I
104TH CONGRESS
1ST SESSION
H. R. 2151
To provide for enhanced penalties for health care fraud, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 1, 1995
Mr. ENGLISH of Pennsylvania introduced the following bill; which was referred
to the Committee on Commerce, and in addition to the Committees on
Ways and Means, the Judiciary, and Government Reform and Oversight,
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 provide for enhanced penalties for health care fraud,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Health Care Fraud Prevention Act of 1995’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM
Sec. 101. All-payer fraud and abuse control program.
Sec. 102. Application of certain Federal health anti-fraud and abuse sanctions
to all fraud and abuse against any health plan.
Sec. 103. Health care fraud and abuse guidance.
Sec. 104. Reporting of fraudulent actions under medicare.
TITLE II—REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND
ABUSE
Sec. 201. Mandatory exclusion from participation in medicare and State health
care programs.
Sec. 202. Establishment of minimum period of exclusion for certain individuals
and entities subject to permissive exclusion from medicare and
State health care programs.
Sec. 203. Permissive exclusion of individuals with ownership or control interest
in sanctioned entities.
Sec. 204. Sanctions against practitioners and persons for failure to comply with
statutory obligations.
Sec. 205. Intermediate sanctions for medicare health maintenance organiza-
tions.
Sec. 206. Effective date.
TITLE III—ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS
Sec. 301. Establishment of the health care fraud and abuse data collection pro-
gram.
TITLE IV—CIVIL MONETARY PENALTIES
Sec. 401. Civil monetary penalties.
TITLE V—AMENDMENTS TO CRIMINAL LAW
Sec. 501. Health care fraud.
Sec. 502. Forfeitures for Federal health care offenses.
Sec. 503. Injunctive relief relating to Federal health care offenses.
Sec. 504. Grand jury disclosure.
Sec. 505. False statements.
Sec. 506. Voluntary disclosure program.
Sec. 507. Obstruction of criminal investigations of Federal health care offenses.
Sec. 508. Theft or embezzlement.
Sec. 509. Laundering of monetary instruments.
TITLE VI—PAYMENTS FOR STATE HEALTH CARE FRAUD
CONTROL UNITS
Sec. 601. Establishment of State fraud units.
Sec. 602. Requirements for State fraud units.
Sec. 603. Scope and purpose.
Sec. 604. Payments to States.
TITLE I—ALL-PAYER FRAUD AND
ABUSE CONTROL PROGRAM
SEC. 101. ALL-PAYER FRAUD AND ABUSE CONTROL PRO-
GRAM.
(a) ESTABLISHMENT OF PROGRAM.—
(1) IN GENERAL.—Not later than January 1,
1996, the Secretary of Health and Human Services
(in this title referred to as the ‘‘Secretary’’), acting
through the Office of the Inspector General of the
Department of Health and Human Services, and the
Attorney General shall establish a program—
(A) to coordinate Federal, State, and local
law enforcement programs to control fraud and
abuse with respect to the delivery of and pay-
ment for health care in the United States,
(B) to conduct investigations, audits, eval-
uations, and inspections relating to the delivery
of and payment for health care in the United
States,
(C) to facilitate the enforcement of the
provisions of sections 1128, 1128A, and 1128B
of the Social Security Act and other statutes
applicable to health care fraud and abuse, and
(D) to provide for the modification and es-
tablishment of safe harbors and to issue inter-
pretative rulings and special fraud alerts pursu-
ant to section 103.
(2) COORDINATION WITH HEALTH PLANS.—In
carrying out the program established under para-
graph (1), the Secretary and the Attorney General
shall consult with, and arrange for the sharing of
data with representatives of health plans.
(3) REGULATIONS.—
(A) IN GENERAL.—The Secretary and the
Attorney General shall by regulation establish
standards to carry out the program under para-
graph (1).
(B) INFORMATION STANDARDS.—
(i) IN
GENERAL.—Such standards
shall include standards relating to the fur-
nishing of information by health plans,
providers, and others to enable the Sec-
retary and the Attorney General to carry
out the program (including coordination
with health plans under paragraph (2)).
(ii) CONFIDENTIALITY.—Such stand-
ards shall include procedures to assure
that such information is provided and uti-
lized in a manner that appropriately pro-
tects the confidentiality of the information
and the privacy of individuals receiving
health care services and items.
(iii) QUALIFIED IMMUNITY FOR PRO-
VIDING INFORMATION.—The provisions of
section 1157(a) of the Social Security Act
(relating to limitation on liability) shall
apply to a person providing information to
the Secretary or the Attorney General in
conjunction with their performance of du-
ties under this section.
(C) DISCLOSURE
OF
OWNERSHIP
INFOR-
MATION.—
(i) IN
GENERAL.—Such standards
shall include standards relating to the dis-
closure of ownership information described
in clause (ii) by any entity providing health
care services and items.
(ii) OWNERSHIP
INFORMATION
DE-
SCRIBED.—The ownership information de-
scribed in this clause includes—
(I) a description of such items
and services provided by such entity;
(II) the names and unique physi-
cian identification numbers of all phy-
sicians with a financial relationship
(as defined in section 1877(a)(2) of
the Social Security Act) with such en-
tity;
(III) the names of all other indi-
viduals with such an ownership or in-
vestment interest in such entity; and
(IV) any other ownership and re-
lated information required to be dis-
closed by such entity under section
1124 or section 1124A of the Social
Security Act, except that the Sec-
retary 
shall 
establish 
procedures
under which the information required
to be submitted under this subclause
will be reduced with respect to health
care provider entities that the Sec-
retary determines will be unduly bur-
dened if such entities are required to
comply fully with this subclause.
(4) AUTHORIZATION OF APPROPRIATIONS FOR
INVESTIGATORS AND OTHER PERSONNEL.—In addi-
tion to any other amounts authorized to be appro-
priated to the Secretary, the Attorney General, the
Director of the Federal Bureau of Investigation, and
the Inspectors General of the Departments of De-
fense, Labor, and Veterans Affairs and of the Office
of Personnel Management, for health care anti-fraud
and abuse activities for a fiscal year, there are au-
thorized to be appropriated additional amounts,
from the Health Care Fraud and Abuse Account de-
scribed in subsection (b) of this section, as may be
necessary to enable the Secretary, the Attorney Gen-
eral, and such Inspectors General to conduct inves-
tigations and audits of allegations of health care
fraud and abuse and otherwise carry out the pro-
gram established under paragraph (1) in a fiscal
year.
(5) ENSURING ACCESS TO DOCUMENTATION.—
The Inspector General of the Department of Health
and Human Services is authorized to exercise the
authority described in paragraphs (4) and (5) of sec-
tion 6 of the Inspector General Act of 1978 (relating
to subpoenas and administration of oaths) with re-
spect to the activities under the all-payer fraud and
abuse control program established under this sub-
section to the same extent as such Inspector General
may exercise such authorities to perform the func-
tions assigned by such Act.
(6) AUTHORITY
OF
INSPECTOR
GENERAL.—
Nothing in this Act shall be construed to diminish
the authority of any Inspector General, including
such authority as provided in the Inspector General
Act of 1978.
(7) HEALTH PLAN DEFINED.—For the purposes
of this subsection, the term ‘‘health plan’’ shall have
the meaning given such term in section 1128(i) of
the Social Security Act.
(b) HEALTH CARE FRAUD AND ABUSE CONTROL AC-
COUNT.—
(1) ESTABLISHMENT.—
(A) IN GENERAL.—There is hereby estab-
lished an account to be known as the ‘‘Health
Care Fraud and Abuse Control Account’’ (in
this section referred to as the ‘‘Anti-Fraud Ac-
count’’). The Anti-Fraud Account shall consist
of—
(i) such gifts and bequests as may be
made as provided in subparagraph (B);
(ii) such amounts as may be deposited
in the Anti-Fraud Account as provided in
subsection (a)(4), sections 5441(b) and
5442(b), and title XI of the Social Security
Act; and
(iii) such amounts as are transferred
to the Anti-Fraud Account under subpara-
graph (C).
(B) AUTHORIZATION TO ACCEPT GIFTS.—
The Anti-Fraud Account is authorized to accept
on behalf 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 activity financed through
the Anti-Fraud Account.
(C) TRANSFER OF AMOUNTS.—
(i) IN
GENERAL.—The Secretary of
the Treasury shall transfer to the Anti-
Fraud Account an amount equal to the
sum of the following:
(I) Criminal fines imposed in
cases involving a Federal health care
offense 
(as 
defined 
in 
section
982(a)(6)(B) of title 18, United
States Code).
(ii) Administrative penalties and as-
sessments imposed under titles XI, XVIII,
and XIX of the Social Security Act (except
as otherwise provided by law).
(iii) Amounts resulting from the for-
feiture of property by reason of a Federal
health care offense.
(iv) Penalties and damages imposed
under the False Claims Act (31 U.S.C.
3729 et seq.), in cases involving claims re-
lated to the provision of health care items
and services (other than funds awarded to
a relator or for restitution).
(2) USE OF FUNDS.—
(A) IN GENERAL.—Amounts in the Anti-
Fraud Account shall be available to carry out
the health care fraud and abuse control pro-
gram established under subsection (a) (includ-
ing the administration of the program), and
may be used to cover costs incurred in operat-
ing the program, including costs (including
equipment, salaries and benefits, and travel and
training) of—
(i) prosecuting health care matters
(through criminal, civil, and administrative
proceedings);
(ii) investigations;
(iii) financial and performance audits
of health care programs and operations;
(iv) inspections and other evaluations;
and
(v) provider and consumer education
regarding compliance with the provisions of
this title.
(B) FUNDS USED TO SUPPLEMENT AGEN-
CY APPROPRIATIONS.—It is intended that dis-
bursements made from the Anti-Fraud Account
to any Federal agency be used to increase and
not supplant the recipient agency’s appro-
priated operating budget.
(3) ANNUAL REPORT.—The Secretary and the
Attorney General shall submit jointly an annual re-
port to Congress on the amount of revenue which is
generated and disbursed by the Anti-Fraud Account
in each fiscal year.
(4) USE OF FUNDS BY INSPECTOR GENERAL.—
(A) REIMBURSEMENTS
FOR
INVESTIGA-
TIONS.—The Inspector General is authorized to
receive and retain for current use reimburse-
ment for the costs of conducting investigations,
when such restitution is ordered by a court, vol-
untarily agreed to by the payer, or otherwise.
(B) CREDITING.—Funds received by the
Inspector General or the Inspectors General of
the Departments of Defense, Labor, and Veter-
ans Affairs and of the Office of Personnel Man-
agement, as reimbursement for costs of con-
ducting investigations shall be deposited to the
credit of the appropriation from which initially
paid, or to appropriations for similar purposes
currently available at the time of deposit, and
shall remain available for obligation for 1 year
from the date of their deposit.
SEC. 102. APPLICATION OF CERTAIN FEDERAL HEALTH
ANTI-FRAUD 
AND 
ABUSE 
SANCTIONS 
TO
FRAUD AND ABUSE AGAINST ANY HEALTH
PLAN.
(a) CRIMES.—
(1) SOCIAL SECURITY ACT.—Section 1128B of
the Social Security Act (42 U.S.C. 1320a–7b) is
amended as follows:
(A) In the heading, by adding at the end
the following: ‘‘OR HEALTH PLANS’’.
(B) In subsection (a)(1)—
(i) by striking ‘‘title XVIII or’’ and
inserting ‘‘title XVIII,’’, and
(ii) by adding at the end the follow-
ing: ‘‘or a health plan (as defined in sec-
tion 1128(i)),’’.
(C) In subsection (a)(5), by striking ‘‘title
XVIII or a State health care program’’ and in-
serting ‘‘title XVIII, a State health care pro-
gram, or a health plan’’.
(D) In the second sentence of subsection
(a)—
(i) by inserting after ‘‘title XIX’’ the
following: ‘‘or a health plan’’, and
(ii) by inserting after ‘‘the State’’ the
following: ‘‘or the plan’’.
(2) IDENTIFICATION OF COMMUNITY SERVICE
OPPORTUNITIES.—Section 1128B of such Act (42
U.S.C. 1320a–7b) is further amended by adding at
the end the following new subsection:
‘‘(f) The Secretary may—
‘‘(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
officials.’’.
(b) HEALTH PLAN DEFINED.—Section 1128 of the
Social Security Act (42 U.S.C. 1320a–7) is amended by
redesignating subsection (i) as subsection (j) and by in-
serting after subsection (h) the following new subsection:
‘‘(i) HEALTH PLAN DEFINED.—For purposes of sec-
tions 1128A and 1128B, the term ‘health plan’ means a
plan that provides health benefits, whether through di-
rectly, through insurance, or otherwise, and includes a pol-
icy of health insurance, a contract of a service benefit or-
ganization, or a membership agreement with a health
maintenance organization or other prepaid health plan,
and also includes an employee welfare benefit plan or a
multiple employer welfare plan (as such terms are defined
in section 3 of the Employee Retirement Income Security
Act of 1974).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1996.
SEC. 103. HEALTH CARE FRAUD AND ABUSE GUIDANCE.
(a) SOLICITATION AND PUBLICATION OF MODIFICA-
TIONS TO EXISTING SAFE HARBORS AND NEW SAFE
HARBORS.—
(1) IN GENERAL.—
(A) SOLICITATION
OF
PROPOSALS
FOR
SAFE
HARBORS.—Not later than January 1,
1996, and not less than annually thereafter, the
Secretary shall publish a notice in the Federal
Register soliciting proposals, which will be ac-
cepted during a 60-day period, for—
(i) modifications to existing safe har-
bors issued pursuant to section 14(a) of
the Medicare and Medicaid Patient and
Program Protection Act of 1987 (42
U.S.C. 1320a–7b note);
(ii) additional safe harbors specifying
payment practices that shall not be treated
as a criminal offense under section
1128B(b) of the Social Security Act the
(42 U.S.C. 1320a–7b(b)) and shall not
serve as the basis for an exclusion under
section 1128(b)(7) of such Act (42 U.S.C.
1320a–7(b)(7));
(iii) interpretive rulings to be issued
pursuant to subsection (b); and
(iv) special fraud alerts to be issued
pursuant to subsection (c).
(B) PUBLICATION
OF
PROPOSED
MODI-
FICATIONS AND PROPOSED ADDITIONAL SAFE
HARBORS.—After considering the proposals de-
scribed in clauses (i) and (ii) of subparagraph
(A), the Secretary, in consultation with the At-
torney General, shall publish in the Federal
Register proposed modifications to existing safe
harbors and proposed additional safe harbors, if
appropriate, with a 60-day comment period.
After considering any public comments received
during this period, the Secretary shall issue
final rules modifying the existing safe harbors
and establishing new safe harbors, as appro-
priate.
(C) REPORT.—The Inspector General of
the Department of Health and Human Services
(hereafter in this section referred to as the ‘‘In-
spector General’’) shall, in an annual report to
Congress or as part of the year-end semiannual
report required by section 5 of the Inspector
General Act of 1978 (5 U.S.C. App.), describe
the proposals received under clauses (i) and (ii)
of subparagraph (A) and explain which propos-
als were included in the publication described in
subparagraph (B), which proposals were not in-
cluded in that publication, and the reasons for
the rejection of the proposals that were not in-
cluded.
(2) CRITERIA FOR MODIFYING AND ESTABLISH-
ING SAFE HARBORS.—In modifying and establishing
safe harbors under paragraph (1)(B), the Secretary
may consider the extent to which providing a safe
harbor for the specified payment practice may result
in any of the following:
(A) An increase or decrease in access to
health care services.
(B) An increase or decrease in the quality
of health care services.
(C) An increase or decrease in patient free-
dom of choice among health care providers.
(D) An increase or decrease in competition
among health care providers.
(E) An increase or decrease in the ability
of health care facilities to provide services in
medically underserved areas or to medically un-
derserved populations.
(F) An increase or decrease in the cost to
Government health care programs.
(G) An increase or decrease in the poten-
tial overutilization of health care services.
(H) The existence or nonexistence of any
potential financial benefit to a health care pro-
fessional or provider which may vary based on
their decisions of—
(i) whether to order a health care
item or service; or
(ii) whether to arrange for a referral
of health care items or services to a par-
ticular practitioner or provider.
(I) Any other factors the Secretary deems
appropriate in the interest of preventing fraud
and abuse in Government health care programs.
(b) INTERPRETIVE RULINGS.—
(1) IN GENERAL.—
(A) REQUEST
FOR
INTERPRETIVE
RUL-
ING.—Any person may present, at any time, a
request to the Inspector General for a state-
ment of the Inspector General’s current inter-
pretation of the meaning of a specific aspect of
the application of sections 1128A and 1128B of
the Social Security Act (hereafter in this sec-
tion referred to as an ‘‘interpretive ruling’’).
(B) ISSUANCE AND EFFECT OF INTERPRE-
TIVE RULING.—
(i) IN GENERAL.—If appropriate, the
Inspector General shall in consultation
with the Attorney General, issue an inter-
pretive ruling in response to a request de-
scribed in subparagraph (A). Interpretive
rulings shall not have the force of law and
shall be treated as an interpretive rule
within the meaning of section 553(b) of
title 5, United States Code. All interpretive
rulings issued pursuant to this provision
shall be published in the Federal Register
or otherwise made available for public in-
spection.
(ii) REASONS FOR DENIAL.—If the In-
spector General does not issue an interpre-
tive ruling in response to a request de-
scribed in subparagraph (A), the Inspector
General shall notify the requesting party of
such decision and shall identify the reasons
for such decision.
(2) CRITERIA FOR INTERPRETIVE RULINGS.—
(A) IN GENERAL.—In determining whether
to issue an interpretive ruling under paragraph
(1)(B), the Inspector General may consider—
(i) whether and to what extent the re-
quest identifies an ambiguity within the
language of the statute, the existing safe
harbors, or previous interpretive rulings;
and
(ii) whether the subject of the re-
quested interpretive ruling can be ade-
quately addressed by interpretation of the
language of the statute, the existing safe
harbor rules, or previous interpretive rul-
ings, or whether the request would require
a substantive ruling not authorized under
this subsection.
(B) NO RULINGS ON FACTUAL ISSUES.—
The Inspector General shall not give an inter-
pretive ruling on any factual issue, including
the intent of the parties or the fair market
value of particular leased space or equipment.
(c) SPECIAL FRAUD ALERTS.—
(1) IN GENERAL.—
(A) 
REQUEST
FOR
SPECIAL
FRAUD
ALERTS.—Any person may present, at any
time, a request to the Inspector General for a
notice which informs the public of practices
which the Inspector General considers to be
suspect or of particular concern under section
1128B(b) of the Social Security Act (42 U.S.C.
1320a–7b(b)) (hereafter in this subsection re-
ferred to as a ‘‘special fraud alert’’).
(B) ISSUANCE AND PUBLICATION OF SPE-
CIAL FRAUD ALERTS.—Upon receipt of a re-
quest described in subparagraph (A), the In-
spector General shall investigate the subject
matter of the request to determine whether a
special fraud alert should be issued. If appro-
priate, the Inspector General shall in consulta-
tion with the Attorney General, issue a special
fraud alert in response to the request. All spe-
cial fraud alerts issued pursuant to this sub-
paragraph shall be published in the Federal
Register.
(2) CRITERIA FOR SPECIAL FRAUD ALERTS.—
In determining whether to issue a special fraud alert
upon a request described in paragraph (1), the In-
spector General may consider—
(A) whether and to what extent the prac-
tices that would be identified in the special
fraud alert may result in any of the con-
sequences described in subsection (a)(2); and
(B) the volume and frequency of the con-
duct that would be identified in the special
fraud alert.
SEC. 104. REPORTING OF FRAUDULENT ACTIONS UNDER
MEDICARE.
Not later than 1 year after the date of the enactment
of this Act, the Secretary shall establish a program
through which individuals entitled to benefits under the
medicare program may report to the Secretary on a con-
fidential basis (at the individual’s request) instances of
suspected fraudulent actions arising under the program by
providers of items and services under the program.
TITLE II—REVISIONS TO CUR-
RENT SANCTIONS FOR FRAUD
AND ABUSE
SEC. 201. MANDATORY EXCLUSION FROM PARTICIPATION
IN MEDICARE AND STATE HEALTH CARE PRO-
GRAMS.
(a) INDIVIDUAL CONVICTED OF FELONY RELATING
TO 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 after the date of the enactment of the Health
Care Fraud Prevention Act of 1995, under Federal
or State law, in connection with the delivery of a
health care item or service or with respect to any act
or omission in a program (other than those specifi-
cally described in paragraph (1)) operated by or fi-
nanced in whole or in part by any Federal, State, or
local government agency, of a criminal offense con-
sisting of a felony relating to fraud, theft, embezzle-
ment, breach of fiduciary responsibility, or other fi-
nancial 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) INDIVIDUAL CONVICTED OF FELONY RELATING
TO CONTROLLED SUBSTANCE.—
(1) IN GENERAL.—Section 1128(a) of the So-
cial Security Act (42 U.S.C. 1320a–7(a)), as amend-
ed by subsection (a), is amended by adding at the
end the following new paragraph:
‘‘(4) FELONY CONVICTION RELATING TO CON-
TROLLED
SUBSTANCE.—Any individual or entity
that has been convicted after the date of the enact-
ment of the Health Care Fraud Prevention Act of
1995, under Federal or State law, of a criminal of-
fense consisting of a felony relating to the unlawful
manufacture, distribution, prescription, or dispens-
ing of a controlled substance.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1128(b)(3) of such Act (42 U.S.C. 1320a–7(b)(3))
is amended—
(A) in the heading, by striking ‘‘CONVIC-
TION’’ and inserting ‘‘MISDEMEANOR CONVIC-
TION’’; and
(B) by striking ‘‘criminal offense’’ and in-
serting ‘‘criminal offense consisting of a mis-
demeanor’’.
SEC. 202. ESTABLISHMENT OF MINIMUM PERIOD OF EX-
CLUSION FOR CERTAIN INDIVIDUALS AND
ENTITIES SUBJECT TO PERMISSIVE EXCLU-
SION FROM MEDICARE AND STATE HEALTH
CARE PROGRAMS.
Section 1128(c)(3) of the Social Security Act (42
U.S.C. 1320a–7(c)(3)) is amended by adding at the end
the following new subparagraphs:
‘‘(D) In the case of an exclusion of an individual or
entity under paragraph (1), (2), or (3) of subsection (b),
the period of the exclusion shall be 3 years, unless the
Secretary determines in accordance with published regula-
tions that a shorter period is appropriate because of miti-
gating circumstances or that a longer period is appro-
priate because of aggravating circumstances.
‘‘(E) In the case of an exclusion of an individual or
entity under subsection (b)(4) or (b)(5), the period of the
exclusion shall not be less than the period during which
the individual’s or entity’s license to provide health care
is revoked, suspended, or surrendered, or the individual
or the entity is excluded or suspended from a Federal or
State health care program.
‘‘(F) In the case of an exclusion of an individual or
entity under subsection (b)(6)(B), the period of the exclu-
sion shall be not less than 1 year.’’.
SEC. 203. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH
OWNERSHIP 
OR 
CONTROL 
INTEREST 
IN
SANCTIONED ENTITIES.
Section 1128(b) of the Social Security Act (42 U.S.C.
1320a–7(b)) is amended by adding at the end the follow-
ing new paragraph:
‘‘(15) INDIVIDUALS
CONTROLLING
A
SANC-
TIONED ENTITY.—Any individual who has a direct
or indirect ownership or control interest of 5 percent
or more, or an ownership or control interest (as de-
fined in section 1124(a)(3)) in, or who is an officer,
director, agent, or managing employee (as defined in
section 1126(b)) of, an entity—
‘‘(A) that has been convicted of any of-
fense described in subsection (a) or in para-
graph (1), (2), or (3) of this subsection;
‘‘(B) against which a civil monetary pen-
alty has been assessed under section 1128A; or
‘‘(C) that has been excluded from partici-
pation under a program under title XVIII or
under a State health care program.’’.
SEC. 204. SANCTIONS AGAINST PRACTITIONERS AND PER-
SONS FOR FAILURE TO COMPLY WITH STATU-
TORY OBLIGATIONS.
(a) MINIMUM PERIOD OF EXCLUSION FOR PRACTI-
TIONERS AND PERSONS FAILING TO MEET STATUTORY
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 1 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) REPEAL OF ‘‘UNWILLING OR UNABLE’’ CONDI-
TION FOR IMPOSITION OF SANCTION.—Section 1156(b)(1)
of the Social Security 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. 205. INTERMEDIATE SANCTIONS FOR MEDICARE
HEALTH MAINTENANCE ORGANIZATIONS.
(a) APPLICATION OF INTERMEDIATE SANCTIONS FOR
ANY PROGRAM VIOLATIONS.—
(1) IN
GENERAL.—Section 1876(i)(1) of the
Social Security Act (42 U.S.C. 1395mm(i)(1)) is
amended by striking ‘‘the Secretary may terminate’’
and all that follows and inserting the following: ‘‘in
accordance with procedures established under para-
graph (9), the Secretary may at any time terminate
any such contract or may impose the intermediate
sanctions described in paragraph (6)(B) or (6)(C)
(whichever is applicable) on the eligible organization
if the Secretary determines that the organization—
‘‘(A) has failed substantially to carry out
the contract;
‘‘(B) is carrying out the contract in a man-
ner inconsistent with the efficient and effective
administration of this section; or
‘‘(C) no longer substantially meets the ap-
plicable conditions of subsections (b), (c), (e),
and (f).’’.
(2) OTHER
INTERMEDIATE
SANCTIONS
FOR
MISCELLANEOUS
PROGRAM
VIOLATIONS.—Section
1876(i)(6) of such Act (42 U.S.C. 1395mm(i)(6)) is
amended by adding at the end the following new
subparagraph:
‘‘(C) In the case of an eligible organization for which
the Secretary makes a determination under paragraph (1)
the basis of which is not described in subparagraph (A),
the Secretary may apply the following intermediate sanc-
tions:
‘‘(i) Civil money penalties of not more than
$25,000 for each determination under paragraph (1)
if the deficiency that is the basis of the determina-
tion has directly adversely affected (or has the sub-
stantial likelihood of adversely affecting) an individ-
ual covered under the organization’s contract.
‘‘(ii) Civil money penalties of not more than
$10,000 for each week beginning after the initiation
of procedures by the Secretary under paragraph (9)
during which the deficiency that is the basis of a de-
termination under paragraph (1) exists.
‘‘(iii) Suspension of enrollment of individuals
under this section after the date the Secretary noti-
fies the organization of a determination under para-
graph (1) and until the Secretary is satisfied that
the deficiency that is the basis for the determination
has been corrected and is not likely to recur.’’.
(3) PROCEDURES FOR IMPOSING SANCTIONS.—
Section 1876(i) of such Act (42 U.S.C. 1395mm(i))
is amended by adding at the end the following new
paragraph:
‘‘(9) The Secretary may terminate a contract with an
eligible organization under this section or may impose the
intermediate sanctions described in paragraph (6) on the
organization in accordance with formal investigation and
compliance procedures established by the Secretary under
which—
‘‘(A) the Secretary provides the organization
with the opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the Secretary’s determination
under paragraph (1);
‘‘(B) in deciding whether to impose sanctions,
the Secretary considers aggravating factors such as
whether an entity has a history of deficiencies or has
not taken action to correct deficiencies the Secretary
has brought to their attention;
‘‘(C) there are no unreasonable or unnecessary
delays between the finding of a deficiency and the
imposition of sanctions; and
‘‘(D) the Secretary provides the organization
with reasonable notice and opportunity for hearing
(including the right to appeal an initial decision) be-
fore imposing any sanction or terminating the con-
tract.’’.
(4) 
CONFORMING
AMENDMENTS.—Section
1876(i)(6)(B) 
of 
such 
Act 
(42 
U.S.C.
1395mm(i)(6)(B)) is amended by striking the sec-
ond sentence.
(b) AGREEMENTS WITH PEER REVIEW ORGANIZA-
TIONS.—
(1) REQUIREMENT
FOR
WRITTEN
AGREE-
MENT.—Section 1876(i)(7)(A) of the Social Security
Act (42 U.S.C. 1395mm(i)(7)(A)) is amended by
striking ‘‘an agreement’’ and inserting ‘‘a written
agreement’’.
(2) DEVELOPMENT OF MODEL AGREEMENT.—
Not later than July 1, 1996, the Secretary shall de-
velop a model of the agreement that an eligible orga-
nization with a risk-sharing contract under section
1876 of the Social Security Act must enter into with
an entity providing peer review services with respect
to services provided by the organization under sec-
tion 1876(i)(7)(A) of such Act.
(3) REPORT BY GAO.—
(A) STUDY.—The Comptroller General of
the United States shall conduct a study of the
costs incurred by eligible organizations with
risk-sharing contracts under section 1876(b) of
such Act of complying with the requirement of
entering into a written agreement with an en-
tity providing peer review services with respect
to services provided by the organization, to-
gether with an analysis of how information gen-
erated by such entities is used by the Secretary
to assess the quality of services provided by
such eligible organizations.
(B) REPORT
TO
CONGRESS.—Not later
than July 1, 1998, the Comptroller General
shall submit a report to the Committee on
Ways and Means and the Committee on Energy
and Commerce of the House of Representatives
and the Committee on Finance and the Special
Committee on Aging of the Senate on the study
conducted under subparagraph (A).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to contract years be-
ginning on or after January 1, 1996.
SEC. 206. EFFECTIVE DATE.
The amendments made by this part shall take effect
January 1, 1996.
TITLE 
III—ADMINISTRATIVE
AND MISCELLANEOUS PROVI-
SIONS
SEC. 301. ESTABLISHMENT OF THE HEALTH CARE FRAUD
AND ABUSE DATA COLLECTION PROGRAM.
(a) GENERAL PURPOSE.—Not later than January 1,
1996, the Secretary shall establish a national health care
fraud and abuse data collection program for the reporting
of final adverse actions (not including settlements in which
no findings of liability have been made) against health
care providers, suppliers, or practitioners as required by
subsection (b), with access as set forth in subsection (c).
(b) REPORTING OF INFORMATION.—
(1) IN
GENERAL.—Each government agency
and health plan shall report any final adverse action
(not including settlements in which no findings of li-
ability have been made) taken against a health care
provider, supplier, or practitioner.
(2) INFORMATION TO BE REPORTED.—The in-
formation to be reported under paragraph (1) in-
cludes:
(A) The name of any health care provider,
supplier, or practitioner who is the subject of a
final adverse action.
(B) The name (if known) of any health
care entity with which a health care provider,
supplier, or practitioner is affiliated or associ-
ated.
(C) The nature of the final adverse action.
(D) A description of the acts or omissions
and injuries upon which the final adverse action
was based, and such other information as the
Secretary determines by regulation is required
for appropriate interpretation of information re-
ported under this section.
(3) CONFIDENTIALITY.—In determining what
information is required, the Secretary shall include
procedures to assure that the privacy of individuals
receiving health care services is appropriately pro-
tected.
(4) TIMING AND FORM OF REPORTING.—The
information required to be reported under this sub-
section shall be reported regularly (but not less often
than monthly) and in such form and manner as the
Secretary prescribes. Such information shall first be
required to be reported on a date specified by the
Secretary.
(5) TO WHOM REPORTED.—The information re-
quired to be reported under this subsection shall be
reported to the Secretary.
(c) DISCLOSURE
AND CORRECTION
OF INFORMA-
TION.—
(1) DISCLOSURE.—With respect to the informa-
tion about final adverse actions (not including settle-
ments in which no findings of liability have been
made) reported to the Secretary under this section
respecting a health care provider, supplier, or practi-
tioner, the Secretary shall, by regulation, provide
for—
(A) disclosure of the information, upon re-
quest, to the health care provider, supplier, or
licensed practitioner, and
(B) procedures in the case of disputed ac-
curacy of the information.
(2) CORRECTIONS.—Each Government agency
and health plan shall report corrections of informa-
tion already reported about any final adverse action
taken against a health care provider, supplier, or
practitioner, in such form and manner that the Sec-
retary prescribes by regulation.
(d) ACCESS TO REPORTED INFORMATION.—
(1) AVAILABILITY.—The information in this
database shall be available to Federal and State gov-
ernment agencies and health plans pursuant to pro-
cedures that the Secretary shall provide by regula-
tion.
(2) FEES
FOR
DISCLOSURE.—The Secretary
may establish or approve reasonable fees for the dis-
closure of information in this database. The amount
of such a fee may not exceed the costs of processing
the requests for disclosure and of providing such in-
formation. Such fees shall be available to the Sec-
retary or, in the Secretary’s discretion to the agency
designated under this section to cover such costs.
(e) PROTECTION FROM LIABILITY
FOR REPORT-
ING.—No person or entity, including the agency des-
ignated by the Secretary in subsection (b)(5) shall be held
liable in any civil action with respect to any report made
as required by this section, without knowledge of the fal-
sity of the information contained in the report.
(f) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section:
(1) The term ‘‘final adverse action’’ includes:
(A) Civil judgments against a health care
provider in Federal or State court related to the
delivery of a health care item or service.
(B) Federal or State criminal convictions
related to the delivery of a health care item or
service.
(C) Actions by Federal or State agencies
responsible for the licensing and certification of
health care providers, suppliers, and licensed
health care practitioners, including—
(i) formal or official actions, such as
revocation or suspension of a license (and
the length of any such suspension), rep-
rimand, censure or probation,
(ii) any other loss of license of the
provider, supplier, or practitioner, by oper-
ation of law, or
(iii) any other negative action or find-
ing by such Federal or State agency that
is publicly available information.
(D) Exclusion from participation in Fed-
eral or State health care programs.
(E) Any other adjudicated actions or deci-
sions that the Secretary shall establish by regu-
lation.
(2) 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 pro-
vide health care services (or any individual who,
without authority holds himself or herself out to be
so licensed or authorized).
(3) The term ‘‘health care provider’’ means a
provider of services as defined in section 1861(u) of
the Social Security Act, and any entity, including a
health maintenance organization, group medical
practice, or any other entity listed by the Secretary
in regulation, that provides health care services.
(4) The term ‘‘supplier’’ means a supplier of
health care items and services described in section
1819 (a) and (b), and section 1861 of the Social Se-
curity Act.
(5) The term ‘‘Government agency’’ shall in-
clude:
(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 deliv-
ery 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 and abuse units.
(F) Federal or State agencies responsible
for the licensing and certification of health care
providers and licensed health care practitioners.
(6) The term ‘‘health plan’’ has the meaning
given to such term by section 1128(i) of the Social
Security Act.
(7) For purposes of paragraph (2), the exist-
ence of a conviction shall be determined under para-
graph (4) of section 1128(j) of the Social Security
Act.
(g) CONFORMING AMENDMENT.—Section 1921(d) of
the Social Security Act is amended by inserting ‘‘and sec-
tion 301 of the Health Care Fraud Prevention Act of
1995’’ after ‘‘section 422 of the Health Care Quality Im-
provement Act of 1986’’.
TITLE IV—CIVIL MONETARY
PENALTIES
SEC. 401. CIVIL MONETARY PENALTIES.
(a) GENERAL CIVIL MONETARY PENALTIES.—Sec-
tion 1128A of the Social Security Act (42 U.S.C. 1320a–
7a) is amended as follows:
(1) In subsection (a)(1), by inserting ‘‘or of any
health plan (as defined in section 1128(i)),’’ after
‘‘subsection (i)(1)),’’.
(2) In subsection (f)—
(A) by redesignating paragraph (3) as
paragraph (4); and
(B) by inserting after paragraph (2) the
following new paragraphs:
‘‘(3) With respect to amounts recovered arising
out of a claim under a health plan, the portion of
such amounts as is determined to have been paid by
the plan shall be repaid to the plan, and the portion
of such amounts attributable to the amounts recov-
ered under this section by reason of the amendments
made by the Health Care Fraud Prevention Act of
1995 (as estimated by the Secretary) shall be depos-
ited into the Health Care Fraud and Abuse Control
(e) REPORTS.—The State Fraud Unit shall submit
to the Secretary an application and an annual report con-
taining such information as the Secretary determines to
be necessary to determine whether the State Fraud Unit
meets the requirements of this section.
(f) FUNDING
SOURCE; PARTICIPATION
IN
ALL-
PAYER PROGRAM.—In addition to those sums expended
by a State under section 604(a) for purposes of determin-
ing the amount of the Secretary’s payments, a State
Fraud Unit may receive funding for its activities from
other sources, the identity of which shall be reported to
the Secretary in its application or annual report. The
State Fraud Unit shall participate in the all-payer fraud
and abuse control program established under section 101.
SEC. 603. SCOPE AND PURPOSE.
The State Fraud Unit shall carry out the following
activities:
(1) The State Fraud Unit shall conduct a state-
wide program for the investigation and prosecution
(or referring for prosecution) of violations of all ap-
plicable state laws regarding any and all aspects of
fraud in connection with any aspect of the adminis-
tration and provision of health care services and ac-
tivities of providers of such services under any Fed-
erally-funded or mandated health care programs;