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curs’’ after ‘‘false or misleading information was
given’’; and
(3) by striking ‘‘twice the amount’’ and inserting
‘‘3 times the amount’’.
(d) CLAIM FOR ITEM OR SERVICE BASED ON INCOR-
RECT 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 pro-
vided,’’;
(2) in subparagraph (C), by striking ‘‘or’’ at the
end;
(3) in subparagraph (D), by striking the semi-
colon and inserting ‘‘, or’’; and
(4) by inserting after subparagraph (D) the fol-
lowing new subparagraph:
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‘‘(E) is for a medical or other item or serv-
ice that a person knows or should know is not
medically necessary; or’’.
(e) SANCTIONS AGAINST PRACTITIONERS AND PER-
SONS FOR FAILURE TO COMPLY WITH STATUTORY OBLIGA-
TIONS.—Section 1156(b)(3) (42 U.S.C. 1320c–5(b)(3)) is
amended by striking ‘‘the actual or estimated cost’’ and in-
serting ‘‘up to $10,000 for each instance’’.
(f) PROCEDURAL PROVISIONS.—Section 1876(i)(6) (42
U.S.C. 1395mm(i)(6)), as amended by section 515(a)(2), is
amended by adding at the end the following new subpara-
graph:
‘‘(D) The provisions of section 1128A (other than sub-
sections (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 pro-
ceeding under section 1128A(a).’’.
(g) PROHIBITION AGAINST OFFERING INDUCEMENTS
TO
INDIVIDUALS
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 para-
graph (1)(D);
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(B) by striking the semicolon at the end of
paragraph (4) and inserting ‘‘; or’’; and
(C) by inserting after paragraph (4) the fol-
lowing 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 de-
fined 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, practi-
tioner, or supplier any item or service for which pay-
ment may be made, in whole or in part, under title
XVIII, or a State health care program (as so de-
fined);’’.
(2) REMUNERATION DEFINED.—Section 1128A(i)
(42 U.S.C. 1320a–7a(i)) is amended by adding the
following new paragraph:
‘‘(6) The term ‘remuneration’ includes the waiv-
er of coinsurance and deductible amounts (or any
part thereof), and transfers of items or services for
free or for other than fair market value. The term ‘re-
muneration’ does not include—
‘‘(A) the waiver of coinsurance and deduct-
ible amounts by a person, if—
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‘‘(i) the waiver is not offered as part of
any advertisement or solicitation;
‘‘(ii) the person does not routinely
waive coinsurance 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 permis-
sible waiver as specified in section
1128B(b)(3) or in regulations issued
by the Secretary;
‘‘(B) differentials in coinsurance and de-
ductible 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 Sec-
retary not later than 180 days after the date of
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the enactment of the Health Insurance Reform
Act of 1996; or
‘‘(C) incentives given to individuals to pro-
mote the delivery of preventive care as deter-
mined by the Secretary in regulations so pro-
mulgated.’’.
(h) EFFECTIVE DATE.—The amendments made by this
section shall take effect January 1, 1997.
Subtitle E—Amendments to
Criminal Law
SEC. 541. HEALTH CARE FRAUD.
(a) IN GENERAL.—
(1) FINES
AND
IMPRISONMENT
FOR
HEALTH
CARE FRAUD VIOLATIONS.—Chapter 63 of title 18,
United States Code, is amended by adding at the end
the following new section:
‘‘§ 1347. Health care fraud
‘‘Whoever knowingly and willfully executes, or at-
tempts to execute, a scheme or artifice—
‘‘(1) to defraud any health care program, in con-
nection with the delivery of or payment for health
care benefits, items, or services; 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
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control of, any health care 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(g)(3) of this title), such
person may be imprisoned for any term of years.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 63 of title 18, Unit-
ed States Code, is amended by adding at the end the
following:
‘‘1347. Health care fraud.’’.
(b) CRIMINAL FINES DEPOSITED IN FEDERAL HOS-
PITAL INSURANCE 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, as added by section 501(b), an amount equal
to the criminal fines imposed under section 1347 of title
18, United States Code (relating to health care fraud).
SEC. 542. FORFEITURES FOR FEDERAL HEALTH CARE OF-
FENSES.
(a) IN GENERAL.—Section 982(a) of title 18, United
States Code, is amended by adding after paragraph (5) the
following new paragraph:
‘‘(6)(A) The court, in imposing sentence on a person
convicted of a Federal health care offense, shall order the
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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) For purposes of this paragraph, the term ‘Federal
health care offense’ means a violation of, or a criminal con-
spiracy to violate—
‘‘(i) section 1347 of this title;
‘‘(ii) section 1128B of the Social Security Act;
and
‘‘(iii) sections 287, 371, 664, 666, 669, 1001,
1027, 1341, 1343, 1920, or 1954 of this title if the
violation or conspiracy relates to health care fraud.’’.
(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 notwithstand-
ing any other provision of law, the Secretary of the
Treasury shall deposit into the Federal Hospital In-
surance 
Trust 
Fund 
pursuant 
to 
section
1817(k)(2)(C) of the Social Security Act, as added by
section 501(b), an amount equal to the net amount re-
alized from the forfeiture of property by reason of a
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Federal health care offense pursuant to section
982(a)(6) of title 18, United States Code.
(2) COSTS
OF
ASSET
FORFEITURE.—For pur-
poses of paragraph (1), the term ‘‘payment of the
costs of asset forfeiture’’ means—
(A) the payment, at the discretion of the At-
torney General, of any expenses necessary to
seize, detain, inventory, safeguard, maintain, ad-
vertise, sell, or dispose of property 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 contrac-
tors to operate 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 functions described in
this subparagraph;
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(B) at the discretion of the Attorney Gen-
eral, the payment of awards for information or
assistance leading to a civil or criminal forfeit-
ure involving any Federal agency participating
in the Health Care Fraud and Abuse Control Ac-
count;
(C) the compromise and payment of valid
liens and mortgages against property that has
been forfeited, subject to the discretion of the At-
torney General to determine the validity of any
such lien or mortgage and the amount of pay-
ment to be made, and the employment of attor-
neys and other personnel skilled in State real es-
tate 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 be-
tween the date of the violation giving rise to the
forfeiture and the date of the forfeiture order.
SEC. 543. INJUNCTIVE RELIEF RELATING TO FEDERAL
HEALTH CARE OFFENSES.
(a) IN GENERAL.—Section 1345(a)(1) of title 18,
United States Code, is amended—
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(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 new sub-
paragraph:
‘‘(C) committing or about to commit a Fed-
eral health care offense (as defined in section
982(a)(6)(B) of this title);’’.
(b) FREEZING OF ASSETS.—Section 1345(a)(2) of title
18, United States Code, is amended by inserting ‘‘or a Fed-
eral health care offense (as defined in section 982(a)(6)(B))’’
after ‘‘title)’’.
SEC. 544. FALSE STATEMENTS.
(a) IN GENERAL.—Chapter 47 of title 18, United
States Code, is amended by adding at the end the following
new section:
‘‘§ 1033. False statements relating to health care mat-
ters
‘‘Whoever, in any matter involving a health care pro-
gram, 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 statement or representation, or makes or
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uses any materially false writing or document know-
ing the same to contain any materially false, ficti-
tious, or fraudulent statement or entry,
shall be fined under this title or imprisoned not more than
5 years, or both.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 47 of title 18, United States Code,
is amended by adding at the end the following:
‘‘1033. False statements relating to health care matters.’’.
SEC. 545. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF
FEDERAL HEALTH CARE OFFENSES.
(a) IN GENERAL.—Chapter 73 of title 18, United
States Code, is amended by adding at the end the following
new section:
‘‘§ 1518. Obstruction of criminal investigations of Fed-
eral 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
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 ‘Federal health
care offense’ has the same meaning given such term in sec-
tion 982(a)(6)(B) of this title.
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‘‘(c) As used in this section the term ‘criminal inves-
tigator’ means any individual duly authorized by a depart-
ment, agency, or armed force of the United States to con-
duct or engage in investigations for prosecutions for viola-
tions of health care offenses.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of chapter 73 of title 18, United States Code,
is amended by adding at the end the following:
‘‘1518. Obstruction of Criminal Investigations of Federal Health Care Offenses.’’.
SEC. 546. THEFT OR EMBEZZLEMENT.
(a) IN GENERAL.—Chapter 31 of title 18, United
States Code, is amended by adding at the end the following
new section:
‘‘§ 669. Theft or embezzlement in connection with
health care
‘‘Whoever willfully embezzles, steals, or otherwise will-
fully and unlawfully converts to the use of any person other
than the rightful owner, or intentionally misapplies any
of the moneys, funds, securities, premiums, credits, prop-
erty, or other assets of a health care program, shall be fined
under this title or imprisoned not more than 10 years, or
both.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning 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.’’.