k(k)), and shall consult with appropriate
Federal and State agencies and private organizations. The Secretary
shall publish in the Federal Register any recommendation of the
National Committee on Vital and Health Statistics regarding the
adoption of a standard under this part.
‘‘(g) APPLICATION TO MODIFICATIONS OF STANDARDS.—This sec-
tion shall apply to a modification to a standard (including an
addition to a standard) adopted under section 1174(b) in the same
manner as it applies to an initial standard adopted under section
1174(a).
‘‘STANDARDS FOR INFORMATION TRANSACTIONS AND DATA ELEMENTS
‘‘SEC. 
1173. 
(a) 
STANDARDS
TO
ENABLE
ELECTRONIC
EXCHANGE.—
H. R. 3103—90
‘‘(1) IN GENERAL.—The Secretary shall adopt standards for
transactions, and data elements for such transactions, to enable
health information to be exchanged electronically, that are
appropriate for—
‘‘(A) the financial and administrative transactions
described in paragraph (2); and
‘‘(B) other financial and administrative transactions
determined appropriate by the Secretary, consistent with
the goals of improving the operation of the health care
system and reducing administrative costs.
‘‘(2) TRANSACTIONS.—The transactions referred to in para-
graph (1)(A) are transactions with respect to the following:
‘‘(A) Health claims or equivalent encounter informa-
tion.
‘‘(B) Health claims attachments.
‘‘(C) Enrollment and disenrollment in a health plan.
‘‘(D) Eligibility for a health plan.
‘‘(E) Health care payment and remittance advice.
‘‘(F) Health plan premium payments.
‘‘(G) First report of injury.
‘‘(H) Health claim status.
‘‘(I) Referral certification and authorization.
‘‘(3) 
ACCOMMODATION
OF
SPECIFIC
PROVIDERS.—The
standards adopted by the Secretary under paragraph (1) shall
accommodate the needs of different types of health care provid-
ers.
‘‘(b) UNIQUE HEALTH IDENTIFIERS.—
‘‘(1) IN
GENERAL.—The Secretary shall adopt standards
providing for a standard unique health identifier for each
individual, employer, health plan, and health care provider
for use in the health care system. In carrying out the preceding
sentence for each health plan and health care provider, the
Secretary shall take into account multiple uses for identifiers
and multiple locations and specialty classifications for health
care providers.
‘‘(2) USE OF IDENTIFIERS.—The standards adopted under
paragraph (1) shall specify the purposes for which a unique
health identifier may be used.
‘‘(c) CODE SETS.—
‘‘(1) IN
GENERAL.—The Secretary shall adopt standards
that—
‘‘(A) select code sets for appropriate data elements
for the transactions referred to in subsection (a)(1) from
among the code sets that have been developed by private
and public entities; or
‘‘(B) establish code sets for such data elements if no
code sets for the data elements have been developed.
‘‘(2) DISTRIBUTION.—The Secretary shall establish efficient
and low-cost procedures for distribution (including electronic
distribution) of code sets and modifications made to such code
sets under section 1174(b).
‘‘(d) SECURITY STANDARDS FOR HEALTH INFORMATION.—
‘‘(1) SECURITY STANDARDS.—The Secretary shall adopt secu-
rity standards that—
‘‘(A) take into account—
‘‘(i) the technical capabilities of record systems
used to maintain health information;
H. R. 3103—91
‘‘(ii) the costs of security measures;
‘‘(iii) the need for training persons who have access
to health information;
‘‘(iv) the value of audit trails in computerized
record systems; and
‘‘(v) the needs and capabilities of small health care
providers and rural health care providers (as such
providers are defined by the Secretary); and
‘‘(B) ensure that a health care clearinghouse, if it is
part of a larger organization, has policies and security
procedures which isolate the activities of the health care
clearinghouse with respect to processing information in
a manner that prevents unauthorized access to such
information by such larger organization.
‘‘(2) SAFEGUARDS.—Each person described in section
1172(a) who maintains or transmits health information shall
maintain reasonable and appropriate administrative, technical,
and physical safeguards—
‘‘(A) to ensure the integrity and confidentiality of the
information;
‘‘(B) to protect against any reasonably anticipated—
‘‘(i) threats or hazards to the security or integrity
of the information; and
‘‘(ii) unauthorized uses or disclosures of the
information; and
‘‘(C) otherwise to ensure compliance with this part
by the officers and employees of such person.
‘‘(e) ELECTRONIC SIGNATURE.—
‘‘(1) STANDARDS.—The Secretary, in coordination with the
Secretary of Commerce, shall adopt standards specifying proce-
dures for the electronic transmission and authentication of
signatures with respect to the transactions referred to in sub-
section (a)(1).
‘‘(2) EFFECT OF COMPLIANCE.—Compliance with the stand-
ards adopted under paragraph (1) shall be deemed to satisfy
Federal and State statutory requirements for written signatures
with respect to the transactions referred to in subsection (a)(1).
‘‘(f) TRANSFER OF INFORMATION AMONG HEALTH PLANS.—The
Secretary shall adopt standards for transferring among health plans
appropriate standard data elements needed for the coordination
of benefits, the sequential processing of claims, and other data
elements for individuals who have more than one health plan.
‘‘TIMETABLES FOR ADOPTION OF STANDARDS
‘‘SEC. 1174. (a) INITIAL STANDARDS.—The Secretary shall carry
out section 1173 not later than 18 months after the date of the
enactment of the Health Insurance Portability and Accountability
Act of 1996, except that standards relating to claims attachments
shall be adopted not later than 30 months after such date.
‘‘(b) ADDITIONS AND MODIFICATIONS TO STANDARDS.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the Secretary shall review the standards adopted under section
1173, and shall adopt modifications to the standards (including
additions to the standards), as determined appropriate, but
not more frequently than once every 12 months. Any addition
or modification to a standard shall be completed in a manner
which minimizes the disruption and cost of compliance.
H. R. 3103—92
‘‘(2) SPECIAL RULES.—
‘‘(A) FIRST 12-MONTH PERIOD.—Except with respect to
additions and modifications to code sets under subpara-
graph (B), the Secretary may not adopt any modification
to a standard adopted under this part during the 12-month
period beginning on the date the standard is initially
adopted, unless the Secretary determines that the modifica-
tion is necessary in order to permit compliance with the
standard.
‘‘(B) ADDITIONS AND MODIFICATIONS TO CODE SETS.—
‘‘(i) IN GENERAL.—The Secretary shall ensure that
procedures exist for the routine maintenance, testing,
enhancement, and expansion of code sets.
‘‘(ii) ADDITIONAL RULES.—If a code set is modified
under this subsection, the modified code set shall
include instructions on how data elements of health
information that were encoded prior to the modification
may be converted or translated so as to preserve the
informational value of the data elements that existed
before the modification. Any modification to a code
set under this subsection shall be implemented in a
manner that minimizes the disruption and cost of
complying with such modification.
‘‘REQUIREMENTS
‘‘SEC. 1175. (a) CONDUCT OF TRANSACTIONS BY PLANS.—
‘‘(1) IN GENERAL.—If a person desires to conduct a trans-
action referred to in section 1173(a)(1) with a health plan
as a standard transaction—
‘‘(A) the health plan may not refuse to conduct such
transaction as a standard transaction;
‘‘(B) the insurance plan may not delay such transaction,
or otherwise adversely affect, or attempt to adversely affect,
the person or the transaction on the ground that the trans-
action is a standard transaction; and
‘‘(C) the information transmitted and received in
connection with the transaction shall be in the form of
standard data elements of health information.
‘‘(2) SATISFACTION OF REQUIREMENTS.—A health plan may
satisfy the requirements under paragraph (1) by—
‘‘(A) directly transmitting and receiving standard data
elements of health information; or
‘‘(B) submitting nonstandard data elements to a health
care clearinghouse for processing into standard data ele-
ments and transmission by the health care clearinghouse,
and receiving standard data elements through the health
care clearinghouse.
‘‘(3) TIMETABLE FOR COMPLIANCE.—Paragraph (1) shall not
be construed to require a health plan to comply with any
standard, implementation specification, or modification to a
standard or specification adopted or established by the Sec-
retary under sections 1172 through 1174 at any time prior
to the date on which the plan is required to comply with
the standard or specification under subsection (b).
‘‘(b) COMPLIANCE WITH STANDARDS.—
‘‘(1) INITIAL COMPLIANCE.—
H. R. 3103—93
‘‘(A) IN GENERAL.—Not later than 24 months after the
date on which an initial standard or implementation speci-
fication is adopted or established under sections 1172 and
1173, each person to whom the standard or implementation
specification applies shall comply with the standard or
specification.
‘‘(B) SPECIAL RULE FOR SMALL HEALTH PLANS.—In the
case of a small health plan, paragraph (1) shall be applied
by substituting ‘36 months’ for ‘24 months’. For purposes
of this subsection, the Secretary shall determine the plans
that qualify as small health plans.
‘‘(2) COMPLIANCE WITH MODIFIED STANDARDS.—If the Sec-
retary adopts a modification to a standard or implementation
specification under this part, each person to whom the standard
or implementation specification applies shall comply with the
modified standard or implementation specification at such time
as the Secretary determines appropriate, taking into account
the time needed to comply due to the nature and extent of
the modification. The time determined appropriate under the
preceding sentence may not be earlier than the last day of
the 180-day period beginning on the date such modification
is adopted. The Secretary may extend the time for compliance
for small health plans, if the Secretary determines that such
extension is appropriate.
‘‘(3) CONSTRUCTION.—Nothing in this subsection shall be
construed to prohibit any person from complying with a stand-
ard or specification by—
‘‘(A) submitting nonstandard data elements to a health
care clearinghouse for processing into standard data ele-
ments and transmission by the health care clearing-
house; or
‘‘(B) receiving standard data elements through a health
care clearinghouse.
‘‘GENERAL PENALTY FOR FAILURE TO COMPLY WITH REQUIREMENTS
AND STANDARDS
‘‘SEC. 1176. (a) GENERAL PENALTY.—
‘‘(1) IN GENERAL.—Except as provided in subsection (b),
the Secretary shall impose on any person who violates a provi-
sion of this part a penalty of not more than $100 for each
such violation, except that the total amount imposed on the
person for all violations of an identical requirement or prohibi-
tion during a calendar year may not exceed $25,000.
‘‘(2) PROCEDURES.—The provisions of section 1128A (other
than subsections (a) and (b) and the second sentence of sub-
section (f)) shall apply to the imposition of a civil money penalty
under this subsection in the same manner as such provisions
apply to the imposition of a penalty under such section 1128A.
‘‘(b) LIMITATIONS.—
‘‘(1) OFFENSES
OTHERWISE
PUNISHABLE.—A penalty may
not be imposed under subsection (a) with respect to an act
if the act constitutes an offense punishable under section 1177.
‘‘(2) NONCOMPLIANCE NOT DISCOVERED.—A penalty may not
be imposed under subsection (a) with respect to a provision
of this part if it is established to the satisfaction of the Secretary
that the person liable for the penalty did not know, and by
H. R. 3103—94
exercising reasonable diligence would not have known, that
such person violated the provision.
‘‘(3) FAILURES DUE TO REASONABLE CAUSE.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), a penalty may not be imposed under subsection
(a) if—
‘‘(i) the failure to comply was due to reasonable
cause and not to willful neglect; and
‘‘(ii) the failure to comply is corrected during the
30-day period beginning on the first date the person
liable for the penalty knew, or by exercising reasonable
diligence would have known, that the failure to comply
occurred.
‘‘(B) EXTENSION OF PERIOD.—
‘‘(i) NO
PENALTY.—The period referred to in
subparagraph (A)(ii) may be extended as determined
appropriate by the Secretary based on the nature and
extent of the failure to comply.
‘‘(ii) ASSISTANCE.—If the Secretary determines that
a person failed to comply because the person was
unable to comply, the Secretary may provide technical
assistance to the person during the period described
in subparagraph (A)(ii). Such assistance shall be pro-
vided in any manner determined appropriate by the
Secretary.
‘‘(4) REDUCTION.—In the case of a failure to comply which
is due to reasonable cause and not to willful neglect, any
penalty under subsection (a) that is not entirely waived under
paragraph (3) may be waived to the extent that the payment
of such penalty would be excessive relative to the compliance
failure involved.
‘‘WRONGFUL DISCLOSURE OF INDIVIDUALLY IDENTIFIABLE HEALTH
INFORMATION
‘‘SEC. 1177. (a) OFFENSE.—A person who knowingly and in
violation of this part—
‘‘(1) uses or causes to be used a unique health identifier;
‘‘(2) obtains individually identifiable health information
relating to an individual; or
‘‘(3) discloses individually identifiable health information
to another person,
shall be punished as provided in subsection (b).
‘‘(b) PENALTIES.—A person described in subsection (a) shall—
‘‘(1) be fined not more than $50,000, imprisoned not more
than 1 year, or both;
‘‘(2) if the offense is committed under false pretenses, be
fined not more than $100,000, imprisoned not more than 5
years, or both; and
‘‘(3) if the offense is committed with intent to sell, transfer,
or use individually identifiable health information for commer-
cial advantage, personal gain, or malicious harm, be fined not
more than $250,000, imprisoned not more than 10 years, or
both.
‘‘EFFECT ON STATE LAW
‘‘SEC. 1178. (a) GENERAL EFFECT.—
H. R. 3103—95
‘‘(1) GENERAL RULE.—Except as provided in paragraph (2),
a provision or requirement under this part, or a standard
or implementation specification adopted or established under
sections 1172 through 1174, shall supersede any contrary provi-
sion of State law, including a provision of State law that
requires medical or health plan records (including billing
information) to be maintained or transmitted in written rather
than electronic form.
‘‘(2) EXCEPTIONS.—A provision or requirement under this
part, or a standard or implementation specification adopted
or established under sections 1172 through 1174, shall not
supersede a contrary provision of State law, if the provision
of State law—
‘‘(A) is a provision the Secretary determines—
‘‘(i) is necessary—
‘‘(I) to prevent fraud and abuse;
‘‘(II) to ensure appropriate State regulation
of insurance and health plans;
‘‘(III) for State reporting on health care deliv-
ery or costs; or
‘‘(IV) for other purposes; or
‘‘(ii) addresses controlled substances; or
‘‘(B) subject to section 264(c)(2) of the Health Insurance
Portability and Accountability Act of 1996, relates to the
privacy of individually identifiable health information.
‘‘(b) PUBLIC HEALTH.—Nothing in this part shall be construed
to invalidate or limit the authority, power, or procedures established
under any law providing for the reporting of disease or injury,
child abuse, birth, or death, public health surveillance, or public
health investigation or intervention.
‘‘(c) STATE REGULATORY REPORTING.—Nothing in this part shall
limit the ability of a State to require a health plan to report,
or to provide access to, information for management audits, financial
audits, program monitoring and evaluation, facility licensure or
certification, or individual licensure or certification.
‘‘PROCESSING PAYMENT TRANSACTIONS BY FINANCIAL INSTITUTIONS
‘‘SEC. 1179. To the extent that an entity is engaged in activities
of a financial institution (as defined in section 1101 of the Right
to Financial Privacy Act of 1978), or is engaged in authorizing,
processing, clearing, settling, billing, transferring, reconciling, or
collecting payments, for a financial institution, this part, and any
standard adopted under this part, shall not apply to the entity
with respect to such activities, including the following:
‘‘(1) The use or disclosure of information by the entity
for authorizing, processing, clearing, settling, billing, transfer-
ring, reconciling or collecting, a payment for, or related to,
health plan premiums or health care, where such payment
is made by any means, including a credit, debit, or other
payment card, an account, check, or electronic funds transfer.
‘‘(2) The request for, or the use or disclosure of, information
by the entity with respect to a payment described in para-
graph (1)—
‘‘(A) for transferring receivables;
‘‘(B) for auditing;
‘‘(C) in connection with—
‘‘(i) a customer dispute; or
H. R. 3103—96
‘‘(ii) an inquiry from, or to, a customer;
‘‘(D) in a communication to a customer of the entity
regarding the customer’s transactions, payment card,
account, check, or electronic funds transfer;
‘‘(E) for reporting to consumer reporting agencies; or
‘‘(F) for complying with—
‘‘(i) a civil or criminal subpoena; or
‘‘(ii) a Federal or State law regulating the entity.’’.
(b) CONFORMING AMENDMENTS.—
(1) REQUIREMENT
FOR
MEDICARE
PROVIDERS.—Section
1866(a)(1) (42 U.S.C. 1395cc(a)(1)) is amended—
(A) by striking ‘‘and’’ at the end of subparagraph (P);
(B) by striking the period at the end of subparagraph
(Q) and inserting ‘‘; and’’; and
(C) by inserting immediately after subparagraph (Q)
the following new subparagraph:
‘‘(R) to contract only with a health care clearinghouse (as
defined in section 1171) that meets each standard and
implementation specification adopted or established under part
C of title XI on or after the date on which the health care
clearinghouse is required to comply with the standard or speci-
fication.’’.
(2) TITLE HEADING.—Title XI (42 U.S.C. 1301 et seq.) is
amended by striking the title heading and inserting the
following:
‘‘TITLE XI—GENERAL PROVISIONS, PEER REVIEW, AND
ADMINISTRATIVE SIMPLIFICATION’’.
SEC. 263. CHANGES IN MEMBERSHIP AND DUTIES OF NATIONAL
COMMITTEE ON VITAL AND HEALTH STATISTICS.
Section 306(k) of the Public Health Service Act (42 U.S.C.
242k(k)) is amended—
(1) in paragraph (1), by striking ‘‘16’’ and inserting ‘‘18’’;
(2) by amending paragraph (2) to read as follows:
‘‘(2) The members of the Committee shall be appointed from
among persons who have distinguished themselves in the fields
of health statistics, electronic interchange of health care informa-
tion, privacy and security of electronic information, population-
based public health, purchasing or financing health care services,
integrated computerized health information systems, health services
research, consumer interests in health information, health data
standards, epidemiology, and the provision of health services. Mem-
bers of the Committee shall be appointed for terms of 4 years.’’;
(3) by redesignating paragraphs (3) through (5) as para-
graphs (4) through (6), respectively, and inserting after para-
graph (2) the following:
‘‘(3) Of the members of the Committee—
‘‘(A) 1 shall be appointed, not later than 60 days after
the date of the enactment of the Health Insurance Portability
and Accountability Act of 1996, by the Speaker of the House
of Representatives after consultation with the Minority Leader
of the House of Representatives;
‘‘(B) 1 shall be appointed, not later than 60 days after
the date of the enactment of the Health Insurance Portability
and Accountability Act of 1996, by the President pro tempore
H. R. 3103—97
of the Senate after consultation with the Minority Leader of
the Senate; and
‘‘(C) 16 shall be appointed by the Secretary.’’;
(4) by amending paragraph (5) (as so redesignated) to read
as follows:
‘‘(5) The Committee—
‘‘(A) shall assist and advise the Secretary—
‘‘(i) to delineate statistical problems bearing on health
and health services which are of national or international
interest;
‘‘(ii) to stimulate studies of such problems by other
organizations and agencies whenever possible or to make
investigations of such problems through subcommittees;
‘‘(iii) to determine, approve, and revise the terms,
definitions, classifications, and guidelines for assessing
health status and health services, their distribution and
costs, for use (I) within the Department of Health and
Human Services, (II) by all programs administered or
funded by the Secretary, including the Federal-State-local
cooperative health statistics system referred to in sub-
section (e), and (III) to the extent possible as determined
by the head of the agency involved, by the Department
of Veterans Affairs, the Department of Defense, and other
Federal agencies concerned with health and health services;
‘‘(iv) with respect to the design of and approval of
health statistical and health information systems concerned
with the collection, processing, and tabulation of health
statistics within the Department of Health and Human
Services, with respect to the Cooperative Health Statistics
System established under subsection (e), and with respect
to the standardized means for the collection of health
information and statistics to be established by the Sec-
retary under subsection (j)(1);
‘‘(v) to review and comment on findings and proposals
developed by other organizations and agencies and to make
recommendations for their adoption or implementation by
local, State, national, or international agencies;
‘‘(vi) to cooperate with national committees of other
countries and with the World Health Organization and
other national agencies in the studies of problems of mutual
interest;
‘‘(vii) to issue an annual report on the state of the
Nation’s health, its health services, their costs and distribu-
tions, and to make proposals for improvement of the
Nation’s health statistics and health information systems;
and
‘‘(viii) in complying with the requirements imposed on
the Secretary under part C of title XI of the Social Security
Act;
‘‘(B) shall study the issues related to the adoption of uni-
form data standards for patient medical record information
and the electronic exchange of such information;
‘‘(C) shall report to the Secretary not later than 4 years
after the date of the enactment of the Health Insurance Port-
ability and Accountability Act of 1996 recommendations and
legislative proposals for such standards and electronic
exchange; and
H. R. 3103—98
‘‘(D) shall be responsible generally for advising the Sec-
retary and the Congress on the status of the implementation
of part C of title XI of the Social Security Act.’’; and
(5) by adding at the end the following:
‘‘(7) Not later than 1 year after the date of the enactment
of the Health Insurance Portability and Accountability Act of 1996,
and annually thereafter, the Committee shall submit to the Con-
gress, and make public, a report regarding the implementation
of part C of title XI of the Social Security Act. Such report shall
address the following subjects, to the extent that the Committee
determines appropriate:
‘‘(A) The extent to which persons required to comply with
part C of title XI of the Social Security Act are cooperating
in implementing the standards adopted under such part.
‘‘(B) The extent to which such entities are meeting the
security standards adopted under such part and the types
of penalties assessed for noncompliance with such standards.
‘‘(C) Whether the Federal and State Governments are
receiving information of sufficient quality to meet their respon-
sibilities under such part.
‘‘(D) Any problems that exist with respect to implementa-
tion of such part.
‘‘(E) The extent to which timetables under such part are
being met.’’.
SEC. 264. RECOMMENDATIONS WITH RESPECT TO PRIVACY OF CER-
TAIN HEALTH INFORMATION.
(a) IN GENERAL.—Not later than the date that is 12 months
after the date of the enactment of this Act, the Secretary of
Health and Human Services shall submit to the Committee on
Labor and Human Resources and the Committee on Finance of
the Senate and the Committee on Commerce and the Committee
on Ways and Means of the House of Representatives detailed
recommendations on standards with respect to the privacy of
individually identifiable health information.
(b) SUBJECTS FOR RECOMMENDATIONS.—The recommendations
under subsection (a) shall address at least the following:
(1) The rights that an individual who is a subject of individ-
ually identifiable health information should have.
(2) The procedures that should be established for the exer-
cise of such rights.
(3) The uses and disclosures of such information that should
be authorized or required.
(c) REGULATIONS.—
(1) IN GENERAL.—If legislation governing standards with
respect to the privacy of individually identifiable health
information transmitted in connection with the transactions
described in section 1173(a) of the Social Security Act (as added
by section 262) is not enacted by the date that is 36 months
after the date of the enactment of this Act, the Secretary
of Health and Human Services shall promulgate final regula-
tions containing such standards not later than the date that
is 42 months after the date of the enactment of this Act.
Such regulations shall address at least the subjects described
in subsection (b).
(2) PREEMPTION.—A regulation promulgated under para-
graph (1) shall not supercede a contrary provision of State
H. R. 3103—99
law, if the provision of State law imposes requirements, stand-
ards, or implementation specifications that are more stringent
than the requirements, standards, or implementation specifica-
tions imposed under the regulation.
(d) CONSULTATION.—In carrying out this section, the Secretary
of Health and Human Services shall consult with—
(1) the National Committee on Vital and Health Statistics
established under section 306(k) of the Public Health Service
Act (42 U.S.C. 242k(k)); and
(2) the Attorney General.
Subtitle G—Duplication and Coordination
of Medicare-Related Plans
SEC. 271. DUPLICATION AND COORDINATION OF MEDICARE-RELATED
PLANS.
(a) TREATMENT OF CERTAIN HEALTH INSURANCE POLICIES AS
NONDUPLICATIVE.—Section 1882(d)(3)(A) (42 U.S.C. 1395ss(d)(3)(A))
is amended—
(1) in clause (iii), by striking ‘‘clause (i)’’ and inserting
‘‘clause (i)(II)’’; and
(2) by adding at the end the following:
‘‘(iv) For purposes of this subparagraph, a health insurance
policy (other than a Medicare supplemental policy) providing for
benefits which are payable to or on behalf of an individual without
regard to other health benefit coverage of such individual is not
considered to ‘duplicate’ any health benefits under this title, under
title XIX, or under a health insurance policy, and subclauses (I)
and (III) of clause (i) do not apply to such a policy.
‘‘(v) For purposes of this subparagraph, a health insurance
policy (or a rider to an insurance contract which is not a health
insurance policy) is not considered to ‘duplicate’ health benefits
under this title or under another health insurance policy if it—
‘‘(I) provides health care benefits only for long-term care,
nursing home care, home health care, or community-based care,
or any combination thereof,
‘‘(II) coordinates against or excludes items and services
available or paid for under this title or under another health
insurance policy, and
‘‘(III) for policies sold or issued on or after the end of
the 90-day period beginning on the date of enactment of the
Health Insurance Portability and Accountability Act of 1996
discloses such coordination or exclusion in the policy’s outline
of coverage.
For purposes of this clause, the terms ‘coordinates’ and ‘coordination’
mean, with respect to a policy in relation to health benefits under
this title or under another health insurance policy, that the policy
under its terms is secondary to, or excludes from payment, items
and services to the extent available or paid for under this title
or under another health insurance policy.
‘‘(vi)(I) An individual entitled to benefits under part A or
enrolled under part B of this title who is applying for a health
insurance policy (other than a policy described in subclause (III))
shall be furnished a disclosure statement described in clause (vii)
for the type of policy being applied for. Such statement shall be