II
Calendar No. 484
105TH CONGRESS
2D SESSION
H. R. 1836
[Report No. 105–257]
To amend chapter 89 of title 5, United States Code, to improve administra-
tion of sanctions against unfit health care providers under the Federal
Employees Health Benefits Program, and for other purposes.
IN THE SENATE OF THE UNITED STATES
NOVEMBER 5, 1997
Received; read twice and referred to the Committee on Governmental Affairs
JULY 21, 1998
Reported by Mr. THOMPSON, with amendments
[Omit the part struck through and insert the part printed in italic]
AN ACT
To amend chapter 89 of title 5, United States Code, to
improve administration of sanctions against unfit health
care providers under the Federal Employees Health Ben-
efits Program, and for other purposes.
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 ‘‘Federal Employees
Health Care Protection Act of 1997 1998’’.
SEC. 2. DEBARMENT AND OTHER SANCTIONS.
(a) AMENDMENTS.—Section 8902a of title 5, United
States Code, is amended—
(1) in subsection (a)—
(A) in paragraph (1)—
(i) by striking ‘‘and’’ at the end of
subparagraph (B);
(ii) by striking the period at the end
of subparagraph (C) and inserting ‘‘; and’’;
and
(iii) by adding at the end the follow-
ing:
‘‘(D) the term ‘should know’ means that a per-
son, with respect to information, acts in deliberate
ignorance of, or in reckless disregard of, the truth
or falsity of the information, and no proof of specific
intent to defraud is required;’’; and
(B) in paragraph (2)(A), by striking ‘‘sub-
section (b) or (c)’’ and inserting ‘‘subsection
(b), (c), or (d)’’;
(2) in subsection (b)—
(A) by striking ‘‘The Office of Personnel
Management may bar’’ and inserting ‘‘The Of-
fice of Personnel Management shall bar’’; and
(B) by amending paragraph (5) to read as
follows:
‘‘(5) Any provider that is currently debarred,
suspended, or otherwise excluded from any procure-
ment or nonprocurement activity (within the mean-
ing of section 2455 of the Federal Acquisition
Streamlining Act of 1994).’’;
(3) by redesignating subsections (c) through (i)
as subsections (d) through (j), respectively, and by
inserting after subsection (b) the following:
‘‘(c) The Office may bar the following providers of
health care services from participating in the program
under this chapter:
‘‘(1) Any provider—
‘‘(A) whose license to provide health care
services or supplies has been revoked, sus-
pended, restricted, or not renewed, by a State
licensing authority for reasons relating to the
provider’s professional competence, professional
performance, or financial integrity; or
‘‘(B) that surrendered such a license while
a formal disciplinary proceeding was pending
before such an authority, if the proceeding con-
cerned the provider’s professional competence,
professional performance, or financial integrity.
‘‘(2) Any provider that is an entity directly or
indirectly owned, or with a control interest of 5 per-
cent or more held, by an individual who has been
convicted of any offense described in subsection (b),
against whom a civil monetary penalty has been as-
sessed under subsection (d), or who has been
debarred from participation under this chapter.
‘‘(3) Any individual who directly or indirectly
owns or has a control interest in a sanctioned entity
and who knows or should know of the action con-
stituting the basis for the entity’s conviction of any
offense described in subsection (b), assessment with
a civil monetary penalty under subsection (d), or de-
barment from participation under this chapter.
‘‘(4) Any provider that the Office determines, in
connection with claims presented under this chapter,
has charged for health care services or supplies in
an amount substantially in excess of such provider’s
customary charge for such services or supplies (un-
less the Office finds there is good cause for such
charge), or charged for health care services or sup-
plies which are substantially in excess of the needs
of the covered individual or which are of a quality
that fails to meet professionally recognized stand-
ards for such services or supplies.
‘‘(5) Any provider that the Office determines
has committed acts described in subsection (d).
Any determination under paragraph (4) relating to wheth-
er a charge for health care services or supplies is substan-
tially in excess of the needs of the covered individual shall
be made by trained reviewers based on written medical
protocols developed by physicians. In the event such a de-
termination cannot be made based on such protocols, a
physician in an appropriate specialty shall be consulted.’’;
(4) in subsection (d) (as so redesignated by
paragraph (3)) by amending paragraph (1) to read
as follows:
‘‘(1) in connection with claims presented under
this chapter, that a provider has charged for a
health care service or supply which the provider
knows or should have known involves—
‘‘(A) an item or service not provided as
claimed,
‘‘(B) charges in violation of applicable
charge limitations under section 8904(b), or
‘‘(C) an item or service furnished during a
period in which the provider was debarred from
participation under this chapter pursuant to a
determination by the Office under this section,
other than as permitted under subsection
(g)(2)(B);’’;
(5) in subsection (f) (as so redesignated by
paragraph (3)) by inserting after ‘‘under this sec-
tion’’ the first place it appears the following:
‘‘(where such debarment is not mandatory)’’;
(6) in subsection (g) (as so redesignated by
paragraph (3))—
(A) by striking ‘‘(g)(1)’’ and all that fol-
lows through the end of paragraph (1) and in-
serting the following:
‘‘(g)(1)(A) Except as provided in subparagraph (B),
debarment of a provider under subsection (b) or (c) shall
be effective at such time and upon such reasonable notice
to such provider, and to carriers and covered individuals,
as shall be specified in regulations prescribed by the Of-
fice. Any such provider that is debarred from participation
may request a hearing in accordance with subsection
(h)(1).
‘‘(B) Unless the Office determines that the health or
safety of individuals receiving health care services war-
rants an earlier effective date, the Office shall not make
a determination adverse to a provider under subsection
(c)(5) or (d) until such provider has been given reasonable
notice and an opportunity for the determination to be
made after a hearing as provided in accordance with sub-
section (h)(1).’’;
(B) in paragraph (3)—
(i) by inserting ‘‘of debarment’’ after
‘‘notice’’; and
(ii) by adding at the end the follow-
ing: ‘‘In the case of a debarment under
paragraph (1), (2), (3), or (4) of sub-
section (b), the minimum period of debar-
ment shall not be less than 3 years, except
as provided in paragraph (4)(B)(ii).’’;
(C) in paragraph (4)(B)(i)(I) by striking
‘‘subsection (b) or (c)’’ and inserting ‘‘sub-
section (b), (c), or (d)’’; and
(D) by striking paragraph (6);
(7) in subsection (h) (as so redesignated by
paragraph (3)) by striking ‘‘(h)(1)’’ and all that fol-
lows through the end of paragraph (2) and inserting
the following:
‘‘(h)(1) Any provider of health care services or sup-
plies that is the subject of an adverse determination by
the Office under this section shall be entitled to reasonable
notice and an opportunity to request a hearing of record,
and to judicial review as provided in this subsection after
the Office renders a final decision. The Office shall grant
a request for a hearing upon a showing that due process
rights have not previously been afforded with respect to
any finding of fact which is relied upon as a cause for
an adverse determination under this section. Such hearing
shall be conducted without regard to subchapter II of
chapter 5 and chapter 7 of this title by a hearing officer
who shall be designated by the Director of the Office and
who shall not otherwise have been involved in the adverse
determination being appealed. A request for a hearing
under this subsection shall be filed within such period and
in accordance with such procedures as the Office shall pre-
scribe by regulation.
‘‘(2) Any provider adversely affected by a final deci-
sion under paragraph (1) made after a hearing to which
such provider was a party may seek review of such deci-
sion in the United States District Court for the District
of Columbia or for the district in which the plaintiff re-
sides or has his or her principal place of business by filing
a notice of appeal in such court within 60 days after the
date the decision is issued, and by simultaneously sending
copies of such notice by certified mail to the Director of
the Office and to the Attorney General. In answer to the
appeal, the Director of the Office shall promptly file in
such court a certified copy of the transcript of the record,
if the Office conducted a hearing, and other evidence upon
which the findings and decision complained of are based.
The court shall have power to enter, upon the pleadings
and evidence of record, a judgment affirming, modifying,
or setting aside, in whole or in part, the decision of the
Office, with or without remanding the case for a rehear-
ing. The district court shall not set aside or remand the
decision of the Office unless there is not substantial evi-
dence on the record, taken as whole, to support the find-
ings by the Office of a cause for action under this section
or unless action taken by the Office constitutes an abuse
of discretion.’’; and
(8) in subsection (i) (as so redesignated by
paragraph (3))—
(A) by striking ‘‘subsection (c)’’ and in-
serting ‘‘subsection (d)’’; and
(B) by adding at the end the following:
‘‘The amount of a penalty or assessment as fi-
nally determined by the Office, or other amount
the Office may agree to in compromise, may be
deducted from any sum then or later owing by
the United States to the party against whom
the penalty or assessment has been levied.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall take effect on the date of the enactment of this
Act.
(2) EXCEPTIONS.—(A) Paragraphs (2), (3),
and (5) of section 8902a(c) of title 5, United States
Code, as amended by subsection (a)(3), shall apply
only to the extent that the misconduct which is the
basis for debarment under such paragraph (2), (3),
or (5), as applicable, occurs after the date of the en-
actment of this Act.
(B) Paragraph (1)(B) of section 8902a(d) of
title 5, United States Code, as amended by sub-
section (a)(4), shall apply only with respect to
charges which violate section 8904(b) of such title
for items or services furnished after the date of the
enactment of this Act.
(C) Paragraph (3) of section 8902a(g) of title
5, United States Code, as amended by subsection
(a)(6)(B), 
shall 
apply 
only 
with 
respect 
to
debarments based on convictions occurring after the
date of the enactment of this Act.
SEC. 3. MISCELLANEOUS AMENDMENTS RELATING TO THE
HEALTH BENEFITS PROGRAM FOR FEDERAL
EMPLOYEES.
(a) DEFINITION OF A CARRIER.—Paragraph (7) of
section 8901 of title 5, United States Code, is amended
by striking ‘‘organization;’’ and inserting ‘‘organization
and an association of organizations or other entities de-
scribed in this paragraph sponsoring a health benefits
plan;’’.
(b) SERVICE BENEFIT PLAN.—Paragraph (1) of sec-
tion 8903 of title 5, United States Code, is amended by
striking ‘‘plan,’’ and inserting ‘‘plan, which may be under-
written by participating affiliates licensed in any number
of States,’’.
(c) PREEMPTION.—Section 8902(m) of title 5,
United States Code, is amended by striking ‘‘(m)(1)’’ and
all that follows through the end of paragraph (1) and in-
serting the following:
‘‘(m)(1) The terms of any contract under this chapter
which relate to the nature, provision, or extent of coverage
or benefits (including payments with respect to benefits)
shall supersede and preempt any State or local law, or
any regulation issued thereunder, which relates to health
insurance or plans.’’.
(B) such plan did not terminate, or the eligi-
bility of such individual with respect to such plan
did not terminate, as described in subsection (a).
(3) Subject to subsection (c), any individual (other
than an individual under paragraph (2)) who, on January
3, 1998 or before January 2, 1999, is covered under a
health benefits plan described in subsection (a)(1) or (2)
as an unmarried dependent child, but who does not then
qualify for coverage under chapter 89 of title 5, United
States Code, as a family member (within the meaning of
such chapter) shall be deemed to be entitled to continued
coverage under section 8905a of such title, to the same
extent and in the same manner as if such individual had,
on January 3, 1998 or before January 2, 1999, ceased to
meet the requirements for being considered an unmarried
dependent child of an enrollee under such chapter.
(4) Coverage under chapter 89 of title 5, United
States Code, pursuant to an enrollment under this section
shall become effective on January 4, 1998 January 3,
1999 or such earlier date as established by the Office of Per-
sonnel Management after consultation with the Federal De-
posit Insurance Corporation or the Board of Governors of
the Federal Reserve System, as appropriate.
(c) ELIGIBILITY FOR FEHBP LIMITED TO INDIVID-
UALS LOSING ELIGIBILITY UNDER FORMER HEALTH
PLAN.—Nothing in subsection (a)(2) or any paragraph of
subsection (b) (to the extent such paragraph relates to the
plan described in subsection (a)(2)) shall be considered to
apply with respect to any individual whose eligibility for
coverage under such plan does not involuntarily terminate
on January 3, 1998 or before January 2, 1999.
(d) TRANSFERS TO THE EMPLOYEES HEALTH BENE-
FITS FUND.—The Federal Deposit Insurance Corporation
and the Board of Governors of the Federal Reserve Sys-
tem shall transfer to the Employees Health Benefits Fund
under section 8909 of title 5, United States Code,
amounts determined by the Director of the Office of Per-
sonnel Management, after consultation with the Federal
Deposit Insurance Corporation and the Board of Gov-
ernors of the Federal Reserve System, to be necessary to
reimburse the Fund for the cost of providing benefits
under this section not otherwise paid for by the individuals
covered by this section. The amounts so transferred shall
be held in the Fund and used by the Office of Personnel
Management in addition to amounts available under sec-
tion 8906(g)(1) of such title.
(e) ADMINISTRATION AND REGULATIONS.—The Of-
fice of Personnel Management—
(1) shall administer the provisions of this sec-
tion to provide for—
(A) a period of notice and open enrollment
for individuals affected by this section; and
(B) no lapse of health coverage for individ-
uals who enroll in a health benefits plan under
chapter 89 of title 5, United States Code, in ac-
cordance with this section; and
(2) may prescribe regulations to implement this
section.
SEC. 5. FULL DISCLOSURE IN HEALTH PLAN CONTRACTS.
The Office of Personnel Management shall encourage
carriers offering health benefits plans described by section
8903 or section 8903a of title 5, United States Code, with
respect to contractual arrangements made by such carriers
with any person for purposes of obtaining discounts from
providers for health care services or supplies furnished to
individuals enrolled in such plan, to seek assurance that
the conditions for such discounts are fully disclosed to the
providers who grant them.
SEC. 6. PROVISIONS RELATING TO CERTAIN PLANS THAT
HAVE DISCONTINUED THEIR PARTICIPATION
IN FEHBP.
(a) AUTHORITY TO READMIT.—
(1) IN GENERAL.—Chapter 89 of title 5, United
States Code, is amended by inserting after section
8903a the following:
‘‘§ 8903b. Authority to readmit an employee organiza-
tion plan
‘‘(a) In the event that a plan described by section
8903(3) or 8903a is discontinued under this chapter
(other than in the circumstance described in section
8909(d)), that discontinuation shall be disregarded, for
purposes of any determination as to that plan’s eligibility
to be considered an approved plan under this chapter, but
only for purposes of any contract year later than the third
contract year beginning after such plan is so discontinued.
‘‘(b) A contract for a plan approved under this sec-
tion shall require the carrier—
‘‘(1) to demonstrate experience in service deliv-
ery within a managed care system (including pro-
vider networks) throughout the United States; and
‘‘(2) if the carrier involved would not otherwise
be subject to the requirement set forth in section
8903a(c)(1), to satisfy such requirement.’’.
(2) CONFORMING AMENDMENT.—The analysis
for chapter 89 of title 5, United States Code, is
amended by inserting after the item relating to sec-
tion 8903a the following:
‘‘8903b. Authority to readmit an employee organization plan.’’.
(3) APPLICABILITY.—
(A) IN GENERAL.—The amendments made
by this subsection shall apply as of the date of
enactment of this Act, including with respect to
any plan which has been discontinued as of
such date.
(B) TRANSITION RULE.—For purposes of
applying section 8903b(a) of title 5, United
States Code (as amended by this subsection)
with respect to any plan seeking to be readmit-
ted for purposes of any contract year beginning
before January 1, 2000, such section shall be
applied by substituting ‘‘second contract year’’
for ‘‘third contract year’’.
(b) TREATMENT OF THE CONTINGENCY RESERVE OF
A DISCONTINUED PLAN.—
(1) IN
GENERAL.—Subsection (e) of section
8909 of title 5, United States Code, is amended by
striking ‘‘(e)’’ and inserting ‘‘(e)(1)’’ and by adding
at the end the following:
‘‘(2) Any crediting required under paragraph (1) pur-
suant to the discontinuation of any plan under this chap-
ter shall be completed by the end of the second contract
year beginning after such plan is so discontinued.
‘‘(3) The Office shall prescribe regulations in accord-
ance with which this subsection shall be applied in the case
of any plan which is discontinued before being credited
with the full amount to which it would otherwise be enti-
tled based on the discontinuation of any other plan.’’.
(2) TRANSITION
RULE.—In the case of any
amounts remaining as of the date of enactment of
this Act in the contingency reserve of a discontinued
plan, such amounts shall be disposed of in accord-
ance with section 8909(e) of title 5, United States
Code, as amended by this subsection, by—
(A) the deadline set forth in section
8909(e) of such title (as so amended); or
(B) if later, the end of the 6-month period
beginning on such date of enactment.
SEC. 7. MAXIMUM PHYSICIANS COMPARABILITY ALLOW-
ANCE PAYABLE.
(a) IN GENERAL.—Paragraph (2) of section 5948(a)
of title 5, United States Code, is amended by striking
‘‘$20,000’’ and inserting ‘‘$30,000’’.
(b) AUTHORITY
TO
MODIFY
EXISTING
AGREE-
MENTS.—
(1) IN
GENERAL.—Any service agreement
under section 5948 of title 5, United States Code,
which is in effect on the date of enactment of this
Act may, with respect to any period of service re-
maining in such agreement, be modified based on
the amendment made by subsection (a).
(2) LIMITATION.—A modification taking effect
under this subsection in any year shall not cause an
allowance to be increased to a rate which, if applied
throughout such year, would cause the limitation
under section 5948(a)(2) of such title (as amended
by this section), or any other applicable limitation,
to be exceeded.
(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be considered to authorize additional or supple-
mental appropriations for the fiscal year in which occurs
the date of enactment of this Act.
SEC. 8. CLARIFICATION RELATING TO SECTION 8902(k).
Section 8902(k) of title 5, United States Code, is
amended—
(1) by redesignating paragraph (2) as para-
graph (3); and
(2) by inserting after paragraph (1) the follow-
ing:
‘‘(2) Nothing in this subsection shall be considered
to preclude a health benefits plan from providing direct
access or direct payment or reimbursement to a provider
in a health care practice or profession other than a prac-
tice or profession listed in paragraph (1), if such provider
is licensed or certified as such under Federal or State
law.’’.
Passed the House of Representatives November 4,
1997.
Attest:
ROBIN H. CARLE,
Clerk.