628
Title VI, Subtitle G
‘‘(1) Whether the fair market value shall be, or
was paid or received for any goods, services or prop-
erty.
‘‘(2) Whether an individual is a bona fide em-
ployee within the requirements of section 3121(d)(2)
of the Internal Revenue Code of 1986.
‘‘(d) EFFECT OF ADVISORY OPINIONS.—
‘‘(1) Each advisory opinion issued by the Sec-
retary shall be binding as to the Secretary and the
party or parties requesting the opinion.
‘‘(2) The failure of a party to seek an advisory
opinion may not be introduced into evidence to prove
that the party intended to violate the provisions of
sections 1128, 1128A, or 1128B.
‘‘(e) REGULATIONS.—The Secretary within 180 days
of the date of enactment, shall issue regulations establish-
ing a system for the issuance of advisory opinions. Such
regulations shall provide for—
‘‘(1) the procedure to be followed by a party ap-
plying for an advisory opinion;
‘‘(2) the procedure to be followed by the Sec-
retary in responding to a request for an advisory
opinion;
‘‘(3) the interval in which the Secretary shall
respond;
629
Title VI, Subtitle G
‘‘(4) the reasonable fee to be charged to the
party requesting an advisory opinion; and
‘‘(5) the manner in which advisory opinions will
be made available to the public.
‘‘(f) INTERVAL FOR ISSUANCE OF ADVISORY OPIN-
IONS.—Under no circumstances shall the interval in which
the Secretary shall respond to a party requesting an advi-
sory opinion exceed 30 days.’’.
SEC. 6632. AUTHORIZING THE SECRETARY OF HEALTH AND
HUMAN SERVICES TO ISSUE ADVISORY OPIN-
IONS RELATING TO PHYSICIAN OWNERSHIP
AND REFERRAL.
Section 1877 of the Social Security Act (42 U.S.C.
1395nn) is amended by the addition of the following new
subsection:
‘‘(i) ADVISORY OPINIONS.—
‘‘(1) IN GENERAL.—The Secretary shall issue
advisory opinions on whether an arrangement or
proposed arrangement will result in a prohibited re-
ferral within the meaning of this section.
‘‘(2) EFFECT OF ADVISORY OPINIONS.—
‘‘(A) Each advisory opinion issued by the
Secretary shall be binding as to the Secretary
and the party or parties requesting the opinion.
630
Title VI, Subtitle G
‘‘(B) The failure of a party to seek an ad-
visory opinion may not be introduced into evi-
dence to prove that the party intended to vio-
late the provisions of this section.
‘‘(3) REGULATIONS.—The Secretary within one
hundred and eighty days of the date of enactment,
shall issue regulations establishing a system for the
issuance of advisory opinions. Such regulations shall
provide for—
‘‘(A) the procedure to be followed by a
party applying for an advisory opinion;
‘‘(B) the procedure to be followed by the
Secretary in responding to a request for an ad-
visory opinion;
‘‘(C) the interval in which the Secretary
shall respond;
‘‘(D) the reasonable fee to be charged to
the party requesting an advisory opinion; and
‘‘(E) the manner in which advisory opin-
ions will be made available to the public.
‘‘(4) INTERVAL
FOR
ISSUANCE
OF
ADVISORY
OPINIONS.—Under no circumstances shall the inter-
val in which the Secretary shall respond to a party
requesting an advisory opinion exceed thirty days.’’.
631
Title VI, Subtitle G
SEC. 6633. EFFECTIVE DATE.
Unless otherwise specified, the amendments made by
this part shall be effective upon the enactment of this Act.
PART 5—PAYMENTS FOR STATE HEALTH CARE
FRAUD CONTROL UNITS
SEC. 6641. ESTABLISHMENT OF STATE FRAUD UNITS.
(a) ESTABLISHMENT OF HEALTH CARE FRAUD AND
ABUSE CONTROL UNIT.—Each State shall, consistent
with State law, establish and maintain in accordance with
subsection (b) a State agency to act as a Health Care
Fraud and Abuse Control Unit for purposes of this part.
(b) DEFINITION.—In this section, a ‘‘State Fraud
Unit’’ means a Health Care Fraud and Abuse Control
Unit designated under subsection (a) that the Attorney
General certifies meets the requirements of this part.
SEC. 6642. REQUIREMENTS FOR STATE FRAUD UNITS.
(a) IN GENERAL.—The State Fraud Unit must—
(1) be a single identifiable entity of the State
government;
(2) be separate and distinct from any State
agency with principal responsibility for the adminis-
tration of any Federally-funded or mandated health
care program; and
(3) meet the other requirements of this section.
(b) SPECIFIC
REQUIREMENTS
DESCRIBED.—The
State Fraud Unit shall—
632
Title VI, Subtitle G
(1) be a Unit of the office of the State Attorney
General or of another department of State govern-
ment which possesses statewide authority to pros-
ecute individuals for criminal violations;
(2) if it is in a State the constitution of which
does not provide for the criminal prosecution of indi-
viduals by a statewide authority and has formal pro-
cedures, (A) assure its referral of suspected criminal
violations to the appropriate authority or authorities
in the State for prosecution, and (B) assure its as-
sistance of, and coordination with, such authority or
authorities in such prosecutions; or
(3) have a formal working relationship with the
office of the State Attorney General or the appro-
priate authority or authorities for prosecution and
have formal procedures (including procedures for its
referral of suspected criminal violations to such of-
fice) which provide effective coordination of activities
between the Fraud Unit and such office with respect
to the detection, investigation, and prosecution of
suspected criminal violations relating to any Feder-
ally-funded or mandated health care programs.
(c) STAFFING REQUIREMENTS.—The Fraud Unit
must—
633
Title VI, Subtitle G
(1) employ attorneys, auditors, investigators
and other necessary personnel; and
(2) be organized in such a manner and provide
sufficient resources as is necessary to promote the
effective and efficient conduct of Fraud Unit activi-
ties.
(d) COOPERATIVE AGREEMENTS; MEMORANDA
OF
UNDERSTANDING.—The Fraud Unit must have coopera-
tive agreements with—
(1) Federally-funded or mandated health care
programs;
(2) similar Fraud Units in other States, as ex-
emplified through membership and participation in
the National Association of Medicaid Fraud Control
Units or its successor; and
(3) the Attorney General of the United States
and the Inspector General of the Department of
Health and Human Services.
(e) REPORTS.—The Fraud Unit shall submit to the
Attorney General an application and an annual report con-
taining such information as the Attorney General deter-
mines to be necessary to determine whether the Fraud
Unit meets the requirements of this section.
(f) FUNDING
SOURCE; PARTICIPATION
IN
ALL-
PAYER PROGRAM.—The Fraud Unit may receive funding
634
Title VI, Subtitle G
for its activities from such sources as the State considers
appropriate. The Fraud Unit shall participate in the all-
payer fraud and abuse control program established under
section 6601.
(g) USE OF MEDICAID FRAUD CONTROL UNITS.—
If a State has a medicaid fraud control unit under title
XIX of the Social Security Act in operation as of the date
of the enactment of this Act, such unit shall be deemed
to meet the requirements of this part and to serve as the
State Fraud Unit under this part if the State dem-
onstrates that the Unit will be able to carry out the activi-
ties described in section 6643.
SEC. 6643. SCOPE AND PURPOSE.
The Fraud Unit shall carry out the following activi-
ties:
(1) The Fraud Unit shall conduct a statewide
program for the investigation and prosecution (or re-
ferring for prosecution) of violations of all applicable
state laws regarding any and all aspects of fraud in
connection with any aspect of the administration
and provision of health care services and activities of
providers of such services under any Federally-fund-
ed or mandated health care programs.
(2) The Fraud Unit shall have procedures for
reviewing complaints of the abuse or neglect of pa-
635
Title VI, Subtitle G
tients of facilities (including patients in residential
facilities and home health care programs) that re-
ceive payments under any Federally-funded or man-
dated health care programs, and, where appropriate,
to investigate and prosecute such complaints under
the criminal laws of the State or for referring the
complaints to other State agencies for action.
(3) The Fraud Unit shall provide for the collec-
tion, or referral for collection to the appropriate
agency, of overpayments that are made under any
Federally-funded or mandated health care program
and that are discovered by the Fraud Unit in carry-
ing out its activities.
SEC. 6644. PAYMENTS TO STATES.
(a) IN GENERAL.—
(1) MATCHING PAYMENTS TO STATES.—Subject
to subsection (c), for each year for which a State
has a Fraud Unit approved under section 6642(b) in
operation the Attorney General shall pay to the
State for each quarter in a fiscal year an amount
equal to the applicable percentage of the sums ex-
pended during the quarter by the Fraud Unit.
(2) TIME OF PAYMENT.—The Attorney General
shall make a payment under paragraph (1) for a
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Title VI, Subtitle G
quarter by not later than 30 days after the end of
the quarter.
(b) APPLICABLE PERCENTAGE DEFINED.—
(1) IN GENERAL.—In subsection (a), the ‘‘ap-
plicable percentage’’ with respect to a State for a
fiscal year is—
(A) 90 percent, for quarters occurring dur-
ing the first 3 years for which the Fraud Unit
is in operation; or
(B) 75 percent, for any other quarters.
(2) TREATMENT
OF
STATES
WITH
MEDICAID
FRAUD CONTROL UNITS.—In the case of a State
with a State medicaid fraud control unit in oper-
ation prior to or as of the date of the enactment of
this Act, in determining the number of years for
which the State’s Fraud Unit under this part has
been in operation, there shall be included the num-
ber of years for which such State medicaid fraud
control unit was in operation.
(c) LIMIT
ON
PAYMENT.—Notwithstanding sub-
section (a), the total amount of payments made to a State
under this section for a fiscal year may not exceed—
(1) for fiscal year 1996, 4 times the amount
paid to the State under section 1903(a)(6) of the
637
Title VI, Subtitle H
Social Security Act during the first quarter of 1995;
and
(2) for each succeeding fiscal year, the amount
determined under this subsection in the previous fis-
cal year, increased by the percentage increase in the
consumer price index for all urban consumers (U.S.
city average) for the year.
Subtitle H—Billing for Laboratory
Services
SEC. 6701. EASING RESTRICTIONS ON BILLING FOR LAB-
ORATORY AND OTHER SERVICES.
(a) IN GENERAL.—The Public Health Service Act is
amended—
(1) by redesignating title XXVII (42 U.S.C.
300cc et seq.) as title XXVIII; and
(2) by inserting after title XXVI the following
new title:
‘‘TITLE XXVII—RESTRICTIONS
ON BILLING
‘‘SEC. 2701. PROHIBITION.
‘‘(a) BILLING OF OTHERS FOR ANCILLARY HEALTH
SERVICES.—Except as provided in section 2702, it shall
be unlawful for any person (including any individual or
entity) who furnishes ancillary health services (as defined
in section 2705(1)) to present or cause to be presented,
638
Title VI, Subtitle H
a claim, bill, or demand for payment to any person other
than the patient receiving such services.
‘‘(b) BILLING OF RECIPIENT OF SERVICES.—Except
as provided in section 2702, it shall be unlawful for any
physician, or the agent of any physician, to present, or
cause to be presented, a claim, bill, or demand for pay-
ment for ancillary health services to any recipient of such
services unless the services covered by the claim, bill, or
demand were furnished—
‘‘(1) personally by, or under the supervision of,
the referring physician;
‘‘(2) personally by, or under the supervision of,
a physician who is a member of the same group
practice as the referring physician; or
‘‘(3) personally by individuals who are employed
by such physician or group practice and who are
personally supervised by the physician or by another
physician in the group practice.
‘‘(c) GENERAL EXCEPTION FOR SERVICES UNDER
MEDICARE.—This section does not apply with respect to
any ancillary health services for which payment may be
made under title XVIII of the Social Security Act.
‘‘SEC. 2702. EXCEPTIONS.
‘‘Notwithstanding the provisions of section 2701, a
person who furnishes ancillary health services to an indi-
639
Title VI, Subtitle H
vidual may present, or cause to be presented, for payment
for actual services rendered a claim, bill, or demand to—
‘‘(1) an immediate family member of the recipi-
ent of the services or any other person legally re-
sponsible for the debts or care of the recipient of the
services;
‘‘(2) a third party payer designated by the re-
cipient of the services;
‘‘(3) a health maintenance organization, or
other health plan providing coverage through a man-
aged care arrangement, in which the recipient of the
services is enrolled;
‘‘(4) a hospital or skilled nursing facility where
the recipient of the services was an inpatient or out-
patient at the time the services were provided;
‘‘(5) an employer where the recipient of the
services is an employee of such employer and the
employer is responsible for payment for the services;
‘‘(6) a governmental agency or specified agent,
on behalf of the recipient of the services;
‘‘(7) a substance abuse program where the cli-
ents of such a program were the recipient of the
services;
‘‘(8) a clinic or other health care provider that
has been designated (or that is operated by an orga-
640
Title VI, Subtitle H
nization that has been designated) as tax-exempt
pursuant to section 501(c)(3) of the Internal Reve-
nue Code of 1986 whose purpose is the promotion
of public health, if the services rendered relate to
testing for sexually transmitted disease, acquired im-
mune deficiency syndrome, pregnancy, pregnancy
termination, or other conditions where the Secretary
has determined that compliance with section 2701
could seriously compromise the recipient’s need for
confidentiality;
‘‘(9) a person engaged in bona fide research
studies;
‘‘(10) the party requesting the ancillary health
services where Federal, State, or local law requires
that the identity of the recipient be kept confiden-
tial;
‘‘(11) another person furnishing the same ancil-
lary health services for which payment is sought
(hereafter referred to in this paragraph as the ‘re-
questing party’) where the person presenting, or
causing to be presented, the claim, bill, or demand
for payment furnished the services at the request of
the requesting party, except that the requesting
party may not be a facility owned or operated by the
physician requesting the ancillary health service; and
641
Title VI, Subtitle H
‘‘(12) an entity approved to receive such claims,
bills or demands by the Secretary in regulations.
The persons described in paragraphs (1) through (12) who
have received a claim, bill, or demand for payment for
such ancillary health services may present, or cause to be
presented, such claim, bill, or demand to the responsible
party.
‘‘SEC. 2703. SANCTIONS.
‘‘(a) PAYMENT.—No payment may be made for a
service that is provided in violation of section 2701.
‘‘(b) COLLECTION OF AMOUNTS.—
‘‘(1) LIABILITY ON COLLECTION.—If a person
collects any amounts that were billed in violation of
section 2701(a), such person shall be liable for, and
shall refund on a timely basis to the individual
whom such amounts were collected, any amounts so
collected.
‘‘(2) COLLECTION BY PHYSICIAN.—If a physi-
cian collects any amounts from a recipient of serv-
ices, or from another person on behalf of the recipi-
ent of services (including a third-party payer) that
were billed in violation of section 2701(b), such phy-
sician shall be liable for, and shall refund on a time-
ly basis to the recipient or person, any amounts so
collected.
642
Title VI, Subtitle H
‘‘(c) REPEATED CLAIMS.—Any person that presents,
or causes to be presented, on a repeated basis, a bill or
a claim that such person knows, or should have known,
is for a service for which payment may not be made under
subsection (a), or for which a refund has not been made
under subsection (b), shall be subject to a civil money pen-
alty of not more than $5,000 for each such bill or claim.
The provisions of section 1128A of the Social Security Act
(other than the first sentence of subsection (a) and sub-
section (b)) shall apply to a civil money penalty assessed
under the previous sentence in the same manner as such
provisions apply to a penalty or proceeding under such
section 1128A(a).
‘‘(d) 
SUSPENSION
OF
LABORATORY
CERTIFI-
CATION.—If the Secretary finds, after reasonable notice
and opportunity for a hearing, that a laboratory which
holds a certificate pursuant to section 353 has violated
section 2701, the Secretary may suspend, revoke or limit
such certification in accordance with the procedures estab-
lished in section 353(k).
‘‘(e) EXCLUSION FROM OTHER PROGRAMS.—
‘‘(1) AUTHORITY.—The Secretary may exclude
from participation in any program under title XVIII
of the Social Security Act, any individual or entity
that the Secretary determines has violated section
643
Title VI, Subtitle H
2701 and may direct that such individual and entity
be excluded from participation in any State health
care program receiving Federal funds.
‘‘(2) APPLICATION OF OTHER LAW.—The provi-
sions of section 1128(e) of the Social Security Act
shall apply to any exclusion under paragraph (1) in
the same manner as such provisions apply to a pro-
ceeding under such section 1128.
‘‘SEC. 2704. REGULATIONS.
‘‘The Secretary shall by regulation impose such other
requirements as may be necessary to implement the pur-
poses of this title.
‘‘SEC. 2705. DEFINITIONS.
‘‘As used in this title:
‘‘(1) ANCILLARY HEALTH SERVICES.—The term
‘ancillary health services’ means—
‘‘(A) clinical laboratory services;
‘‘(B) diagnostic x-ray tests and other diag-
nostic imaging services including CT and mag-
netic resonance imaging services;
‘‘(C) other diagnostic tests;
‘‘(D) durable medical equipment; and
‘‘(E) physical therapy services.
‘‘(2) GROUP
PRACTICES.—The term ‘group
practice’ means a group of 2 or more physicians le-
644
Title VI, Subtitle H
gally organized as a partnership, professional cor-
poration, foundation, not-for-profit corporation, fac-
ulty practice plan, or similar association—
‘‘(A) in which each physician who is a
member of the group provides substantially the
full range of services that the physician rou-
tinely provides (including medical care, con-
sultation, diagnosis, or treatment) through the
joint use of shared office space, facilities, equip-
ment, and personnel;
‘‘(B) for which substantially all of the serv-
ices of the physicians who are members of the
group are provided through the group and are
billed in the name of the group and amounts so
received are treated as receipts of the group;
‘‘(C) in which the overhead expenses of
and the income from the practice are distrib-
uted in accordance with methods previously de-
termined by members of the group; and
‘‘(D) which meets such other standards as
the Secretary may impose by regulation.
In the case of a faculty practice plan associated with
a hospital with an approved medical residency train-
ing program in which physician members may pro-
vide a variety of different specialty services and pro-
645
Title VI, Subtitle H
vide professional services both within and outside the
group (as well as perform other tasks, such as re-
search), the definition of such term shall be limited
with respect to the services provided outside of the
faculty practice plan.
‘‘(3) IMMEDIATE FAMILY MEMBER.—The term
‘immediate family member’ shall include spouses,
natural and adoptive parents, natural and adoptive
children, natural and adopted siblings, stepparents,
stepchildren and stepsiblings, fathers-in-law, moth-
ers-in-law, brothers-in-law, sisters-in-law, sons-in-law
and daughters-in-law, grandparents and grand-
children, and such additional family members as
may be specified in regulations adopted by the Sec-
retary.
‘‘(4) 
PHYSICIAN.—The 
term 
‘physician’
means—
‘‘(A) a doctor of medicine or osteopathy le-
gally authorized to practice medicine and per-
form surgery by the State in which such indi-
vidual performs such function or action;
‘‘(B) a doctor of dental surgery or of den-
tal medicine who is legally authorized to prac-
tice dentistry in the State in which such indi-
vidual performs such functions;
646
Title VI, Subtitle H
‘‘(C) a doctor of podiatric medicine;
‘‘(D) a doctor of optometry; or
‘‘(E) a chiropractor.
‘‘(5) THIRD
PARTY
PAYER.—The term ‘third
party payer’ means any health care insurer, includ-
ing any hospital services corporation, health services
corporation, medical expense indemnity corporation,
mutual insurance company, or self-insured corpora-
tion, that provides coverage for health or health-re-
lated items or service.’’.
(b) CONFORMING AMENDMENTS.—
(1) Sections 2701 through 2714 of the Public
Health Service Act (42 U.S.C. 300cc through
300cc–15) are redesignated as sections 2801
through 2814, respectively.
(2)(A) Sections 465(f) and 497 of such Act (42
U.S.C. 286(f) and 289) are amended by striking out
‘‘2701’’ each place that such appears and inserting
in lieu thereof ‘‘2801’’.
(B) Section 305(i) of such Act (42 U.S.C.
242c(i)) is amended by striking out ‘‘2711’’ each
place that such appears and inserting in lieu thereof
‘‘2811’’.
647
Title VII
SEC. 6702. EFFECTIVE DATE.
(a) IN GENERAL.—Title XXVII of the Public Health
Service Act, as added by section 6701(a), shall become ef-
fective December 31, 1994.
(b) REGULATIONS.—Not later than July 1, 1995, the
Secretary of Health and Human Services shall promulgate
such regulations as may be appropriate to carry out such
title.
TITLE VII—MEDICARE
TABLE OF CONTENTS OF TITLE
Subtitle A—Increased Beneficiary Choice; Improved Program
Efficiency
PART 1—INCREASED BENEFICIARY CHOICE
Sec. 7001. Requirements for health maintenance organizations under medicare.
Sec. 7002. Expansion and revision of medicare select policies.
Sec. 7003. Including notice of available health maintenance organizations in an-
nual notice to beneficiaries.
Sec. 7004. Legislative proposal on enrolling medicare beneficiaries in qualified
health plans.
Sec. 7005. Optional interim enrollment of medicare beneficiaries in private
health plans.
PART 2—IMPROVED PROGRAM EFFICIENCY
Sec. 7011. Improved efficiency through consolidation of administration of parts
A and B.
PART 3—NOTICE OF ADVANCE DIRECTIVE RIGHTS
Sec. 7021. Providing notice of rights regarding medical care to individuals en-
tering medicare.
Subtitle B—Savings
PART 1—SAVINGS RELATING TO PART A
Sec. 7101. Reduction in update for payments for inpatient hospital services.
Sec. 7102. Reduction in payments for capital-related costs for inpatient hospital
services.
PART 2—SAVINGS RELATING TO PART B