I
105TH CONGRESS
1ST SESSION
H. R. 1770
To prevent fraud, abuse, and waste in the Medicare and Medicaid Programs,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 3, 1997
Mr. STARK (for himself, Mr. MCDERMOTT, and Mr. WEYGAND) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committees on Commerce and the Judiciary, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To prevent fraud, abuse, and waste in the Medicare and
Medicaid Programs, 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; TABLE OF CONTENTS; REF-
ERENCES IN ACT.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare and Medicaid Fraud, Abuse, and Waste Pre-
vention Amendments of 1997’’.
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(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents; references in Act.
TITLE I—ACCOUNTABILITY OF SERVICE PROVIDERS
PART A—SANCTION AUTHORITY
Sec. 101. Exclusion of entity controlled by family member of a sanctioned indi-
vidual.
Sec. 102. Civil money penalties (CMPs) for kickbacks.
Sec. 103. CMPs for persons that contract with excluded individuals.
Sec. 104. CMPs for services ordered or prescribed by an excluded individual or
entity.
Sec. 105. CMPs for false certification of eligibility to receive partial hospitaliza-
tion and hospice services.
Sec. 106. Extension of subpoena and injunction authority.
Sec. 107. Kickback penalties for knowing violations.
Sec. 108. Elimination of exception of Federal Employees Health Benefits Pro-
gram from definition of Federal health care program.
Sec. 109. Amounts of CMPs.
Sec. 110. Liability of physicians in specialty hospitals.
Sec. 111. Expansion of criminal penalties for kickbacks.
PART B—PROVIDER ENROLLMENT PROCESS
Sec. 121. Requirements to disclose employer identification numbers (EINs) and
social security numbers (SSNs).
Sec. 122. Fees for agreements with Medicare providers and suppliers.
Sec. 123. Authority to refuse to enter into Medicare or Medicaid agreements
with individuals or entities convicted of felonies.
Sec. 124. Fees and requirements for issuance of standard health care identifi-
ers.
TITLE II—PROVIDER REIMBURSEMENT AND RELATED MATTERS
PART A—COVERAGE AND PAYMENT LIMITS
Sec. 201. No home health benefits based solely on drawing blood.
Sec. 202. Monthly certification for hospice care after first six months.
Sec. 203. Payment for home hospice care on basis of geographic location of
home.
Sec. 204. Limitation on hospice care liability for individuals not in fact termi-
nally ill.
Sec. 205. Medicare capital asset sales price equal to book value.
Sec. 206. Repeal of moratorium on bad debt policy.
PART B—BANKRUPTCY PROVISIONS
Sec. 221. Application of certain provisions of the bankruptcy code.
TITLE III—MEDICARE MENTAL HEALTH PARTIAL
HOSPITALIZATION SERVICES
Sec. 301. Services not to be furnished in residential settings.
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Sec. 302. Additional requirements for community mental health centers.
Sec. 303. Prospective payment system.
TITLE IV—MEDICARE RURAL HEALTH CLINICS
Sec. 401. Per-visit payment limits for provider-based clinics.
Sec. 402. Assurance of quality services.
Sec. 403. Waiver of certain staffing requirements limited to clinics in program.
Sec. 404. Refinement of shortage area requirements.
Sec. 405. Decreased beneficiary cost sharing for RHC services.
Sec. 406. Prospective payment system for RHC services.
(c) REFERENCE TO SOCIAL SECURITY ACT.—Except
as otherwise specifically provided, whenever in this act an
amendment is expressed in terms of an amendment to or
repeal of a section or other provision, the reference is con-
sidered to be made to that section or other provision of
the Social Security Act.
TITLE I—ACCOUNTABILITY OF
SERVICE PROVIDERS
PART A—SANCTION AUTHORITY
SEC. 101. EXCLUSION OF ENTITY CONTROLLED BY FAMILY
MEMBER OF A SANCTIONED INDIVIDUAL.
Section 1128 (42 U.S.C. 1320a–7) is amended—
(1) in subsection (b)(8), by inserting ‘‘, or an
immediate family member of such person (as defined
in section 1128(j)), or a member of the household of
such person (as defined in section 1128(k))’’ after
‘‘the Secretary determines that a person’’; and
(2) by adding after subsection (i) the following
new subsections:
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‘‘(j) DEFINITION
OF IMMEDIATE FAMILY MEM-
BER.—For purposes of subsection (b)(8), the term ‘imme-
diate family member’ means a husband or wife; natural
or adoptive parent, child, or sibling; stepparent, stepchild,
stepbrother, or stepsister; father-, mother-, daughter-,
son-, brother-, or sister-in-law; grandparent or grandchild;
or spouse of a grandparent or grandchild.
‘‘(k) DEFINITION
OF MEMBER
OF
THE HOUSE-
HOLD.—For purposes of subsection (b)(8), the term
‘member of the household’ means any person sharing a
common abode as part of a single family unit, including
domestic employees and others who live together as a fam-
ily unit, but not including a roomer or boarder.’’.
SEC. 102. CIVIL MONEY PENALTIES (CMPS) FOR KICK-
BACKS.
(a) PERMITTING SECRETARY TO IMPOSE CIVIL MON-
ETARY PENALTY.—Section 1128A(a) (42 U.S.C. 1320a–
7a(a)) is amended—
(1) by striking ‘‘or’’ at the end of paragraph
(4);
(2) by adding ‘‘or’’ at the end of paragraph (5);
and
(3) by adding after paragraph (5) the following
new paragraph:
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‘‘(6) commits an act described in paragraph (1)
or (2) of section 1128B(b);’’.
(b) DESCRIPTION OF CIVIL MONETARY PENALTY AP-
PLICABLE.—Section 1128A(a) (42 U.S.C. 1320a–7a(a)) is
amended—
(1) by striking ‘‘occurs).’’ in the matter follow-
ing paragraph (6) and inserting ‘‘occurs; or, in cases
under paragraph (6), $50,000 for each such viola-
tion).’’; and
(2) by striking ‘‘claim.’’ in the matter following
paragraph (6) and inserting ‘‘claim (or, in cases
under paragraph (6), damages of not more than
three times the total amount of remuneration of-
fered, paid, solicited, or received, without regard to
whether a portion of such remuneration was offered,
paid, solicited, or received for a lawful purpose).’’.
SEC. 103. CMPS FOR PERSONS THAT CONTRACT WITH EX-
CLUDED INDIVIDUALS.
Section 1128A(a) (42 U.S.C. 1320a–7a(a)), as
amended by section 102, is amended—
(1) by striking ‘‘or’’ at the end of paragraph
(5);
(2) by adding ‘‘or’’ at the end of paragraph (6);
and
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(3) by adding after paragraph (6) the following
new paragraph:
‘‘(7) arranges or contracts (by employment or
otherwise) with an individual or entity that the per-
son knows or should know is excluded from partici-
pation in a Federal health care program (as defined
in section 1128B(f)), for the provision of items or
services for which payment may be made under such
a program;’’.
SEC. 104. CMPS FOR SERVICES ORDERED OR PRESCRIBED
BY AN EXCLUDED INDIVIDUAL OR ENTITY.
Section 1128A(a)(1) (42 U.S.C. 1320a–7a(a)(1)), as
amended by section 102, is amended—
(1) in subparagraph (D)—
(A) by inserting ‘‘, ordered, or prescribed
by such person’’ after ‘‘other item or service
furnished’’;
(B) by inserting ‘‘(pursuant to this title or
title XVIII)’’ after ‘‘period in which the person
was excluded’’;
(C) by striking ‘‘pursuant to a determina-
tion by the Secretary’’ and all that follows
through ‘‘the provisions of section 1842(j)’’;
and
(D) by striking ‘‘or’’ at the end; and
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(2) by redesignating subparagraph (E) as sub-
paragraph (F); and
(3) by adding after subparagraph (D) the fol-
lowing new subparagraph:
‘‘(E) is for a medical or other item or serv-
ice ordered or prescribed by a person excluded
(pursuant to this title or title XVIII) from the
program under which the claim was made, and
the person furnishing such item or service
knows or should know of such exclusion, or’’.
SEC. 105. CMPS FOR FALSE CERTIFICATION OF ELIGI-
BILITY TO RECEIVE PARTIAL HOSPITALIZA-
TION AND HOSPICE SERVICES.
Section 1128A(b)(3) (42 U.S.C. 1320a–7a(b)(3)) is
amended—
(1) in subparagraph (A)(ii), by inserting ‘‘, hos-
pice care, or partial hospitalization services’’ after
‘‘home health services’’; and
(2) in subparagraph (B), by inserting ‘‘, section
1814(a)(7) in the case of hospice care, or section
1835(a)(2)(F) in the case of partial hospitalization
services’’ after ‘‘home health services’’.
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SEC. 106. EXTENSION OF SUBPOENA AND INJUNCTION AU-
THORITY.
(a) SUBPOENA AUTHORITY.—Section 1128A(j)(1)
(42 U.S.C. 1320a–7a(j)(1)) is amended by inserting ‘‘and
section 1128’’ after ‘‘with respect to this section’’.
(b) INJUNCTION AUTHORITY.—Section 1128A(k) (42
U.S.C. 1320a–7a(k)) is amended by inserting ‘‘or an ex-
clusion under section 1128,’’ after ‘‘subject to a civil mon-
etary penalty under this section,’’.
(c) CLARIFYING AMENDMENTS.—Section 1128A(j)
(42 U.S.C. 1320a–7a(j)) is amended—
(1) in paragraph (1)—
(A) by inserting ‘‘, except that, in so ap-
plying such sections, any reference therein to
the Commissioner of Social Security or the So-
cial Security Administration shall be considered
a reference to the Secretary or the Department
of Health and Human Services, respectively’’
after ‘‘with respect to title II’’; and
(B) by striking the second sentence; and
(2) in paragraph (2), to read as follows:
‘‘(2) The Secretary may delegate to the Inspector
General of the Department of Health and Human Services
any or all authority granted under this section or under
section 1128.’’.
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(d) CONFORMING AMENDMENT.—Section 1128 (42
U.S.C. 1320a–7) is amended by adding at the end the fol-
lowing new subsection:
‘‘(j) REFERENCE TO LAWS DIRECTLY AFFECTING
THIS SECTION.—For provisions of law concerning the
Secretary’s subpoena and injunction authority under this
section, see section 1128A(j) and (k).’’.
SEC. 107. KICKBACK PENALTIES FOR KNOWING VIOLA-
TIONS.
Section 1128B(b) (42 U.S.C. 1320a–7b(b)) is
amended by striking ‘‘and willfully’’ each place it occurs.
SEC. 108. ELIMINATION OF EXCEPTION OF FEDERAL EM-
PLOYEES 
HEALTH 
BENEFITS 
PROGRAM
FROM DEFINITION OF FEDERAL HEALTH
CARE PROGRAM.
Section 1128B(f)(1) (42 U.S.C. 1320a–7b(f)(1)) is
amended by striking ‘‘(other than the health insurance
program under chapter 89 of title 5, United States
Code)’’.
SEC. 109. AMOUNTS OF CMPS.
Section 1842(j)(2) (42 U.S.C. 1395u(j)(2)) is amend-
ed in the second sentence—
(1) by striking ‘‘(other than the first 2 sen-
tences of subsection (a) and other than subsection
(b))’’; and
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(a), or necessary stabilizing treatment as
required by subsection (b), or
‘‘(iv) fails or refuses to accept an ap-
propriate transfer of a patient to a hospital
that has specialized capabilities or facilities
as defined in subsection (g),’’.
SEC. 111. EXPANSION OF CRIMINAL PENALTIES FOR KICK-
BACKS.
(a) APPLICATION OF CRIMINAL PENALTY AUTHOR-
ITY TO ALL HEALTH CARE BENEFIT PROGRAMS.—Sec-
tion 1128B(b) (42 U.S.C. 1320a–7b(b)) is amended by
striking ‘‘Federal health care program’’ each place it ap-
pears and inserting ‘‘health care benefit program’’.
(b) ATTORNEY GENERAL’S AUTHORITY TO SEEK
CIVIL PENALTIES.—Section 1128B (42 U.S.C. 1320a–7b)
is further amended by adding at the end the following new
subsection:
‘‘(g)(1) The Attorney General may bring an action
in the district courts to impose upon any person who car-
ries out any activity in violation of this section with re-
spect to a Federal health care program a civil penalty of
$25,000 to $50,000 for each such violation, and damages
of three times the total remuneration offered, paid, solic-
ited, or received.
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‘‘(2) A violation exists under paragraph (1) is 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 paragraph (1)
with regard to subpoenas, statute of limitations, standard
of proof, and collateral estoppel shall be governed by 31
U.S.C. 3731, and the Federal Rules of Civil Procedure
shall apply to actions brought under this section.
‘‘(4) This provision does not affect the availability of
other criminal and civil remedies for such violations.’’.
(c) ATTORNEY GENERAL’S INJUNCTION AUTHOR-
ITY.—Section 1128B (42 U.S.C. 1320a–7b) is further
amended by adding at the end the following new sub-
section:
‘‘(h) If the Attorney General has reason to believe
that a person is engaging in conduct constituting an of-
fense under subsection (b) or (g), the Attorney General
may petition an appropriate United States district court
for an order prohibiting that person from engaging in such
conduct. The court may issue an order prohibiting that
person from engaging in such conduct if the court finds
that the conduct constitutes such an offense. The filing
of a petition under this section does not preclude any other
remedy which is available by law to the United States or
any other person.’’.
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(d) DEFINITION.—Section 1128B(f) (42 U.S.C.
1320a–7b(f)) is amended—
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B);
(2) by striking ‘‘(f)’’ and inserting ‘‘(f)(1)’’; and
(3) by adding at the end the following new
paragraph:
‘‘(2) For purposes of this section, the term ‘‘health
care benefit program’’ has the meaning given such term
in 18 U.S.C. 24(b).’’.
(e) CONFORMING AMENDMENTS.—
(1) Section 1128A(a) (42 U.S.C. 1320a–7a(a))
is amended in the final sentence by striking
‘‘1128B(f)(1)’’ and inserting ‘‘1128B(f)(1)(A)’’; and
(2) Section 24(a) of title 18 of the United
States Code is amended—
(A) by striking the period at the end of
paragraph (2) and adding a semicolon; and
(B) by adding after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) section 1128B of the Social Security Act.’’.
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PART B—PROVIDER ENROLLMENT PROCESS
SEC. 121. REQUIREMENTS TO DISCLOSE EMPLOYER IDEN-
TIFICATION NUMBERS (EINs) AND SOCIAL SE-
CURITY NUMBERS (SSNs).
(a) DISCLOSING ENTITIES, OWNERS, AND CONTROL-
LING INTERESTS.—Section 1124 (42 U.S.C. 1320a–3) is
amended by adding after subsection (b) the following new
subsection:
‘‘(c) REQUIREMENT TO FURNISH SOCIAL SECURITY
NUMBERS AND EMPLOYER IDENTIFICATION NUMBERS.—
No payment may be made to any disclosing entity under
title V, XVIII, or XIX unless such disclosing entity fur-
nishes to the Secretary both the employer identification
number and social security number of—
‘‘(1) the disclosing entity;
‘‘(2) each person with an ownership or control
interest (as defined in subsection (a)(3)); and
‘‘(3) any subcontractor in which the entity di-
rectly or indirectly has a 5 percent or more owner-
ship interest.’’.
(b) OTHER MEDICARE PROVIDERS.—Section 1124A
(42 U.S.C. 1320a–3a) is amended—
(1) in subsection (a)—
(A) by striking ‘‘and’’ at the end of para-
graph (1);
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(B) by striking the period at the end of
paragraph (2) and inserting ‘‘; and’’; and
(C) by adding after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) including the employer identification num-
ber and social security number of the disclosing part
B provider and any person, managing employee, or
other entity identified under paragraph (1) or (2).’’;
and
(2) in subsection (c) by inserting ‘‘(or, for pur-
poses of subsection (a)(3), any entity receiving pay-
ment)’’ after ‘‘on an assignment-related basis’’.
(c) VERIFICATION BY SOCIAL SECURITY ADMINIS-
TRATION (SSA).—Section 1124A (42 U.S.C. 1320a–3a)
is amended—
(1) by redesignating subsection (c) as sub-
section (d); and
(2) by adding after subsection (b) the following
new subsection:
‘‘(c) VERIFICATION BY SOCIAL SECURITY ADMINIS-
TRATION.—
‘‘(1) TRANSMITTAL
BY
HHS.—The Secretary
shall transmit to the Social Security Administration
information concerning each social security number
and employer identification number supplied to the
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Secretary pursuant to subsection (a)(3) or section
1124(c) to the extent necessary for verification of
such information in accordance with paragraph (2).
‘‘(2) VERIFICATION BY SSA.—The Social Secu-
rity Administration shall verify the accuracy of, or
correct, the information supplied by the Secretary
pursuant to paragraph (1), and shall report such
verifications or corrections to the Secretary.
‘‘(3) FEES FOR SSA VERIFICATION.—The Sec-
retary shall reimburse the Commissioner of Social
Security, at a rate negotiated between the Secretary
and the Commissioner, for the costs incurred by the
Commissioner in performing the verification and cor-
rection services described in this subsection.’’.
SEC. 122. FEES FOR AGREEMENTS WITH MEDICARE PRO-
VIDERS AND SUPPLIERS.
(a) FEES RELATED TO MEDICARE PROVIDER AND
SUPPLIER ENROLLMENT AND REENROLLMENT.—Section
1866 is amended—
(1) in the heading, by adding ‘‘AND ENROLL-
MENT OF OTHER PERSONS FURNISHING
SERVICES’’ after ‘‘PROVIDERS OF SERV-
ICES’’; and
(2) by adding at the end the following new sub-
section:
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‘‘(j) ENROLLMENT PROCEDURES AND FEES.—
‘‘(1) ENROLLMENT.—The Secretary is author-
ized to establish a procedure for enrollment (and
periodic reenrollment) of individuals or entities that
are not providers of services subject to the provisions
of subsection (a) but that furnish health care items
or services under this title.
‘‘(2) FEES.—The Secretary is authorized to im-
pose fees for initiation and renewal of provider
agreements and for enrollment and periodic reenroll-
ment of other individuals and entities furnishing
health care items or services under this title, in
amounts up to the full amount which the Secretary
reasonably estimates to be sufficient to cover the
Secretary’s costs related to the process for initiating
and reviewing such agreements and enrollments.
Fees collected pursuant to this paragraph shall be
credited to a special fund of the United States
Treasury, and shall remain available until expended,
to the extent and in such amounts as provided in
advance in appropriations acts, for necessary ex-
penses for these purposes, including costs of estab-
lishing and maintaining procedures and records sys-
tems; processing applications; and background inves-
tigations.’’.