[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 337 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 337

  To amend the Public Health Service Act to prohibit physicians from 
 referring patients to health entities in which they have a financial 
                 relationship, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             February 4 (legislative day, January 5), 1993

Mr. Bingaman (for himself and Mr. Metzenbaum) introduced the following 
 bill; which was read twice and referred to the Committee on Labor and 
                            Human Resources

_______________________________________________________________________

                                 A BILL


 
  To amend the Public Health Service Act to prohibit physicians from 
 referring patients to health entities in which they have a financial 
                 relationship, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Ethics in Referrals and Billing 
Act''.

SEC. 2. AMENDMENT TO PUBLIC HEALTH SERVICE ACT.

    (a) In General.--The Public Health Service Act is amended--
            (1) by redesignating title XXVII (42 U.S.C. 300cc et seq.) 
        as title XXVIII; and
            (2) by inserting after title XXVI the following new title:

             ``TITLE XXVII--PHYSICIAN REFERRAL AND BILLING

                 ``Subtitle A--Prohibition on Referrals

``SEC. 2701. PROHIBITION.

    ``(a) In General.--Except as provided in section 2702, if a 
physician (or immediate family member of such physician) has a 
financial relationship with an entity--
            ``(1) the physician may not make a referral to the entity 
        for the furnishing of health or health-related items or 
        services; and
            ``(2) neither the entity nor the physician may present, or 
        cause to be presented, to any person (including an individual, 
        entity or third-party payor) a claim, bill or other demand for 
        payment for health or health-related items or services 
        furnished pursuant to a referral prohibited by this section.
    ``(b) Financial Relationship.--For purposes of subsection (a), the 
term `financial relationship' means--
            ``(1) except as provided in subsections (a), (b) and (c) of 
        section 2702, an ownership or investment interest (whether 
        through debt, equity or otherwise) in the entity; or
            ``(2) except as provided in subsections (a) and (d) of 
        section 2702, a compensation arrangement (as defined in section 
        2709(1)) between the physician (or immediate family member of 
        the physician) and the entity.

``SEC. 2702. EXCEPTIONS TO FINANCIAL RELATIONSHIP PROVISIONS.

    ``(a) Ownership and Compensation Arrangement Prohibitions.--Section 
2701(a) shall not apply in the following cases:
            ``(1) Physicians' services.--In the case of physicians' 
        services (as defined in section 2709(8)) provided or supervised 
        personally by the referring physician or provided or supervised 
        personally by another physician in the same group practice (as 
        defined in paragraph 2709(4)) as the referring physician.
            ``(2) In-office ancillary services.--In the case of health 
        or health-related items or services--
                    ``(A) that are furnished--
                            ``(i) personally by the referring 
                        physician;
                            ``(ii) personally by a physician who is a 
                        member of the same group practice as the 
                        referring physician; or
                            ``(iii) personally by individuals who are 
                        employed by such physician or group practice 
                        and who are personally supervised by the 
                        physician or by another physician in the group 
                        practice; and
                    ``(B) that are billed--
                            ``(i) by the physician performing or 
                        supervising the services;
                            ``(ii) by a group practice of which such 
                        physician is a member; or
                            ``(iii) by an entity that is wholly owned 
                        by such physician or such group practice, if 
                        the ownership or investment interest in such 
                        services meets such other requirements as the 
                        Secretary may by regulation impose as needed to 
                        protect against patient and payor abuse.
            ``(3) Prepaid plans.--In the case of services furnished by 
        a public or private entity (which may be a health maintenance 
        organization or a competitive medical plan organized under the 
        laws of any State) that--
                    ``(A) is a health maintenance organization (as 
                defined in section 1301); or
                    ``(B) complies with such other requirements as the 
                Secretary may by regulation impose.
            ``(4) Other relationships.--In the case of any other 
        financial relationship that the Secretary determines, and 
        specifies in regulations, does not pose a risk of payor or 
        patient abuse.
    ``(b) Ownership or Investment Prohibition for Ownership of 
Publicly-Traded Securities.--
            ``(1) In general.--Ownership of investment securities 
        (including shares or bonds, debentures, notes, or other debt 
        instruments) that were purchased on terms equally available to 
        the public and that are in a corporation that--
                    ``(A)(i) is listed for trading on--
                            ``(I) the New York Stock Exchange;
                            ``(II) the American Stock Exchange; or
                            ``(III) another exchange approved by the 
                        Secretary; or
                    ``(ii) is a national market system security traded 
                under an automated interdealer quotation system 
                operated by the National Association of Securities 
                Dealers; and
                    ``(B) had, at the end of the corporation's most 
                recent fiscal year, total assets exceeding 
                $100,000,000, and stockholder equity in excess of 
                $50,000,000;
        shall not be considered to be an ownership or investment 
        interest described in section 2701(b)(1), except that any 
        ownership or investment in an entity providing any health or 
        health-related item or service in which investments, 
        solicitations, or other inducements to invest are made 
        exclusively or primarily to physicians either prior to or in 
        the course of a public offering would be considered to be a 
        financial relationship for purposes of this section.
            ``(2) Additional requirements.--Paragraph (1) shall only 
        apply in the case of a corporation that has not loaned funds 
        to, or guaranteed a loan for, an investor who is in a position 
        to make or influence referrals to, furnish items or services 
        to, or otherwise generate business for the corporation if the 
        investor used any part of such loan to obtain the investment 
        interest.
    ``(c) Additional Exceptions Related to Ownership or Investment 
Prohibition.--For purposes of section 2701(b)(1), a physician shall not 
be considered as having an ownership or investment interest in an 
entity in the following cases:
            ``(1) Hospital ownership.--In the case of health or health-
        related items or services provided by a hospital, if--
                    ``(A) the referring physician performs services at 
                the hospital;
                    ``(B) the ownership or investment interest is in 
                the hospital itself (and not merely in a subdivision 
                thereof) subject to the requirements of subsection (b); 
                and
                    ``(C) at least 60 percent of the hospital is owned 
                by physicians performing services at the hospital.
            ``(2) Rural providers.--In the case of an entity that is 
        furnishing health or health-related items or services, if--
                    ``(A) the entity is located in a rural area (as 
                defined in section 1886(d)(2)(D) of the Social Security 
                Act);
                    ``(B) the referring physician maintains a practice 
                in the same area; and
                    ``(C) the patient receiving the services is a 
                resident of the same area;
        except that, an entity described in subparagraph (A) may 
        provide the requested services in cases where the referring 
        physician certifies that an actual emergency exists.
            ``(3) Ambulatory surgery centers.--In the case of health or 
        health-related items or services that are provided by an 
        ambulatory surgical center, if such items or services are 
        provided in connection with a surgical procedure performed by 
        the referring physician or a member of the referring 
        physician's group practice.
    ``(d) Exceptions Relating to Other Compensation Arrangements.--
            ``(1) In general.--For purposes of section 2701(b)(2), the 
        following shall not be considered to be compensation 
        arrangements.
                    ``(A) Rental of office space.--Payments made by a 
                lessee to a lessor for the use of premises if--
                            ``(i) the lease agreement is in writing and 
                        signed by the parties;
                            ``(ii) the lease specifies the premises 
                        covered by the lease;
                            ``(iii) in cases where the lease is 
                        intended to provide the lessee with access to 
                        the premises for periodic intervals of time, 
                        rather than on a full-time basis for the term 
                        of the lease, and the lease specifies exactly 
                        the schedule of such intervals, their precise 
                        length, and the exact rent for such intervals; 
                        and
                            ``(iv) the aggregate rental charge is set 
                        in advance, is consistent with fair market 
                        value in arms-length transactions and is not 
                        determined in a manner that takes into account 
                        the volume or value of any referrals or other 
                        business generated between the parties.
                    ``(B) Rental of equipment.--Payments made by a 
                lessee of equipment to the lessor of the equipment for 
                the use of the equipment if--
                            ``(i) the lease agreement is in writing and 
                        signed by the parties;
                            ``(ii) the lease specifies the equipment 
                        covered by the lease;
                            ``(iii) in cases where the lease is 
                        intended to provide the lessee with use of the 
                        equipment for periodic intervals of time, 
                        rather than on a full-time basis for the term 
                        of the lease, the lease specifies exactly the 
                        schedule of such intervals, their precise 
                        length, and the exact rent for such interval; 
                        and
                            ``(iv) the aggregate rental charge set in 
                        advance and is consistent with fair market 
                        value in arms-length transactions.
                    ``(C) Payments for other items or services.--
                Payments made by an entity to a physician who is not 
                employed by the entity as compensation for--
                            ``(i) specified consultative services if--
                                    ``(I) abnormal test results have 
                                been obtained that require additional 
                                interpretation or consultation; or
                                    ``(II) such services are 
                                specifically requested by the referring 
                                physician on a specified patient, such 
                                services are furnished by a physician 
                                other than the referring physician (or 
                                by another physician who is a member of 
                                the same group practice) and where the 
                                consulting physician furnishes a 
                                written report for that patient;
                            ``(ii) the interpretation of tissue 
                        pathology or Pap smear slides or the provision 
                        of other cytology services;
                            ``(iii) employment-related health care 
                        services, including a payment by a self-insured 
                        employer for services rendered to employees or 
                        their families under the terms of a health 
                        insurance plan; and
                            ``(iv) any services required by local, 
                        State or Federal licensure, accreditation or 
                        other health and safety provisions:
                except that the services described in this clause shall 
                only be exempt for purposes of section 2701(b)(2) if, 
                (aa) the services are provided pursuant to an agreement 
                that is set out in writing; (bb) the agreement 
                specifies the services to be provided by the parties; 
                (cc) in cases where the agreement is intended to 
                provide for the services on a periodic, sporadic or 
                part-time basis, rather than on a full-time basis for 
                the term of the agreement, the agreement specifies 
                exactly the schedule of such intervals, their precise 
                length, and the exact charge for such intervals; (dd) 
                the aggregate compensation paid over the term of the 
                agreement is consistent with fair market value in arms-
                length transactions; and (ee) the services performed 
                under the agreement do not involve the counseling or 
                promotion of a business arrangement or other activity 
                that violates any State or Federal law.
                    ``(D) Employment and service arrangements with 
                hospitals.--An arrangement between a hospital or 
                nursing facility and a physician (or immediate family 
                member) for the employment of the physician (or family 
                member) or for the provision of administrative services 
                by the physician, if--
                            ``(i) the arrangement is for identifiable 
                        services;
                            ``(ii) the amount of the remuneration under 
                        the arrangement--
                                    ``(I) is consistent with the fair 
                                market value of the services provided; 
                                and
                                    ``(II) is not determined in a 
                                manner that takes into account 
                                (directly or indirectly) the volume or 
                                value of any referrals by the referring 
                                physician;
                            ``(iii) the remuneration is provided 
                        pursuant to an agreement which would be 
                        commercially reasonable even if no referrals 
                        were made to the hospital; and
                            ``(iv) the arrangement meets such other 
                        requirements as the Secretary may impose by 
                        regulation as needed to protect against program 
                        or patient abuse.
                    ``(E) Employees.--Payments to an employee, who is 
                an immediate family member of a physician, if the 
                payments--
                            ``(i) are for bona fide employment 
                        services;
                            ``(ii) are generally consistent with the 
                        compensation paid to other employees for the 
                        same or similar services; and
                            ``(iii) do not constitute, directly or 
                        indirectly, payments or remuneration for 
                        referrals from the immediate family member.
                    ``(F) Physician recruitment.--Payments provided by 
                a hospital to a physician to induce the physician to 
                relocate to the geographic area served by the hospital 
                in order to be a member of the medical staff of the 
                hospital, if--
                            ``(i) the physician is not required to 
                        refer patients to the hospital;
                            ``(ii) the amount of the remuneration under 
                        the arrangement is not determined in a manner 
                        that takes into account (directly or 
                        indirectly) the volume or value of any 
                        referrals by the referring physician; and
                            ``(iii) the remuneration does not continue 
                        for more than 2 years.
                    ``(G) Isolated transactions.--An isolated financial 
                transaction (such as a one-time sale of property) if--
                            ``(i) the amount of the payment under the 
                        transaction--
                                    ``(I) is consistent with the fair 
                                market value of the items or property 
                                sold; and
                                    ``(II) is not determined in a 
                                manner that takes into account 
                                (directly or indirectly) the volume or 
                                value of any referrals by the referring 
                                physician; and
                            ``(ii) the remuneration is provided 
                        pursuant to an agreement that would be 
                        commercially reasonable even if no referrals 
                        were involved.
                    ``(H) Salaried physicians in a group practice.--
                Payment by a group practice of the salary of a 
                physician member of the group practice.
                    ``(I) Provision of certain items, devices, and 
                supplies.--The provision of information, items, 
                devices, or supplies by a laboratory to a physician 
                that are incident to, or necessary for--
                            ``(i) the collection, transportation, or 
                        testing of specimens by the laboratory 
                        providing such information, items, devices or 
                        supplies; or
                            ``(ii) the communication of results by the 
                        laboratory providing such information, items, 
                        devices, or supplies.
            ``(2) Other requirements.--The Secretary may by regulation 
        impose such other requirements as are needed to protect against 
        patient and payor abuse.

``SEC. 2703. CLARIFICATION REGARDING CERTAIN REFERRALS.

    ``(a) What Constitutes a Referral.--In the case of--
            ``(1) a health or health-related item or service, the 
        request by a physician for the health or health related item or 
        service, including the request by a physician for a 
        consultation with another physician, and any test or procedure 
        ordered by, or to be performed by or under the supervision of 
        that other physician shall constitute a referral by a referring 
        physician;
            ``(2) a request or establishment of a plan of care by a 
        physician which includes the provision of the health or health 
        related items or services, such request or establishment shall 
        constitute a referral by a referring physician; and
            ``(3) the prescription of the drug by a physician 
        constitutes a referral by a referring physician, but only if 
        the physician directs the patient to the specific pharmacy, 
        home intravenous drug therapy provider or other entity 
        dispensing the drug.
    ``(b) Nonreferrals.--The following shall not constitute a referral 
by a referring physician:
            ``(1) Furnishing of professional services.--A request by a 
        physician for physician's services consisting solely of 
        professional services to be furnished personally by that 
        physician or under that physician's personal supervision.
            ``(2) Clinical diagnostic tests.--A request by a 
        pathologist for clinical diagnostic laboratory tests and 
        pathological examination services, if such services are 
        furnished by (or under the supervision of) such pathologist 
        pursuant to a consultation requested by another physician.
            ``(3) Diagnostic x-rays.--Except as provided in subsection 
        (a)(1), a request by a radiologist for diagnostic x-ray or 
        imaging services, if such services are furnished by (or under 
        the direct or personal supervision of) such radiologist 
        pursuant to a consultation requested by another physician.
            ``(4) Radiation therapy.--Except as provided in subsection 
        (a)(1), a request by a physician specializing in the provision 
        of radiation therapy services for such services, if such 
        services are furnished by (or under the direct or personal 
        supervision of) such physician specializing in the provision of 
        radiation therapy services pursuant to a consultation requested 
        by another physician.
            ``(5) Specialized cancer pharmacy.--A referral by a 
        physician to a specialized cancer treatment pharmacy, if the 
        pharmacy is engaged in the specific practice of preparing and 
        distributing intravenous drugs and solutions used in the 
        diagnosis and treatment of cancer and the complications thereof 
        and is not engaged in distributing general pharmaceuticals to 
        the public.
            ``(6) Renal dialysis provider.--A referral by a physician 
        to a renal dialysis provider in conjunction with a renal 
        dialysis procedure performed under the supervision of the 
        physician.

``SEC. 2704. DISCLOSURE OF INFORMATION.

    ``Each claim, bill or other demand for health or health related 
items or services shall identify the referring physician by name and 
appropriate physician identification number, as determined by the 
Secretary pursuant to section 2705.

``SEC. 2705. REPORTING REQUIREMENTS.

    ``(a) Ownership Arrangement Information.--Each entity providing 
health or health-related items or services shall make available to the 
Secretary, and to any payor (including a patient or third party payor), 
if requested by such payor, information concerning the entity's 
ownership arrangements, including--
            ``(1) the covered items and services provided by the 
        entity; and
            ``(2) the names and Unique Physician Identification 
        Numbers, or other appropriate identification number, of all 
        physicians with an ownership or investment interest (as 
        described in subsection 2701(b)(1)) in the entity, or whose 
        immediate relatives have such an ownership or investment.
    ``(b) Form and Manner.--The information required under subsection 
(a) shall be made available in such form, manner, and at such times as 
the Secretary shall require.
    ``(c) Consultations.--The Secretary shall consult with all 
interested parties to determine how best to make the information 
required under subsection (a) available and establish appropriate 
procedures to carry out such determination.
    ``(d) Report by Secretary.--Not later than the end of the first 
calendar quarter after the first full year during which this title is 
in effect, and annually thereafter, the Secretary shall prepare and 
submit to the appropriate committees of Congress a report containing--
            ``(1) summaries of the information submitted to the 
        Secretary by entities under this title for the period for which 
        the report is being submitted;
            ``(2) the actions taken by the Secretary and other entities 
        to remain in compliance with this title; and
            ``(3) recommendations for legislation to improve this title 
        if appropriate.

``SEC. 2706. REGULATIONS.

    ``The Secretary shall promulgate such regulations as may be 
necessary to carry out the purposes of this title. If the Secretary 
determines that additional exceptions to the requirements of section 
2701 are in the public interest, and will not result in patient or 
program abuse, the Secretary may by regulation prescribe additional 
exceptions.

``SEC. 2707. SANCTIONS.

    ``(a) Payment.--No person (including an individual, entity or third 
party payor) shall be required to pay any claim, bill, or other demand 
for payment for health or health-related items or services furnished 
pursuant to a referral prohibited under section 2701.
    ``(b) Liability on Collection.--If a person collects on any amounts 
that were billed in violation of section 2701, such person shall be 
liable to the payor for any amounts so collected.
    ``(c) Insurance Provision With Respect to Nonpayment.--A policy of 
accident or health insurance issued by any third-party payor, including 
every subscriber contract issued by a hospital service corporation, 
health service corporation, medical expense indemnity corporation or 
mutual insurance company that provides coverage for health or health-
related items or services shall include a provision prohibiting the 
payment of any claim, bill or other demand for payment for the 
provision of a health or health related item or service furnished 
pursuant to a referral prohibited under section 2701.
    ``(d) Patterns of Claims.--A third-party payor that is subject to 
subsection (c) shall report to the Secretary any pattern that may exist 
in the submission of claims, bills or other demands for payment that 
are submitted in violation of section 2701, not later than 60 days 
after that date on which such third-party payor has knowledge of such 
pattern.
    ``(e) No Requirement of Audit.--Notwithstanding the requirements of 
subsections (b), (c) and (d), a third-party payor providing 
reimbursements for health or health-related items or services shall not 
be required to audit or investigate any claim, bill or other demand for 
payment for such items or services that are furnished pursuant to a 
referral.
    ``(f) Knowledge of Violation.--Any person or entity that presents 
or causes to be presented, on a repeated basis, a bill or claim that 
such person or entity knows, or should have known, is for a service for 
which payment may not be made under subsection (a), and any physician 
that makes referrals, on a repeated basis, that are prohibited under 
section 2701, shall be subject to a civil money penalty of not more 
than $15,000 for each such service or referral. The provisions of 
section 1128A of the Social Security Act (other than the first sentence 
of subsection (a) and subsection (b)) shall apply to any civil money 
penalty assessed under the previous sentence in the same manner as such 
provisions apply to a penalty or proceeding under section 1128A(a).
    ``(g) Concerted Action in Violation of Subtitle.--
            ``(1) In general.--Any person or entity that enters into an 
        arrangement or scheme (such as a cross-referral arrangement) 
        that the person or entity knows, or should have known, has a 
        principal purpose of assuring referrals by a physician to a 
        particular entity which, if the physician directly made 
        referrals to such entity, would be in violation of this 
        section, shall be subject to a civil money penalty of not more 
        than $100,000 for each such arrangement or scheme. The 
        provisions of section 1128A of the Social Security Act (other 
        than the first sentence of subsection (a) and subsection (b)) 
        shall apply to a civil money penalty assessed under the 
        previous sentence in the same manner as such provisions apply 
        to a penalty or proceeding under section 1128A.
            ``(2) Other concerted actions.--The Secretary may through 
        regulations define such other arrangements whose purpose is to 
        circumvent the purposes of this subtitle. A violation of such 
        regulations shall be subject to a civil money penalty of not 
        more than $100,000 for each such arrangement or scheme. The 
        provisions of section 1128A of the Social Security Act (other 
        than the first sentence of subsection (a) and subsection (b)) 
        shall apply to a civil money penalty under the previous 
        sentence in the same manner as such provisions apply to a 
        penalty or proceeding under section 1l28A(a).
    ``(h) Suspension of Laboratory Certification.--If the Secretary 
finds, after reasonable notice and opportunity for a hearing, that a 
laboratory which holds a certificate pursuant to section 353 has 
violated section 2701, the Secretary may suspend, revoke or limit such 
certification in accordance with the procedures established in section 
353(k).
    ``(i) Exclusion from Other Programs.--The Secretary may exclude 
from participation in any program under title XVIII of the Social 
Security Act, any individual or entity that the Secretary determines 
has violated section 2701 and may direct that such individual and 
entity be excluded from participation in any State health care program 
receiving Federal funds.
    ``(j) Failure To Report Information.--Any person who knowingly 
fails to comply with a reporting requirement imposed under this title 
shall be subject to a civil money penalty of not more than $10,000 for 
each day for which such required reporting is not complied with. The 
provisions of section 1128A of the Social Security Act (other than the 
first sentence of subsection (a) and subsection (b)) shall apply to a 
civil money penalty assessed under the previous sentence in the same 
manner as such provisions apply to a penalty or proceeding under 
section 1128A(a).

``SEC. 2708. RIGHT OF PERSON INJURED.

    ``Any person who pays any claim, bill or other demand for payment 
for health or health-related items or services, where the person 
furnishing the items or services knew or should have known that they 
were furnished pursuant to a referral prohibited under section 2701, 
may sue therefore in any district court in the United States in the 
district in which the defendant resides or is found or has an agent, 
without respect to the amount in controversy, and shall recover the 
amount of his payment, the cost of suit, including a reasonable 
attorney's fee.

``SEC. 2709. DEFINITIONS.

    ``As used in this subtitle:
            ``(1) Compensation arrangement.--The term `compensation 
        arrangement' means any payment (whether directly or indirectly, 
        overtly or covertly, in cash or in kind) made by an entity to a 
        physician (or immediate family member).
            ``(2) Employee.--The term `employee' means an individual 
        who would be considered to be employed by an entity under the 
        usual common law rules applicable in determining the employer-
        employee relationship (as applied for purposes of section 
        3121(d)(2) of the Internal Revenue Code of 1986).
            ``(3) Fair market value.--The term `fair market value' 
        means the value of items or services in arms length 
        transactions, consistent with the general market value of such 
        items or services, and, with respect to rentals or leases, the 
        value of rental property for general commercial purposes (not 
        taking into account its intended use) and, in the case of a 
        lease of space or equipment, not adjusted to reflect the 
        additional value the prospective lessee or lessor would 
        attribute to the proximity or convenience to sources of 
        referrals or business.
            ``(4) Group practice.--The term `group practice' means a 
        group of two or more physicians legally organized as a 
        partnership, professional corporation, foundation, not-for-
        profit corporation, faculty practice plan, or similar 
        association--
                    ``(A) in which each physician who is a member of 
                the group provides substantially the full range of 
                services which the physician routinely provides 
                (including medical care, consultation, diagnosis, or 
                treatment) through the joint use of shared office 
                space, facilities, equipment, and personnel;
                    ``(B) for which substantially all of the services 
                of the physicians who are members of the group are 
                provided through the group and are billed in the name 
                of the group and amounts so received are treated as 
                receipts of the group;
                    ``(C) in which the overhead expenses of and the 
                income from the practice are distributed in accordance 
                with methods previously determined by members of the 
                group; and
                    ``(D) which meets such other standards as the 
                Secretary may impose by regulation.
        In the case of a faculty practice plan associated with a 
        hospital with an approved medical residency training program in 
        which physician members may provide a variety of different 
        specialty services and provide professional services both 
        within and outside the group (as well as perform other tasks 
        such as research), subparagraph (D) shall be applied only with 
        respect to the services provided within the faculty practice 
        plan.
            ``(5) Health and health-related items and services.--The 
        term `health and health-related items and services' shall be 
        construed to have the broadest meaning practicable, and shall 
        include, at a minimum, the medical and other health services 
        specified in section 1861(s) of the Social Security Act.
            ``(6) Immediate family member.--The term `immediate family 
        member' shall include spouses, natural and adoptive parents, 
        natural and adoptive children, natural and adopted siblings, 
        stepparents, stepchildren and stepsiblings, fathers-in-law, 
        mothers-in-law, brothers-in-law, sisters-in-law, sons-in-law 
        and daughters-in-law, grandparents and grandchildren, and such 
        additional family members as may be specified in regulations 
        adopted by the Secretary.
            ``(7) Physician.--The term `physician' means--
                    ``(A) a doctor of medicine or osteopathy legally 
                authorized to practice medicine and perform surgery by 
                the State in which such individual performs such 
                function or action;
                    ``(B) a doctor of dental surgery or of dental 
                medicine who is legally authorized to practice 
                dentistry in the State in which such individual 
                performs such functions;
                    ``(C) a doctor of podiatric medicine;
                    ``(D) a doctor of optometry; or
                    ``(E) a chiropractor.
            ``(8) Physician services.--The term `physician services' 
        means professional services performed by physicians, including 
        surgery, consultation, and home, office and institutional 
        calls.
            ``(9) Remuneration.--The term `remuneration' means the 
        provision of something of value that is not incident to the 
        entity's performance of, or the physician's payment for, the 
        services that are the subject of the referral.
            ``(10) Third party payor.--The term `third party payor' 
        means any health care insurer, including any hospital services 
        corporation, health services corporation, medical expense 
        indemnity corporation, mutual insurance company, or self-
        insured corporation, that provides coverage for health or 
        health-related items or service.

``SEC. 2710. NO EXEMPTION FROM ANTITRUST LAWS.

    ``Nothing in this title shall be construed to create any immunity 
to any civil or criminal action under any Federal or State antitrust 
law, or to alter or restrict in any matter the applicability of any 
Federal or State antitrust law.

                 ``Subtitle B--Restrictions on Billing

``SEC. 2721. PROHIBITION.

    ``(a) Billing of Others for Ancillary Services.--Except as provided 
in section 2722, it shall be unlawful for any person (including any 
individual or entity) who furnishes ancillary health services (as 
defined in section 2724(e)) to present or cause to be presented, a 
claim, bill or demand for payment to any person other than the patient 
receiving such services.
    ``(b) Billing of Recipient of Services.--It shall be unlawful for 
any physician, or the agent of any physician, to present, or cause to 
be presented, a claim, bill or demand for payment for ancillary 
services to any recipient of such services unless the services covered 
by the claim, bill or demand were furnished--
            ``(1) personally by or under the supervision of the 
        referring physician;
            ``(2) personally by or under the supervision of a physician 
        who is a member of the same group practice as the referring 
        physician; or
            ``(3) personally by individuals who are employed by such 
        physician or group practice and who are personally supervised 
        by the physician or by another physician in the group practice.

``SEC. 2722. EXCEPTIONS.

    ``Notwithstanding the provisions of section 2721, a person who 
furnishes ancillary health services to an individual may present, or 
cause to be presented, a claim, bill or demand for payment for actual 
services rendered to--
            ``(1) an immediate family member of the recipient of the 
        services or any other person legally responsible for the debts 
        or care of the recipient of the services;
            ``(2) a third-party payor designated by the recipient of 
        the services;
            ``(3) a health maintenance organization in which the 
        recipient of the services is enrolled;
            ``(4) a hospital or skilled nursing facility where the 
        recipient of the services was an inpatient or outpatient at the 
        time the services were provided;
            ``(5) an employer where the recipient of the services is an 
        employee of such employer and the employer is responsible for 
        payment for the services;
            ``(6) a governmental agency or specified agent, on behalf 
        of the recipient of the services;
            ``(7) a substance abuse program where the clients of such a 
        program were the recipient of the services;
            ``(8) a clinic or other health care provider that has been 
        designated (or that is operated by an organization that has 
        been designated) as tax-exempt pursuant to section 501(c)(3) of 
        the Internal Revenue Code of 1986, whose purpose is the 
        promotion of public health, where the services rendered relate 
        to testing for sexually transmitted disease, acquired immune 
        deficiency syndrome, pregnancy, pregnancy termination or other 
        conditions where the Secretary has determined that compliance 
        with section 2721 could seriously compromise the recipient's 
        need for confidentiality;
            ``(9) a person engaged in bona fide research studies;
            ``(10) the party requesting the ancillary health services 
        where Federal, State or local law requires that the identity of 
        the recipient be kept confidential;
            ``(11) another person furnishing the same ancillary health 
        services for which payment is sought (hereafter referred to in 
        this paragraph as the `requesting party') where the person 
        presenting, or causing to be presented, the claim, bill or 
        demand for payment furnished the services at the request of the 
        requesting party, except that the requesting party may not be a 
        facility owned or operated by the physician requesting the 
        ancillary health service; and
            ``(12) an entity approved to receive such claims, bills or 
        demands by the Secretary in regulations.
The persons described in paragraphs (1) through (12) may present, or 
cause to be presented, a claim, bill or demand for payment for such 
ancillary services to the responsible party.

``SEC. 2723. SANCTIONS.

    ``(a) Payment.--No payment may be made for a service that is 
provided in violation of section 2721.
    ``(b) Collection of Amounts.--
            ``(1) Liability on collection.--If a person collects any 
        amounts that were billed in violation of section 2721(a), such 
        person shall be liable for, and shall refund on a timely basis 
        to the individual from whom such amounts were collected, any 
        amounts so collected.
            ``(2) Collection by physician.--If a physician collects any 
        amounts from a recipient of services, or from another person on 
        behalf of the recipient of services (including a third-party 
        payor), that were billed in violation of section 2721(b), such 
        physician shall be liable for, and shall refund on a timely 
        basis to the recipient or person, any amounts so collected.
    ``(c) Repeated Claims.--Any person that presents, or causes to be 
presented, on a repeated basis a bill or a claim that such person 
knows, or should have known, is for a service for which payment may not 
be made under subsection (a), or for which a refund has not been made 
under subsection (b), shall be subject to a civil money penalty of not 
more than $5,000 for each such bill or claim. The provisions of section 
1128A of the Social Security Act (other than the first sentence of 
subsection (a) and subsection (b)) shall apply to a civil money penalty 
assessed under the previous sentence in the same manner as such 
provisions apply to a penalty or proceeding under such section 
1128A(a).
    ``(d) Suspension of Laboratory Certification.--If the Secretary 
finds, after reasonable notice and opportunity for a hearing, that a 
laboratory which holds a certificate pursuant to section 353 has 
violated section 2721, the Secretary may suspend, revoke or limit such 
certification in accordance with the procedures established in section 
353(k).
    ``(e) Exclusion From Other Programs.--
            ``(1) Authority.--The Secretary may exclude from 
        participation in any program under title XVIII of the Social 
        Security Act, any individual or entity that the Secretary 
        determines has violated section 2721 and may direct that such 
        individual and entity be excluded from participation in any 
        State health care program receiving Federal funds.
            ``(2) Application of other law.--The provisions of section 
        1128(e) of the Social Security Act shall apply to any exclusion 
        under paragraph (1) in the same manner as such provisions apply 
        to a proceeding under such section 1128.

``SEC. 2724. REGULATIONS.

    ``The Secretary shall by regulation impose such other requirements 
as may be necessary to implement the purposes of this subtitle.

``SEC. 2725. DEFINITIONS.

    ``As used in this subtitle:
            ``(1) Ancillary health services.--The term `ancillary 
        health services' means--
                    ``(A) diagnostic laboratory tests;
                    ``(B) diagnostic x-ray tests and other diagnostic 
                imaging services including CT and magnetic resonance 
                imaging services;
                    ``(C) other diagnostic tests;
                    ``(D) durable medical equipment; and
                    ``(E) physical therapy services.
            ``(2) Group practice.--The term `group practice' means a 
        group of two or more physicians legally organized as a 
        partnership, professional corporation, foundation, not-for-
        profit corporation, faculty practice plan, or similar 
        association--
                    ``(A) in which each physician who is a member of 
                the group provides substantially the full range of 
                services that the physician routinely provides 
                (including medical care, consultation, diagnosis, or 
                treatment) through the joint use of shared office 
                space, facilities, equipment, and personnel;
                    ``(B) for which substantially all of the services 
                of the physicians who are members of the group are 
                provided through the group and are billed in the name 
                of the group and amounts so received are treated as 
                receipts of the group;
                    ``(C) in which the overhead expenses of and the 
                income from the practice are distributed in accordance 
                with methods previously determined by members of the 
                group; and
                    ``(D) which meets such other standards as the 
                Secretary may impose by regulation.
        In the case of a faculty practice plan associated with a 
        hospital with an approved medical residency training program in 
        which physician members may provide a variety of different 
        specialty services and provide professional services both 
        within and outside the group (as well as perform other tasks 
        such as research), the definition of such term shall be limited 
        with respect to the services provided outside of the faculty 
        practice plan.
            ``(3) Immediate family member.--The term `immediate family 
        member' shall include spouses, natural and adoptive parents, 
        natural and adoptive children, natural and adopted siblings, 
        stepparents, stepchildren and stepsiblings, fathers-in-law, 
        mothers-in-law, brothers-in-law, sisters-in-law, sons-in-law 
        and daughters-in-law, grandparents and grandchildren, and such 
        additional family members as may be specified in regulations 
        adopted by the Secretary.
            ``(4) Physician.--The term `physician' has the same meaning 
        given such term in section 2709(7).
            ``(5) Third party payor.--The term `third party payor' has 
        the same meaning given such term in section 2709(10).''.
    (b) Conforming Amendments.--
            (1) Sections 2701 through 2714 of the Public Health Service 
        Act (42 U.S.C. 300cc through 300cc-15) are redesignated as 
        sections 2801 through 2814, respectively.
            (2)(A) Sections 465(f) and 497 of such Act (42 U.S.C. 
        286(f) and 289) are amended by striking out ``2701'' each place 
        that such appears and inserting in lieu thereof ``2801''.
            (B) Section 305(i) of such Act (42 U.S.C. 242c(i)) is 
        amended by striking out ``2711'' each place that such appears 
        and inserting in lieu thereof ``2811''.

SEC. 3. EFFECTIVE DATE.

    (a) In General.--Except as provided in this section, this Act shall 
become effective July 1, 1994.
    (b) Exceptions.--Notwithstanding subsection (a)--
            (1) section 2707(c) of the Public Health Service Act (as 
        added by section 2(a)) shall become effective on July 1, 1994, 
        and shall apply to all policies, contracts and certificates 
        delivered or issued for delivery on or after such date and, as 
        to those policies, contracts and certificates delivered or 
        issued for delivery prior to such date, on the date such 
        policies, contracts or certificates are renewed, modified, 
        altered or amended, except that the Secretary may adopt such 
        regulations and take such steps as may be appropriate prior to 
        such effective date; and
            (2) subtitle B of title XXVII of the Public Health Service 
        Act (as added by section 2(a)) shall become effective on July 
        1, 1994.
    (c) Regulations.--Not later than July 1, 1994, the Secretary of 
Health and Human Services shall promulgate such regulations as may be 
appropriate to carry out this Act.

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