[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2389 Introduced in House (IH)]

  1st Session
                                H. R. 2389

   To combat fraud and abuse in the medicare program, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 21, 1995

   Mr. Thomas (for himself, Mr. Bilirakis, and Mr. Barton of Texas) 
 introduced the following bill; which was referred to the Committee on 
 Ways and Means, and in addition to the Committees on Commerce and the 
 Judiciary, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To combat fraud and abuse in the medicare program, 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; REFERENCES IN ACT; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Safeguarding 
Medicare Integrity Act of 1995''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act an amendment is expressed 
in terms of an amendment to or repeal of a section or other provision, 
the reference shall be considered to be made to that section or other 
provision of the Social Security Act.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; references in act; table of contents.
                  TITLE I--PREVENTING FRAUD AND ABUSE

Sec. 101. Increasing awareness of fraud and abuse.
Sec. 102. Beneficiary incentive programs.
Sec. 103. Intermediate sanctions for medicare health maintenance 
                            organizations.
Sec. 104. Voluntary disclosure program.
Sec. 105. Revisions to current sanctions.
Sec. 106. Consolidated funding for anti-fraud and abuse activities 
                            under Medicare Integrity Program.
Sec. 107. Permitting carriers to carry out prior authorization for 
                            certain items of durable medical equipment.
Sec. 108. Establishment of Health Care Anti-Fraud Task Force.
Sec. 109. Study of adequacy of private quality assurance programs.
                      TITLE II--REGULATORY RELIEF

Sec. 201. Clarification of level of intent required for imposition of 
                            sanctions.
Sec. 202. Clarification of and additions to exceptions to anti-kickback 
                            penalties.
Sec. 203. Solicitation and publication of modifications to existing 
                            safe harbors and new safe harbors.
Sec. 204. Issuance of advisory opinions under title XI.

                  TITLE I--PREVENTING FRAUD AND ABUSE

SEC. 101. INCREASING AWARENESS OF FRAUD AND ABUSE.

    (a) Beneficiary Outreach Efforts.--The Secretary of Health and 
Human Services (acting through the Administrator of the Health Care 
Financing Administration and the Inspector General of the Department of 
Health and Human Services) shall make ongoing efforts (through public 
service announcements, publications, and other appropriate methods) to 
alert individuals entitled to benefits under the medicare program of 
the existence of fraud and abuse committed against the program and the 
costs to the program of such fraud and abuse, and of the existence of 
the toll-free telephone line operated by the Secretary to receive 
information on fraud and abuse committed against the program.
    (b) Clarification of Requirement to Provide Explanation of Medicare 
Benefits.--The Secretary shall provide an explanation of benefits under 
the medicare program with respect to each item or service for which 
payment may be made under the program which is furnished to an 
individual, without regard to whether or not a deductible or 
coinsurance may be imposed against the individual with respect to the 
item or service.
    (c) Provider Outreach Efforts; Publication of Fraud Alerts.--
            (1) Special fraud alerts.--
                    (A) In general.--
                            (i) Request for special fraud alerts.--Any 
                        person may present, at any time, a request to 
                        the Secretary to issue and publish a special 
                        fraud alert.
                            (ii) Special fraud alert defined.--In this 
                        section, a ``special fraud alert'' is a notice 
                        which informs the public of practices which the 
                        Secretary considers to be suspect or of 
                        particular concern under the medicare program 
                        or a State health care program (as defined in 
                        section 1128(h) of the Social Security Act).
                    (B) Issuance and publication of special fraud 
                alerts.--
                            (i) Investigation.--Upon receipt of a 
                        request for a special fraud alert under 
                        subparagraph (A), the Secretary shall 
                        investigate the subject matter of the request 
                        to determine whether a special fraud alert 
                        should be issued. If appropriate, the Secretary 
                        (in consultation with the Attorney General) 
                        shall issue a special fraud alert in response 
                        to the request. All special fraud alerts issued 
                        pursuant to this subparagraph shall be 
                        published in the Federal Register.
                            (ii) Criteria for issuance.--In determining 
                        whether to issue a special fraud alert upon a 
                        request under subparagraph (A), the Secretary 
                        may consider--
                                    (I) whether and to what extent the 
                                practices that would be identified in 
                                the special fraud alert may result in 
                                any of the consequences described in 
                                section 203(b); and
                                    (II) the extent and frequency of 
                                the conduct that would be identified in 
                                the special fraud alert.
            (2) Publication of all hcfa fraud alerts in federal 
        register.--Each notice issued by the Health Care Financing 
        Administration which informs the public of practices which the 
        Secretary considers to be suspect or of particular concern 
        under the medicare program or a State health care program (as 
        defined in section 1128(h) of the Social Security Act) shall be 
        published in the Federal Register, without regard to whether or 
        not the notice is issued by a regional office of the Health 
        Care Financing Administration.

SEC. 102. BENEFICIARY INCENTIVE PROGRAMS.

    (a) Program to Collect Information on Fraud and Abuse.--
            (1) Establishment of program.--Not later than 3 months 
        after the date of the enactment of this Act, the Secretary 
        shall establish a program under which the Secretary shall 
        encourage individuals to report to the Secretary information on 
        individuals and entities who are engaging or who have engaged 
        in acts or omissions which constitute grounds for the 
        imposition of a sanction under section 1128, section 1128A, or 
        section 1128B of the Social Security Act, or who have otherwise 
        engaged in fraud and abuse against the medicare program.
            (2) Payment of portion of amounts collected.--If an 
        individual reports information to the Secretary under the 
        program established under paragraph (1) which serves as the 
        basis for the collection by the Secretary or the Attorney 
        General of any amount of at least $100 (other than any amount 
        paid as a penalty under section 1128B of the Social Security 
        Act), the Secretary may pay a portion of the amount collected 
        to the individual (under procedures similar to those applicable 
        under section 7623 of the Internal Revenue Code of 1986 to 
        payments to individuals providing information on violations of 
        such Code).
    (b) Program to Collect Information on Program Efficiency.--
            (1) Establishment of program.--Not later than 3 months 
        after the date of the enactment of this Act, the Secretary 
        shall establish a program under which the Secretary shall 
        encourage individuals to submit to the Secretary suggestions on 
        methods to improve the efficiency of the medicare program.
            (2) Payment of portion of program savings.--If an 
        individual submits a suggestion to the Secretary under the 
        program established under paragraph (1) which is adopted by the 
        Secretary and which results in savings to the program, the 
        Secretary may make a payment to the individual of such amount 
        as the Secretary considers appropriate.

SEC. 103. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH MAINTENANCE 
              ORGANIZATIONS.

    (a) Application of Intermediate Sanctions for any Program 
Violations.--
            (1) In general.--Section 1876(i)(1) (42 U.S.C. 
        1395mm(i)(1)) is amended by striking ``the Secretary may 
        terminate'' and all that follows and inserting the following: 
        ``in accordance with procedures established under paragraph 
        (9), the Secretary may at any time terminate any such contract 
        or may impose the intermediate sanctions described in paragraph 
        (6)(B) or (6)(C) (whichever is applicable) on the eligible 
        organization if the Secretary determines that the 
        organization--
            ``(A) has failed substantially to carry out the contract;
            ``(B) is carrying out the contract in a manner inconsistent 
        with the efficient and effective administration of this 
        section;
            ``(C) is operating in a manner that is not in the best 
        interests of the individuals covered under the contract; or
            ``(D) no longer substantially meets the applicable 
        conditions of subsections (b), (c), (e), and (f).''.
            (2) Other intermediate sanctions for miscellaneous program 
        violations.--Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is 
        amended by adding at the end the following new subparagraph:
    ``(C) In the case of an eligible organization for which the 
Secretary makes a determination under paragraph (1) the basis of which 
is not described in subparagraph (A), the Secretary may apply the 
following intermediate sanctions:
            ``(i) Civil money penalties of not more than $25,000 for 
        each determination under paragraph (1) if the deficiency that 
        is the basis of the determination has directly adversely 
        affected (or has the substantial likelihood of adversely 
        affecting) an individual covered under the organization's 
        contract.
            ``(ii) Civil money penalties of not more than $10,000 for 
        each week beginning after the initiation of procedures by the 
        Secretary under paragraph (9) during which the deficiency that 
        is the basis of a determination under paragraph (1) exists.
            ``(iii) Suspension of enrollment of individuals under this 
        section after the date the Secretary notifies the organization 
        of a determination under paragraph (1) and until the Secretary 
        is satisfied that the deficiency that is the basis for the 
        determination has been corrected and is not likely to recur.''.
            (3) Procedures for imposing sanctions.--Section 1876(i) (42 
        U.S.C. 1395mm(i)) is amended by adding at the end the following 
        new paragraph:
    ``(9) The Secretary may terminate a contract with an eligible 
organization under this section or may impose the intermediate 
sanctions described in paragraph (6) on the organization in accordance 
with formal investigation and compliance procedures established by the 
Secretary under which--
            ``(A) the Secretary provides the organization with the 
        opportunity to develop and implement a corrective action plan 
        to correct the deficiencies that were the basis of the 
Secretary's determination under paragraph (1);
            ``(B) the Secretary shall impose more severe sanctions on 
        organizations that have a history of deficiencies or that have 
        not taken steps to correct deficiencies the Secretary has 
        brought to their attention;
            ``(C) there are no unreasonable or unnecessary delays 
        between the finding of a deficiency and the imposition of 
        sanctions; and
            ``(D) the Secretary provides the organization with 
        reasonable notice and opportunity for hearing (including the 
        right to appeal an initial decision) before imposing any 
        sanction or terminating the contract.''.
            (4) Conforming amendments.--(A) Section 1876(i)(6)(B) (42 
        U.S.C. 1395mm(i)(6)(B)) is amended by striking the second 
        sentence.
            (B) Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is further 
        amended by adding at the end the following new subparagraph:
    ``(D) The provisions of section 1128A (other than subsections (a) 
and (b)) shall apply to a civil money penalty under subparagraph (A) or 
(B) in the same manner as they apply to a civil money penalty or 
proceeding under section 1128A(a).''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to contract years beginning on or after January 1, 
1996.

SEC. 104. VOLUNTARY DISCLOSURE PROGRAM.

    Title XI (42 U.S.C. 1301 et seq.) is amended by inserting after 
section 1128B the following new section:

              ``voluntary disclosure of acts or omissions

    ``Sec. 1129. (a) Establishment of Voluntary Disclosure Program.--
Not later than 3 months after the date of the enactment of the Omnibus 
Budget Reconciliation Act of 1995, the Secretary shall establish a 
program to encourage individuals and entities to voluntarily disclose 
to the Secretary information on acts or omissions of the individual or 
entity which constitute grounds for the imposition of a sanction 
described in section 1128, 1128A, or 1128B.
    ``(b) Effect of Voluntary Disclosure.--If an individual or entity 
voluntarily discloses information with respect to an act or omission to 
the Secretary under subsection (a), the following rules shall apply:
            ``(1) The Secretary may waive, reduce, or otherwise 
        mitigate any sanction which would otherwise be applicable to 
        the individual or entity under section 1128, 1128A, or 1128B as 
        a result of the act or omission involved.
            ``(2) No qui tam action may be brought pursuant to chapter 
        37 of title 31, United States Code, against the individual or 
        entity with respect to the act or omission involved.''.

SEC. 105. REVISIONS TO CURRENT SANCTIONS.

    (a) Increase in Amount of Criminal Fines.--Section 1128B (42 U.S.C. 
1320a-7b) is amended by striking ``$25,000'' each place it appears in 
subsections (a), (b)(1), (b)(2), (c), and (d) and inserting 
``$250,000''.
    (b) Establishment of Minimum Period of Exclusion for Certain 
Individuals and Entities Subject to Permissive Exclusion.--Section 
1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended by adding at the end 
the following new subparagraphs:
    ``(D) In the case of an exclusion of an individual or entity under 
paragraph (1), (2), or (3) of subsection (b), the period of the 
exclusion shall be 3 years, unless the Secretary determines in 
accordance with published regulations that a shorter period is 
appropriate because of mitigating circumstances or that a longer period 
is appropriate because of aggravating circumstances.
    ``(E) In the case of an exclusion of an individual or entity under 
subsection (b)(4) or (b)(5), the period of the exclusion shall not be 
less than the period during which the individual's or entity's license 
to provide health care is revoked, suspended, or surrendered, or the 
individual or the entity is excluded or suspended from a Federal or 
State health care program.
    ``(F) In the case of an exclusion of an individual or entity under 
subsection (b)(6)(B), the period of the exclusion shall be not less 
than 1 year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to acts or omissions occurring on or after January 
1, 1996.

SEC. 106. CONSOLIDATED FUNDING FOR ANTI-FRAUD AND ABUSE ACTIVITIES 
              UNDER MEDICARE INTEGRITY PROGRAM.

    (a) Establishment of Medicare Integrity Program.--Title XVIII is 
amended by adding at the end the following new section:

                      ``medicare integrity program

    ``Sec. 1894. (a) Establishment of Program.--There is hereby 
established the Medicare Integrity Program (hereafter in this section 
referred to as the `Program') under which the Secretary shall promote 
the integrity of the medicare program by entering into contracts in 
accordance with this section with eligible private entities to carry 
out the activities described in subsection (b).
    ``(b) Activities Described.--The activities described in this 
subsection are as follows:
            ``(1) Review of activities of providers of services or 
        other individuals and entities furnishing items and services 
        for which payment may be made under this title (including 
        skilled nursing facilities and home health agencies), including 
        medical and utilization review and fraud review (employing 
        similar standards, processes, and technologies used by private 
        health plans, including equipment and software technologies 
        which surpass the capability of the equipment and technologies 
        used in the review of claims under this title as of the date of 
        the enactment of the Omnibus Budget Reconciliation Act of 
        1995).
            ``(2) Audit of cost reports.
            ``(3) Determinations as to whether payment should not be, 
        or should not have been, made under this title by reason of 
        section 1862(b), and recovery of payments that should not have 
        been made.
            ``(4) Education of providers of services, beneficiaries, 
        and other persons with respect to payment integrity and benefit 
        quality assurance issues.
    ``(c) Eligibility of Entities.--An entity is eligible to enter into 
a contract under the Program to carry out any of the activities 
described in subsection (b) if--
            ``(1) the entity has demonstrated capability to carry out 
        such activities;
            ``(2) in carrying out such activities, the entity agrees to 
        cooperate with the Inspector General of the Department of 
        Health and Human Services, the Attorney General of the United 
        States, and other law enforcement agencies, as appropriate, in 
        the investigation and deterrence of fraud and abuse in relation 
        to this title and in other cases arising out of such 
        activities;
            ``(3) the entity's financial holdings, interests, or 
        relationships will not interfere with its ability to perform 
        the functions to be required by the contract in an effective 
        and impartial manner; and
            ``(4) the entity meets such other requirements as the 
        Secretary may impose.
    ``(d) Process for Entering Into Contracts.--The Secretary shall 
enter into contracts under the Program in accordance with such 
procedures as the Secretary may by regulation establish, except that 
such procedures shall include the following:
            ``(1) The Secretary shall determine the appropriate number 
        of separate contracts which are necessary to carry out the 
        Program and the appropriate times at which the Secretary shall 
        enter into such contracts, except that contracts must be in 
        effect to carry out the activities described in subsection (b) 
        with respect to services, providers, and investigations and 
        other activities for all fiscal years beginning on or after 
        October 1, 1998.
            ``(2) The provisions of section 1153(e)(1) shall apply to 
        contracts and contracting authority under this section, except 
        that competitive procedures must be used when entering into new 
        contracts under this section, or at any other time considered 
        appropriate by the Secretary.
            ``(3) A contract under this section may be renewed without 
        regard to any provision of law requiring competition if the 
        contractor has met or exceeded the performance requirements 
        established in the current contract.
    ``(e) Limitation on Contractor Liability.--The Secretary shall by 
regulation provide for the limitation of a contractor's liability for 
actions taken to carry out a contract under the Program, and such 
regulation shall, to the extent the Secretary finds appropriate, employ 
the same or comparable standards and other substantive and procedural 
provisions as are contained in section 1157.
    ``(f) Transfer of Amounts to Medicare Anti-Fraud and Abuse Trust 
Fund.--For each fiscal year, the Secretary shall transfer from the 
Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund to the Medicare Anti-Fraud and Abuse Trust 
Fund under subsection (g) an amount equal to the total amount of 
expenditures which would have been made by the Secretary under this 
title (whether through contracts with fiscal intermediaries under 
section 1816, contracts with carriers under section 1842, or otherwise) 
during the year to carry out the activities described in subsection (b) 
if the Program had not been in effect (as estimated by the Secretary 
prior to the beginning of the year). Such transfer shall be in an 
allocation as reasonably reflects the proportion of such expenditures 
associated with part A and part B.
    ``(g) Medicare Anti-Fraud and Abuse Trust Fund.--
            ``(1) Establishment.--
                    ``(A) In general.--There is hereby established in 
                the Treasury of the United States the Anti-Fraud and 
                Abuse Trust Fund (hereafter in this subsection referred 
                to as the `Trust Fund'). The Trust Fund shall consist 
                of such gifts and bequests as may be made as provided 
                in subparagraph (B) and such amounts as may be 
                deposited in the Trust Fund as provided in subsection 
                (f), paragraph (3), and title XI.
                    ``(B) Authorization to accept gifts and bequests.--
                The Trust Fund is authorized to accept on behalf of the 
                United States money gifts and bequests made 
                unconditionally to the Trust Fund, for the benefit of 
                the Trust Fund or any activity financed through the 
                Trust Fund.
            ``(2) Investment.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall invest such amounts of the Fund as such Secretary 
                determines are not required to meet current withdrawals 
                from the Fund. Such investments may be made only in 
                interest-bearing obligations of the United States. For 
                such purpose, such obligations may be acquired on 
                original issue at the issue price, or by purchase of 
                outstanding obligations at the market price.
                    ``(B) Sale of obligations.--Any obligation acquired 
                by the Fund may be sold by the Secretary of the 
                Treasury at the market price.
                    ``(C) Availability of income.--Any interest derived 
                from obligations acquired by the Fund, and proceeds 
                from any sale or redemption of such obligations, are 
                hereby appropriated to the Fund.
            ``(3) Amounts deposited into trust fund.--There shall be 
        deposited in the Trust Fund--
                    ``(A) that portion of amounts recovered in relation 
                to section 1128A arising out of a claim under title 
                XVIII as remains after application of subsection (f)(2) 
                (relating to repayment of the Federal Hospital 
                Insurance Trust Fund or the Federal Supplementary 
                Medical Insurance Trust Fund) of that section, as may 
                be applicable,
                    ``(B) fines imposed under section 1128B arising out 
                of a claim under this title, and
                    ``(C) penalties and damages imposed (other than 
                funds awarded to a relator or for restitution) under 
                sections 3729 through 3732 of title 31, United States 
                Code (pertaining to false claims) in cases involving 
                claims relating to programs under title XVIII or XIX.
            ``(4) Direct appropriation of funds to carry out program.--
        There are appropriated from the Trust Fund for each fiscal year 
        such amounts as are necessary to carry out the Medicare 
        Integrity Program under this section.
            ``(5) Annual report.--The Secretary shall submit an annual 
        report to Congress on the amount of revenue which is generated 
        and disbursed by the Trust Fund in each fiscal year.''.
    (b) Elimination of FI and Carrier Responsibility for Carrying out 
Activities Subject to Program.--
            (1) Responsibilities of fiscal intermediaries under part 
        a.--Section 1816 (42 U.S.C. 1395h) is amended by adding at the 
        end the following new subsection:
    ``(l) No agency or organization may carry out (or receive payment 
for carrying out) any activity pursuant to an agreement under this 
section to the extent that the activity is carried out pursuant to a 
contract under the Medicare Integrity Program under section 1894.''.
            (2) Responsibilities of carriers under part b.--Section 
        1842(c) (42 U.S.C. 1395u(c)) is amended by adding at the end 
        the following new paragraph:
    ``(6) No carrier may carry out (or receive payment for carrying 
out) any activity pursuant to a contract under this subsection to the 
extent that the activity is carried out pursuant to a contract under 
the Medicare Integrity Program under section 1894.''.
    (c) Conforming Amendment.--Section 1128A(f)(3) (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 Anti-Fraud and 
Abuse Trust Fund established under section 1145''.

SEC. 107. PERMITTING CARRIERS TO CARRY OUT PRIOR AUTHORIZATION FOR 
              CERTAIN ITEMS OF DURABLE MEDICAL EQUIPMENT.

    (a) In General.--Section 1834(a)(15) (42 U.S.C. 1395m(a)(15)), as 
amended by section 135(b) of the Social Security Act Amendments of 
1994, is amended by adding at the end the following new subparagraphs:
                    ``(D) Application by carriers.--A carrier may 
                develop (and periodically update) a list of items under 
                subparagraph (A) and a list of suppliers under 
                subparagraph (B) in the same manner as the Secretary 
                may develop (and periodically update) such lists.
                    ``(E) Waiver of publication requirement.--A carrier 
                may make an advance determination under subparagraph 
                (C) with respect to an item or supplier on a list 
                developed by the Secretary or the carrier without 
                regard to whether or not the Secretary has promulgated 
                a regulation with respect to the list, except that the 
                carrier may not make such an advance determination with 
                respect to an item or supplier on a list until the 
                expiration of the 30-day period beginning on the date 
                the Secretary or the carrier places the item or 
                supplier on the list.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the enactment of the Social Security Act 
Amendments of 1994.

SEC. 108. ESTABLISHMENT OF HEALTH CARE ANTI-FRAUD TASK FORCE.

    (a) In General.--Not later than 120 days after the date of the 
enactment of this Act, the Attorney General shall establish (in 
consultation with the Advisory Group described in subsection (c)) 
within the Department of Justice a task force (similar to the Organized 
Crime Drug Enforcement Task Force) to be known as the ``Health Care 
Anti-Fraud Task Force'' (hereafter in this section referred to as the 
``Task Force'') to prosecute health care fraud offenses. Nothing in 
this section may be construed as affecting the powers of the Attorney 
General or any other individual.
    (b) Operations of Task Force.--The Attorney General shall establish 
and operate the Task Force in a manner such that--
            (1) at least one fully staffed operational segment of the 
        Task Force (including at least one Federal representative 
        engaged in Task Force activities on a full-time basis) shall 
        operate in each judicial district of the United States; and
            (2) the Task Force maintains separate accounting of its 
        finances, personnel, case load, and resolution of claims and 
        actions.
    (c) Advisory Group Described.--The Advisory Group described in this 
subsection is a group consisting of the following individuals (or their 
designees):
            (1) The Secretary of Health and Human Services.
            (2) The Secretary of the Treasury.
            (3) The Secretary of Veterans' Affairs.
            (4) The Chair of the Board of Governors of the United 
        States Postal Service.

SEC. 109. STUDY OF ADEQUACY OF PRIVATE QUALITY ASSURANCE PROGRAMS.

    (a) In General.--The Administrator of the Health Care Financing 
Administration (acting through the Director of the Office of Research 
and Development) shall enter into an agreement with a private entity to 
conduct a study during the 5-year period beginning on the date of the 
enactment of this Act of the adequacy of the quality assurance programs 
and consumer protections used by eligible organizations with risk-
sharing contracts under section 1876 of the Social Security Act, and 
shall include in the study an analysis of the effectiveness of such 
organizations in protecting enrollees against the risk of insufficient 
provision of benefits which may result from utilization controls.
    (b) Report.--Not later than 6 months after the conclusion of the 5-
year period described in subsection (a), the Administrator shall submit 
a report to Congress on the study conducted under such subsection.

                      TITLE II--REGULATORY RELIEF

SEC. 201. CLARIFICATION OF LEVEL OF INTENT REQUIRED FOR IMPOSITION OF 
              SANCTIONS.

    (a) Clarification of Level of Knowledge Required for Imposition of 
Civil Monetary Penalties.--
            (1) In general.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)) 
        is amended--
                    (A) in paragraphs (1) and (2), by inserting 
                ``knowingly'' before ``presents'' each place it 
                appears; and
                    (B) in paragraph (3), by striking ``gives'' and 
                inserting ``knowingly gives or causes to be given''.
            (2) Definition of standard.--Section 1128A(i) (42 U.S.C. 
        1320a-7a(i)) is amended by adding at the end the following new 
        paragraph:
            ``(6) The term `should know' means that a person, with 
        respect to information--
                    ``(A) acts in deliberate ignorance of the truth or 
                falsity of the information; or
                    ``(B) acts in reckless disregard of the truth or 
                falsity of the information,
        and no proof of specific intent to defraud is required.''.
    (b) Clarification of Effect and Application of Safe Harbor 
Exceptions.--For purposes of section 1128B(b)(3) of the Social Security 
Act, the specification of any payment practice in regulations 
promulgated pursuant to section 14(a) of the Medicare and Medicaid 
Program Patient Protection Act of 1987 is--
            (1) solely for the purpose of adding additional exceptions 
        to the types of conduct which are not subject to an anti-
        kickback penalty under such section and not for the purpose of 
        limiting the scope of such exceptions; and
            (2) for the purpose of prescribing criteria for qualifying 
        for such an exception notwithstanding the intent of the party 
        involved.
    (c) Limiting Imposition of Anti-kickback Penalties to Actions With 
Significant Purpose to Induce Referrals.--Section 1128B(b)(2) (42 
U.S.C. 1320a-7b(b)(2)) is amended in the matter preceding subparagraph 
(A) by striking ``to induce'' and inserting ``for the significant 
purpose of inducing''.
    (d) Effective Date.--The amendments made by this section shall 
apply to acts or omissions occurring on or after January 1, 1996.

SEC. 202. CLARIFICATION OF AND ADDITIONS TO EXCEPTIONS TO ANTI-KICKBACK 
              PENALTIES.

    (a) Discounts, Risk-Sharing and Other Managed Care Arrangements, 
and De Minimis Remuneration.--Section 1128B(b)(3) (42 U.S.C. 1320a-
7b(b)(3)) is amended--
            (1) by striking ``and'' at the end of subparagraph (D);
            (2) by striking the period at the end of subparagraph (E) 
        and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
            ``(F) any reduction in cost sharing or increased benefits 
        given to an individual, any amounts paid to a provider for an 
        item or service furnished to an individual, any discount or 
        reduction in price given by the provider for such an item or 
        service, or any other remuneration if--
                    ``(i) the item or service is provided--
                            ``(I) the item or service is provided 
                        through an organization described in section 
                        1877(b)(3), or is provided through such an 
                        organization on behalf of another entity 
                        (including but not limited to a self-insured 
                        employer or indemnity plan) that assumes 
                        financial risk for the provision of the item or 
                        service, or
                            ``(II) the item or service is provided 
                        through any capitation, risk-sharing, or 
                        disease management program (or any program 
                        found by the Secretary to be similar to such a 
                        program) and the Secretary and the directors of 
                        State health care programs are provided with 
information on the nature and scope of the reduction, amount paid, or 
discount involved;
                    ``(ii) the reduction, amount paid, or discount or 
                reduction in price is with respect to another item or 
                service related to or furnished in conjunction with 
                such item or service; or
                    ``(iii) the remuneration is in the form of an item 
                which is de minimis (as established by the Secretary 
                taking into account professional or ethical guidelines 
                applicable to the provider or organization involved) or 
                is a sample of a drug or drug product (in compliance 
                with section 503(d) of the Federal Food, Drug, and 
                Cosmetic Act).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to acts or omissions occurring on or after January 1, 1996.

SEC. 203. SOLICITATION AND PUBLICATION OF MODIFICATIONS TO EXISTING 
              SAFE HARBORS AND NEW SAFE HARBORS.

    (a) In General.--
            (1) Solicitations.--Not later than January 1, 1996, and not 
        less than annually thereafter, the Secretary of Health and 
        Human Services shall publish a notice in the Federal Register 
        soliciting proposals, which will be accepted during a 60-day 
        period, for--
                    (A) modifications to existing safe harbors issued 
                pursuant to section 14(a) of the Medicare and Medicaid 
                Patient and Program Protection Act of 1987;
                    (B) additional safe harbors specifying payment 
                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; and
                    (C) special fraud alerts to be issued pursuant to 
                section 101(c).
            (2) Publication of proposed modifications and proposed 
        additional safe harbors.--Not later than 120 days after 
        receiving the proposals described in subparagraphs (A) and (B) 
        of paragraph (1), the Secretary, after considering such 
        proposals in consultation with the Attorney General, shall 
        publish in the Federal Register proposed modifications to 
        existing safe harbors and proposed additional safe harbors, if 
        appropriate, with a 60-day comment period. After considering 
        any public comments received during this period, the Secretary 
        shall issue final rules modifying the existing safe harbors and 
        establishing new safe harbors, as appropriate.
            (3) Report.--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 subparagraphs (A) and (B) 
        of paragraph (1) and explain which proposals were included in 
        the publication described in paragraph (2), which proposals 
        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 harbors under subsection (a)(2), the 
Secretary may consider the extent to which providing a safe harbor for 
the specified 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 cost to health care 
        programs of the Federal Government.
            (6) An increase or decrease in the potential 
        overutilization of health care services.
            (7) Any other factors the Secretary deems appropriate in 
        the interest of preventing fraud and abuse in health care 
        programs of the Federal Government.

SEC. 204. ISSUANCE OF ADVISORY OPINIONS UNDER TITLE XI.

    (a) In General.--Title XI (42 U.S.C. 1301 et seq.), as amended by 
section 104(a), is amended by inserting after section 1129 the 
following new section:

                          ``advisory opinions

    ``Sec. 1130. (a) Issuance of Advisory Opinions.--The Secretary 
shall issue written advisory opinions as provided in this section.
    ``(b) Matters Subject to Advisory Opinions.--The Secretary shall 
issue advisory opinions as to the following matters:
            ``(1) What constitutes prohibited remuneration within the 
        meaning of section 1128B(b).
            ``(2) Whether an arrangement or proposed arrangement 
        satisfies the criteria set forth in section 1128B(b)(3) for 
        activities which do not result in prohibited remuneration.
            ``(3) Whether an arrangement or proposed arrangement 
        satisfies the criteria which the Secretary has established, or 
        shall establish by regulation for activities which do not 
        result in prohibited remuneration.
            ``(4) What constitutes an inducement to reduce or limit 
        services to individuals entitled to benefits under title XVIII 
        or title XIX within the meaning of section 1128B(b).
            ``(5) Whether any activity or proposed activity constitutes 
        grounds for the imposition of a sanction under section 1128, 
        1128A, or 1128B.
    ``(c) Matters Not Subject to Advisory Opinions.--Such advisory 
opinions shall not address the following matters:
            ``(1) Whether the fair market value shall be, or was paid 
        or received for any goods, services or property.
            ``(2) Whether an individual is a bona fide employee within 
        the requirements of section 3121(d)(2) of the Internal Revenue 
        Code of 1986.
    ``(d) Effect of Advisory Opinions.--
            ``(1) Binding as to secretary and parties involved.--Each 
        advisory opinion issued by the Secretary shall be binding as to 
        the Secretary and the party or parties requesting the opinion.
            ``(2) Failure to seek opinion.--The failure of a party to 
        seek an advisory opinion may not be introduced into evidence to 
        prove that the party intended to violate the provisions of 
        sections 1128, 1128A, or 1128B.
    ``(e) Regulations.--
            ``(1) In general.--Not later than 180 days after the date 
        of the enactment of this section, the Secretary shall issue 
        regulations to carry out this section. Such regulations shall 
        provide for--
                    ``(A) the procedure to be followed by a party 
                applying for an advisory opinion;
                    ``(B) the procedure to be followed by the Secretary 
                in responding to a request for an advisory opinion;
                    ``(C) the interval in which the Secretary shall 
                respond;
                    ``(D) the reasonable fee to be charged to the party 
                requesting an advisory opinion; and
                    ``(E) the manner in which advisory opinions will be 
                made available to the public.
            ``(2) Specific contents.--Under the regulations promulgated 
        pursuant to paragraph (1)--
                    ``(A) the Secretary shall be required to respond to 
                a party requesting an advisory opinion by not later 
                than 30 days after the request is made; and
                    ``(B) the fee charged to the party requesting an 
                advisory opinion shall be equal to the costs incurred 
                by the Secretary in responding to the request.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to requests for advisory opinions made on or after January 1, 
1996.
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