I
104TH CONGRESS
1ST SESSION
H. R. 2326
To improve Federal efforts to combat fraud and abuse against health care
programs, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 13, 1995
Mr. SCHIFF (for himself, Mr. SHAYS, Mr. CLINGER, Mr. FOX of Pennsylvania,
Mr. SCHUMER, and Mr. TOWNS) introduced the following bill; which was
referred to the Committee on the Judiciary, and in addition to the Com-
mittees on Government Reform and Oversight, Ways and Means, and
Commerce, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned
A BILL
To improve Federal efforts to combat fraud and abuse
against health care 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.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Health Care Fraud and Abuse Prevention Act of 1995’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—COORDINATION OF FEDERAL ENFORCEMENT
Sec. 101. Federal enforcement by Inspectors General and Attorney General.
Sec. 102. State enforcement.
Sec. 103. Payments to States.
Sec. 104. Health Care Fraud and Abuse Control Account.
Sec. 105. Acceptance of gifts, bequests, and devises.
Sec. 106. Reimbursements of expenses and other payments to participating
agencies.
Sec. 107. Account Payments Advisory Board.
Sec. 108. Establishment of health care fraud and abuse data base.
Sec. 109. Definitions.
Sec. 110. Effective date.
TITLE II—REVISIONS TO CRIMINAL LAW
Sec. 201. Definition of Federal health care offense.
Sec. 202. Health care fraud.
Sec. 203. Theft or embezzlement.
Sec. 204. False Statements.
Sec. 205. Bribery and graft.
Sec. 206. Illegal remuneration with respect to health care benefit programs.
Sec. 207. Obstruction of criminal investigations of health care offenses.
Sec. 208. Civil penalties for violations of Federal health care offenses.
Sec. 209. Injunctive relief relating to health care offenses.
Sec. 210. Authorized investigative demand procedures.
Sec. 211. Grand jury disclosure.
Sec. 212. Miscellaneous amendments to title 18, United States code.
TITLE III—ANTI-FRAUD INITIATIVES UNDER MEDICARE AND
MEDICAID
Sec. 301. Revision to current penalties.
Sec. 302. Solicitation and publication of modifications to existing safe harbors
and new safe harbors.
Sec. 303. Requiring Secretary to implement proposal to expedite payment ad-
justments based upon inherent reasonableness.
Sec. 304. Requiring annual notice to medicare beneficiaries of need to prevent
fraud and abuse against medicare program.
Sec. 305. Requiring use of single provider number in submission of claims for
payment under medicare and medicaid.
Sec. 306. Liability of carriers and fiscal intermediaries for claims submitted by
excluded providers.
Sec. 307. Study of financial solvency and integrity standards for providers and
suppliers.
TITLE I—COORDINATION OF
FEDERAL ENFORCEMENT
SEC. 101. FEDERAL ENFORCEMENT BY INSPECTORS GEN-
ERAL AND ATTORNEY GENERAL.
(a) AUDITS, INVESTIGATIONS, INSPECTIONS, AND
EVALUATIONS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the Inspector General of each of the De-
partment of Health and Human Services, the De-
partment of Defense, the Department of Labor, the
Office of Personnel Management, and the Depart-
ment of Veterans Affairs, and the Attorney General
shall conduct audits, civil and criminal investiga-
tions, inspections, and evaluations relating to the
prevention, detection, and control of health care
fraud and abuse in violation of any Federal law.
(2) LIMITATION.—An Inspector General, other
than the Inspector General of the Department of
Health and Human Services, may not conduct any
audit, investigation, inspection, or evaluation under
paragraph (1) with respect to health care fraud or
abuse under title V, XI, XVIII, XIX, or XX of the
Social Security Act.
(b) POWERS.—For purposes of carrying out duties
and responsibilities under subsection (a), each Inspector
General referred to in subsection (a) may exercise powers
that are available to the Inspector General for purposes
of audits, investigations, and other activities under the In-
spector General Act of 1978 (5 U.S.C. App.).
(c) COORDINATION AND REVIEW OF ACTIVITIES OF
OTHER FEDERAL, STATE, AND LOCAL AGENCIES.—
(1) PROGRAM.—The Inspector General and the
Attorney General shall—
(A) jointly establish, on the effective date
specified in section 110(a), a program to pre-
vent, detect, and control health care fraud and
abuse in violation of any Federal law, which
takes into account the activities of Federal,
State, and local law enforcement agencies, Fed-
eral and State agencies responsible for the li-
censing and certification of health care provid-
ers, and State agencies designated under sec-
tion 102(a)(1); and
(B) publish a description of the program in
the Federal Register, by not later than 180
days after the date of the enactment of this
Act.
(2) ANNUAL INVESTIGATIVE PLAN.—Each In-
spector General referred to in subsection (a)(1) and
the Attorney General shall each develop an annual
investigative plan for the prevention, detection, and
control of health care fraud and abuse in accordance
with the program established under paragraph (1).
(d) CONSULTATIONS.—Each of the Inspectors Gen-
eral referred to in subsection (a)(1) and the Attorney Gen-
eral shall regularly consult with each other, with Federal,
State, and local law enforcement agencies, with Federal
and State agencies responsible for the licensing and cer-
tification of health care providers, and with Health Care
Fraud and Abuse Control Units, in order to assist in co-
ordinating the prevention, detection, and control of health
care fraud and abuse in violation of any federal law.
SEC. 102. STATE ENFORCEMENT.
(a) DESIGNATION OF STATE AGENCIES AND ESTAB-
LISHMENT OF HEALTH CARE FRAUD AND ABUSE CON-
TROL UNIT.—The Governor of each State—
(1) shall, consistent with State law, designate
agencies of the State which conduct, supervise, and
coordinate audits, civil and criminal investigations,
inspections, and evaluations relating to the preven-
tion, detection, and control of health care fraud and
abuse in violation of any Federal law in the State;
and
(2) may establish and maintain in accordance
with subsection (b) a State agency to act as a
Health Care Fraud and Abuse Control Unit for pur-
poses of this title.
(b) HEALTH CARE FRAUD AND ABUSE CONTROL
UNIT REQUIREMENTS.—A Health Care Fraud and Abuse
Control Unit established by a State under subsection
(a)(2) shall be a single identifiable entity of State govern-
ment which is separate and distinct from any State agency
with principal responsibility for the administration of
health care programs, and which meets the following re-
quirements:
(1) The entity—
(A) is a unit of the office of the State At-
torney General or of another department of
State government that possesses statewide au-
thority to prosecute individuals for criminal vio-
lations;
(B) is in a State the constitution of which
does not provide for the criminal prosecution of
individuals by a statewide authority, and has
formal procedures, approved by the Secretary,
that assure it will refer suspected criminal vio-
lations relating to health care fraud or abuse in
violation of any Federal law to the appropriate
authority or authorities of the State for pros-
ecution and assure it will assist such authority
or authorities in such prosecutions; or
(C) has a formal working relationship with
the office of the State Attorney General or the
appropriate authority or authorities for pros-
ecution and has formal procedures (including
procedures under which it will refer suspected
criminal violations to such office), that provide
effective coordination of activities between the
Health Care Fraud and Abuse Control Unit
and such office with respect to the detection, in-
vestigation, and prosecution of suspected health
care fraud or abuse in violation of any Federal
law.
(2) The entity conducts a statewide program
for the investigation and prosecution of violations of
all applicable State laws regarding any and all as-
pects of health care fraud and abuse under Federal
law.
(3) The entity has procedures for—
(A) reviewing complaints of the abuse or
neglect of patients of health care facilities in
the State, and
(B) where appropriate, investigating and
prosecuting such complaints under the criminal
laws of the State or for referring the complaints
to other State or Federal agencies for action.
(4) The entity provides for the collection, or re-
ferral for collection to the appropriate agency, of
overpayments that—
(A) are made under any federally funded
or mandated health care program required by
this Act, and
(B) it discovers in carrying out its activi-
ties.
(5) The entity employs attorneys, auditors, in-
vestigators, and other necessary personnel, is orga-
nized in such a manner, and provides sufficient re-
sources, as is necessary to promote the effective and
efficient conduct of its activities.
(c) SUBMISSION OF ANNUAL PLAN.—Each Health
Care Fraud and Abuse Control Unit may submit each year
to the Inspector General and the Attorney General a plan
for preventing, detecting, and controlling, consistent with
the program established under section 101(c)(1), health
care fraud and abuse in violation of any Federal law.
(d) APPROVAL OF ANNUAL PLAN.—The Inspector
General shall approve a plan submitted under subsection
(c) by the Health Care Fraud and Abuse Control Unit
of a State, unless the Inspector General establishes that
the plan—
(1) is inconsistent with the program established
under section 101(c)(1); or
(2) will not enable the agencies of the State
designated under subsection (a)(1) to prevent, de-
tect, and control health care fraud and abuse in vio-
lation of any Federal law.
(e) REPORTS.—Each Health Care Fraud and Abuse
Control Unit shall submit to the Inspector General an an-
nual report containing such information as the Inspector
General determines to be necessary.
(f) SEMIANNUAL REPORTS OF INSPECTOR GENERAL
OF HEALTH AND HUMAN SERVICES.—The Inspector Gen-
eral shall include in its semiannual reports to the Congress
under section 5(a) of the Inspector General Act of 1978
(5 U.S.C. App.) an assessment of the Inspector General
of the effectiveness of States in preventing, detecting, and
controlling health care fraud and abuse.
SEC. 103. PAYMENTS TO STATES.
(a) IN GENERAL.—For each year for which a State
has an annual plan approved under section 102(d), and
subject to the availability of appropriations, the Inspector
General shall pay to the State for each quarter an amount
equal to 75 percent of the sums expended during the quar-
ter by agencies designated by the Governor of the State
under section 102(a)(1) in conducting activities described
in that subsection.
(b) TIME OF PAYMENT.—The Inspector General shall
make a payment under subsection (a) for a quarter by
not later than 30 days after the end of the quarter.
(c) PAYMENTS ARE ADDITIONAL.—Payments to a
State under this subsection shall be in addition to any
amounts paid under section 106.
SEC. 104. HEALTH CARE FRAUD AND ABUSE CONTROL AC-
COUNT.
(a) ESTABLISHMENT.—There is established on the
books of the Treasury of the United States a separate ac-
count, which shall be known as the Health Care Fraud
and Abuse Control Account. The Account shall consist
of—
(1) the Health Care Fraud and Abuse Expenses
Subaccount; and
(2) the Health Care Fraud and Abuse Reserve
Subaccount.
(b) EXPENSES SUBACCOUNT.—
(1) CONTENTS.—The Expenses Subaccount
consists of—
(A) amounts deposited under paragraph
(2); and
(B) amounts transferred from the Reserve
Subaccount under subsection (c)(2).
(2) DEPOSITS.—Except as provided in sub-
section (c)(1), there shall be deposited in the Ex-
penses Subaccount all amounts received by the
United States as—
(A) fines imposed in cases involving a Fed-
eral health care offense;
(B) civil penalties or damages (other than
restitution) in actions under section 3729 or
3730 of title 31, United States Code (commonly
referred to as the ‘‘False Claims Act’’), that are
based on claims related to the provision of
health care items and services;
(C) administrative penalties under titles
XI, XVIII, and XIX of the Social Security Act;
(D) proceeds of seizures and forfeitures of
property for acts or omissions in violation of
any Federal law related to the provision of
health care items and services; and
(E) money and proceeds of property that
are accepted under section 105.
(3) USE.—Amounts in the Expenses Sub-
account shall be available to the Inspector General
and the Attorney General, under such terms and
conditions as the Inspector General and the Attor-
ney General jointly determine to be appropriate,
for—
(A) paying expenses incurred by their re-
spective agencies in carrying out activities
under section 101; and
(B) making reimbursements to other In-
spectors General and Federal, State, and local
agencies in accordance with section 106.
(c) RESERVE SUBACCOUNT.—
(1) DEPOSITS.—An amount otherwise required
under subsection (b)(1) to be deposited in the Ex-
penses Subaccount in a fiscal year shall be deposited
in the Reserve Subaccount, if—
(A) the amount in the Expenses Sub-
account is greater than $500,000,000; and
(B) the deposit of that amount in the Ex-
penses Subaccount would result in the amount
in the Expenses Subaccount exceeding 110 per-
cent of the total amount deposited in the Ex-
penses Subaccount in the preceding fiscal year.
(2) TRANSFERS TO EXPENSES SUBACCOUNT.—
(A) ESTIMATION
OF
SHORTFALL.—Not
later than the first day of the last quarter of
each fiscal year, the Inspector General (in con-
sultation with the Attorney General) shall esti-
mate whether sufficient amounts will be avail-
able during such quarter in the Expenses Sub-
account for the uses described in subsection
(b)(3).
(B) TRANSFER TO COVER SHORTFALL.—If
the Inspector General estimates under sub-
section (a) that there will not be available suffi-
cient amounts in the Expenses Subaccount dur-
ing the last quarter of a fiscal year, there shall
be transferred from the Reserve Subaccount to
the Expenses Subaccount such amount as the
Inspector General estimates is required to en-
sure that sufficient amounts are available in the
Expenses Subaccount during such quarter.
(3) LIMITATION ON AMOUNT CARRIED OVER TO
SUCCEEDING FISCAL YEAR.—There shall be trans-
ferred to the general fund of the Treasury any
amount remaining in the Reserve Subaccount at the
end of a fiscal year (after any transfer made under
paragraph (2)) in excess of 10 percent of the total
amount authorized to be deposited in the Expenses
Subaccount (consistent with paragraph (1)) during
the fiscal year.
(d) RESTRICTION ON DEPOSITS.—In the case of a
Federal health care offense, the attorney for the Govern-
ment may not, in exchange for payment by a defendant
of a fine or other monetary amount to be deposited in the
Account, reduce the exposure of the defendant to a term
of imprisonment by moving for dismissal or reduction of
charges, agreeing to dismiss charges, agreeing not to bring
charges, or recommending a lesser sentence.
(e) ANNUAL REPORT TO CONGRESS.—Not later than
180 days after the end of each fiscal year (beginning with
fiscal year 1996), the Secretary of Health and Human
Services and the Attorney General shall submit a report
to the Committee on Government Reform and Oversight
of the House of Representatives and the Committee on
Governmental Affairs of the Senate on the operations of
the Account during the fiscal year, including a description
of the deposits made into the Account and the payments
made from the Account during the year.
SEC. 105. ACCEPTANCE OF GIFTS, BEQUESTS, AND DEVISES.
The Attorney General or any Inspector General re-
ferred to in section 101(a) may accept, use, and dispose
of gifts, bequests, or devises of services or property (real
or personal), for the purpose of aiding or facilitating ac-
tivities under this title regarding health care fraud and
abuse. Gifts, bequests, or devises of money and proceeds
from sales of other property received as gifts, bequests,
or devises shall be deposited in the Account and shall be
available for use in accordance with section 104(b)(3).
SEC. 106. REIMBURSEMENTS OF EXPENSES AND OTHER
PAYMENTS TO PARTICIPATING AGENCIES.
(a) REIMBURSEMENT OF EXPENSES OF FEDERAL
AGENCIES.—The Inspector General and the Attorney
General, subject to the availability of amounts in the Ac-
count, shall jointly and promptly reimburse Federal agen-
cies for expenses incurred in carrying out section 101.
(b) PAYMENTS
TO STATE
AND LOCAL LAW EN-
FORCEMENT AGENCIES.—The Inspector General and the
Attorney General, subject to the availability of amounts
in the Account, shall jointly and promptly pay to any State
or local law enforcement agency that participated directly
in any activity which led to deposits in the Account, or
property the proceeds of which are deposited in the Ac-
count, an amount that reflects generally and equitably the
participation of the agency in the activity.
(c) FUNDS USED TO SUPPLEMENT AGENCY APPRO-
PRIATIONS.—It is intended that disbursements made from
the Account to any Federal agency be used to increase
and not supplant the recipient agency’s appropriated oper-
ating budget.
SEC. 107. ACCOUNT PAYMENTS ADVISORY BOARD.
(a) ESTABLISHMENT.—There is established the Ac-
count Payments Advisory Board, which shall make rec-
ommendations to the Inspector General and the Attorney
General regarding the equitable allocation of payments
from the Account.
(b) MEMBERSHIP.—The Board shall consist of—
(1) each of the Inspectors General referred to
in section 101(a), other than the Inspector General
of the Department of Health and Human Services;
and
(2) 10 members appointed by the Inspector
General of the Department of Health and Human
Services to represent Health Care Fraud and Abuse
Control Units, of whom one shall be appointed—
(A) for each of the 10 regions established
by the Director of the Office of Management
and Budget under Office of Management and
Budget Circular A–105, to represent Units in
that region; and
(B) from among individuals recommended
by the heads of those agencies in that region.
(c) TERMS.—The term of a Member of the Board ap-
pointed under subsection (b)(2) shall be 3 years, except
that of such members first appointed 3 members shall
serve an initial term of one year and 3 members shall serve
an initial term of 2 years, as specified by the Inspector
General at the time of appointment.
(d) VACANCIES.—A vacancy on the Board shall be
filled in the same manner in which the original appoint-
ment was made, except that an individual appointed to
fill a vacancy occurring before the expiration of the term
for which the individual is appointed shall be appointed
only for the remainder of that term.
(e) CHAIRPERSON AND BYLAWS.—The Board shall
elect one of its members as chairperson and shall adopt
bylaws.
(f) COMPENSATION
AND EXPENSES.—Members of
the Board shall serve without compensation, except that
the Inspector General may pay the expenses reasonably
incurred by the Board in carrying out its functions under
this section.
(g) NO TERMINATION.—Section 14(a)(2) of the Fed-
eral Advisory Committee Act (5 U.S.C. App.) does not
apply to the Board.
SEC. 108. ESTABLISHMENT OF HEALTH CARE FRAUD AND
ABUSE DATA BASE.
(a) IN GENERAL.—The Secretary of Health and
Human Services, in consultation with the Attorney Gen-
eral, shall establish a data base for the reporting of final
adverse actions taken by a Government agency against
health care providers, suppliers, or practitioners, or
against health care benefit programs, in order to provide
a central repository of such information to assist in the
prevention, detection, and prosecution of health care fraud
and abuse.
(b) REPORTING INFORMATION.—
(1) IN GENERAL.—For purposes of establishing
and maintaining the data base under this section,
each Government agency shall report any final ad-
verse action taken against a health care provider,
supplier, or practitioner, or against a health care
benefit program, together with the information de-
scribed in paragraph (2).
(2) INFORMATION TO BE REPORTED.—The in-
formation referred to in this paragraph is as follows:
(A) The name of any health care insurer,
provider, supplier, or practitioner or health care
benefit program which is the subject of the final
adverse action reported under paragraph (1).
(B) In the case of a final adverse action
taken against a health care provider, supplier,
or practitioner, the name (if known) of any
health care benefit program with which the in-
surer, provider, supplier, or practitioner is af-
filiated or associated.
(C) The nature of the final adverse action.
(D) A description of the acts or omissions
and injuries upon which the final adverse action
was based.
(E) Such other information as required by
the Secretary.
(3) CONFIDENTIALITY.—The Secretary shall es-
tablish procedures to assure that in the submission
of information under this subsection the privacy of
individuals receiving health care services is appro-
priately protected.
(4) FORM AND MANNER OF REPORTING.—The
information required to be reported under this sub-
section shall be reported on a monthly basis and in
such form and manner as determined by the Sec-
retary. Such information shall first be required to be
reported on a date specified by the Secretary.
(5) TO WHOM REPORTED.—The information re-
quired to be reported under this subsection shall be
reported to the Secretary or such person or persons
designated by the Secretary.
(c) CORRECTION OF ERRONEOUS INFORMATION.—
(1) DISCLOSURE AND CORRECTION.—The Sec-
retary shall provide for a procedure through which
a person, to whom information within the data base
established under this section pertains, may review
that information and obtain the correction of errors
pertaining to that person.
(2) OTHER CORRECTIONS.—Each Government
agency shall report corrections of information al-
ready reported about any final adverse action taken
against a health care provider, supplier, or practi-
tioner, or a health care benefit program, in such
form and manner as required by the Secretary.
(d) ACCESS TO REPORTED INFORMATION.—
(1) AVAILABILITY.—The information in this
data base shall be available to the public, Federal
and State law enforcement agencies, Federal and
State government agencies, and health care benefit
programs pursuant to procedures established by the
Secretary and Attorney General.
(2) FEES.—The Secretary may establish rea-
sonable fees for the disclosure of information in this
data base.
(e) PROTECTION FROM LIABILITY
FOR REPORT-
ING.—No person may be held liable in any civil action with
respect to reporting information required to be reported
under this section, unless the information reported was
false and the person had knowledge of the falsity of the
information.
(f) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section:
(1) The term ‘‘final adverse action’’ includes
the following:
(A) Civil judgments in Federal or State
court related to the delivery of a health care
item or service.
(B) Federal or State criminal convictions
related to the delivery of a health care item or
service, as determined in accordance with proce-
dures applicable to the exclusion of individuals
and entities under section 1128(j) of the Social
Security Act.
(C) Actions by State or Federal agencies
responsible for the licensing and certification of
health care providers, suppliers, and licensed
health care practitioners, including—
(i) formal or official actions, such as
revocation or suspension of a license (and
the length of any such suspension), rep-
rimand, censure or probation;
(ii) any other loss of license of the
provider, supplier, or practitioner, whether
by operation of law, voluntary surrender or
otherwise; or
(iii) any other negative action or find-
ing by such State or Federal agency that
is publicly available information.
(D) Exclusion from participation in Fed-
eral or State health care programs.
(E) Any other actions as required by the
Secretary.
(2) The term ‘‘Government agency’’ includes—
(A) the Department of Justice;
(B) the Department of Health and Human
Services;
(C) any other Federal agency that either
administers or provides payment for the deliv-
ery of health care services, including (but not
limited to) the Department of Defense and the
Department of Veterans Affairs;
(D) State law enforcement agencies;
(E) State Medicaid fraud and abuse con-
trol units described in section 1903(q) of the
Social Security Act; and
(F) State or Federal agencies responsible
for the licensing and certification of health care
providers and licensed health care practitioners.
(3) The term ‘‘health care benefit program’’ has
the meaning given such term in section 1347(b) of
title 18, United States Code, as added by section
202(b).
(4) The term ‘‘health care provider’’ means a
provider of services (as defined in section 1861(u) of
the Social Security Act) and any entity, including a
health maintenance organization or group medical
practice, that provides health care services (as speci-
fied by the Secretary in regulations).
(5) The terms ‘‘licensed health care practi-
tioner’’ and ‘‘practitioner’’ mean, with respect to a
State, an individual who is licensed or otherwise au-
thorized by the State to provide health care services
(or any individual who without authority holds him-
self or herself out to be so licensed or authorized).
(6) The term ‘‘Secretary’’ means the Secretary
of Health and Human Services.
(7) The term ‘‘supplier’’ means a supplier of
items and services for which payment may be made
under part B of title XVIII of the Social Security
Act.
SEC. 109. DEFINITIONS.
In this title:
(1) ACCOUNT.—The term ‘‘Account’’ means the
Health Care Fraud and Abuse Control Account es-
tablished by section 104(a).
(2) EXPENSES SUBACCOUNT.—The term ‘‘Ex-
penses Subaccount’’ means the Health Care Fraud
and Abuse Expenses Subaccount of the Account.
(3) FEDERAL
HEALTH
CARE
OFFENSE.—The
term ‘‘Federal health care offense’’ has the meaning
given such term in section 24(a) of title 18, United
States Code.
(4) HEALTH CARE FRAUD AND ABUSE CONTROL
UNIT.—The term ‘‘Health Care Fraud and Abuse
Control Unit’’ means such a unit established by a
State in accordance with section 102(b).
(5) INSPECTOR GENERAL.—Except as otherwise
provided, the term ‘‘Inspector General’’ means the
Inspector General of the Department of Health and
Human Services.
(6) RESERVE
SUBACCOUNT.—The term ‘‘Re-
serve Subaccount’’ means the Health Care Fraud
and Abuse Reserve Subaccount of the Account.
SEC. 110. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b), this title shall take effect after the expiration of the
180-day period which begins on the date of the enactment
of this Act.
(b) DEVELOPMENT AND PUBLICATION OF DESCRIP-
TION OF PROGRAM.—Section 101(c)(1) shall take effect
on the date of the enactment of this Act.
TITLE II—REVISIONS TO
CRIMINAL LAW
SEC. 201. DEFINITION OF FEDERAL HEALTH CARE OF-
FENSE.
(a) IN GENERAL.—Chapter 2 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 24. Definition of Federal health care offense
‘‘(a) As used in this title, the term ‘Federal health
care offense’ means—
‘‘(1) a violation of, or criminal conspiracy to
violate section 226, 227, 669, 1035, 1347, or 1518
of this title;
‘‘(2) a violation of, or criminal conspiracy to
violate section 1128B of the Social Security Act (42
U.S.C. 1320a–7b);
‘‘(3) a violation of, or criminal conspiracy to
violate section 201, 287, 371, 664, 666, 1001, 1027,
1341, 1343, or 1954 of this title, if the violation or
conspiracy relates to a health care benefit program;
‘‘(4) a violation of, or criminal conspiracy to
violate section 501 or 511 of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1131
or 29 U.S.C. 1141), if the violation or conspiracy re-
lates to a health care benefit program;
‘‘(5) the commission of, or attempt to commit,
an act which constitutes grounds for the imposition
of a penalty under section 303 of the Federal Food,
Drug, and Cosmetic Act, if the act or attempt re-
lates to a health care benefit program; or
‘‘(6) a violation of, or criminal conspiracy to
violate, section 3 of the Anti-Kickback Act of 1986
(41 U.S.C. 53), if the violation or conspiracy relates
to a health care benefit program.
‘‘(b) As used in this title, the term ‘health care bene-
fit program’ has the meaning given such term in section
1347(b) of this title.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 2 of title 18, United States
Code, is amended by inserting after the item relating to
section 23 the following new item:
‘‘24. Definition relating to Federal health care offense defined.’’.
SEC. 202. HEALTH CARE FRAUD.
(a) IN GENERAL.—Chapter 63 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 1347. Health care fraud
‘‘(a) Whoever, having devised or intending to devise
a scheme or artifice, commits or attempts to commit an
act in furtherance of or for the purpose of executing such
scheme or artifice—
‘‘(1) to defraud any health care benefit pro-
gram; or
‘‘(2) to obtain, by means of false or fraudulent
pretenses, representations, or promises, any of the
money or property owned by, or under the custody
or control of, any health care benefit program,
shall be fined under this title or imprisoned not more than
10 years, or both. If the violation results in serious bodily
injury (as defined in section 1365 of this title), such per-
son shall be fined under this title or imprisoned not more
than 20 years, or both; and if the violation results in
death, such person shall be fined under this title, or im-
prisoned for any term of years or for life, or both.
‘‘(b) As used in this section, the term ‘health care
benefit program’ means any public or private plan or con-
tract under which any medical benefit, item, or service is
provided to any individual, and includes any individual or
entity who is providing a medical benefit, item, or service
for which payment may be made under the plan or con-
tract.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 63 of title 18, United States
Code, is amended by adding at the end the following:
‘‘1347. Health care fraud.’’.
SEC. 203. THEFT OR EMBEZZLEMENT.
(a) IN GENERAL.—Chapter 31 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 669. Theft or embezzlement in connection with
health care
‘‘(a) Whoever embezzles, steals, or otherwise without
authority willfully and unlawfully converts to the use of
any person other than the rightful owner, or intentionally
misapplies any of the moneys, funds, securities, premiums,
credits, property, or other assets of a health care benefit
program, shall be fined under this title or imprisoned not
more than 10 years, or both.
‘‘(b) As used in this section, the term ‘health care
benefit program’ has the meaning given such term in sec-
tion 1347(b) of this title.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 31 of title 18, United States
Code, is amended by adding at the end the following:
‘‘669. Theft or embezzlement in connection with health care.’’.
SEC. 204. FALSE STATEMENTS.
(a) IN GENERAL.—Chapter 47 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 1035. False statements relating to health care mat-
ters
‘‘(a) Whoever, in any matter involving a health care
benefit program, knowingly and willfully falsifies, conceals,
or covers up by any trick, scheme, or device a material
fact, or makes any false, fictitious, or fraudulent state-
ments or representations, or makes or uses any false writ-
ing or document knowing the same to contain any false,
fictitious, or fraudulent statement or entry, shall be fined
under this title or imprisoned not more than 5 years, or
both.
‘‘(b) As used in this section, the term ‘health care
benefit program’ has the meaning given such term in sec-
tion 1347(b) of this title.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 47 of title 18, United States
Code, is amended by adding at the end the following new
item:
‘‘1035. False statements relating to health care matters.’’.
SEC. 205. BRIBERY AND GRAFT.
(a) IN GENERAL.—Chapter 11 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 226. Bribery and graft in connection with health
care
‘‘(a) Whoever—
‘‘(1) directly or indirectly, corruptly gives, of-
fers, or promises anything of value to a health care
official, or offers or promises to give anything of
value to any other person, or attempts to violate this
subsection, with intent—
‘‘(A) to influence any of the health care of-
ficial’s actions, decisions, or duties relating to a
health care benefit program;
‘‘(B) to influence such an official to com-
mit or aid in the committing, or collude in or
allow, any fraud, or make opportunity for the
commission of any fraud, on a health care bene-
fit program; or
‘‘(C) to induce such an official to engage
in any conduct in violation of the lawful duty of
such official; or
‘‘(2) being a health care official, directly or in-
directly, corruptly demands, seeks, receives, accepts,
or agrees to accept anything of value personally or
for any other person or entity, the giving of which
violates paragraph (1) of this subsection, or at-
tempts to violate this subsection,
shall be fined under this title or imprisoned not more than
15 years, or both.
‘‘(b) Whoever—
‘‘(1) otherwise than as provided by law for the
proper discharge of any duty, directly or indirectly
gives, offers, or promises anything of value to a
health care official, for or because of any of the
health care official’s actions, decisions, or duties re-
lating to a health care benefit program, or attempts
to violate this subsection; or
‘‘(2) being a health care official, otherwise than
as provided by law for the proper discharge of any
duty, directly or indirectly, demands, seeks, receives,
accepts or agrees to accept anything of value person-
ally or for any other person or entity, the giving of
which violates paragraph (1) of this subsection, or
attempts to violate this subsection,
shall be fined under this title, or imprisoned not more than
2 years, or both.
‘‘(c) As used in this section—
‘‘(1) the term ‘health care official’ means—
‘‘(A) an administrator, officer, trustee, fi-
duciary, custodian, counsel, agent, or employee
of any health care benefit program;
‘‘(B) an officer, counsel, agent, or em-
ployee, of an organization that provides services
under contract to any health care benefit pro-
gram; or
‘‘(C) an official, employee, or agent of an
entity having regulatory authority over any
health care benefit program; and
‘‘(2) the term ‘health care benefit program’ has
the meaning given such term in section 1347(b) of
this title.’’.
(b) CLERICAL AMENDMENT.—The table of chapters
at the beginning of chapter 11 of title 18, United States
Code, is amended by adding at the end the following new
item:
‘‘226. Bribery and graft in connection with health care.’’.
SEC. 206. ILLEGAL REMUNERATION WITH RESPECT TO
HEALTH CARE BENEFIT PROGRAMS.
(a) IN GENERAL.—Chapter 11 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 227. Illegal remuneration with respect to health
care benefit programs
‘‘(a) Whoever knowingly and willfully solicits or re-
ceives any remuneration (including any kickback, bribe, or
rebate) directly or indirectly, overtly or covertly, in cash
or in kind—
‘‘(1) in return for referring any individual to a
person for the furnishing or arranging for the fur-
nishing of any item or service for which payment
may be made in whole or in part by any health care
benefit program; or
‘‘(2) in return for purchasing, leasing, ordering,
or arranging for or recommending purchasing, leas-
ing, or ordering any good, facility, service, or item
for which payment may be made in whole or in part
by any health care benefit program, or attempting to
do so,
shall be fined under this title or imprisoned for not more
than 5 years, or both.
‘‘(b) Whoever knowingly and willfully offers or pays
any remuneration (including any kickback, bribe, or re-
bate) directly or indirectly, overtly, or covertly, in cash or
in kind to any person to induce such person—
‘‘(1) to refer an individual to a person for the
furnishing or arranging for the furnishing of any
item or service for which payment may be made in
whole or in part by any health benefit program; or
‘‘(2) to purchase, lease, order, or arrange for or
recommend purchasing, leasing, or ordering any
good, facility, service, or item for which payment
may be made in whole or in part by any health bene-
fit program or attempts to do so,
shall be fined under this title or imprisoned for not more
than 5 years, or both.
‘‘(c) Subsections (a) and (b) shall not apply to—
‘‘(1) a discount or other reduction in price ob-
tained by a provider of services or other entity under
a health care benefit program if the reduction in
price is properly disclosed and appropriately re-
flected in the costs claimed or charges made by the
provider or entity under a health care benefit pro-
gram;
‘‘(2) any amount paid by an employer to an em-
ployee (who has a bona fide employment relationship
with such employer) for employment in the provision
of covered items or services if the amount of the re-
muneration under the arrangement is consistent
with the fair market value of the services and is not
determined in a manner that takes into account (di-
rectly or indirectly) the volume or value of any refer-
rals;
‘‘(3) any amount paid by a vendor of goods or
services to a person authorized to act as a purchas-
ing agent for a group of individuals or entities who
are furnishing services reimbursed under a health
care benefit program if—
‘‘(A) the person has a written contract,
with each such individual or entity, which speci-
fies the amount to be paid the person, which
amount may be a fixed amount or a percentage
of the value of the purchases made by each
such individual or entity under the contract,
and
‘‘(B) in the case of an entity that is a pro-
vider of services (as defined in section 1861(u)
of the Social Security Act, the person discloses
(in such form and manner as the Secretary of
Health and Human Services requires) to the
entity and, upon request, to the Secretary the
amount received from each such vendor with re-
spect to purchases made by or on behalf of the
entity;
‘‘(4) a waiver of any coinsurance under part B
of title XVIII of the Social Security Act by a feder-
ally qualified health care center with respect to an
individual who qualifies for subsidized services under
a provision of the Public Health Service Act; and
‘‘(5) any payment practice specified by the Sec-
retary of Health and Human Services in regulations
promulgated pursuant to section 14(a) of the Medi-
care and Medicaid Patient and Program Protection
Act of 1987.
‘‘(d) Any person injured in his business or property
by reason of a violation of this section or section 226 of
this title may sue therefor in any appropriate United
States district court and shall recover threefold the dam-
ages such person sustains and the cost of the suit, includ-
ing a reasonable attorney’s fee.
‘‘(e) As used in this section, ‘health care benefit pro-
gram’ has the meaning given such term in section 1347(b)
of this title.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 11 of title 18, United States
Code, is amended by adding at the end the following:
‘‘227. Illegal remuneration with respect to health care benefit programs.’’.
(c) CONFORMING AMENDMENT.—Section 1128B of
the Social Security Act (42 U.S.C. 1320a–7b) is amended
by striking subsection (b).
SEC. 207. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF
HEALTH CARE OFFENSES.
(a) IN GENERAL.—Chapter 73 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 1518. Obstruction of criminal investigations of
health care offenses
‘‘(a) Whoever willfully prevents, obstructs, misleads,
delays or attempts to prevent, obstruct, mislead, or delay
the communication of information or records relating to
a violation of a health care offense to a criminal investiga-
tor shall be fined under this title or imprisoned not more
than 5 years, or both.
‘‘(b) As used in this section the term ‘health care of-
fense’ has the meaning given such term in section 24 of
this title.
‘‘(c) As used in this section the term ‘criminal inves-
tigator’ means any individual duly authorized by a depart-
ment, agency, or armed force of the United States to con-
duct or engage in investigations for prosecutions for viola-
tions of health care offenses.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 73 of title 18, United States
Code, is amended by adding at the end the following new
item:
‘‘1518. Obstruction of criminal investigations of health care offenses.’’.
SEC. 208. CIVIL PENALTIES FOR VIOLATIONS OF FEDERAL
HEALTH CARE OFFENSES.
(a) IN GENERAL.—Chapter 63 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 1348. Civil penalties for violations of Federal
health care offenses
‘‘The Attorney General may bring a civil action in
the appropriate United States district court against any
person who engages in conduct constituting a violation of
Federal health care offense, as that term is defined in sec-
tion 24 of this title and, upon proof of such conduct by
a preponderance of the evidence, such person shall be sub-
ject to a civil penalty of not more than $50,000 for each
violation or the amount of compensation or proceeds which
the person received or offered for the prohibited conduct,
whichever amount is greater. The imposition of a civil pen-
alty under this section does not preclude any other crimi-
nal or civil statutory, common law, or administrative rem-
edy, which is available by law to the United States or any
other person.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 63 of title 18, United States Code, is amended
by adding at the end the following item:
‘‘1348. Civil penalties for violations of Federal health care offenses.’’.
SEC. 209. INJUNCTIVE RELIEF RELATING TO HEALTH CARE
OFFENSES.
Section 1345(a)(1) of title 18, United States Code,
is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(A);
(2) by inserting ‘‘or’’ at the end of subpara-
graph (B); and
(3) by adding at the end the following:
‘‘(C) committing or about to commit a
Federal health care offense (as defined in sec-
tion 24 of this title).’’.
SEC. 210. AUTHORIZED INVESTIGATIVE DEMAND PROCE-
DURES.
(a) IN GENERAL.—Chapter 233 of title 18, United
States Code, is amended by adding after section 3485 the
following:
‘‘§ 3486. Authorized investigative demand procedures
‘‘(a) AUTHORIZATION.—(1) In any investigation re-
lating to functions set forth in paragraph (2), the Attorney
General or the Director of the Federal Bureau of Inves-
tigation or their designees may issue in writing and cause
to be served a summons compelling the attendance and
testimony of witnesses and requiring the production of any
records (including any books, papers, documents, elec-
tronic media, or other objects or tangible things), which
may be relevant to an authorized law enforcement inquiry,
that a person or legal entity may possess or have care,
custody, or control. The attendance of witnesses and the
production of records may be required from any place in
any State or in any territory or other place subject to the
jurisdiction of the United States at any designated place
of hearing; except that a witness shall not be required to
appear at any hearing more than 500 miles distant from
the place where he was served with a subpoena. Witnesses
summoned under this section shall be paid the same fees
and mileage that are paid witnesses in the courts of the
United States. A summons requiring the production of
records shall describe the objects required to be produced
and prescribe a return date within a reasonable period of
time within which the objects can be assembled and made
available.
‘‘(2) Investigative demands utilizing an administra-
tive summons are authorized for:
‘‘(A) Any investigation with respect to any act
or activity constituting an offense involving a Fed-
eral health care offense as that term is defined in
section 24 of title 18, United States Code.
‘‘(B) Any investigation, with respect to viola-
tions of sections 1073 and 1074 of title 18, United
States Code, or in which an individual has been law-
fully charged with a Federal offense and such indi-
vidual is avoiding prosecution or custody or confine-
ment after conviction of such offense or attempt.
‘‘(b) SERVICE.—A subpoena issued under this section
may be served by any person designated in the subpoena
to serve it. Service upon a natural person may be made
by personal delivery of the subpoena to him. Service may
be made upon a domestic or foreign corporation or upon
a partnership or other unincorporated association which
is subject to suit under a common name, by delivering the
subpoena to an officer, to a managing or general agent,
or to any other agent authorized by appointment or by
law to receive service of process. The affidavit of the per-
son serving the subpoena entered on a true copy thereof
by the person serving it shall be proof of service.
‘‘(c) ENFORCEMENT.—In the case of contumacy by
or refusal to obey a subpoena issued to any person, the
Attorney General may invoke the aid of any court of the
United States within the jurisdiction of which the inves-
tigation is carried on or of which the subpoenaed person
is an inhabitant, or in which he carries on business or may
be found, to compel compliance with the subpoena. The
court may issue an order requiring the subpoenaed person
to appear before the Attorney General to produce records,
if so ordered, or to give testimony touching the matter
under investigation. Any failure to obey the order of the
court may be punished by the court as a contempt thereof.
All process in any such case may be served in any judicial
district in which such person may be found.
‘‘(d) IMMUNITY FROM CIVIL LIABILITY.—Notwith-
standing any Federal, State, or local law, any person, in-
cluding officers, agents, and employees, receiving a sum-
mons under this section, who complies in good faith with
the summons and thus produces the materials sought,
shall not be liable in any court of any State or the United
States to any customer or other person for such produc-
tion or for nondisclosure of that production to the cus-
tomer.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 223 of title 18, United States
Code, is amended by inserting after the item relating to
section 3485 the following new item:
‘‘3486. Authorized investigative demand procedures.’’.
(c) 
CONFORMING
AMENDMENT.—Section
1510(b)(3)(B) of title 18, United States Code, is amended
by inserting ‘‘or a Federal Bureau of Investigation sum-
mons (issued under section 3486 of title 18),’’ after ‘‘sub-
poena’’.
SEC. 211. GRAND JURY DISCLOSURE.
Section 3322 of title 18, United States Code, is
amended—
(1) by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively; and
(2) by inserting after subsection (b) the follow-
ing:
‘‘(c) A person who is privy to grand jury information
concerning a health care offense—
‘‘(1) received in the course of duty as an attor-
ney for the Government; or
‘‘(2) disclosed under rule 6(e)(3)(A)(ii) of the
Federal Rules of Criminal Procedure;
may disclose that information to an attorney for the Gov-
ernment to use in any civil investigation or proceeding re-
lated to a Federal health care offense (as defined in sec-
tion 24 of this title).’’.
SEC. 212. MISCELLANEOUS AMENDMENTS TO TITLE 18,
UNITED STATES CODE.
(a) LAUNDERING OF MONETARY INSTRUMENTS.—
Section 1956(c)(7) of title 18, United States Code, is
amended by adding at the end thereof the following:
‘‘(F) Any act or activity constituting an offense
involving a Federal health care offense as that term
is defined in section 24 of title 18, United States
Code.’’.
(b) ENHANCED PENALTIES.—Section 2326(2) of title
18, United States Code, is amended by striking ‘‘sections
that—’’ and inserting ‘‘or in the case of a Federal health
care offense as that term is defined in section 24 of this
title, that—’’.
(c) AUTHORIZATION FOR INTERCEPTION OF WIRE,
ORAL, 
OR
ELECTRONIC
COMMUNICATIONS.—Section
2516(1)(c) of title 18, United States Code, is amended—
(1) by inserting ‘‘section 226 (bribery and graft
in connection with health care), section 227 (illegal
remunerations)’’ after ‘‘section 224 (bribery in
sporting contests),’’; and
(2) by inserting ‘‘section 1347 (health care
fraud)’’ after ‘‘section 1344 (relating to bank
fraud),’’ .
(d) DEFINITIONS.—Section 1961(1) of title 18, Unit-
ed States Code, is amended—
(1) by inserting ‘‘sections 226 and 227 (relating
to bribery and graft, and illegal remuneration in
connection with health care)’’ after ‘‘section 224 (re-
lating to sports bribery),’’;
(2) by inserting ‘‘section 669 (relating to theft
or embezzlement in connection with health care)’’
after ‘‘section 664 (relating to embezzlement from
pension and welfare funds),’’; and
(3) by inserting ‘‘section 1347 (relating to
health care fraud)’’ after ‘‘section 1344 (relating to
financial institution fraud),’’.
(e) CRIMINAL FORFEITURE.—Section 982(a) of title
18, United States Code, is amended by adding at the end
the following new paragraph:
‘‘(6) The court in imposing sentence on a per-
son convicted of a Federal health care offense as de-
fined in section 24 of this title, shall order that the
offender forfeit to the United States any real or per-
sonal property constituting or derived from proceeds
that the offender obtained directly or indirectly as
the result of the offense.’’.
(f) REWARDS FOR INFORMATION LEADING TO PROS-
ECUTION AND CONVICTION.—Section 3059(c)(1) of title
18, United States Code, is amended by inserting ‘‘or fur-
nishes information unknown to the Government relating
to a possible prosecution of a Federal health care offense
as defined in section 24 of this title, which results in a
conviction’’ before the period at the end.
TITLE III—ANTI-FRAUD INITIA-
TIVES UNDER MEDICARE AND
MEDICAID
SEC. 301. REVISION TO CURRENT PENALTIES.
(a) PERMISSIVE EXCLUSION OF INDIVIDUALS WITH
OWNERSHIP OR CONTROL INTEREST IN SANCTIONED EN-
TITIES.—Section 1128(b) of the Social Security Act (42
U.S.C. 1320a–7(b)) is amended by adding at the end the
following new paragraph:
‘‘(15) INDIVIDUALS
CONTROLLING
A
SANC-
TIONED ENTITY.—Any individual who has a direct
or indirect ownership or control interest of 5 percent
or more, or an ownership or control interest (as de-
fined in section 1124(a)(3)) in, or who is an officer,
director, agent, or managing employee (as defined in
section 1126(b)) of, an entity—
‘‘(A) that has been convicted of any of-
fense described in subsection (a) or in para-
graph (1), (2), or (3) of this subsection;
‘‘(B) against which a civil monetary pen-
alty has been assessed under section 1128A; or
‘‘(C) that has been excluded from partici-
pation under a program under title XVIII or
under a State health care program.’’.
(b) IMPOSITION OF CIVIL MONETARY PENALTY ON
EMPLOYER BILLING FOR SERVICES FURNISHED BY EX-
CLUDED EMPLOYEE.—Section 1128A(a)(1) of the Social
Security Act (42 U.S.C. 1320a–7a(a)(1)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(C);
(2) by striking ‘‘; or’’ at the end of subpara-
graph (D) and inserting ‘‘, or’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(E) is for a medical or other item or serv-
ice furnished by an individual who is an em-
ployee or agent of the person during a period
in which such employee or agent was excluded
from the program under which the claim was
made on any of the grounds for exclusion de-
scribed in subparagraph (D);’’.
(c) DEPOSIT OF PENALTIES INTO HEALTH CARE
FRAUD
AND
ABUSE
CONTROL
ACCOUNT.—Section
1128A(f)(3) of such Act (42 U.S.C. 1320a–7a(f)(3)) is
amended by striking ‘‘as miscellaneous receipts of the
Treasury of the United States’’ and inserting ‘‘in the
Health Care Fraud and Abuse Control Account estab-
lished under section 104 of the Health Care Fraud and
Abuse Prevention Act of 1995’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to sanctions imposed
for acts or omissions occurring on or after the date of the
enactment of this Act.
SEC. 302. SOLICITATION AND PUBLICATION OF MODIFICA-
TIONS TO EXISTING SAFE HARBORS AND NEW
SAFE HARBORS.
(a) IN GENERAL.—
(1) SOLICITATION
OF
PROPOSALS
FOR
SAFE
HARBORS.—Not later than one year after the date
of the enactment of this Act and not less than every
2 years thereafter, the Secretary of Health and
Human Services (hereafter in this title referred to as
the ‘‘Secretary’’) shall publish a notice in the Fed-
eral Register soliciting proposals, which will be ac-
cepted during a 60-day period, for—
(A) modifications to existing safe harbors
issued pursuant to section 14(a) of the Medi-
care and Medicaid Patient and Program Protec-
tion Act of 1987; and
(B) additional safe harbors specifying pay-
ment practices that shall not be treated as a
criminal offense under section 1128B(b) of the
Social Security Act and shall not serve as the
basis for an exclusion under section 1128(b)(7)
of such Act.
(2) PUBLICATION
OF
PROPOSED
MODIFICA-
TIONS
AND
PROPOSED
ADDITIONAL
SAFE
HAR-
BORS.—After considering the proposals described in
paragraph (1), the Secretary, in consultation with
the Attorney General, shall publish in the Federal
Register proposed modifications to existing safe har-
bors and proposed additional safe harbors, if appro-
priate, with a 60-day comment period. After consid-
ering any public comments received during this pe-
riod, the Secretary shall issue final rules modifying
the existing safe harbors and establishing new safe
harbors, as appropriate.
(3) REPORT.—The Inspector General of the
Department of Health and Human Services (here-
after in this section referred to as the ‘‘Inspector
General’’) shall, in an annual report to Congress or
as part of the year-end semiannual report required
by section 5 of the Inspector General Act of 1978,
describe the proposals received under paragraph (1)
and explain which proposals were included in the
publication described in paragraph (2), which pro-
posals were not included in that publication, and the
reasons for the rejection of the proposals that were
not included.
(b) CRITERIA FOR MODIFYING AND ESTABLISHING
SAFE HARBORS.—In modifying and establishing safe har-
bors under subsection (a)(2), the Secretary may consider
the extent to which providing a safe harbor for the speci-
fied payment practice may result in any of the following:
(1) An increase or decrease in access to health
care services.
(2) An increase or decrease in the quality of
health care services.
(3) An increase or decrease in patient freedom
of choice among health care providers.
(4) An increase or decrease in competition
among health care providers.
(5) An increase or decrease in the ability of
health care facilities to provide services in medically
underserved areas or to medically underserved popu-
lations.
(6) An increase or decrease in the cost to health
care programs operated or financed by the Federal,
State, or local governments.
(7) An increase or decrease in the potential
overutilization of health care services.
(8) The existence or nonexistence of any poten-
tial financial benefit to a health care professional or
provider which may vary based on their decisions
of—
(A) whether to order a health care item or
service; or
(B) whether to arrange for a referral of
health care items or services to a particular
practitioner or provider.
(9) Any other factors the Secretary deems ap-
propriate in the interest of preventing fraud and
abuse in health care programs operated or financed
by the Federal, State, or local governments.
SEC. 303. REQUIRING SECRETARY TO IMPLEMENT PRO-
POSAL 
TO 
EXPEDITE 
PAYMENT 
ADJUST-
MENTS BASED UPON INHERENT REASON-
ABLENESS.
Not later than 6 months after the date of the enact-
ment of this Act, the Secretary of Health and Human
Services shall implement its initiative of December 1994
to expedite the implementation of payment adjustments
for covered items under section 1834(a)(10)(B) of the So-
cial Security Act pursuant to the provisions of paragraphs
(8) and (9) of section 1842(b) of such Act.
SEC. 304. REQUIRING ANNUAL NOTICE TO MEDICARE
BENEFICIARIES 
OF 
NEED 
TO 
PREVENT
FRAUD AND ABUSE AGAINST MEDICARE PRO-
GRAM.
(a) IN GENERAL.—Section 1804(a) of the Social Se-
curity Act (42 U.S.C. 1395b–2(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(2);
(2) by striking the period at the end of para-
graph (3) and inserting ‘‘, and’’; and
(3) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4) a description of the costs to the medicare
program of waste, fraud, and abuse, together with
suggestions for steps which medicare beneficiaries
may take to help combat waste, fraud, and abuse
against the program, including the toll-free tele-
phone number operated by the Secretary and the In-
spector General of the Department of Health and
Human Services for reporting information on fraud
and abuse against the program and the potential
availability of a reward for individuals reporting in-
formation which leads to a criminal prosecution and
conviction for health care fraud under title 18,
United States Code.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to the annual notice mailed
under section 1804(a) of the Social Security Act for years
beginning with 1997.
SEC. 305. REQUIRING USE OF SINGLE PROVIDER NUMBER
IN SUBMISSION OF CLAIMS FOR PAYMENT
UNDER MEDICARE AND MEDICAID.
(a) USE OF SINGLE NUMBER UNDER MEDICARE.—
Section 1842(r) of the Social Security Act (42 U.S.C.
1395u(r)) is amended to read as follows:
‘‘(r)(1) Not later than 1 year after the date of the
enactment of the Health Care Fraud and Abuse Preven-
tion Act of 1995, the Secretary shall establish a system
which provides for a unique identifier for each individual
or entity who furnishes items or services for which pay-
ment may be made under this part.
‘‘(2) No payment may be made under this title for
any item or service furnished by an individual or entity
unless the claim for payment with respect to the item or
service includes the unique identifier provided to the indi-
vidual or entity under the system established under para-
graph (1).’’.
(b) PROVIDING MEDICARE NUMBER FOR SUBMIS-
SION OF MEDICAID CLAIMS.—Section 1902(x) of such Act
(42 U.S.C. 1396a(x)) is amended—
(1) by striking ‘‘(x)’’ and inserting ‘‘(x)(1)’’;
and
(2) by adding at the end the following new
paragraph:
‘‘(2) If an individual or entity submitting a claim to
the State for payment for providing medical assistance
under the State plan has a unique identifier assigned by
the Secretary pursuant to section 1842(r) for purposes of
title XVIII, the individual or entity shall include the iden-
tifier with such claim.’’.
SEC. 
306. 
LIABILITY 
OF 
CARRIERS 
AND 
FISCAL
INTERMEDIARIES FOR CLAIMS SUBMITTED
BY EXCLUDED PROVIDERS.
(a) REIMBURSEMENT TO SECRETARY FOR AMOUNTS
PAID TO EXCLUDED PROVIDERS.—
(1) 
REQUIREMENT
FOR
FISCAL
INTERMEDIARIES.—
(A) IN GENERAL.—Section 1816 of the So-
cial Security Act (42 U.S.C. 1395h), as amend-
ed by section 151(b)(1)(A) of the Social Secu-
rity Act Amendments of 1994, is amended by
adding at the end the following new subsection:
‘‘(l) An agreement with an agency or organization
under this section shall require that such agency or orga-
nization reimburse the Secretary for any amounts paid for
a service under this title which is furnished by an individ-
ual or entity during any period for which the individual
or entity is excluded pursuant to section 1128, 1128A,
1156, or subsection (j)(2) from participation in the pro-
gram under this title, if the amounts are paid after the
Secretary notifies the agency or organization of the exclu-
sion.’’.
(B) CONFORMING
AMENDMENT.—Section
1816(i) of such Act (42 U.S.C. 1395h(i)) is
amended by adding at the end the following
new paragraph:
‘‘(4) Nothing in this subsection shall be construed to
prohibit reimbursement by an agency or organization
under subsection (l).’’.
(2) REQUIREMENT
FOR
CARRIERS.—Section
1842(b)(3) of such Act (42 U.S.C. 1395u(b)(3)), as
amended by section 151(b)(1)(B) of the Social Secu-
rity Act Amendments of 1994, is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (I); and
(B) by inserting after subparagraph (I) the
following new subparagraph:
‘‘(J) will reimburse the Secretary for any
amounts paid for an item or service under this part
which is furnished by an individual or entity during
any period for which the individual or entity is ex-
cluded pursuant to section 1128, 1128A, 1156, or
subsection (j)(2) from participation in the program
under this title, if the amounts are paid after the
Secretary notifies the carrier of the exclusion; and’’.
(b) CONFORMING REPEAL OF MANDATORY PAYMENT
RULE.—Section 1862(e)(2) of such Act (42 U.S.C.
1395y(e)(2)) is amended to read as follows:
‘‘(2) No individual or entity may bill (or collect any
amount from) any individual for any item or service for
which payment is denied under paragraph (1). No person
is liable for payment of any amounts billed for such an
item or service in violation of the previous sentence. If an
individual or entity knowingly and willfully bills (or col-
lects an amount) for such an item or service in violation
of such sentence, the Secretary may apply sanctions
against the individual or entity in the same manner as
the Secretary may apply sanctions against a physician in
accordance with subsection (j)(2) in the same manner as
such section applies with respect to a physician. Para-
graph (4) of subsection (j) shall apply in this paragraph
in the same manner as such paragraph applies to such
section.’’.
SEC. 307. STUDY OF FINANCIAL SOLVENCY AND INTEGRITY
STANDARDS FOR PROVIDERS AND SUPPLI-
ERS.
(a) STUDY.—The Secretary of Health and Human
Services shall conduct a study of the feasibility and desir-
ability of imposing qualifications on individuals and enti-
ties providing items and services for which payment may
be made under the medicare and medicaid programs relat-
ing to financial solvency and fiscal integrity to protect the
programs from waste, fraud, and abuse.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Secretary shall submit
a report to Congress on the study conducted under sub-
section (a), and shall include in the report such rec-
ommendations as the Secretary considers appropriate for
financial solvency and fiscal integrity standards for provid-
ers and suppliers under the medicare and medicaid pro-
grams.
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