257
Subtitle C, Part 5
‘‘(j)(1) In addition to amounts paid under subsection
(d)(5)(F), the Secretary is authorized to pay hospitals
which are eligible for such payments for a fiscal year sup-
plemental amounts that do not exceed the limit provided
for in paragraph (2).
‘‘(2) The sum of the aggregate amounts paid pursu-
ant to paragraph (1) for a fiscal year shall not exceed the
Secretary’s estimate of 75 percent of the amount of reduc-
tions in payments under section 1855 that are attributable
to the operation of subsection (b)(2)(B)(ii) of such
section. ’’.
SEC. 15242. REDUCTION IN PAYMENT ADJUSTMENTS FOR
INDIRECT MEDICAL EDUCATION.
(a) MODIFICATION REGARDING 5.6 PERCENT.—Sec-
tion 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is
amended—
(1) by striking ‘‘on or after October 1, 1988,’’
and inserting ‘‘on or after October 1, 1999,’’; and
(2) by striking ‘‘1.89’’ and inserting ‘‘1.38’’.
(b) SPECIAL RULE REGARDING FISCAL YEARS 1996
THROUGH 1998; MODIFICATION REGARDING 6 PER-
CENT.—Section 1886(d)(5)(B)(ii), as amended by para-
graph (1), is amended by adding at the end the following:
‘‘In the case of discharges occurring on or after October
1, 1995, and before October 1, 1999, the preceding sen-
258
Subtitle D
tence applies to the same extent and in the same manner
as the sentence applies to discharges occurring on or after
October 1, 1999, except that the term ‘1.38’ is deemed
to be 1.48.’’.
Subtitle D—Provisions Relating to
Medicare Beneficiaries
SEC. 15301. EXTENDING MEDICARE PART B PREMIUM.
Section 1839(e) (42 U.S.C. 1395r(e)) is amended—
(1) in paragraph (1)(A), by striking ‘‘January
1999 shall be an amount equal to 50 percent’’ and
inserting ‘‘January 2003 shall be an amount equal
to 56 percent’’, and
(2) in paragraph (2) by striking ‘‘1998’’ and in-
serting ‘‘2002’’.
SEC. 15302. RELATING MEDICARE PART B PREMIUM TO IN-
COME FOR CERTAIN HIGH INCOME INDIVID-
UALS.
(a) INCREASE IN PREMIUM.—
(1) IN
GENERAL.—Section 1839 (42 U.S.C.
1395r) is amended by adding at the end the follow-
ing:
‘‘(h)(1) Notwithstanding the previous subsections of
this section, in the case of an individual whose modified
adjusted gross income in a taxable year ending with or
within a calendar year (as reported by the individual under
259
Subtitle D
section 1894(a)) is equal to or exceeds the sum of the
threshold amount described in paragraph (4) and
$25,000, the amount of the monthly premium for the cal-
endar year shall be increased by an amount such that the
total monthly premium (determined without regard to sub-
section (b)) is equal to 200 percent of the monthly actuar-
ial rate for enrollees age 65 and over as determined under
subsection (a)(1) for that calendar year. The preceding
sentence shall not apply to any individual whose threshold
amount is zero.
‘‘(2) Notwithstanding the previous subsections of this
section, in the case of an individual not described in para-
graph (1) whose modified adjusted gross income in a tax-
able year ending with or within a calendar year (as re-
ported by the individual under section 1894(a)) exceeds
the threshold amount described in paragraph (4), the
amount of the monthly premium for the calendar year
shall be increased by an amount which bears the same
ratio to the amount of the increase determined under
paragraph (1) as such excess bears to $25,000. The pre-
ceding sentence shall not apply to any individual whose
threshold amount is zero.
‘‘(3) Using information provided by the Secretary of
the Treasury under section 6103(l)(14) of the Internal
Revenue Code of 1986, the Secretary shall determine the
260
Subtitle D
actual modified adjusted gross income of individuals en-
rolled in this part during a taxable year and adjust the
monthly premium applicable to an individual during a cal-
endar year to take into account any overpayments or un-
derpayments in the premium during the previous calendar
year resulting from the application of this subsection.
‘‘(4) In this subsection and section 1813(c), the term
‘threshold amount’ means—
‘‘(A) except as otherwise provided in this para-
graph, $75,000,
‘‘(B) $100,000 in the case of an individual who
files a joint return under section 6013 of the Inter-
nal Revenue Code of 1986, and
‘‘(C) zero in the case of an individual who—
‘‘(i) is married at the close of the taxable
year (as determined under section 7703 of the
Internal Revenue Code of 1986) but does not
file a joint return for such year, and
‘‘(ii) does not live apart from the individ-
ual’s spouse at all times during the taxable
year.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1839(f) (42 U.S.C. 1395r(f)) is amended by striking
‘‘if an individual’’ and inserting the following: ‘‘if an
individual (other than an individual subject to an in-
261
Subtitle D
crease in the monthly premium under this section
pursuant to subsection (h))’’.
(3) EFFECTIVE DATE.—The amendments made
by paragraphs (1) and (2) shall apply to the month-
ly premium under section 1839 of the Social Secu-
rity Act for months beginning after February 1996
in taxable years beginning after December 31, 1995.
(b) 
REPORTING
REQUIREMENT
FOR
BENE-
FICIARIES.—Title 
XVIII, 
as 
amended 
by 
section
15231(d), is further amended by adding at the end the
following:
‘‘REPORT TO SECRETARY ON ESTIMATED MODIFIED
ADJUSTED GROSS INCOME
‘‘SEC. 1894. (a) IN GENERAL.—
‘‘(1) 
INDIVIDUALS
COVERED
THROUGHOUT
YEAR.—Not later than November 1 of each year (be-
ginning with 1996), each individual enrolled under
part B shall submit to the Secretary (in such form
and manner as the Secretary may require, in con-
sultation with the Secretary of the Treasury) an es-
timate of the individual’s modified adjusted gross in-
come anticipated for the taxable year ending with or
within the following calendar year, to be used (sub-
ject to section 1839(h)(3)) to determine whether the
individual is to be subject to an increase in the
262
Subtitle D
monthly part B premium under section 1839(h) for
such following calendar year.
‘‘(2) SPECIAL RULE FOR FIRST YEAR OF COV-
ERAGE.—For the first year in which an individual is
enrolled under part B, the individual shall submit to
the Secretary (at such time and in such form and
manner as the Secretary may require, in consulta-
tion with the Secretary of the Treasury) an estimate
of the individual’s modified adjusted gross income
anticipated for the taxable year ending with Decem-
ber 31 of such year, to be used to determine whether
the individual is to be subject to an increase in the
monthly part B premium under section 1839(h) for
such year.
‘‘(b) SPECIAL RULE FOR 1996.—Not later than 60
days after the date of the enactment of this section, each
individual described in subsection (a) shall submit to the
Secretary an estimate of the individual’s modified adjusted
gross income for the taxable year ending December 1995,
to be used to determine (subject to section 1839(h)(3))
whether the individual is to be subject to an increase in
the monthly part B premium under section 1839(h) dur-
ing 1996.
‘‘(c) MODIFIED ADJUSTED GROSS INCOME DE-
FINED.—In subsection (a), the term ‘modified adjusted
263
Subtitle D
gross income’ means, with respect to an individual for a
taxable year, the individual’s adjusted gross income under
the Internal Revenue Code of 1986, determined without
regard to sections 931 or 933 of such Code.’’.
(c) DISCLOSURE OF CERTAIN TAX INFORMATION BY
SECRETARY OF TREASURY.—
(1) IN
GENERAL.—Subsection (l) of section
6103 of the Internal Revenue Code of 1986 (relating
to confidentiality and disclosure of returns and re-
turn information) is amended by adding at the end
thereof the following new paragraph:
‘‘(14) DISCLOSURE OF RETURN INFORMATION
TO MEANS-TEST MEDICARE.—
‘‘(A) IN GENERAL.—The Secretary shall,
upon written request from the Administrator of
the Health Care Financing Administration, dis-
close to the officers and employees of such Ad-
ministration return information necessary to
determine the modified adjusted gross income
(as defined in section 1894(c) of the Social Se-
curity Act) of any medicare beneficiary (as de-
fined in paragraph (12)(E)), to be used to de-
termine whether the beneficiary is to be subject
to an increase in the monthly part B premium
under section 1839(g) of such Act.
264
Subtitle D
‘‘(B) RESTRICTION ON USE OF DISCLOSED
INFORMATION.—Any officer or employee of the
Health Care Financing Administration receiv-
ing return information under subparagraph (A)
shall use such information only for purposes of,
and to the extent necessary in, establishing the
modified adjusted gross income (as so defined)
of any medicare beneficiary (as so defined).’’
(2) CONFORMING
AMENDMENTS.—Paragraphs
(3)(A) and (4) of section 6103(p) of such Code are
each amended by striking ‘‘or (13)’’ each place it ap-
pears and inserting ‘‘(13), or (14)’’.
(3) EFFECTIVE DATE.—The amendments made
by paragraphs (1) and (2) shall apply with respect
to information for taxable years beginning after De-
cember 31, 1995.
SEC. 15303. EXPANDED COVERAGE OF PREVENTIVE BENE-
FITS.
(a) PROVIDING ANNUAL SCREENING MAMMOGRAPHY
FOR WOMEN OVER AGE 49.—Section 1834(c)(2)(A) (42
U.S.C. 1395m(c)(2)(A)) is amended—
(1) in clause (iv), by striking ‘‘but under 65
years of age,’’; and
(2) by striking clause (v).
265
Subtitle D
(b) COVERAGE OF SCREENING PAP SMEAR AND PEL-
VIC EXAMS.—
(1) COVERAGE OF PELVIC EXAM; INCREASING
FREQUENCY OF COVERAGE OF PAP SMEAR.—Section
1861(nn) (42 U.S.C. 1395x(nn)) is amended—
(A) in the heading, by striking ‘‘Smear’’
and inserting ‘‘Smear; Screening Pelvic Exam’’;
(B) by striking ‘‘(nn)’’ and inserting
‘‘(nn)(1)’’;
(C) by striking ‘‘3 years’’ and all that fol-
lows and inserting ‘‘3 years, or during the pre-
ceding year in the case of a woman described
in paragraph (3).’’; and
(D) by adding at the end the following new
paragraphs:
‘‘(2) The term ‘screening pelvic exam’ means an pel-
vic examination provided to a woman if the woman in-
volved has not had such an examination during the preced-
ing 3 years, or during the preceding year in the case of
a woman described in paragraph (3), and includes a clini-
cal breast examination.
‘‘(3) A woman described in this paragraph is a
woman who—
‘‘(A) is of childbearing age and has not had a
test described in this subsection during each of the
266
Subtitle D
preceding 3 years that did not indicate the presence
of cervical cancer; or
‘‘(B) is at high risk of developing cervical can-
cer (as determined pursuant to factors identified by
the Secretary).’’.
(2) WAIVER OF DEDUCTIBLE.—The first sen-
tence of section 1833(b) (42 U.S.C. 1395l(b)), as
amended by subsection (a)(2), is amended—
(A) by striking ‘‘and (5)’’ and inserting
‘‘(5)’’; and
(B) by striking the period at the end and
inserting the following: ‘‘, and (6) such deduct-
ible shall not apply with respect to screening
pap smear and screening pelvic exam (as de-
scribed in section 1861(nn)).’’.
(3) CONFORMING AMENDMENTS.—(A) Section
1861(s)(14) (42 U.S.C. 1395x(s)(14)) is amended
by inserting ‘‘and screening pelvic exam’’ after
‘‘screening pap smear’’.
(B) 
Section 
1862(a)(1)(F) 
(42 
U.S.C.
1395y(a)(1)(F)) is amended by inserting ‘‘and
screening pelvic exam’’ after ‘‘screening pap smear’’.
(c) COVERAGE OF COLORECTAL SCREENING.—
267
Subtitle D
(1) IN
GENERAL.—Section 1834 (42 U.S.C.
1395m) is amended by inserting after subsection (c)
the following new subsection:
‘‘(d) FREQUENCY
AND
PAYMENT
LIMITS
FOR
SCREENING FECAL-OCCULT BLOOD TESTS, SCREENING
FLEXIBLE
SIGMOIDOSCOPIES, 
AND
SCREENING
COLONOSCOPY.—
‘‘(1) FREQUENCY
LIMITS
FOR
SCREENING
FECAL-OCCULT BLOOD TESTS.—Subject to revision
by the Secretary under paragraph (4), no payment
may be made under this part for a screening fecal-
occult blood test provided to an individual for the
purpose of early detection of colon cancer if the test
is performed—
‘‘(A) in the case of an individual under 65
years of age, more frequently than is provided
in a periodicity schedule established by the Sec-
retary for purposes of this subparagraph; or
‘‘(B) in the case of any other individual,
within the 11 months following the month in
which a previous screening fecal-occult blood
test was performed.
‘‘(2) 
SCREENING
FLEXIBLE
SIGMOIDO-
SCOPIES.—
268
Subtitle D
‘‘(A) PAYMENT AMOUNT.—The Secretary
shall establish a payment amount under section
1848 
with 
respect 
to 
screening 
flexible
sigmoidoscopies provided for the purpose of
early detection of colon cancer that is consistent
with payment amounts under such section for
similar or related services, except that such
payment amount shall be established without
regard to subsection (a)(2)(A) of such section.
‘‘(B) FREQUENCY LIMITS.—Subject to re-
vision by the Secretary under paragraph (4), no
payment may be made under this part for a
screening flexible sigmoidoscopy provided to an
individual for the purpose of early detection of
colon cancer if the procedure is performed—
‘‘(i) in the case of an individual under
65 years of age, more frequently than is
provided in a periodicity schedule estab-
lished by the Secretary for purposes of this
subparagraph; or
‘‘(ii) in the case of any other individ-
ual, within the 59 months following the
month in which a previous screening flexi-
ble sigmoidoscopy was performed.
269
Subtitle D
‘‘(3) SCREENING COLONOSCOPY FOR INDIVID-
UALS AT HIGH RISK FOR COLORECTAL CANCER.—
‘‘(A) PAYMENT AMOUNT.—The Secretary
shall establish a payment amount under section
1848 with respect to screening colonoscopy for
individuals at high risk for colorectal cancer (as
determined in accordance with criteria estab-
lished by the Secretary) provided for the pur-
pose of early detection of colon cancer that is
consistent with payment amounts under such
section for similar or related services, except
that such payment amount shall be established
without regard to subsection (a)(2)(A) of such
section.
‘‘(B) FREQUENCY LIMIT.—Subject to revi-
sion by the Secretary under paragraph (4), no
payment may be made under this part for a
screening colonoscopy for individuals at high
risk for colorectal cancer provided to an individ-
ual for the purpose of early detection of colon
cancer if the procedure is performed within the
47 months following the month in which a pre-
vious screening colonoscopy was performed.
‘‘(C) FACTORS
CONSIDERED
IN
ESTAB-
LISHING CRITERIA FOR DETERMINING INDIVID-
270
Subtitle D
UALS AT HIGH RISK.—In establishing criteria
for determining whether an individual is at high
risk for colorectal cancer for purposes of this
paragraph, the Secretary shall take into consid-
eration family history, prior experience of can-
cer, a history of chronic digestive disease condi-
tion, and the presence of any appropriate recog-
nized gene markers for colorectal cancer.
‘‘(4) REVISION OF FREQUENCY.—
‘‘(A) REVIEW.—The Secretary shall review
periodically the appropriate frequency for per-
forming screening fecal-occult blood tests,
screening flexible sigmoidoscopies, and screen-
ing colonoscopy based on age and such other
factors as the Secretary believes to be pertinent.
‘‘(B) REVISION OF FREQUENCY.—The Sec-
retary, taking into consideration the review
made under clause (i), may revise from time to
time the frequency with which such tests and
procedures may be paid for under this sub-
section.’’.
(2) CONFORMING
AMENDMENTS.—(A) Para-
graphs (1)(D) and (2)(D) of section 1833(a) (42
U.S.C. 1395l(a)) are each amended by striking
271
Subtitle D
‘‘subsection (h)(1),’’ and inserting ‘‘subsection (h)(1)
or section 1834(d)(1),’’.
(B) 
Clauses 
(i) 
and 
(ii) 
of 
section
1848(a)(2)(A) (42 U.S.C. 1395w–4(a)(2)(A)) are
each amended by striking ‘‘a service’’ and inserting
‘‘a 
service 
(other 
than 
a 
screening 
flexible
sigmoidoscopy provided to an individual for the pur-
pose of early detection of colon cancer or a screening
colonoscopy provided to an individual at high risk
for colorectal cancer for the purpose of early detec-
tion of colon cancer)’’.
(C) Section 1862(a) (42 U.S.C. 1395y(a)) is
amended—
(i) in paragraph (1)—
(I) in subparagraph (E), by striking
‘‘and’’ at the end;
(II) in subparagraph (F), by striking
the semicolon at the end and inserting ‘‘,
and’’; and
(III) by adding at the end the follow-
ing new subparagraph:
‘‘(G) in the case of screening fecal-occult blood
tests, screening flexible sigmoidoscopies, and screen-
ing colonoscopy provided for the purpose of early de-
tection of colon cancer, which are performed more
272
Subtitle D
frequently than is covered under section 1834(d);’’;
and
(ii) in paragraph (7), by striking ‘‘para-
graph (1)(B) or under paragraph (1)(F)’’ and
inserting ‘‘subparagraphs (B), (F), or (G) of
paragraph (1)’’.
(d) PROSTATE CANCER SCREENING TESTS.—
(1) IN
GENERAL.—Section 1861(s)(2) (42
U.S.C. 1395x(s)(2)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (N) and subparagraph (O); and
(B) by inserting after subparagraph (O)
the following new subparagraph:
‘‘(P) prostate cancer screening tests (as defined
in subsection (oo)); and’’.
(2) TESTS
DESCRIBED.—Section 1861 (42
U.S.C. 1395x) is amended by adding at the end the
following new subsection:
‘‘Prostate Cancer Screening Tests
‘‘(oo) The term ‘prostate cancer screening test’
means a test that consists of a digital rectal examination
or a prostate-specific antigen blood test (or both) provided
for the purpose of early detection of prostate cancer to
a man over 40 years of age who has not had such a test
during the preceding year.’’.
273
Subtitle D
(3) PAYMENT
FOR
PROSTATE-SPECIFIC
ANTI-
GEN
BLOOD
TEST
UNDER
CLINICAL
DIAGNOSTIC
LABORATORY
TEST
FEE
SCHEDULES.—Section
1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amend-
ed by inserting after ‘‘laboratory tests’’ the follow-
ing: ‘‘(including prostate cancer screening tests
under section 1861(oo) consisting of prostate-spe-
cific antigen blood tests)’’.
(4) 
CONFORMING
AMENDMENT.—Section
1862(a) (42 U.S.C. 1395y(a)), as amended by sub-
section (c)(3)(C), is amended—
(A) in paragraph (1)—
(i) in subparagraph (F), by striking
‘‘and’’ at the end,
(ii) in subparagraph (G), by striking
the semicolon at the end and inserting ‘‘,
and’’, and
(iii) by adding at the end the follow-
ing new subparagraph:
‘‘(H) in the case of prostate cancer screening
test (as defined in section 1861(oo)) provided for the
purpose of early detection of prostate cancer, which
are performed more frequently than is covered under
such section;’’; and
274
Subtitle D
(B) in paragraph (7), by striking ‘‘or (G)’’
and inserting ‘‘(G), or (H)’’.
(e) DIABETES SCREENING BENEFITS.—
(1) DIABETES OUTPATIENT SELF-MANAGEMENT
TRAINING SERVICES.—
(A) IN GENERAL.—Section 1861(s)(2) (42
U.S.C. 1395x(s)(2)), as amended by subsection
(d)(1), is amended—
(i) by striking ‘‘and’’ at the end of
subparagraph (N);
(ii) by striking ‘‘and’’ at the end of
subparagraph (O); and
(iii) by inserting after subparagraph
(O) the following new subparagraph:
‘‘(P) diabetes outpatient self-management train-
ing services (as defined in subsection (pp)); and’’.
(B) 
DEFINITION.—Section 
1861 
(42
U.S.C. 1395x), as amended by subsection
(d)(2), is amended by adding at the end the fol-
lowing new subsection:
‘‘DIABETES OUTPATIENT SELF-MANAGEMENT TRAINING
SERVICES
‘‘(pp)(1) The term ‘diabetes outpatient self-manage-
ment training services’ means educational and training
services furnished to an individual with diabetes by or
under arrangements with a certified provider (as described
275
Subtitle D
in paragraph (2)(A)) in an outpatient setting by an indi-
vidual or entity who meets the quality standards described
in paragraph (2)(B), but only if the physician who is man-
aging the individual’s diabetic condition certifies that such
services are needed under a comprehensive plan of care
related to the individual’s diabetic condition to provide the
individual with necessary skills and knowledge (including
skills related to the self-administration of injectable drugs)
to participate in the management of the individual’s condi-
tion.
‘‘(2) In paragraph (1)—
‘‘(A) a ‘certified provider’ is an individual or
entity that, in addition to providing diabetes out-
patient self-management training services, provides
other items or services for which payment may be
made under this title; and
‘‘(B) an individual or entity meets the quality
standards described in this paragraph if the individ-
ual or entity meets quality standards established by
the Secretary, except that the individual or entity
shall be deemed to have met such standards if the
individual or entity meets applicable standards origi-
nally established by the National Diabetes Advisory
Board and subsequently revised by organizations
who participated in the establishment of standards
276
Subtitle D
by such Board, or is recognized by the American Di-
abetes Association as meeting standards for furnish-
ing the services.’’.
(C) CONSULTATION WITH ORGANIZATIONS
IN
ESTABLISHING
PAYMENT
AMOUNTS
FOR
SERVICES
PROVIDED
BY
PHYSICIANS.—In es-
tablishing payment amounts under section
1848(a) of the Social Security Act for physi-
cians’ services consisting of diabetes outpatient
self-management training services, the Sec-
retary of Health and Human Services shall con-
sult with appropriate organizations, including
the American Diabetes Association, in deter-
mining the relative value for such services
under section 1848(c)(2) of such Act.
(2) BLOOD-TESTING STRIPS FOR INDIVIDUALS
WITH DIABETES.—
(A) INCLUDING STRIPS AS DURABLE MEDI-
CAL EQUIPMENT.—Section 1861(n) (42 U.S.C.
1395x(n)) is amended by striking the semicolon
in the first sentence and inserting the following:
‘‘, and includes blood-testing strips for individ-
uals with diabetes without regard to whether
the individual has Type I or Type II diabetes
(as determined under standards established by
277
Subtitle E
the Secretary in consultation with the American
Diabetes Association);’’.
(2) PAYMENT FOR STRIPS BASED ON METH-
ODOLOGY FOR INEXPENSIVE AND ROUTINELY PUR-
CHASED
EQUIPMENT.—Section 1834(a)(2)(A) (42
U.S.C. 1395m(a)(2)(A)) is amended—
(A) by striking ‘‘or’’ at the end of clause
(ii);
(B) by adding ‘‘or’’ at the end of clause
(iii); and
(C) by inserting after clause (iii) the fol-
lowing new clause:
‘‘(iv) which is a blood-testing strip for
an individual with diabetes,’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to items and services furnished on
or after January 1, 1996.
Subtitle E—Medicare Fraud
Reduction
SEC. 15401. INCREASING BENEFICIARY AWARENESS OF
FRAUD AND ABUSE.
(a) BENEFICIARY OUTREACH EFFORTS.—The Sec-
retary of Health and Human Services (acting through the
Administrator of the Health Care Financing Administra-
tion and the Inspector General of the Department of
278
Subtitle E
Health and Human Services) shall make ongoing efforts
(through public service announcements, publications, and
other appropriate methods) to alert individuals entitled to
benefits under the medicare program of the existence of
fraud and abuse committed against the program and the
costs to the program of such fraud and abuse, and of the
existence of the toll-free telephone line operated by the
Secretary to receive information on fraud and abuse com-
mitted against the program.
(b) CLARIFICATION OF REQUIREMENT TO PROVIDE
EXPLANATION OF MEDICARE BENEFITS.—The Secretary
shall provide an explanation of benefits under the medi-
care program with respect to each item or service for
which payment may be made under the program which
is furnished to an individual, without regard to whether
or not a deductible or coinsurance may be imposed against
the individual with respect to the item or service.
(c) PROVIDER OUTREACH EFFORTS; PUBLICATION
OF FRAUD ALERTS.—
(1) SPECIAL FRAUD ALERTS.—
(A) IN GENERAL.—
(i) REQUEST
FOR
SPECIAL
FRAUD
ALERTS.—Any person may present, at any
time, a request to the Secretary to issue
and publish a special fraud alert.
279
Subtitle E
(ii) 
SPECIAL
FRAUD
ALERT
DE-
FINED.—In this section, a ‘‘special fraud
alert’’ is a notice which informs the public
of practices which the Secretary considers
to be suspect or of particular concern
under the medicare program or a State
health care program (as defined in section
1128(h) of the Social Security Act).
(B) ISSUANCE AND PUBLICATION OF SPE-
CIAL FRAUD ALERTS.—
(i) INVESTIGATION.—Upon receipt of
a request for a special fraud alert under
subparagraph (A), the Secretary shall in-
vestigate the subject matter of the request
to determine whether a special fraud alert
should be issued. If appropriate, the Sec-
retary (in consultation with the Attorney
General) shall issue a special fraud alert in
response to the request. All special fraud
alerts issued pursuant to this subpara-
graph shall be published in the Federal
Register.
(ii) CRITERIA FOR ISSUANCE.—In de-
termining whether to issue a special fraud
280
Subtitle E
alert upon a request under subparagraph
(A), the Secretary may consider—
(I) whether and to what extent
the practices that would be identified
in the special fraud alert may result
in any of the consequences described
in subparagraph (C); and
(II) the extent and frequency of
the conduct that would be identified
in the special fraud alert.
(C) 
CONSEQUENCES
DESCRIBED.—The
consequences described in this subparagraph
are as follows:
(i) An increase or decrease in access
to health care services.
(ii) An increase or decrease in the
quality of health care services.
(iii) An increase or decrease in patient
freedom of choice among health care pro-
viders.
(iv) An increase or decrease in com-
petition among health care providers.
(v) An increase or decrease in the cost
to health care programs of the Federal
Government.
281
Subtitle E
(vi) An increase or decrease in the po-
tential overutilization of health care serv-
ices.
(vii) Any other factors the Secretary
deems appropriate in the interest of pre-
venting fraud and abuse in health care
programs of the Federal Government.
(2) PUBLICATION OF ALL HCFA FRAUD ALERTS
IN FEDERAL REGISTER.—Each notice issued by the
Health Care Financing Administration which in-
forms the public of practices which the Secretary
considers to be suspect or of particular concern
under the medicare program or a State health care
program (as defined in section 1128(h) of the Social
Security Act) shall be published in the Federal Reg-
ister, without regard to whether or not the notice is
issued by a regional office of the Health Care Fi-
nancing Administration.
SEC. 15402. BENEFICIARY INCENTIVES TO REPORT FRAUD
AND ABUSE.
(a) PROGRAM TO COLLECT INFORMATION ON FRAUD
AND ABUSE.—
(1) ESTABLISHMENT OF PROGRAM.—Not later
than 3 months after the date of the enactment of
this Act, the Secretary shall establish a program
282
Subtitle E
under which the Secretary shall encourage individ-
uals to report to the Secretary information on indi-
viduals and entities who are engaging or who have
engaged in acts or omissions which constitute
grounds for the imposition of a sanction under sec-
tion 1128, section 1128A, or section 1128B of the
Social Security Act, or who have otherwise engaged
in fraud and abuse against the medicare program.
(2) PAYMENT OF PORTION OF AMOUNTS COL-
LECTED.—If an individual reports information to
the Secretary under the program established under
paragraph (1) which serves as the basis for the col-
lection by the Secretary or the Attorney General of
any amount of at least $100 (other than any
amount paid as a penalty under section 1128B of
the Social Security Act), the Secretary may pay a
portion of the amount collected to the individual
(under procedures similar to those applicable under
section 7623 of the Internal Revenue Code of 1986
to payments to individuals providing information on
violations of such Code).
(b) PROGRAM TO COLLECT INFORMATION ON PRO-
GRAM EFFICIENCY.—
(1) ESTABLISHMENT OF PROGRAM.—Not later
than 3 months after the date of the enactment of
283
Subtitle E
this Act, the Secretary shall establish a program
under which the Secretary shall encourage individ-
uals to submit to the Secretary suggestions on meth-
ods to improve the efficiency of the medicare pro-
gram.
(2) PAYMENT OF PORTION OF PROGRAM SAV-
INGS.—If an individual submits a suggestion to the
Secretary under the program established under
paragraph (1) which is adopted by the Secretary and
which results in savings to the program, the Sec-
retary may make a payment to the individual of
such amount as the Secretary considers appropriate.
SEC. 15403. ELIMINATION OF HOME HEALTH OVERPAY-
MENTS.
(a) REQUIRING BILLING
AND PAYMENT TO BE
BASED ON SITE WHERE SERVICE FURNISHED.—Section
1891 (42 U.S.C. 1395bbb) is amended by adding at the
end the following new subsection:
‘‘(g) A home health agency shall submit claims for
payment for home health services under this title only on
the basis of the geographic location at which the service
is furnished.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished during cost
reporting periods beginning on or after October 1, 1995.
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Subtitle E
SEC. 15404. SKILLED NURSING FACILITIES.
(a) CLARIFICATION OF TREATMENT OF HOSPITAL
TRANSFERS.—Section 
1886(d)(5)(I) 
(42 
U.S.C.
1395ww(d)(5)(I)) is amended by adding at the end the
following new clause:
‘‘(iii) In making adjustments under clause (i) for
transfer cases, the Secretary shall treat as a transfer any
transfer to a hospital (without regard to whether or not
the hospital is a subsection (d) hospital), a unit thereof,
or a skilled nursing facility.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to discharges occurring on or
after October 1, 1995.
SEC. 15405. DIRECT SPENDING FOR ANTI-FRAUD ACTIVI-
TIES UNDER MEDICARE.
(a) ESTABLISHMENT OF MEDICARE INTEGRITY PRO-
GRAM.—Title XVIII, as amended by section 15231(d) and
section 15302(b), is further amended by adding at the end
the following new section:
‘‘MEDICARE INTEGRITY PROGRAM
‘‘SEC. 1895. (a) ESTABLISHMENT OF PROGRAM.—
There is hereby established the Medicare Integrity Pro-
gram (hereafter in this section referred to as the ‘Pro-
gram’) under which the Secretary shall promote the integ-
rity of the medicare program by entering into contracts
285
Subtitle E
in accordance with this section with eligible private entities
to carry out the activities described in subsection (b).
‘‘(b) ACTIVITIES DESCRIBED.—The activities de-
scribed in this subsection are as follows:
‘‘(1) Review of activities of providers of services
or other individuals and entities furnishing items
and services for which payment may be made under
this title (including skilled nursing facilities and
home health agencies), including medical and utiliza-
tion review and fraud review (employing similar
standards, processes, and technologies used by pri-
vate health plans, including equipment and software
technologies which surpass the capability of the
equipment and technologies used in the review of
claims under this title as of the date of the enact-
ment of this section).
‘‘(2) Audit of cost reports.
‘‘(3) Determinations as to whether payment
should not be, or should not have been, made under
this title by reason of section 1862(b), and recovery
of payments that should not have been made.
‘‘(4) Education of providers of services, bene-
ficiaries, and other persons with respect to payment
integrity and benefit quality assurance issues.
286
Subtitle E
‘‘(c) ELIGIBILITY OF ENTITIES.—An entity is eligible
to enter into a contract under the Program to carry out
any of the activities described in subsection (b) if—
‘‘(1) the entity has demonstrated capability to
carry out such activities;
‘‘(2) in carrying out such activities, the entity
agrees to cooperate with the Inspector General of
the Department of Health and Human Services, the
Attorney General of the United States, and other
law enforcement agencies, as appropriate, in the in-
vestigation and deterrence of fraud and abuse in re-
lation to this title and in other cases arising out of
such activities;
‘‘(3) the entity’s financial holdings, interests, or
relationships will not interfere with its ability to per-
form the functions to be required by the contract in
an effective and impartial manner; and
‘‘(4) the entity meets such other requirements
as the Secretary may impose.
‘‘(d) PROCESS FOR ENTERING INTO CONTRACTS.—
The Secretary shall enter into contracts under the Pro-
gram in accordance with such procedures as the Secretary
may by regulation establish, except that such procedures
shall include the following:
287
Subtitle E
‘‘(1) The Secretary shall determine the appro-
priate number of separate contracts which are nec-
essary to carry out the Program and the appropriate
times at which the Secretary shall enter into such
contracts.
‘‘(2) The provisions of section 1153(e)(1) shall
apply to contracts and contracting authority under
this section, except that competitive procedures must
be used when entering into new contracts under this
section, or at any other time considered appropriate
by the Secretary.
‘‘(3) A contract under this section may be re-
newed without regard to any provision of law requir-
ing competition if the contractor has met or ex-
ceeded the performance requirements established in
the current contract.
‘‘(e) LIMITATION ON CONTRACTOR LIABILITY.—The
Secretary shall by regulation provide for the limitation of
a contractor’s liability for actions taken to carry out a con-
tract under the Program, and such regulation shall, to the
extent the Secretary finds appropriate, employ the same
or comparable standards and other substantive and proce-
dural provisions as are contained in section 1157.
‘‘(f) TRANSFER OF AMOUNTS TO MEDICARE ANTI-
FRAUD AND ABUSE TRUST FUND.—For each fiscal year,
288
Subtitle E
the Secretary shall transfer from the Federal Hospital In-
surance Trust Fund and the Federal Supplementary Med-
ical Insurance Trust Fund to the Medicare Anti-Fraud
and Abuse Trust Fund under subsection (g) such amounts
as are necessary to carry out the activities described in
subsection (b). Such transfer shall be in an allocation as
reasonably reflects the proportion of such expenditures as-
sociated with part A and part B.
‘‘(g) MEDICARE ANTI-FRAUD
AND ABUSE TRUST
FUND.—
‘‘(1) ESTABLISHMENT.—
‘‘(A) IN GENERAL.—There is hereby estab-
lished in the Treasury of the United States the
Anti-Fraud and Abuse Trust Fund (hereafter
in this subsection referred to as the ‘Trust
Fund’). The Trust Fund shall consist of such
gifts and bequests as may be made as provided
in subparagraph (B) and such amounts as may
be deposited in the Trust Fund as provided in
subsection (f).
‘‘(B) AUTHORIZATION
TO
ACCEPT
GIFTS
AND BEQUESTS.—The Trust Fund is author-
ized to accept on behalf of the United States
money gifts and bequests made unconditionally
to the Trust Fund, for the benefit of the Trust
289
Subtitle E
Fund or any activity financed through the
Trust Fund.
‘‘(2) INVESTMENT.—
‘‘(A) IN GENERAL.—The Secretary of the
Treasury shall invest such amounts of the Fund
as such Secretary determines are not required
to meet current withdrawals from the Fund in
government account serial securities.
‘‘(B) USE OF INCOME.—Any interest de-
rived from investments under subparagraph (A)
shall be credited to the Fund.
‘‘(3) DIRECT
APPROPRIATION
OF
FUNDS
TO
CARRY OUT PROGRAM.—
‘‘(A) IN
GENERAL.—There are appro-
priated from the Trust Fund for each fiscal
year such amounts as are necessary to carry
out the Medicare Integrity Program under this
section, subject to subparagraph (B).
‘‘(B) AMOUNTS SPECIFIED.—The amount
appropriated under subparagraph (A) for a fis-
cal year is as follows:
‘‘(i) For fiscal year 1996, such
amount 
shall 
be 
not 
less 
than
$430,000,000 
and 
not 
more 
than
$440,000,000.
290
Subtitle E
‘‘(ii) For fiscal year 1997, such
amount 
shall 
be 
not 
less 
than
$490,000,000 
and 
not 
more 
than
$500,000,000.
‘‘(iii) For fiscal year 1998, such
amount 
shall 
be 
not 
less 
than
$550,000,000 
and 
not 
more 
than
$560,000,000.
‘‘(iv) For fiscal year 1999, such
amount 
shall 
be 
not 
less 
than
$620,000,000 
and 
not 
more 
than
$630,000,000.
‘‘(v) For fiscal year 2000, such
amount 
shall 
be 
not 
less 
than
$670,000,000 
and 
not 
more 
than
$680,000,000.
‘‘(vi) For fiscal year 2001, such
amount 
shall 
be 
not 
less 
than
$690,000,000 
and 
not 
more 
than
$700,000,000.
‘‘(vii) For fiscal year 2002, such
amount 
shall 
be 
not 
less 
than
$710,000,000 
and 
not 
more 
than
$720,000,000.
291
Subtitle E
‘‘(4) ANNUAL
REPORT.—The Secretary shall
submit an annual report to Congress on the amount
of revenue which is generated and disbursed by the
Trust Fund in each fiscal year.’’.
(b) ELIMINATION OF FI AND CARRIER RESPONSIBIL-
ITY FOR CARRYING OUT ACTIVITIES SUBJECT TO PRO-
GRAM.—
(1) 
RESPONSIBILITIES
OF
FISCAL
INTERMEDIARIES
UNDER
PART
A.—Section 1816
(42 U.S.C. 1395h) is amended by adding at the end
the following new subsection:
‘‘(l) No agency or organization may carry out (or re-
ceive payment for carrying out) any activity pursuant to
an agreement under this section to the extent that the ac-
tivity is carried out pursuant to a contract under the Med-
icare Integrity Program under section 1895.’’.
(2) RESPONSIBILITIES
OF
CARRIERS
UNDER
PART B.—Section 1842(c) (42 U.S.C. 1395u(c)) is
amended by adding at the end the following new
paragraph:
‘‘(6) No carrier may carry out (or receive payment
for carrying out) any activity pursuant to a contract under
this subsection to the extent that the activity is carried
out pursuant to a contract under the Medicare Integrity
Program under section 1895.’’.
292
Subtitle E
(c) DIRECT SPENDING FOR MEDICARE-RELATED AC-
TIVITIES
OF INSPECTOR GENERAL.—Section 1895, as
added by subsection (a), is amended by adding at the end
the following new subsection:
‘‘(h) DIRECT SPENDING FOR MEDICARE-RELATED
ACTIVITIES OF INSPECTOR GENERAL.—
‘‘(1) IN
GENERAL.—There are appropriated
from the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance
Trust Fund to the Inspector General of the Depart-
ment of Health and Human Services for each fiscal
year such amounts as are necessary to enable the
Inspector General to carry out activities relating to
the medicare program (as described in paragraph
(2)), subject to paragraph (3).
‘‘(2) ACTIVITIES
DESCRIBED.—The activities
described in this paragraph are as follows:
‘‘(A) Prosecuting medicare-related matters
through criminal, civil, and administrative pro-
ceedings.
‘‘(B) Conducting investigations relating to
the medicare program.
‘‘(C) Performing financial and performance
audits of programs and operations relating to
the medicare program.