Subtitle A—Fraud and Abuse Control Program
Sec. 201. Fraud and abuse control program.
Sec. 202. Medicare integrity program.
Sec. 203. Beneficiary incentive programs.
Sec. 204. Application of certain health anti-fraud and abuse sanctions to fraud
and abuse against Federal health care programs.
Sec. 205. Guidance regarding application of health care fraud and abuse sanc-
tions.
Subtitle B—Revisions to Current Sanctions for Fraud and Abuse
Sec. 211. Mandatory exclusion from participation in medicare and State health
care programs.
Sec. 212. Establishment of minimum period of exclusion for certain individuals
and entities subject to permissive exclusion from medicare and
State health care programs.
Sec. 213. Permissive exclusion of individuals with ownership or control interest
in sanctioned entities.
Sec. 214. Sanctions against practitioners and persons for failure to comply with
statutory obligations.
Sec. 215. Intermediate sanctions for medicare health maintenance organiza-
tions.
Sec. 216. Additional exception to anti-kickback penalties for discounting and
managed care arrangements.
Sec. 217. Criminal penalty for fraudulent disposition of assets in order to ob-
tain medicaid benefits.
Sec. 218. Effective date.
Subtitle C—Data Collection
Sec. 221. Establishment of the health care fraud and abuse data collection pro-
gram.
Subtitle D—Civil Monetary Penalties
Sec. 231. Social security act civil monetary penalties.
Sec. 232. Clarification of level of intent required for imposition of sanctions.
Sec. 233. Penalty for false certification for home health services.
Subtitle E—Revisions to Criminal Law
Sec. 241. Definition of Federal health care offense.
Sec. 242. Health care fraud.
Sec. 243. Theft or embezzlement.
Sec. 244. False statements.
Sec. 245. Obstruction of criminal investigations of health care offenses.
Sec. 246. Laundering of monetary instruments.
Sec. 247. Injunctive relief relating to health care offenses.
Sec. 248. Authorized investigative demand procedures.
Sec. 249. Forfeitures for Federal health care offenses.
Subtitle F—Administrative Simplification
Sec. 251. Purpose.
Sec. 252. Administrative simplification.
‘‘PART C—ADMINISTRATIVE SIMPLIFICATION
‘‘Sec. 1171. Definitions.
‘‘Sec. 1172. General requirements for adoption of standards.
‘‘Sec. 1173. Standards for information transactions and data elements.
‘‘Sec. 1174. Timetables for adoption of standards.
‘‘Sec. 1175. Requirements.
‘‘Sec. 1176. General penalty for failure to comply with requirements and
standards.
‘‘Sec. 1177. Wrongful disclosure of individually identifiable health informa-
tion.
‘‘Sec. 1178. Effect on State law.
‘‘Sec. 1179. Health Information Advisory Committee.’’.
TITLE I—IMPROVED AVAILABIL-
ITY 
AND 
PORTABILITY 
OF
HEALTH 
INSURANCE 
COV-
ERAGE
Subtitle A—Coverage Under Group
Health Plans
SEC. 101. PORTABILITY OF COVERAGE FOR PREVIOUSLY
COVERED INDIVIDUALS.
(a) CREDITING PERIODS OF PREVIOUS COVERAGE
TOWARD PREEXISTING CONDITION RESTRICTIONS.—Sub-
ject to the succeeding provisions of this section, a group
health plan, and an insurer or health maintenance organi-
zation offering health insurance coverage in connection
with a group health plan, shall provide that any preexist-
ing condition limitation period (as defined in subsection
(b)(2)) is reduced by the length of the aggregate period
of qualified prior coverage (if any, as defined in subsection
(b)(3)) applicable to the participant or beneficiary as of
the date of commencement of coverage under the plan.
(b) DEFINITIONS AND OTHER PROVISIONS RELAT-
ING TO PREEXISTING CONDITIONS.—
(1) PREEXISTING CONDITION.—
(A) IN GENERAL.—For purposes of this
subtitle, subject to subparagraph (B), the term
‘‘preexisting condition’’ means a condition, re-
gardless of the cause of the condition, for which
medical advice, diagnosis, care, or treatment
was recommended or received within the 6-
month period ending on the day before—
(i) the effective date of the coverage
of such participant or beneficiary, or
(ii) the earliest date upon which such
coverage could have been effective if there
were no waiting period applicable,
whichever is earlier.
(B) EXTENSION OF PERIOD IN THE CASE
OF LATE ENROLLMENT.—In the case of a par-
ticipant or beneficiary whose initial coverage
commences after the date the participant or
beneficiary first becomes eligible for coverage
under the group health plan, the reference in
subparagraph (A) to ‘‘6-month period’’ is
deemed a reference to ‘‘12-month period’’.
(2) PREEXISTING CONDITION LIMITATION PE-
RIOD.—For purposes of this subtitle, the term ‘‘pre-
existing condition limitation period’’ means, with re-
spect to coverage of an individual under a group
health plan or under health insurance coverage, the
period during which benefits with respect to treat-
ment of a condition of such individual are not pro-
vided based on the fact that the condition is a pre-
existing condition.
(3) AGGREGATE PERIOD OF QUALIFIED PRIOR
COVERAGE.—
(A) IN GENERAL.—For purposes of this
section, the term ‘‘aggregate period of qualified
prior coverage’’ means, with respect to com-
mencement of coverage of an individual under
a group health plan or health insurance cov-
erage offered in connection with a group health
plan, the aggregate of the qualified coverage pe-
riods (as defined in subparagraph (B)) of such
individual occurring before the date of such
commencement. Such period shall be treated as
zero if there is more than a 60-day break in
coverage under a group health plan (or health
insurance coverage offered in connection with
such a plan) between the date the most recent
qualified coverage period ends and the date of
such commencement.
(B) QUALIFIED COVERAGE PERIOD.—
(i) IN
GENERAL.—For purposes of
this paragraph, subject to subsection (c),
the term ‘‘qualified coverage period’’
means, with respect to an individual, any
period of coverage of the individual under
a group health plan, health insurance cov-
erage, or under title XIX of the Social Se-
curity Act.
(ii) DISREGARDING PERIODS BEFORE
BREAKS
IN
COVERAGE.—Such term does
not include any period occurring before
any 60-day break in coverage described in
subparagraph (A).
(C) WAITING PERIOD NOT TREATED AS A
BREAK
IN
COVERAGE.—For purposes of sub-
paragraphs (A) and (B), any period that is in
a waiting period for any coverage under a
group health plan (or for health insurance cov-
erage offered in connection with a group health
plan) shall not be considered to be a break in
coverage described in subparagraph (B)(ii).
(D) 
ESTABLISHMENT
OF
PERIOD.—A
qualified coverage period with respect to an in-
dividual shall be established through presen-
tation of certifications described in subsection
(c) or in such other manner as may be specified
in regulations to carry out this section.
(c) CERTIFICATIONS
OF COVERAGE; CONFORMING
COVERAGE.—
(1) IN GENERAL.—The plan administrator of a
group health plan, or the insurer or HMO offering
health insurance coverage in connection with a group
health plan, shall, on request made on behalf of an
individual covered (or previously covered within the
previous 18 months) under the plan or coverage,
provide for a certification of the period of coverage
of the individual under such plan or coverage and of
the waiting period (if any) imposed with respect to
the individual for any coverage under the plan.
(2) STANDARD METHOD.—Subject to paragraph
(3), a group health plan, or insurer or HMO offering
health insurance coverage in connection with a group
health plan, shall determine qualified coverage peri-
ods under subsection (b)(3)(B) by including all peri-
ods described in such subsection, without regard to
the specific benefits offered during such a period.
benefit information on the benefits avail-
able under the previous plan or coverage,
and
(ii) may charge for the reasonable
cost of providing such information.
SEC. 102. LIMITATION ON PREEXISTING CONDITION EXCLU-
SIONS; 
NO 
APPLICATION 
TO 
CERTAIN
NEWBORNS, ADOPTED CHILDREN, AND PREG-
NANCY.
(a) LIMITATION OF PERIOD.—
(1) IN
GENERAL.—Subject to the succeeding
provisions of this section, a group health plan, and
an insurer or HMO offering health insurance cov-
erage in connection with a group health plan, shall
provide that any preexisting condition limitation pe-
riod (as defined in section 101(b)(2)) does not ex-
ceed 12 months, counting from the effective date of
coverage.
(2) EXTENSION OF PERIOD IN THE CASE OF
LATE ENROLLMENT.—In the case of a participant or
beneficiary whose initial coverage commences after
the date the participant or beneficiary first becomes
eligible for coverage under the group health plan,
the reference in paragraph (1) to ‘‘12 months’’ is
deemed a reference to ‘‘18 months’’.
(b) EXCLUSION
NOT
APPLICABLE
TO
CERTAIN
NEWBORNS AND CERTAIN ADOPTIONS.—
(1) IN GENERAL.—Subject to paragraph (2), a
group health plan, and an insurer or HMO offering
health insurance coverage in connection with a group
health plan, may not provide any limitation on bene-
fits based on the existence of a preexisting condition
in the case of—
(A) an individual who within the 30-day
period beginning with the date of birth, or
(B) an adopted child or a child placed for
adoption beginning at the time of adoption or
placement if the individual, within the 30-day
period beginning on the date of adoption or
placement,
becomes covered under a group health plan or other-
wise becomes covered under health insurance cov-
erage (or covered for medical assistance under title
XIX of the Social Security Act).
(2) LOSS IF BREAK IN COVERAGE.—Paragraph
(1) shall no longer apply to an individual if the indi-
vidual does not have any coverage under a group
health plan, health insurance coverage, or under title
XIX of the Social Security Act for a continuous pe-
riod of 60 days, not counting in such period any
days that are in a waiting period for any coverage
under a group health plan.
(3) PLACED FOR ADOPTION DEFINED.—In this
subsection and section 103(d), the term ‘‘place-
ment’’, or being ‘‘placed’’, for adoption, in connec-
tion with any placement for adoption of a child with
any person, means the assumption and retention by
such person of a legal obligation for total or partial
support of such child in anticipation of adoption of
such child. The child’s placement with such person
terminates upon the termination of such legal obliga-
tion.
(c) EXCLUSION NOT APPLICABLE TO PREGNANCY.—
For purposes of this section, pregnancy shall not be treat-
ed as a preexisting condition.
(d) ELIGIBILITY
PERIOD
IMPOSED
BY
HEALTH
MAINTENANCE
ORGANIZATIONS
AS
ALTERNATIVE
TO
PREEXISTING CONDITION LIMITATION.—A health mainte-
nance organization which offers health insurance coverage
in connection with a group health plan and which does
not use the preexisting condition limitations allowed under
this section and section 101 with respect to any particular
coverage option may impose an eligibility period for such
coverage option, but only if such period does not exceed—
(1) 90 days, in the case of a participant or ben-
eficiary whose initial coverage commences at the
time such participant or beneficiary first becomes el-
igible for coverage under the plan, or
(2) 180 days, in the case of a participant or
beneficiary whose initial coverage commences after
the date on which such participant or beneficiary
first becomes eligible for coverage.
For purposes of this subsection, the term ‘‘eligibility pe-
riod’’ means a period which, under the terms of the health
insurance coverage offered by the health maintenance or-
ganization, must expire before the health insurance cov-
erage becomes effective. Any such eligibility period shall
be treated for purposes of this subtitle as a waiting period
under the plan and shall run concurrently with any other
applicable waiting period under the plan.
SEC. 103. PROHIBITING EXCLUSIONS BASED ON HEALTH
STATUS AND PROVIDING FOR ENROLLMENT
PERIODS.
(a) PROHIBITION OF EXCLUSION OF PARTICIPANTS
OR BENEFICIARIES BASED ON HEALTH STATUS.—
(1) IN GENERAL.—A group health plan, and an
insurer or HMO offering health insurance coverage
in connection with a group health plan, may not ex-
clude an employee or his or her beneficiary from
being (or continuing to be) a participant or bene-
ficiary under the terms of such plan or coverage
based on health status (as defined in section
191(c)(6)).
(2) CONSTRUCTION.—Nothing in this sub-
section shall be construed as preventing the estab-
lishment of preexisting condition limitations and re-
strictions to the extent consistent with the provisions
of this subtitle.
(b) ENROLLMENT OF ELIGIBLE INDIVIDUALS WHO
LOSE OTHER COVERAGE.—A group health plan shall per-
mit an uncovered employee who is otherwise eligible for
coverage under the terms of the plan (or an uncovered
dependent, as defined under the terms of the plan, of such
an employee, if family coverage is available) to enroll for
coverage under the plan under at least one benefit option
if each of the following conditions is met:
(1) The employee or dependent was covered
under a group health plan or had health insurance
coverage at the time coverage was previously offered
to the employee or individual.
(2) The employee stated in writing at such time
that coverage under a group health plan or health
insurance coverage was the reason for declining en-
rollment.
(3) The employee or dependent lost coverage
under a group health plan or health insurance cov-
erage (as a result of loss of eligibility for the cov-
erage, termination of employment, or reduction in
the number of hours of employment).
(4) The employee requests such enrollment
within 30 days after the date of termination of such
coverage.
(c) DEPENDENT BENEFICIARIES.—
(1) IN
GENERAL.—If a group health plan
makes family coverage available, the plan may not
require, as a condition of coverage of an individual
as a dependent (as defined under the terms of the
plan) of a participant in the plan, a waiting period
applicable to the coverage of a dependent who—
(A) is a newborn,
(B) is an adopted child or child placed for
adoption (within the meaning of section
102(b)(3)), at the time of adoption or place-
ment, or
(C) is a spouse, at the time of marriage,
if the participant has met any waiting period appli-
cable to that participant.
(2) TIMELY ENROLLMENT.—
(A) IN GENERAL.—Enrollment of a partici-
pant’s beneficiary described in paragraph (1)
shall be considered to be timely if a request for
enrollment is made within 30 days of the date
family coverage is first made available or, in the
case described in—
(i) paragraph (1)(A), within 30 days
of the date of the birth,
(ii) paragraph (1)(B), within 30 days
of the date of the adoption or placement
for adoption, or
(iii) paragraph (1)(C), within 30 days
of the date of the marriage with such a
beneficiary who is the spouse of the partic-
ipant,
if family coverage is available as of such date.
(B) COVERAGE.—If available coverage in-
cludes family coverage and enrollment is made
under such coverage on a timely basis under
subparagraph (A), the coverage shall become ef-
fective not later than the first day of the first
month beginning 15 days after the date the
completed request for enrollment is received.
SEC. 104. ENFORCEMENT.
(a) ENFORCEMENT THROUGH COBRA PROVISIONS
IN INTERNAL REVENUE CODE.—
(1) APPLICATION OF COBRA SANCTIONS.—Sub-
section (a) of section 4980B of the Internal Revenue
Code of 1986 is amended by striking ‘‘the require-
ments of’’ and all that follows and inserting ‘‘the re-
quirements of—
‘‘(1) subsection (f) with respect to any qualified
beneficiary, or
‘‘(2) subject to subsection (h)—
‘‘(A) section 101 or 102 of the Health
Coverage Availability and Affordability Act of
1996 with respect to any individual covered
under the group health plan, or
‘‘(B) section 103 of such Act with respect
to any individual.’’.
(2) 
NOTICE
REQUIREMENT.—Section
4980B(f)(6)(A) of such Code is amended by insert-
ing before the period the following: ‘‘and subtitle A
of title I of the Health Coverage Availability and Af-
fordability Act of 1996’’.
(3) SPECIAL RULES.—Section 4980B of such
Code is amended by adding at the end the following:
‘‘(h) SPECIAL RULES.—For purposes of applying this
section in the case of requirements described in subsection
(a)(2) relating to section 101, section 102, or section 103
of the Health Coverage Availability and Affordability Act
of 1996—
‘‘(1) DEFERRAL TO STATE REGULATION.—No
tax shall be imposed by this section on any failure
to meet the requirements of such section by any en-
tity which offers health insurance coverage and
which is an insurer or health maintenance organiza-
tion (as defined in section 191(c) of the Health Cov-
erage Availability and Affordability Act of 1996)
regulated by a State if the Secretary of Health and
Human Services has made the determination de-
scribed in section 104(c)(2) of such Act with respect
to such State, section, and entity.
‘‘(2) LIMITATION FOR INSURED PLANS.—In the
case of a group health plan of a small employer (as
defined in section 191 of the Health Coverage Avail-
ability and Affordability Act of 1996) that provides
health care benefits solely through a contract with
an insurer or health maintenance organization (as
defined in such section), no tax shall be imposed by
this section upon the employer on a failure to meet
such requirements if the failure is solely because of
the product offered by the insurer or organization
under such contract.
‘‘(3) LIMITATION ON IMPOSITION OF TAX.—In
no case shall a tax be imposed by this section for a
failure to meet such a requirement if a sanction has
been imposed—
‘‘(A) by the Secretary of Labor under part
5 of subtitle A of title I of the Employee Retire-
ment Income Security Act of 1974 with respect
to such failure, or
‘‘(B) by the Secretary of Health and
Human Services under section 109 of the
Health Coverage Availability and Affordability
Act of 1996 with respect to such failure.’’.
(b) ENFORCEMENT THROUGH ERISA SANCTIONS
FOR CERTAIN GROUP HEALTH PLANS.—
(1) IN
GENERAL.—Subject to the succeeding
provisions of this subsection, sections 101 through
103 of this subtitle shall be deemed to be provisions
of title I of the Employee Retirement Income Secu-
rity Act of 1974 for purposes of applying such title.
(2) FEDERAL ENFORCEMENT ONLY IF NO EN-
FORCEMENT
THROUGH
STATE.—The Secretary of
Labor shall enforce each section referred to in para-
graph (1) with respect to any entity which is an in-
surer or health maintenance organization regulated
by a State only if the Secretary of Labor determines
that—
(A) such State has not provided for en-
forcement of State laws which govern the same
matters as are governed by such section and
which require compliance by such entity with at
least the same requirements as those provided
under such section, and
(B) such entity has failed to comply with
such requirements of such section as are appli-
cable to such entity.
(3) LIMITATIONS ON LIABILITY.—
(A) NO
APPLICATION
WHERE
FAILURE
NOT
DISCOVERED
EXERCISING
REASONABLE
DILIGENCE.—No liability shall be imposed
under this subsection on the basis of any failure
during any period for which it is established to
the satisfaction of the Secretary of Labor that
none of the persons against whom the liability
would be imposed knew, or exercising reason-
able diligence would have known, that such fail-
ure existed.
(B) NO
APPLICATION
WHERE
FAILURE
CORRECTED
WITHIN
DAYS.—No liability
shall be imposed under this subsection on the
basis of any failure if such failure was due to
reasonable cause and not to willful neglect, and
such failure is corrected during the 30-day pe-
riod beginning on the first day any of the per-
sons against whom the liability would be im-
posed knew, or exercising reasonable diligence
would have known, that such failure existed.
(4) AVOIDING DUPLICATION OF CERTAIN PEN-
ALTIES.—In no case shall a civil money penalty be
imposed under the authority provided under para-
graph (1) for a violation of this subtitle for which
an excise tax has been imposed under section 4980B
of the Internal Revenue Code of 1986 or a civil
money penalty imposed under subsection (c).
(c) ENFORCEMENT THROUGH CIVIL MONEY PEN-
ALTIES.—
(1) IMPOSITION.—
(A) IN GENERAL.—Subject to the succeed-
ing provisions of this subsection, any group
health plan, insurer, or organization that fails
to meet a requirement of this subtitle is subject
to a civil money penalty under this section.
(B) LIABILITY FOR PENALTY.—Rules simi-
lar to the rules described in section 4980B(e) of
the Internal Revenue Code of 1986 for liability
group health plan and may not place any re-
striction which is inconsistent with section
103(a) on an individual being a participant or
beneficiary so long as such individual is an eli-
gible individual.
(2) ELIGIBLE INDIVIDUAL DEFINED.—In this
section, the term ‘‘eligible individual’’ means, with
respect to an insurer or HMO that offers health in-
surance coverage to any small employer in the small
group market, such an individual in relation to the
employer as shall be determined—
(A) in accordance with the terms of such
plan,
(B) as provided by the insurer or HMO
under rules of the insurer or HMO which are
uniformly applicable, and
(C) in accordance with all applicable State
laws governing such insurer or HMO.
(b) SPECIAL RULES
FOR NETWORK PLANS
AND
HMOS.—
(1) IN GENERAL.—In the case of an insurer
that offers health insurance coverage in the small
group market through a network plan and in the
case of an HMO that offers health insurance cov-