I
104TH CONGRESS
1ST SESSION
H. R. 2476
To amend title XVIII of the Social Security Act to provide for common
sense reforms of the Medicare Program.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 12, 1995
Mr. STUPAK introduced the following bill; which was referred to the Commit-
tee on Ways and Means, and in addition to the Committees on Com-
merce, and the Judiciary, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
for common sense reforms of the Medicare Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Common Sense Medi-
care Reform Act of 1995’’.
TITLE I—FRAUD AND ABUSE
Subtitle A—Provisions Relating to
Durable Medical Equipment
SEC. 101. REVISION OF PAYMENT METHODOLOGY FOR DU-
RABLE MEDICAL EQUIPMENT.
(a) IN GENERAL.—Section 1834(a) of the Social Se-
curity Act (42 U.S.C. 1395m(a)) is amended by adding
at the end the following new paragraph:
‘‘(19) USING COMPETITIVE PRICING TO DETER-
MINE PAYMENT AMOUNTS.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of this subsection, the Secretary
shall promulgate (on an interim basis pending
notice and opportunity for public comment) a
fee schedule for payment for covered items
under this subsection based on competitive
prices and using the inherent reasonableness
authority contained in paragraph (10), but
without regard to section 1842(b)(9).
‘‘(B) COMPETITIVE
BIDDING.—Notwith-
standing any other provision of law, for various
areas of the country, the Secretary may employ
a competitive rate setting process to establish
payment rates for items of durable medical
equipment, prosthetics, orthotics, and supplies
under this part. The Secretary may restrict
payment for these benefits (i) to that supplier
with the lowest bid in such a process, or in
those instances where the Secretary concludes it
is advantageous to have more than one supplier,
(ii) to that set of suppliers whose bids are
among the lowest, or (iii) to those suppliers
submitting bids who are willing to accept the
competitive rate as payment in full.
‘‘(C) LIMITATION ON BILLING.—No sup-
plier of covered items under this subsection may
balance bill recipients for more than 15 percent
of what is payable to the supplier under this
part (determined without regard to deductibles
or coinsurance).
‘‘(D) IMPROVED MONITORING OF UTILIZA-
TION OF DURABLE MEDICAL EQUIPMENT.—The
Secretary shall take such steps as may be nec-
essary to improve the monitoring of the utiliza-
tion of covered items under this part.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply, pursuant to regulations of the
Secretary, to durable medical equipment furnished on or
after the date of the enactment of this Act.
SEC. 102. FREEZE IN UPDATES FOR 1996.
(a) COVERED ITEMS.—Section 1834(a)(14) of the
Social Security Act (42 U.S.C. 1395m(a)(14)) is amend-
ed—
(1) by striking ‘‘and’’ at the end of subpara-
graph (A);
(2) in subparagraph (B), by striking ‘‘a subse-
quent year’’ and inserting ‘‘1993, 1994, and 1995’’;
and
(3) by adding at the end the following:
‘‘(C) for 1996 and each year thereafter, 0
percentage points.’’.
(b) 
ORTHOTICS
AND
PROSTHETICS.—Section
1834(h)(4)(A) of such Act (42 U.S.C. 1395m(h)(4)(A))
is amended—
(1) by adding ‘‘and’’ at the end of clause (ii),
and
(2) in clause (iii), by striking ‘‘and 1995’’ and
inserting ‘‘and each subsequent year’’, and
(3) by striking clause (iv).
‘‘(2) A violation exists under paragraph (1) of one
or more purposes of the remuneration is unlawful, and the
damages shall be the full amount of such remuneration.
‘‘(3) The procedures for actions under this subsection
with regard to subpoenas, statute of limitations, standard
of proof, and collateral estoppel shall be governed by sec-
tion 3731 of title 31, United States Code, and the Federal
Rules of Civil Procedures shall apply to actions brought
under this subsection.
‘‘(4) This subsection shall not affect the availability
of other criminal and civil remedies for violations of sub-
sections (a) and (b).
‘‘(d) Subsections (a) through (c) shall not apply to
any of the following:
‘‘(1) A discount or other reduction in price ob-
tained by a provider of services or other entity under
a specified health care benefit program if the reduc-
tion in price is properly disclosed and appropriately
reflected in the costs claimed or charges made by the
provider or entity under a specified health care bene-
fit program.
‘‘(2) Any amount paid by an employer to an
employee (which has a bona fide employment rela-
tionship with such employer) for employment in the
provision of covered items or services if the amount
of the remuneration under the arrangement is con-
sistent with the fair market value of the services and
is not determined in a manner that takes into ac-
count (directly or indirectly) the volume or value of
any referrals.
‘‘(3) Any amount paid by a vendor of goods or
services to a person authorized to act as a purchas-
ing agent for a group of individuals or entities who
are furnishing services reimbursed under a specified
health care benefit program if—
‘‘(A) the person has a written contract
with each such individual or entity, which speci-
fies the amount to be paid the person, which
amount may be a fixed amount or a percentage
of the value of the purchases made by each
such individual or entity under the contract,
and
‘‘(B) in the case of an entity that is a pro-
vider of services (as defined in section 1861(u)
of the Social Security Act), the person discloses
(in such form and manner as the Secretary of
Health and Human Services requires) to the
entity, and, upon request, to the Secretary of
Health and Human Services the amount re-
ceived from each such vendor with respect to
chases made by or on behalf of the entity.
‘‘(4) A waiver of any coinsurance under part B
of title XVIII of the Social Security Act by a feder-
ally qualified health care center with respect to an
individual who qualifies for subsidized services under
a provision of the Public Health Service Act.
‘‘(5) Any payment practice specified by the Sec-
retary of Health and Human Services in regulations
promulgated pursuant to section 14(a) of the Medi-
care and Medicaid Patient and Program Protection
Act of 1987.
‘‘(e) As used in this section, the term ‘specified health
care benefit program’ means any plan that provides health
benefits, whether directly, through insurance, or other-
wise, which is funded in whole or in part by the United
States Government, or is a State health care program (as
defined in section 1128(h) of the Social Security Act).’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of such chapter is amended by adding
at the end the following:
‘‘227. Illegal remuneration with respect to specified health care benefit pro-
grams.’’.
SEC. 112. GRAND JURY DISCLOSURE.
Section 332 of title 18, United States Code, is
amended—
(1) by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively, and
(2) by inserting after subsection (b) the follow-
ing new subsection:
‘‘(c) A person who is privy to grand jury information
concerning a Federal health offense (as defined in section
982(a)(6)(D)) that is—
‘‘(1) received in the course of duty as an attor-
ney for the Government, or
‘‘(2) disclosed under rule 6(e)(3)(A)(ii) of the
Federal Rules of Criminal Procedure,
may disclose that information to an attorney for the Gov-
ernment to use in any investigation or civil proceeding re-
lating to health care fraud.’’.
SEC. 113. AUTHORIZED INVESTIGATIVE DEMAND PROCE-
DURES.
(a) IN GENERAL.—Chapter 233 of title 18, United
States Code, is amended by inserting after section 3485
the following:
‘‘§ 3486. Authorized investigative demand procedures
‘‘(a) AUTHORIZATION.—
‘‘(1) In any investigation relating to functions
set forth in paragraph (2), the Attorney General (or
designee of the Attorney General) may issue in writ-
ing and cause to be served a subpoena compelling
production of any records (including any books, pa-
pers, documents, electronic media, or other objects
or tangible things) which may be relevant to an au-
thorized law enforcement inquiry that a person or
legal entity may possess or have care, custody, or
control. A custodian of records may be required to
give testimony concerning the production and au-
thentication of such records. The production of
records may be required from any place in any State
or in any territory or other place subject to the ju-
risdiction of the United States at any designated
place; except that such production shall not be re-
quired more than 500 miles distant from the place
where the subpoena is served. Witnesses summoned
under this paragraph shall be paid the same fees
and mileage that are paid witnesses in the courts of
the United States. A subpoena requiring the produc-
tion of records 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.
‘‘(2) Investigative demands utilizing an admin-
istrative subpoena are authorized for any investiga-
tion with respect to any act or activity constituting
or involving health care fraud. For purposes of this
paragraph, the term ‘health care fraud’ means a
scheme or artifice (A) to defraud any health plan or
other person, in connection with the delivery of or
payment for health care benefits, items, or services,
or (B) 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 plan, or person in connec-
tion with the delivery of or payment for health care
benefits, items, or services.
‘‘(b) SERVICES.—A subpoena issued under this sec-
tion may be served by any person designated in the sub-
poena to serve it. Service upon a natural person may be
made by personal delivery of the subpoena to the person.
Service may be made upon a domestic or foreign associa-
tion 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 ap-
pointment or by law to receive service of process. The affi-
davit of the person serving the subpoena entered on a true
copy thereof by the person serving it shall be proof of serv-
ice.
‘‘(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